1
Exhibit 10.1
CREDIT AGREEMENT
between
SHOP VAC CORPORATION
and
FELCHAR MANUFACTURING
CORPORATION
as Borrowers
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA,
and certain other Lenders
and
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
as Agent
$25,000,000 Revolving Credit Facility
October 1, 1996
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TABLE OF CONTENTS
Page
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Recitals.................................................................. 1
ARTICLE I
DEFINITIONS
1.1. Defined Terms ................................................... 1
1.2. Accounting Terms ................................................ 21
1.3. Singular/Plural ................................................. 21
1.4. Other Terms ..................................................... 21
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1. The Loans ....................................................... 21
2.2. Borrowings ...................................................... 22
2.3. Notes ........................................................... 23
2.4. Reduction of Commitments ........................................ 24
2.5. Payments; Voluntary, Mandatory .................................. 24
2.6. Interest ........................................................ 25
2.7. Fees ............................................................ 26
2.8. Interest Periods ................................................ 26
2.9. Conversions and Continuations ................................... 27
2.10. Method of Payments; Computations ................................ 28
2.11. Increased Costs, Change in Circumstances, etc ................... 29
2.12. Taxes ........................................................... 31
2.13. Compensation .................................................... 33
2.14. Use of Proceeds ................................................. 34
2.15. Recovery of Payments ............................................ 34
2.16. Pro Rata Borrowings ............................................. 34
2.17. Letters of Credit ............................................... 35
2.18. Weekly Settlement ............................................... ▇▇
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▇
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇; CONDITIONS OF CLOSING AND BORROWING
3.1 Closing ......................................................... 40
3.2 Conditions of Initial Loans and Advances ........................ 40
3.2.1 Executed Loan Documents ................................ 40
3.2.2 Closing Certificates; etc .............................. 40
3.2.3 Real Estate Matters .................................... 42
3.2.4 Environmental Assessment ............................... 42
3.2.5 Consents; No Adverse Change ............................ 42
3.2.6 Financial Matters ...................................... 42
3.2.7 Miscellaneous .......................................... 43
3.3 Conditions to All Loans and Advances ............................ 43
3.4 Waiver of Conditions Precedent .................................. 44
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Corporate Organization and Power ................................ 44
4.2 Subsidiaries .................................................... 44
4.3 Enforceability of Loan Documents; Compliance With Other
Instruments .................................................... 44
4.4 Use of Proceeds ................................................. 45
4.5 Governmental Authorization ...................................... 45
4.6 Litigation; Government Regulation ............................... 45
4.7 Taxes ........................................................... 45
4.8 Event of Default ................................................ 46
4.9 Margin Securities ............................................... 46
4.10 Full Disclosure ................................................. 46
4.11 ERISA ........................................................... 46
4.12 Financial Statements ............................................ 47
4.13 Solvency ........................................................ 48
4.14 Leased Properties ............................................... 48
4.15 Realty .......................................................... 48
4.16 Principal Places of Business .................................... 48
4.17 Assets for Conduct of Business .................................. 49
4.18 Trade Relations ................................................. 49
4.19 Compliance With Laws ............................................ 49
4.20 Environmental Matters ........................................... 49
4.21 Outstanding Borrowings .......................................... 50
4.22 Contracts; Labor Disputes ....................................... 50
4.23 Insurance ....................................................... 50
4.24 Ownership of Properties ......................................... 50
4.25 First Priority .................................................. 50
4.26 Investment Company .............................................. 51
4.27 Stock of the Borrowers .......................................... 51
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4.28 Single Business Enterprise ...................................... 51
4.29 Material Contracts .............................................. 51
ARTICLE V
AFFIRMATIVE COVENANTS
5.1 Financial and Business Information about the Borrowers .......... 51
5.2 Notice of Certain Events ........................................ 53
5.3 Corporate Existence and Maintenance of Properties, Licenses ..... 54
5.4 Payment of Indebtedness; Performance of Other Obligations ....... 54
5.5 Payment of Trade Accounts Payable, etc .......................... 55
5.6 Insurance ....................................................... 55
5.7 Maintenance of Books and Records; Inspection .................... 56
5.8 Compliance with ERISA ........................................... 56
5.9 COBRA ........................................................... 57
5.10 Payment of Taxes ................................................ 57
5.11 Compliance with Statutes, etc ................................... 57
5.12 Name Change ..................................................... 57
5.13 Compliance with Environmental Laws .............................. 57
5.14 Lockbox Arrangement ............................................. 57
5.15 Further Assurances .............................................. 58
ARTICLE VI
NEGATIVE COVENANTS
6.1 Merger and Dissolution .......................................... 58
6.2 Acquisitions .................................................... 59
6.3 Indebtedness .................................................... 59
6.4 Liens and Encumbrances .......................................... 59
6.5 Contingent Obligations .......................................... 59
6.6 Disposition of Assets ........................................... 60
6.7 Transactions With Related Persons ............................... 60
6.8 Restricted Investments .......................................... 60
6.9 Restrictions on Dividends ....................................... 61
6.10 Capital Expenditures ............................................ 61
6.11 Leases .......................................................... 61
6.12 Interest Coverage Ratio ......................................... 61
6.13 Funded Debt/EBITDA Ratio ........................................ 61
6.14 Sale and leaseback .............................................. 62
6.15 Hazardous Substances ............................................ 62
6.16 Subsidiaries or Partnerships .................................... 62
6.17 New Business .................................................... 63
6.18 Fiscal Year ..................................................... 63
6.19 Amendments; Prepayments of Debt, Etc ............................ 63
6.20 Location of Assets .............................................. 63
6.21 Receivables Documents ........................................... 63
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ARTICLE VII
EVENTS OF DEFAULT
7.1 Events of Default ............................................... 63
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1 Remedies: Termination of Commitments, Acceleration, etc ......... 65
8.2 Right of Set-off ................................................ 66
8.3 Rights and Remedies Cumulative; Non-Waiver; etc ................. 66
ARTICLE IX
THE AGENT
9.1 Appointment ..................................................... 67
9.2 Nature of Duties ................................................ 67
9.3 Absence of Reliance on the Agent ................................ 67
9.4 Certain Rights of the Agent ..................................... 68
9.5 Notice of Default ............................................... 68
9.6 Reliance by Agent ............................................... 69
9.7 Indemnification ................................................. 69
9.8 The Agent in its Individual Capacity ............................ 69
9.9 Holders ......................................................... 69
9.10 Successor Agent ................................................. 69
9.11 Collateral Matters .............................................. 70
ARTICLE X
MISCELLANEOUS
10.1 Survival ........................................................ 70
10.2 Governing Law, Consent to Jurisdiction .......................... 71
10.3 Waiver of Jury Trial ............................................ 71
10.4 Notice .......................................................... 73
10.5 Assignments, Participations ..................................... 75
10.6 Fees and Expenses ............................................... 77
10.7 Indemnification ................................................. 78
10.8 Amendments, Waivers, Etc ........................................ 78
10.9 Rights and Remedies Cumulative, Non-waiver, etc ................. 79
10.10 Binding Effect, Assignment ...................................... 80
10.11 Severability .................................................... 80
10.12 Entire Agreement ................................................ 80
10.13 Interpretation .................................................. 80
10.14 Counterparts; Effectiveness ..................................... 80
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10.15 Conflict of Terms .................................................. 81
10.16 Injunctive Relief .................................................. 81
10.17 Confidentiality .................................................... 81
10.18 The Borrowers as Co-Obligors ....................................... 81
10.19 Post-Closing Matters ............................................... 82
SCHEDULES
Schedule 1.1(a) - Existing Liens
Schedule 4.1 - Foreign Jurisdiction; Names; Subsidiaries
Schedule 4.3 - Compliance with Other Instruments
Schedule 4.6 - Litigation; Government Regulation
Schedule 4.7 - Taxes
Schedule 4.11 - Employee Plans
Schedule 4.14 - Leased Properties
Schedule 4.15 - Realty
Schedule 4.16 - Principal Places of Business
Schedule 4.18 - Trade Relations
Schedule 4.20 - Environmental Matters
Schedule 4.21 - Outstanding Borrowings
Schedule 4.23 - Insurance
Schedule 4.29 - Material; Contracts
Schedule 6.5 - Contingent Obligations
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B-1 - Notice of Borrowing
Exhibit B-2 - Notice of Conversion/Continuation
Exhibit B-3 - Letter of Credit Request
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Borrowing Base Certificate
Exhibit E - Compliance Certificate
Attachment A: Covenant Compliance Worksheet
Exhibit F - Inventory Report
Exhibit G - Financial Condition Certificate
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of the 1st day of October, 1996 (the
"Credit Agreement" or "Agreement"), is between
SHOP VAC CORPORATION, a New Jersey corporation with its principal
offices in Williamsport, Pennsylvania, and FELCHAR MANUFACTURING CORPORATION, a
New York corporation with its principal offices in Kirkwood, New York
(collectively, the "Borrowers" or individually, a "Borrower");
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a national banking
association with its principal offices in Charlotte, North Carolina ("First
Union"), and the other financial institutions that are now or hereafter become
parties hereto (collectively with First Union, the "Lenders"); and
FIRST UNION, as Agent for the Lenders to the extent described in ARTICLE
IX hereof (in such capacity, the "Agent").
RECITALS
A. The Borrowers have applied to the Lenders for a revolving credit loan
in the aggregate principal amount of up to $25,000,000, to be advanced by the
Lenders in accordance with the terms hereof.
B. Each of the Borrowers will pledge its accounts receivable and
inventory to secure its respective obligations hereunder and under the Loan
Documents.
C. The parties acknowledge that this Credit Agreement and each of the
Loan Documents (as hereinafter defined) have been negotiated and delivered in
Charlotte, North Carolina.
D. First Union has arranged or will arrange, at its discretion, for a
Lender or a syndicate of Lenders to make the Loans. The Lenders are willing to
make the Loans described hereinabove based on the terms and conditions set forth
in this Credit Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Lenders, and
the Agent hereby agree as set forth herein.
ARTICLE I
DEFINITIONS
1.1. Defined Terms. For purposes of this Credit Agreement, in addition
to the terms defined elsewhere, the following terms shall have the meanings set
forth below:
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"Account Debtor" shall mean any Person who is or who may become
obligated to a Borrower under or on account of an Account or Account Receivable.
"Accounts" or "Accounts Receivable" shall have the meaning assigned to
such term in the Security Agreement.
"Adjusted Base Rate" shall mean a per annum rate equal to the Base Rate
plus 0.75%.
"Adjusted LIBOR Rate" shall mean a per annum rate equal to the LIBOR
Rate plus 2.00%
"Advance" shall mean an advance of funds by a Lender to the Agent
pursuant to the Commitment of such Lender, to be disbursed by the Agent to the
Borrowers as a Loan from such Lender.
"Affiliate" shall mean, as to any Person, each of the Persons (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with such Person; (ii) or which
beneficially owns or holds 10% or more of any class of the outstanding voting
stock (or in the case of a Person which is not a corporation 10% or more of the
equity interest) of such Person; or (iii) 10% or more of any class of the
outstanding voting stock (or in the case of a Person which is not a corporation,
10% or more of the equity interest) of which is beneficially owned or held by
the such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting stock, by contract or
otherwise.
"Agent" shall mean First Union, as appointed in ARTICLE IX hereof, and
its successors and assigns.
"Agreement" or "this Agreement" or "Credit Agreement" shall mean this
Credit Agreement and any amendments, modifications and supplements hereto, any
replacements, renewals, extensions and restatements hereof, and any substitutes
herefor, in whole or in part and all Schedules and Exhibits hereto, and shall
refer to this Agreement as the same may be in effect at the time such reference
becomes operative.
"Assignment and Acceptance" shall mean an Assignment and Acceptance
Agreement substantially in the form of EXHIBIT C between a Lender and an
Eligible Assignee, and accepted by the Agent, pursuant to which such Lender
assigns to such Eligible Assignee, and the Eligible Assignee accepts, all or a
portion of such Lender's rights and obligations under this Credit Agreement.
"Bankruptcy Code" shall mean 11 U.S.C. Sections 101 et seq., as amended,
and any successor statute or statutes having substantially the same function.
"Base Rate" shall mean an interest rate per annum equal to the higher of
(i) the Prime Rate, or (ii) one-half percentage point (0.5%) in excess of the
Federal Funds Rate, as adjusted to conform to changes as of the opening of
business on the date of any such change in the Federal Funds Rate.
"Base Rate Loan" shall mean, at any time, any Loan that bears interest
at such time at the Adjusted Base Rate.
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"Borrowers" shall mean collectively Shop Vac Corporation, a New Jersey
corporation. and Felchar Manufacturing Corporation, a New York corporation,
together with and their respective permitted successors and assigns.
"Borrowing" shall mean the incurrence by the Borrowers on a given date
(including as a result of conversions of outstanding Loans pursuant to SECTION
2.9) of one Type of Loan, provided that Base Rate Loans incurred pursuant to
SECTION 2.11(c) shall be considered part of the related Borrowing of LIBOR
Loans.
"Borrowing Base" shall mean at any time, the amount, as determined in
accordance with the Borrowing Base Certificate most recently delivered to, and
accepted by, the Agent, equal to:
(i) Seventy-five percent (75%) of the face amount (less maximum
discounts, credits and allowances that may be taken by or
granted to Account Debtors in connection therewith) of Eligible
Accounts Receivable; plus
(ii) Thirty percent (30%) of Eligible Finished Goods Inventory
(provided, however, that the amount to be included in the
Borrowing Base attributable to Eligible Finished Goods Inventory
shall not exceed $7,000,000); less
(iii) any Reserves.
"Borrowing Base Certificate" shall mean a fully completed certificate in
the form of EXHIBIT D to this Credit Agreement.
"Borrowing Date" shall have the meaning assigned to such term in SECTION
2.2(a).
"Business Day" shall mean any day (other than a Saturday, Sunday or
legal holiday) on which commercial banks in Charlotte, North Carolina are open
for business, and with respect to any determination relevant to a LIBOR Loan or
any Swap Agreement, any Business Day which is also a Eurodollar Business Day.
"Capital Asset" shall mean any asset that would, in accordance with
Generally Accepted Accounting Principles, be required to be classified and
accounted for as a capital asset.
"Capital Expenditures" shall mean, for any period, the aggregate cost
(less the amount of any trade-in allowance included in such cost) of all Capital
Assets acquired by the Borrowers and their Subsidiaries during such period,
including Capital Lease Obligations incurred during such period.
"Capital Lease" shall mean any lease of any property, real or personal,
that would, in accordance with Generally Accepted Accounting Principles, be
required to be classified and accounted for as a capital lease on the balance
sheet of the lessee.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that would, in
accordance with Generally Accepted Accounting Principles, appear on a balance
sheet as a liability of such lessee in respect of such Capital Lease.
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"Cash" shall mean currency of the United States of America.
"Cash Collateral Account" shall have the meaning assigned to such term
in SECTION 2.17(i).
"Cash Investments" shall mean (i) marketable direct obligations issued
or unconditionally fully guaranteed by the United States of America, issued by
any agency of the United States of America and backed by the full faith and
credit of the United States of America, in each case maturing within six months
from the date of acquisition thereof; (ii) marketable direct obligations issued
by any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof, in each case maturing within
six months from the date of acquisition thereof and, at the time of acquisition,
having the highest rating obtainable from either Standard & Poor's or ▇▇▇▇▇'▇
Investors Service, Inc. (the "Rating Agencies"); (iii) repurchase obligations of
any of the Lenders or their Affiliates with a term not exceeding seven (7) days
with respect to underlying securities of the types described in clause (i)
above; (iv) variable rate demand notes backed by letters of credit issued by any
of the Lenders or their Affiliates; (v) Eurodollar deposits in any of the
Lenders or their Affiliates; (vi) marketable commercial paper maturing no more
than six months from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor's or at least P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors
Service, Inc.; and (vii) demand deposits, time deposits and certificates of
deposit that are held or issued by a Lender, or are insured by the Federal
Deposit Insurance Corporation (the "FDIC") or any successor instrumentality of
the federal government of the United States of America up to the applicable
limit on insurance granted by the FDIC or such other instrumentality with
respect to such instruments (it being understood that the amount invested in
such instrument may not exceed the limit on such insurance), maturing within six
months from the date of issuance thereof and issued by any Lender or a bank or
trust company organized under the laws of the United States of America or any
state thereof and having capital, surplus and undivided profits aggregating at
least $500 million.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Shop Vac Corporation and its Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than Principals or any Related Party, (ii) the adoption
of a plan relating to the liquidation or dissolution of Shop Vac Corporation,
(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as defined
above), other than the Principals or any Related Party becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of (a) more than 35% of the voting stock of the
Shop Vac Corporation and (b) more of the voting stock of the Shop Vac
Corporation than is at the time "beneficially owned" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act) by the Principals and their
Related Parties in the aggregate, or (iv) the first day on which a majority of
the members of the Board of Directors of Shop Vac Corporation are not Continuing
Directors.
"Closing" shall have the meaning assigned to such term in SECTION 3.1.
"Closing Date" shall mean the date referred to in SECTION 3.1 hereof.
"Collateral" shall mean all Accounts Receivable and Inventory of the
Borrowers, wherever located and whether now or hereafter existing or now owned
or hereafter acquired or arising, and all other collateral that shall, from time
to time, directly or indirectly secure the Obligations.
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"Commitment" shall mean, for any Lender, such Lender's Revolving Credit
Commitment.
"Compliance Certificate" shall mean a fully completed certificate in the
form of EXHIBIT E.
"Consolidated Net Income" shall mean, for any period, the net income (or
loss) of the Borrowers and their Subsidiaries, on a consolidated basis and
excluding intercompany items, for such period. determined in accordance with
Generally Accepted Accounting Principles, but excluding from the determination
of such net income (or loss): (a) gains (or losses) on the sale, conversion or
other disposition of Capital Assets, (b) gains (or losses) on the acquisition,
retirement, sale or other disposition of Stock of any Borrower or any of their
Subsidiaries, (c) gains (or losses) on the collection of life insurance
proceeds, (d) any write-up or write-down of any asset, and (e) any other gain or
credit (or loss) of an extraordinary nature.
"Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
lease, dividend, guaranty, letter of credit (other than a standby letter of
credit with no reasonable likelihood of draw, in the reasonable opinion of the
Agent) or other obligation (the "primary obligation") of another Person (the
"primary obligor"), whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligations or any property constituting direct
or indirect security therefor, (b) to advance or provide funds (i) for the
payment or discharge of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor in respect thereof to make
payment of such primary obligation, or (d) otherwise to assure or hold harmless
the owner of any such primary obligation against loss or failure or inability to
perform in respect thereof. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made (unless such
Contingent Obligation is limited by its terms in which case the amount of such
Contingent Obligation shall be such limited amounts) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of Shop Vac Corporation who (i) was a member of
such Board of Directors on the date of this Agreement or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election.
"Current Assets" shall mean, at any date, the aggregate of the current
assets of the Borrowers and their Subsidiaries appearing on the asset side of
their consolidated balance sheet, as determined in accordance with Generally
Accepted Accounting Principles.
"Current Liabilities" shall mean, at any date, the aggregate of the
current liabilities of the Borrowers and their Subsidiaries appearing on the
liability side of their consolidated balance sheet, as determined in accordance
with Generally Accepted Accounting Principles, minus, to the extent otherwise
included in the calculation of such current liabilities, the principal balance
outstanding under the Revolving Loans.
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"Default" shall mean any event that, with the passage of time or giving
of notice, or both, would constitute an Event of Default.
"Default Rate" shall mean, with respect to any Loan, an interest rate
per annum equal to the Elected Rate applicable to such Loan plus two (2)
percentage points.
"Dollars" or "$" shall mean dollars of the United States of America.
"EBITDA" shall mean, with respect to the Borrowers and their
Subsidiaries on a consolidated basis as of the last day of any period, the
aggregate of (i) Consolidated Net Income for the immediately preceding period
then ended, plus (ii) without duplication, the sum of Interest Expense, losses
related to any foreign currency translations, taxes, depreciation, amortization
and other non-cash expenses or charges reducing income for such period (to the
extent taken into account in the calculation of Consolidated Net Income for such
period), minus (iii) without duplication, any income or gains realized upon the
sale of assets other than in the ordinary course of business, any gains related
to foreign currency translations and non-cash credits increasing Consolidated
Net Income for such period (to the extent taken into account in the calculation
of Consolidated Net Income for such period). In addition, notwithstanding
anything to the contrary herein, EBITDA with respect to the Borrowers and their
Subsidiaries on a consolidated basis for the quarter ending September 30, 1996,
shall mean EBITDA plus the reserve, not to exceed $6,400,000, for one-time
restructuring charges related to the consolidation or closing of certain of the
Borrowers' European subsidiaries.
"EPA" shall mean the United States Environmental Protection Agency.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan (as defined in SECTION 4.11); (b) a withdrawal by any Borrower from a
Qualified Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a
complete or partial withdrawal by any Borrower from a Multiemployer Plan; (d)
the filing of a notice of intent to terminate, the treatment of a plan amendment
as a termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Qualified
Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure to make
required contributions to a Qualified Plan or Multiemployer Plan; (f) an event
or condition which is reasonably expected to constitute grounds under Section
4042 of ERISA for the termination by the Pension Benefit Guaranty Corporation
of, or the appointment of a trustee to administer, any Qualified Plan or
Multiemployer Plan; (g) an application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the Internal Revenue Code
with respect to any Qualified Plan; (h) any Borrower engages in or otherwise
becomes liable for a material excise tax or civil penalty with respect to a
non-exempt prohibited transaction; or (i) a violation of the applicable
requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Internal Revenue Code by any fiduciary with respect to any
Qualified Plan for which any Borrower is found by a court of competent
jurisdiction to be liable.
"Elected Rate" shall mean the rate of interest with respect to a Loan
selected by the Borrowers pursuant to ARTICLE II or as may apply as a result of
a conversion.
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"Eligible Account Receivable" shall mean any bona fide Account created
or acquired by a Borrower in the ordinary course of its business that the Agent
deems to be an Eligible Account Receivable acting in good faith based on prudent
banking practices and on audits performed by the Agent with respect to such
Accounts. The Agent shall determine, on a daily basis, whether any Account
constitutes and continues to constitute an Eligible Account Receivable, and if
an Eligible Account Receivable subsequently becomes ineligible for any reason,
its ineligibility shall become effective immediately. In making its
determination whether an Account is an Eligible Account Receivable, the Agent
may consider whether an Account satisfies and continues to satisfy the following
requirements:
(a) The Account is a bona fide existing obligation of the named
Account Debtor arising from the sale and delivery of materials, merchandise or
the rendering of services to such Account Debtor in the ordinary course of a
Borrower's business, is actually and absolutely owing to such Borrower and is
not contingent for any reason, and such Borrower has lawful and absolute title
to such Account Receivable and the unqualified right to assign and grant a
security interest therein to the Agent on behalf of the Lender, as Collateral;
(b) The subject materials, merchandise or products have been
shipped or delivered on open account to the named Account Debtor on an absolute
sale basis and not on consignment, on approval or on a sale or return,
▇▇▇▇-and-hold or guaranteed sale basis or subject to any other repurchase or
return agreement, and no part of the subject goods has been returned nor notice
received by a Borrower that the goods will be returned;
(c) The Account is not evidenced by chattel paper or an
instrument of any kind, unless such chattel paper or instrument is duly endorsed
to and is in the possession of the Agent;
(d) Except for Account Debtors located in Canada (which for
purposes hereof will be treated as an Account Debtor located in the United
States), if the Account Debtor is located outside of the United States
(excluding its territories and possessions), the Account is payable in the full
amount of the face value of the Account in Dollars and is supported by (i) an
irrevocable letter of credit issued by a financial institution satisfactory to
the Agent, and the letter of credit and all documents required to draw thereon
have been delivered to the Agent, or (ii) credit insurance that is satisfactory
to the Agent and has been assigned to the Agent for the benefit of the Lenders;
(e) The Account is a valid, legally enforceable obligation of
the Account Debtor and no offset (including without limitation discounts,
counterclaims or contra accounts) or other defense on the part of such Account
Debtor or any claim on the part of such Account Debtor denying liability
thereunder has been asserted; provided, however, that if the Account Receivable
is subject to any such offset, defense or claim, or any Inventory related
thereto has been returned, the balance of such Account Receivable, after
subtracting the maximum amount of such offset, defense, claim, or return, shall
be an Eligible Account Receivable if it represents a valid, uncontested and
legally enforceable obligation of the Account Debtor and meets all of the other
criteria for eligibility set forth herein;
(f) Except for Permitted Liens, the Account is not subject to
any lien or security interest whatsoever, and a currently effective Financing
Statement filed by the Agent against each applicable Borrower covering such
Account Receivable is on file in all appropriate filing
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14
locations and, except for Permitted Liens. the Agent, on behalf of the Lenders,
has a first priority security interest therein;
(g) The Account has been billed within a reasonable period of time, is
due not more than one hundred twenty (120) days after its invoice date, and has
not remained unpaid for a period of more than sixty (60) days from its due date;
(h) The Account Debtor is Solvent and not the subject of any bankruptcy
or insolvency proceeding of any kind, and the creditworthiness of the Account
Debtor is, in all other respects, reasonably acceptable to the Agent, in its
reasonable discretion, at the time in question;
(i) The Account does not arise out of a transaction with an employee,
officer, agent, director, stockholder or other Affiliate of any Borrower;
(j) The Account is not due from a Account Debtor whose total
indebtedness to the Borrowers on Accounts Receivable exceeds twenty-five percent
(25%) of the aggregate amount of all the Borrowers' Eligible Accounts
Receivable (except when the Account Debtor is Walmart, in which case the total
indebtedness of such Account Debtor to the Borrowers on accounts Receivable does
not exceed forty percent (40%) of the aggregate amount of all the Borrowers
Eligible Accounts Receivable) provided, however, that only Accounts due from
such Account Debtor in excess of twenty-five percent (25%) of the aggregate
amount of all of the Borrowers Eligible Accounts Receivable shall be ineligible
(except when the Account Debtor is Walmart, in which case only Accounts due from
such Account Debtor in excess of forty (40%) of the aggregate amount of all of
the Borrowers' Eligible Accounts Receivable shall be ineligible);
(k) The Account is not due from an Account Debtor whose indebtedness to
the Borrowers on Accounts which are unpaid sixty (60) days or more after the due
date of the respective invoices exceeds fifty percent (50%) of such Account
Debtor's total indebtedness to the Borrowers;
(l) The Account does not arise out of a direct contract with the United
States of America, or any department, agency, subdivision or instrumentality
thereof, or if so, the applicable Borrowers have complied with all requirements
of the Federal Assignment of Claims Act relative to the assignment of such
Account Receivable to the Agent;
(m) There are no material regulatory, administrative or judicial
obstacles to the Agent's or the Lenders' direct enforcement of the Account
against the Account Debtor or to the Agent's or the Lenders' intervention in any
enforcement action that might be brought by any Borrower with respect thereto;
(n) The Account Debtor is not located in the State of New Jersey,
Minnesota, Indiana or Connecticut or any other state which requires that any
Borrower in order to ▇▇▇ any Person in such state's courts, either (i) qualify'
to do business in such state or (ii) file a report with the taxation department
of such states, or, if the Account Debtor is located in any such states, such
Borrower has either qualified as a foreign corporation authorized to transact
business in such state or has filed appropriate reports with the taxation
division for the then current year; except where the failure to qualify or file
would not impair the ability of such Borrower or its Subsidiaries to collect on
the Account from an Account Debtor located in such state; and
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15
(o) Any credit balances of an Account Debtor aged 90 days or more than
the invoice date shall not be included in Eligible Account Receivable.
"Eligible Assignee" shall mean (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets in excess
of $5,000,000,000, (ii) a commercial bank organized under the laws of any other
country that is a member of the OECD or a political subdivision of any such
country and having total assets in excess of $5,000,000,000, provided that such
bank is acting through a branch or agency located in the United States, in the
country under the laws of which it is organized or in another country that is
also a member of the OECD, (iii) the central bank of any country that is a
member of the OECD, (iv) a finance company, mutual funds, insurance company or
other financial institution that is engaged in making, purchasing or otherwise
investing in commercial loans in the ordinary course of its business and having
total assets in excess of $3,000,000,000, (v) any Affiliate of an existing
Lender or (vi) any other Person approved by the Agent and the Borrowers, which
approval shall not be unreasonably withheld.
"Eligible Finished Goods Inventory" shall mean all Finished Goods
Inventory created or acquired by a Borrower in the ordinary course of its
business as presently conducted or anticipated to be conducted that the Agent
reasonably deems to be Eligible Finished Goods Inventory acting in good faith
based on prudent banking practices and on audits performed by the Agent. The
Agent shall determine, on a daily basis, whether any such Inventory constitutes
and continues to constitute Eligible Finished Goods Inventory, and if Eligible
Finished Goods Inventory subsequently becomes ineligible for any reason, its
ineligibility shall become effective immediately. In making its determination of
Eligible Inventory, the Agent may consider whether the Finished Goods Inventory
satisfies and continues to satisfy the following requirements:
(a) The Finished Goods Inventory consists of finished goods in
each case located at the locations specified on Exhibit B to the Security
Agreement (as such Exhibit B may be amended from time to time) and shall not
include any Inventory not located at such locations;
(b) The Finished Goods Inventory is, in the Agent's reasonable
judgment, (j) in good saleable condition, (ii) not deteriorating in quality or
obsolete and (iii) subject to satisfactory internal control and management
procedures;
(c) The Finished Goods Inventory meets in all material respects
all standards imposed by any Governmental Authority having regulatory authority
over such Inventory, its use or sale, and is either currently usable or
currently saleable in the normal course of any Borrower's business;
(d) Except for the Agent's security interest, on behalf of the
Lenders, and Permitted Liens, the Finished Goods Inventory is not subject to any
lien or security interest whatsoever, and currently effective Financing
Statements filed by the Agent against each Borrower covering all Inventory are
on file in all appropriate filing locations where such Inventory is located and.
except for Permitted Liens the Agent, on behalf of the Lenders, has a first
priority perfected security interest in such Inventory;
(e) If the Inventory is located at a location that is leased to
any Borrower, either (i) the lessor (and if the lessor is not the owner of the
location, the owner) has executed and delivered a landlord agreement in
recordable form to the Agent in form and substance reasonably
9
16
satisfactory to the Agent or (ii) if the lease is for a term no longer than
month-to-month, the lessor under such lease is entitled to no contractual or
statutory lien on such Inventory and the Borrowers furnish written evidence to
the Agent of each payment of rent or other charges under the lease within five
(5) days after payment;
(f) If the Inventory is located at a location under a bailment
with any Borrower, the bailee has executed and delivered a bailee agreement in
recordable form to the Agent in form and substance reasonably satisfactory to
the Agent;
(g) The Inventory is not consigned; and
(h) Each of the warranties and representations set forth in the
Security Agreement with respect to Inventory remains true and correct.
"Employee Plan" shall mean any "employee benefit plan" within the
meaning of Section 3(3) of ERISA maintained by the Borrowers.
"Environmental Claims" shall mean any and all administrative, regulatory
or judicial proceedings, suits, demands, demand letters, claims, liens or
notices of noncompliance or violation. arising out of a violation of or
liability under Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereinafter, "Claims"), including, without
limitation, (i) any and all Claims by Governmental Authorities for enforcement,
cleanup, removal, response or remedial actions or damages pursuant to any
applicable Environmental Law and (ii) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to health or the environment.
"Environmental Laws" shall mean any federal, provincial, state or local
law, statute, ordinance, rule, regulation, permit, license, order, approval, or
other legal requirement (including without limitation any subsequent enactment,
amendment or modification) relating to the protection of human health or the
environment, including, but not limited to, any requirement pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of materials that are or may constitute a threat to human health or
the environment. Without limiting the foregoing, each of the following is an
Environmental Law: the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et. seq.) ("CERCLA"), the Hazardous
Material Transportation Act (49 U.S.C. Section 1801 et. seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et. seq.) ("RCRA"), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et. seq.), the Clean
Air Act (42 U.S.C. Section 7401 et. seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et. seq.), the Safe Drinking Water Act (42 U.S.C. Section
300, et. seq.), and the Occupational Safety and Health Act (29 U.S.C. Section
651 et. seq.) ("OSHA"), as such laws have been amended or supplemented, and each
similar federal, state and local statute, and each rule and regulation
promulgated thereunder.
"Eurodollar Business Day" shall mean a day on which commercial banks are
open for business (including dealings in foreign exchange and foreign currency
deposits in the London interbank market) in London, England.
"Event of Default" shall have the meaning specified in Article VII
hereof.
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17
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Facility" shall mean the Revolving Credit Facility.
"Federal Funds Rate" shall mean, for any day. a fluctuating interest
rate per annum equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or. if such day is not a
Business Day. for the next preceding Business Day) by the Federal Reserve Bank
of Richmond. or if such rate is not so published on the relevant Business Day,
the average of the quotations for such day on such transactions received by the
Agent from three federal funds brokers of recognized standing selected by the
Agent.
"Financial Condition Certificate" shall mean a fully completed Financial
Condition Certificate, in form and substance substantially similar to EXHIBIT H
hereto with the attachments required thereby.
"Financial Statements" shall mean the annual consolidated financial
statements of the Borrowers and their Subsidiaries for the periods ended
December 31,1995, December 31,1994, and December 31, 1993, and the unaudited
interim financial statements for the Borrowers and Subsidiaries for the seven
month period ended July 31, 1996; and all other financial statements of the
Borrowers and their Subsidiaries that have previously been delivered by the
Borrowers, any of these Subsidiaries to the Agent or any Lender, including
without limitation interim financial statements.
"Financing Statements" shall mean financing statements approved for
filing in accordance with the applicable adopted version of the Uniform
Commercial Code and all other titles, documents and certificates that the Agent
may reasonably require from the Borrowers to describe and perfect the security
interests created hereunder or under the other Loan Documents, and all
amendments thereto and assignments thereof, in form and substance reasonably
satisfactory to the Agent.
"Finished Goods Inventory" shall mean all Inventory consisting of
completed consumer and industrial wet/dry vacuum cleaners, component parts and
accessories that are ready for sale and finished plastic parts located at
Canton, Pennsylvania and Williamsport, Pennsylvania and shall include fully
manufactured goods of Felchar that are awaiting shipment to, or have been
shipped to, Shop Vac's facility in Williamsport, Pennsylvania, or awaiting
shipment to non-Borrower Subsidiaries or to original equipment manufacturers.
"First Union" shall mean First Union National Bank of North Carolina, a
national banking association, and its successors and assigns.
"Foreign Subsidiary" shall mean any direct or indirect subsidiary of a
Borrower that is organized and existing under the laws of any jurisdiction other
than a state of the United States of America.
"Foreign Subsidiary Letter of Credit Outstandings" shall mean, at any
time, the sum of (i) the aggregate Stated Amount of all outstanding Foreign
Subsidiary Letters of Credit at such time and (ii) the aggregate amount of all
outstanding Reimbursement Obligations at such time.
"Foreign Subsidiary Letters of Credit" shall mean Letters of Credit
issued pursuant to SECTION 2.17(a) for the benefit of a Foreign Subsidiary.
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18
"Funded Debt" shall mean all Indebtedness for borrowed money of any of
the Borrowers or their Subsidiaries on a consolidated basis less Cash and Cash
Investments.
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles. as recognized by the American Institute of Certified
Public Accountants, consistently applied and maintained on a consistent basis
for the Borrowers and their Subsidiaries on a consolidated basis throughout the
period indicated and consistent with the financial practice of the Borrowers and
their Subsidiaries after the date hereof; provided, however, that, in the event
that changes in Generally Accepted Accounting Principles shall be mandated by
the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Borrowers' certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date this Agreement shall
have been amended to the extent necessary to reflect any such changes in the
financial covenants and other terms and conditions of this Agreement.
"Generally Accepted Auditing Standards" shall mean those standards that
are generally accepted auditing standards as approved and adopted by the
membership of the American Institute of Certified Public Accountants,
specifically the General Standards, Standards of Fieldwork and Standards of
Reporting.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Substances" means any substance or material meeting any one
or more of the following criteria: (i) it is defined as a hazardous waste,
hazardous substance, pollutant, contaminant or toxic substance under any
Environmental Law; (ii) it is toxic, explosive, corrosive, ignitable,
infectious, radioactive or mutagenic; (iii) its presence requires investigation
or remediation under an Environmental Law; or (iv) it is or contains, without
limiting the foregoing, asbestos, polychlorinated biphenyls, urea formaldehyde
foam insulation, petroleum hydrocarbons, crude oil, nuclear fuel, natural gas or
synthetic gas.
"Indebtedness" shall mean, without duplication, all liabilities,
obligations and indebtedness of the Borrowers and their Subsidiaries of any and
every kind and nature, including, without limitation, the Obligations,
obligations for borrowed money and interest thereon (including interest paid in
kind), whether heretofore, now or hereafter owing, arising, due or payable from
any Borrower or its Subsidiaries to any Person and howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise and whether matured or unmatured. Without in any way limiting
(he generality of the foregoing, Indebtedness specifically includes the
following: (i) all obligations or liabilities of any Person that are secured by
any lien, claim, encumbrance or security interest upon property owned by any
Borrower or Subsidiary, even though such Borrower or Subsidiary has not assumed
or become liable for the payment thereof; (ii) all obligations or liabilities
created or arising under any Capital Lease of real or personal property, or
conditional sale or other title retention agreement with respect to property
used or acquired by any Borrower or Subsidiary', even though the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such property; and (iii) all obligations under any guaranty agreements,
letters of credit or other documents creating such
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contingent liabilities; provided that Indebtedness shall not include trade
payables, accrued expenses. accrued dividends, accrued income taxes, warranty
reserves and deferred income taxes, to the extent arising in the ordinary course
of business.
"Intercompany Loans" shall mean (i) loans by any of the Borrowers to the
Foreign Subsidiaries and (ii) Foreign Subsidiary Letters of Credit.
"Intercompany Loans" shall not include any amounts owing by a Foreign Subsidiary
to the Borrowers arising from a non cash transaction and reflected on the
Borrowers' Books as of September 30, 1996.
"Intercompany Loan Documents" shall mean Intercompany Notes and any
other documents evidencing or relating to Intercompany Loans.
"Intercompany Notes" shall mean the promissory notes of any Foreign
Subsidiary of a Borrower executed and delivered by a Foreign Subsidiary to a
Borrower evidencing the obligation of the Foreign Subsidiary to repay funds
advanced pursuant to an Intercompany Loan.
"Interest Expense" shall mean, for any period, total cash interest
expense of the Borrowers and their Subsidiaries on a consolidated basis for such
period (including, without limitation, cash interest expense attributable to
Capital Lease Obligations), less interest income for such period, determined in
accordance with Generally Accepted Accounting Principles.
"Interest Period" shall have the meaning set forth in SECTION 2.8
hereof.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as
the same may be amended from time to time.
"Inventory" shall have the meaning assigned to such term in the Security
Agreement.
"Inventory Report" shall mean a fully completed certificate in the form
of EXHIBIT F to this Credit Agreement.
"Investments" shall have the meaning assigned to such term in SECTION
6.8.
"Issuing Bank" shall mean First Union, in its capacity as issuer of the
Letters of Credit, and its successors and assigns in such capacity.
"L/C Participant" shall have the meaning assigned w such term in SECTION
2.17(c).
"LIBOR Loan" shall mean, at any time, any Loan that bears interest at
such time at the adjusted LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next higher 1/100 of one percentage
point) equal to an interest rate obtained by dividing (i) the rate of interest
determined by Lender to be the rate for deposits in U.S. dollars for the
applicable Interest Period which appears on the Telerate Page 3750 at
approximately 11:00 a.m. London time, three (3) Business Days prior to the first
date of the applicable Interest Period, or if such rate is not available, the
rate per annum at which, in the reasonable opinion of Lender, U.S. dollars in
the amount of the Loan request are being offered to leading reference banks for
settlement in the London
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interbank market at approximately 11:00 a.m. London time, three (3) Business
Days prior to the first date of the applicable Interest Period. by (ii) the
percentage equal to one hundred percent (expressed as a decimal fraction) minus
the Reserve Requirement for such Interest Period. The LIBOR Rate shall be
adjusted as of the first day of each Interest Period to reflect the LIBOR Rate
as of such day. Each calculation by the Agent of the applicable LIBOR Rate shall
be conclusive and binding for all purposes.
absent bad faith or manifest error.
"Landlord Consents" shall mean (i) a waiver and consent from each
landlord with respect to the properties of the Borrower and its Subsidiaries
listed on SCHEDULE 4.14 and (ii) all other landlord consents that the Agent or
the Required Lenders may reasonably require of the Borrower or any of its
Subsidiaries from time to time in respect of amendments, modifications or
renewals of the leases referred to in clause (i) above or in respect of any
other material leases to which the Borrowers or any of their Subsidiaries are
now or hereafter a party, in each case in form and substance reasonably
satisfactory to the Agent, together with any amendments, modifications and
supplements thereto and restatements thereof, in whole or in part.
"Leased Properties" shall mean the real properties leased and occurred
by the Borrowers and their Subsidiaries, as of the date hereof and at any time
hereafter and consisting, as of the date hereof, of the properties set forth in
SCHEDULE 4.14 hereof.
"Lenders" shall mean First Union and the other financial institutions
now or hereafter parties to this Agreement, and their successors or assigns
"Lending Office" shall mean, with respect to any Lender, the branch or
branches (or Affiliates) from which any of such Lender's Loans are made or
maintained.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate Stated Amount of all outstanding Letters of Credit, including
Foreign Subsidiary Letters of Credit, at such time and (ii) the aggregate amount
of all outstanding Reimbursement Obligations at such time.
"Letter of Credit Request" shall have the meaning assigned to such term
in SECTION 2.17(b).
"Letters of Credit" shall have the meaning assigned to such term in
SECTION 2.17(a), and shall include Foreign Subsidiary Letters of Credit.
"Lien" means any interest in property securing an obligation owed to, or
a claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights-of-way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
property. For the purposes of this Agreement, the Borrowers and their
Subsidiaries shall be deemed to be the owners of any property which it or they
have acquired or hold subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the property has been retained
by or vested in some other Person for security purposes.
"Loan Documents" shall mean and collectively refer to this Agreement,
the Notes, the Security Agreement, the Financing Statements, Swap Agreements, if
any, with a Lender relating to the Notes, and
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21
any and all agreements, instruments and documents, including, without
limitation, notes, guaranties. mortgages, deeds to secure debt, deeds of trust,
chattel mortgages, pledges, powers of attorney. consents. assignments.
contracts. notices, security agreements, lockbox agreements, trust account
agreements and all other written matters whether heretofore, now or hereafter
executed by or in behalf of any Borrower or its Subsidiaries or delivered to the
Agent or any Lender, with respect to this Agreement or with respect to the
transactions contemplated by this Agreement. and in each case, together with any
amendments, modifications and supplements thereto, any replacements, renewals,
extensions and restatements thereof, and any substitutes therefor, in whole or
in part.
"Loans" shall mean and collectively refer to the Revolving Credit Loans.
"Material Adverse Effect" or "Material Adverse Change" shall mean a
material adverse effect upon, or a material adverse change in, any of (i) the
financial condition, operations, business or properties of the Borrowers and
their Subsidiaries, taken as a whole; (ii) the ability of any Borrower or any
Subsidiary to perform under any Loan Document in any material respect; (iii) the
legality, validity or enforceability of any Loan Document; or (iv) the
perfection or priority of the liens of the Agent granted under the Loan
Documents or the rights and remedies of the Agent or the Lenders under the Loan
Documents for reasons other than the Agent's or any Lender's gross negligence or
wilful misconduct or the failure of the Agent or Lenders to file appropriate
continuation statements.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which any Borrower or any of its
Subsidiaries is, or has been, making or is required to make contributions.
"Norwich Property" shall have the meaning assigned to such term in
SECTION 6.6.
"Notes" shall mean the Revolving Credit Notes.
"Notice of Borrowing" shall have the meaning assigned to such term in
SECTION 2.2(a).
"Notice of Conversion/Continuation" shall have the meaning assigned to
such term in SECTION 2.9(b).
"Obligations" shall mean and include (i) the Loans, any Reimbursement
Obligations and all other loans, advances, indebtedness, liabilities,
obligations, covenants and duties owing, arising, due or payable from the
Borrowers and their Subsidiaries to the Agent, the Issuing Bank or any Lender of
any kind or nature, present or future, howsoever evidenced, created, incurred,
acquired or owing, arising under this Agreement, the Notes or the other Loan
Documents or in any other way related to this Agreement, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired, and (ii) all interest (including, to the extent permitted
by law, all post-petition interest), charges, expenses, fees, attorneys' fees
and any other sums payable by any Borrower to the Agent, the Issuing Bank or any
Lender under this Agreement or any of the other Loan Documents.
"Old Revolving Credit Facility" shall mean the revolving credit facility
extended to the Borrower by First Union National Bank pursuant to the Second
Amended and Restated Loan Agreement dated as of February 1,1994, as amended by a
First Amendment dated as of December 19, 1994, a Second Amendment dated May 25,
1995, a Third Amendment dated November 1, 1995, the Letter Agreement
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22
dated December 13, 1995, the Letter Agreement dated February 22, 1996 and the
Fourth Amendment and Omnibus Modification of Loan Documents dated August 28,
1996.
"Old Senior Notes" shall mean the Borrowers' 10.83 percent (10.83%)
Senior Secured Notes in the aggregate original principal amount of $40,000,000,
due April 30, 2001, executed and delivered by Borrowers pursuant to the terms of
the Note Agreements, each dated as of April 26,1991 as amended by First
Amendment, Joinder and Assumption Agreement dated as of February 1, 1994, a
Second Amendment Agreement dated as of May 25, 1995, a Third Amendment Agreement
dated as of July 1, 1995, a Fourth Amendment Agreement dated as of November 1,
1995 and a Fifth Amendment Agreement dated as of August 28, 1996, to Allstate
Life Insurance Company of New York, First Allmerica Financial Life Insurance
Company (formerly known as State Mutual Life Insurance Company of America),
Allmerica Financial Life Insurance and Annuity Company (formerly known as SMA
Life Assurance Company), Jefferson-Pilot Life Insurance Company, Ohio National
Life Assurance Corporation and First Union National Bank of North Carolina.
"Operating Lease" shall mean any lease of property that is not a Capital
Lease.
"Participant" shall mean any Person, now or at any time hereafter,
participating with the Lenders in the Loans to the Borrowers pursuant to this
Agreement, and its successors and assigns.
"Pension Plan" shall mean any "employee pension benefit plan" within the
meaning of Section 3(2) of ERISA that is maintained by a Borrower (other than a
Multiemployer Plan).
"Percentage" shall mean, with respect to any Lender at any time, such
Lender's Revolving Credit Percentage at such time, as the context may require.
"Permitted Liens" shall mean any of the following liens securing any
Indebtedness of any of the Borrowers or any Subsidiary on the property, real or
personal, of any of the Borrowers or such Subsidiary, whether now owned or
hereafter acquired:
(a) Liens granted to the Agent, for the benefit of the Lenders;
(b) Liens imposed by mandatory provisions of law of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due and payable;
(c) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure the performance of letters of
credit, bids, tenders, statutory obligations, leases and contracts (other than
for borrowed money) including utility and similar deposits entered into in the
ordinary course of business, provided that all such liens in the aggregate have
no reasonable likelihood of causing a Material Adverse Effect;
(d) Liens for current taxes, assessments or other governmental
charges that are not delinquent or remain payable without any penalty or that
are being contested in good faith and with due diligence by appropriate
proceedings, provided that all such liens in the aggregate have no reasonable
likelihood of causing a Material Adverse Effect and, if reasonably requested by
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the Agent, such Borrower or such Subsidiary has established reserves determined
in accordance with Generally Accepted Accounting Principles with respect
thereto;
(e) Purchase money liens incurred in the purchase of Equipment permitted
under SECTION 6.10 hereof;
(f) Set-off rights of banks, whether statutory or consensual;
(g) zoning, entitlement, building and other land use regulations imposed
by Governmental Authorities having jurisdiction over the Realty which are not
violated by the current use of the Realty and covenants, conditions and
restrictions, easements and other matters of record affecting title to the
Realty which do not impair the use or occupancy of the Realty for the purposes
it is currently used;
(h) Leases referenced in SCHEDULE 4.14 hereto and any extensions,
amendments, modifications, renewals or replacements thereof;
(i) Liens on property that is the subject of a Capital Lease to secure
the performance of the Capital Lease Obligations relating thereto;
(j) Liens arising from Uniform Commercial Code financing statements
regarding operating leases permitted by this Agreement;
(k) Any interest or title of a lessor or sublessor or licensor under any
lease or license permitted by this Agreement;
(l) Liens set forth on SCHEDULE 1.1(a) attached hereto;
(m) Liens of Foreign Subsidiaries to secure Indebtedness permitted by
SECTION 6.3;
(n) Any other liens or encumbrances as the Required Lenders may approve
in writing from time to time.
"Person" shall mean a corporation, an association, a joint venture, a
partnership, a limited liability company, an organization, a business, an
individual, a trust or a government or political subdivision thereof or any
government agency or any other legal entity.
"Plan" means any employee benefit or other plan established or
maintained or with respect to which contributions have been made by any Borrower
or any of its domestic Subsidiaries, or under which the Borrower or its domestic
Subsidiaries have liability and which is covered by Title IV of ERISA or to
which the minimum funding standards of Section 412 of the Code apply.
"Prime Rate" shall mean the per annum interest rate publicly announced
from time to time by First Union National Bank of North Carolina from its
principal office in Charlotte, North Carolina to be its prime rate (which rate
is one of several interest rate bases used by Lender), as that rate may change
from time to time with changes to occur on the date the Prime Rate changes.
Lender lends at rate both above and below the Prime Rate, and the Borrowers
acknowledge and agree that the Prime Rate is not represented or intended to be
the lowest or most favorable rate of interest offered by Lender.
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"Principals" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Prohibited Transaction" shall mean any transaction described in (i)
Section 406 of ERISA or (ii) Section 4975(c) of the Internal Revenue Code for
which there is no statutory, individual or class exemption.
"Projections" shall mean the financial projections described in SECTION
4.12(b).
"Pro Rata Share" of any amount shall mean, with respect to any Lender at
any time, the product of (i) such amount, multiplied by (ii) such Lender's
Percentage at such time under the Facility.
"Realty" shall mean all of the right, title and interest of the
Borrowers and any of their Subsidiaries in and to land, improvements and
fixtures, including any leasehold interests (whether as lessor or lessee).
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 204, or any successor or other regulator
hereafter relating to reserve requirements applicable to member banks of the
Federal Reserve System.
"Regulation G" shall mean Regulation G of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Part 207, or any successor or other regulation
hereafter promulgated by said Board to replace the prior Regulation G and having
substantially the same function.
"Regulation U" shall mean Regulation U promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the Board of
Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any successor or
other regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"Reimbursement Obligation" shall have the meaning assigned to such term
in SECTION 2.17(d).
"Related Party" with respect to any Principal means (i) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (ii) trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (i).
"Reportable Event" shall mean a reportable event as defined in Section
4043(b) of ERISA (other than an event for which notice is waived under the ERISA
regulations).
"Required Lenders" shall mean, at any time, the Lenders owning or
holding 51 % or more of the sum of (i) the then aggregate principal amount of
the Loans then outstanding plus (ii) the aggregate Stated Amount of all Letters
of Credit then outstanding; or, if no Loans or Letters of Credit are then
outstanding, the Lenders with 51% or more of the aggregate of all Commitments at
such time. For purposes of this definition, the Stated Amount of each
outstanding Letter of Credit shall be considered to be owed to the Lenders
according to their respective Revolving Credit Percentages.
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"Requirement of Law" means, as to any Person, the charter, articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and any statute, law, treaty, rule, regulation, order,
decree, writ, injunction or determination of any arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) applicable two (2) Business Days
before the first clay of such Interest Period determined by the Agent to be in
effect on such day, as provided by the Board of Governors of the Federal Reserve
System (or any successor governmental body), applied for determining the maximum
reserve requirements (including, without limitation, basic, supplemental,
marginal and emergency reserves) applicable to the Lenders under Regulation D
with respect to "Eurocurrency liabilities" within the meaning of Regulation D,
or under any similar or successor regulation with respect to Eurocurrency
liabilities or Eurocurrency funding.
"Reserves" shall mean any reserves established by the Agent against the
Borrowing Base.
"Revolving Credit Commitment" shall mean, with respect to all of the
Lenders, the aggregate amount of $25,000,000, as such amount may be reduced
pursuant to the terms hereof and, with respect to any Lender at any time, the
amount set forth under such Lender's name on its signature page hereto under the
caption "Revolving Credit Commitment" or, if such Lender has entered into one or
more Assignment and Acceptances, the amount set forth for such Lender at such
time in the Register maintained by the Agent pursuant to SECTION 10.5(c) as such
Lender's "Revolving Credit Commitment," as such amount may be reduced at or
prior to such time pursuant to the terms hereof.
"Revolving Credit Facility" shall mean the revolving line of credit made
available by the Lenders to the Borrowers pursuant to SECTION 2.1(b) hereof.
"Revolving Credit Facility Maturity Date" shall mean September 30, 1999.
"Revolving Credit Facility Termination Date" shall mean the earliest of
(i) September 30, 1999; (ii) the date of termination after the occurrence of an
Event of Default; (iii) such date of termination as is mutually agreed upon by
the Lenders and the Borrowers; and (iv) the date after all Obligations have been
paid in full and the Lenders are no longer obligated to make Advances or
Revolving Credit Loans or issue Letters of Credit hereunder.
"Revolving Credit Loans" shall have the meaning assigned to such term in
SECTION 2.1(a).
"Revolving Credit Notes" shall mean the joint and several promissory
notes of the Borrowers, dated the date hereof, in substantially the form of
EXHIBIT A attached hereto, executed and delivered to the Lenders pursuant to
SECTION 2.3(b) hereof, or in connection with an Assignment and Acceptance
pursuant to SECTION 10.5(d), evidencing the obligation of the Borrowers to repay
funds advanced pursuant to the Revolving Credit Commitment of each Lender
individually, and the Total Revolving Credit Commitment in the aggregate,
together with any amendments, modifications and supplements thereto, any
replacements, restatements, renewals and extensions thereof, and any substitutes
therefor, in whole or part.
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"Revolving Credit Percentage" shall mean, with respect to any Lender at
any time, a fraction (expressed as a percentage) the numerator of which is the
Revolving Credit Commitment of such Lender at such time and the denominator of
which is the Total Revolving Credit Commitment at such time; provided that if
the Revolving Credit Percentage of any Lender is to be determined after the
Revolving Credit Commitments have been terminated, then such Revolving Credit
Percentage shall be determined immediately prior (and without giving effect) to
such termination.
"Security Agreement" shall mean the Security Agreement, dated as of the
date hereof, between the Borrowers and the Agent, whereby the Borrowers have
granted to the Agent a security interest in certain Collateral described therein
as security for the Obligations, together with any amendments, modifications and
supplements thereto, any replacements, renewals, extensions and restatements
thereof, and any substitutes therefor, in whole or in part.
"Senior Secured Notes" shall mean the Borrowers' promissory notes in the
aggregate principal amount of $100,000,000 bearing interest at 10 5/8% per
annum, maturing on September 2003 and issued pursuant to the Senior Secured
Notes Offering.
"Senior Secured Notes Offering" shall mean the offering pursuant to
which the Borrowers shall offer for sale the Senior Secured Notes pursuant to
the terms and conditions set forth in the offering memorandum by the Borrowers
dated October 1, 1996.
"Solvent" shall mean, as to any Person on any particular date, that such
Person (i) does not have unreasonably small capital to carry on its business as
now conducted and as presently proposed to be conducted, (ii) is able to pay its
debts as they become due in the ordinary course of business (taking into account
the timing and amounts of cash expected to be received by it, and amounts
expected to be payable on or in respect of its debts) and (iii) has assets with
a present fair saleable value greater than its total stated liabilities and
identified contingent liabilities taking into account the likelihood of
realization of such contingent liabilities.
"Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the maximum amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).
"Stock" shall mean all shares, options, interests or other equivalents
(howsoever designated) of or in a corporation or other entity, whether voting or
non-voting, including, without limitation, common stock, warrants, preferred
stock and common stock obtainable upon conversion of (i) convertible debentures
or (ii) any agreements, instruments and documents convertible, in whole or in
part, into any one or more or all of the foregoing.
"Subsidiary" shall mean any corporation or other entity of which more
than fifty percent (50%) of the outstanding Stock having ordinary voting power
to elect a majority of the board of directors is at the time, directly or
indirectly, owned by any Person or one or more of its Subsidiaries (irrespective
of whether, at the time, Stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency).
"Swap Agreement" shall mean any interest rate swap agreement, hedging
agreement or similar arrangement (including without limitation, any swap
agreement as defined in 11 U.S.C. Section 101(55) or any
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successor statute) between the Borrowers and a lender, now or hereafter
existing, pursuant to which the Borrowers obtain interest rate protection for
the Loans or any portion thereof.
"Total Commitment" shall mean, at any time, the sum of all Commitments
at such time.
"Total Debt" shall mean all Indebtedness of the Borrowers and their
Subsidiaries, on a consolidated basis.
"Total Revolving Credit Commitment" shall mean, at any time, the sum of
the Revolving Credit Commitments of each Lender at such time.
"Total Unutilized Revolving Credit Commitment" shall mean, at any time,
the sum of the Unutilized Revolving Credit Commitments of each Lender at such
time.
"Uniform Commercial Code" shall mean the Uniform Commercial Code of the
State of North Carolina, as amended from time to time, unless in any particular
instance the Uniform Commercial Code of another state is applicable, in which
case it shall mean the Uniform Commercial Code of such state.
"Unutilized Revolving Credit Commitment" shall mean, with respect to any
Lender at any time, such Lender's Revolving Credit Commitment at such time less
the sum of (i) the aggregate principal amount of all Revolving Credit Loans made
by such Lender that are outstanding at such time and (ii) such Lender's Pro Rata
Share of all Letter of Credit Outstandings at such time.
1.2. Accounting Terms. Any accounting terms used in this Agreement that
are not specifically defined shall have the meanings customarily given them in
accordance with Generally Accepted Accounting Principles.
1.3. Singular/Plural. Unless the context otherwise requires words in the
singular include the plural and words in the plural include the singular.
1.4. Other Terms. All other terms contained in this Agreement shall,
when the context so indicates, have the meanings provided for by the Uniform
Commercial Code of the State of North Carolina to the extent the same are used
or defined therein.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS;
LETTERS OF CREDIT
2.1. The Loans.
(a) Each Lender severally agrees, subject to and on the terms and
conditions of this Agreement, to make Loans (each, a "Revolving Credit Loan" and
collectively, the "Revolving Credit Loans") to the Borrowers, jointly and
severally, from time to time on any Business Day during the period from the date
hereof to the Revolving Credit Facility Termination Date, provided that (i) the
aggregate principal amount of Revolving Credit Loans at any time outstanding for
any Lender shall not exceed the
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difference between (A) such Lender's Revolving Credit Commitment at such time
less (B) such Lender's Pro Rata Share (calculated based on its Revolving Credit
Percentage) of the aggregate Letter of Credit Outstandings at such time
(exclusive of Reimbursement Obligations that are repaid with the proceeds of,
and simultaneously with the incurrence of, Revolving Credit Loans) and (ii) no
Borrowing of Revolving Credit Loans shall be made if, immediately after giving
effect thereto, the sum of (X) the aggregate principal amount of Revolving
Credit Loans outstanding at such time plus (Y) the aggregate Letter of Credit
Outstandings at such time would exceed the lesser of (A) the Total Revolving
Credit Commitment and (B) the Borrowing Base, and (iii) no Borrowing of
Revolving Credit Loans shall be permitted if, immediately after giving effect
thereto, a Default or Event of Default exists. Subject to and on the terms and
conditions of this Agreement, the Borrowers may borrow, repay and reborrow
Revolving Credit Loans. Furthermore, no advances under the Revolving Loan Credit
Facility shall be made if the Agent has not received a current Borrowing Base
Certificate in accordance with the applicable provisions of SECTION 5.1(k).
(b) The Loans shall, at the option of the Borrowers and subject to the
terms and conditions of this Agreement, be either Base Rate Loans or LIBOR Loans
(each such type of Loan, a "Type"), provided that all Loans comprising the same
Borrowing shall, unless otherwise specifically provided herein, be of the same
Type.
2.2. Borrowings.
(a) Whenever the Borrowers desire to make a Borrowing (other than
continuations or conversions of outstanding Loans pursuant to SECTION 2.9) under
the Revolving Credit Facility, the Borrowers will give the Agent written notice
(by telecopier or otherwise), prior to 11:00 a.m., Charlotte, North Carolina
time, at least three (3) Business Days prior to each Borrowing to be comprised
of LIBOR Loans and by 12:00 p.m., Charlotte, North Carolina time, at least one
(1) Business Day prior to each Borrowing to be comprised of Base Rate Loans,
except in the cause of Borrowings through any lock box or similar arrangement
for which no advance notice is required. Each such notice (each, a "Notice of
Borrowing") shall be irrevocable, shall be given in the form of EXHIBIT B-1 and
shall be appropriately completed to specify (i) the aggregate principal amount
and Type of the Loans to be made pursuant to such Borrowing (and, in the case of
a Borrowing of LIBOR Loans, the initial Interest Period to be applicable
thereto), (ii) the identity of the Borrower for whose benefit the Borrowing will
be made, and (iii) the requested date of the Borrowing (the "Borrowing Date"),
which shall be a Business Day.
Notwithstanding anything to the contrary contained herein:
(i) the aggregate principal amount of each Borrowing
hereunder, in the case of Borrowings comprised of LIBOR
Loans, shall not be less than $1,000,000 and, if
greater, shall be in an integral multiple of $1,000,000
in excess thereof;
(ii) if the Borrowers shall have failed to designate the Type
of Loans comprising a Borrowing, the Borrowers shall be
deemed to have requested a Borrowing comprised of Base
Rate Loans;
(iii) if the Borrowers shall have failed to select the
duration of the Interest Period to be applicable to any
Borrowing of LIBOR Loans, then the Borrowers shall be
deemed to have selected an Interest Period with a
duration of one (1) month; and
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(iv) no more than five LIBOR Loans may be outstanding at any
one time.
(b) Upon the receipt of a Notice of Borrowing, the Agent will promptly
notify each Lender with a Revolving Credit Commitment of the proposed Borrowing,
of such Lender's Pro Rata Share thereof and of the other matters specified in
the Notice of Borrowing. Each such Lender will make the amount of its Pro Rata
Share of such Borrowing available to the Agent at its office referred to in
SECTION 10.4, for the account of the Borrowers, in Dollars and in immediately
available funds, prior to 2:00 p.m., Charlotte, North Carolina time, on the
Borrowing Date. To the extent the relevant Lenders have made such amounts
available to the Agent as provided hereinabove, the Agent will make the
aggregate of such amounts available to the Borrowers' account at the Agent's
office and in like funds as received by the Agent, prior to 3:00 p.m.,
Charlotte, North Carolina time, on the Borrowing Date.
(c) Unless the Agent has received, prior to 12:30 pm, Charlotte, North
Carolina time, on any Borrowing Date, written notice from a Lender that such
Lender will not make available to the Agent its Pro Rata Share of the relevant
Borrowing, the Agent may assume that such Lender has made its Pro Rata Share of
such Borrowing available to the Agent on such Borrowing Date in accordance with
subsection (b) above, and the Agent may, in reliance upon such assumption, make
a corresponding amount available to the Borrowers on such Borrowing Date. If and
to the extent that such Lender shall not have made such Pro Rata Share available
to the Agent, and the Agent shall have made such corresponding amount available
to the Borrowers, such Lender, on the one hand, and the Borrowers, on the other,
severally agree to pay to the Agent forthwith on demand such corresponding
amount, together with interest thereon for each day from the date such amount is
made available to the Borrowers until the date such amount is repaid to the
Agent, (i) if recovered from such Lender, at the Federal Funds Rate. and (ii) if
recovered from the Borrowers, at the rate of interest applicable to Loans
comprising such Borrowing, as determined under SECTION 2.6. If such Lender shall
repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(d) The failure of any Lender to make any Loan required to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation
hereunder to make its Loan on the respective Borrowing Date, but no Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender as part of any Borrowing.
(e) Notwithstanding any other provision contained herein or in any of
the other Loan Documents, any Lender that refuses to fund or otherwise defaults
in the funding of its Pro Rata Share of any Borrowings requested and permitted
to be made by the Borrowers hereunder shall not, for so long as such refusal has
not been withdrawn or such default has not been cured, have any rights of
consent or approval or any voting rights whatsoever with respect to any matter
hereunder or under any of the other Loan Documents that requires or permits the
consent, approval or action of the Lenders, or any of them, and the Commitments
and the Loans of any such Lender shall not be taken into account for purposes of
determining, at any time during the continuation of any such refusal or default,
the Required Lenders or the number or percentage of Lenders that shall be
required for the Lenders or any of them to take or approve, or direct the Agent
to take, any action hereunder.
2.3. Notes
(a) The Loans made by each Lender shall be evidenced by a Revolving
Credit Note appropriately completed in substantially the form of EXHIBIT A-2.
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(b) The Revolving Credit Note issued to each Lender with a Revolving
Credit Commitment shall (i) be executed by the Borrowers, jointly and severally,
(ii) be payable to the order of such Lender. (iii) be dated as of the Closing
Date (or, in the case of Revolving Credit Notes issued pursuant to an Assignment
and Acceptance, as of the date thereof), (iv) be in a stated principal amount
equal to such Lender's Revolving Credit Commitment, (v) bear interest in
accordance with the provisions of Section 2.6, as the same may be applicable to
the Revolving Credit Loans made by such Lender from time to time, and (vi) be
entitled to all of the benefits of this Agreement and the other Loan Documents
and subject to the provisions hereof and thereof.
(c) Each Lender will record on its internal records the amount of each
Loan made by it and each payment received by it in respect thereof and will, in
the event of any transfer of any of its Notes, either endorse on the reverse
side thereof the outstanding principal amount of the Loans evidenced thereby as
of the date of transfer or provide such information on Annex I to the Assignment
and Acceptance relating to such transfer; provided, however, that the failure of
any Lender to make any such recordation or provide any such information, or any
error in such recordation or information, shall not affect any Borrower's
obligations in respect of such Loans.
2.4. Reduction of Commitments.
(a) At any time and from time to time, upon at least five (5) Business
Days' prior written notice to the Agent, the Borrowers may terminate in whole or
reduce in part the Total Unutilized Revolving Credit Commitment, provided that
any such partial reduction shall be in an aggregate amount of not less than
$1,000,000 or integral multiples thereof. The amount of any termination or
reduction made under this subsection (a) may not thereafter be reinstated.
(b) Upon any mandatory prepayment of the Loans pursuant to SECTION
2,5(c), the Total Revolving Credit Commitment shall be reduced by an amount
equal to the amount of the mandatory prepayment.
(c) Each reduction of the Revolving Credit Commitment under this Section
shall be applied ratably to the Revolving Credit Commitments of the Lenders
according to their respective Percentages under the Revolving Credit Facility.
After any such reduction, the fee provided for in SECTIONS 2.7(a) shall be
calculated with respect to the reduced Commitments.
2.5. Payments; Voluntary, Mandatory.
(a) The Borrowers shall have the right from time to time to prepay the
Loans, in whole or in part, upon written notice to the Agent, provided that,
unless made together with all amounts required under SECTION 2.13 to be paid as
a consequence of such prepayment, a prepayment of a LIBOR Loan may be made only
on the last day of the Interest Period applicable thereto. Each such notice
shall specify (x) the proposed date of such prepayment and (y) the aggregate
principal amount and the Types of the Loans to be prepaid (and, in the case of
LIBOR Loans, the specific Borrowing or Borrowings pursuant to which made) and
shall be irrevocable and shall bind the Borrowers to make such prepayment on the
terms specified therein. Amounts prepaid under the Revolving Credit Facility
pursuant to this subsection (a) may be reborrowed, subject to the terms and
conditions of this Agreement.
(b) In the event that the sum of (i) the aggregate principal amount of
the Revolving Credit Loans outstanding on any date plus (ii) the aggregate
Letter of Credit Outstandings as of such date exceeds the lesser of the Total
Revolving Credit Commitment as of such date (after giving effect to any
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termination or reduction thereof as of such date) or the Borrowing Base as of
such date, the Borrowers, jointly and severally, will repay the principal amount
of the Revolving Credit Loans on such date in the amount of such excess;
provided that, (A) such payment shall be accompanied by all amounts required
under SECTION 2.13 if applied to a LIBOR Loan and such payment is not made on
the last day of the Interest Period applicable thereto, and (B) to the extent
such excess amount required to be repaid is greater than the aggregate principal
amount of the Revolving Credit Loans outstanding immediately prior to the
application of such repayment, the amount so repaid shall be retained by the
Agent and held in the Cash Collateral Account as security for the Borrowers'
Reimbursement Obligations, as more particularly described in SECTION 2.17(i).
(c) On the date of receipt by the Borrowers or any of their Subsidiaries
of any proceeds from any issuance or sale of equity securities or subordinated
debt (except to the Borrowers by any of their Subsidiaries), the Borrowers shall
make mandatory repayment of principal of the Loans in an amount equal to one
hundred percent (100%) of such proceeds (net of any underwriting discounts and
commissions and other reasonable costs associated with such issuance or sale).
(d) Each prepayment under subsections (a) (other than ordinary course
payments pursuant to the lockbox account of the Borrowers) and (b) above shall
be made together with accrued interest to the date of such payment on the
principal amount so paid.
(e) The Borrowers, jointly and severally, shall repay the Revolving
Credit Notes in full on the Revolving Credit Facility Termination Date.
2.6. Interest.
(a) The Borrowers, jointly and severally, will pay interest in respect
of the unpaid principal amount of each Loan, from the date of Borrowing thereof
until such principal amount shall be paid in full, (i) at the Adjusted Base
Rate, as in effect from time to time during such periods as such Loan is a Base
Rate Loan, or (ii) at the Adjusted LIBOR Rate, as in effect from time to time
during such periods as such Loan is a LIBOR Loan. Once elected, the Adjusted
LIBOR Rate is fixed for the entire Interest Period selected.
(b) Any principal amounts of the Loans not paid when due or principal
existing after the occurrence of an Event of Default, and, to the greatest
extent permitted by law, all interest accrued on the Loans and all other fees
and amounts hereunder not paid when due (whether at maturity, pursuant to
acceleration or otherwise), shall bear interest at a rate per annum equal to the
interest rate then applicable to such Loans (whether the Adjusted Base Rate or
the Adjusted LIBOR Rate) plus two percentage points (2.0%), and such default
interest shall be payable on demand. To the greatest extent permitted by law,
interest shall continue to accrue after the filing by or against any Borrower of
any petition seeking any relief in bankruptcy or under any act or law pertaining
to insolvency or debtor relief, whether state, federal or foreign.
(c) Accrued (and theretofore unpaid) interest shall be payable (j) in
respect of each Base Rate Loan, in arrears on the last Business Day of each
month, beginning with the last Business Day of October 1996, (ii) in respect of
each LIBOR Loan, in arrears on the last Business Day of the Interest Period
applicable thereto (subject to the provisions of clause (iv) in SECTION 2.8),
and (iii) in respect of any Loan, on the date of any repayment or prepayment (in
respect of the amount so repaid or prepaid), at maturity (whether pursuant to
acceleration or otherwise) and, after maturity, on demand.
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(d) Nothing contained in this Agreement or in any other Loan Document
shall be deemed to establish or require the payment of interest to any Lender at
a rate in excess of the maximum rate permitted by applicable law. If the amount
of interest payable for the account of any Lender on any interest payment date
would exceed the maximum amount permitted by applicable law to be charged by
such Lender, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
In the event of any such reduction affecting any Lender, if from time to time
thereafter the amount of interest payable for the account of such Lender on any
interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest payable
for its account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time shall the
aggregate amount by which interest paid for the account of any Lender has been
increased pursuant to this sentence exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to the
previous sentence.
(e) The Agent shall promptly notify the Borrowers and the Lenders upon
determining the interest rate for each Borrowing after its receipt of the
relevant Notice of Borrowing or Notice of Conversion/Continuation; provided,
however, that the failure of the Agent to provide the Borrowers or the Lenders
with any such notice shall neither affect any obligations of the Borrowers or
the Lenders hereunder nor result in any liability on the part of the Agent to
the Borrowers or any Lender. Each such determination (including each
determination of the Reserve Requirement in connection with a Borrowing of LIBOR
Loans) shall, absent manifest error, be final and conclusive and binding on all
parties hereto.
2.7. Fees. The Borrowers, jointly and severally, agree to pay:
(a) To the Agent, for the account of each Lender with a Revolving Credit
Commitment, a facility fee per annum for the period from the Closing Date to the
Revolving Credit Facility Termination Date at the rate of 0.375% per annum,
applied to the average daily Unutilized Revolving Credit Commitment of such
Lender, payable in arrears (i) on the last Business Day of each month, beginning
with the last Business Day of October 1996, and (ii) on the Revolving Credit
Facility Termination Date;
(b) To the Agent, for the account of each Lender with a Revolving Credit
Commitment, a letter of credit fee in respect of each Letter of Credit for the
period from the date of its issuance to the date of its termination, in the
amount of 1.00% per annum on the Stated Amount thereof, payable in advance;
(c) To the Issuing Bank, for its own account, a facing fee in respect of
each Letter of Credit for the period from the date of its issuance to the date
of its termination, at the rate of 0.125% per annum on the Stated Amount
thereof, payable in advance;
(d) To the Issuing Bank, for its own account, such commissions, issuance
fees, transfer fees and other fees and charges incurred in connection with the
issuance and administration of each Letter of Credit as are customarily charged
from time to time by the Issuing Bank for the performance of such services in
connection with similar letters of credit, or as may be otherwise agreed to by
the Issuing Bank, but without duplication of amounts payable under subsection
(c) above; and
(e) To the Agent, an agent fee, if any, in accordance with the fee
letter, if any.
2.8. Interest Periods. Concurrently with the giving of any Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of LIBOR Loans, the Borrowers shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
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applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrowers, be a one (1), two (2), or three (3) month period (subject to
availability); provided, however, that:
(i) all LIBOR Loans comprising a single Borrowing shall at
all times have the same Interest Period;
(ii) the initial Interest Period for any LIBOR Loan shall
commence on the date of the Borrowing of such Loan
(including the date of any continuation of, or
conversion into, such LIBOR Loan), and each successive
Interest Period applicable to such LIBOR Loan shall
commence on the day on which the next preceding Interest
Period applicable thereto expires;
(iii) the Borrowers may not select any Interest Period that
expires after the Revolving Credit Facility Maturity
Date;
(iv) if any Interest Period otherwise would expire on a day
that is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day unless such
next succeeding Business Day falls in another calendar
month, in which case such Interest Period shall expire
on the next preceding Business Day;
(v) if any Interest Period begins on a day for which there
is no numerically corresponding day in the calendar
month during which such Interest Period would otherwise
expire, such Interest Period shall expire on the last
Business Day of such calendar month; and
(vi) if, upon the expiration of any Interest Period
applicable to a Borrowing of LIBOR Loans, the Borrowers
shall have failed to elect a new Interest Period to be
applicable to such LIBOR Loans, then the Borrowers shall
be deemed to have elected to convert such LIBOR Loans
into Base Rate Loans as of the expiration of the then
current Interest Period applicable thereto.
2.9. Conversions and Continuations.
(a) The Borrowers shall have the right, on any Business Day, to elect
(y) to convert all (or a portion in an amount not less than, in the case of
LIBOR Loans, $1,000,000 or, if greater, an integral multiple of $1,000,000 in
excess thereof) of the outstanding principal amount of any Loans of one Type
made pursuant to one or more Borrowings under any Facility (and, in the case of
LIBOR Loans, having the same Interest Period) into a Borrowing or Borrowings of
Loans of the other Type, or (z) to continue all (or a portion, subject to the
restrictions as to amount set forth in clause (y) above) of the outstanding
principal amount of any LIBOR Loans made pursuant to one or more Borrowings (and
having the same Interest Period) for an additional Interest Period, provided
that (i) except as otherwise provided for in SECTION 2.11(d), LIBOR Loans may be
converted into Base Rate Loans only on the last day of the Interest Period
applicable thereto (and, in any event, if a LIBOR Loan is converted into a Base
Rate Loan on any day other than the last day of the Interest Period applicable
thereto, the Borrowers will pay, upon such conversion, all amounts required
under SECTION 2.13 to be paid as a consequence thereof), (ii) if any partial
conversion of LIBOR Loans into Base Rate Loans shall have reduced the
outstanding principal amount of the remaining LIBOR Loans made pursuant to a
single Borrowing (and thereby continued) to less than $1,000,000, such remaining
LIBOR Loans shall be converted immediately into Base Rate Loans and may not
thereafter be converted into or continued as LIBOR Loans unless the requirements
of clause (y) above are satisfied, (iii) no conversion of Base Rate Loans into
LIBOR Loans or continuation of
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LIBOR Loans shall be permitted during the continuance of a Default or Event of
Default and (iv) no conversion or continuation under this Section shall result
in a greater number of separate Interest Periods in respect of LIBOR Loans under
the Facility than is permitted under SECTION 2.2(a)(iv).
(b) The Borrowers shall make each such election by delivering written
notice to the Agent prior to 11:00 a.m., Charlotte, North Carolina time, at
least three (3) Business Days prior to the effective date of any conversion of
Base Rate Loans into, or continuation of, LIBOR Loans and prior to 11:00 a.m.,
Charlotte, North Carolina time on the effective date of any conversion of LIBOR
Loans into Base Rate Loans. Each such notice (each, a "Notice of
Conversion/Continuation") shall be irrevocable, shall be given in the form of
EXHIBIT B-2 and shall be appropriately completed to specify (x) the date of such
conversion or continuation, (y) in the case of a conversion into, or a
continuation of, LIBOR Loans, the Interest Period to be applicable thereto and
(z) the aggregate amount and Type of the Loans being converted or continued.
Upon the receipt of a Notice of Conversion/Continuation, the Agent will promptly
notify each Lender of the proposed conversion or continuation, of such Lender's
Pro Rata Share thereof and of the other matters specified in the Notice of
Conversion/Continuation. In the event that the Borrowers shall fail to deliver a
Notice of Conversion/Continuation as provided hereinabove with respect to any
Borrowing of LIBOR Loans, such LIBOR Loans shall automatically be converted to
Base Rate Loans upon the expiration of the then current Interest Period
applicable thereto.
2.10. Method of Payments; Computations.
(a) All payments by the Borrowers hereunder and under the Notes shall be
made without setoff, counterclaim or other defense, in Dollars and in
immediately available funds to the Agent, for the account of the Lenders (except
as otherwise provided in SECTIONS 2.7(c), 2.7(d), 2.17, 10.5 and 10.6 as to
payments required to be made directly to the Agent or the Issuing Bank (for
their own accounts), the Issuing Bank or the Lenders) at its office referred to
in SECTION 10.4, prior to 12:00 noon, Charlotte, North Carolina time, on the
date payment is due. Any payment made as required hereinabove, but after 12:00
noon, Charlotte, North Carolina time, shall be deemed to have been made on the
next succeeding Business Day. If any payment falls due on a day that is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day (except that in the case of LIBOR Loans to which the provisions of
clause (iv) in SECTION 2.8 are applicable, such due date shall be the next
preceding Business Day), and such extension of time shall then be included in
the computation of payment of interest, fees or other applicable amounts.
(b) The Agent will distribute to the Lenders like amounts relating to
payments made to the . Agent for the account of such Lenders as follows: (i) if
the payment is received by 12:00 noon, Charlotte, North Carolina time, in
immediately available funds, the Agent will make available to each such Lender
on the same date, by wire transfer of immediately available funds, such Lender's
Pro Rata Share of such payment, and (ii) if such payment is received after 12:00
noon, Charlotte, North Carolina time, or in other' than immediately available
funds, the Agent will make available to each such Lender its Pro Rata Share of
such payment by wire transfer of immediately available funds on the next
succeeding Business Day (or in the case of uncollected funds, as soon as
practicable after collected). If the Agent shall not have made a required
distribution to the appropriate Lenders as required hereinabove after receiving
a payment for the account of such Lenders, the Agent will pay to each such
Lender, on demand, its Pro Rata Share of such payment with interest thereon at
the Federal Funds Rate for each day from the date such amount was required to be
disbursed by the Agent until the date repaid to such Lender. The Agent will
distribute to the Issuing Bank like amounts relating to payments made to the
Agent for the account of the Issuing Bank in the same manner, and subject to the
same terms and conditions, as set forth hereinabove with respect to
distributions of amounts to the Lenders.
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(c) Unless the Agent shall have received notice from the Borrowers prior
to the date on which any payment is due to any Lender hereunder that such
payment will not be made in full, the Agent may assume that the Borrowers have
made such payment in full to the Agent on such date, and the Agent may, in
reliance on such assumption, cause to be distributed to each Lender on such due
date an amount equal to the amount then due to each such Lender. If and to the
extent the Borrowers shall not have so made such payment in full to the Agent,
each such Lender shall repay to the Agent forthwith on demand such amount so
distributed to such Lender, together with interest thereon for each day from the
date such amount is so distributed to such Lender until the date repaid to the
Agent, at the Federal Funds Rate.
(d) Each Borrower hereby authorizes each Lender, if and to the extent
that any payment owed to such Lender is not made when due hereunder or under any
Note held by such Lender, to charge from time to time against any or all of the
accounts of such Borrower with such Lender any amount so due or to satisfy any
such payment due by advancing a Revolving Credit Loan in the amount of such
payment.
(e) With respect to each payment on the Loans hereunder, except as
specifically provided otherwise herein or in any of the other Loan Documents,
the Borrowers may designate by written notice to the Agent prior to or
concurrently with such payment the Types of Loans that are to be repaid or
prepaid and, in the case of LIBOR Loans, the specific Borrowing or Borrowings
under the respective Facility pursuant to which made, provided that (i) unless
made together with all amounts required under SECTION 2.13 to be paid as a
consequence thereof, a prepayment of a LIBOR Loan may be made only on the last
day of the Interest Period applicable thereto, (ii) if any partial prepayment of
LIBOR Loans made pursuant to any single Borrowing shall reduce the outstanding
principal amount of the remaining LIBOR Loans under such Borrowing to less than
$1,000,000, such remaining LIBOR Loans shall be converted immediately into Base
Rate Loans and (iii) each prepayment of Loans comprising a single Borrowing
shall be applied pro rata among such Loans. In the absence of any such
designation by the Borrowers, the Agent shall, subject to the foregoing, make
such designation in its sole discretion.
(f) All computations of interest and fees hereunder shall be made on the
basis of a year consisting of 360 days and the actual number of days (including
the first day, but excluding the last day) elapsed.
2.11. Increased Costs, Change in Circumstances, etc.
(a) If, at any time after the Closing Date and from time to time, the
adoption or modification of any applicable law, rule or regulation, or any
interpretation or administration thereof by any Governmental Authority or
central bank (whether or not having the force of law) charged with the
interpretation, administration or compliance of the Lenders with any of such
requirements, shall:
(i) subject any Lender to, or increase the net amount of,
any tax, impost, duty, charge or withholding with
respect to any amount received or to be received
hereunder in connection with LIBOR Loans (other than
taxes imposed on net income or profits of, or any branch
or franchise tax applicable to, such Lender or a Lending
Office of such Lender);
(ii) change the basis of taxation of payments to any Lender
in connection with LIBOR Loans (other than changes in
taxes on the net income or profits of, or any branch or
franchise tax applicable to, such Lender or a Lending
Office of such Lender);
(iii) impose, increase or render applicable any reserve (other
than the Reserve Requirement), capital adequacy, special
deposit or similar requirement against
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assets of, deposits with or for the account of, or
loans, credit or commitments extended by, any Lender or
a Lending Office of such Lender; or
(iv) impose on any Lender or in the London interbank
Eurodollar market any other condition or requirement
affecting this Agreement or LIBOR Loans;
and the result of any of the foregoing is to increase the costs to any Lender of
agreeing to make, making, funding or maintaining any LIBOR Loans or to reduce
the yield or rate of return of such Lender on any LIBOR Loans to a level below
that which such Lender could have achieved but for the adoption or modification
of any such requirements, the Borrowers will, within fifteen (15) days after
delivery to the Borrowers by such Lender of written demand therefor (with a copy
thereof to the Agent), jointly and severally pay to such Lender such additional
amounts as shall compensate such Lender for such increase in costs or reduction
in return.
(b) If, at any time after the Closing Date and from time to time, any
Lender shall have determined that the adoption or modification of any applicable
federal, state or local law, rule or regulation regarding such Lender's required
level of capital (including any allocation of cash requirements or conditions,
but excluding federal, state or local income tax liability), or the
implementation of any such requirements previously adopted but not implemented
prior to the Closing Date, or any interpretation or administration thereof by
any Governmental Authority (whether or not having the force of law) charged with
the interpretation, administration or compliance of such Lender with any of such
requirements, has or would have the effect of reducing the rate of return on
such Lender's capital as a consequence of its Commitments, Loans or
participations in Letters of Credit hereunder to a level below that which such
Lender could have achieved but for such adoption, modification, implementation
or interpretation (taking into account such Lender's policies with respect to
capital adequacy), the Borrowers will, within fifteen (15) days after delivery
to the Borrowers by such Lender of written demand therefor (with a copy thereof
to the Agent), jointly and severally pay to such Lender such additional amounts
as will compensate such Lender for such reduction in return.
(c) If, on or prior to the first day of any Interest Period, (i) the
Agent shall have received written notice from any Lender of such Lender's
determination that Dollar deposits in the amount of such Lender's required LIBOR
Loan pursuant to such Borrowing are not generally available in the London
interbank Eurodollar market or that the rate at which such Dollar deposits are
being offered will not adequately and fairly reflect the cost to such Lender of
making or maintaining its LIBOR Loan during such Interest Period or (ii) the
Agent shall have determined that adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate for such Interest Period, the Agent will
forthwith so notify the Borrowers and the Lenders, whereupon the obligation of
(y) in the case of clause (i) above, each such affected Lender, and (z) in the
case of clause (ii) above, all Lenders, in each case to make, to convert Base
Rate Loans into, or to continue, LIBOR Loans shall be suspended (including
pursuant to the Borrowing to which such Interest Period applies), and any Notice
of Borrowing or Notice of Conversion/Continuation given at any time thereafter
with respect to LIBOR Loans shall be deemed to be a request for Base Rate Loans
(but in the case of clause (i) above, only to the extent of such affected
Lender's Pro Rata Share thereof) until the Agent or the affected Lender, as the
case may be, shall have determined that the circumstances giving rise to such
suspension no longer exist (and the affected Lender, if making such
determination, shall have so notified the Agent), and the Agent shall have so
notified the Borrowers and the Lenders.
(d) Notwithstanding any other provision in this Agreement, if, at any
time after the Closing Date and from time to time, any Lender shall have
determined that the adoption or motivation of any applicable law, rule or
regulation, or any interpretation or administration thereof by any governmental
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Authority or central bank (whether or not having the force of law) charged with
the interpretation, administration or compliance of such Lender with any of such
requirements, has or would have the effect of making it unlawful for such Lender
to honor its obligation to make LIBOR Loans or to continue to make or maintain
LIBOR Loans, such Lender will forthwith so notify the Agent and the Borrowers,
whereupon (i) each of such Lender's outstanding LIBOR Loans shall automatically,
on the expiration date of the respective Interest Period applicable thereto or,
to the extent any such LIBOR Loan may not lawfully be maintained as a LIBOR Loan
until such expiration date, upon such notice, be converted into a Base Rate Loan
and (ii) the obligation of such Lender to make, to convert Base Rate Loans into,
or to continue, LIBOR Loans shall be suspended, and any Notice of Borrowing or
Notice of Conversion/Continuation given at any time thereafter with respect to
LIBOR Loans shall, as to such Lender, be deemed to be a request for Base Rate
Loans, until such Lender shall have determined that the circumstances giving
rise to such suspension no longer exist and shall have so notified the Agent,
and the Agent shall have so notified the Borrowers.
(e) Determinations by the Agent or any Lender for purposes of this
SECTION 2.11 of any increased costs, reduction in return, market contingencies,
illegality or any other matter shall, absent manifest error, be conclusive,
provided that such determinations are made in good faith. Each Lender agrees
that, upon the occurrence of any event giving rise to the operation of this
SECTION 2.11 with respect to such Lender, it will, if requested by the Borrowers
and to the extent permitted by law, endeavor in good faith to designate another
Lending Office for its LIBOR Loans, but only if such designation would make it
lawful for such Lender to continue to make or maintain LIBOR Loans hereunder;
provided that such designation is made on such terms that such Lender, in its
good faith determination, suffers no increased cost or economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of this SECTION 2.11.
(f) Each demand for payment under this SECTION 2.11 shall be preceded by
a notice to the Borrowers of such anticipated demand, which notice shall specify
in reasonable detail the basis for such demand, but the failure to provide such
advance notice shall not relieve the Borrowers of any of their obligations
hereunder. No failure by the Agent or any Lender to demand payment of any
amounts payable under this Section shall constitute a waiver of its right to
demand payment of any additional amounts arising at any subsequent time. Nothing
in this Section shall be construed or so operate as to require the Borrowers to
pay any interest, fees, costs or charges in excess of that permitted by
applicable law.
2.12. Taxes.
(a) Any and all payments by the Borrowers hereunder or under any Note
shall be made, in accordance with the terms hereof and thereof, 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 (other than net income and franchise taxes imposed on the Agent, the
Issuing Bank or any Lender) (y) by the jurisdiction under the laws of which the
Agent, the Issuing Bank or such Lender, as the case may be, is organized or any
political subdivision thereof and (z) in the case of each Lender, by the
jurisdiction in which any Lending Office of such Lender is located or any
political subdivision thereof (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrowers shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to the Agent, the
Issuing Bank or any Lender, (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 ), the Agent, the
Issuing Bank or such Lender, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) the Borrowers
will make such deductions, and (iii) the
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Borrowers will pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) The Borrowers will indemnify the Agent, the Issuing Bank and each
Lender for the full amount of Taxes (including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable under this Section) paid
by the Agent, the Issuing Bank or such Lender, as the case may be, and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
the Agent, the Issuing Bank or any Lender, as the case may be, makes written
demand therefor. Within thirty (30) days after the date of any payment of Taxes
pursuant to this Section , the Borrowers will furnish to the Agent, the Issuing
Bank or the relevant Lender, as the case may be, the original or a certified
copy of a receipt evidencing payment thereof. The Agent, the Issuing Bank and
each Lender will reimburse the Borrowers if the Agent, the Issuing Bank or such
Lender receives a refund for any Taxes paid by the Borrowers pursuant to this
SECTION 2.12(b). Such reimbursement will occur within thirty (30) days of
receipt by the Agent, the Issuing Bank or such Lender.
(c) If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the Internal Revenue Code, and such Lender claims
exemption from United States withholding tax under Section 1441 or 1442 of the
Internal Revenue Code, such Lender will deliver to the Agent and the Borrowers:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the
payment of any interest in the first calendar year, and
before the payment of any interest in each third
succeeding calendar year, during which interest may be
paid to such Lender under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax
because it is effectively connected with a United States
trade or business of such Lender, two properly completed
and executed copies of IRS Form 4224 before the payment
of any interest is due in the first taxable year of such
Lender, and in each succeeding taxable year of such
Lender, during which interest may be paid to such Lender
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Internal Revenue Code or other laws of the United States
as a condition to exemption from, or reduction of,
United States withholding tax.
Each such Lender will promptly notify the Agent and the Borrowers of any
changes in circumstances that would modify or render invalid any claimed
exemption or reduction.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required under subsection
(c) above are not delivered to the Agent, then the Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax. For purposes of this
Section , a distribution hereunder by the Agent to or for the account of any
Lender shall be deemed a payment by the Borrowers.
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(e) If the IRS or any other Governmental Authority, domestic or foreign,
asserts a claim that the Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (whether because the appropriate form was
not delivered or was not properly executed, because such Lender failed to notify
the Agent of a change in circumstances that rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason), such Lender
shall indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to the Agent under
this subsection (e), together with all costs, expenses and reasonable attorneys'
fees incurred or paid in connection therewith.
(f) If at any time the Borrowers request any Lender to deliver any forms
or other documentation pursuant to subsection (c) above, then the Borrowers
shall, upon demand of such Lender, reimburse such Lender for any reasonable
costs or expenses incurred by such Lender in the preparation or delivery of such
forms or other documentation.
(g) Each Lender agrees that, if any Borrower is required to pay
additional amounts to any Lender pursuant to subsection (a) above, then such
Lender will, if requested by such Borrower and to the extent permitted by law,
endeavor in good faith to designate another Lending Office for its LIBOR Loans,
but only if such designation would make it lawful for such Lender to continue to
make or maintain LIBOR Loans hereunder; provided that such designation is made
on such terms that such Lender, in its good faith determination, suffers no
increased cost or economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of this
Section.
(h) Notwithstanding any other provision of this Agreement, the Borrower
will not be required to pay additional amounts under this Agreement to the
Agent, the Issuing Bank or any Lender with respect to withholding taxes imposed
on payments to a Lender if payments to such Lender were subject to withholding
taxes (other than at a 0% rate) at the time it became a Lender, taking into
account any applicable tax treaty.
2.13. Compensation. The Borrowers will compensate each Lender, upon its
written request (which request shall set forth the basis for requesting such
compensation and shall be copied to the Agent), for all losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its LIBOR Loans) that such Lender may sustain
(i) if for any reason (other than a default by such Lender or the Agent) a
Borrowing of, or conversion of or into, LIBOR Loans does not occur on a date
specified therefor in a Notice of Borrowing or Notice of Conversion/
Continuation, (ii) if any repayment, prepayment or conversion of any of its
LIBOR Loans occurs on a date other than the last day of an Interest Period
applicable thereto, (iii) if any prepayment of any of its LIBOR Loans is not
made on any date specified in a notice of prepayment given by the Borrowers, or
(iv) as a consequence of any other failure by the Borrowers to make any payments
with respect to LIBOR Loans when due hereunder, including as a consequence of
acceleration of the maturity of such Loans pursuant to SECTION 8.1. In addition,
the Borrowers will pay to the Agent, for its own account, an administrative fee
of $250 concurrently with any payments made in respect of any single occurrence
pursuant to this Section . Calculation of all amounts payable to a Lender under
this Section shall be made as though such Lender had actually funded its
relevant LIBOR Loan through the purchase of a Eurodollar deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of such LIBOR Loan,
having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore Lending Office of such
Lender to a Lending Office of such Lender in the United States; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it sees
fit and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section.
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2.14. Use of Proceeds. The proceeds of the Loans shall be used by the
Borrowers solely (i) to pay certain transaction fees and expenses associated
with the Facility and the offering and sale of the Senior Secured Notes, (ii) to
provide for the working capital, capital expenditures and general corporate
requirements of the Borrowers and their Subsidiaries.
2.15. Recovery of Payments.
(a) Each Borrower agrees that to the extent any Borrower makes a payment
or payments to or for the account of the Agent, the Lenders or the Issuing Bank,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party under any bankruptcy, insolvency or
similar state or federal law, common law or equitable cause, then, to the extent
of such payment or repayment, the Obligation intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
received.
(b) If any amounts distributed by the Agent to a Lender are subsequently
returned or repaid by the Agent to the Borrowers or their representatives or
successors in interest, whether by court order or by settlement approved by the
Lender in question, such Lender will, promptly upon receipt of notice thereof
from the Agent, pay the Agent such amount. If any such amounts are recovered by
the Agent from the Borrowers or their representatives or successors in interest,
the Agent shall redistribute such amounts to the Lenders on the same basis as
such amounts were originally distributed.
2.16. Pro Rata Borrowings.
(a) All Borrowings, continuations and conversions of Loans shall be made
by the Lenders pro rata on the basis of their respective Percentages, as
appropriate from time to time, rounded to the nearest ▇▇▇▇▇.
(b) Each Lender agrees that if it shall receive any amount hereunder
(whether by voluntary payment, realization upon security, exercise of the right
of setoff or banker's lien, counterclaim or cross action, enforcement of any
right under the Loan Documents, or otherwise) applicable to the payment of any
of the Obligations that exceeds its Pro Rata Share of payments on account of
such Obligations then or therewith obtained by all the Lenders to which such
payments are required to have been made, such Lender shall forthwith purchase
from the other Lenders such participations in such Obligations as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each such other Lender shall be rescinded and each
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such other Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to the provisions of this Section may, to the fullest extent permitted
by law, exercise any and all rights of payment (including, without limitation,
setoff, banker's lien or counterclaim) with respect to such participation as
fully as if such participant were a direct creditor of the Borrowers in the
amount of such participation.
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2.17. Letters of Credit.
(a) Subject to and upon the terms and conditions herein set forth, so
long as no Default or Event of Default has occurred and is continuing, the
Issuing Bank will, at any time and from time to time on and after the Closing
Date and prior to the Revolving Credit Facility Termination Date, and upon
request by any Borrower in accordance with the provisions of SECTION 2.17(b),
issue for the account of such Borrower one or more irrevocable standby letters
of credit denominated in Dollars and in a form customarily used or otherwise
approved by the Issuing Bank (together with all amendments, modifications and
supplements thereto, substitutions therefor and renewals and restatements
thereof, collectively, the "Letters of Credit"). The Stated Amount of each
Letter of Credit shall not be less than such amount as may be acceptable to the
Issuing Bank. Notwithstanding the foregoing:
(i) Except for Foreign Subsidiary Letters of Credit, no
Letter of Credit shall be issued the Stated Amount upon
issuance of which (i) when added to all other Letter of
Credit Outstandings, excluding Foreign Subsidiary
Letters of Credit, at such time, would exceed $5,000,000
or (ii) when added to all other Letter of Credit
Outstandings, including Foreign Subsidiary Letter of
Credit Outstandings, at such time and the aggregate
principal amount of all Revolving Credit Loans then
outstanding, would exceed the lesser of (A) the Total
Revolving Credit Commitment or (B) the Borrowing Base,
at such time;
(ii) No Letter of Credit shall be issued that by its terms
expires more than one (1) year after its date of
issuance or later than the seventh day prior to the
Revolving Credit Facility Maturity Date; provided,
however, that a Letter of Credit may, if requested by
the Borrowers, provide by its terms, and on terms
acceptable to the Issuing Bank, for renewal for
successive periods of one year or less (but not beyond
the seventh day prior to the Revolving Credit Facility
Maturity Date), unless and until the Issuing Bank shall
have delivered a notice of nonrenewal to the beneficiary
of such Letter of Credit;
(iii) The Issuing Bank shall be under no obligation to issue
any Letter of Credit if, at the time of such proposed
issuance, (A) any order, judgment or decree of any
Governmental Authority or arbitrator shall purport by
its terms to enjoin or restrain the Issuing Bank from
issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or
directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the
Issuing Bank shall prohibit, or request that the Issuing
Bank refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or
shall impose upon the Issuing Bank with respect to such
Letter of Credit any restriction or reserve or capital
requirement (for which the Issuing Bank is not otherwise
compensated) not in effect on the Closing Date, or any
unreimbursed loss, cost or expense that was not
applicable, in effect or known to the Issuing Bank as of
the Closing Date and that the Issuing Bank in good ▇▇▇▇▇
▇▇▇▇▇ material to it, or (B) the Issuing Bank shall have
actual knowledge, or shall have received notice from any
Lender, prior to the issuance of such Letter of Credit
that one or more of the conditions specified in SECTION
3.3 are not then satisfied or that the issuance of such
Letter of Credit would violate the provisions of
subsection (i) above; and
(iv) No Foreign Subsidiary Letter of Credit shall be issued
(A) the Stated Amount upon the issuance of which when
(1) added to all other Foreign Subsidiary Letter
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of Credit Outstandings at such time would exceed (a)
$5,000,000 during the time period from Closing to
December 31, 1998, and (b) zero dollars thereafter and,
(2) when added to all other Letter of Credit
Outstandings at such time and the aggregate principal
amount of all Revolving Credit Loans then outstanding
would exceed the lessor of (a) the Total Revolving
Credit Commitment or (b) the Borrowing Base, at such
time, and (B) unless (1) the Foreign Subsidiary Letter
of Credit is issued to a lender of a Foreign Subsidiary
to secure a loan to such Subsidiary and such lender
agrees that, to the extent the Issuing Bank makes a
payment to such lender under such Letter of Credit, the
Issuing Bank shall be subrogated to the rights of such
lender on such lender's loan to such Foreign Subsidiary,
or (1) the Foreign Subsidiary for whose benefit the
Letter of Credit is issued shall agree to undertake
jointly and severally with the Borrowers a Reimbursement
Obligation in connection with such Letter of Credit.
(b) Whenever any Borrower desires the issuance of a Letter of Credit,
such Borrower will notify the Issuing Bank (with copies to the Agent) in
writing, by 11:00 a.m., Charlotte, North Carolina time, at least three (3)
Business Days' (or such shorter period as is acceptable to the Issuing Bank for
any given case) prior to the requested date of issuance thereof. Each such
request (each, a "Letter of Credit Request") shall be irrevocable, shall be
given in the form of EXHIBIT B-3 and shall be appropriately completed to specify
(i) the proposed date of issuance (which shall be a Business Day), (ii) the
proposed Stated Amount and expiry date of the Letter of Credit, and (iii) the
name and address of the proposed beneficiary or beneficiaries of the Letter of
Credit. Such Borrower will also complete any application procedures and
documents customarily required by the Issuing Bank in connection with the
issuance of any Letter of Credit. The Agent will, promptly upon its receipt
thereof, notify each Lender of the Letter of Credit Request. Upon its issuance
of any Letter of Credit, the Issuing Bank will promptly notify each Lender of
such issuance and will notify each Lender with a Revolving Credit Commitment of
the amount of its participation therein under SECTION 2.17(c).
(c) Immediately upon the issuance of any Letter of Credit, the Issuing
Bank shall be deemed to have sold and transferred to each Lender with a
Revolving Credit Commitment, and each such Lender (each, in such capacity, an
"L/C Participant") shall be deemed irrevocably and unconditionally to have
purchased and received from the Issuing Bank, without recourse or warranty, an
undivided interest and participation, pro rata to the extent of its Revolving
Credit Percentage at such time, in such Letter of Credit, each drawing made
thereunder, and the obligations of the Borrowers under this Agreement with
respect thereto and any security therefor (including the Collateral) or guaranty
pertaining thereto; provided, however, that the fees and other charges relating
to Letters of Credit described in SECTIONS 2.7(c) and (d) shall be payable
directly to the Issuing Bank as provided therein, and the L/C Participants shall
have no right to receive any portion thereof. Upon any change in the Revolving
Credit Commitments of any of the Lenders pursuant to SECTION 10.5, with respect
to all outstanding Letters of Credit and Reimbursement Obligations there shall
be an automatic adjustment to the participations pursuant to this Section to
reflect the new Revolving Credit Percentages of the assigning Lender and the
Eligible Assignee.
(d) The Borrowers hereby jointly and severally agree to reimburse the
Issuing Bank by making payment to the Agent, for the account of the Issuing
Bank, in immediately available funds, for any payment made by the Issuing Bank
under any Letter of Credit (each such amount so paid until reimbursed, together
with interest thereon payable as provided hereinbelow, a "Reimbursement
Obligation") immediately after, and in any event on the date of, such payment,
together with interest on the amount so paid by the Issuing Bank, to the extent
not reimbursed prior to 2:00 p.m., Charlotte, North Carolina time, on the date
of such payment or disbursement, (i) for the period from the date of the
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respective payment to the date of receipt by the Borrowers from the Issuing Bank
of notice of such payment, at the Adjusted Base Rate as in effect from time to
time during such period, and (ii) for the period from the date of receipt by the
Borrowers from the Issuing Bank of notice of such payment to the date the
Reimbursement Obligation created thereby is satisfied, the Adjusted Base Rate as
in effect from time to time during such period plus two percentage points
(2.0%), such interest also to be payable on demand. The Issuing Bank will
provide the Agent and the Borrowers with prompt notice of any payment or
disbursement made under any Letter of Credit, although the failure to give, or
any delay in giving, any such notice shall not release, diminish or otherwise
affect the Borrowers' obligations under this Section or any other provision of
this Agreement. To the extent a Borrowing is available in accordance with the
Borrowing Base, each Borrower hereby authorizes and directs the Agent, the
Issuing Bank and the Lenders to satisfy any such Reimbursement Obligation by
advancing a Revolving Credit Loan in such amount. To the extent no such
Borrowing is available, the Borrowers shall immediately make payment to the
Agent, for the account of the Issuing Bank, in accordance with the terms
hereinabove.
(e) In the event that the Issuing Bank makes any payment under any
Letter of Credit and the Borrowers shall not have timely satisfied in full its
Reimbursement Obligation to the Issuing Bank pursuant to SECTION 2.17(d), and to
the extent that any amounts then held in the Cash Collateral Account established
pursuant to SECTION 2.17(i) shall be insufficient to satisfy such Reimbursement
Obligation in full, the Issuing Bank will promptly notify the Agent, and the
Agent will promptly notify each L/C Participant, of such failure. If the Agent
gives such notice prior to 11:00 a.m., Charlotte, North Carolina time, on any
Business Day to any L/C Participant, such L/C Participant will make available to
the Agent, for the account of the Issuing Bank, its Pro Rata Share (calculated
with respect to its Revolving Credit Percentage) of the amount of such payment
on such Business Day in immediately available funds. If the Agent gives such
notice after 11:00 a.m., Charlotte, North Carolina time, on any Business Day to
any such L/C Participant, such L/C Participant shall make its Pro Rata Share of
such amount available to the Agent on the next succeeding Business Day. If and
to the extent such L/C Participant shall not have so made its Pro Rata Share of
the amount of such payment available to the Agent, such L/C Participant agrees
to pay to the Agent, for the account of the Issuing Bank, forthwith on demand
such amount, together with interest thereon, for each day from such date until
the date such amount is paid to the Agent at the Federal Funds Rate. The failure
of any L/C Participant to make available to the Agent its Pro Rata Share of any
payment under any Letter of Credit shall not relieve any other L/C Participant
of its obligation hereunder to make available to the Agent its Pro Rata Share of
any payment under any Letter of Credit on the date required, as specified above,
but no L/C Participant shall be responsible for the failure of any other L/C
Participant to make available to the Agent such other L/C Participant's Pro Rata
Share of any such payment. Each such payment by an L/C Participant under this
SECTION 2.17(e) of its Pro Rata Share of an amount paid by the Issuing Bank
shall constitute a Revolving Credit Loan by such Lender (the Borrowers being
deemed to have given a timely Notice of Borrowing therefor) and shall be treated
as such for all purposes of this Agreement; provided that for purposes of
determining the available unused portion of the Total Revolving Credit
Commitment immediately prior to giving effect to the application of the proceeds
of such Revolving Credit Loans, the Reimbursement Obligation being satisfied
thereby shall be deemed not to be outstanding at such time.
(f) Whenever the Issuing Bank receives a payment in respect of a
Reimbursement Obligation as to which the Agent has received, for the account of
the Issuing Bank, any payments from the L/C Participants pursuant to SECTION
2.17(e), the Issuing Bank will promptly pay to the Agent, and the Agent will
promptly pay to each L/C Participant that has paid its Pro Rata Share thereof,
in immediately available funds, an amount equal to such L/C Participant's
ratable share (based on the proportionate amount funded by such L/C Participant
to the aggregate amount funded by all L/C Participants) of such Reimbursement
Obligation.
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(g) The Reimbursement Obligations of the Borrowers, and the obligations
of the L/C Participants to make payments to the Agent, for the account of the
Issuing Bank, with respect to Letters of Credit, shall be irrevocable, shall
remain in effect until the Issuing Bank shall have no further obligations to
make any payments or disbursements under any circumstances with respect to any
Letter of Credit, and, except to the extent resulting from any gross negligence
or willful misconduct on the part of the Issuing Bank, shall not be subject to
counterclaim, setoff or other defense or any other qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation, any of the
following circumstances:
(i) Any lack of validity or enforceability of this
Agreement, any of the other Loan Documents or any
documents or instruments relating to any Letter of
Credit;
(ii) Any change in the time, manner or place of payment of,
or in any other term of, all or any of the Obligations
in respect of any Letter of Credit or any other
amendment, modification or waiver of or any consent to
departure from any Letter of Credit or any documents or
instruments relating thereto, in each case whether or
not the Borrowers have notice or knowledge thereof;
(iii) The existence of any claim, setoff, defense or other
right that any Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee
of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Agent, the Issuing Bank,
any Lender or other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions
contemplated hereby or any unrelated transactions
(including any underlying transaction between any
Borrower and the beneficiary named in any such Letter of
Credit);
(iv) Any draft, certificate or any other document presented
under the 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, any errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail,
telecopier or otherwise, or any errors in translation or
in interpretation of technical terms;
(v) Any defense based upon the failure of any drawing under
a Letter of Credit to conform to the terms of the Letter
of Credit (the Issuing Bank's sole obligation, in
determining whether to pay under any Letter of Credit,
being in good faith to confirm that any documents
required to be delivered under such Letter of Credit
have been delivered and that they appear on their face
to comply with the requirements of such Letter of
Credit), any nonapplication or misapplication by the
beneficiary or any transferee of the proceeds of such
drawing or any other act or omission of such beneficiary
or transferee in connection with such Letter of Credit;
(vi) The exchange, release, surrender or impairment of any
Collateral or other security for the Obligations;
(vii) The occurrence of any Default or Event of Default; or
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(viii) Any other circumstance or event whatsoever, including,
without limitation, any other circumstance that might
otherwise constitute a defense available to, or a
discharge of, any Borrower.
None of the foregoing shall impair, prevent or otherwise affect any of the
rights and powers granted to the Issuing Bank hereunder. Any action taken or
omitted to be taken by the Issuing Bank under or in connection with any Letter
of Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall be binding upon the Borrowers and each L/C Participant and
shall not create or result in any liability of the Issuing Bank to any Borrower
or any L/C Participant.
(h) If at any time after the Closing Date the Issuing Bank or any L/C
Participant determines that the introduction of or any change in any applicable
law, rule, regulation, order, guideline or request or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Issuing Bank or
any L/C Participant with any request or directive by any such authority (whether
or not having the force of law) shall either (i) impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement against
Letters of Credit issued by the Issuing Bank or participated in by any L/C
Participant or (ii) impose on the Issuing Bank or any L/C Participant any other
conditions relating, directly or indirectly, to this Agreement or any Letter of
Credit, and the result of any of the foregoing is to increase the cost to the
Issuing Bank or L/C Participant of issuing, maintaining or participating in any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Issuing Bank or such L/C Participant hereunder or reduce the rate of return
on its capital with respect to Letters of Credit, then the Borrowers will,
within fifteen (15) days after delivery to the Borrowers by the Issuing Bank or
such L/C Participant of written demand therefor (with a copy thereof to the
Agent), jointly and severally pay to the Issuing Bank or such L/C Participant
such additional amounts as shall compensate the Issuing Bank or such L/C
Participant for such increase in costs or reduction in return. The Issuing Bank
and each L/C Participant shall exercise reasonable diligence to mitigate any
such costs. A certificate submitted to the Borrowers by the Issuing Bank or such
L/C Participant, as the case may be (a copy of which certificate shall be sent
by the Issuing Bank or such L/C Participant to the Agent), setting forth the
basis for the determination of such additional amount or amounts necessary to
compensate the Issuing Bank or such L/C Participant as aforesaid, shall be
conclusive and binding on the Borrowers absent manifest error.
(i) At any time and from time to time (i) during the continuance of an
Event of Default, the Agent, at the direction, or with the consent, of the
Required Lenders, may require the Borrowers to deliver to the Agent such
additional amount of cash as is equal to the aggregate Stated Amount of all
Letters of Credit at any time outstanding (whether or not any beneficiary under
any Letter of Credit shall have drawn or be entitled at such time to draw
thereunder) and (ii) in the event of a repayment under SECTION 2.5(b), the Agent
will retain such amount as may then be required to be retained under the proviso
in SECTION 2.5(b,), such amount in each case under clauses (i) and (ii) above to
be held by the Agent in a non-interest bearing cash collateral account (the
"Cash Collateral Account") as security for, and for application to, the
Borrowers' Reimbursement Obligations. In the event of a drawing, and subsequent
payment by the Issuing Bank, under any Letter of Credit at any time during which
any amounts are held in the Cash Collateral Account, the Agent will deliver to
the Issuing Bank an amount equal to the Reimbursement Obligation created as a
result of such payment (or, if the amounts so held are less than such
Reimbursement Obligation, all of such amounts) to reimburse the Issuing Bank
therefor. Any amounts remaining in the Cash Collateral Account after the
expiration of all Letters of Credit and reimbursement in full of the Issuing
Bank for all of its obligations thereunder shall be held by the Agent, for the
benefit of the Borrowers, to be applied against the Obligations in such order as
the Agent may direct.
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(j) Notwithstanding any termination of the Commitments or repayment of
the Loans, or both, the obligations of the Borrowers under this SECTION 2.17
shall remain in full force and effect until the Issuing Bank and the L/C
Participants shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit.
2.18. Weekly Settlement. The Lenders and the Agent hereby agree that
notwithstanding the requirements of Section 2.10, the Agent shall distribute
each Lender's Pro Rata Share of all payments by the Borrowers during any payment
Period (as defined below) on the last day of such payment Period. For purposes
of this agreement, each "Payment Period" shall begin at 12:01 p.m. on the last
Business Day of a week and end at 12:00 noon on the last Business Day of the
following week.
ARTICLE III
CLOSING; CONDITIONS OF CLOSING AND BORROWING
3.1. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at such place as the parties hereto
shall mutually agree, at 10:00 a.m. on October 1, 1996, or at such other time as
the parties hereto shall mutually agree. The parties agree that the Loans have
been and shall be made in North Carolina and that the Loan Documents were
prepared and negotiated in North Carolina.
3.2. Conditions of Initial Loans and Advances. The obligation of the
Lenders to close this financing and to make the initial Loans under this
Agreement on the Closing Date are subject to the satisfaction of the following
conditions precedent:
3.2.1 Executed Loan Documents.
(a) Loan Documents. The Notes and all Loan Documents shall have been
duly authorized, executed and delivered to the appropriate Lenders by the
Borrowers, in form and substance satisfactory to the Lenders, shall be in full
force and effect and no Default shall exist thereunder, each Lender shall have
received its original Notes and a copy of each other Note, and the Agent shall
have received a copy of each Note.
(b) Security Agreement. The Security Agreement shall have been duly
authorized executed and delivered to the Agent and such Lender by the Borrowers
in form and substance satisfactory to the Lenders.
(c) Financing Statements. Financing Statements and all other filings or
recordations necessary to perfect the security interest of the Agent, on behalf
of the Lenders, in the Collateral shall have been filed, and the Agent shall
have received confirmation in a form acceptable to the Lenders that such
security interest constitutes a valid and perfected first priority security
interest therein, subject only to Permitted Liens.
3.2.2 Closing Certificates; etc.
(a) Certificates of the Borrowers. The Agent and each Lender shall have
received a certificate dated as of the Closing Date from the executive vice
president or the chief financial officer on
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behalf of each Borrower, in form and substance satisfactory to the Agent, to the
effect: (i) that all representations and warranties of such Borrower contained
in this Agreement and the other Loan Documents are true, correct and complete in
all material respects as of the Closing Date; (ii) that such Borrower is not in
violation of any of the covenants contained in this Agreement and the other Loan
Documents; (iii) that, after giving effect to the transactions contemplated
under this Agreement, no Default or Event of Default has occurred and is
continuing; and (iv) that such Borrower has satisfied each of the closing
conditions set forth in this ARTICLE III.
(b) Secretary's Certificates. The Agent and each Lender shall have
received a certificate dated as of the Closing Date of the secretary or
assistant secretary of each Borrower in form and substance satisfactory to the
Agent, certifying: (i) that attached thereto is a copy of the certificate or
articles of incorporation or organization or other organizational documents and
all amendments thereto of such corporation, certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of organization, and that
such organizational documents have not been amended since such date; (ii) that
attached thereto is a true and complete copy of the bylaws (or equivalent
regulations) of such corporation as in effect on the date of such certification;
(iii) that attached thereto is a true and complete copy of resolutions adopted
by the Board of Directors (or equivalent governing body) of such corporation,
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents, as applicable; and (iv) as to the incumbency and
genuineness of the signature of each officer of such corporation executing this
Agreement or any of the other Loan Documents.
(c) Certificates of Good Standing. The Agent and each Lender shall have
received (i) certificates as of a recent date of the good standing of each
Borrower under the laws of each such corporation's jurisdiction of organization
and each jurisdiction in which such corporations are qualified to conduct
business; and (ii) if available, a certificate, dated as of a recent date, of
the department of revenue or similar taxing authority of each of the foregoing
jurisdictions certifying that each Borrower has filed all required tax returns
and that each Borrower do not owe any delinquent taxes.
(d) Opinions of Counsel. The Agent and each Lender shall have received
the favorable opinion of: (i) the law firm of ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to the
Borrowers, dated as of the Closing Date and addressed to the Agent, for the
benefit of the Agent and the Lenders, and (ii) such other opinions as the Agent
or any Lender may reasonably request, all of which shall be in form and
substance reasonably satisfactory to the Lenders.
(e) UCC Search. The Agent and each Lender shall have received the
results of a UCC search of all filings made against each Borrower and each
domestic Subsidiary under the Uniform Commercial Code as in effect in the states
in which any assets of each Borrower and each domestic Subsidiary are located,
indicating among other things that the Collateral is free and clear of any liens
or encumbrances except for Permitted Liens.
(f) Insurance. The Agent shall have received certificates of insurance
in form and substance reasonably satisfactory to the Agent upon the Collateral
and the business of each Borrower with mortgagee, additional insured and loss
payable endorsements required by SECTION 5.6.
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3.2.3 Real Estate Matters.
(a) Landlord Consents. A Landlord Consent with respect to each of the
Leased Properties shall have been duly authorized, executed and delivered to the
Agent by the tenant and the landlord with respect thereto, shall be in full
force and effect and no Default shall exist thereunder, shall be recorded and
filed in the appropriate real estate records in a manner acceptable to the
Agent, and the Agent shall have received a fully executed copy thereof.
3.2.4 Environmental Assessment. Each Borrower shall have delivered to
the Agent a Phase I environmental assessment report from a qualified
environmental consultant acceptable to the Agent, in form and substance
satisfactory to the Agent in Agent's reasonable discretion, indicating
appropriate inquiry into the present and previous ownership and use of the
Realty consistent with good commercial or customary practices.
3.2.5 Consents; No Adverse Change.
(a) Governmental and Third Party Approvals. All necessary approvals,
authorizations and consents, if any be required, of any Person and of all
Governmental Authorities (including courts) having jurisdiction with respect to
the Collateral and the transactions contemplated by this Agreement shall have
been obtained.
(b) No Injunction, Etc. No action, proceeding, investigation, regulation
or legislation, including but not limited to any bankruptcy, insolvency or
similar proceeding or claim, shall have been instituted, threatened in writing
or proposed before any court or other Governmental Authority to enjoin, restrain
or prohibit, or to obtain substantial damages in respect of the Borrowers or
their Subsidiaries, or that is related to or arises out of this Agreement or the
consummation of the transactions contemplated hereby or that, in the Required
Lenders' reasonable discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
(c) No Material Adverse Change. From and after December 31, 1995, there
shall not have occurred (i) any Material Adverse Change in the condition
(financial or otherwise), operations, properties, prospects or business of the
Borrowers or their Subsidiaries, or (ii) any event, condition or state of facts
that could reasonably be expected to have a Material Adverse Effect, other than
as specifically contemplated by the transactions contemplated under this
Agreement.
(d) No Event of Default. No Default or Event of Default shall have
occurred and be continuing.
3.2.6 Financial Matters.
(a) Financial Statements. The Agent and each Lender shall have received
the Financial Statements from the Borrowers, in form and substance satisfactory
to the Agent.
(b) Financial Condition Certificate. The Agent and each Lender shall
have received a Financial Condition Certificate, in form and substance attached
hereto as EXHIBIT H.
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(c) Payment at Closing. The Borrowers shall have paid to the Agent the
fees set forth in the commitment letter from First Union to the Borrowers dated
August 28, 1996, and required to be paid at Closing.
(d) Taxes. All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of any of the Loan
Documents shall have been paid by the Borrowers.
3.2.7 Miscellaneous.
(a) Disbursement Instructions. The Agent shall have received written
instructions from the Borrowers to the Agent directing the payment of any
proceeds of Loans made under this Agreement that are to be paid on the Closing
Date.
(b) Existing Indebtedness. All outstanding Indebtedness of the Old
Revolving Credit Facility and the Old Senior Secured Notes shall have been
repaid in full.
(c) Issuance of Senior Secured Notes. The Borrowers shall
contemporaneously with the Closing, (i) deliver copies of the executed indenture
and other documents evidencing and related to, and consummate, the Senior
Secured Notes Offering on terms and conditions satisfactory in form and
substance to the Agent, (ii) receive net cash proceeds from the issuance of the
Senior Secured Notes of not less than $95,600,000, and (c) apply the net cash
proceeds, to the extent necessary, to repay in full the Old Revolving Credit
Facility and the Old Senior Notes.
(d) Borrowing Base Availability. The Borrowing Base as of the Closing
Date shall, after giving effect to estimated Borrowings under the Revolving
Credit Facility on the Closing Date, permit additional Borrowings under the
Revolving Credit Facility of at least $15,000,000.
(e) Proceedings and Documents. The Agent and the Lenders shall have
received copies of all other documents (including insurance policies of the
Borrowers), certificates, opinions, instruments and other evidence as each may
reasonably request, in form and substance satisfactory to the Lenders, with
respect to the transactions contemplated by this Agreement and the taking of all
actions in connection therewith.
3.3. Conditions to All Loans and Advances. The obligation of the Lenders
to make any Loan hereunder (including any Loans made on the Closing Date, but
excluding conversions) is subject to the continued validity of all Loan
Documents and the satisfaction of the following conditions precedent on the
relevant Borrowing Date:
(a) Each of the representations and warranties made by the Borrowers
contained in ARTICLE IV hereof and in the other Loan Documents shall be true and
correct in all material respects on and as of such Borrowing Date with the same
effect as if made on and as of the Borrowing Date, unless such representation or
warranty relates by its terms to a prior date;
(b) No Default or Event of Default shall have occurred and be continuing
on the Borrowing Date or would result from the Loans to be made on such
Borrowing Date; and
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(c) The security interest in the Collateral previously pledged to the
Agent, for the benefit of the Lenders, pursuant to the Loan Documents, shall
remain in full force and effect.
3.4. Waiver of Conditions Precedent. If any Lender makes any Loan or
Advance hereunder prior to the fulfillment of any of the conditions precedent
set forth in this ARTICLE III, the making of such Loan or Advance shall
constitute only an extension of time for the fulfillment of such condition and
not a waiver thereof, and unless the Required Lenders indicate otherwise in
writing, the Borrowers shall thereafter use their best efforts to fulfill each
such condition promptly. No failure by the Borrowers to fulfill any such
condition precedent shall constitute a Default or an Event of Default hereunder,
except to the extent any such failure is continuing after the expiration of any
period within which such condition is specifically required to be fulfilled.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement, to make the
Loans and to continue to make the Loans, the Borrowers jointly and severally
represent and warrant to the Agent, the Issuing Bank and each Lender as follows:
4.1. Corporate Organization and Power. Each Borrower and each Subsidiary
of a Borrower (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (b) is
qualified to do business and is in good standing in every other jurisdiction
where the nature of its business or the ownership of its properties requires it
to be so qualified and where the failure to be so qualified would have a
Material Adverse Effect, which jurisdictions as of the Closing Date are set
forth on SCHEDULE 4.1; (c) except as set forth on SCHEDULE 4.1, as of the
Closing Date has no Subsidiaries or Affiliates (other than its officers,
directors and direct or indirect shareholders) and is not a partner or joint
venturer in any partnerships or joint ventures; (d) has the corporate power to
own and give a lien on and security interest in its respective Collateral and to
engage in the transactions contemplated hereby; and (e) has the full corporate
power, authority and legal right to execute and deliver this Agreement and the
other Loan Documents to which it is a party and to perform and observe the terms
and provisions thereof. No Borrower nor any Subsidiary has, during the preceding
five (5) years before the Closing Date, been known as or used any other
corporate, fictitious or trade names in the United States other than as set
forth on SCHEDULE 4.1.
4.2. Subsidiaries. SCHEDULE 4.1 contains a complete and accurate list of
the direct and indirect Subsidiaries of each Borrower as of the Closing Date,
showing, as to each Subsidiary, the number of shares of each class of capital
stock authorized and outstanding. All of such issued and outstanding shares of
capital stock of all of each Borrower's Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by the
applicable Borrower or a Subsidiary, free and clear of any liens, charges,
encumbrances, security interests, claims or restrictions of any nature
whatsoever, except for liens in favor of the Agent, for the benefit of the
Lenders, granted under the Loan Documents, and there are no other equity
securities of any Subsidiary issued and outstanding or reserved for any purpose.
4.3. Enforceability of Loan Documents; Compliance With Other
Instruments. Each of the Loan Documents to which any Borrower is a party, as the
case may be, has been duly authorized by all
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necessary corporate action on the part of such Borrower has been validly
executed and delivered by such Borrower and is the legal, valid and binding
obligation of such Borrower enforceable against such Borrower in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general principles of equity. Except as set forth in
SCHEDULE 4.3, no Borrower nor any Subsidiary is in default in any material
respect with respect to any indenture, loan agreement, mortgage, lease, deed or
similar agreement related to the borrowing of monies to which it is a party or
by which it, or any of its property, is bound, where such default could
reasonably be expected to result in a Material Adverse Effect. Neither the
execution, delivery or performance of the Loan Documents by any Borrower, nor
compliance by the Borrowers therewith: (a) conflicts or will conflict with or
results or will result in any breach of, or constitutes or will constitute with
the passage of time or the giving of notice or both, a default under, (i) any
Requirement of Law or (ii) any agreement or instrument to which any Borrower is
a party or by which it, or any of its property, is bound except where such
conflict, default, breach or violation would not reasonably be expected to have
a Material Adverse Effect or (b) results or will result in the creation or
imposition of any lien, charge or encumbrance upon the properties of any
Borrower or any Subsidiary pursuant to any such agreement or instrument, except
for Permitted Liens where such lien, charge or encumbrance would not reasonably
be expected to have a Material Adverse Effect.
4.4. Use of Proceeds. The Borrowers' use of the proceeds of any Loans
made by the Lenders to the Borrowers pursuant to this Agreement are and will be
legal and proper corporate uses, duly authorized by the Board of Directors of
each Borrower, and such uses are and will be consistent in all material respects
with all applicable laws and states, as in effect from time to time.
4.5. Governmental Authorization. No authorization, consent or approval
of, or declaration or filing with, any Governmental Authority is required for
the valid execution, delivery and performance by any Borrower or Subsidiary of
the Loan Documents to which it is a party or the consummation by the Borrowers
and their Subsidiaries of the transactions contemplated hereby and thereby,
except for the filing and recording of the Financing Statements. Each Borrower
and each of its Subsidiaries has, and is in good standing with respect to, all
material governmental approvals, permits, certificates, inspections, consents
and franchises necessary to continue to conduct business as heretofore conducted
and to own or lease and operate its respective properties as now owned or leased
by it. None of such material approvals, permits, certificates, consents, or
franchises contains any term, provision, condition or limitation more burdensome
than such as are generally applicable to Persons engaged in the same or similar
business as the Borrowers and their Subsidiaries.
4.6. Litigation; Government Regulation. (a) Except as set forth on
SCHEDULE 4.6, there are no judgments, injunctions or similar orders or decrees,
and no actions, suits, investigations or proceedings pending or, to the
knowledge of the Borrowers, threatened in writing against or affecting any
Borrower or any Subsidiary, its assets or its business, or that question the
validity of this Agreement or any of the Loan Documents, at law or in equity
before any court, arbitrator or Governmental Authority, that would, if adversely
determined, have a Material Adverse Effect, and (b) no Borrower nor any
Subsidiary is in violation of or in default under any Requirement of Law where
such violation could have a Material Adverse Effect.
4.7. Taxes: Except as set forth on SCHEDULE 4.7, no Borrower nor any
Subsidiary is delinquent in the payment of any material taxes that have been
levied or assessed by any Governmental Authority against them or their assets
unless such tax is being contested in good faith and by proper proceedings and
the Borrowers have maintained adequate reserves with respect thereto in
accordance with
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Generally Accepted Accounting Principles (if required by GAAP to maintain such
reserves). Except as set forth on SCHEDULE 4.7, each Borrower and each
Subsidiary (i) has timely filed all tax returns that are required by law to be
filed, and has paid all taxes shown on said returns and all other assessments or
fees levied upon it or upon its properties to the extent that such taxes,
assessments or fees have become due, and if not due, such taxes have been
adequately provided for and sufficient reserves therefor established on its
books of account and (ii) has been current with respect to payment of all
required withholding taxes, social security taxes and other similar payroll
taxes. No material controversy in respect of income taxes is pending or, to the
knowledge of the officers of the Borrowers, threatened in writing against any
Borrower or any Subsidiary.
4.8. Event of Default. No Default or Event of Default has occurred and
is continuing
4.9. Margin Securities. (a) No Borrower nor any Subsidiary of any
Borrower owns any "margin stock" within the meaning of Regulation U. None of the
proceeds of the Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock, maintaining, reducing or retiring any
Indebtedness that was originally incurred to purchase or carry margin stock or
for any other purpose that would violate Regulation G, Regulation U, Regulation
T or Regulation X or any other regulation of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time, or for
any purpose that would violate the Exchange Act.
(b) None of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds of the Loans) will violate or result
in a violation of Section 7 of the Exchange Act. No Borrower nor any Subsidiary
of any Borrower owns or intends to carry or purchase directly or indirectly any
"margin security" within the meaning of the Exchange Act.
4.10. Full Disclosure. None of the Loan Documents, or any certificate
furnished to the Agent or any Lender by or on behalf of the Borrowers or any
Subsidiary in connection with the Loan Documents, contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading.
4.11. ERISA.
(a) SCHEDULE 4.11 lists all Employee Plans maintained or sponsored by
the Borrowers and their domestic Subsidiaries as of the Closing Date or to which
any Borrower or any domestic Subsidiary is obligated to contribute as of the
Closing Date.
(b) Each such Employee Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Internal Revenue Code and other
federal or state law, including all requirements under the Internal Revenue Code
or ERISA for filing reports (which are true and correct in all material respects
as of the date filed) except to the extent that any non-compliance is not
reasonably expected to result in a Material Adverse Effect, and benefits have
been paid in accordance with the provisions of each such Employee Plan.
(c) The form of each Pension Plan intended to be qualified under Section
401 of the Internal Revenue Code ("Qualified Plan"), and the trusts created
thereunder are, in the opinion of the Borrowers, exempt from tax under the
provisions of Section 501 of the Internal Revenue Code, and to the knowledge
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of the Borrowers nothing has occurred that is reasonably expected to cause the
loss of such qualification or tax-exempt status.
(d) There is no outstanding liability under Title IV of ERISA with
respect to any Pension Plan maintained or sponsored by the Borrowers and their
Subsidiaries (as to which any Borrower or any Subsidiary is or is reasonably
expected to be liable), nor with respect to any Pension Plan to which any
Borrower or any Subsidiary (wherein any Borrower or any Subsidiary is or is
reasonably expected to be liable) contributes or is obligated to contribute.
(e) None of the Qualified Plans subject to Title IV of ERISA has any
material unfunded benefit liability (as to which any Borrower is or is
reasonably expected to be liable).
(f) Except under the Employee Plans disclosed in SCHEDULE 4.11, no
Employee Plan maintained or sponsored by any Borrower or its domestic
Subsidiaries provides medical or other welfare benefits or extends coverage
relating to such benefits beyond the date of a participant's termination of
employment with any Borrower or such Subsidiary, except to the extent required
by Section 4980B of the Internal Revenue Code or applicable state continuation
coverage law. The Borrowers and their domestic Subsidiaries have complied in all
material respects with the notice and continuation coverage requirements of
Section 4980B of the Internal Revenue Code.
(g) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan maintained or sponsored by any Borrower and its Subsidiaries
or to which any Borrower or any Subsidiary is obligated to contribute.
(h) There are no pending or, to the knowledge of the Borrower,
threatened claims, actions or lawsuits, other than routine claims for benefits
in the usual and ordinary course, asserted or instituted against (i) any
Employee Plan maintained or sponsored by any Borrower and its Subsidiaries or
its assets, or (ii) any fiduciary with respect to any Employee Plan for which
any Borrower or any Subsidiary is liable, through indemnification obligations or
otherwise except to the extent that any such claims, actions or law suits are
not reasonably expected to result in a Material Adverse Effect.
(i) Except as disclosed on SCHEDULE 4.11, no Borrower nor any domestic
Subsidiary has incurred or, to the knowledge of the Borrowers, reasonably
expects to incur (i) any liability (and no event has occurred that, with the
giving of notice under Section 4219 of ERISA, would reasonably be expected to
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan or (ii) any liability under Title IV of ERISA (other than
premiums due and not delinquent under Section 4007 of ERISA) with respect to a
Plan, which could reasonably be expected to result in a Material Adverse Effect.
(j) No Borrower nor any Subsidiary has engaged in a non-exempt
prohibited transaction (as defined in Section 4975 of the Internal Revenue Code
or Section 406 of ERISA) in connection with any Pension Plan that has a
reasonable likelihood of having a Material Adverse Effect.
4.12. Financial Statements. (a) The Borrowers have heretofore furnished
to each Lender copies of the Financial Statements. The Financial Statements have
been prepared in accordance with Generally Accepted Accounting Principles
(subject, with respect to the unaudited Financial Statements, to the absence of
notes required by Generally Accepted Accounting Principles and to normal
year-end audit adjustments) and present fairly the financial position of each of
the Borrowers as of the respective
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dates thereof and the results of operations of each of the Borrowers for the
respective periods then ended. Except as fully reflected in the most recent
Financial Statements and the notes thereto, as of the Closing Date, and after
giving effect to the Loans to be made on the Closing Date and the other
transactions contemplated by the Loan Documents, there will be no material
liabilities or obligations with respect to each of the Borrowers of any nature
whatsoever (whether absolute, contingent or otherwise and whether or not due).
Since the date of the most recent Financial Statements, there has been no
Material Adverse Change, and, to the knowledge of the Borrowers, no Material
Adverse Change is threatened or reasonably likely to occur. No Borrower nor any
of its Subsidiaries has directly or indirectly declared, ordered, paid, made or
set apart any amounts or property for any dividend, share acquisition or other
distribution, or agreed to do so, except as permitted by SECTION 6.9.
(b) The Borrowers have prepared, and have heretofore furnished to each
Lender copies of, annual projected balance sheets and statements of income of
the Borrowers and their Subsidiaries for the 5-year period beginning January 1,
1996 (the "Projections"). In the opinion of the Borrowers' management, the
assumptions used in preparation of the Projections were reasonable when made and
are reasonable as of the Closing Date. The Projections have been prepared in
good faith by the executive and financial personnel of the Borrowers in light of
the historical financial performance of the Borrowers and their Subsidiaries and
the financial and operating condition of the Borrowers and the Subsidiaries at
the time prepared, give effect to the transactions contemplated by the Loan
Documents and represent, as of the Closing Date, a reasonable estimate of the
future performance and financial condition of the Borrowers and their
Subsidiaries, subject to the uncertainties and approximations inherent in any
projections and without representation or warranty that such projected
performance and financial condition will actually be achieved.
4.13. Solvency. Each Borrower and each Subsidiary (i) is Solvent and
(ii) after giving effect to the transactions contemplated under this Agreement,
will be Solvent.
4.14. Leased Properties. SCHEDULE 4.14 lists, as of the Closing Date,
(i) all real property leased by each Borrower or any of its Subsidiaries and
sets forth, with respect to each such lease of real property, the identity of
the landlord, the address and legal description of such real property, the
applicable lease term, the amount of annual lease payments and the use of the
real property leased, and (ii) all personal property leased by each Borrower or
any of its Subsidiaries requiring lease payments in excess of $100,000 per year,
including in each case the name of the lessors and a description of the
locations of such property. Each Borrower and each of its Subsidiaries enjoys
peaceful and undisturbed possession under all of its leases, and all such leases
are valid and subsisting and in full force and effect. At the Agent's request,
the Borrowers agree to deliver complete and accurate copies of all such leases
to the Agent and the Lenders.
4.15. Realty. SCHEDULE 4.15 lists all real property owned as of the
Closing Date by the Borrowers or any of their Subsidiaries. To the knowledge of
the Borrowers, no portion of any Realty is located either in a flood fringe area
or an unbuildable floodway area.
4.16. Principal Places of Business. SCHEDULE 4.16 lists, as of the
Closing Date, (i) the chief executive office and principal place of business
(including county or town designation), as provided in the Uniform Commercial
Code, of each Borrower and each of its domestic Subsidiaries, (ii) the locations
at which each Borrower and each of its domestic Subsidiaries maintains, or
presently intends to maintain, billing and related records relating to Accounts
Receivable, and (iii) all locations where inventory of the Borrower or any of
its domestic Subsidiaries is presently maintained.
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4.17. Assets for Conduct of Business. Each Borrower and each Subsidiary
possesses adequate assets, licenses, patents, copyrights, trademarks and trade
names to continue to conduct its business in all material respects as heretofore
conducted without any material conflict with the rights of other Persons.
4.18. Trade Relations. Except as disclosed on SCHEDULE 4.18, to the
knowledge of the Borrowers, there exists no actual or threatened termination,
cancellation or limitation of, or any adverse modification or change in, the
business relationship of any Borrower or any Subsidiary with any customer or any
group of customers whose purchases individually or in the aggregate are material
to the business of the Borrowers and their Subsidiaries, or with any material
supplier, and to the knowledge of the Borrowers there exists no present
condition or state of facts or circumstances that would materially adversely
affect the Borrowers or any Subsidiary or its business or prevent the Borrowers
or any Subsidiary from conducting their business after the consummation of the
transactions contemplated under this Agreement in substantially the same manner
in which it has heretofore been conducted.
4.19. Compliance With Laws. To the knowledge of the Borrowers, each
Borrower and each Subsidiary has duly complied in all material respects with,
and the Collateral, the business operations and leaseholds of each Borrower and
each Subsidiary are in material compliance with, all Requirements of Law,
including, without limitation, all federal and state securities laws where such
failure to comply could result in a Material Adverse Effect.
4.20. Environmental Matters.
(a) Except as set forth on SCHEDULE 4.20 attached hereto, (i) no
Hazardous Substances are stored or located on the Realty in violation of any
Environmental Law or so as to give rise to any liability or investigative,
remedial or corrective obligations under any Environmental Law, and no part of
the Realty, including the groundwater located thereon and thereunder, has been
contaminated by any such substance during the ownership or operation thereof by
the applicable Borrower or any of its applicable Subsidiaries, and, to the
knowledge of the Borrower, no part of the Realty, including the groundwater
located thereon and thereunder has been previously contaminated by any such
substance; (ii) no improvements on the Realty contain any friable asbestos or
substances containing asbestos; (iii) there have been no releases of such
Hazardous Substances in violation of any Environmental Law or so as to give rise
to any liability or investigative, remedial or corrective obligations under any
Environmental Law, by any Borrower or any of its Subsidiaries, or to the
Borrowers' knowledge by any other Person, on any Realty previously owned or
operated by any Borrower or any of its Subsidiaries; (iv) to the Borrowers'
knowledge, the foregoing statements are true and correct with respect to all of
the real property adjoining any of the Realty; (v) none of the Realty is located
on a site which, pursuant to any Environmental Law, has been placed on the
"National Priorities List" or "CERCLIS List" (or any similar state or provincial
list) of hazardous waste sites; (vi) there are no underground storage tanks
situated on the Realty and no underground storage tanks have ever been situated
on the Realty; (vii) to the knowledge of the Borrowers, no Borrower nor any
Subsidiary has ever sent Hazardous Substances to a site which, pursuant to any
Environmental Law, (1) has been placed on the "National Priorities List" or
"CERCLIS List" of hazardous waste sites (or any similar state or provincial
list) or (2) which is subject to a claim, an administrative order or other
request to take "removal" or "remedial" action (as defined under Environmental
Laws) or to pay for the costs of cleaning up such a site; and
(b) All activities and operations of the Borrowers and each of their
Subsidiaries meet in all material respects the requirements of all applicable
Environmental Laws of all Governmental Authorities
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having jurisdiction over the Borrowers or any of their Subsidiaries or their
properties and no Borrower nor any of their Subsidiaries is involved in any suit
or proceeding or has received any written notice from any governmental agency
with respect to a release of Hazardous Substances or has received written notice
of any claims from any person or entity relating to property damages or personal
injuries from exposure to Hazardous Substances.
4.21. Outstanding Borrowings. Except as disclosed on SCHEDULE 4.21, as
of the Closing Date, no Borrower nor any Subsidiary has Indebtedness for
borrowed money other than the Obligations and Indebtedness secured by Permitted
Liens.
4.22. Contracts; Labor Disputes. No Borrower nor any Subsidiary is a
party to any contract or agreement, or subject to any charge, corporate
restriction, judgment, injunction, decree, rule, regulation or order of any
court or Governmental Authority, that has or could reasonably be expected to
have a Material Adverse Effect. No Borrower nor any Subsidiary is a party to,
and there is not pending or, to the knowledge of the Borrowers, threatened in
writing, any labor dispute, strike, lock-out, grievance, slowdown, work stoppage
or walkout relating to any labor contract to which any Borrower or any
Subsidiary is a party or otherwise subject, that has or could reasonably be
expected to have a Material Adverse Effect. The Borrowers and each Subsidiary
have complied with, and will continue to comply with, the provisions of the Fair
Labor Standards Act of 1938, as amended, and no Borrower nor any Subsidiary, nor
any of its officers, directors or employees, has committed any unfair labor
practice, as defined in the National Labor Relations Act of 1947, as amended,
that has or could reasonably be expected to have a Material Adverse Effect.
4.23. Insurance. SCHEDULE 4.23 accurately summarizes all insurance
policies or programs of the Borrowers and their Subsidiaries in effect as of the
Closing Date, and indicates the insurer's name, policy number, expiration date,
amount of coverage, type of coverage, annual premiums, exclusions and
deductibles, and also indicates any self-insurance program that is in effect.
4.24. Ownership of Properties. Except as set forth on SCHEDULE 1.1(a),
(a) each of the Borrowers and their Subsidiaries has good and marketable title
to all Realty owned by it, holds interests as lessee under valid leases in full
force and effect with respect to all leased real and material personal property
used in connection with its business, and has good title to all of its other
properties and assets, including, without limitation, the assets reflected in
the most recent Financial Statements (except as sold or otherwise disposed of
since the date thereof in the ordinary course of business), in each case free
and clear of all Liens other than Permitted Liens; and (b) other than the
Financing Statements in favor of the Agent or in connection with Permitted
Liens, no financing statement that names any Borrower or any of its Subsidiaries
as debtor has been filed and is still in effect, and no Borrower nor any
Subsidiary has signed any other financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement.
4.25. First Priority. The provisions of this Agreement, together with
the other Loan Documents (whether executed and delivered prior to or on the
Closing Date or thereafter), are and will be effective to create in favor of the
Agent, for the benefit of the Lenders, upon the initial extension of credit
hereunder and the proper filing of all financing statements and other
recordations contemplated thereunder in the jurisdictions and locations
contemplated thereby, a valid and enforceable first priority perfected security
interest in and lien upon all right, title and interest of the Borrowers and
their Subsidiaries in the Collateral described therein, to the extent such
filings and possession may perfect such security and interests subject only to
Permitted Liens.
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4.26. Investment Company. No Borrower is an "investment company" or
"controlled by" an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
4.27. Stock of the Borrowers. As of the Closing, all outstanding capital
stock of each Borrower has been duly and validly authorized and issued, and all
such outstanding shares are fully paid and nonassessable and held of record as
set forth on SCHEDULE 4.1.
4.28. Single Business Enterprise. The Borrowers have historically
operated as, and intend to continue operating as, a single business enterprise.
Although separate entities, the Borrowers operate under a common business plan.
Each of the Borrowers will accordingly benefit from the financing arrangement
established by this Agreement.
4.29. Material Contracts. SCHEDULE 4.29 lists all contracts, agreements
and commitments of any of the Borrowers as of the Closing Date, whether written
or oral, that (i) extend beyond December 31, 1996 and involve the receipt or
payment of more than $100,000; (ii) relate to employment, labor or union
matters; or (iii) are material to the business, property, assets, operations or
condition, financial or otherwise, of any of the Borrowers. At the Agent's
request, the Borrowers agree to deliver complete and accurate copies of all such
material contracts to the Agent and the Lenders.
ARTICLE V
AFFIRMATIVE COVENANTS
Until payment in full of the Obligations and the termination of the
Lenders' obligation to make Loans, the Borrowers, jointly and severally,
covenant and agree that:
5.1. Financial and Business Information about the Borrowers. The
Borrowers shall deliver to the Agent and the Lenders:
(a) As soon as practicable and in any event within thirty (30) days
after the close of each month, beginning with the current month, an unaudited
consolidated and consolidating balance sheet of the Borrowers and their
Subsidiaries as of the close of each such month and unaudited consolidated and
consolidating statements of income, retained earnings and cash flows for the
Borrowers and their Subsidiaries for the month then ended, and that portion of
the fiscal year then ended, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding fiscal year and,
beginning January 1, 1997, budget for the same period in the current fiscal
year, all prepared in accordance with Generally Accepted Accounting Principles
for interim financial statements (subject to the absence of notes required by
Generally Accepted Accounting Principles and subject to year-end audit
adjustment) applied on a basis consistent with that of the preceding month or
containing disclosure of the effect on the financial position or results of
operations of any change in the application of accounting principles and
practices during the month, certified by the executive vice president, treasurer
or controller of the Borrowers to be true and accurate in all material respects;
(b) As soon as practicable and in any event within forty-five (45) days
after the close of each of fiscal quarter of the Borrowers, beginning with the
current fiscal quarter, an unaudited consolidated and consolidating balance
sheet of the Borrowers and their Subsidiaries as of the close of such fiscal
quarter and unaudited consolidated and consolidating statements of income,
retained earnings and cash
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flows for the Borrowers and their Subsidiaries for the fiscal quarter then ended
and for that portion of the fiscal year then ended, all in reasonable detail
setting forth in comparative form the corresponding figures for the preceding
fiscal year and, beginning January 1, 1997, budget for the same period in the
current fiscal year, all prepared in accordance with Generally Accepted
Accounting Principles for interim financial statements (subject to the absence
of notes required by Generally Accepted Accounting Principles and subject to
year-end audit adjustment) applied on a basis consistent with that of the
preceding quarter or containing disclosure of the effect on the financial
position or results of operation of any change in the application of accounting
principles and practices during the quarter, certified by the executive vice
president, treasurer or controller of the Borrower to be true and accurate in
all material respects;
(c) As soon as practicable and in any event within ninety (90) days
after the close of each fiscal year of the Borrowers, beginning with the current
fiscal year, an audited consolidated balance sheet of the Borrowers and their
Subsidiaries as of the close of such fiscal year and audited consolidated
statements of income, retained earnings and cash flows for the Borrowers and
their Subsidiaries for the fiscal year then ended, including the notes to each,
all in reasonable detail setting forth in comparative form the corresponding
figures for the preceding fiscal year, prepared by KPMG Peat Marwick LLP or
another nationally-recognized independent certified public accountant in
accordance with Generally Accepted Accounting Principles applied on a basis
consistent with that of the preceding year or containing disclosure of the
effect on the financial position or results of operation of any change in the
application of accounting principles and practices during the year, accompanied
by a report thereon by such certified public accountant containing an opinion
that is not qualified with respect to scope limitations imposed by the Borrowers
or their Subsidiaries or with respect to accounting principles followed by the
Borrowers or their Subsidiaries not in accordance with Generally Accepted
Accounting Principles;
(d) Concurrently with the delivery of the financial statements described
in subsection (c) above, a certificate addressed to the Agent and the Lenders
from the independent certified public accountant that in making its audit of the
financial statements of the Borrowers and their Subsidiaries, it obtained no
knowledge of the occurrence or existence of any Default or Event of Default, or
a statement specifying the nature and period of existence of any such Default or
Event of Default disclosed by its audit; provided, however, that such accountant
shall not be liable to anyone by reason of its failure to obtain knowledge of
any Default or Event of Default that would not customarily be disclosed in the
course of an audit conducted in accordance with Generally Accepted Auditing
Standards;
(e) Concurrently with the delivery of the financial statements described
in subsections (a), (b) and (c) above, a certificate from the Borrowers and each
Borrower's senior financial officer or chief executive officer certifying to the
Lenders that, to the best of such person's knowledge after appropriate inquiry
and, in the case of the delivery of the financial statements described in
subsections (b) and (c) above, after review of this Agreement, no Default or
Event of Default has occurred or specifying any such Default or Event of De
fault, together with a Compliance Certificate, in form satisfactory to the
Required Lenders, reflecting the computation of the financial covenants set
forth in ARTICLE VI as of the end of the period covered by such financial
statements;
(f) As soon as practicable and in any event within thirty (30) days
after the close of each fiscal year of the Borrowers, beginning with the close
of the current fiscal year, an annual operating budget and capital budget and
projected annual financial statements (each prepared on a monthly basis) for the
Borrowers and their Subsidiaries, consisting of consolidated and consolidating
balance sheets, statements of income and cash flows, accompanied by a
certificate from the Borrowers and each Borrower's chief executive officer or
senior financial officer to the effect that the budgets and financial
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projections have been prepared in good faith and are reasonable estimates of the
financial condition and operations of the Borrowers and their Subsidiaries for
such period;
(g) Within ten (10) days after issuance, copies of each report, document
or other correspondence that any Borrower shall from time to time render to or
file with any Governmental Authority (other than sales tax reports, employee
withholding reports, state tax reports, federal and state tax returns and
similar routine filings, reports or correspondence), including reports and other
documents filed with the Securities Exchange Commission, and all press releases
issued by any Borrower excluding promotional materials and ads for trade;
(h) Within ten (10) days after any Borrower's receipt thereof, copies of
any management letter or other communication from certified public accountants,
consulting report or any other similar business report management may request of
any Person from time to time, other than routine reports received in the
ordinary course of business;
(i) Within fifteen (15) days after the end of each month, in form and
detail acceptable to the Agent, a consolidated and consolidating aging of the
Accounts Receivable of the Borrowers as of the end of such month, certified by
the senior financial officer, treasurer or the controller of each Borrower to be
correct in all material respects;
(j) Within fifteen (15) days after the end of each month, in form and
detail acceptable to the Agent, an Inventory Report of the Inventory of each
Borrower as of the end of such month, certified by the senior financial officer,
treasurer or the controller of each Borrower to be correct in all material
respects;
(k) Within fifteen (15) days after the end of each month, a Borrowing
Base Certificate as of the end of such month, certified by the senior financial
officer, treasurer or the controller of each Borrower to be correct; and
(l) Upon the Agent's or any Lender's request, such other information
about the Collateral or the financial condition and operations of the Borrowers
and their Subsidiaries as the Agent or any Lender may from time to time
reasonably request.
5.2. Notice of Certain Events. The Borrowers shall promptly, but in no
event later than ten (10) days after obtaining knowledge thereof, give written
notice to the Agent and the Lenders of:
(a) any litigation or proceeding brought against any Borrower or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect,
whether or not the claim is considered by the Borrowers to be covered by
insurance;
(b) any notice of a violation received by any Borrower or any Subsidiary
from any Governmental Authority that, if such violation were established, could
reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in a strike or slowdown or
other work action that could reasonably be expected to have a Material Adverse
Effect;
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(d) any judgment in excess of $200,000, or any attachment, lien, levy or
order that may be placed on or assessed against or threatened against any
Borrower or any Subsidiary or any of the Collateral, except for Permitted Liens;
(e) any Default or Event of Default;
(f) any information relating to the filing by or against any Account
Debtor whose aggregate outstanding Accounts at such time exceed $200,000 of any
petition seeking liquidation, reorganization, arrangement or readjustment of
debts of such Account Debtor or for any other relief under the Bankruptcy Code
or under any act or law pertaining to insolvency or debtor relief, whether
state, federal or foreign;
(g) any default or event of default under any agreement or instrument to
which any Borrower or any Subsidiary is a party or by which it or any of its
property is bound, including the Senior Secured Notes the termination of which
could reasonably be expected to have a Material Adverse effect;
(h) any delay or delays in the performance by any Borrower or any
Subsidiary any of its obligations to any its Account Debtors that would
reasonably by expected to have a Material Adverse Effect;
(i) any information relating to a Material Adverse Change in the
creditworthiness of a material Account Debtor; and
(i) any other matter that in the reasonable judgment of the Borrowers
would be expected to result in a Material Adverse Change.
5.3. Corporate Existence and Maintenance of Properties, Licenses. Each
of the Borrowers shall, and shall cause each of its Subsidiaries to:
(a) Maintain and preserve in full force and effect its corporate
existence except as otherwise permitted by SECTION 6.1, and all material rights,
privileges and franchises; provided however that the Borrowers may permit the
dissolution of any of their Subsidiaries (and any such subsidiary may suffer
such dissolution) if, at the time of such dissolution, such Subsidiary has no
assets, engages in no business and otherwise has no activities other than
activities related to the maintenance of its corporate existence and good
standing;
(b) Conduct its business in accordance with sound business practices,
keep its properties in good working order and condition (normal wear and tear
excepted), and from time to time make all needed repairs to, renewals of or
replacements of its properties (except to the extent that any of such properties
are obsolete or are being replaced) so that the efficiency of its business
operations shall be fully maintained and preserved; and
(c) File or cause to be filed in a timely manner all reports,
applications, estimates and licenses that shall be required by any Governmental
Authority and that, if not timely filed, could reasonably be expected to have a
Material Adverse Effect.
5.4. Payment of Indebtedness; Performance of Other Obligations. The
Borrowers shall, and shall cause each of their Subsidiaries to, pay all
Indebtedness at maturity, all lawful claims that such
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Borrower or such Subsidiary is obligated to pay, that are due and that, if
unpaid, might by law become a lien upon property of such Borrower or such
Subsidiary, and all other obligations in accordance with customary trade
practices, and comply with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official applicable to the
Collateral or any part thereof or to the operation of the business of such
Borrower or such Subsidiary unless noncompliance is not reasonably likely to
result in a Material Adverse Effect. Each of the Borrowers shall, and shall
cause each of its Subsidiaries to, observe and remain in compliance with all
laws, ordinances, governmental rules and regulations to which it is subject and
obtain all licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its respective properties or the conduct of its
respective businesses, and all covenants and conditions of all agreements and
instruments to which any Borrower or any Subsidiary is a party, which failure to
comply or failure to obtain could reasonably be expected to have a Material
Adverse Effect.
5.5. Payment of Trade Accounts Payable, etc. Each of the Borrowers
shall, and shall cause each of its Subsidiaries to, pay in accordance with
customary' trade practices and in the ordinary course of its business all of its
trade accounts that are payable or accrued as of the Closing Date, and, upon
request, shall deliver promptly to the Agent evidence reasonably satisfactory to
the Agent of such payment.
5.6. Insurance. (a) Each of the Borrowers shall, and shall cause each of
its Subsidiaries to, maintain and pay for insurance upon all of its assets,
including the Collateral, wherever located, and all real property owned or
leased by any Borrower or any Subsidiary' covering casualty, hazard, public
liability, product liability, business interruption, boiler, fidelity and such
other risks, and in such amounts and with such insurance companies as would be
carried by a reasonably prudent operator in a similar business (and in any event
in such amounts as shall be adequate to cover the Collateral), and deliver
certificates of such insurance to the Agent with satisfactory loss payable
endorsements naming the Agent as loss payee, additional insured and mortgagee
thereunder, as appropriate.
(b) Each such policy of insurance shall contain a standard loss payee
clause and shall require the insurer to give not less than thirty (30) days'
prior written notice to the Agent before any cancellation of the policies for
any reason whatsoever. Each Borrower hereby directs all insurers under policies
of property and casualty insurance on the physical assets constituting the
Collateral to pay all proceeds payable thereunder in excess of $100,000 directly
to the Agent. The Agent, on behalf of the Lenders, shall hold all such proceeds
for the account of the Borrowers. So long as no payment Default or payment Event
of Default has occurred and is continuing, the Agent shall, at the Borrowers'
option, disburse such proceeds as payment for the purpose of replacing or
repairing destroyed or damaged assets, as and when required to be paid and upon
presentation of evidence satisfactory to the Agent of such required payments and
such other documents as the Agent may reasonably request, or shall apply such
proceeds in whole or in pan as a prepayment of the Loans, in such order as the
Borrowers may determine. Upon and during the continuance of a Default or Event
of Default, the Agent may, and at the direction of the Required Lenders shall,
apply such proceeds as a prepayment of the Revolving Credit Loans. Each Borrower
hereby irrevocably makes, constitutes and appoints the Agent at all times during
the continuance of an Event of Default and after acceleration of the
Obligations, its true and lawful attorney (and agent-in-fact) for the purpose of
making, settling and adjusting claims under such policies of insurance,
endorsing its name on any check, draft, instrument or other item or payment for
the proceeds of such policies of insurance and for making all determinations and
decisions with respect to such policies of insurance.
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(c) If any Borrower or any Subsidiary fails to obtain and maintain any
of the policies of insurance required to be maintained hereunder or to pay any
premium in whole or in part, the Agent may, without waiving or releasing any
obligation or Default by the Borrowers hereunder, at the Borrowers' expense, but
without any obligation to do so, procure such policies or pay such premiums on
behalf of the Lenders. All sums disbursed by the Agent, for the benefit of the
Lenders, including reasonable attorneys' fees, court costs, expenses and other
charges related thereto, shall be payable by the Borrowers, jointly and
severally, to the Agent on demand and shall be additional Obligations under the
Credit Agreement, secured by the Collateral,
(d) The Borrowers shall deliver to the Agent, promptly as rendered, true
copies of all claims and monthly reports made in any reporting forms to
insurance companies. Not less than 30 days prior to the expiration date of the
insurance policies required to be maintained by the Borrowers or their
Subsidiaries, the Borrowers shall deliver to the Agent one or more certificates
of insurance evidencing renewal of the insurance coverage required hereunder
plus such other evidence of payment of premiums therefor as the Agent may
request. As soon as practicable after the Closing Date, the Borrowers shall
deliver to the Agent certified copies of the original policies of all insurance
on the Collateral.
(e) Upon the reasonable request of the Agent from time to time, the
Borrowers shall deliver to the Agent evidence that the insurance required to be
maintained pursuant to this Agreement is in effect.
5.7. Maintenance of Books and Records; Inspection. Each Borrower shall,
and shall cause each of its Subsidiaries to, maintain adequate books, accounts
and records and prepare all financial statements required under this Agreement
in accordance with Generally Accepted Accounting Principles. The Borrowers shall
permit any employee or representative of the Agent or any Lender to visit and
inspect any of the properties of the Borrowers and their Subsidiaries to examine
and audit each Borrower's and their Subsidiaries' books of account, records,
reports and other papers, to make copies and extracts therefrom, and to discuss
the affairs, finances and accounts of the Borrowers and their Subsidiaries with
its officers and, upon notice to the Borrowers, its independent public
accountants (and by this provision each Borrower authorizes said accountants to
discuss its finances and affairs and to provide the Agent or any Lender with
access to such accountants' work papers), all at such reasonable times and as
often as may be reasonably requested.
5.8. Compliance with ERISA. The Borrowers ,shall, and shall cause their
Subsidiaries to: (i) make timely payment of contributions required to meet the
minimum funding standards set forth in ERISA with respect to any Plan; (ii) not
take any action or fail to take action the result of which action or inaction
would reasonably be expected to be a material liability of any Borrower or any
Subsidiary to the Pension Benefit Guaranty Corporation or to a Multiemployer
Plan; and (iii) notify the Agent as soon as practicable of any ERISA Event and
of any additional act or condition arising in connection with any Pension Plan
that the Borrowers believe constitutes grounds for the termination thereof by
the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer such plan.
The Borrowers shall not, and shall not permit their Subsidiaries to, participate
in any Prohibited Transaction that would reasonably be expected to subject any
Borrower or any Subsidiary to any material civil penalty under ERISA or material
tax under the Internal Revenue Code. The Borrowers shall, and shall cause their
Subsidiaries to, furnish to the Agent upon the Agent's request such additional
information about any Employee Plan or other material employee benefit plan as
may be reasonably requested by the Agent.
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5.9. COBRA. The Employee Plans of the Borrowers and their Subsidiaries
shall be operated in such a manner that no Borrower nor any Subsidiary will be
reasonably expected to incur any material tax liability under Section 4980B of
the Internal Revenue Code or any material liability to any qualified beneficiary
as defined in Section 4980B.
5.10. Payment of Taxes. Each of the Borrowers shall, and shall cause
each of its Subsidiaries to, pay and discharge all material taxes, assessments
and governmental charges or levies imposed upon it, including, without
limitation, taxes, assessments, or charges or levies relating to its payroll tax
liability or income or profits, or upon any properties belonging to it, prior to
the date on which penalties would attach thereto, and all lawful claims (other
than claims secured by Permitted Liens) that, if unpaid, might become a lien or
charge upon any of its properties; provided, however, that the Borrowers and
their Subsidiaries shall not be required to pay any such tax, assessment,
charge, levy or claim that is being contested in good faith and by proper
proceedings if the Borrowers have maintained adequate reserves with respect
thereto in accordance with (and if required by) Generally Accepted Accounting
Principles. The Borrowers shall promptly notify the Agent of any notice received
from the Internal Revenue Service or other taxing authority regarding such
delinquent taxes and shall furthermore promptly deliver a copy of such notice to
the Agent.
5.11. Compliance with Statutes, etc. Each of the Borrowers shall, and
shall cause each of its Subsidiaries to, comply in all material respects with
all material applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property
(including applicable Environmental Laws and statutes and regulations) where the
failure to comply would have a Material Adverse Effect.
5.12. Name Change. Each Borrower shall notify the Agent at least thirty
(30) days prior to the effective date of any change of its name or the name of
any of its Subsidiaries, and prior to such effective date any such Borrower or
Subsidiary' shall have executed any required amended or new Financing Statements
and other Loan Documents necessary to maintain and continue the perfected
security interest of the Agent, for the benefit of the Lenders, in all of its
Collateral and shall have taken such other actions and executed such documents
as the Agent shall reasonably require.
5.13. Compliance with Environmental Laws. The Borrowers shall take all
measures reasonably necessary and to the extent consistent with prudent business
practices to fully comply with the Environmental Laws.
5.14. Lockbox Arrangement. The Borrowers shall establish and maintain a
lockbox/ACH service with such bank or banks as may be acceptable to the Agent.
Accounts established in connection with this service shall be subject to the
sole control of the Agent, for the credit of the Lenders and the Agent, for the
credit of the Lenders, shall have the right at all times in its sole discretion
to apply all or a part of the monies in said account to payment of the
Obligations. The Agent, at the request of the Required Lenders, may in its sole
discretion release to the Borrowers, all or any part of the monies held in the
respective accounts. After a lockbox/ACH service is established by a Borrower,
whenever such Borrower or any of its Affiliates (other than another Borrower
maintaining a lockbox/ACH service at the Agent's request and the Foreign
Subsidiaries, shareholders, directors, officers, employees or agents) shall
receive any monies, checks, notes, drafts or any other items of payment:
(i) Such Borrower shall hold all such items of payment in
trust for Agent, on behalf of the Lenders, and as the
property of Agent, for
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the credit of Lenders, separate from the funds of such Borrower or any Affiliate
of the Borrower, and no later than the first Business Day following the receipt
thereof, the Borrower shall forward or cause to be forwarded the same to the
lockbox/ACH service for application to the Revolving Credit Loans;
(ii) Such Borrower shall forward to the Agent upon request, on a daily basis,
deposit slips related to all such items of payment received by such Borrower or
any Affiliate of such Borrower and, if required by the Agent, copies of such
checks and other items, together with a statement showing the application of
that portion of such items of payment relating to payment on Accounts Receivable
to outstanding Accounts Receivable and a collection report with regard thereto
in form and substance satisfactory to the Agent;
(iii) All such items of payment shall be the sole and exclusive property of the
Agent, for the credit of the Lenders, immediately upon the earlier of receipt of
such items by the Agent or any Lender or the receipt of such items by such
Borrower or any Affiliate of such Borrower; provided, however, that no such item
received by the Agent or any Lender shall constitute payment to the Agent, for
credit of the Lenders, unless such item is actually collected by the Agent, for
the credit of the Lenders' depository bank and such collection is finally
credited to the Lenders' account; and
(iv) Neither the Agent nor any Lender assumes any responsibility for such
lockbox/ACH service arrangement, including without limitation any claim of
accord and satisfaction or release with respect to deposits accepted by any bank
thereunder.
5.15. Further Assurances. The Borrowers shall, and shall cause each of
their Subsidiaries to, make, execute, endorse, acknowledge and deliver to the
Agent and the Lenders any amendments, restatements, modifications or supplements
hereto and any other agreements, instruments or documents, and take any and all
such other actions, as may from time to time be reasonably requested by the
Agent or the Required Lenders to effect, confirm or further assure or protect
and preserve the interests, rights and remedies of the Lenders and the Agent
under this Agreement and the other Loan Documents.
ARTICLE VI
NEGATIVE COVENANTS
Until payment in full of the Obligations and the termination of the
Lenders' obligation to make Loans, the Borrowers jointly and severally covenant
and agree that the Borrowers will not, and will not permit their Subsidiaries
to:
6.1. Merger and Dissolution. Merge or consolidate with or into any other
Person, liquidate, wind up or dissolve, or sell, lease or dispose of, in a
single transaction or a series of
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related transactions, all or a substantial portion of the assets of any Borrower
or any domestic Subsidiary; provided, however, (i) a Borrower or a Subsidiary
may merge or consolidate with another Person so long as a Borrower is the
surviving corporation and (ii) a Foreign Subsidiary may merge into another
Foreign Subsidiary.
6.2. Acquisitions. Except as permitted by SECTION 6.1 above or 6.8
below, consummate any transaction or series of related transactions after the
date hereof by which any Borrower or any Subsidiary (i) acquires all or a
substantial part of the assets of a going business or division of any Person,
whether through purchase of assets, merger or otherwise; (ii) directly or
indirectly acquires control of at least a majority in voting power of the
securities of any Person; or (iii) directly or indirectly acquires control of a
5% or more ownership interest in any partnership, limited liability company or
joint venture, except acquisitions by a Borrower of the assets, stock or other
ownership interest of another Borrower.
6.3. Indebtedness. Directly or indirectly issue, assume, create, incur
or suffer to exist any Indebtedness except for: (i) the Obligations; (ii) the
Senior Secured Notes; (iii) business expenses, trade accounts payable or accrued
by the Borrowers or their Subsidiaries in the ordinary course of their
businesses (provided that the same shall be paid substantially when due in
accordance with customary trade terms unless contested by appropriate
proceedings), and other obligations and liabilities other than for borrowed
money incurred by the Borrowers or their Subsidiaries in the ordinary course of
their businesses; (iv) Indebtedness secured by Permitted Liens; (v) Indebtedness
under Swap Agreements with a Lender that are reasonably satisfactory in form and
substance to the Required Lenders, (vi) Indebtedness between a Borrower and
another Borrower; (vii) Intercompany Loans, provided that the aggregate amount
of Intercompany Loans does not exceed (A) $15,000,000 during the time period
from the date of this Agreement to December 31, 1997, (B) $7,500,000 thereafter
to June 30, 1998, (C) $5,000,000 thereafter to December 31, 1998 and (D) zero
dollars thereafter; (viii) Indebtedness incurred pursuant to Capital Leases
including Capital Lease Obligations relating thereto of up to $5,000,000 in the
aggregate; (ix) Contingent Obligations permitted pursuant to SECTION 6.5; (x)
endorsements in the ordinary course of business of the Borrowers and their
Subsidiaries; (xi) Indebtedness permitted pursuant to SECTION 6.8 below; (xii)
Indebtedness for money borrowed (other than Intercompany Notes) of the Foreign
Subsidiaries in the aggregate principal amount not to exceed $20,000,000 at any
time; and (xiii) other Indebtedness which individually or in the aggregate does
not exceed $250,000.
6.4. Liens and Encumbrances. Create, assume or suffer to exist any Lien,
except Liens granted to the Agent for the benefit of the Lenders and Permitted
Liens.
6.5. Contingent Obligations. Except as disclosed on SCHEDULE 6.5,
create, incur, assume or suffer to exist any Contingent Obligation other than:
(i) endorsements of instruments or items of payment for
deposit or collection in the ordinary course of
business;
(ii) Contingent Obligations incurred pursuant to the
guaranties listed on SCHEDULE 6.5;
(iii) obligations under Letters of Credit issued under SECTION
2.17;
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(iv) guarantees by a Borrower or any of its Subsidiaries of
any other Indebtedness permitted under SECTION 6.3.
6.6. Disposition of Assets. Sell, lease, transfer, convey or otherwise
dispose of any of their assets or property, including without limitation the
Collateral, other than (i) the sale of Inventory in the ordinary course of
business; (ii) the sale or trade-in of Equipment for replacement Equipment in
the ordinary course of a Borrower's business; (iii) the sale, trade-in or other
disposition of Equipment no longer used or useful in the business of the
Borrowers and their Subsidiaries not in excess of $250,000 annually for all such
dispositions pursuant to this clause (iii) whether or not in the ordinary course
of business; (iv) sales, transfers, leases, conveyances or other dispositions of
assets to Borrowers; (v) the sale or disposition of Investments expressly
permitted to be held hereunder; (vi) the sale by Felchar Manufacturing
Corporation of approximately 3.03 acres of real property, buildings and
improvements owned by it in Norwich, New York (the "Norwich Property"); or (vii)
the sale of stock or assets of the Borrowers' European Subsidiaries in
connection with the consolidation or closing of such European Subsidiaries. To
the extent any Collateral is sold as permitted by this Section , such Collateral
shall be sold free and clear of the liens created by the Loan Documents, and the
A shall be authorized to take any actions that it deems appropriate in order to
effect the forego.
6.7. Transactions With Related Persons. Except as otherwise permitted by
SECTIONS 6.2, 6.3, 6.4 and 6.8, directly or indirectly (a) make any loan or
advance to, or purchase, assume or guarantee any Indebtedness to or from, any of
their officers, directors, stockholders or Affiliates, or to or from any member
of the immediate family of any of their officers, directors, stockholders or
Affiliates, or subcontract any operations to any Affiliate, except for travel or
other reasonable expense advances to employees in the ordinary course of
business; or enter into any transaction with any Affiliate (including the
purchase of any selling, general, management or administrative services from an
Affiliate), except for ordinary course of business and officer relocation loans
and except pursuant to the reasonable requirements of the businesses of the
Borrowers and on terms substantially no less favorable to the Borrowers than
those that the Borrowers would obtain in a comparable arms-length transaction
with a Person not an Affiliate of the Borrowers or (b) sell or transfer on
credit of motors or other parts to a Foreign Subsidiary, except for such sales
made on 90-day credit terms to a Foreign Subsidiary when (i) the Borrowers'
aggregate credit exposure at any time on all such sales to Foreign Subsidiaries
does not exceed $3,500,000 (based on standard transfer costs) and (ii) no
Foreign Subsidiary is in default on payment due on such sales.
6.8. Restricted Investments. Purchase, own, invest in or otherwise
acquire, directly or indirectly, any Stock, evidence of indebtedness, or other
obligation or security or any interest whatsoever in any other Person, or make
or permit to exist any loans, advances or extensions of credit to, or any
investment in cash or by delivery of property in, any Person (collectively,
"Investments"), except for: (i) investments in Cash Investments; (ii) loans and
advances to employees for reasonable travel and business expenses in the
ordinary course of business; (iii) prepaid expenses incurred in the ordinary
course of business; (iv) trade accounts receivable created in the ordinary
course of business; and (v) investments in existence as of the Closing Date in
corporations or other entities that are Subsidiaries as of the Closing Date;
(vi) investment after the Closing Date in entities that become Subsidiaries
after the Closing Date and that become a Borrower accordance with SECTION 6.16
hereof; (vii) loans to or investments in any Subsidiary with total equity and or
assets of less than $25,000; (viii) investments by the Borrowers under
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any Swap Agreement which meets the requirements of SECTION 5.14, provided that
the notional amount of all Swap Agreements at any time shall not exceed the
aggregate amount of the Commitments at such time; (ix) any other investments
approved in writing from time to time by the Required Lenders; and (x)
indebtedness permitted by SECTION 6.3 hereinabove.
6.9. Restrictions on Dividends. Declare or pay any dividends (other than
dividends payable solely in their own Stock) upon any of their Stock, or
purchase, redeem, retire, or otherwise acquire, directly or indirectly, any
shares of their Stock or any option, warrant or other right to acquire shares of
their Stock, or make any distribution of cash, property or assets among the
holders of shares of their Stock; provided, however, that any Borrower or any of
its Subsidiaries may do any of the foregoing if a recipient of the proceeds of
any of the foregoing otherwise prohibited activities is a Borrower.
6.10. Capital Expenditures. Make or incur any Capital Expenditure if,
after giving effect thereto, the aggregate amount of all such Capital
Expenditures (excluding any Capital Expenditures involving the use of insurance
proceeds to replace, rebuild or repair damaged or destroyed assets to the extent
of such proceeds and applicable deductibles or the limits of applicable
deductibles if no insurance proceeds were received on account of such damage or
destruction) shall exceed $2,000,000 for the 1996 fiscal year, $3,500,000 for
each of the 1997 and 1998 fiscal years and $4,000,000 for each fiscal year
thereafter.
6.11. Leases. Enter into any Operating Leases; provided, however, that
the Borrowers may maintain and renew existing Operating Leases; and, provided
further, that any of the Borrowers may enter into new Operating Leases provided
the required payments under all such leases (whether now existing or hereafter
arising) shall not exceed $3,000,000 in the aggregate for any fiscal year.
6.12. Interest Coverage Ratio. Permit the ratio of EBITDA (measured for
the four consecutive quarters ending on the measurement date) to Interest
Expense at the end of any fiscal quarter to be less than (i) 1.80 to 1.00 from
the Closing Date through the fiscal quarter ending September 30, 1997, (ii) 2.00
to 1.00 thereafter through the fiscal quarter ending September 30, 1998, (iii)
2.25 to 1.00 through the fiscal quarter ending September 30, 1999 and (iv) 2.50
to 1.00 through the end of any fiscal quarter thereafter. For purposes of this
covenant, Interest Expense shall be calculated as follows: (a) Interest Expense
for the last fiscal quarter of 1996 will be annualized by multiplying such
amount by 4, (b) Interest Expense for the first fiscal quarter of 1997 will be
annualized by multiplying the Interest Expense for the last fiscal quarter of
1996 and first fiscal quarter of 1997 by 2, (c) Interest Expense for the second
fiscal quarter of 1996 will be annualized by multiplying the Interest Expense
for the last fiscal quarter of 1996 and the first two fiscal quarters of 1997 by
1.333%, and (d) thereafter, Interest Expense shall be measured for the four
consecutive fiscal quarters ending on the measurement date.
6.13. Funded Debt/EBITDA Ratio. Permit the ratio of Funded Debt to
EBITDA (measured for the four consecutive quarters ending on the measurement
date) to be greater than (i) 4.85 to 1.00 from the Closing Date through the
fiscal quarter ending September 30, 1997, (ii) 4.25 to 1.00 thereafter through
the fiscal quarter ending September 30, 1998, (iii) 3.50 to 1.00 at the end of
any fiscal quarter thereafter.
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6.14. Sale and Leaseback. Enter Into any arrangement with any Person
providing for the leasing by any Borrower or any Subsidiary of any asset that
has been sold or transferred by any Borrower or any Subsidiary to such Person.
6.15. Hazardous Substances. (i) Violate any Environmental Law if such
violation could reasonably be expected to have a Material Adverse Effect or (ii)
permit any Hazardous Substances to be brought onto any of the Realty or any
other property owned, leased or operated by any Borrower or any Subsidiary
(unless such Hazardous Substance is necessary for the conduct of the Borrower's
or such Subsidiary's business as it exists on the Closing Date or any new
business permitted under SECTION 6.16 hereunder), if the presence of such
Hazardous Substance could reasonably be expected to result in a Material Adverse
Effect. If any Hazardous Substance is brought or found thereon or therein,
except as may be permitted above, the Borrowers, at no expense to the Agent or
the Lenders, shall take or cause to be taken all required environmental
response, removal, corrective or remedial actions in accordance with all
Environmental Laws. The Borrowers shall promptly give written notice to the
Agent of receipt of any written notice of violation or noncompliance, order or
request for information from any Governmental Authority with respect to any
Environmental Law, and shall promptly remedy any breach of any Environmental Law
by Borrowers or their Subsidiaries that could be reasonably expected to result
in a Material Adverse Effect. The Agent shall have the right to enter upon the
Realty or other property owned, leased or operated by any Borrower or any
Subsidiary, or any part thereof (through its employees and/or agents), to verify
compliance by Borrowers and their Subsidiaries with the terms of this Agreement
and to conduct such environmental assessments and audits as Agent shall deem
advisable to facilitate such verification at the expense of the Borrowers;
provided, however, EACH BORROWER HEREBY ACKNOWLEDGES THAT ALL HAZARDOUS MATERIAL
HANDLING PRACTICES AND ENVIRONMENTAL PRACTICES AND PROCEDURES ARE THE SOLE
RESPONSIBILITY OF THE BORROWERS, AND THE BORROWERS HAVE FULL DECISION-MAKING
POWER WITH RESPECT THERETO. EACH BORROWER FURTHER ACKNOWLEDGES THAT NEITHER THE
AGENT NOR ANY LENDER IS AN ENVIRONMENTAL CONSULTANT, ENGINEER, INVESTIGATOR OR
INSPECTOR OF ANY TYPE WHATSOEVER. NO ACT (OR DECISION NOT TO ACT) OF THE AGENT
OR ANY LENDER RELATED TO THIS AGREEMENT OR ANY LOAN DOCUMENT SHALL GIVE RISE TO
ANY OBLIGATION OR LIABILITY ON THE PART OF THE AGENT OR ANY LENDER WITH RESPECT
TO ENVIRONMENTAL MATTERS. IN NO EVENT SHALL ANY INFORMATION OBTAINED FROM THE
AGENT OR ANY LENDER OR THEIR RESPECTIVE AGENTS PURSUANT TO THIS AGREEMENT OR ANY
LOAN DOCUMENT CONCERNING THE ENVIRONMENTAL CONDITION OF THE REALTY OR OTHER
PROPERTY BE CONSIDERED BY THE BORROWERS OR ANY SUBSIDIARY (OR ANY OTHER
RECIPIENT OF SAID INFORMATION) AS CONSTITUTING LEGAL OR ENVIRONMENTAL
CONSULTING, ENGINEERING, INVESTIGATING OR INSPECTING ADVICE, AND NO BORROWER NOR
ANY SUBSIDIARY (NOR ANY OTHER RECIPIENT OF SAID INFORMATION) SHALL RELY ON SAID
INFORMATION. THE RESPONSIBILITY FOR COMPLIANCE WITH ENVIRONMENTAL LAWS RESTS
SOLELY WITH THE BORROWERS AND THEIR SUBSIDIARIES.
6.16. Subsidiaries or Partnerships. Except as otherwise permitted by the
terms of this Agreement, (a) become a partner or joint venturer in any
partnership or joint venture or (b) create or acquire any new Subsidiary.
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6.17. New Business. Engage in any business other than the business in
which they are currently engaged or a business reasonably related thereto, or
make any material change in their business objectives.
6.18. Fiscal Year. Change their fiscal year from a fiscal year ending
December 31 unless (i) the Borrowers give the Agent written notice of its
intention to change such fiscal year at least sixty (60) days prior thereto, and
(ii) the Borrowers, the Agent and the Lenders shall have amended this Agreement
to make any changes in the financial covenants and other terms and conditions of
this Agreement, to the extent necessary in the Lenders' reasonable determination
to reflect the new fiscal year end.
6.19. Amendments; Prepayments of Debt, Etc. (a) Amend in any respect
their certificates or articles of incorporation except in connection with the
transactions permitted pursuant to this Agreement; or (b) except with respect to
the Indebtedness created under the Loan Documents, (i) amend or modify (or
permit the amendment or modification of) any of the terms or provisions of any
Indebtedness, including the Senior Secured Notes, for money borrowed or any
agreement related thereto or (ii) make any voluntary or optional prepayment or
redemption or acquisition for value of (including, without limitation, by way of
depositing with any trustee with respect thereto money or securities before due
for the purpose of paying when due), or exchange, any Indebtedness, including
without limitation, the Senior Secured Notes; provided, however, the Borrowers
may make prepayments of their indebtedness under the Senior Secured Notes after
September 30, 1997 and so long as there neither exists at the time of, nor
results from, such prepayment: (w) any Default or Event of Default, (x) any
Borrowing under the Revolving Credit Facility, (y) Letter of Credit Outstandings
in an aggregate amount greater than $5,000,000, no portion of which shall be
attributable to Foreign Subsidiary Letters of Credit, or (z) Intercompany Loans,
excluding Foreign Subsidiary Letters of Credit, in an aggregate amount greater
than $5,000,000, and provided further that the Borrowers send to the Agent and
the Lenders, at least 15 days prior to such prepayment, written notice of such
prepayment, accompanied by a certificate from the Borrowers and each Borrower's
chief executive officer or senior financial officer to the effect that each of
the conditions of this SECTION 6.19 to the prepayment of any indebtedness under
the Senior Secured Notes has been met.
6.20. Location of Assets. Maintain any Inventory at any location other
than the locations set forth on SCHEDULE 4.16.
6.21. Receivables Documents. Remove the billing and related records
relating to Accounts Receivable from the locations set forth on SCHEDULE 4.16.
ARTICLE VII
EVENTS OF DEFAULT
7.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":
(a) The Borrowers fail to pay when due any principal, interest or fees
on the Obligations;
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(b) The Borrowers fail or neglect to observe, perform or comply with any
term, provision, condition or covenant contained in (i) SECTIONS 2.14, 5.3(a),
5.6 or 5.12 or any of the Sections of ARTICLE VI of this Agreement, or (ii)
SECTIONS 5.1 or 5.2 within ten (10) days after notice from the Agent thereof;
provided that the Agent shall only be required to give notice of any Default
under each of SECTION 5.1 and 5.2 one time and thereafter no further cure
periods will be required or available for future Defaults under such Sections.
(c) Any Borrower or any Subsidiary fails or neglects to observe, perform
or comply with any term, provision, condition or covenant contained in this
Credit Agreement except those enumerated in subsections (a) or (b) above, and
the same is not cured to the Required Lenders' satisfaction within thirty (30)
days after the Borrowers acquire knowledge thereof;
(d) If any representation or warranty made by or on behalf of any of the
Borrowers or any Subsidiary in this Agreement, in the other Loan Documents or
any certificate, instrument or document delivered in connection therewith, or in
any agreement now existing or hereafter executed between any Borrower or any
Subsidiary and the Agent or any Lender in connection with this Agreement or the
other Loan Documents, shall prove to have been false or incorrect in any
material respect at the time as of which such representation or warranty was
made;
(e) The occurrence of any default or event of default on the part of any
Borrower or any Subsidiary (including specifically, but without limitation,
defaults due to non-payment) under the terms of any agreement, document or
instrument pursuant to which such Borrower or such Subsidiary has incurred any
Indebtedness for money borrowed in excess of $500,000, including without
limitation, the Senior Secured Notes, which default would permit acceleration of
such Indebtedness;
(f) The occurrence of any event of default (after giving effect to
applicable cure periods) under any of the other Loan Documents or in any other
agreement now existing or hereafter executed evidencing or securing any of the
Obligations;
(g) The filing by any Borrower or any Subsidiary of any voluntary
petition seeking liquidation, reorganization, arrangement, readjustment of debts
or for any other relief under the Bankruptcy Code or under any other act or law
pertaining to insolvency or debtor relief, whether state, federal or foreign,
now or hereafter existing;
(h) The filing against any Borrower or any Subsidiary of any involuntary
petition seeking liquidation, reorganization, arrangement, readjustment of debts
or for any other relief under the Bankruptcy Code or under any other act or law
pertaining to insolvency or debtor relief, whether state, federal or foreign,
now or hereafter existing, which petition is not dismissed within sixty (60)
days of the date of filing;
(i) Any Borrower or any Subsidiary ceases to be Solvent, or ceases to
conduct its business substantially as now conducted or is enjoined, restrained
or in any way prevented by court order from conducting all or any material part
of its business affairs;
(j) The entry of a judgment in an amount greater than $200,000 or the
issuance of a warrant of attachment, execution or similar process against any
Borrower or any Subsidiary or any of such Borrower's or Subsidiary's respective
assets, which shall not be dismissed, stayed, discharged or bonded within sixty
(60) days;
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(k) A notice of lien, levy or assessment in excess of $200,000 is filed
of record with respect to all or any portion of the assets of any Borrower or
any Subsidiary by the United States, or any department, agency or
instrumentality thereof, or by any other Governmental Authority, including,
without limitation, the Pension Benefit Guaranty Corporation, or if any taxes or
debts in excess of $200,000 owing at any time or times hereafter to any one of
them becomes a lien or encumbrance upon the Collateral or any other assets of
any Borrower or any Subsidiary in each case and the same is not dismissed,
released or discharged within thirty (30) days after the same becomes a lien or
encumbrance or, in the case of ad valorem taxes, prior to the last day when
payment may be made without material penalty;
(l) A custodian, trustee, receiver or assignee for the benefit of
creditors is appointed or takes possession of all or any material portion of the
Collateral or any other assets of any Borrower or any Subsidiary;
(m) The occurrence of any of the following events, if such event is
reasonably expected to result in a Material Adverse Effect: (i) the happening of
a Reportable Event (notice of which is not waived by the Pension Benefit
Guaranty Corporation) with respect to any Pension Plan; (ii) the termination of
any Pension Plan in a "distress termination" under the provisions of Section
4041 of ERISA; (iii) the appointment of a trustee by an appropriate United
States District Court to administer any Pension Plan; (iv) the institution of
any proceedings by the Pension Benefit Guaranty Corporation to terminate any
Pension Plan or to appoint a trustee to administer any such plan; and (v) the
failure of the Borrowers to notify the Agent promptly upon receipt by the
Borrowers of any notice by the Pension Benefit Guaranty Corporation of the
institution of any proceeding or any other actions by the Pension Benefit
Guaranty Corporation that are reasonably expected to result in the termination
of any such plan;
(n) The occurrence of any material uninsured damage to or material
uninsured loss, theft or destruction of all or substantially all of the
Collateral and other assets of the Borrowers;
(o) A Change of Control shall occur;
(p) All of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall cease to act in
their current capacities with Shop Vac or shall cease to manage the business
operations of Shop Vac; or
(q) A Material Adverse Change.
ARTICLE VIII
RIGHTS AND REMEDIES AFTER EVENT OF DEFAULT
8.1. Remedies: Termination of Commitments, Acceleration, etc. Upon and
at any time after the occurrence and during the continuance of any Event of
Default, the Agent shall at the direction, or may with the consent, of the
Required Lenders, take any or all of the following actions at the same or
different times:
(a) Declare the Commitments of each Lender, and the Issuing Bank's
obligation to issue Letters of Credit, to be terminated, whereupon the same
shall terminate (provided that, upon the occurrence of an Event of Default
pursuant to SECTIONS 7.1(1), (j) or (k), all of the
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Commitments, together with the Issuing Bank's obligation to issue Letters of
Credit, shall automatically be terminated);
(b) Declare all or any part of the outstanding principal amount of the
Loans, all unpaid interest accrued thereon, and all other amounts payable under
this Agreement, the Notes and the other Loan Documents to be immediately due and
payable, whereupon such outstanding principal amounts, accrued interest and
other such amounts shall become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by each
Borrower (provided that, upon the occurrence of an Event of Default pursuant to
SECTIONS 7.1(g), (h) or (m), all of such outstanding principal amounts, accrued
interest and other such amounts shall automatically become immediately due and
payable);
(c) Direct the Borrowers to deliver (and each Borrower hereby agrees,
upon receipt of notice of such direction from the Agent, to deliver) to the
Agent from time to time such additional amount of cash as is equal to the
aggregate Stated Amount of all Letters of Credit then outstanding (whether or
not any beneficiary under any Letter of Credit shall have drawn or be entitled
at such time to draw thereunder), such amount to be held by the Agent in the
Cash Collateral Account as security for the Borrowers' Reimbursement Obligations
as described in SECTION 2.17(i); and
(d) Exercise all rights and remedies available to it under this
Agreement, the other Loan Documents and applicable law,
8.2. Right of Set-off. The Agent and each Lender may, and are hereby
authorized by each Borrower, at any time and from time to time, to the fullest
extent permitted by applicable law, without advance notice to the Borrowers (any
such notice being expressly waived by each Borrower) and irrespective of demand
for payment, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held in other than a fiduciary
account and any other indebtedness at any time owing by such Lender to or for
the credit or the account of any Borrower against any or all of the Obligations
now or hereafter existing, whether or not such Obligations have matured. The
Agent agrees to notify the Borrowers after any such setoff or application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.
8.3. Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of
the Agent's and the Lenders' rights and remedies set forth in this Agreement is
not intended to be exhaustive, and the exercise by the Agent or any Lender of
any right or remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative, and shall be in addition to any
other right or remedy given hereunder, under the Loan Documents or under any
other agreement between the Borrowers or any Subsidiary and the Agent or the
Lenders or that may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Agent or any
Lender in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Borrowers or any Subsidiary
and the Agent or the Lenders or their agents or employees shall be effective to
change, modify or discharge any provision of this Agreement or any of the other
Loan Documents or to constitute a waiver of any Event of Default.
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ARTICLE IX
THE AGENT
9.1. Appointment. The Lenders and the Issuing Bank (for purposes of this
Article, any reference to the Lenders or any Lender shall be deemed also to
include a reference to the Issuing Bank) hereby designate and appoint First
Union as Agent to act as specified herein and in the other Loan Documents. Each
Lender hereby authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed to authorize, the Agent to take such action as agent on its
behalf under the provisions of this Agreement and the other Loan Documents and
any other instruments and agreements referred to herein or therein, and to
exercise such powers and to perform such duties hereunder and thereunder, as are
specifically delegated to or required of the Agent by the terms hereof or
thereof and such other powers as are reasonably incidental thereto. The Agent
may execute any of its duties under this Agreement or any other Loan Document by
or through agents or attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact that it selects with
reasonable care.
9.2. Nature of Duties. The Agent shall have no duties or
responsibilities other than those expressly set forth in this Agreement and the
other Loan Documents. Neither the Agent nor any of its officers, directors,
employees or agents shall be liable for any action taken or omitted by it or
them as such hereunder or under any other Loan Document or in connection
herewith or therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement or any other Loan
Document a fiduciary relationship in respect of any Lender or the holder of any
Note; and nothing in this Agreement or any other Loan Document, express or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligations or liabilities in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein:
9.3. Absence of Reliance on the Agent.
(a) Each Lender acknowledges that neither the Agent nor any of its
officers, directors, employees or agents has made any representation or warranty
to it and that no act by the Agent hereinafter taken, including any review of
the affairs of the Borrowers and their Subsidiaries, shall be deemed to
constitute any representation or warranty by the Agent to any Lender.
(b) Each Lender acknowledges that, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed and may deem appropriate, (i) it has made its own appraisal of
and investigation into the business, prospects, operations, properties,
financial and other condition and creditworthiness of the Borrowers and their
Subsidiaries in connection with its decision to enter into this Agreement and
extend credit to the Borrowers hereunder, and (ii) it will continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
hereunder.
(c) Except as expressly provided in this Agreement, the Agent shall have
no duty or responsibility, either initially or on a continuing basis, to provide
any Lender or the holder of any
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Note with any credit or other information concerning the business, prospects,
operations, properties, financial or other condition or creditworthiness of the
Borrowers, their Subsidiaries or any other Person that may come into its
possession, whether before the making of the initial Loans, the participation in
the initial Letters of Credit, or at any time or times thereafter.
(d) The Agent shall not be responsible to any Lender or the holder of
any Note for any recitals, statements, information, representations or
warranties herein or in any other Loan Document or in any document, instrument,
certificate or other writing delivered in connection herewith or therewith or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, priority or sufficiency of this Agreement or any other Loan Document
or the financial condition of the Borrowers, their Subsidiaries or any other
Person, or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
any other Loan Document, or the financial condition of the Borrowers, their
Subsidiaries or any other Person or the existence or possible existence of any
Default or Event of Default.
(e) The Agent shall be under no obligation or duty to take any action
under this Agreement or any other Loan Document if taking such action (i) would
subject the Agent to a tax in any jurisdiction where it is not then subject to a
tax, (ii) would require the Agent to qualify to do business in any jurisdiction
where it is not then so qualified, unless the Agent receives security or
indemnity satisfactory to it against any tax or other liability in connection
with such qualification or resulting from the taking of such action in
connection therewith, or (iii) would subject the Agent to in personam
jurisdiction in any location where it is not then so subject.
9.4. Certain Rights of the Agent. If the Agent shall request
instructions from the Required Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, the Agent shall be entitled to refrain from such act or taking such
action unless and until it shall have received such instructions, and the Agent
shall incur no liability by reason of so refraining. The Agent shall not be
obligated to take any action hereunder or under any other Loan Document (i) if
such action would, in the reasonable opinion of the Agent, be contrary to
applicable law or this Agreement or the other Loan Documents, (ii) if it shall
not receive such advice or concurrence of the Required Lenders as it reasonably
deems appropriate or (iii) if it shall not first be indemnified to its
satisfaction by the Lenders requesting such action against any and all liability
and expense that may be incurred by it by reason of taking or continuing to take
any such action. Without limiting the foregoing, no Lender or holder of any Note
shall have any right of action whatsoever against the Agent as a result of the
Agent's acting or refraining from acting hereunder or under any other Loan
Document in accordance with the instructions of the Required Lenders.
9.5. Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, other than any
Default or Event of Default arising out of the failure to pay any principal,
interest, fees or other amounts payable to the Agent for the account of the
Lenders, unless the Agent has received written notice from the Borrowers or a
Lender describing such Default or Event of Default and stating that such notice
is a "notice of default." In the event that the Agent receives such a notice,
the Agent shall give notice thereof to the Lenders as soon as reasonably
practicable; provided, however, that if any such notice has also been furnished
to the Lenders, the Agent shall have no obligation to notify the Lenders with
respect thereto. Each Lender shall promptly give the Agent such a notice upon
its actual knowledge of a Default or an Event of Default; provided, however,
that the failure of
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any Lender to deliver such notice in the absence of gross negligence or willful
misconduct shall not affect its rights hereunder or under the other Loan
Documents.
9.6. Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, consent, certificate, telex, teletype or facsimile message, order or
other documentary, teletransmission or telephone message believed by it in good
faith to be genuine and correct and to have been signed, sent or made by the
proper Person. The Agent may consult with legal counsel (including counsel for
the Borrowers), independent public accountants and other experts selected by it
with respect to all matters pertaining to this Agreement and the other Loan
Documents and its duties hereunder and thereunder and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
9.7. Indemnification. To the extent the Agent is not reimbursed by or on
behalf of the Borrowers, and without limiting the obligation of the Borrowers to
do so, the Lenders will reimburse and indemnify the Agent, in proportion to
their respective percentages as used in determining the Required Lenders, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including attorneys' fees and
expenses) or disbursements of any kind or nature whatsoever that may at any time
(including at any time following the indefeasible repayment in full of the
Loans) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Loan Document or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing, and in particular
will reimburse the Agent for out-of-pocket expenses promptly upon demand by the
Agent therefor; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements finally determined by a court
of competent jurisdiction and not subject to any appeal (or pursuant to
arbitration as set forth in SECTION 10.3(b)) to have resulted from the Agent's
gross negligence or willful misconduct.
9.8. The Agent in its Individual Capacity. With respect to its
Commitments, the Loans made by it and the Notes issued to it, the Agent shall
have the same rights and powers under the Loan Documents as any other Lender or
holder of a Note and may exercise the same as though it were not performing the
agency duties specified herein; and the terms "Lenders," "Required Lenders,"
"holders of Notes" and any similar terms shall, unless the context clearly
otherwise, indicates, include the Agent in its individual capacity. The Agent
may accept deposits from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with the Borrowers or any
of their Subsidiaries or any of their respective Affiliates as if it were not
performing the agency duties specified herein, and may accept fees and other
consideration from the Borrowers for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
9.9. Holders. The Agent may deem and treat the payee of any Note as the
holder thereof for all purposes hereof unless and until a written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have been
filed with the Agent. Any request, authority or consent of any Person that, at
the time of making such request or giving such authority or consent, is the
holder of any Note, shall be conclusive and binding on any subsequent holder,
transferee, assignee or endorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
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9.10. Successor Agent. The Agent may resign at any time upon sixty (60)
days' prior written notice to the Borrowers and the Lenders. The Agent may be
removed with or without cause by the Required Lenders (and, so long as no
Default or Event of Default has occurred and is continuing, with the consent of
the Borrowers, which consent shall not be unreasonably withheld), at any time
upon sixty (60) days' prior written notice to the Borrowers and the Agent. Such
resignation or removal, as the case may be, shall take effect upon the
appointment of a successor Agent as provided hereinbelow. Upon any such notice
of resignation or removal (and, in the case of removal, upon the consent of the
Borrowers, if required as provided hereinabove), the Required Lenders (so long
as no Default or Event of Default has occurred and is continuing, with the
consent of the Borrowers, which consent shall not be unreasonably withheld) will
appoint from among the Lenders a successor Agent. If no successor Agent shall
have been appointed within such sixty-day period, the Agent may appoint, after
consulting with the Lenders and the Borrowers, a successor agent from among the
Lenders, who shall serve as Agent until such time, if any, as the Required
Lenders shall have appointed a successor Agent as provided hereinabove. Upon the
written acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. After any retiring Agent's resignation as Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent.
9.11. Collateral Matters.
(a) The Agent is hereby authorized on behalf of all the Lenders, without
the necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral that may be necessary to perfect and maintain perfected the liens
upon the Collateral granted pursuant to the Loan Documents.
(b) The Lenders hereby irrevocably authorize the Agent, at its option
and in its discretion, to release any lien granted to or held by the Agent upon
any Collateral (i) upon termination of the Commitments and indefeasible payment
in full of all Obligations, (ii) constituting property sold or to be sold or
disposed of as part of or in connection with a disposition permitted hereunder,
(iii) constituting property in which neither the Borrowers nor any Subsidiary
owned any interest at the time such lien was granted or at any time thereafter
or (iv) if approved, authorized or ratified in writing by the Lenders or the
Required Lenders, as may be required with respect to any such release in
accordance with SECTION 10.8(b). Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent's authority to release Collateral
pursuant to this subsection (b).
ARTICLE X
MISCELLANEOUS
10.1. Survival. The representations and warranties made by or on behalf
of any Borrower or any Subsidiary in this Agreement and in each other Loan
Document shall survive the execution and delivery of this Agreement and each
such other Loan Document. Notwithstanding any other provision herein or anything
provided or implied by law to the contrary, no termination or cancellation
(regardless of cause or procedure) of the Commitments,
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this Agreement or any of the other Loan Documents shall in any way affect or
impair the rights and obligations of the parties hereto with respect to any of
the provisions of (i) SECTION 10.3, (ii) SECTION 2.15 or (iii) this Agreement
and the other Loan Documents relating to indemnification or payment of costs and
expenses, including, without limitation, all of the provisions of SECTIONS
2.11(a), 2.41(b), 2,12, 2.13, 2.17(b), 9.7, 10.6 and 10.7, and, in each case,
such provisions shall survive any such termination or cancellation and the
making and repayment of the Loans.
10.2. Governing Low, Consent to Jurisdiction. THIS AGREEMENT HAS BEEN
EXECUTED, DELIVERED AM) ACCEPTED AT, AND SHALL BE DEEMED TO HAVE BEEN MADE IN,
NORTH CAROLINA AM) SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
CONFLICTS OF LAW PROVISIONS) OF THE STATE OF NORTH CAROLINA; PROVIDED THAT EACH
LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT OR, IF NO
SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR
DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED
THEREBY, THE INTERNAL LAWS OF THE STATE OF NORTh CAROLINA. AS PART OF THE
CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, EACH BORROWER HEREBY CONSENTS TO
THE JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA OR
ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH
CAROLINA FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER LOAN
DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS, OR ANY PROCEEDING TO WHICH THE AGENT, THE ISSUING BANK,
ANY LENDER OR ANY BORROWER IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING
OUT OF, OR IN CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE ISSUING BANK,
ANY LENDER OR ANY BORROWER. EACH BORROWER IRREVOCABLY AGREES TO BE BOUND
(SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF
GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK
OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
SUCH PROCEEDING. EACH BORROWER CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT ITS ADDRESS SET FORTH
HEREINBELOW, AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE
EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. NOTHING IN THIS
SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
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10.3. Waiver of Jury Trial. (a) EACH BORROWER AND, BY ITS ACCEPTANCE OF
THE BENEFITS HEREOF, THE AGENT, THE ISSUING BANK AND EACH LENDER, HEREBY WAIVE,
TO THE EXTENT PERMITTED BY APPLICABLE LAW THEIR RESPECTIVE RIGHTS TO TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY PROCEEDING TO WHICH THE
AGENT, THE ISSUING BANK, ANY LENDER OR ANY BORROWER IS A PARTY, INCLUDING ANY
ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT,
THE ISSUING BANK, ANY LENDER OR ANY BORROWER. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. The Borrowers and, by its acceptance of
the benefits hereof, each of the Agent, the Issuing Bank and the Lenders, (i)
acknowledge that this waiver is a material inducement to enter into a
business relationship, that it has relied on this waiver in entering into this
Agreement or ???? the benefits hereof, as the case may be, and that it will
continue to rely on this waiver its ??? related future dealings with the other
parties hereto, and (ii) further warrants and represents that it has reviewed
this waiver with its legal counsel and that, based upon such review, it
knowingly and voluntarily waives its jury trial rights to the extent permitted
by applicable law. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, MODIFICATIONS OR SUPPLEMENTS TO OR RESTATEMENTS OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(b) IN THE EVENT THAT THE WAIVER OF JURY TRIAL HEREIN SHALL BE
DETERMINED TO BE INVALID OR UNENFORCEABLE AS A MATTER OF LAW WITH RESPECT TO ANY
PARTY, THE PROVISIONS OF THIS SECTION 10.3(b) SHALL APPLY. Upon demand of any
party hereto, whether made before or after institution of any judicial
proceeding, any judicial proceeding, any dispute, claim or controversy arising
out of, connected with or relating to this Agreement and other Loan Documents
("Disputes") between or among the parties to this Agreement shall be resolved by
binding arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims, counterclaims, disputes
as to whether a matter is subject to arbitration, claims brought as class
actions, claims arising from Loan Documents executed in the future, or claims
arising out of or connected with the transaction reflected by this Agreement.
Arbitration shall be conducted under the governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in Mecklenburg County, North Carolina.
The expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules
shall be applicable to claims of less that $1,000,000. All applicable statutes
of limitation shall apply to any Dispute. A judgement upon the award may be
entered in any court having jurisdiction. The panel from which all arbitrators
are selected shall be comprised of licensed attorneys. The single arbitrator
selected for expedited procedure shall be a retired
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judge from the highest court of general jurisdiction, state or federal, of the
state where the hearing will be conducted or if such person is not available to
serve, the single arbitrator may be a licensed attorney. Notwithstanding the
foregoing, this arbitration provision does not apply to disputes under or
related to swap agreements.
Notwithstanding the preceding binding arbitration provisions, Agent, the
Lenders and the Borrowers agree to preserve, without diminution, certain
remedies that any party hereto may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration action is
brought. Agent, the Lenders and the Borrowers shall have the right to proceed in
any count of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted
under Loan Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtain provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
Agent, the Lenders and the Borrowers agree that they shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
10.4. Notice. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:
If to the Borrowers: Shop Vac Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & Sinon, LLP
One South Market Square
Dauphin Building, 12th Floor
Harrisburg, Pennsylvania 17108-1146
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Agent
or the Issuing Bank: First Union National Bank of
North Carolina
Leveraged Finance Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: First Union Corporation
Leveraged Finance Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: At the address set forth on its signature page hereto
or to such other address as any party may designate for itself by like notice to
all other parties hereto. All such notices and communications shall be deemed to
have been given (i) if mailed as provided above by any method other than
overnight delivery service, on the third Business Day after deposit in the
mails, (ii) if mailed by overnight delivery service, telegraphed, telexed,
telecopied or cabled, when delivered for overnight delivery, delivered to the
telegraph company, confirmed by telex answerback, transmitted by telecopier or
delivered to the cable company, respectively, or (iii) if delivered by hand,
upon delivery; provided that notices and communications to the Agent shall not
be effective until received by the Agent. Each Borrower hereby appoints and
authorizes Shop Vac Corporation to act as the Borrowers' representative for the
purpose of receiving and delivering notices, including without limitation
notices set forth in EXHIBITS ▇-▇, ▇-▇, ▇-▇, D, E, F, G and H, and to act on
behalf of all Borrowers hereunder. Notice to Shop Vac Corporation shall be
deemed to be notice to all Borrowers.
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10.5. Assignments, Participations.
(a) With the prior consent of the Agent and the Borrowers, which consent
shall not be unreasonably withheld, each Lender may assign to one or more other
Persons all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments, the
outstanding Loans made by it and the Note or Notes held by it); provided,
however, that (i) each such assignment shall be of an equal, pro rata percentage
of such Lender's rights and obligations (including its Commitments) under each
Facility, (ii) except in the case of an assignment to an Affiliate of such
Lender or a Person that, immediately prior to such assignment, was a Lender, the
amount of the Commitments of such assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
with respect to each such assignment) shall in no event be less than the lesser
of (y) the aggregate Commitments of such Lender immediately prior to such
assignment or (z) $5,000,000, (iii) each such assignment shall be to an Eligible
Assignee, and (iv) the parties to each such assignment will execute and deliver
to the Agent, for its acceptance and recording in the Register, an Assignment
and Acceptance, together with any Note or Notes subject to such assignment, and
will pay a processing fee of $3,000 to the Agent for its own account. Upon such
execution, delivery, acceptance and recording of the Assignment and Acceptance,
from and after the effective date specified therein (a) the assignee thereunder
shall be deemed a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of such Lender hereunder with respect
thereto, and (b) the assigning Lender 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 such assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender and the assignee thereunder confirm to and agree, with each
other and with the other parties hereto, as follows: (i) other than as may be
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished hereto or pursuant
thereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or any of their Subsidiaries or the performance o observance by the
Borrowers or any of their Subsidiaries of any of their respective obligations
under this Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; (iii) such assignee confirms that
it has received a copy of this Agreement, together with copies of the Financial
Statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Agreement; (iv)
such assignee will, independently and without reliance upon the Agent, the
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints
and authorizes the 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 and any other instruments and agreements referred to herein or
therein, and to exercise such powers and to perform such
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duties hereunder and thereunder, as are specifically delegated to or required of
the Agent by the terms hereof or thereof and such other powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Agent will maintain 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 Lenders and the Commitments of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrowers, the Agent, the Issuing Bank and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers, the Issuing Bank or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, together with any Note or Notes subject to
such assignment, the Agent will, if such Assignment and Acceptance has been
completed and is in substantially the form of EXHIBIT D, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give notice thereof to the Borrowers. Within five (5)
Business Days after its receipt of such notice, the Borrowers, at their own
expense, will execute and deliver to the Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to the Commitment or Commitments assumed by it pursuant to such Assignment
and Acceptance and, to the extent the assigning Lender has retained its
Commitments hereunder, a new Note or Notes to the order of the assigning Lender
in an amount equal to the Commitment or Commitments 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 forms of EXHIBITS A-1 and A-2, as appropriate.
(e) Each Lender may sell to one or more other Persons participations in
any portion comprising less than all of its rights and obligations under this
Agreement (including, without limitation, a portion of its Commitments, the
outstanding Loans made by it and the Note or Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrowers, the Issuing Bank, the Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (iv)
any such participation shall be in an amount of not less than $5,000,000, (v) no
Lender shall sell any participation that, when taken together with all other
participations, if any, sold by such Lender, covers all of such Lender's rights
and obligations under this Agreement (including, without limitation, all of its
Commitments, the outstanding Loans made by it and the Note or Notes held by it),
(vi) each such participation shall be of an equal, pro rata percentage of such
Lender's rights and obligations (including its Commitments) under each Facility,
and (vii) no Lender shall permit any participant to have any voting rights or
any right to control the vote of such Lender with respect to any amendment,
modification, waiver, consent or other action hereunder or under any other Loan
Document except as to actions of the type described in SECTION 10.8(a). In the
case of a participation, the participant shall not have any rights under this
Agreement or any of the other Loan Documents, the participant's rights against
the granting Lender in respect of such participation to be those set
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forth in the participation agreement, and all amounts payable by the Borrowers
hereunder shall be determined as if such Lender had not sold such participation;
provided, however, that each such participant shall have the rights of a Lender
for purposes of SECTIONS 2.11(a), 2.11(b), 2.12, 2.13 and 8.2, and shall be
entitled to the benefits thereto, to the extent that the Lender selling such
participation would be entitled to such benefits if the participation had not
been sold.
(f) With the prior consent of the Required Lenders and the Borrowers,
which consent shall not be unreasonably withheld, the Issuing Bank may assign
all, but not less than all, of its rights and obligations as Issuing Bank under
this Agreement, including, without limitation, its commitment to issue Letters
of Credit, to any Eligible Assignee, and upon acceptance of such assignment, the
successor Issuing Bank shall succeed to such rights and obligations and the
assigning Issuing Bank shall be discharged therefrom.
(g) The Agent, the Issuing Bank and each Lender may, in connection with
any assignment or participation or proposed assignment or participation pursuant
to this Section , disclose to the assignee or participant, or proposed assignee
or participant, any information relating to the Borrowers and their Subsidiaries
furnished to it by or on behalf of any other party hereto, provided that such
assignee or participant or proposed assignee or participant agrees in writing to
the Agent, the Issuing Bank or such Lender, as the case may be, to keep such
information confidential to the same extent required of the Lenders under
SECTION 10.17.
10.6. Fees and Expenses. Whether or not the transactions contemplated by
this Agreement shall be consummated, the Borrowers shall be jointly and
severally obligated:
(a) to pay or reimburse the Agent upon demand and after notice in
accordance with SECTION 10.4 for all reasonable and documented expenses
(including, without limitation, reasonable attorneys' fees, but excluding
salaries of the Agent's regularly employed personnel and overhead) incurred or
paid by the Agent in connection with: (i) the preparation, execution, delivery,
interpretation, modification, amendment or termination of this Agreement or the
other Loan Documents or any consent or waiver requested by the Borrowers
hereunder or thereunder; (ii) charges for appraisers, examiners, environmental
consultants, auditors or similar Persons whom the Agent may, if then authorized
to do so hereunder, engage with respect to rendering opinions concerning the
financial condition of the Borrowers and their Subsidiaries; and (iii) any
commercially reasonable attempt to inspect, verify, protect, preserve, collect,
sell, liquidate or otherwise dispose of the Collateral or any other assets of
any of the Borrowers, including without limitation, the Agent's normal and
customary Collateral audits;
(b) to pay or reimburse the Agent and each Lender upon demand and after
notice in accordance with SECTION 10.4 for all reasonable and documented
expenses (including, without limitation, reasonable attorneys' fees, but
excluding salaries of the Agent's or such Lender's regularly employed personnel
and overhead) incurred or paid by the Agent or such Lender in connection with:
(i) any litigation, contest, dispute, suit or proceeding or action (whether
instituted by the Agent, the Lenders, or any of them, the Borrowers or any other
Person) in any way relating to this Agreement or the other Loan Documents or to
any Borrower's or any Subsidiary's affairs (other than a dispute solely between
or among the Lenders); (ii) any attempt by the Agent or such Lender to enforce
any of its rights against the Borrowers or any other Person that may be
obligated to the Agent or such Lender by virtue of this Agreement or the other
Loan Documents: and (iii) any refinancing or restructuring of the credit
arrangement
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provided under this Agreement in the nature of a "work-out" or in any insolvency
or bankruptcy proceeding;
(c) to pay and hold the Agent and each Lender harmless from and against
any and all liability and loss with respect to or resulting from the nonpayment
or delayed payment of any and all intangibles, documentary stamp and other
similar taxes, fees and excises, if any, including any interest and penalties,
that may be, or be determined to be, payable in connection with the transactions
contemplated by this Agreement and the other Loan Documents or in any
modification hereof or thereof; and
(d) to pay and hold the Agent and each Lender harmless from and against
any and all finder's or brokerage fees and commissions that may be payable in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, other than any fees or commissions of finders or brokers engaged
by the Agent or any Lender.
10.7. Indemnification. From and at all times after the date of this
Agreement, and in addition to the costs and expenses payable under SECTION 10.6
and all of the Agent's and the Lenders' other rights and remedies against the
Borrowers, the Borrowers jointly and severally agree to indemnify and hold
harmless the Agent, the Issuing Bank and each Lender and each of their
directors, officers, employees, agents and Affiliates (each, an "Indemnified
Person") against any and all claims, losses, damages, liabilities, costs and
expenses of any kind or nature whatsoever, including, without limitation,
attorneys' fees, costs and expenses (collectively, "Indemnified Costs") incurred
by or asserted against any such Indemnified Person from and after the date
hereof, whether direct, indirect or consequential, as a result of or arising
from or in any way relating to any suit, action or proceeding (including any
inquiry or investigation) by any Person, whether threatened or initiated,
asserting a claim for any legal or equitable remedy under any statute or
regulation, including, without limitation, any federal or state securities laws,
or under any common law or equitable cause or otherwise, arising from or in
connection with the negotiation, preparation, execution, performance or
enforcement of this Agreement or the other Loan Documents or any of the
transactions contemplated herein or therein, and including, without limitation,
Environmental Claims, whether or not such Indemnified Person is a party to any
such action, proceeding or suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Person shall have the
right to be indemnified hereunder for any Indemnified Costs resulting primarily
from the gross negligence or willful misconduct of such Indemnified Person (as
finally determined by a court of competent jurisdiction or pursuant to
arbitration as set forth in SECTION 10.3). All of the foregoing losses, damages,
costs and expenses of any Indemnified Person shall be payable by the Borrowers,
as and when incurred and upon demand, and shall be additional Obligations
hereunder. In the event that the foregoing indemnity is unavailable or
insufficient to hold each Indemnified Person harmless, then the Borrowers will
contribute to amounts paid or payable by such Indemnified Persons in respect of
their losses, claims, damages or liabilities in such proportions as
appropriately reflect the relative benefits received by and fault of the
Borrowers and such Indemnified Persons in connection with the matters as to
which such losses, claims, damages or liabilities relate and other equitable
considerations.
10.8. Amendments, Waivers, Etc. Except as may be otherwise specifically
set forth in this Agreement or the other Loan Documents, neither this Agreement
nor any other Loan Document nor any provision hereof or thereof may be amended,
modified, waived, discharged or terminated, and no consent to any departure by
the Borrowers from any provision hereof or
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thereof may be given, except in a writing signed by the Required Lenders;
provided, however, that:
(a) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of each Lender holding Obligations directly
affected thereby, (i) reduce the principal amount of, or rate of interest on,
any Loan, or reduce any fees or other Obligations (other than fees payable to
the Agent for its own account) or any obligations of any Person now or hereafter
primarily or contingently liable with respect to the Obligations or (ii)
postpone any date fixed for any payment of principal, interest (other than
additional interest payable under SECTION 2.6(b) during the continuance of an
Event of Default), fees (other than fees payable to the Agent for its own
account) or any other Obligations;
(b) no such amendment, modification, waiver, discharge, termination or
consent shall, without the consent of all Lenders, (i) increase the Commitments
of any Lender (it being understood that a waiver of any Default or Event of
Default or of any mandatory reduction in either Total Commitment shall not
constitute such an increase), (ii) change the definition of "Required Lenders"
or otherwise change the number or percentage of Lenders that shall be required
for the Lenders or any of them to take or approve, or direct the Agent to take,
any action hereunder, (iii) amend, modify or waive any of the provisions for
extending, or take action to extend, the term of the Revolving Credit Facility
(iv) affect the obligation of the Lenders having Revolving Credit Commitments to
become L/C Participants, (v) amend any provision of this Section , (vi) release
all or substantially all of the Collateral or (vii) consent to the assignment or
transfer by the Borrowers, or by any other Person now or hereafter primarily or
contingently liable with respect to the Obligations, of any of its rights and
obligations under this Agreement or any of the other Loan Documents;
(c) no provision relating to the rights or obligations of the Issuing
Bank under this Agreement or any of the other Loan Documents may be amended,
modified or waived without the consent of the Issuing Bank; and
(d) no provision relating to the rights or obligations of the Agent
under this Agreement or any of the other Loan Documents may be amended, modified
or waived without the consent of the Agent.
10.9. Rights and Remedies Cumulative, Non-waiver, etc. The enumeration
of the Agent's and the Lenders' rights and remedies set forth in this Agreement
and the other Loan Documents is not intended to be exhaustive, and the exercise
by the Agent or any Lender of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative, and
shall be in addition to any other right or remedy given hereunder, under the
other Loan Documents or under any other agreement between the Borrowers and the
Lenders, or any of them (or the Agent on their behalf), or that may now or
hereafter exist in law or in equity or by suit or otherwise. No delay or failure
to take action on the part of the Agent or any Lender in exercising any right,
power or privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Event of Default. No course of dealing
between any of the Borrowers and the Agent or the Lenders or their agents or
employees shall be effective to change, modify or discharge any provision of
this Agreement or to constitute a waiver of any Event of Default. No notice to
or demand upon the Borrowers in any case shall entitle the Borrowers to any
other or further notice
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or demand in similar or other circumstances or constitute a waiver of the right
of the Agent or any Lender to exercise any right or remedy or take any other or
further action in any circumstances without notice or demand.
10.10. Binding Effect, Assignment. All of the terms of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the Borrower, the Agent, the Issuing Bank
and each Lender; provided, however, that (i) assignments may be made only if
permitted, and on the terms set forth in this Agreement, (ii) the Borrowers may
not sell, assign or transfer this Agreement or any portion hereof or thereof,
including, without limitation, any of its rights, title, interests, remedies,
powers and duties hereunder or thereunder and (iii) any assignees and
participants of the Lenders and any successor Issuing Bank shall have such
rights and obligations with respect to this Agreement and the other Loan
Documents as are provided for in and pursuant to SECTION 10.5.
10.11. Severability. To the extent any provision of this Agreement is
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
10.12. Entire Agreement. THIS AGREEMENT AND THE DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED CONTEMPORANEOUSLY HEREWITH EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND SUPERSEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO
THE SUBJECT MATTER HEREOF, EXCEPT FOR ANY PRIOR ARRANGEMENTS MADE WITH RESPECT
TO PAYMENT BY THE BORROWERS OF (OR ANY INDEMNIFICATION FOR) ANY FEES, COSTS OR
EXPENSES PAYABLE TO OR INCURRED (OR TO BE INCURRED) BY OR ON BEHALF OF THE
AGENT, THE ISSUING BANK OR ANY LENDER, THE PROVISIONS OF WHICH PRIOR
ARRANGEMENTS ARE HEREBY INCORPORATED INTO THIS AGREEMENT BY THIS REFERENCE. THIS
AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS AND THE INSTRUMENTS AND DOCUMENTS
EXECUTED IN CONNECTION HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
10.13. Interpretation. The captions to the various sections and
subsections of this Agreement have been inserted for convenience only and shall
not limit or affect any of the terms hereof. Unless the context otherwise
requires, words in the singular include the plural and words in the plural
include the singular, and the use of any gender shall be applicable to all
genders.
10.14. Counterparts; Effectiveness. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which shall together constitute one and the same
instrument. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
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10.15. Conflict of Terms. The Exhibits and Schedules hereto and the
other Loan Documents are incorporated in this Agreement by this reference
thereto. Except as otherwise provided in this Agreement and except as otherwise
provided in the other Loan Documents, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision of the other
Loan Documents, the provision contained in this Agreement shall control.
10.16. Injunctive Relief. The Borrowers recognize that in the event they
fail to perform, observe or discharge any of their obligations or liabilities
under this Agreement, any remedy of law may prove to be inadequate relief to the
Agent and the Lenders. The Borrowers therefore agree that the Agent and the
Lenders, if the Agent so requests, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damages in any case
where a remedy at law, in the reasonable opinion of the Required Lenders, may
prove to be inadequate relief.
10.17. Confidentiality. Each Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
non-public confidential information provided in connection with this Agreement
or any other Loan Document and agrees and undertakes that it shall not use any
such information for any purpose or in any manner other than pursuant to the
terms contemplated by this Agreement. Any Lender may disclose such information
(i) to any bank regulatory authority at the request of or in connection with an
examination of such Lender by any such authority, (ii) pursuant to subpoena or
other court process, (iii) when required to do so in accordance with the
provisions of any applicable law to such Persons to whom such disclosure is so
required, (iv) at the express direction of any agency of any State of the United
States of America or of any other jurisdiction in which such Lender conducts its
business, to such agency, (v) to such Lender's independent auditors and other
professional advisors that have a reasonable need or basis for access thereto;
provided they agree to maintain confidentiality and (vi) in order to protect or
enforce their rights hereunder.
10.18. The Borrowers as Co-Obligors.
(a) The Borrowers are accepting the joint and several liability provided
for hereunder in consideration of the financial accommodations provided and to
be provided by the Lenders under this Agreement for the mutual benefit, directly
and indirectly, of the Borrowers and in consideration of each of the
undertakings of each Borrower herein to accept joint and several liability for
their mutual benefit, for the Obligations of each of the other of them.
(b) The Borrowers, jointly and severally as hereinafter described,
hereby irrevocably and unconditionally accept, not merely as surety but also as
co-debtors, joint and several liability with respect to the payment and
performance of all of the Obligations under all of the Loan Documents, it being
the intention of the parties hereto that all the Obligations shall be the joint
and several obligations of all the Borrowers without preference or distinction
among them, except for those obligations expressly set forth as only applying to
a single Borrower.
(c) If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations owed by it as and when due or to
perform any of such Obligations in accordance with the terms thereof, then in
each such event each of the other Borrowers will, forthwith upon demand by the
Lenders, make such payment with respect to, or perform, such obligation pursuant
to the terms thereof.
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(d) Each Borrower hereby acknowledges and consents to all provisions of
each Loan Document. In connection with its obligations under this SECTION 10.18,
each Borrower hereby waives notice of acceptance of the joint and several
liability contained in this SECTION 10.18, notice of any and all Loans made or
of any financial accommodations extended to any Borrower by the Lenders under
any Loan Document, notice of the occurrence of any Default or any Event of
Default or of any demand upon any Borrower for any payment under this Agreement
or any other Loan Documents whether in respect of any Loans or any other
obligation owing hereunder or thereunder, notice of any action at any time taken
or omitted by the Lenders under or in respect of any Loan Document or any of the
Obligations and, generally, all demands, notices, protests and other formalities
of every kind in connection with the joint and several liability contained in
this SECTION 10.18, the other provisions of this Agreement or any provisions of
the other Loan Documents. In connection with its obligations under this SECTION
10.18, each Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by the Lenders at any time or times in respect of any Default by
any Borrower in the performance or satisfaction of any term, covenant, condition
or provision of any Loan Document, any and all other indulgences whatsoever by
the Lenders in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of the Obligations or the addition, substitution or release, in
whole or in part, of any Person or Persons primarily or secondarily liable in
respect of any of the Obligations. Each of the Borrowers also waives: (I) any
right to require the Lenders to (A) proceed against any other person, including
any other Borrower, or (B) pursue any other remedy; and (II) any defense arising
by reason of (A) any disability or other defense of any Borrower, or any other
Person, (B) the cessation from any cause whatsoever, other than payment or
performance in full, of any of the obligations of the Borrowers, or any other
Person, or (C) any act or omission by the Lenders which directly or indirectly
results in or aids the discharge of any Borrower or any Obligation hereunder by
operation of law or otherwise. The obligations of each Borrower under this
SECTION 10.18 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any Borrower or the Lenders. The joint and several
liability of each Borrower in this SECTION 10.18 shall continue in full force
and effect notwithstanding any absorption, merger, amalgamation or any other
change whatsoever in the name, charter, membership, constitution or place of
formation of any Borrower, or any Lender. Each of the Borrowers agrees that each
of the waivers set forth above are made with such Borrower's full knowledge of
their significance and consequences, and such Borrower agrees that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any of said waivers are determined to be contrary to any applicable law
or public policy, such waivers shall be effective only to the extent permitted
by law.
10.19. Post-Closing Matters. The Borrowers will, and will cause each of
their Subsidiaries to, use their reasonable efforts to assist the Agent in the
syndication of the Facilities and the resultant addition of Lenders after the
Closing Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized corporate officers as
of the date first above written.
SHOP VAC CORPORATION
[CORPORATE SEAL] By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
W. ▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice President
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Secretary
FELCHAR MANUFACTURING CORPORATION
[CORPORATE SEAL) By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
W. ▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice President
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Assistant Secretary
(signatures continued)
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▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, AS AGENT
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President
Revolving Credit Commitment: 25,000,000
Address:
First Union National Bank
of North Carolina
Leveraged Finance Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Wiring Instructions:
First Union National Bank
of North Carolina
Charlotte, North Carolina
ABA #▇▇▇▇▇▇▇▇▇
For further credit to:
FUCC Charlotte
Attn: Loan Operations
Account #2070482789126
Regarding: Shop Vac Corporation
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