AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT by and among LSB INDUSTRIES, INC., as Guarantor, THERMACLIME, INC. and
AMENDED
AND RESTATED LOAN
AND SECURITY AGREEMENT
by
and among
LSB
INDUSTRIES, INC.,
as
Guarantor,
THERMACLIME,
INC. and
EACH
OF ITS SUBSIDIARIES
THAT ARE SIGNATORIES HERETO,
as
Borrowers,
THE
LENDERS THAT ARE
SIGNATORIES HERETO
as
the Lenders,
and
▇▇▇▇▇
FARGO FOOTHILL, INC.
as
the Arranger and
Administrative Agent
Dated
as of
[ ][ ],
2007
AMENDED
AND RESTATED LOAN
AND SECURITY AGREEMENT
THIS
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT (this “Agreement”), is entered into
as of [ ][ ], 2007,
between and among, on the one hand, the lenders identified on the signature
pages hereof (such lenders, together with their respective successors and
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), ▇▇▇▇▇ FARGO FOOTHILL,
INC., a California corporation formerly known as Foothill Capital
Corporation, as the arranger and administrative agent for the Lenders
(“Agent”), and, on the other hand, LSB INDUSTRIES, INC.,
an Delaware corporation (“Parent”), THERMACLIME, INC.,
an Oklahoma corporation formerly known as ClimaChem, Inc.
(“ThermaClime”), and each of the Subsidiaries of ThermaClime identified
on the signature pages hereof (such Subsidiaries, together with ThermaClime,
are
referred to hereinafter each individually as a “Borrower”, and
individually and collectively, jointly and severally, as “Borrowers”).
WHEREAS,
the
Borrowers, the Agent and the Lenders are parties to the Loan and Security
Agreement, dated as of April 13, 2001 (as heretofore amended or otherwise
modified, the “Original Loan Agreement”), pursuant to which the Lenders
extended credit to the Borrowers consisting of (i) several term loan
facilities in an aggregate principal amount of $7,500,000 at any time
outstanding of which no amounts are outstanding on the date hereof (the
“Original Term Loan”) and (ii) a revolving credit facility, in an
aggregate principal amount of $50,000,000 at any time outstanding, as reduced
in
accordance with the terms thereof (the “Original Revolver Facility” and
together with the Original Term Loan, the “Original Loan Facility”),
which included a $8,500,000 sub-facility for the issuance of letters of credit;
WHEREAS,
pursuant
to the Original Loan Agreement, the Borrowers granted to the Agent and the
Lenders, a continuing security interest in all of their right, title and
interest in all then existing and thereafter acquired or arising Collateral
(as
defined in the Original Loan Agreement) in order to secure the repayment of
any
and all of the Obligations (as defined in the Original Loan Agreement);
WHEREAS,
the
Borrowers have notified the Agent that they intend to refinance the Orix Loans
(as defined in the Original Loan Agreement) by entering into a new term loan
facility arranged by Banc of America Leasing & Capital, LLC (the
“BofA Facility”) and have requested that the Lenders amend the Original
Loan Agreement in order to make certain modifications to the Original Loan
Facility (including, without limitation, releasing the Agent’s lien on certain
Collateral some of which is being pledged to secure obligations under the BofA
Facility), and in connection therewith, to amend and restate the Original Loan
Agreement in its entirety to provide for certain other modifications as set
forth herein;
WHEREAS,
in
connection with the amendment and restatement of the Original Loan Agreement,
the Borrowers have agreed to continue, confirm and reaffirm the grant to the
Agent, for the benefit of the Lender Group, of the security interest in the
Collateral that is not released herein to secure the Obligations; and
NOW
THEREFORE, in
consideration of the mutual covenants and agreements herein contained, and
subject to the terms and conditions of this Agreement, the parties hereto agree
to amend and restate the Original Loan Agreement as follows:
1.
DEFINITIONS AND
CONSTRUCTION.
1.1
Definitions. As used in this Agreement, the following terms
shall have the following definitions:
“Account
Debtor” means any
Person who is or who may become obligated under, with respect to, or on account
of, an Account, chattel paper, or a General Intangible.
“Accounts”
means
all of
Borrowers’ now owned or hereafter acquired right, title, and interest with
respect to “accounts” (as that term is defined in the Code), and any and all
supporting obligations in respect thereof.
“ACH
Transactions” means any
cash management or related services (including the Automated Clearing House
processing of electronic funds transfers through the direct Federal Reserve
Fedline system) provided by the Bank Product Provider for the account of a
Borrower or its Subsidiaries.
“Additional
Documents” has
the meaning set forth in Section 4.4.
“Administrative
Borrower” has
the meaning set forth in Section 17.9.
“Advances”
has
the meaning
set forth in Section 2.1.
“Affiliate”
means,
as applied
to any Person, any other Person who, directly or indirectly, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly, of the
power to direct the management and policies of a Person, whether through the
ownership of Stock, by contract, or otherwise; provided, however,
that, in any event: (a) any Person which owns directly or indirectly 15% or
more of the securities having ordinary voting power for the election of
directors or other members of the governing body of a Person or 15% or more
of
the partnership or other ownership interests of a Person (other than as a
limited partner of such Person) shall be deemed to control such Person;
(b) each director (or comparable manager) of a Person shall be deemed to be
an Affiliate of such Person; and (c) each partnership or joint venture in
which a Person is a general partner or joint venturer shall be deemed to be
an
Affiliate of such Person.
“Agent”
means
Foothill,
solely in its capacity as agent for the Lenders hereunder, and any successor
thereto.
“Agent’s
Account” means an
account at a bank designated by Agent from time to time as the account into
which Borrowers shall make all payments to Agent for the benefit of the Lender
Group and into which the Lender Group shall make all payments to Agent under
this Agreement and the other Loan Documents; unless and until Agent notifies
Administrative Borrower and the Lender Group to the contrary, Agent’s Account
shall be that certain deposit account bearing account number 323-266193 and
maintained by Agent with The Chase Manhattan Bank, 4 New York Plaza, 15th Floor,
New York, New York 10004, ABA #▇▇▇▇▇▇▇▇▇.
-2-
“Agent
Advances” has the
meaning set forth in Section 2.3(e)(i).
“Agent’s
Liens” means the
Liens granted by Borrowers to Agent for the benefit of the Lender Group under
this Agreement or the other Loan Documents.
“Agent-Related
Persons” means
Agent together with its Affiliates, officers, directors, employees, and agents.
“Agreement”
has
the meaning
set forth in the preamble hereto.
“Applicable
Prepayment
Premium” means, as of any date of determination, an amount equal to
(a) during the period of time from and after the Restatement Effective Date
up to April 12, 2008, 2% times the sum of (i) the Maximum Revolver
Amount, plus (ii) the outstanding principal balance of the Term Loan on the
date immediately prior to the date of determination, (b) during the period
of time from and including April 13, 2008 up to April 12, 2009, 1%
times the sum of (i) the Maximum Revolver Amount, plus (ii) the
outstanding principal balance of the Term Loan on the date immediately prior
to
the date of determination, and (c) during the period of time from and
including April 13, 2009 up to April 12, 2010, 0.5% times the sum of
(i) the Maximum Revolver Amount, plus (ii) the outstanding principal
balance of the Term Loan on the date immediately prior to the date of
determination; and (d) during the period of time from and including
April 13, 2010 and prior to the Maturity Date, 0% times the sum of
(i) the Maximum Revolver Amount, plus (ii) the outstanding principal
balance of the Term Loan on the date immediately prior to the date of
determination.
“Assignee”
has
the meaning
set forth in Section 14.1.
“Assignment
and Acceptance”
means an Assignment and Acceptance substantially in the form of Exhibit
A-1.
“Authorized
Person” means any
officer or other employee of Administrative Borrower.
“Availability”
means,
as of
any date of determination, if such date is a Business Day, and determined at
the
close of business on the immediately preceding Business Day, if such date of
determination is not a Business Day, the amount that Borrowers are entitled
to
borrow as Advances under Section 2.1 (after giving effect to all
then outstanding Obligations (other than Bank Products Obligations) and all
sublimits and reserves applicable hereunder).
“Bank
Product Agreements”
means those certain cash management service agreements entered into from
time to
time by a Borrower or its Subsidiaries in connection with any of the Bank
Products.
“Bank
Product Obligations”
means all obligations, liabilities, contingent reimbursement obligations,
fees,
and expenses owing by Borrowers or their Subsidiaries to Bank Product Provider
pursuant to or evidenced by the Bank Product Agreements and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to
-3-
become
due, now existing or
hereafter arising, and including all such amounts that Borrowers are obligated
to reimburse to Agent or any member of the Lender Group as a result of Agent
or
such member of the Lender Group purchasing participations or executing
indemnities or reimbursement obligations with respect to the Bank Products
provided to Borrowers or their Subsidiaries pursuant to the Bank Product
Agreements.
“Bank
Product Provider” means
▇▇▇▇▇ Fargo or any of its Affiliates.
“Bank
Product Reserves”
means, as of any date of determination, the amount of reserves that Agent
has
established (based upon Bank Product Provider’s reasonable determination of the
credit exposure in respect of then extant Bank Products) for Bank Products
then
provided or outstanding.
“Bank
Products” means any
service or facility extended to Borrowers or their Subsidiaries by Bank Product
Provider including: (a) credit cards, (b) credit card processing
services, (c) debit cards, (d) purchase cards, (e) ACH
Transactions, (f) cash management, including controlled disbursement,
accounts or services, or (g) Hedge Agreements.
“Bankruptcy
Code” means the
United States Bankruptcy Code, as in effect from time to time.
“Base
LIBOR Rate” means the
rate per annum, determined by Agent in accordance with its customary procedures,
and utilizing such electronic or other quotation sources as it considers
appropriate (rounded upwards, if necessary, to the next 1/16%), on the basis
of
the rates at which Dollar deposits are offered to major banks in the London
interbank market on or about 11:00 a.m. (California time) 2 Business Days prior
to the commencement of the applicable Interest Period, for a term and in amounts
comparable to the Interest Period and amount of the LIBOR Rate Loan requested
by
Administrative Borrower in accordance with this Agreement, which determination
shall be conclusive in the absence of manifest error.
“Base
Rate” means, the rate
of interest announced within ▇▇▇▇▇ Fargo at its principal office in San
Francisco as its “prime rate”, with the understanding that the “prime rate” is
one of ▇▇▇▇▇ Fargo’s base rates (not necessarily the lowest of such rates) and
serves as the basis upon which effective rates of interest are calculated for
those loans making reference thereto and is evidenced by the recording thereof
after its announcement in such internal publication or publications as ▇▇▇▇▇
Fargo may designate.
“Base
Rate Loan” means each
portion of an Advance or the Term Loan that bears interest at a rate determined
by reference to the Base Rate.
“Base
Rate Margin” means 0.50
percentage point.
“Benefit
Plan” means a
“defined benefit plan” (as defined in Section 3(35) of ERISA) for
which any Borrower or any Subsidiary or ERISA Affiliate of any Borrower has
been
an “employer” (as defined in Section 3(5) of ERISA) within the past
six years.
-4-
“Board
of Directors” means
the board of directors (or comparable managers) of Parent or any committee
thereof duly authorized to act on behalf thereof.
“BofA”
means,
collectively,
Banc of America Leasing & Capital, LLC and each of the lenders party to
the BofA Loan Agreement, and their respective successors and assigns (including
any other lender or group of lenders that at any time succeeds to or refinances,
replaces or substitutes for all or any portion of the BofA Loans at any time
and
from time to time).
“BofA
Collateral” means the
“Collateral” (as such term is defined in the BofA Loan Agreement as in
effect on the date hereof).
“BofA
Inter-Lender Agreement”
means that certain Inter-Lender Agreement dated as of
,
2007 by and between Agent and BofA (as collateral agent), as the same may be
amended, supplemented or otherwise modified from time to time.
“BofA
Loan Agreement” means
that certain Term Loan Agreement dated as of
,
2007, by and among ThermaClime and each of the borrowers listed therein, Parent,
as guarantor, each of the lenders listed therein, and BofA, as administrative
agent and collateral agent for lenders, and Bank of Utah, as payment agent,
as
the same may be amended, supplemented or otherwise modified from time to time.
“BofA
Loans” means those
certain term loans made by BofA to ThermaClime and each of the borrowers listed
in the BofA Loan Agreement pursuant to the terms of the BofA Loan Agreement
in
an aggregate principal amount of up to $50,000,000.
“Books”
means
all of each
Borrower’s now owned or hereafter acquired books and records (including all of
its Records indicating, summarizing, or evidencing its assets (including the
Collateral) or liabilities, all of its Records relating to its business
operations or financial condition, and all of its goods or General Intangibles
related to such information).
“Borrower”
and
“Borrowers” have the respective meanings set forth in the preamble to
this Agreement.
“Borrowing”
means
a borrowing
hereunder of Advances made on the same day by the Lenders (or Agent on behalf
thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the
case of an Agent Advance, or a Term Loan, as the case may be.
“Borrowing
Base” has the
meaning set forth in Section 2.1.
“Borrowing
Base Certificate”
means a certificate in the form of Exhibit B-1.
“Business
Day” means any day
that is not a Saturday, Sunday, or other day on which national banks are
authorized or required to close, except that, if a determination of a Business
Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall
exclude any day on which banks are closed for dealings in Dollar deposits in
the
London interbank market.
-5-
“Capital
Assets” has the
meaning set forth in Section 2.2.
“Capital
Lease” means a lease
that is required to be capitalized for financial reporting purposes in
accordance with GAAP.
“Capitalized
Lease
Obligation” means any Indebtedness represented by obligations under a
Capital Lease, but excluding all Indebtedness under any operating lease that
is
entered into between any Borrower and any of its Subsidiaries, as lessee, and
any “related party” (as defined in paragraph 5 of Financial Accounting Standards
Board Statement No. 13, “Accounting for leases (FAS13)”) or Affiliate of
such lessee, as lessor, that is required to be treated as capital lease
obligations under GAAP, pursuant to FAS 13, as amended from time to time.
“Cash
Equivalents” means
(a) marketable direct obligations issued or unconditionally guaranteed by
the United States or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within 1 year from the
date of acquisition thereof, (b) marketable direct obligations issued by
any state of the United States or any political subdivision of any such state
or
any public instrumentality thereof maturing within 1 year from the date of
acquisition thereof and, at the time of acquisition, having the highest rating
obtainable from either S&P or ▇▇▇▇▇’▇, (c) commercial paper maturing no
more than 1 year from the date of acquisition thereof and, at the time of
acquisition, having a rating of A-1 or P-1, or better, from S&P or ▇▇▇▇▇’▇,
and (d) certificates of deposit or bankers’ acceptances maturing within 1
year from the date of acquisition thereof either (i) issued by any bank
organized under the laws of the United States or any state thereof which bank
has a rating of A or A2, or better, from S&P or ▇▇▇▇▇’▇, or
(ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.
“Cash
Management Bank” has
the meaning set forth in Section 2.7(a).
“Cash
Management Account” has
the meaning set forth in Section 2.7(a).
“Cash
Management Agreements”
means those certain cash management service agreements, in form and substance
satisfactory to Agent, each of which is among Administrative Borrower, Agent,
and one of the Cash Management Banks.
“Change
of Control” means
(a) any “person” or “group” (within the meaning of Sections 13(d) and 14(d)
of the Exchange Act) becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of a greater number of shares of Parent’s Stock having
the right to vote for the election of members of the Board of Directors than
the
number of shares of such Stock held by the Permitted Holders, or (b) a
majority of the members of the Board of Directors do not constitute Continuing
Directors, or (c) the Parent ceases to directly or indirectly own and
control 100% of the outstanding capital Stock of ThermaClime, or
(d) ThermaClime ceases to directly or indirectly own and control 100% of
the outstanding capital Stock of each Borrower (other than ThermaClime), or
(e) any Borrower ceases to directly own and control 100% of the outstanding
capital Stock of each of its Subsidiaries extant as of the Closing Date.
-6-
“Chemex
I” means Chemex I
Corp., an Oklahoma corporation formerly known as Slurry Explosive Corporation.
“Chemex
II” means Chemex II
Corp., an Oklahoma corporation formerly known as Universal Tech Corporation.
“Cherokee”
means
Cherokee
Nitrogen Holdings, Inc., an Oklahoma corporation formerly known as Cherokee
Nitrogen Company.
“ClimaCool”
means
ClimaCool
Corp., an Oklahoma corporation.
“ClimateCraft”
means
ClimateCraft, Inc., an Oklahoma corporation.
“Climate
Control Business”
means the business consisting of the manufacture and sale of hydronic fan
coils
and water source heat pumps as well as other products used in commercial and
residential heating, ventilation and air conditioning systems conducted by
TTI,
CMI, IEC, Koax, ClimateCraft, XPA and ClimaCool.
“Climate
Control Raw
Inventory” means Eligible Raw Inventory that is used or consumed in the
Climate Control Business.
“Closing
Date” means
April 13, 2001, the date on which the Original Loan Agreement became
effective.
“CMI”
means
Climate Master,
Inc., a Delaware corporation.
“Closing
Date Business Plan”
means the set of Projections of Borrowers for the 1 year period following
the
Closing Date, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
“Code”
means
the New York
Uniform Commercial Code, as in effect from time to time.
“Collateral”
means
all of
each Borrower’s now owned or hereafter acquired right, title, and interest in
and to each of the following:
(a)
Accounts,
(b)
Books,
(c)
General Intangibles,
(d)
Inventory,
(e)
Investment Property (excluding
the Stock of (i) each Borrower and its Subsidiaries and (ii) EDN and
DSN and their respective Subsidiaries),
(f)
Negotiable Collateral,
-7-
(g)
money or other assets of each
such Borrower that arise from or relate to Accounts, Books, General Intangibles
and Inventory and that now or hereafter come into the possession, custody,
or
control of any member of the Lender Group, and
(h)
the proceeds and products,
whether tangible or intangible, of any of the foregoing, including proceeds
of
insurance covering any or all of the foregoing, and any and all Accounts, Books,
General Intangibles, Inventory, Investment Property, Negotiable Collateral,
money, deposit accounts, or other tangible or intangible property resulting
from
the sale, exchange, collection, or other disposition of any of the foregoing,
or
any portion thereof or interest therein, and the proceeds thereof;
provided, however, that the Collateral shall not include any BofA
Collateral.
“Collateral
Access Agreement”
means a landlord waiver, bailee letter, or acknowledgement agreement of
any
lessor, warehouseman, processor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Inventory, in each
case, in form and substance satisfactory to Agent.
“Collections”
means
all cash,
checks, notes, instruments, and other items of payment (including insurance
proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of
Borrowers.
“Commitment”
means,
with
respect to each Lender, its Revolver Commitment, its Term Loan Commitment or
its
Total Commitment, as the context requires, and, with respect to all Lenders,
their Revolver Commitments, their Term Loan Commitments or their Total
Commitments, as the context requires, in each case as such Dollar amounts are
set forth beside such Lender’s name under the applicable heading on Schedule
C-1 or on the signature page of the Assignment and Acceptance pursuant to
which such Lender became a Lender hereunder in accordance with the provisions
of
Section 14.1.
“Compliance
Certificate”
means a certificate substantially in the form of Exhibit C-1 delivered
by the
chief financial officer of Parent to Agent.
“Consolidated
Net Interest
Expense” means, with respect to any Person for any period, gross interest
expense of such Person and its Subsidiaries for such period determined in
conformity with GAAP (including, without limitation, interest expense paid
to
Affiliates of such Person other than a Subsidiary of Parent, less the sum
of interest income and non-cash accretion expense and non-cash amortization
of
debt origination cost for such period, each determined on a consolidated basis
and in accordance with GAAP for such Person and its Subsidiaries.
“Continuing
Director” means
(a) any member of the Board of Directors who was a director (or comparable
manager) of Parent on the Closing Date, and (b) any individual who becomes
a member of the Board of Directors after the Closing Date if such individual
was
appointed or nominated for election to the Board of Directors by a majority
of
the Continuing Directors, but excluding any such individual originally proposed
for election in opposition to the Board of Directors in office at the Closing
Date in an actual or threatened election contest relating to the election of
the
directors (or comparable managers) of Parent (as such terms are used in Rule
14a-11 under the Exchange Act) and whose initial assumption of office resulted
from such contest or the settlement thereof.
-8-
“Contribution
Agreement”
means that certain Contribution Agreement, dated as of even date herewith,
among
the Borrowers and the Guarantors, in form and substance satisfactory to Agent.
“Daily
Balance” means, with
respect to each day during the term of this Agreement, the amount of an
Obligation owed at the end of such day.
“DDA”
means
any checking or
other demand deposit account maintained by any Borrower.
“Default”
means
an event,
condition, or default that, with the giving of notice, the passage of time,
or
both, would be an Event of Default.
“Defaulting
Lender” means any
Lender that fails to make any Advance (or other extension of credit) that it
is
required to make hereunder on the date that it is required to do so hereunder.
“Defaulting
Lender Rate”
means (a) the Base Rate for the first 3 days from and after the date the
relevant payment is due, and (b) thereafter, at the interest rate then
applicable to Advances that are Base Rate Loans (inclusive of the Base Rate
Margin applicable thereto).
“Designated
Account” means
account number 400519526 of Administrative Borrower maintained with the
Designated Account Bank or such other deposit account of Administrative Borrower
(located within the United States) that has been designated as such, in writing,
by Administrative Borrower to Agent.
“Designated
Account Bank”
means BancFirst of Oklahoma, whose office is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and whose ABA number is ▇▇▇▇▇▇▇▇▇.
“Dilution”
means,
as of any
date of determination, a percentage, based upon the experience of the
immediately prior 90 days, that is the result of dividing the Dollar amount
of
(a) bad debt write-downs, discounts, advertising allowances, credits, or
other dilutive items with respect to the Accounts during such period, by
(b) Borrowers’ ▇▇▇▇▇▇▇▇ during such period plus the Dollar amount of clause
(a).
“Dilution
Reserve” means, as
of any date of determination, an amount sufficient to reduce the advance rate
against Eligible Accounts by one percentage point for each percentage point
by
which Dilution is in excess of 5%.
“Disbursement
Letter” means
an instructional letter executed and delivered by Administrative Borrower to
Agent regarding the extensions of credit to be made on the Closing Date, the
form and substance of which is satisfactory to Agent.
-9-
“Dollars”
or
“$”
means
United States dollars.
“DSN
Corporation” means DSN
Corporation, an Oklahoma corporation.
“Due
Diligence Letter” means
the due diligence letter sent by Agent’s counsel to Administrative Borrower,
together with Administrative Borrower’s completed responses to the inquiries set
forth therein, the form and substance of such responses to be satisfactory
to
Agent.
“EBITDA”
means,
with respect
to any fiscal period, the result of (i) ThermaClime’s and its Subsidiaries’
consolidated net earnings (or loss), minus (ii) the aggregate amount of all
extraordinary gains of ThermaClime and its Subsidiaries for such period, plus
(iii) the aggregate amount of (a) all extraordinary losses, interest
expense, income taxes, and depreciation and amortization of ThermaClime and
its
Subsidiaries for such period and (b) other non-operating, non-cash, one
time charges of ThermaClime and its Subsidiaries for such period, all as
determined in accordance with GAAP.
“EDC”
means
El Dorado
Chemical Company, an Oklahoma corporation.
“EDN”
means
El Dorado
Nitrogen Company, an Oklahoma corporation.
“Eligible
Accounts” means
those Accounts created by one of Borrowers in the ordinary course of its
business, that arise out of its sale of goods or rendition of services, that
comply with each of the representations and warranties respecting Eligible
Accounts made by Borrowers under the Loan Documents, and that are not excluded
as ineligible by virtue of one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised
from time to time by Agent in Agent’s Permitted Discretion to address the
results of any audit performed by Agent from time to time after the Closing
Date. In determining the amount to be included, Eligible Accounts shall be
calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Accounts shall not include the following:
(a)
Accounts that the Account Debtor
has failed to pay within 120 days of original invoice date or Accounts which
are
more than 60 days past due,
(b)
Accounts owed by an Account
Debtor (or its Affiliates) where 50% or more of all Accounts owed by that
Account Debtor (or its Affiliates) are deemed ineligible under clause
(a) above,
(c)
Accounts with respect to which
the Account Debtor is an employee or Affiliate of any Borrower,
(d)
Accounts arising in a
transaction wherein goods are placed on consignment or are sold pursuant to
a
guaranteed sale, a sale or return, a sale on approval, a ▇▇▇▇ and hold (except
Accounts of the Borrowers having an aggregate invoice amount for all such
Borrowers of up to $1,500,000 with respect to goods that are subject to a ▇▇▇▇
and hold letter in form and substance satisfactory to Agent), or any other
terms
by reason of which the payment by the Account Debtor may be conditional,
-10-
(e)
Accounts that are not payable in
Dollars,
(f)
Accounts with respect to which
the Account Debtor either (i) does not maintain its chief executive office
in the United States or Canada, or (ii) is not organized under the laws of
the United States or Canada or any state or province thereof, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
(y) the Account is supported by an irrevocable letter of credit
satisfactory to Agent in its Permitted Discretion, or (z) the Account is
covered by credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Agent,
(g)
Accounts with respect to which
the Account Debtor is either (i) the United States or any department,
agency, or instrumentality of the United States (exclusive, however, of Accounts
with respect to which the applicable Borrower has complied, to the reasonable
satisfaction of Agent, with the Assignment of Claims Act, 31 USC § 3727), or
(ii) any state of the United States (exclusive, however, of
(y) Accounts owed by any state that does not have a statutory counterpart
to the Assignment of Claims Act or (z) Accounts owed by any state that does
have a statutory counterpart to the Assignment of Claims Act as to which the
applicable Borrower has complied to Agent’s satisfaction),
(h)
Accounts with respect to which
the Account Debtor is a creditor of any Borrower, has or has asserted a right
of
setoff, has disputed its liability, or has made any claim with respect to its
obligation to pay the Account, to the extent of such claim, right of setoff,
or
dispute,
(i)
Accounts with respect to an
Account Debtor whose total obligations owing to Borrowers exceed 10% (or, in
the
case of Carrier Corporation and Orica USA Inc., 20%) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of
such
percentage,
(j)
Accounts with respect to which
the Account Debtor is subject to an Insolvency Proceeding, is not Solvent,
has
gone out of business, or as to which a Borrower has received notice of an
imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor,
(k)
Accounts with respect to which
the Account Debtor is located in the states of New Jersey, Minnesota, or West
Virginia (or any other state that requires a creditor to file a business
activity report or similar document in order to bring suit or otherwise enforce
its remedies against such Account Debtor in the courts or through any judicial
process of such state), unless the applicable Borrower has qualified to do
business in New Jersey, Minnesota, West Virginia, or such other states, or
has
filed a business activities report with the applicable division of taxation,
the
department of revenue, or with such other state offices, as appropriate, for
the
then-current year, or is exempt from such filing requirement,
(l)
Accounts, the collection of
which, Agent, in its Permitted Discretion, believes to be doubtful by reason
of
the Account Debtor’s financial condition,
-11-
(m)
Accounts that are not subject to
a valid and perfected first priority Agent’s Lien,
(n)
Accounts with respect to which
(i) the goods giving rise to such Account have not been shipped and billed
(except Accounts of the Borrowers having an aggregate invoice amount for all
such Borrowers of up to $1,500,000 with respect to goods that are subject to
a
▇▇▇▇ and hold letter in form and substance satisfactory to Agent) to the Account
Debtor, or (ii) the services giving rise to such Account have not been
performed and billed to the Account Debtor, or
(o)
Accounts that represent the
right to receive progress payments or other advance ▇▇▇▇▇▇▇▇ that are due prior
to the completion of performance by the applicable Borrower of the subject
contract for goods or services.
“Eligible
Inventory” means
Inventory of Borrowers consisting of first quality finished goods held for
sale
in the ordinary course of Borrowers’ business located at one of the business
locations of Borrowers set forth on Schedule E-1 (or in-transit between any
such
locations), that complies with each of the representations and warranties
respecting Eligible Inventory made by Borrowers in the Loan Documents, and that
is not excluded as ineligible by virtue of the one or more of the criteria
set
forth below; provided, however, that such criteria may be fixed
and revised from time to time by Agent in Agent’s Permitted Discretion to
address the results of any audit or appraisal performed by Agent from time
to
time after the Closing Date. In determining the amount to be so included,
Inventory shall be valued at the lower of cost or market on a basis consistent
with Borrowers’ historical accounting practices. An item of Inventory shall not
be included in Eligible Inventory if:
(a)
a Borrower does not have good,
valid, and marketable title thereto,
(b)
it is not located at one of the
locations in the United States set forth on Schedule E-1 or in transit
from one such location to another such location,
(c)
it is located on real property
owned or leased by a Borrower or in a contract warehouse, in each case, unless
it is subject to a Collateral Access Agreement executed by the lessor,
warehouseman, or other third party, as the case may be, and unless it is
segregated or otherwise separately identifiable from goods of others, if any,
stored on the premises,
(d)
it is not subject to a valid and
perfected first priority security Agent’s Lien,
(e)
it consists of goods returned or
rejected by a Borrower’s customers, or
(f)
it consists of goods that are
obsolete or slow moving, restrictive or custom items, work-in-process, raw
materials or component parts, or goods that constitute spare parts, packaging
and shipping materials, supplies used or consumed in a Borrower’s business, ▇▇▇▇
and hold goods, defective goods, “seconds,” or Inventory acquired on
consignment.
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“Eligible
Raw Inventory”
means Inventory of Borrowers that would qualify as Eligible Inventory but
for
the fact that it consists of goods that are raw materials or component parts
used or consumed in a Borrower’s business.
“Eligible
Transferee” means
(a) a commercial bank organized under the laws of the United States, or any
state thereof, and having total assets in excess of $250,000,000, (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development or a political
subdivision of any such country and which has total assets in excess of
$250,000,000, provided that such bank is acting through a branch or agency
located in the United States, (c) a finance company, insurance company, or
other financial institution or fund that is engaged in making, purchasing,
or
otherwise investing in commercial loans in the ordinary course of its business
and having (together with its Affiliates) total assets in excess of
$250,000,000, (d) any Affiliate (other than individuals) of a Lender that
was party hereto as of the Closing Date, or any fund, money market account,
investment account or other account managed by a Lender or an Affiliate of
a
Lender, (e) so long as no Event of Default has occurred and is continuing,
any other Person approved by Agent and Administrative Borrower, and
(f) during the continuation of an Event of Default, any other Person
approved by Agent.
“Environmental
Actions” means
any complaint, summons, citation, notice, directive, order, claim, litigation,
investigation, judicial or administrative proceeding, judgment, letter, or
other
communication from any Governmental Authority, or any third party involving
violations of Environmental Laws or releases of Hazardous Materials from
(a) any assets, properties, or businesses of any Borrower or any
predecessor in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials
generated by any Borrower or any predecessor in interest.
“Environmental
Law” means any
applicable federal, state, provincial, foreign or local statute, law, rule,
regulation, ordinance, code, binding and enforceable guideline, binding and
enforceable written policy or rule of common law now or hereafter in effect
and
in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, to the extent binding on Borrowers, relating to the environment,
employee health and safety, or Hazardous Materials, including CERCLA; RCRA;
the
Federal Water Pollution Control Act, 33 USC § 1251 et seq; the Toxic
Substances Control Act, 15 USC, § 2601 et seq; the Clean Air Act, 42 USC
§ 7401 et seq.; the Safe Drinking Water Act, 42 USC. § 3803 et
seq.; the Oil Pollution Act of 1990, 33 USC. § 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC. § 11001
et seq.; the Hazardous Material Transportation Act, 49 USC § 1801 et
seq.; and the Occupational Safety and Health Act, 29 USC. §651 et
seq. (to the extent it regulates occupational exposure to Hazardous
Materials); any state and local or foreign counterparts or equivalents, in
each
case as amended from time to time.
“Environmental
Liabilities and
Costs” means all liabilities, monetary obligations, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all reasonable fees, disbursements and expenses of
counsel, experts, or consultants, and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a result of
any
claim or demand by any Governmental Authority or any third party, and which
relate to any Environmental Action.
-13-
“Environmental
Lien” means
any Lien in favor of any Governmental Authority for Environmental Liabilities
and Costs.
“Equipment”
means
all of
Borrowers’ now owned or hereafter acquired right, title, and interest with
respect to equipment, machinery, machine tools, motors, furniture, furnishings,
fixtures, vehicles (including motor vehicles), tools, parts, goods (other than
consumer goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.
“ERISA”
means
the Employee
Retirement Income Security Act of 1974, as amended, and any successor statute
thereto.
“ERISA
Affiliate” means
(a) any Person subject to ERISA whose employees are treated as employed by
the same employer as the employees of a Borrower under IRC Section 414(b),
(b) any trade or business subject to ERISA whose employees are treated as
employed by the same employer as the employees of a Borrower under IRC
Section 414(c), (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under
IRC
Section 414(m), or (d) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any Person subject to ERISA that is a
party to an arrangement with a Borrower and whose employees are aggregated
with
the employees of a Borrower under IRC Section 414(o).
“Event
of Default” has the
meaning set forth in Section 8.
“Excess
Availability” means
the amount, as of the date any determination thereof is to be made, equal to
Availability minus the aggregate amount, if any, of (i) all trade payables
of Borrowers aged in excess of their historical levels with respect thereto,
and
(ii) the amount determined by Agent that is necessary to maintain
Borrowers’ liabilities reasonably within terms, in each case as determined by
Agent in its Permitted Discretion.
“Exchange
Act” means the
Securities Exchange Act of 1934, as in effect from time to time.
“Fair
Market Value” means,
with respect to any asset or property of a Person, the price which could be
negotiated in an arm’s length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.
“Family
Member” means, with
respect to any individual, any other individual having a relationship by blood
(to the second degree of consanguinity), marriage, or adoption to such
individual.
-14-
“Family
Entities” means, with
respect to any individual, any trust, corporation, limited liability company,
or
partnership for which (i) all of the beneficiaries, shareholders, members,
or partners, as the case may be, are Family Members of such individual, and
(ii) such individual or a Family Member of such individual is the
controlling trustee, shareholder, member, or partner of such entity.
“Fee
Letter” means that
certain fee letter, dated as of the Closing Date, between Borrowers and Agent,
in form and substance satisfactory to Agent, as amended, supplemented or
otherwise modified from time to time.
“FEIN”
means
Federal Employer
Identification Number.
“Fixed
Charge Coverage Ratio”
means, for any period, the ratio of (i) EBITDA for such period, to
(ii) the sum of (A) all principal of Indebtedness of ThermaClime and
its Subsidiaries scheduled to be paid or prepaid during such period (not
including prepayments of Advances unless such prepayments are accompanied by
a
reduction of the Revolver Commitment and not including the final scheduled
payment of the Obligations at the Maturity Date), plus
(B) Consolidated Net Interest Expense of ThermaClime and its Subsidiaries
for such period, plus (C) all amounts paid or payable by ThermaClime
and its Subsidiaries on Capitalized Lease Obligations having a scheduled due
date during such period.
“Foothill”
means
▇▇▇▇▇ Fargo
Foothill, Inc., a California corporation formerly known as Foothill Capital
Corporation.
“Funding
Date” means the date
on which a Borrowing occurs.
“Funding
Losses” has the
meaning set forth in Section 2.13(b)(ii).
“GAAP”
means
generally
accepted accounting principles as in effect from time to time in the United
States, consistently applied.
“General
Intangibles” means
all of Borrowers’ now owned or hereafter acquired right, title, and interest
with respect to “general intangibles” as that term is defined in the Code
(including payment intangibles, contract rights, rights to payment, proprietary
rights, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due
or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, money, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), and any and all supporting
obligations in respect thereof.
“Governing
Documents” means,
with respect to any Person, the certificate or articles of incorporation,
by-laws, or other organizational documents of such Person.
“Governmental
Authority”
means any federal, state, local, or other governmental or administrative
body,
instrumentality, department, or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.
-15-
“Guaranties”
means,
collectively, (i) the guaranty made by Parent contained in Section 18
hereof and (ii) those certain general continuing guaranties executed and
delivered by Guarantors (other than Parent) in favor of Agent, for the benefit
of the Lender Group, in form and substance satisfactory to Agent.
“Guarantor
Security
Agreement” means a security agreement made by Guarantors in favor of Agent
for the benefit of Lenders, the form and substance of which is satisfactory
to
Agent.
“Guarantors”
means
(i) the Parent, (ii) each of ThermaClime’s Subsidiaries extant as of
the Closing Date (other than EDN, DSN, and their respective Subsidiaries) that
are not Borrowers, and (iii) Cherokee.
“Hard
Cost” means, with
respect to each Capital Asset acquired by a Borrower, the cash purchase price
paid by a Borrower for such Capital Asset less the aggregate amount of all
soft
costs (including, without limitation, all taxes, delivery and storage charges,
installation charges and other charges added to such purchase price) included
in
the purchase price for such Capital Asset.
“Hazardous
Materials” means
(a) substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as “hazardous substances,”
“hazardous materials,” “hazardous wastes,” “toxic substances,” or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil,
petroleum, or petroleum derived substances, natural gas, natural gas liquids,
synthetic gas, drilling fluids, produced waters, and other wastes associated
with the exploration, development, or production of crude oil, natural gas,
or
geothermal resources, (c) any flammable substances or explosives or any
radioactive materials, and (d) asbestos in any form or electrical equipment
that contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million.
“Hedge
Agreement” means any
and all transactions, agreements, or documents now existing or hereafter entered
into between Borrower or its Subsidiaries and Bank Product Provider, which
provide for an interest rate, credit, commodity or equity swap, cap, floor,
collar, forward foreign exchange transaction, currency swap, cross currency
rate
swap, currency option, or any combination of, or option with respect to, these
or similar transactions, for the purpose of hedging Borrower’s or its
Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.
“IEC”
means
International
Environmental Corporation, an Oklahoma corporation.
“Indebtedness”
means
(a) all obligations of a Borrower for borrowed money, (b) all
obligations of a Borrower evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations of a Borrower
in
-16-
respect
of letters of credit,
bankers acceptances, interest rate swaps, or other financial products,
(c) all Capitalized Lease Obligations, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Borrower, irrespective
of whether such obligation or liability is assumed, (e) all obligations of
a Borrower for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of a Borrower’s business and repayable in
accordance with customary trade practices), and (f) any obligation of a
Borrower guaranteeing or intended to guarantee (whether directly or indirectly
guaranteed, endorsed, co-made, discounted, or sold with recourse to a Borrower)
any obligation of any other Person.
“Indemnified
Liabilities” has
the meaning set forth in Section 11.3.
“Indemnified
Person” has the
meaning set forth in Section 11.3.
“Insolvency
Proceeding” means
any proceeding commenced by or against any Person under any provision of the
Bankruptcy Code or under any other state or federal bankruptcy or insolvency
law, assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
“Intangible
Assets” means,
with respect to any Person, that portion of the book value of all of such
Person’s assets that would be treated as intangibles under GAAP.
“Interest
Period” means, with
respect to each LIBOR Rate Loan, a period commencing on the date of the making
of such LIBOR Rate Loan and ending 1, 2, or 3 months thereafter;
provided, however, that (a) if any Interest Period would end
on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate
from and including the first day of each Interest Period to, but excluding,
the
day on which any Interest Period expires, (c) any Interest Period that
would end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (d) with respect to an Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers (or Administrative Borrower on
behalf thereof) may not elect an Interest Period which will end after the
Maturity Date.
“In-Transit
Inventory“ means
Eligible Inventory that is in-transit (via rail car or truck) between any of
the
locations set forth on Schedule E-1 with respect to which Agent has received
reports in form and substance satisfactory to Agent.
“Inventory”
means
all
Borrowers’ now owned or hereafter acquired right, title, and interest with
respect to inventory, including goods held for sale or lease or to be furnished
under a contract of service, goods that are leased by a Borrower as lessor,
goods that are furnished by a Borrower under a contract of service, and raw
materials, work in process, or materials used or consumed in a Borrower’s
business.
-17-
“Investment”
means,
with
respect to any Person, any investment by such Person in any other Person
(including Affiliates) in the form of loans, guarantees, advances, or capital
contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide Accounts arising from the sale of goods or rendition of
services in the ordinary course of business consistent with past practice),
purchases or other acquisitions for consideration of Indebtedness or Stock,
and
any other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP.
“Investment
Property” means
all of Borrowers’ now owned or hereafter acquired right, title, and interest
with respect to “investment property” as that term is defined in the Code (but
excluding the Stock of (i) each Borrower and its Subsidiaries and
(ii) EDN and DSN and their respective Subsidiaries), and any and all
supporting obligations in respect thereof.
“IRC”
means
the Internal
Revenue Code of 1986, as in effect from time to time.
“Issuing
Lender” means
Foothill or any other Lender that, at the request of Administrative Borrower
and
with the consent of Agent agrees, in such Lender’s sole discretion, to become an
Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant
to
Section 2.12.
“Koax”
means
Koax Corp., an
Oklahoma corporation.
“L/C”
has
the meaning set
forth in Section 2.12(a).
“L/C
Disbursement” means a
payment made by the Issuing Lender pursuant to a Letter of Credit.
“L/C
Undertaking” has the
meaning set forth in Section 2.12(a).
“Lender”
and
“Lenders”
have the respective meanings set forth in the preamble to this Agreement, and
shall include any other Person made a party to this Agreement in accordance
with
the provisions of Section 14.1.
“Lender
Group” means,
individually and collectively, each of the Lenders (including the Issuing
Lender), the Bank Product Provider and Agent.
“Lender
Group Expenses” means
all (a) out-of-pocket costs or expenses (including taxes, and insurance
premiums) required to be paid by a Borrower under any of the Loan Documents
that
are paid or incurred by any one or more members of the Lender Group,
(b) fees or charges paid or incurred by any one or more members of Lender
Group in connection with any one or more members of the Lender Group’s
transactions with Borrowers under the Loan Documents, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, judgment, and UCC searches and
including searches with the patent and trademark office, the copyright office),
filing, recording, (including, without limitation, mortgage recordation taxes
and other similar fees or taxes in connection with the recordation or filing
or
any mortgage from time to time together with any penalties, interest or costs
arising therefrom or related thereto) publication, appraisal (including periodic
-18-
Collateral
appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement), and environmental audits,
(c) costs and expenses incurred by any one or more members of Lender Group
in the disbursement of funds to or for the account of Borrowers (by wire
transfer or otherwise), (d) charges paid or incurred by any one or more
members of Lender Group resulting from the dishonor of checks,
(e) reasonable costs and expenses paid or incurred by any one or more
members of the Lender Group to correct any default or enforce any provision
of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising
to
sell the Collateral, or any portion thereof, irrespective of whether a sale
is
consummated, (f) audit fees and expenses of any one or more members of
Lender Group related to audit examinations of the Books to the extent of the
fees and charges (and up to the amount of any limitation) contained in this
Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by any one or more members of the Lender Group
in
enforcing or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents, (h) any one or more members of Lender
Group’s reasonable fees and expenses (including attorneys fees) incurred in
advising, structuring, drafting, reviewing, administering, or amending the
Loan
Documents, and (i) any one or more members of Lender Group’s reasonable
fees and expenses (including attorneys fees) incurred in terminating, enforcing
(including attorneys fees and expenses incurred in connection with a “workout,”
a “restructuring,” or an Insolvency Proceeding concerning any Borrower or in
exercising rights or remedies under the Loan Documents), or defending the Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.
“Lender-Related
Person”
means, with respect to any Lender, such Lender, together with such Lender’s
Affiliates, and the officers, directors, employees, and agents of such Lender.
“Letter
of Credit” means an
L/C or an L/C Undertaking, as the context requires.
“Letter
of Credit Usage”
means, as of any date of determination, the aggregate undrawn amount of
all
outstanding Letters of Credit plus 100% of the amount of outstanding time drafts
accepted by an Underlying Issuer as a result of drawings under Underlying
Letters of Credit.
“LIBOR
Deadline” has the
meaning set forth in Section 2.13(b)(i).
“LIBOR
Notice” means a
written notice in the form of Exhibit L-1.
“LIBOR
Rate” means, for each
Interest Period for each LIBOR Rate Loan, the rate per annum determined by
Agent
(rounded upwards, if necessary, to the next 1/16%) by dividing (a) the Base
LIBOR Rate for such Interest Period, by (b) 100% minus the Reserve
Percentage. The LIBOR Rate shall be adjusted on and as of the effective day
of
any change in the Reserve Percentage.
-19-
“LIBOR
Rate Loan” means each
portion of an Advance that bears interest at a rate determined by reference
to
the LIBOR Rate.
“LIBOR
Rate Margin” means
1.75 percentage points.
“Lien”
means
any interest in
an asset securing an obligation owed to, or a claim by, any Person other than
the owner of the asset, whether such interest shall be based on the common
law,
statute, or contract, whether such interest shall be recorded or perfected,
and
whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future circumstance or circumstances,
including the lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
agreement, conditional sale or trust receipt, or from a lease, consignment,
or
bailment for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
“Loan
Account” has the
meaning set forth in Section 2.10.
“Loan
Documents” means this
Agreement, the Bank Product Agreements, the Cash Management Agreements, the
Contribution Agreement, the Disbursement Letter, the Due Diligence Letter,
the
Fee Letter, the Guaranties, Guarantor Security Agreement, the Letters of Credit,
the Officers’ Certificate, the Patent Security Agreement, the Trademark Security
Agreement, any note or notes executed by a Borrower in connection with this
Agreement and payable to a member of the Lender Group, and any other agreement
entered into, now or in the future, by any Borrower and the Lender Group in
connection with this Agreement.
“LSB
Chemical” means LSB
Chemical Corp., an Oklahoma corporation.
“Management
Agreement” means
the Management Agreement dated November 21, 1997 between the Parent and
ThermaClime (as amended, renewed or extended), in the form delivered to Agent
on
the Closing Date.
“Material
Adverse Change”
means (a) a material adverse change in the business, prospects, operations,
results of operations, assets, liabilities or condition (financial or otherwise)
of Borrowers taken as a whole, (b) a material impairment of the ability of
Borrowers, taken as a whole, to perform their obligations under the Loan
Documents or of the Lender Group’s ability to enforce the Obligations or realize
upon the Collateral, or (c) a material impairment of the enforceability or
priority of the Agent’s Liens with respect to the Collateral as a result of an
action or failure to act on the part of a Borrower.
“Maturity
Date” has the
meaning set forth in Section 3.4.
“Maximum
Revolver Amount”
means $50,000,000 minus the aggregate principal amount of the Term Loan
then
outstanding.
“Negotiable
Collateral” means
all of Borrowers’ now owned and hereafter acquired right, title, and interest
with respect to letters of credit, letter of credit rights, instruments,
promissory notes, drafts, documents, and chattel paper (including electronic
chattel paper and tangible chattel paper), and any and all supporting
obligations in respect thereof.
-20-
“Net
Orderly Liquidation
Value” means, with respect to an item of Eligible Inventory and Eligible Raw
Inventory, as of any date of determination, the orderly liquidation value
thereof as determined by Agent in its Permitted Discretion, which determination
may be made by Agent in reliance on periodic appraisals.
“Obligations”
means
(a) all loans, Advances, debts, principal, interest (including any interest
that, but for the provisions of the Bankruptcy Code, would have accrued),
contingent reimbursement obligations with respect to outstanding Letters of
Credit, premiums, liabilities (including all amounts charged to Borrowers’ Loan
Account pursuant hereto), obligations, fees (including the fees provided for
in
the Fee Letter), charges, costs, Lender Group Expenses (including any fees
or
expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), guaranties, covenants, and duties of any kind and description owing
by
Borrowers to the Lender Group pursuant to or evidenced by the Loan Documents
and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Group Expenses
that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise, and (b) all Bank Product Obligations. Any reference in this
Agreement or in the Loan Documents to the Obligations shall include all
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.
“Officers’
Certificate”
means
the representations and warranties of officers form submitted by Agent to
Administrative Borrower, together with Borrowers’ completed responses to the
inquiries set forth therein, the form and substance of such responses to be
satisfactory to Agent.
“Operating
Lease Obligations”
means all obligations for the payment of rent for any real or personal
property
under leases or agreements to lease, other than Capitalized Lease Obligations.
“Original
Loan Agreement” has
the meaning set forth in the recitals to this Agreement.
“Original
Revolver Facility”
has the meaning set forth in the recitals to this Agreement.
“Original
Revolver
Indebtedness” has the meaning set forth in Section 2.1(h).
“Original
Term Loan” has the
meaning set forth in the recitals to this Agreement.
“Original
Term Loan
Indebtedness” has the meaning set forth in Section 2.2(b).
-21-
“Originating
Lender” has the
meaning set forth in Section 14.1(e).
“Overadvance”
has
the meaning
set forth in Section 2.5.
“Parent”
has
the meaning set
forth in the preamble to this Agreement.
“Participant”
has
the meaning
set forth in Section 14.1(e).
“Patent
Security Agreement”
means a patent security agreement executed and delivered by Borrowers and
Agent,
the form and substance of which is satisfactory to Agent.
“Permitted
Discretion” means
a determination made in good faith and in the exercise of reasonable (from
the
perspective of a secured asset-based lender) business judgment.
“Permitted
Dispositions”
means (a) sales or other dispositions by Borrowers of Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of the
applicable Borrower’s business, (b) sales by Borrowers of Inventory to
buyers in the ordinary course of business, (c) the use or transfer of money
or Cash Equivalents by Borrowers in a manner that is not prohibited by the
terms
of this Agreement or the other Loan Documents, (d) the licensing by
Borrowers, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of the applicable
Borrower’s business, (e) sales, transfers leases or other dispositions of
assets by any Borrower or any of its Subsidiaries to any other Borrower or
Guarantor (other than Parent), and (f) sales or other dispositions by
Borrowers of Accounts which are not Eligible Accounts, provided that
(i) the consideration payable in connection with the sale or disposition of
such non-Eligible Accounts shall be in cash and shall equal no less than 100%
of
the aggregate original invoice amount of such Accounts and (ii) the
proceeds from such sales or dispositions shall be deposited in a Cash Management
Account and applied to the Obligations.
“Permitted
Holders” means
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, their respective Family Members, and their respective Family Entities.
“Permitted
Investments” means
(a) Investments in Cash Equivalents, (b) Investments in negotiable
instruments for collection, (c) advances made in connection with purchases
of goods or services in the ordinary course of business, (d) Investments by
any Borrower or Guarantor in any other Borrower or any Guarantor (other than
Parent), (e) guarantees by a Borrower or Guarantor of Indebtedness
permitted under Section 7.1(e), (f) guarantees permitted under
Section 7.6, (g) other Investments set forth on Schedule 7.13
hereto, (h) Investments made by any Borrower or Guarantor (other than the
Parent) in the Parent, provided the aggregate amount of such Investments do
not
exceed $2,000,000 at any time outstanding and (i) Investments in any newly
created Subsidiary by means of purchase or other acquisition of the equity
interests of such Subsidiary including by way of merger, provided there
is no investment of Collateral.
“Permitted
Liens” means
(a) Liens held by Agent for the benefit of Agent and the Lenders,
(b) Liens for unpaid taxes that either (i) are not yet delinquent, or
(ii) do not constitute an Event of Default hereunder and are the subject of
Permitted
-22-
Protests,
(c) Liens set forth
on Schedule P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (f) Liens arising by operation of law
in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers,
or suppliers, incurred in the ordinary course of Borrowers’ business and not in
connection with the borrowing of money, and which Liens either (i) are for
sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(g) Liens arising from deposits made in connection with obtaining worker’s
compensation or other unemployment insurance, social security and other similar
laws (h) Liens or deposits to secure performance of bids, tenders, or
leases incurred in the ordinary course of Borrowers’ business and not in
connection with the borrowing of money, (i) Liens granted as security for
surety, payment, performance or appeal bonds in connection with obtaining such
bonds in the ordinary course of Borrowers’ business, (j) Liens resulting
from any judgment or award that is not an Event of Default hereunder,
(k) with respect to any Real Property, easements, exceptions, reservations,
encroachments, restrictions, rights of way, zoning restrictions and other
similar title policy exceptions or encumbrances that do not materially interfere
with or impair the use or operation thereof by Borrowers; and (l) Liens on
the BofA Collateral in favor of BofA (as collateral agent) on the Restatement
Effective Date securing the repayment of the BofA Loans and all other
obligations under the BofA Loan Agreement.
“Permitted
Protest” means the
right of the applicable Borrower to protest any Lien (other than any such Lien
that secures the Obligations), taxes (other than payroll taxes or taxes that
are
the subject of a United States federal tax lien), or rental payment, provided
that (a) a reserve with respect to such obligation is established on the
Books in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by the applicable Borrower in
good
faith, and (c) Agent is satisfied in its Permitted Discretion that, while
any such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of the Agent’s Liens.
“Permitted
Purchase Money
Indebtedness” means, as of any date of determination, Purchase Money
Indebtedness incurred after the Closing Date in an aggregate amount outstanding
at any one time not in excess of $7,500,000.
“Person”
means
natural
persons, corporations, limited liability companies, limited partnerships,
general partnerships, limited liability partnerships, joint ventures, trusts,
land trusts, business trusts, or other organizations, irrespective of whether
they are legal entities, and governments and agencies and political subdivisions
thereof.
“Projections”
means
Parent’s
forecasted (a) balance sheets, (b) profit and loss statements, and
(c) cash flow statements, all prepared on a consistent basis with Parent’s
historical financial statements, together with appropriate supporting details
and a statement of underlying assumptions.
-23-
“Pro
Rata Share” means:
(a)
with respect to a Lender’s
obligation to make Advances and receive payments of principal, interest, fees,
costs, and expenses with respect thereto, the percentage obtained by dividing
(i) such Lender’s Revolver Commitment, by (ii) the aggregate Revolver
Commitments of all Lenders,
(b)
with respect to a Lender’s
obligation to participate in Letters of Credit, to reimburse the Issuing Lender,
and to receive payments of fees with respect thereto, the percentage obtained
by
dividing (i) such Lender’s Revolver Commitment, by (ii) the aggregate
Revolver Commitments of all Lenders,
(c)
with respect to a Lender’s
obligation to make the Term Loan and receive payments of interest, fees, and
principal with respect thereto, the percentage obtained by dividing
(i) such Lender’s Term Loan Commitment, by (ii) the aggregate amount
of all Lenders’ Term Loan Commitments, and
(d)
with respect to all other
matters (including the indemnification obligations arising under
Section 16.7), the percentage obtained by dividing (i) such Lender’s
Total Commitment, by (ii) the aggregate amount of Total Commitments of all
Lenders; provided, however, that, in each case, in the event all
Commitments have been terminated, Pro Rata Share shall be determined according
to the Commitments in effect immediately prior to such termination.
“Purchase
Money Indebtedness”
means Indebtedness (other than the Obligations, but including Capitalized
Lease
Obligations), incurred at the time of, or within 60 days after, the acquisition
of any fixed assets for the purpose of financing all or any part of the
acquisition cost thereof.
“Real
Property” means any
estates or interests in real property now owned or hereafter acquired by any
Borrower and the improvements thereto.
“Record”
means
information
that is inscribed on a tangible medium or which is stored in an electronic
or
other medium and is retrievable in perceivable form.
“Remedial
Action” means all
actions taken to (a) clean up, remove, remediate, contain, treat, monitor,
assess, evaluate, or in any way address Hazardous Materials in the indoor or
outdoor environment, (b) prevent or minimize a release or threatened
release of Hazardous Materials so they do not migrate or endanger or threaten
to
endanger public health or welfare or the indoor or outdoor environment,
(c) perform any pre-remedial studies, investigations, or post-remedial
operation and maintenance activities, or (d) conduct any other actions
authorized by 42 USC § 9601.
“Report”
has
the meaning set
forth in Section 16.17.
“Required
Lenders” means, at
any time, Lenders whose Pro Rata Shares aggregate 66-2/3 % of the Total
Commitments, or if the Commitments have been terminated irrevocably, 66-2/3%
of
the Obligations (other than Bank Product Obligations) then outstanding.
-24-
“Reserve
Percentage” means,
on any day, for any Lender, the maximum percentage prescribed by the Board
of
Governors of the Federal Reserve System (or any successor Governmental
Authority) for determining the reserve requirements (including any basic,
supplemental, marginal, or emergency reserves) that are in effect on such date
with respect to eurocurrency funding (currently referred to as “eurocurrency
liabilities”) of that Lender, but so long as such Lender is not required or
directed under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.
“Restatement
Effective Date”
has the meaning set forth in Section 3.2.
“Revolver
Commitment” means,
with respect to each Lender, its Revolver Commitment, and, with respect to
all
Lenders, their Revolver Commitments, in each case as such Dollar amounts are
set
forth beside such Lender’s name under the applicable heading on Schedule C-1 or
on the signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of
Section 14.1.
“Revolver
Usage” means, as of
any date of determination, the sum of (a) the then extant amount of
outstanding Advances, plus (b) the then extant amount of the Letter of
Credit Usage.
“Risk
Participation
Liability” means, as to each Letter of Credit, all reimbursement obligations
of Borrowers to the Issuing Lender with respect to an L/C Undertaking,
consisting of (a) the amount available to be drawn or which may become
available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an Advance or otherwise, and (c) all accrued and
unpaid interest, fees, and expenses payable with respect thereto.
“SEC”
means
the United States
Securities and Exchange Commission and any successor thereto.
“Securities
Account” means a
“securities account” as that term is defined in the Code.
“Senior
Leverage Coverage
Ratio” means, as of any date, the ratio of (a) the sum of (i) the
aggregate outstanding principal amount of the Advances, the Term Loan and the
BofA Loans plus the Letter of Credit Usage as of such date to (b) EBITDA
for the twelve (12) month period ending as of the last day of the month
immediately preceding such date.
“Services
Agreement” means
the Services Agreement dated November 21, 1997 between the Parent and
ThermaClime (as amended, renewed or extended), in the form delivered to Agent
on
the Closing Date.
“Settlement”
has
the meaning
set forth in Section 2.3(f)(i).
“Settlement
Date” has the
meaning set forth in Section 2.3(f)(i).
-25-
“Solvent”
means,
with respect
to any Person on a particular date, that such Person is not insolvent (as such
term is defined in the Uniform Fraudulent Transfer Act).
“Special
Term Advance” has
the meaning set forth in Section 2.01(h).
“Stock”
means
all shares,
options, warrants, interests, participations, or other equivalents (regardless
of how designated) of or in a Person, whether voting or nonvoting, including
common stock, preferred stock, or any other “equity security” (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by
the
SEC under the Exchange Act).
“Subsidiary”
of
a Person
means a corporation, partnership, limited liability company, or other entity
in
which that Person directly or indirectly owns or controls the shares of Stock
having ordinary voting power to elect a majority of the board of directors
(or
appoint other comparable managers) of such corporation, partnership, limited
liability company, or other entity, other than EDN, DSN and each of their
respective Subsidiaries.
“Swing
Lender” means Foothill
or any other Lender that, at the request of Administrative Borrower and with
the
consent of Agent agrees, in such Lender’s sole discretion, to become the Swing
Lender hereunder.
“Swing
Loan” has the meaning
set forth in Section 2.3(d)(i).
“Tangible
Net Worth” means,
with respect to any Person, as of any date of determination, the result of
(a) the total stockholder’s equity of such Person and its Subsidiaries,
minus (b) the sum of (i) all Intangible Assets of such Person and its
Subsidiaries, (ii) all of such Person’s prepaid expenses, and
(iii) all amounts due to such Person and its Subsidiaries from Affiliates.
“Taxes”
has
the meaning set
forth in Section 2.2.
“Term
Loan” has the meaning
set forth in Section 2.2(a).
“Term
Loan Amount” means
$7,500,000.
“Term
Loan Commitment” means,
with respect to each Lender, its Term Loan Commitment, and, with respect to
all
Lenders, their Term Loan Commitments, in each case as such Dollar amounts are
set forth beside such Lender’s name under the applicable heading on Schedule
C-1.
“Term
Loan Priority
Collateral” means all Capital Assets acquired by a Borrower with proceeds of
the Term Loan.
“ThermaClime”
means
ThermaClime, Inc., an Oklahoma corporation formerly known as ClimaChem, Inc.
“ThermaClime
Fifth Supplemental
Indenture” means that certain Fifth Supplemental Indenture dated as of
May 24, 2002, among ThermaClime, as issuer, the guarantors named therein,
and Bank One, N.A., as trustee, supplementing and amending the ThermaClime
Indenture.
-26-
“ThermaClime
Indenture” means
the Indenture dated as of November 26, 1997 among ThermaClime, as issuer,
the guarantors named therein, and Bank One, N.A., as trustee, with respect
to
ThermaClime’s 10 3/4%
Senior Notes due 2007.
“ThermaClime
Notes” means the
Securities (as such term is defined in the ThermaClime Indenture) issued by
ThermaClime under and pursuant to the ThermaClime Indenture.
“Total
Commitment” means,
with respect to each Lender, its Total Commitment, and, with respect to all
Lenders, their Total Commitments, in each case as such Dollar amounts are set
forth beside such Lender’s name under the applicable heading on Schedule
C-1 attached hereto or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in accordance
with the provisions of Section 14.1.
“Trademark
Security
Agreement” means a trademark security agreement executed and delivered by
certain Borrowers and Agent, the form and substance of which is satisfactory
to
Agent.
“Trison”
means
Trison
Construction, Inc., an Oklahoma corporation.
“TTI”
means
ThermaClime
Technologies, Inc., an Oklahoma corporation.
“Underlying
Issuer” means a
third Person which is the beneficiary of an L/C Undertaking and which has issued
a letter of credit at the request of the Issuing Lender for the benefit of
Borrowers.
“Underlying
Letter of Credit”
means a letter of credit that has been issued by an Underlying Issuer.
“Voidable
Transfer” has the
meaning set forth in Section 17.7.
“▇▇▇▇▇
Fargo” means ▇▇▇▇▇
Fargo Bank, National Association, a national banking association.
“XPA”
means
XpediAir, Inc.,
an Oklahoma corporation formerly known as The Environmental Group, Inc.
1.2
Accounting
Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP. When used herein, the term “financial
statements” shall include the notes and schedules thereto. Whenever the term
“Borrowers” or the term “Parent” is used in respect of a financial covenant or a
related definition, it shall be understood to mean Parent and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise.
-27-
1.3
Code.
Any terms used in this Agreement that are defined in the Code shall be construed
and defined as set forth in the Code unless otherwise defined herein.
1.4
Construction. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include
the
singular, references to the singular include the plural, the term “including” is
not limiting, and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.” The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as
the
case may be, as a whole and not to any particular provision of this Agreement
or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to
any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person’s successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5
Schedules
and
Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.
2.
LOAN AND TERMS OF
PAYMENT.
2.1
Advances.
(a)
Subject to the terms and
conditions of this Agreement, and during the term of this Agreement, each Lender
with a Revolver Commitment agrees (severally, not jointly or jointly and
severally) to make advances (“Advances”) to Borrowers in an amount at any
one time outstanding not to exceed such Lender’s Pro Rata Share of an amount
equal to the lesser of (i) the Maximum Revolver Amount less the Letter of
Credit Usage or (ii) the Borrowing Base less the Letter of Credit Usage.
For purposes of this Agreement, “Borrowing Base,” as of any date of
determination, shall mean the result of the following for all Borrowers:
(A)
the lesser of
(1)
85% of the amount of Eligible
Accounts of such Borrowers, less the amount, if any, of the sum of the Dilution
Reserve, and
(2)
an amount equal to such
Borrowers’ Collections with respect to Accounts for the immediately preceding 75
day period, plus
-28-
(B)
the lowest of
(1)
$25,000,000, and
(2)
the sum of
(x)
the lesser of (i) 70% of
the value of such Borrowers’ Eligible Inventory, and (ii) 80% of the Net
Orderly Liquidation Value of such Borrowers’ Eligible Inventory, plus
(y)
the lesser of (i) 60% (or,
in the case of Climate Control Raw Inventory, 65%) of the value of such
Borrowers’ Eligible Raw Inventory, and (ii) 80% of the Net Orderly
Liquidation Value of such Borrowers’ Eligible Raw Inventory, minus
(C)(z)
the sum of (1) the Bank
Products Reserve, and (2) the aggregate amount of reserves, if any,
established by Agent under Section 2.1(b).
(b)
Anything to the contrary in this
Section 2.1 notwithstanding, Agent shall have the right to establish
reserves in such amounts, and with respect to such matters, as Agent in its
Permitted Discretion shall deem necessary or appropriate, against the Borrowing
Base, including reserves with respect to (i) sums that Borrowers are
required to pay (such as taxes, assessments, insurance premiums, or, in the
case
of leased assets, rents or other amounts payable under such leases) and has
failed to pay under any Section of this Agreement or any other Loan Document,
and (ii) amounts owing by Borrowers to any Person to the extent secured by
a Lien on, or trust over, any of the Collateral (other than any existing
Permitted Lien set forth on Schedule P-1 which is specifically identified
thereon as entitled to have priority over the Agent’s Liens), which Lien or
trust, in the Permitted Discretion of Agent likely would have a priority
superior to the Agent’s Liens (such as Liens or trusts in favor of landlords,
warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or
Liens
or trusts for ad valorem, excise, sales, or other taxes where given priority
under applicable law) in and to such item of the Collateral. In addition to
the
foregoing, Agent shall have the right to have the Inventory reappraised by
a
qualified appraisal company selected by Agent from time to time after the
Closing Date for the purpose of redetermining the Net Orderly Liquidation Value
of the Eligible Inventory and/or the Eligible Raw Inventory, which appraisals,
so long as no Default or Event of Default shall have occurred and be continuing,
shall be conducted at Borrowers’ expense no more frequently than once during any
twelve month period, and, after the occurrence and during the continuance of
a
Default or an Event of Default, at Borrowers’ expense as frequently as Agent
shall determine. Based upon the results of any such redetermination, and any
other information received from the collateral reporting required under
Section 6.2, Agent may, in its Permitted Discretion, redetermine the
Borrowing Base.
(c)
Intentionally deleted.
-29-
(d)
Notwithstanding the foregoing,
the aggregate principal amount of Advances made by the Lenders based upon the
aggregate value of Borrowers’ Eligible Inventory included in the Borrowing Base
shall not exceed the aggregate principal amount of Advances made by the Lenders
based upon the aggregate amount of Borrowers’ Eligible Accounts included in the
Borrowing Base.
(e)
Notwithstanding the foregoing,
the aggregate principal amount of Advances made by the Lenders based upon the
aggregate value of Borrowers’ In-Transit Inventory shall not exceed $2,000,000.
In addition, all amounts payable to common carriers in respect of Borrowers’
In-Transit Inventory shall be deducted by Agent from the proceeds of Advances
made by Lenders in respect of such In-Transit Inventory.
(f)
The Lenders with Revolver
Commitments shall have no obligation to make additional Advances hereunder
to
the extent such additional Advances would cause the Revolver Usage to exceed
(i) the Maximum Revolver Amount or (ii) the maximum amount of
indebtedness permitted to be incurred pursuant to clause (b) of the
definition of “Permitted Indebtedness” under the ThermaClime Indenture.
(g)
Amounts borrowed pursuant to
this Section may be repaid and, subject to the terms and conditions of this
Agreement, reborrowed at any time during the term of this Agreement.
(h)
Notwithstanding anything to the
contrary contained in this Section 2.1, the Borrowers hereby
acknowledge, confirm and agree that (i) immediately prior to the
Restatement Effective Date, the existing outstanding principal amount of the
Advances under and as defined in the Original Loan Facility is equal to $[0.00]
(such Indebtedness being hereinafter referred to as the “Original Revolver
Indebtedness”), (ii) such Original Revolver Indebtedness shall not be
repaid on the Closing Date, but rather shall be reevidenced by this Agreement
as
a portion of the Advances outstanding hereunder, and (iii) for all purposes
of this Agreement and the other Loan Documents, the sum of the Original Revolver
Indebtedness on the Restatement Effective Date and the Advances made on the
Restatement Effective Date (if any) shall constitute the Advances outstanding
on
the Restatement Effective Date.
2.2
CapEx
Loans.
(a)
Subject to the terms and
conditions of this Agreement, and during the term of this Agreement, each Lender
with a Term Loan Commitment may, in its sole discretion, make term loans
(collectively, the “Term Loan”) to Borrowers, in an aggregate principal
amount at any one time outstanding not to exceed such Lender’s Pro Rata Share of
the Term Loan Amount. The proceeds of each Term Loan shall be used by a Borrower
solely to fund a portion of the purchase price of assets (“Capital
Assets”) acquired by such Borrower that, in accordance with GAAP, are or
should be included in “property, plant and equipment” or in a similar fixed
asset account on such Borrower’s balance sheet. The maximum principal amount of
each Term Loan shall not exceed 70% of the Hard Cost of the Capital Assets
to be
acquired by the Borrowers with a portion of the proceeds of such Term Loan.
Each
Term Loan shall be made in a minimum amount of $50,000. The outstanding unpaid
principal balance and all accrued and unpaid interest under
-30-
the
Term Loan shall be due and
payable on the date of termination of this Agreement, whether by its terms,
by
prepayment, or by acceleration. All amounts outstanding under the Term Loan
shall constitute Obligations. Any principal amount of the Term Loan which is
repaid or prepaid by Borrowers may be reborrowed pursuant to the terms hereof.
Borrowers may, at any time, prepay all or a portion of the Term Loan without
penalty or premium.
(b)
Notwithstanding anything to the
contrary contained in this Section 2.2, the Borrowers hereby
acknowledge, confirm and agree that (i) immediately prior to the
Restatement Effective Date, the outstanding principal amount of the Term Loan
under and as defined in the Original Loan Facility is equal to $[0.00] (such
Indebtedness being hereinafter referred to as the “Original Term Loan
Indebtedness”), (ii) such Original Term Loan Indebtedness shall not be
repaid on the Restatement Effective Date, but rather shall be reevidenced by
this Agreement as a portion of the Term Loan outstanding hereunder,
(iii) for all purposes of this Agreement and the other Loan Documents, the
Original Term Loan Indebtedness on the Restatement Effective Date shall
constitute the Term Loan outstanding on the Restatement Effective Date.
2.3
Borrowing
Procedures
and Settlements.
(a)
Procedure
for
Borrowing. Each Borrowing shall be made by an irrevocable written
request by an Authorized Person delivered to Agent, which notice must be
received by Agent no later than 10:00 a.m. (California time) on the Business
Day
prior to the date that is the requested Funding Date in the case of a request
for an Advance specifying (i) the amount of such Borrowing, (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
in the case of a request for Swing Loan in an amount of $6,000,000, or less,
such notice will be timely received if it is received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding
Date, and (iii) in the case of a Borrowing consisting of a Term Loan, the
Capital Assets proposed to be financed with the proceeds of such Term Loan
together with the Hard Cost of such Capital Assets, the invoices pertaining
to
such Capital Assets and any other information or documents reasonably requested
by Agent that pertain to such Capital Assets. At Agent’s election, in lieu of
delivering the above-described written request, any Authorized Person may give
Agent telephonic notice of such request by the required time, with such
telephonic notice to be confirmed in writing within 24 hours of the giving
of
such notice.
(b)
Agent’s
Election. Promptly after receipt of a request for a Borrowing pursuant
to Section 2.3(a), Agent shall elect, in its discretion, (i) to
have the terms of Section 2.3(c) apply to such requested Borrowing,
or (ii) if the Borrowing is for an Advance, to request Swing Lender to make
a Swing Loan pursuant to the terms of Section 2.3(d) in the amount
of the requested Borrowing; provided, however, that if Swing
Lender declines in its sole discretion to make a Swing Loan pursuant to
Section 2.3(d), Agent shall elect to have the terms of
Section 2.3(c) apply to such requested Borrowing.
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(c)
Making
of
Advances.
(i)
In the event that Agent shall
elect to have the terms of this Section 2.3(c) apply to a requested
Borrowing as described in Section 2.3(b), then promptly after
receipt of a request for a Borrowing pursuant to Section 2.3(a),
Agent shall notify the Lenders, not later than 1:00 p.m. (California time)
on
the Business Day immediately preceding the Funding Date applicable thereto,
by
telecopy, telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of
the requested Borrowing available to Agent in immediately available funds,
to
Agent’s Account, not later than 10:00 a.m. (California time) on the Funding Date
applicable thereto. After Agent’s receipt of the proceeds of such Advances, upon
satisfaction of the applicable conditions precedent set forth in
Section 3 hereof, Agent shall make the proceeds thereof available to
Administrative Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Agent to
Administrative Borrower’s Designated Account; provided, however,
that, subject to the provisions of Section 2.3(i), Agent shall not
request any Lender to make, and no Lender shall have the obligation to make,
any
Advance if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless
such
condition has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
(ii)
Unless Agent receives notice
from a Lender on or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least 1 Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when required
hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro
Rata Share of the Borrowing, Agent may assume that each Lender has made or
will
make such amount available to Agent in immediately available funds on the
Funding Date and Agent may (but shall not be so required), in reliance upon
such
assumption, make available to Borrowers on such date a corresponding amount.
If
and to the extent any Lender shall not have made its full amount available
to
Agent in immediately available funds and Agent in such circumstances has made
available to Borrowers such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to Agent, together with
interest at the Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount is so
made
available, such payment to Agent shall constitute such Lender’s Advance on the
date of Borrowing for all purposes of this Agreement. If such amount is not
made
available to Agent on the Business Day following the Funding Date, Agent will
notify Administrative Borrower of such failure to fund and, upon demand by
Agent, Borrowers shall pay such amount to Agent for Agent’s account, together
with interest thereon for each day elapsed since the date of such Borrowing,
at
a rate per annum equal to the interest rate applicable at the time to the
Advances composing such Borrowing. The
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failure
of any Lender to make any
Advance on any Funding Date shall not relieve any other Lender of any obligation
hereunder to make an Advance on such Funding Date, but no Lender shall be
responsible for the failure of any other Lender to make the Advance to be made
by such other Lender on any Funding Date.
(iii)
Agent shall not be obligated
to transfer to a Defaulting Lender any payments made by Borrowers to Agent
for
the Defaulting Lender’s benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each other
non-Defaulting Lender member of the Lender Group ratably in accordance with
their Commitments (but only to the extent that such Defaulting Lender’s Advance
was funded by the other members of the Lender Group) or, if so directed by
Administrative Borrower and if no Default or Event of Default had occurred
and
is continuing (and to the extent such Defaulting Lender’s Advance was not funded
by the Lender Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the foregoing,
Agent may hold and, in its Permitted Discretion, re-lend to Borrowers for the
account of such Defaulting Lender the amount of all such payments received
and
retained by it for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents,
such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s
Commitment shall be deemed to be zero. This Section shall remain effective
with
respect to such Lender until (x) the Obligations under this Agreement shall
have been declared or shall have become immediately due and payable,
(y) the non-Defaulting Lenders, Agent, and Borrowers shall have waived such
Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes
its Pro Rata Share of the applicable Advance and pays to Agent all amounts
owing
by Defaulting Lender in respect thereof. The operation of this Section shall
not
be construed to increase or otherwise affect the Commitment of any Lender,
to
relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance
by Borrower of its duties and obligations hereunder to Agent or to the Lenders
other than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Administrative Borrower at its option, upon written
notice to Agent, to arrange for a substitute Lender to assume the Commitment
of
such Defaulting Lender, such substitute Lender to be acceptable to Agent. In
connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance Agreement
in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to
being
repaid its share of the outstanding Obligations (other than Bank Product
Obligations) (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever;
provided further, however, that any such assumption of the
Commitment of such Defaulting Lender shall not be deemed to constitute a waiver
of any of the Lender Groups’ or Borrowers’ rights or remedies against any such
Defaulting Lender arising out of or in relation to such failure to fund.
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(d)
Making
of Swing
Loans.
(i)
In the event Agent shall elect,
with the consent of Swing Lender, as a Lender, to have the terms of this
Section 2.3(d) apply to a requested Borrowing as described in
Section 2.3(b), Swing Lender as a Lender shall make such Advance in
the amount of such Borrowing (any such Advance made solely by Swing Lender
as a
Lender pursuant to this Section 2.3(d) being referred to as a “Swing
Loan” and such Advances being referred to collectively as “Swing Loans”)
available to Borrowers on the Funding Date applicable thereto by transferring
immediately available funds to Administrative Borrower’s Designated Account.
Each Swing Loan is an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that no such Swing Loan
shall be eligible for the LIBOR Option and all payments on any Swing Loan shall
be payable to Swing Lender as a Lender solely for its own account (and for
the
account of the holder of any participation interest with respect to such Swing
Loan). Subject to the provisions of Section 2.3(i), Agent shall not
request Swing Lender as a Lender to make, and Swing Lender as a Lender shall
not
make, any Swing Loan if Agent has actual knowledge that (i) one or more of
the applicable conditions precedent set forth in Section 3 will not
be satisfied on the requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (ii) the requested Borrowing would
exceed the Availability on such Funding Date. Swing Lender as a Lender shall
not
otherwise be required to determine whether the applicable conditions precedent
set forth in Section 3 have been satisfied on the Funding Date
applicable thereto prior to making, in its sole discretion, any Swing Loan.
(ii)
The Swing Loans shall be
secured by the Agent’s Liens, shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from time to time
to
Advances that are Base Rate Loans.
(e)
Agent
Advances.
(i)
Agent hereby is authorized by
Borrowers and the Lenders, from time to time in Agent’s sole discretion,
(1) after the occurrence and during the continuance of a Default or an
Event of Default, or (2) at any time that any of the other applicable
conditions precedent set forth in Section 3 have not been satisfied, to
make Advances to Borrowers on behalf of the Lenders that Agent, in its Permitted
Discretion deems necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations (other than the Bank Product Obligations), or
(C) to pay any other amount chargeable to Borrowers pursuant to the terms
of this Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in Section 10 (any of the Advances described in this
Section 2.3(e) shall be referred to as “Agent Advances”). Each Agent
Advance is an Advance hereunder and shall be subject to all the terms and
conditions
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applicable
to other Advances, except
that no such Agent Advance shall be eligible for the LIBOR Option and all
payments thereon shall be payable to Agent solely for its own account (and
for
the account of the holder of any participation interest with respect to such
Agent Advance).
(ii)
The Agent Advances shall be
repayable on demand and secured by the Agent’s Liens granted to Agent under the
Loan Documents, shall constitute Advances and Obligations hereunder, and shall
bear interest at the rate applicable from time to time to Advances that are
Base
Rate Loans.
(f)
Settlement.
It
is agreed that each Lender’s funded portion of the Advances is intended by the
Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding
Advances. Such agreement notwithstanding, Agent, Swing Lender, and the other
Lenders agree (which agreement shall not be for the benefit of or enforceable
by
Borrowers) that in order to facilitate the administration of this Agreement
and
the other Loan Documents, settlement among them as to the Advances, the Swing
Loans, and the Agent Advances shall take place on a periodic basis in accordance
with the following provisions:
(i)
Agent shall request settlement
(“Settlement”) with the Lenders on a weekly basis, or on a more frequent
basis if so determined by Agent, (1) on behalf of Swing Lender, with
respect to each outstanding Swing Loan, (2) for itself, with respect to
each Agent Advance, and (3) with respect to Collections received, as to
each by notifying the Lenders by telecopy, telephone, or other similar form
of
transmission, of such requested Settlement, no later than 2:00 p.m. (California
time) on the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the “Settlement
Date”). Such notice of a Settlement Date shall include a summary statement
of the amount of outstanding Advances, Swing Loans, and Agent Advances for
the
period since the prior Settlement Date. Subject to the terms and conditions
contained herein (including Section 2.3(c)(iii)): (y) if a
Lender’s balance of the Advances, Swing Loans, and Agent Advances exceeds such
Lender’s Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m. (California
time)
on the Settlement Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement Date,
its
Pro Rata Share of the Advances, Swing Loans, and Agent Advances, and (z) if
a Lender’s balance of the Advances, Swing Loans, and Agent Advances is less than
such Lender’s Pro Rata Share of the Advances, Swing Loans, and Agent Advances as
of a Settlement Date, such Lender shall no later than 12:00 p.m. (California
time) on the Settlement Date transfer in immediately available funds to the
Agent’s Account, an amount such that each such Lender shall, upon transfer of
such amount, have as of the Settlement Date, its Pro Rata Share of the Advances,
Swing Loans, and Agent Advances. Such amounts made available to Agent under
clause (z) of the immediately preceding sentence shall be applied against
the amounts of the applicable Swing Loan or Agent Advance and, together with
the
portion of such Swing Loan or Agent Advance
-35-
representing
Swing Lender’s Pro Rata
Share thereof, shall constitute Advances of such Lenders. If any such amount
is
not made available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be entitled
to
recover for its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.
(ii)
In determining whether a
Lender’s balance of the Advances, Swing Loans, and Agent Advances is less than,
equal to, or greater than such Lender’s Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, Agent shall, as part of
the
relevant Settlement, apply to such balance the portion of payments actually
received in good funds by Agent with respect to principal, interest, fees
payable by Borrowers and allocable to the Lenders hereunder, and proceeds of
Collateral. To the extent that a net amount is owed to any such Lender after
such application, such net amount shall be distributed by Agent to that Lender
as part of such next Settlement.
(iii)
Between Settlement Dates,
Agent, to the extent no Agent Advances or Swing Loans are outstanding, may
pay
over to Swing Lender any payments received by Agent, that in accordance with
the
terms of this Agreement would be applied to the reduction of the Advances,
for
application to Swing Lender’s Pro Rata Share of the Advances. If, as of any
Settlement Date, Collections received since the then immediately preceding
Settlement Date have been applied to Swing Lender’s Pro Rata Share of the
Advances other than to Swing Loans, as provided for in the previous sentence,
Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent
shall
pay to the Lenders, to be applied to the outstanding Advances of such Lenders,
an amount such that each Lender shall, upon receipt of such amount, have, as
of
such Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Agent Advances, and each Lender (subject to the effect of letter
agreements between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Agent Advances, shall be entitled to interest at
the
applicable rate or rates payable under this Agreement on the daily amount of
funds employed by Swing Lender, Agent, or the Lenders, as applicable.
(g)
Notation.
Agent
shall record on its books the principal amount of the Advances owing to each
Lender, including the Swing Loans owing to Swing Lender, and Agent Advances
owing to Agent, and the interests therein of each Lender, from time to time.
In
addition, each Lender is authorized, at such Lender’s option, to note the date
and amount of each payment or prepayment of principal of such Lender’s Advances
in its books and records, including computer records, such books and records
constituting conclusive evidence, absent manifest error, of the accuracy of
the
information contained therein.
(h)
Lenders’
Failure
to
Perform. All Advances (other than Swing Loans and Agent Advances) shall
be made by the Lenders contemporaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender
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shall
be responsible for any failure
by any other Lender to perform its obligation to make any Advance (or other
extension of credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.
(i)
Optional
Overadvances. Any contrary provision of this Agreement notwithstanding,
the Lenders hereby authorize Agent or Swing Lender, as applicable, and Agent
or
Swing Lender, as applicable, may, but is not obligated to, knowingly and
intentionally, continue to make Advances (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or thereby would be created, so
long
as (i) after giving effect to such Advances (including a Swing Loan), the
Revolver Usage with respect to the Borrowers does not exceed the Borrowing
Base
by more than $5,000,000, (ii) after giving effect to such Advances
(including a Swing Loan) the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount, and (iii) at
the time of the making of any such Advance (including a Swing Loan), Agent
does
not believe, in good faith, that the Overadvance created by such Advance will
be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same
terms and conditions as any other Advance or Swing Loan, as applicable, except
that they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence
of a Default or Event of Default.
(i)
In the event Agent obtains
actual knowledge that the Revolver Usage exceeds the amounts permitted by the
preceding paragraph, regardless of the amount of, or reason for, such excess,
Agent shall notify Lenders as soon as practicable (and prior to making any
(or
any additional) intentional Overadvances (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender Group Expenses) unless
Agent determines that prior notice would result in imminent harm to the
Collateral or its value), and the Lenders with Revolver Commitments thereupon
shall, together with Agent, jointly determine the terms of arrangements that
shall be implemented with Borrowers and intended to reduce, within a reasonable
time, the outstanding principal amount of the Advances to Borrowers to an amount
permitted by the preceding paragraph. In the event Agent or any Lender disagrees
over the terms of reduction or repayment of any Overadvance, the terms of
reduction or repayment thereof shall be implemented according to the
determination of the Required Lenders.
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(ii)
Each Lender with a Revolver
Commitment shall be obligated to settle with Agent as provided in
Section 2.3(f) for the amount of such Lender’s Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(i), and any
Overadvances resulting from the charging to the Loan Account of interest, fees,
or Lender Group Expenses.
2.4
Payments.
(a)
Payments
by
Borrowers.
(i)
Except as otherwise expressly
provided herein, all payments by Borrowers shall be made to Agent’s Account for
the account of the Lender Group and shall be made in immediately available
funds, no later than 11:00 a.m. (California time) on the date specified herein.
Any payment received by Agent later than 11:00 a.m. (California time), shall
be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.
(ii)
Unless Agent receives notice
from Administrative Borrower prior to the date on which any payment is due
to
the Lenders that Borrowers will not make such payment in full as and when
required, Agent may assume that Borrowers have made (or will make) such payment
in full to Agent on such date in immediately available funds and Agent may
(but
shall not be so required), in reliance upon such assumption, distribute to
each
Lender on such due date an amount equal to the amount then due such Lender.
If
and to the extent Borrowers do not make such payment in full to Agent on the
date when due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the Defaulting
Lender Rate for each day from the date such amount is distributed to such Lender
until the date repaid.
(iii)
In the event the aggregate
principal amount of the Advances outstanding on any day exceeds the maximum
amount of indebtedness permitted to be incurred pursuant to clause (b) of
the definition of “Permitted Indebtedness” under the ThermaClime Indenture,
Borrowers will immediately prepay the outstanding principal amount of the
Advances, to the full extent of any such excess.
(iv)
Upon receipt of any
disbursements or dividends described in Section 6.16, the Borrowers
shall immediately prepay the outstanding principal amount of the Advances in
the
amount of such distribution or dividend.
(b)
Apportionment
and
Application of Payments.
(i)
Except as otherwise provided
with respect to Defaulting Lenders and except as otherwise provided in the
Loan
Documents (including letter agreements between Agent and individual Lenders),
aggregate principal and interest payments shall be apportioned ratably among
the
Lenders (according to the unpaid principal balance of the
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Obligations
to which such payments
relate held by each Lender) and payments of fees and expenses (other than fees
or expenses that are for Agent’s separate account, after giving effect to any
letter agreements between Agent and individual Lenders) shall be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Commitment
or
Obligation to which a particular fee relates. All payments shall be remitted
to
Agent and all such payments (other than payments received while no Default
or
Event of Default has occurred and is continuing and which relate to the payment
of principal or interest of specific Obligations or which relate to the payment
of specific fees), and all proceeds of Accounts or other Collateral received
by
Agent, shall be applied as follows:
A.
first,
to pay any Lender
Group Expenses then due to Agent under the Loan Documents, until paid in full,
B.
second,
to pay any Lender
Group Expenses then due to the Lenders under the Loan Documents, on a ratable
basis, until paid in full,
C.
third,
to pay any fees
then due to Agent (for its separate accounts, after giving effect to any letter
agreements between Agent and the individual Lenders) under the Loan Documents
until paid in full,
D.
fourth,
to pay any fees
then due to any or all of the Lenders (after giving effect to any letter
agreements between Agent and individual Lenders) under the Loan Documents,
on a
ratable basis, until paid in full,
E.
fifth,
to pay interest due
in respect of all Agent Advances, until paid in full,
F.
sixth,
ratably to pay
interest due in respect of the Advances (other than Agent Advances), the Swing
Loans, and the Term Loan until paid in full,
G.
seventh,
to pay the
principal of all Agent Advances until paid in full,
H.
eighth,
to pay the
principal amounts then due and payable (other than as a result of an
acceleration thereof) with respect to the Term Loan until paid in full,
I.
ninth,
to pay the
principal of all Swing Loans until paid in full,
J.
tenth,
so long as no Event
of Default has occurred and is continuing, and at Agent’s election (which
election Agent agrees will not be made if an Overadvance would be created
thereby), to pay amounts then due and owing by any Borrower or its Subsidiaries
in respect of Bank Products, until paid in full,
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K.
eleventh,
so long as no
Event of Default has occurred and is continuing, to pay the principal of all
Advances until paid in full,
L.
twelfth,
if an Event of
Default has occurred and is continuing, ratably (i) to pay the principal of
all Advances until paid in full, and (ii) to Agent, to be held by Agent,
for the benefit of ▇▇▇▇▇ Fargo or its Affiliates, as applicable, as cash
collateral in an amount up to the amount of the Bank Products Reserve
established prior to the occurrence of, and not in contemplation of, the subject
Event of Default until Borrowers’ and their Subsidiaries’ obligations in respect
of the then extant Bank Products have been paid in full or the cash collateral
amount has been exhausted,
M.
thirteenth,
if an Event of
Default has occurred and is continuing, to pay the outstanding principal balance
of the Term Loan (in inverse order of the maturity of the installments due
thereunder) until the Term Loan is paid in full,
N.
fourteenth,
if an Event of
Default has occurred and is continuing, to Agent, to be held by Agent, for
the
ratable benefit of Issuing Lender and those Lenders having a Revolver
Commitment, as cash collateral in an amount up to 105% of the then extant Letter
of Credit Usage until paid in full,
O.
fifteenth,
to pay any
other Obligations (including Bank Product Obligations) until paid in full,
and
P.
sixteenth,
to Borrowers
(to be wired to the Designated Account) or such other Person entitled thereto
under applicable law.
(ii)
Agent promptly shall distribute
to each Lender, pursuant to the applicable wire instructions received from
each
Lender in writing, such funds as it may be entitled to receive, subject to
a
Settlement delay as provided in Section 2.3(h).
(iii)
In each instance, so long as
no Default or Event of Default has occurred and is continuing,
Section 2.4(b) shall not be deemed to apply to any payment by
Borrowers specified by Borrowers to be for the payment of specific Obligations
then due and payable (or prepayable) under any provision of this Agreement.
(iv)
For purposes of the foregoing,
“paid in full” means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees, professional
fees, interest (and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest, interest on
interest, and expense reimbursements, whether or not the same would be or is
allowed or disallowed in whole or in part in any Insolvency Proceeding.
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(v)
In the event of a direct
conflict between the priority provisions of this Section 2.4 and
other provisions contained in any other Loan Document, it is the intention
of
the parties hereto that such priority provisions in such documents shall be
read
together and construed, to the fullest extent possible, to be in concert with
each other. In the event of any actual, irreconcilable conflict that cannot
be
resolved as aforesaid, the terms and provisions of this Section 2.4
shall control and govern.
(vi)
Notwithstanding anything to the
contrary contained in this Agreement or any other Loan Document, all proceeds
received by Agent from the sale or other disposition of, or in connection with
any casualty or loss of, any Term Loan Priority Collateral shall be applied,
first, to the Obligations in respect of the Term Loan then outstanding and
the
remainder of such proceeds shall be applied in accordance with
Section 2.4(b)(i).
2.5
Overadvances. If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the
Dollar or percentage limitations set forth in Sections 2.1 or 2.12, (an
“Overadvance”), Borrowers immediately shall pay to Agent, in cash, the
amount of such excess, which amount shall be used by Agent to reduce such
Overadvances in accordance with the priorities set forth in
Section 2.4(b). In addition, Borrowers hereby promise to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to the Lender Group as and when due and payable under the terms
of this Agreement and the other Loan Documents.
2.6
Interest
Rates and
Letter of Credit Fee: Rates, Payments, and Calculations.
(a)
Interest
Rates.
Except as provided in clause (c) below, all Obligations (except for undrawn
Letters of Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest
on
the Daily Balance thereof as follows (i) if the relevant Obligation is an
Advance that is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate
plus the LIBOR Rate Margin, (ii) otherwise, at a per annum rate equal to
the Base Rate plus the Base Rate Margin.
The
foregoing notwithstanding, at no
time shall any portion of the Obligations (other than Bank Product Obligations)
in respect of the Term Loan bear interest on the Daily Balance thereof at a
per
annum rate less than 6.25%. To the extent that interest accrued hereunder at
the
rate set forth herein would be less than the foregoing minimum daily rate,
the
interest rate chargeable hereunder for such day automatically shall be deemed
increased to the minimum rate.
(b)
Letter
of Credit
Fee. Borrowers shall pay Agent (for the ratable benefit of the Lenders
with a Revolver Commitment, subject to any letter agreement between Agent and
individual Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which
shall accrue at a rate equal to 1.00% per annum times the Daily Balance of
the undrawn amount of all outstanding Letters of Credit.
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(c)
Default
Rate.
Upon the occurrence and during the continuation of an Event of Default (and
at
the election of Agent or the Required Lenders),
(i)
all Obligations (except for
undrawn Letters of Credit and except for Bank Product Obligations) that have
been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to 2 percentage
points above the per annum rate otherwise applicable hereunder, and
(ii)
the Letter of Credit fee
provided for above shall be increased to 2 percentage points above the per
annum
rate otherwise applicable hereunder.
(d)
Payment.
Interest, Letter of Credit fees, and all other fees payable hereunder shall
be
due and payable, in arrears, on the first day of each month at any time that
Obligations or Commitments are outstanding. Borrowers hereby authorize Agent,
from time to time, without prior notice to Borrowers, to charge such interest
and fees, all Lender Group Expenses (as and when incurred), the charges,
commissions, fees, and costs provided for in Section 2.12(e) (as and
when accrued or incurred), the fees and costs provided for in
Section 2.11 (as and when accrued or incurred), and all other
payments as and when due and payable under any Loan Document (including any
amounts due and payable to ▇▇▇▇▇ Fargo or its Affiliates in respect of Bank
Products up to the amount of the then extant Bank Products Reserve) to
Borrowers’ Loan Account, which amounts thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances hereunder.
Any
interest not paid when due shall be compounded by being charged to Borrowers’
Loan Account and shall thereafter constitute Advances hereunder and shall accrue
interest at the rate then applicable to Advances that are Base Rate Loans
hereunder.
(e)
Computation.
All interest and fees chargeable under the Loan Documents shall be computed
on
the basis of a 360 day year for the actual number of days elapsed. In the event
the Base Rate is changed from time to time hereafter, the rates of interest
hereunder based upon the Base Rate automatically and immediately shall be
increased or decreased by an amount equal to such change in the Base Rate.
(f)
Intent
to Limit Charges
to Maximum Lawful Rate. In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law that a court of
competent jurisdiction shall, in a final determination, deem applicable.
Borrowers and the Lender Group, in executing and delivering this Agreement,
intend legally to agree upon the rate or rates of interest and manner of payment
stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then,
ipso facto, as of the date of this Agreement, Borrowers are and shall be
liable only for the payment of such maximum as allowed by law, and payment
received from Borrowers in excess of such legal maximum, whenever received,
shall be applied to reduce the principal balance of the Obligations to the
extent of such excess.
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2.7
Cash
Management.
(a)
Borrowers shall
(i) establish and maintain cash management services of a type and on terms
satisfactory to Agent at one or more of the banks set forth on Schedule
2.7(a) (each a “Cash Management Bank”), and shall request in writing
and otherwise take such reasonable steps to ensure that all of its Account
Debtors forward payment of the amounts owed by them directly to such Cash
Management Bank, and (ii) deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors
to a
Cash Management Bank) into a bank account in Agent’s name (a “Cash Management
Account”) at one of the Cash Management Banks.
(b)
On the Closing Date, each Cash
Management Bank shall establish and maintain Cash Management Agreements with
Agent and Borrowers in form and substance acceptable to Agent, provided that
such Cash Management Agreements may not be implemented until 30 days after
the
Closing Date. Each such Cash Management Agreement shall provide, among other
things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank as agent
or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights
of setoff or recoupment or any other claim against the applicable Cash
Management Account, other than for payment of its service fees and other charges
directly related to the administration of such Cash Management Account and
for
returned checks or other items of payment, and (iii) it immediately will
forward by daily sweep all amounts in the applicable Cash Management Account
to
the Agent’s Account.
(c)
So long as no Default or Event
of Default has occurred and is continuing, Administrative Borrower may amend
Schedule 2.7(a) or (b) to add or replace a Cash Management Account Bank or
Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be satisfactory to Agent and Agent shall
have consented in writing in advance to the opening of such Cash Management
Account with the prospective Cash Management Bank, and (ii) prior to the
time of the opening of such Cash Management Account, Borrowers and such
prospective Cash Management Bank shall have executed and delivered to Agent
a
Cash Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance
with
the foregoing sentence) promptly and in any event within 30 days of notice
from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent’s reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Agent’s liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Agent’s reasonable judgment.
(d)
The Cash Management Accounts
shall be cash collateral accounts, with all cash, checks and similar items
of
payment in such accounts securing payment of the Obligations, and in which
Borrowers are hereby deemed to have granted a Lien to Agent.
2.8
Crediting
Payments. The receipt of any payment item by Agent (whether from
transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless
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such
payment item is a wire transfer
of immediately available federal funds made to the Agent’s Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrowers shall
be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into
the
Agent’s Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Agent’s Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to
have
been received by Agent as of the opening of business on the immediately
following Business Day.
2.9
Designated
Account. Agent is authorized to make the Advances, and Issuing
Lender is authorized to issue the Letters of Credit, under this Agreement based
upon telephonic or other instructions received from anyone purporting to be
an
Authorized Person, or without instructions if pursuant to Section 2.6(d).
Administrative Borrower agrees to establish and maintain a Designated Account
for Borrowers with the Designated Account Bank for the purpose of receiving
the
proceeds of the Advances requested by Borrowers and made by Agent or the Lenders
hereunder. Unless otherwise agreed by Agent and Administrative Borrower, any
Advance, Agent Advance or Swing Loan requested by Borrowers and made by Agent
or
the Lenders hereunder shall be made to the Designated Account.
2.10
Maintenance
of Loan
Account; Statements of Obligations. Agent shall maintain an account
on its books in the name of Borrowers and (the “Loan Account”) on which
Borrowers will be charged with the Term Loan, all Advances (including Agent
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers’ account, the Letters of Credit issued by Issuing
Lender for Borrowers’ account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses.
In
accordance with Section 2.8, the Loan Account will be credited with all
payments received by Agent from Borrowers or for Borrowers’ account, including
all amounts received in the Agent’s Account from any Cash Management Bank. Agent
shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and such statements
shall
be conclusively presumed to be correct and accurate and constitute an account
stated between Borrowers and the Lender Group unless, within 45 days after
receipt thereof by Administrative Borrower, Administrative Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.
2.11
Fees.
Borrowers shall pay to Agent the following fees and charges, which fees and
charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter) and shall be apportioned among the Lenders
in accordance with the terms of letter agreements between Agent and individual
Lenders:
(a)
Unused Line Fee. On the first
day of each month during the term of this Agreement, an unused line fee in
the
amount equal to 0.375% per annum times the result of (a) the Maximum
Revolver Amount, less (b) the sum of (i) the average Daily Balance of
Advances that were outstanding during the immediately preceding month, plus
(ii) the average Daily Balance of the Letter of Credit Usage during the
immediately preceding month,
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(b)
Fee Letter Fees. As and when due
and payable under the terms of the Fee Letter, Borrowers shall pay to Agent
the
fees set forth in the Fee Letter, and
(c)
For the separate account of each
member of the Lender Group, audit, appraisal, and valuation fees and charges
as
follows, (i) a fee of $1,000 per day, per auditor, plus out-of-pocket
expenses for each financial audit of a Borrower performed by personnel employed
by Agent and each Lender that accompanies Agent’s personnel in connection with
such financial audit conducted by Agent, (ii) if implemented, for the sole
account of the Agent, a one time charge of $3,000 plus out-of-pocket expenses
for expenses for the establishment of electronic collateral reporting systems,
(iii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses,
for each appraisal of the Collateral consisting of Inventory and Capital Assets
performed by personnel employed by Agent, provided, that, in the absence of
a
continuing Event of Default, the Borrowers shall not be obligated to pay for
more than one (1) appraisal in any 12 month period, and (iv) the
actual charges paid or incurred by the Agent (and, subject to clause
(i) above, each Lender) if it elects to employ the services of one or more
third Persons to perform financial audits of Borrowers, to appraise the
Collateral, or any portion thereof, or to assess a Borrower’s business
valuation.
2.12
Letters
of
Credit.
(a)
Subject to the terms and
conditions of this Agreement, the Issuing Lender agrees to issue letters of
credit (each, an “L/C”) for the account of Borrowers or to purchase
participations or execute indemnities or reimbursement obligations (each such
undertaking, an “L/C Undertaking”) with respect to letters of credit
issued by an Underlying Issuer (as of the Closing Date, the prospective
Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of Borrowers. To request
the issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or
extension of an outstanding L/C or L/C Undertaking), Administrative Borrower
shall hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Lender) to the
Issuing Lender and Agent (reasonably in advance of the requested date of
issuance, amendment, renewal, or extension) a notice requesting the issuance
of
an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such other
information as shall be necessary to prepare, amend, renew, or extend such
L/C
or L/C Undertaking. If requested by the Issuing Lender, Borrowers also shall
be
an applicant under the application with respect to any Underlying Letter of
Credit that is to be the subject of an L/C Undertaking. The Issuing Lender
shall
have no obligation to issue a Letter of Credit if any of the following would
result after giving effect to the requested Letter of Credit:
(i)
the Letter of Credit Usage would
exceed the Borrowing Base less the amount of outstanding Advances, or
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(ii)
the Letter of Credit Usage
would exceed $15,000,000, or
(iii)
the Letter of Credit Usage
would exceed the lesser of (A) Maximum Revolver Amount and (B) the
maximum amount of indebtedness permitted to be incurred pursuant to clause
(b) of the definition of “Permitted Indebtedness” under the ThermaClime
Indenture less (C) the then extant amount of outstanding Advances.
Borrowers
and the Lender Group
acknowledge and agree that certain Underlying Letters of Credit may be issued
to
support letters of credit that already are outstanding as of the Closing Date.
Each Letter of Credit (and corresponding Underlying Letter of Credit) shall
have
an expiry date no later than 30 days prior to the Maturity Date and all such
Letters of Credit (and corresponding Underlying Letter of Credit) shall be
in
form and substance acceptable to the Issuing Lender (in the exercise of its
Permitted Discretion), including the requirement that the amounts payable
thereunder must be payable in Dollars. If Issuing Lender is obligated to advance
funds under a Letter of Credit, Borrowers immediately shall reimburse such
L/C
Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C
Disbursement not later than 11:00 a.m., California time, on the date that such
L/C Disbursement is made, if Administrative Borrower shall have received written
or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California
time, on such date, or, if such notice has not been received by Administrative
Borrower prior to such time on such date, then not later than 11:00 a.m.,
California time, on (i) the Business Day that Administrative Borrower
receives such notice, if such notice is received prior to 10:00 a.m., California
time, on the date of receipt, and, in the absence of such reimbursement, the
L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the rate then applicable
to
Advances that are Base Rate Loans under Section 2.6. To the extent
an L/C Disbursement is deemed to be an Advance hereunder Borrowers’ obligation
to reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrowers pursuant to this paragraph, Agent shall distribute such payment to
the
Issuing Lender or, to the extent that Lenders have made payments pursuant to
Section 2.12(c) to reimburse the Issuing Lender, then to such
Lenders and the Issuing Lender as their interest may appear.
(b)
Promptly following receipt of a
notice of L/C Disbursement pursuant to Section 2.12(a), each Lender
with a Revolver Commitment agrees to fund its Pro Rata Share of any Advance
deemed made pursuant to the foregoing subsection on the same terms and
conditions as if Borrowers had requested such Advance and Agent shall promptly
pay to Issuing Lender the amounts so received by it from the Lenders. By the
issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing
the amount thereof) and without any further action on the part of the Issuing
Lender or the Lenders with Revolver Commitment, the Issuing Lender shall be
deemed to have granted to each Lender with a Revolver Commitment, and each
Lender with a Revolver Commitment shall be deemed to have purchased, a
participation in each Letter of Credit, in an amount equal to its Pro Rata
Share
of the Risk Participation Liability of such Letter of Credit, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender’s Pro Rata Share of any payments made by the Issuing Lender under such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Lender with a Revolver Commitment hereby absolutely and unconditionally agrees
to pay to
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Agent,
for the account of the
Issuing Lender, such Lender’s Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrowers on the date due as provided
in clause (a) of this Section, or of any reimbursement payment required to
be refunded to Borrowers for any reason. Each Lender with a Revolver Commitment
acknowledges and agrees that its obligation to deliver to Agent, for the account
of the Issuing Lender, an amount equal to its respective Pro Rata Share pursuant
to this Section 2.12(b) shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of
an
Event of Default or Default or the failure to satisfy any condition set forth
in
Section 3 hereof. If any such Lender fails to make available to
Agent the amount of such Lender’s Pro Rata Share of any payments made by the
Issuing Lender in respect of such Letter of Credit as provided in this Section,
Agent (for the account of the Issuing Lender) shall be entitled to recover
such
amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.
(c)
Each Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless from any loss,
cost,
expense, or liability, and reasonable attorneys fees incurred by the Lender
Group arising out of or in connection with any Letter of Credit;
provided, however, that no Borrower shall be obligated hereunder
to indemnify for any loss, cost, expense, or liability that is caused by the
gross negligence or willful misconduct of the Issuing Lender or any other member
of the Lender Group. Each Borrower agrees to be bound by the Underlying Issuer’s
regulations and interpretations of any Underlying Letter of Credit or by Issuing
Lender’s interpretations of any L/C issued by Issuing Lender to or for such
Borrower’s account, even though this interpretation may be different from such
Borrower’s own, and each Borrower understands and agrees that the Lender Group
shall not be liable for any error, negligence, or mistake, whether of omission
or commission, in following Borrowers’ instructions or those contained in the
Letter of Credit or any modifications, amendments, or supplements thereto.
Each
Borrower understands that the L/C Undertakings may require Issuing Lender to
indemnify the Underlying Issuer for certain costs or liabilities arising out
of
claims by Borrowers against such Underlying Issuer. Each Borrower hereby agrees
to indemnify, save, defend, and hold the Lender Group harmless with respect
to
any loss, cost, expense (including reasonable attorneys fees), or liability
incurred by the Lender Group under any L/C Undertaking as a result of the Lender
Group’s indemnification of any Underlying Issuer; provided,
however, that no Borrower shall be obligated hereunder to indemnify
for
any loss, cost, expense, or liability that is caused by the gross negligence
or
willful misconduct of the Issuing Lender or any other member of the Lender
Group.
(d)
Each Borrower hereby authorizes
and directs any Underlying Issuer to deliver to the Issuing Lender all
instruments, documents, and other writings and property received by such
Underlying Issuer pursuant to such Underlying Letter of Credit and to accept
and
rely upon the Issuing Lender’s instructions with respect to all matters arising
in connection with such Underlying Letter of Credit and the related application.
(e)
Any and all charges,
commissions, fees, and costs incurred by the Issuing Lender relating to
Underlying Letters of Credit shall be Lender Group Expenses for purposes of
this
Agreement and immediately shall be reimbursable by Borrowers to Agent for the
account of the Issuing Lender; it being acknowledged and agreed by each Borrower
that, as of the Closing Date, the issuance charge imposed by the prospective
Underlying Issuer is .825% per annum times the face amount of each Underlying
Letter of Credit, that such issuance charge may be changed from time to time,
and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.
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(f)
If by reason of (i) any
change in any applicable law, treaty, rule, or regulation or any change in
the
interpretation or application thereof by any Governmental Authority, or
(ii) compliance by the Underlying Issuer or the Lender Group with any
direction, request, or requirement (irrespective of whether having the force
of
law) of any Governmental Authority or monetary authority including, Regulation
D
of the Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i)
any reserve, deposit, or similar
requirement is or shall be imposed or modified in respect of any Letter of
Credit issued hereunder, or
(ii)
there shall be imposed on the
Underlying Issuer or the Lender Group any other condition regarding any
Underlying Letter of Credit or any Letter of Credit issued pursuant hereto;
and
the result of the foregoing is
to increase, directly or indirectly, the cost to the Lender Group of issuing,
making, guaranteeing, or maintaining any Letter of Credit or to reduce the
amount receivable in respect thereof by the Lender Group, then, and in any
such
case, Agent may, at any time within a reasonable period after the additional
cost is incurred or the amount received is reduced, notify Administrative
Borrower, and Borrowers shall pay on demand such amounts as Agent may specify
to
be necessary to compensate the Lender Group for such additional cost or reduced
receipt, together with interest on such amount from the date of such demand
until payment in full thereof at the rate then applicable to Base Rate Loans
hereunder. The determination by Agent of any amount due pursuant to this
Section, as set forth in a certificate setting forth the calculation thereof
in
reasonable detail, shall, in the absence of manifest or demonstrable error,
be
final and conclusive and binding on all of the parties hereto.
2.13
LIBOR
Option.
(a)
Interest
and Interest
Payment Dates. In lieu of having interest charged at the rate based
upon the Base Rate, Borrowers shall have the option (the “LIBOR Option”)
to have interest on all or a portion of the Advances be charged at the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of
(i) the last day of the Interest Period applicable thereto, (ii) the
occurrence of an Event of Default in consequence of which the Required Lenders
or Agent on behalf thereof elect to accelerate the maturity of the Obligations,
or (iii) termination of this Agreement pursuant to the terms hereof. On the
last day of each applicable Interest Period, unless Administrative Borrower
properly has exercised the LIBOR Option with respect thereto, the interest
rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate
of
interest then applicable to Base Rate Loans of the same type hereunder. At
any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Advances bear interest at the
LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
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(b)
LIBOR Election.
(i)
Administrative Borrower may, at
any time and from time to time, so long as no Event of Default has occurred
and
is continuing, elect to exercise the LIBOR Option by notifying Agent prior
to
11:00 a.m. (California time) at least 3 Business Days prior to the commencement
of the proposed Interest Period (the “LIBOR Deadline”). Notice of
Administrative Borrower’s election of the LIBOR Option for a permitted portion
of the Advances and an Interest Period pursuant to this Section shall be made
by
delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline,
or by telephonic notice received by Agent before the LIBOR Deadline (to be
confirmed by delivery to Agent of a LIBOR Notice received by Agent prior to
5:00
p.m. (California time) on the same day. Promptly upon its receipt of each such
LIBOR Notice, Agent shall provide a copy thereof to each of the Lenders having
a
Revolver Commitment.
(ii)
Each LIBOR Notice shall be
irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan,
each Borrower shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as a result
of (a) the payment of any principal of any LIBOR Rate Loan other than on
the last day of an Interest Period applicable thereto (including as a result
of
an Event of Default), (b) the conversion of any LIBOR Rate Loan other than
on the last day of the Interest Period applicable thereto, or (c) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such losses, costs,
and
expenses, collectively, “Funding Losses”). Funding Losses shall, with
respect to Agent or any Lender, be deemed to equal the amount determined by
Agent or such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such LIBOR Rate
Loan
had such event not occurred, at the LIBOR Rate that would have been applicable
thereto, for the period from the date of such event to the last day of the
then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
therefor), minus (ii) the amount of interest that would accrue on
such principal amount for such period at the interest rate which Agent or such
Lender would be offered were it to be offered, at the commencement of such
period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative
Borrower setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section shall be conclusive absent manifest
error.
(iii)
Borrowers shall have not more
than 5 LIBOR Rate Loans in effect at any given time. Borrowers only may exercise
the LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
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(c)
Prepayments.
Borrowers may prepay LIBOR Rate Loans at any time; provided,
however, that in the event that LIBOR Rate Loans are prepaid on any
date
that is not the last day of the Interest Period applicable thereto, including
as
a result of any automatic prepayment through the required application by Agent
of proceeds of Collections in accordance with Section 2.4(b) or for any
other reason, including early termination of the term of this Agreement or
acceleration of the Obligations pursuant to the terms hereof, each Borrower
shall indemnify, defend, and hold Agent and the Lenders and their Participants
harmless against any and all Funding Losses in accordance with clause
(b) above.
(d)
Special
Provisions
Applicable to LIBOR Rate.
(i)
The LIBOR Rate may be adjusted
by Agent with respect to any Lender on a prospective basis to take into account
any additional or increased costs to such Lender of maintaining or obtaining
any
eurodollar deposits or increased costs due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed
by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding loans bearing interest at the LIBOR Rate. In any
such event, the affected Lender shall give Administrative Borrower and Agent
notice of such a determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, upon its receipt of the notice from the
affected Lender, Administrative Borrower may, by notice to such affected Lender
(y) require such Lender to furnish to Administrative Borrower a statement
setting forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment, or (z) repay the LIBOR Rate
Loans with respect to which such adjustment is made (together with any amounts
due under clause (b)(ii) above).
(ii)
In the event that any change in
market conditions or any law, regulation, treaty, or directive, or any change
therein or in the interpretation of application thereof, shall at any time
after
the date hereof, in the reasonable opinion of any Lender, make it unlawful
or
impractical for such Lender to fund or maintain LIBOR Advances or to continue
such funding or maintaining, or to determine or charge interest rates at the
LIBOR Rate, such Lender shall give notice of such changed circumstances to
Agent
and Administrative Borrower and Agent promptly shall transmit the notice to
each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender
that are outstanding, the date specified in such Lender’s notice shall be deemed
to be the last day of the Interest Period of such LIBOR Rate Loans, and interest
upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at
the
rate then applicable to Base Rate Loans, and (z) Borrowers shall not be
entitled to elect the LIBOR Option until such Lender determines that it would
no
longer be unlawful or impractical to do so.
(e)
No
Requirement of
Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
-50-
fund
any Obligation as to which
interest accrues at the LIBOR Rate. The provisions of this Section shall apply
as if each Lender or its Participants had match funded any Obligation as to
which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits
for each Interest Period in the amount of the LIBOR Rate Loans.
2.14
Capital
Requirements. If, after the date hereof, any Lender determines that
(i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by
such Lender or its parent bank holding company with any guideline, request
or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender’s or such
holding company’s capital as a consequence of such Lender’s Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender’s or such holding company’s then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity’s capital) by any amount deemed by such Lender to be material in the
exercise of its Permitted Discretion, then such Lender may notify Administrative
Borrower and Agent thereof. Following receipt of such notice, Borrowers agree
to
pay such Lender on demand the amount of such reduction of return of capital
as
and when such reduction is determined, payable within 90 days after presentation
by such Lender of a statement in the amount and setting forth in reasonable
detail such Lender’s calculation thereof and the assumptions upon which such
calculation was based (which statement shall be deemed true and correct absent
manifest error). In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
2.15
Joint
and Several
Liability of Borrowers.
(a)
Each of Borrowers is accepting
joint and several liability hereunder and under the other Loan Documents in
consideration of the financial accommodations to be provided by the Agent and
the Lenders under this Agreement, for the mutual benefit, directly and
indirectly, of each of Borrowers and in consideration of the undertakings of
the
other Borrowers to accept joint and several liability for the Obligations.
(b)
Each of Borrowers, jointly and
severally, hereby irrevocably and unconditionally accepts, not merely as a
surety but also as a co-debtor, joint and several liability with the other
Borrowers, with respect to the payment and performance of all of the Obligations
(including, without limitation, any Obligations arising under this
Section 2.15), it being the intention of the parties hereto that all
the Obligations shall be the joint and several obligations of each Person
composing Borrowers without preferences or distinction among them.
(c)
If and to the extent that any of
Borrowers shall fail to make any payment with respect to any of the Obligations
as and when due or to perform any of the Obligations in accordance with the
terms thereof, then in each such event the other Persons composing Borrowers
will make such payment with respect to, or perform, such Obligation.
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(d)
The Obligations of each Person
composing Borrowers under the provisions of this Section 2.15
constitute the absolute and unconditional, full recourse Obligations of each
Person composing Borrowers enforceable against each such Borrower, irrespective
of the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e)
Except as otherwise expressly
provided in this Agreement, each Person composing Borrowers hereby waives notice
of acceptance of its joint and several liability, notice of any Advances or
Letters of Credit issued under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand for any payment
under this Agreement, notice of any action at any time taken or omitted by
Agent
or Lenders under or in respect of any of the Obligations, any requirement of
diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in
connection with this Agreement (except as otherwise provided in this Agreement).
Each Person composing Borrowers 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 payment of any of the Obligations, the acceptance of
any
partial payment thereon, any waiver, consent or other action or acquiescence
by
Agent or Lenders at any time or times in respect of any default by any Person
composing Borrowers in the performance or satisfaction of any term, covenant,
condition or provision of this Agreement, any and all other indulgences
whatsoever by Agent or 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 composing Borrowers. Without
limiting the generality of the foregoing, each of Borrowers assents to any
other
action or delay in acting or failure to act on the part of any Agent or Lender
with respect to the failure by any Person composing Borrowers to comply with
any
of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for
the
provisions of this Section 2.15 afford grounds for terminating,
discharging or relieving any Person composing Borrowers, in whole or in part,
from any of its Obligations under this Section 2.15, it being the
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing Borrowers under this Section 2.15 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Person composing Borrowers under this
Section 2.15 shall not be diminished or rendered unenforceable by
any winding up, reorganization, arrangement, liquidation, reconstruction or
similar proceeding with respect to any Person composing Borrowers or any Agent
or Lender. The joint and several liability of the Persons composing Borrowers
hereunder shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in the name,
constitution or place of formation of any of the Persons composing Borrowers
or
any Agent or Lender.
(f)
Each Person composing Borrowers
represents and warrants to Agent and Lenders that such Borrower is currently
informed of the financial condition of Borrowers and of all other circumstances
which a diligent inquiry would reveal and which bear upon the risk of nonpayment
of the Obligations. Each Person composing Borrowers further represents and
warrants to Agent and Lenders that such Borrower has read and understands the
terms and conditions of the Loan Documents. Each Person composing Borrowers
hereby covenants that such Borrower will continue to keep informed of Borrowers’
financial condition, the financial condition of other guarantors, if any, and
of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
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(g)
The provisions of this
Section 2.15 are made for the benefit of the Agent, the Lenders and
their respective successors and assigns, and may be enforced by it or them
from
time to time against any or all of the Persons composing Borrowers as often
as
occasion therefor may arise and without requirement on the part of any such
Agent, Lender, successor or assign first to marshal any of its or their claims
or to exercise any of its or their rights against any of the other Persons
composing Borrowers or to exhaust any remedies available to it or them against
any of the other Persons composing Borrowers or to resort to any other source
or
means of obtaining payment of any of the Obligations hereunder or to elect
any
other remedy. The provisions of this Section 2.15 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored
or
returned by any Agent or Lender upon the insolvency, bankruptcy or
reorganization of any of the Persons composing Borrowers, or otherwise, the
provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.
3.
CONDITIONS; TERM OF
AGREEMENT.
3.1
Conditions
Precedent
to the Initial Extension of Credit. The obligation of the Lender
Group (or any member thereof) to make the initial Advance (or otherwise to
extend any credit provided for hereunder) on the Closing Date, is subject to
the
fulfillment, to the satisfaction of Agent, of each of the conditions precedent
set forth below:
(a)
the Closing Date shall occur on
or before April 16, 2001;
(b)
Agent shall have received all
financing statements required by Agent, duly executed by the applicable
Borrowers, and Agent shall have received searches reflecting the filing of
all
such financing statements;
(c)
Agent shall have received each
of the following documents, in form and substance satisfactory to Agent, duly
executed, and each such document shall be in full force and effect:
(i)
[Intentionally Omitted]
(ii)
the Disbursement Letter,
(iii)
the Due Diligence Letter,
(iv)
the Fee Letter,
(v)
the Guaranties,
(vi)
the Cash Management Agreements,
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(vii)
the Contribution Agreement,
(vii)
the Officers’ Certificate,
(ix)
the Patent Security Agreement,
(x)
the Trademark Security
Agreement,
(xii)
[Intentionally Omitted],
(xiii)
the Guarantor Security
Agreement,
(xiv)
[Intentionally Omitted];
(d)
Agent shall have received a
certificate from the Secretary of each Borrower attesting to the resolutions
of
such Borrower’s Board of Directors authorizing its execution, delivery, and
performance of this Agreement and the other Loan Documents to which such
Borrower is a party and authorizing specific officers of such Borrower to
execute the same;
(e)
Agent shall have received copies
of each Borrower’s Governing Documents, as amended, modified, or supplemented to
the Closing Date, certified by the Secretary of such Borrower;
(f)
Agent shall have received a
certificate of status with respect to each Borrower, dated within 10 days of
the
Closing Date, such certificate to be issued by the appropriate officer of the
jurisdiction of organization of such Borrower, which certificate shall indicate
that such Borrower is in good standing in such jurisdiction;
(g)
Agent shall have received
certificates of status with respect to each Borrower, each dated within 30
days
of the Closing Date, such certificates to be issued by the appropriate officer
of the jurisdictions (other than the jurisdiction of organization of such
Borrower) in which its failure to be duly qualified or licensed would constitute
a Material Adverse Change, which certificates shall indicate that such Borrower
is in good standing in such jurisdictions;
(h)
Agent shall have received a
certificate from the Secretary of each Guarantor attesting to the resolutions
of
such Guarantor’s Board of Directors authorizing its execution, delivery, and
performance of the Loan Documents to which such Guarantor is a party and
authorizing specific officers of such Guarantor to execute the same;
(i)
Agent shall have received copies
of each Guarantor’s Governing Documents, as amended, modified, or supplemented
to the Closing Date, certified by the Secretary of such Guarantor;
(j)
Agent shall have received a
certificate of status with respect to each Guarantor, dated within 10 days
of
the Closing Date, such certificate to be issued by the appropriate officer
of
the jurisdiction of organization of such Guarantor, which certificate shall
indicate that such Guarantor is in good standing in such jurisdiction;
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(k)
Agent shall have received
certificates of status with respect to each Guarantor, each dated within 30
days
of the Closing Date, such certificates to be issued by the appropriate officer
of the jurisdictions (other than the jurisdiction of organization of such
Guarantor) in which its failure to be duly qualified or licensed would
constitute a Material Adverse Change, which certificates shall indicate that
such Guarantor is in good standing in such jurisdictions;
(l)
Agent shall have received a
certificate of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be
satisfactory to Agent;
(m)
Agent shall have received
Collateral Access Agreements with respect to the locations set forth on Schedule
3.1(m) hereto;
(n)
Agent shall have received
opinions of Borrowers’ counsel in form and substance satisfactory to Agent;
(o)
Agent shall have received
satisfactory evidence (including a certificate of the chief financial officer
of
Parent) that all tax returns required to be filed by Borrowers have been timely
filed and all taxes upon Borrowers or their properties, assets, income, and
franchises (including Real Property taxes and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest;
(p)
Intentionally deleted;
(q)
Agent shall have completed its
business, legal, and collateral due diligence, including (i) a collateral
audit and review of Borrowers’ books and records and verification of Borrowers’
representations and warranties to the Lender Group, the results of which shall
be satisfactory to Agent, (ii) an inspection of each of the locations where
Inventory is located, the results of which shall be satisfactory to Agent,
and
(iii) receipt of an updated environmental review of Borrowers’ Real
Property indicating no change from the initial environmental review provided
to
Agent on or about May, 2000;
(r)
Agent shall have received
completed reference checks with respect to Borrowers’ senior management, the
results of which are satisfactory to Agent in its sole discretion;
(s)
Agent shall have received an
appraisal from Continental Plant of the Net Orderly Liquidation Value of
Borrowers’ Inventory, the results of which shall be satisfactory to Agent;
(t)
Agent shall have received
(i) Borrowers’ Closing Date Business Plan, and (ii) a draft of the
Parent’s consolidated audited income statement for the fiscal year ended
December 31, 2000, the results of which shall be materially consistent with
the draft annual financial statements provided to Agent prior to the Closing
Date;
(u)
Agent shall have received a
schedule from Parent listing all of the Parent’s significant real property
indicating the estimated Fair Market Value of each item.
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(v)
Borrowers shall pay all Lender
Group Expenses incurred in connection with the transactions evidenced by this
Agreement;
(w)
Agent shall have received copies
of each of Management Agreement and the Services Agreement together with a
certificate of the Secretary of the applicable Borrower certifying each such
document as being a true, correct, and complete copy thereof;
(x)
Borrowers shall have received
all licenses, approvals or evidence of other actions required by any
Governmental Authority in connection with the execution and delivery by
Borrowers of this Agreement or any other Loan Document or with the consummation
of the transactions contemplated hereby and thereby; and
(y)
all other documents and legal
matters in connection with the transactions contemplated by this Agreement
shall
have been delivered, executed, or recorded and shall be in form and substance
satisfactory to Agent.
3.2
Conditions
Precedent
to Restatement Effective Date. The effectiveness of this Agreement
is subject to the fulfillment, in a manner satisfactory to the Agent, of each
of
the following conditions precedent (the first date upon which all such
conditions shall have been satisfied being herein called the “Restatement
Effective Date”):
(a)
Representations and Warranties;
No Event of Default. The representations and warranties contained in
Section 5 herein and in each other Loan Document and certificate or other
writing delivered to the Agent or any Lender pursuant hereto on or prior to
the
Restatement Effective Date shall be correct in all material respects on and
as
of the Restatement Effective Date as though made on and as of such date, except
to the extent that such representations and warranties (or any schedules related
thereto) expressly relate solely to an earlier date (in which case such
representations and warranties shall be true and correct in all material
respects on and as of such date); and no Default or Event of Default shall
have
occurred and be continuing on the Restatement Effective Date or would result
from this Amendment becoming effective in accordance with its terms.
(b)
Delivery of Documents. The Agent
shall have received on or before the Restatement Effective Date the following,
each in form and substance satisfactory to the Agent and, unless indicated
otherwise, dated the Restatement Effective Date:
(i)
counterparts of this Agreement
duly executed by the Borrowers, the Agent and the Lenders;
(ii)
fully executed copies of the
BofA Loan Agreement and the BofA Inter-Lender Agreement;
(iii)
such other agreements,
instruments, approvals, opinions and other documents as the Agent may reasonably
request from the Borrowers.
(c)
Amendment Fee. The Borrowers
shall have paid to the Agent, for the benefit of the Lenders, in immediately
available funds, a fully earned and nonrefundable amendment fee equal to $50,000
the payment of which shall be effected by Agent charging such fee to Borrowers’
Loan Account.
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(d)
Proceedings. All proceedings in
connection with the transactions contemplated by this Agreement, and all
documents incidental thereto, shall be satisfactory to the Agent and its special
counsel, and the Agent and such special counsel shall have received from the
Borrowers all such information and such counterpart originals or certified
copies of documents, and such other agreements, instruments, approvals, opinions
and other documents, as the Agent or such special counsel may reasonably
request.
3.3
Conditions
Precedent
to all Extensions of Credit. The obligation of the Lender Group (or
any member thereof) to make all Advances (or to extend any other credit
hereunder) shall be subject to the following conditions precedent:
(a)
the representations and
warranties contained in this Agreement and the other Loan Documents shall be
true and correct in all material respects on and as of the date of such
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date);
(b)
no Default or Event of Default
shall have occurred and be continuing on the date of such extension of credit,
nor shall either result from the making thereof; and
(c)
no injunction, writ, restraining
order, or other order of any nature prohibiting, directly or indirectly, the
extending of such credit shall have been issued and remain in force by any
Governmental Authority against any Borrower, Agent, any Lender, or any of their
Affiliates.
3.4
Term.
This Agreement shall become effective upon the execution and delivery hereof
by
Borrowers, Agent, and the Lenders and shall continue in full force and effect
for a term ending on April 13, 2012 (the “Maturity Date”). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.5
Effect
of
Termination. On the date of termination of this Agreement, all
Obligations (including contingent reimbursement obligations of Borrowers with
respect to any outstanding Letters of Credit and including all Bank Products
Obligations) immediately shall become due and payable without notice or demand
(including providing cash collateral to be held by Agent for the benefit of
▇▇▇▇▇ Fargo or its Affiliates with respect to the then extant Bank Products
Obligations). No termination of this Agreement, however, shall relieve or
discharge Borrowers of their duties, Obligations, or covenants hereunder and
the
Agent’s Liens in the Collateral shall remain in effect until all Obligations
have been fully and finally discharged and the Lender Group’s obligations to
provide additional credit hereunder have been terminated. When this Agreement
has been terminated and all of the Obligations have been fully and finally
discharged and the Lender Group’s obligations to provide additional credit under
the Loan Documents have been terminated irrevocably, Agent will, at Borrowers’
sole expense, execute and deliver any ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent’s Liens
and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.
3.6
Early
Termination by
Borrowers. Borrowers have the option, at any time upon 90 days
prior written notice by Administrative Borrower to Agent, to terminate this
Agreement by paying to Agent, for the benefit of the Lender Group, in cash,
the
Obligations (including (a) either (i) providing cash collateral to be
held by Agent for the benefit of those Lenders with a Revolver Commitment in
an
amount equal to 105% of the then extant Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral to be held by Agent for the
benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect to the then extant Bank
Products Obligations), in full, together with the Applicable Prepayment Premium
(to be allocated based upon letter agreements between Agent and individual
Lenders). If Administrative Borrower has sent a notice of termination pursuant
to the provisions of this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations (including (a) either
(i) providing cash collateral to be held by Agent for the benefit of those
Lenders with a Revolver Commitment in an amount equal to 105% of the then extant
Letter of Credit Usage, or (ii) causing the original Letters of Credit to
be returned to the Issuing Lender, and (b) providing cash collateral to be
held by Agent for the benefit of ▇▇▇▇▇ Fargo or its Affiliates with respect
to
the then extant Bank Products Obligations), in full, together with the
Applicable Prepayment Premium, on the date set forth as the date of termination
of this Agreement in such notice. In the event of the termination of this
Agreement and repayment of the Obligations at any time prior to the Maturity
Date, for any other reason, including (a) termination upon the election of
the Required Lenders to terminate after the occurrence and during the
continuation of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or
(iv) restructure, reorganization or compromise of the Obligations by the
confirmation of a plan of reorganization, or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of
the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result
of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent
(to
be allocated based upon letter agreements between Agent and individual Lenders),
measured as of the date of such termination.
4.
CREATION OF SECURITY
INTEREST.
4.1
Grant
of Security
Interest.
(a)
Each Borrower hereby grants to
Agent, for the benefit of the Lender Group, a continuing security interest
in
all of its right, title, and interest in all currently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all of the Obligations in accordance with the terms and conditions of the Loan
Documents and in order to secure prompt performance by Borrowers of each of
their covenants and duties under the Loan Documents. The Agent’s Liens in and to
the Collateral shall attach to all Collateral without further act on the part
of
Agent or Borrowers. Anything contained in this Agreement or
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any
other Loan Document to the
contrary notwithstanding, except for Permitted Dispositions and as otherwise
permitted in Sections 7.3 and 7.4 of this Agreement, Borrowers
have no authority, express or implied, to dispose of any item or portion of
the
Collateral.
(b)
Each of the Borrowers hereby
confirm, ratify and reaffirm that the Liens granted to the Agent pursuant to
the
Original Loan Agreement (as amended hereby), in all of its right, title, and
interest in all then existing and thereafter acquired or arising Collateral
in
order to secure prompt repayment of any and all of the Obligations in accordance
with the terms and conditions of the Loan Documents and in order to secure
prompt performance by the Borrowers of each of their covenants and duties under
the Loan Documents are continuing and are and shall remain unimpaired and
continue to constitute fully perfected, first priority Liens in favor of Agent
(subject only to Permitted Liens which have priority as a matter of law), for
the benefit of the Lender Group, with the same force, effect and priority in
effect both immediately prior to and after entering into this Agreement and
the
other Loan Documents entered into on or as of the Closing Date. Each of the
Borrowers hereby confirm and agree that such Liens attach to all currently
existing and hereafter acquired or arising Collateral in order to secure the
prompt repayment of any and all of the Obligations in accordance with the terms
and conditions of the Loan Documents (as defined herein) and in order to secure
the prompt performance by the Borrowers of each of their covenants and duties
under the Loan Documents. The Agent’s Liens in and to the Collateral have
attached and continue to attach to all such Collateral without further act
on
the part of Agent or the Borrowers. Anything contained in this Agreement or
any
other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions or as otherwise permitted in Sections 7.5 and 7.4 of this
Agreement, the Borrowers have no authority, express or implied, to dispose
of
any item or portion of the Collateral.
4.2
Negotiable
Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, and if and to the extent
that perfection or priority of Agent’s security interest is dependent on or
enhanced by possession, the applicable Borrower, immediately upon the request
of
Agent, shall endorse and deliver physical possession of such Negotiable
Collateral to Agent.
4.3
Collection
of
Accounts, General Intangibles, and Negotiable Collateral. At any
time after the occurrence and during the continuation of an Event of Default,
Agent or Agent’s designee may (a) notify Account Debtors of Borrowers that
the Accounts, chattel paper, or General Intangibles have been assigned to Agent
or that Agent has a security interest therein, or (b) collect the Accounts,
chattel paper, or General Intangibles directly and charge the collection costs
and expenses to the Loan Account. Each Borrower agrees that it will hold in
trust for the Lender Group, as the Lender Group’s trustee, any Collections that
it receives and immediately will deliver said Collections to Agent or a Cash
Management Bank in their original form as received by the applicable Borrower.
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4.4
Filing
of Financing
Statements; Commercial Tort Claims; Delivery of Additional Documentation
Required.
(a)
Each Borrower authorizes Agent
to file any financing statement required hereunder, and any continuation
statement or amendment with respect thereto, in any appropriate filing office
without the signature of such Borrower where permitted by applicable law. Each
Borrower hereby ratifies the filing of any financing statement, and any
continuation statement or amendment with respect thereto, filed without the
signature of such Borrower prior to the date hereof. Agent shall endeavor to
promptly deliver to Administrative Borrower a copy of each such financing
statement so filed by Agent.
(b)
If any Borrower acquires any
commercial tort claims after the date hereof, such Borrower shall immediately
deliver to Agent a written description of such commercial tort claim and shall
deliver a written agreement, in form and substance satisfactory to Agent,
pursuant to which such Borrower shall pledge and collaterally assign all of
its
right, title and interest in and to such commercial tort claim to Agent, for
the
benefit of the Lender Group, as security for the Obligations (a “Commercial
Tort Claim Assignment”).
(c)
At any time upon the request of
Agent, Borrowers shall execute and deliver to Agent, and cause its Subsidiaries
that are Guarantors to execute and deliver to Agent, any and all financing
statements, original financing statements in lieu of continuation statements,
amendments to financing statements, fixture filings, security agreements,
pledges, assignments, Commercial Tort Claim Assignments, endorsements of
certificates of title, and all other documents (collectively, the “Additional
Documents”) that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to create and perfect and continue perfected
or
better perfect the Agent’s Liens in the Collateral (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), and
in
order to fully consummate all of the transactions contemplated hereby and under
the other Loan Documents. To the maximum extent permitted by applicable law,
each Borrower authorizes Agent to execute any such Additional Documents in
the
applicable Borrower’s name and authorize Agent to file such executed Additional
Documents in any appropriate filing office. To the maximum extent permitted
by
applicable law, each Borrower authorizes the filing of any such Additional
Documents without the signature of such Borrower in any appropriate filing
office. In addition, on such periodic basis as Agent shall require, Borrowers
shall (i) provide Agent with a report of all new patentable, copyrightable,
or trademarkable materials acquired or generated by Borrowers during the prior
period, (ii) cause all patents, copyrights, and trademarks acquired or
generated by Borrowers that are not already the subject of a registration with
the appropriate filing office (or an application therefor diligently prosecuted)
to be registered with such appropriate filing office in a manner sufficient
to
impart constructive notice of Borrowers’ ownership thereof, and (iii) cause
to be prepared, executed, and delivered to Agent supplemental schedules to
the
applicable Loan Documents to identify such patents, copyrights, and trademarks
as being subject to the security interests created thereunder.
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4.5
Power
of
Attorney. Each Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent’s officers, employees, or agents designated by
Agent) as such Borrower’s true and lawful attorney, with power to (a) if
such Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 4.4, sign the name of such Borrower
on any of the documents described in Section 4.4, (b) at any
time that an Event of Default has occurred and is continuing, sign such
Borrower’s name on any invoice or ▇▇▇▇ of lading relating to the Collateral,
drafts against Account Debtors, or notices to Account Debtors, (c) send
requests for verification of Accounts, (d) endorse such Borrower’s name on
any Collection item that may come into the Lender Group’s possession,
(e) at any time that an Event of Default has occurred and is continuing,
make, settle, and adjust all claims under such Borrower’s policies of property
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting
the
Accounts, chattel paper, or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent
may
cause to be executed and delivered any documents and releases that Agent
determines to be necessary. The appointment of Agent as each Borrower’s
attorney, and each and every one of its rights and powers, being coupled with
an
interest, is irrevocable until all of the Obligations have been fully and
finally repaid and performed and the Lender Group’s obligations to extend credit
hereunder are terminated.
4.6
Right
to
Inspect. Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect the Books and to check, test, and appraise the Collateral
in order to verify Borrowers’ financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.
4.7
Control
Agreements. Each Borrower agrees that it will not transfer any
Collateral or any other assets out of any Securities Accounts or deposit
accounts and, if to another securities intermediary or depository, unless each
of the applicable Borrower, Agent, and the substitute securities intermediary
or
depository have entered into a Control Agreement. Upon the occurrence and during
the continuance of a Event of Default, Agent may notify any securities
intermediary or depository to liquidate the applicable Securities Account or
depository account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent’s Account for application to the
Obligations in accordance with the terms of the Loan Documents. Each Borrower
hereby agrees to take any or all action that Agent requests in order for Agent
to obtain control in accordance with Sections 9-104, 9-105, 9-106 and 9-107
of
the Code with respect to any Collateral constituting Securities Accounts,
deposit accounts, electronic chattel paper, Investment Property and
letter-of-credit rights. No arrangement contemplated hereby or by a Control
Agreement in respect of any Securities Accounts or other Investment Property,
or
deposit accounts, electronic paper or letter-of-credit rights, shall be modified
by any Borrower without the prior written consent of Agent.
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5.
REPRESENTATIONS AND
WARRANTIES.
In
order to induce the Lender Group
to enter into this Agreement, each Borrower makes the following representations
and warranties to the Lender Group which shall be true, correct, and complete,
in all material respects, as of the date hereof, and shall be true, correct,
and
complete, in all material respects, as of the Restatement Effective Date, and
at
and as of the date of the making of each Advance (or other extension of credit)
made thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:
5.1
No
Encumbrances. Each Borrower has good and indefeasible title to its
Collateral free and clear of Liens except for Permitted Liens.
5.2
Eligible
Accounts. The Eligible Accounts are bona fide existing payment
obligations of Account Debtors created by the sale and delivery of Inventory
or
the rendition of services to such Account Debtors in the ordinary course of
Borrowers’ business, owed to Borrowers without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. As to each Eligible Account,
such Account is not:
(a)
owed by an employee, Affiliate,
or agent of a Borrower,
(b)
on account of a transaction
wherein goods were placed on consignment or were sold pursuant to a guaranteed
sale, a sale or return, a sale on approval, a ▇▇▇▇ and hold, or on any other
terms by reason of which the payment by the Account Debtor may be conditional,
(c)
payable in a currency other than
Dollars,
(d)
owed by an Account Debtor that
has or has asserted a right of setoff, has disputed its liability, or has made
any claim with respect to its obligation to pay the Account,
(e)
owed by an Account Debtor that
is subject to any Insolvency Proceeding or is not Solvent or as to which a
Borrower has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,
(f)
on account of a transaction as
to which the goods giving rise to such Account have not been shipped and billed
to the Account Debtor or the services giving rise to such Account have not
been
performed and accepted by the Account Debtor,
(g)
a right to receive progress
payments or other advance ▇▇▇▇▇▇▇▇ that are due prior to the completion of
performance by the applicable Borrower of the subject contract for goods or
services, and
(h)
an Account that has not been
billed to the customer.
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5.3
Eligible
Inventory
and Eligible Raw Inventory. All Eligible Inventory is of good and
merchantable quality, free from defects. As to each item of Eligible Inventory
and Eligible Raw Inventory, such Inventory is
(a)
owned by a Borrower free and
clear of all Liens other than Liens in favor of Agent,
(b)
either located at one of the
locations set forth on Schedule E-1 or in transit from one such location to
another such location,
(c)
not located on real property
leased by a Borrower or in a contract warehouse, in each case, unless subject
to
a Collateral Access Agreement executed by the lessor, the warehouseman, or
other
third party, as the case may be, and unless segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises,
(d)
not goods that have been
returned or rejected by Borrowers’ customers, and
(e)
not goods that are obsolete or
slow moving, restrictive or custom items, work-in-process, or that constitute
spare parts, packaging and shipping materials, supplies used or consumed in
Borrowers’ business, ▇▇▇▇ and hold goods, defective goods, “seconds,” or
Inventory acquired on consignment, except for Eligible Raw Inventory.
5.4
Equipment. All of the material Equipment is used or held for use
in Borrowers’ business or is useful in Borrowers’ business.
5.5
Location
of
Inventory. The Inventory are not stored with a bailee,
warehouseman, or similar party and are located only at the locations identified
on Schedule 5.5.
5.6
Inventory
Records. Each Borrower keeps correct and accurate records itemizing
and describing the type, quality, and quantity of its Inventory and the book
value thereof.
5.7
Location
of Chief
Executive Office; FEIN. The chief executive office of each Borrower
is located at the address indicated in Schedule 5.7 and each Borrower’s FEIN is
identified in Schedule 5.7.
5.8
Due
Organization and
Qualification; Subsidiaries.
(a)
Each Borrower is duly organized
and existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the failure to
be
so qualified reasonably could be expected to have a Material Adverse Change.
(b)
Set forth on Schedule 5.8(b), is
a complete and accurate description of the authorized capital Stock of each
Borrower, by class, and, as of the Closing Date, a description of the number
of
shares of each such class that are issued and outstanding. Other than as
described on Schedule 5.8(b), there are no subscriptions, options, warrants,
or
calls relating to any shares
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of
each Borrower’s capital Stock,
including any right of conversion or exchange under any outstanding security
or
other instrument. No Borrower is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital Stock or any security convertible into or exchangeable for any of its
capital Stock.
(c)
Set forth on Schedule 5.8(c), is
a complete and accurate list of each Borrower’s direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization;
(ii) the number of shares of each class of common and preferred Stock
authorized for each of such Subsidiaries; and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by the applicable Borrower. All of the outstanding capital Stock
of
each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d)
Except as set forth on Schedule
5.8(c), there are no subscriptions, options, warrants, or calls relating to
any
shares of any Borrower’s Subsidiaries’ capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument.
No
Borrower or any of its respective Subsidiaries is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of any Borrower’s Subsidiaries’ capital Stock or any security convertible
into or exchangeable for any such capital Stock.
5.9
Due
Authorization; No
Conflict.
(a)
As to each Borrower, the
execution, delivery, and performance by such Borrower of this Agreement and
the
Loan Documents to which it is a party have been duly authorized by all necessary
action on the part of such Borrower.
(b)
As to each Borrower, the
execution, delivery, and performance by such Borrower of this Agreement and
the
Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to any
Borrower, the Governing Documents of any Borrower, or any order, judgment,
or
decree of any court or other Governmental Authority binding on any Borrower,
(ii) conflict with, result in a breach of, or constitute (with due notice
or lapse of time or both) a default under any material contractual obligation
of
any Borrower, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of Borrower, other
than Permitted Liens, or (iv) require any approval of any Borrower’s
interestholders or any approval or consent of any Person under any material
contractual obligation of any Borrower.
(c)
Other than the filing of
financing statements, the execution, delivery, and performance by each Borrower
of this Agreement and the Loan Documents to which such Borrower is a party
do
not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person.
(d)
As to each Borrower, this
Agreement and the other Loan Documents to which such Borrower is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by such Borrower will be the legally valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating
to
or limiting creditors’ rights generally.
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(e)
The Agent’s Liens are validly
created, perfected, and first priority Liens, subject only to Permitted Liens
and the filing of financing statements and other recordations with the United
States Patent and Trademark Office.
(f)
The execution, delivery, and
performance by each Guarantor of the Loan Documents to which it is a party
have
been duly authorized by all necessary action on the part of such Guarantor.
(g)
The execution, delivery, and
performance by each Guarantor of the Loan Documents to which it is a party
do
not and will not (i) violate any provision of federal, state, or local law
or regulation applicable to such Guarantor, the Governing Documents of such
Guarantor, or any order, judgment, or decree of any court or other Governmental
Authority binding on such Guarantor, (ii) conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a default under
any
material contractual obligation of such Guarantor, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon
any
properties or assets of such Guarantor, other than Permitted Liens, or
(iv) require any approval of such Guarantor’s interestholders or any
approval or consent of any Person under any material contractual obligation
of
Guarantor.
(h)
The execution, delivery, and
performance by each Guarantor of the Loan Documents to which such Guarantor
is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority or
other Person.
(i)
The Loan Documents to which each
Guarantor is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Guarantor will be legally valid and binding
obligations of such Guarantor, enforceable against such Guarantor in accordance
with their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally.
5.10
Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge
of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance
(subject to customary deductibles), and (b) matters arising after the
Closing Date that, if decided adversely to Borrowers, or any of their
Subsidiaries, as applicable, reasonably could not be expected to result in
a
Material Adverse Change.
5.11
No
Material Adverse
Change. All financial statements relating to Borrowers that have
been delivered by Borrowers to the Lender Group have been prepared in accordance
with GAAP (except, in the case of unaudited financial statements, for the lack
of footnotes and being subject to year-end audit adjustments) and present fairly
in all material respects, Borrowers’ financial condition as of the date thereof
and results of operations for the period then ended.
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5.12
Fraudulent
Transfer.
(a)
Each Borrower is Solvent.
(b)
No transfer of property is being
made by any Borrower and no obligation is being incurred by any Borrower in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present
or
future creditors of Borrowers.
5.13
Employee
Benefits. None of Borrowers, any of their Subsidiaries, or any of
their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14
Environmental
Condition. Except as set forth on Schedule 5.14, (a) to
Borrowers’ knowledge, none of Borrowers’ properties or assets has ever been used
by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was
in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers’ knowledge, none of Borrowers’ properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) none of Borrowers have
received notice that a Lien arising under any Environmental Law has attached
to
any revenues or to any Real Property owned or operated by Borrowers, and
(d) none of Borrowers have received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or
state
governmental agency concerning any action or omission by any Borrower resulting
in the releasing or disposing of Hazardous Materials into the environment.
5.15
[Intentionally
Omitted].
5.16
Intellectual
Property. Each Borrower owns, or holds licenses in, all trademarks,
trade names, copyrights, patents, patent rights, and licenses that are necessary
to the conduct of its business as currently conducted. Attached hereto as
Schedule 5.16 is a true, correct, and complete listing of all material patents,
patent applications, trademarks, trademark applications, copyrights, and
copyright registrations as to which each Borrower is the owner or is an
exclusive licensee.
5.17
Leases.
Borrowers enjoy peaceful and undisturbed possession under all leases material
to
the business of Borrowers and to which Borrowers are a party or under which
Borrowers are operating. All of such leases are valid and subsisting and no
material default by Borrowers exists under any of them.
5.18
DDAs.
Set forth on Schedule 5.18 are all of the DDAs of each Borrower, including,
with
respect to each depository (i) the name and address of that depository, and
(ii) the account numbers of the accounts maintained with such depository.
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5.19
Complete
Disclosure. All factual information (taken as a whole) furnished by
or on behalf of Borrowers in writing to Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan Documents
or any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of Borrowers
in writing to the Agent or any Lender will be, true and accurate in all material
respects on the date as of which such information is dated or certified and
not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided. On the Closing
Date, the Closing Date Projections represent, and as of the date on which any
other Projections are delivered to Agent, such additional Projections represent
Borrowers’ good faith best estimate of its future performance for the periods
covered thereby.
5.20
Indebtedness. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of each Borrower outstanding immediately prior to
the
Closing Date that is to remain outstanding after the Closing Date, other than
Indebtedness owing by a Borrower to another Borrower, and such Schedule
accurately reflects the aggregate principal amount of such Indebtedness, the
amortization schedule (if any) in respect of such Indebtedness and the maturity
date of such Indebtedness.
6.
AFFIRMATIVE
COVENANTS.
Each
Borrower covenants and agrees
that, so long as any credit hereunder shall be available and until full and
final payment of the Obligations, Borrowers shall and shall cause each of their
respective Subsidiaries to do all of the following:
6.1
Accounting
System. Maintain a system of accounting that enables Borrowers to
produce financial statements in accordance with GAAP and maintain records
pertaining to the Collateral that contain information as from time to time
reasonably may be requested by Agent. Borrowers also shall keep an inventory
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
6.2
Collateral
Reporting. Provide Agent (and if so requested by a Lender, with
copies for such Lender) with the following documents at the following times
in
form satisfactory to Agent:
| Daily |
(a)
a sales journal,
collection journal, and credit register since the last such schedule
and a
calculation of the Borrowing Base of Borrowers on an individual and
a
combined basis, and
(b)
notice of all returns,
disputes, or claims.
|
|
| Weekly | (c) Inventory reports specifying each Borrower’s cost and the wholesale market value of its Inventory, with additional detail showing additions to and deletions from the Inventory. | |
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| Monthly (not later than the 15th day of each month) |
(d)
a detailed calculation of
the Borrowing Base of Borrowers, on an individual and a combined
basis,
(including, in each case, detail regarding those Accounts that are
not
Eligible Accounts),
(e)
a detailed aging, by
total, of the Accounts, together with a reconciliation to the detailed
calculation of the Borrowing Base previously provided to
Agent,
(f)
a summary aging, by
vendor, of Borrowers’ accounts payable and any book overdraft,
and
(g)
a calculation of Dilution
for the prior month.
|
|
| Quarterly |
(h)
a detailed list of each
Borrower’s customers with outstanding account balances,
(i)
a report regarding each
Borrower’s accrued, but unpaid, ad valorem taxes,
|
|
| Upon request by Agent |
(j)
copies of invoices in
connection with the Accounts, credit memos, remittance advices, deposit
slips, shipping and delivery documents in connection with the Accounts
and, for Inventory and Equipment acquired by Borrowers, purchase
orders
and invoices, and
(k)
such other reports as to
the Collateral, or the financial condition of Borrowers as Agent
may
request.
|
|
In
addition, each Borrower agrees to
cooperate fully with Agent to facilitate and implement a system of electronic
collateral reporting in order to provide electronic reporting of each of the
items set forth above.
6.3
Financial
Statements,
Reports, Certificates. Deliver to Agent, with copies to each
Lender:
(a)
as soon as available, but in any
event within 30 days (45 days (or, if such Person has filed a filing extension
with the SEC, 50 days) in the case of a month that is the end of one of the
first 3 fiscal quarters in a fiscal year) after the end of each month during
each of Parent’s and ThermaClime’s fiscal years,
(i)
a company prepared consolidated
and consolidating balance sheet, income statement, and statement of cash flow
covering Parent’s and its Subsidiaries’ and ThermaClime’s and its Subsidiaries’
operations during such period,
(ii)
a certificate signed by the
chief financial officer or vice president/controller of Parent and of
ThermaClime to the effect that:
A.
the financial statements
delivered hereunder have been prepared in accordance with GAAP (except for
the
lack of footnotes and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of Parent and its
Subsidiaries and ThermaClime and its Subsidiaries, as the case may be,
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B.
the representations and
warranties of Borrowers contained in this Agreement and the other Loan Documents
are true and correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier date), and
C.
there does not exist any
condition or event that constitutes a Default or Event of Default (or, to the
extent of any non-compliance, describing such non-compliance as to which he
or
she may have knowledge and what action Borrowers have taken, are taking, or
propose to take with respect thereto), and
(iii)
for each month that is the
date on which a financial covenant in Section 7.20 is to be tested,
a Compliance Certificate demonstrating, in reasonable detail, compliance at
the
end of such period with the applicable financial covenants contained in
Section 7.20, and
(b)
as soon as available, but in any
event within 90 days (or, if such Person has filed a filing extension with
the
SEC, 105 days) after the end of each of Parent’s and ThermaClime’s fiscal years,
(i)
financial statements of Parent
and its Subsidiaries and of ThermaClime and its Subsidiaries for each such
fiscal year, prepared on a consolidated and consolidating basis, audited (in
the
case of the consolidated financial statements) by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in accordance with
GAAP (such audited financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such accountants’ letter
to management),
(ii)
a certificate of such
accountants addressed to Agent and the Lenders stating that such accountants
do
not have knowledge of the existence of any continuing Default or Event of
Default under Section 7.20,
(c)
as soon as available, but in any
event at least 1 day prior to the start of each of Parent’s and ThermaClime’s
fiscal years,
(i)
copies of Borrowers’
Projections, in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming
year, month by month, certified by the chief financial officer or vice
president/controller of Parent and of ThermaClime as being such officer’s good
faith best estimate of the financial performance of Parent and its Subsidiaries
and of ThermaClime and its Subsidiaries, as the case may be, during the period
covered thereby,
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(d)
if and when filed by any
Borrower or by Parent or ThermaClime,
(i)
10-Q quarterly reports, Form
10-K annual reports, and Form 8-K current reports,
(ii)
any other filings made by any
Borrower, Parent or ThermaClime with the SEC,
(iii)
copies of Borrowers’, Parent’s
and ThermaClime’s federal income tax returns (if requested by Agent), and any
amendments thereto, filed with the Internal Revenue Service, and
(iv)
any other information that is
provided by Parent to its shareholders generally,
(e)
if and when filed by any
Borrower and as requested by Agent, satisfactory evidence of payment of
applicable excise taxes in each jurisdictions in which (i) any Borrower
conducts business or is required to pay any such excise tax, (ii) where any
Borrower’s failure to pay any such applicable excise tax would result in a Lien
on the properties or assets of any Borrower, or (iii) where any Borrower’s
failure to pay any such applicable excise tax reasonably could be expected
to
result in a Material Adverse Change,
(f)
as soon as a Borrower has
knowledge of any event or condition that constitutes a Default or an Event
of
Default, notice thereof and a statement of the curative action that Borrowers
propose to take with respect thereto,
(g)
as soon as available, but no
later than Wednesday of each week, a report listing (i) all cash
distributions and advances made by EDN to any Borrower and Guarantor (other
than
Parent and Cherokee) during the preceding week and (ii) all cash
distributions and advances made by any Borrower and Guarantor (other than Parent
and Cherokee) to EDN during the preceding week, and
(h)
upon the request of Agent, any
other report reasonably requested relating to the financial condition of
Borrowers.
In
addition to the financial
statements referred to above, Borrowers agree to deliver financial statements
prepared on both a consolidated and consolidating basis and that no Borrower,
or
any Subsidiary of a Borrower, will have a fiscal year different from that of
ThermaClime. Parent, ThermaClime and Borrowers agree that their independent
certified public accountants are authorized to communicate with Agent and to
release to Agent whatever financial information concerning Parent, ThermaClime
or Borrowers that Agent reasonably may request. Parent, ThermaClime and each
Borrower waives the right to assert a confidential relationship, if any, it
may
have with any accounting firm or service bureau in connection with any
information requested by Agent pursuant to or in accordance with this Agreement,
and agree that Agent may contact directly any such accounting firm or service
bureau in order to obtain such information. Notwithstanding the foregoing,
the
Agent will use reasonable good faith efforts to permit a representative of
Borrowers to be present or participate in any communication with such
accountants.
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6.4
[Intentionally
Omitted].
6.5
Return.
Cause returns and allowances as between Borrowers and their Account Debtors,
to
be on the same basis and in accordance with the usual customary practices of
the
applicable Borrower, as they exist at the time of the execution and delivery
of
this Agreement. If, at a time when no Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to any Borrower, the
applicable Borrower promptly shall determine the reason for such return and,
if
the applicable Borrower accepts such return, issue a credit memorandum (with
a
copy to be sent to Agent) in the appropriate amount to such Account Debtor.
If,
at a time when an Event of Default has occurred and is continuing, any Account
Debtor returns any Inventory to any Borrower, the applicable Borrower promptly
shall determine the reason for such return and, if Agent consents (which consent
shall not be unreasonably withheld), issue a credit memorandum (with a copy
to
be sent to Agent) in the appropriate amount to such Account Debtor.
6.6
Maintenance
of
Properties. Maintain and preserve all of its properties which are
necessary or useful in the proper conduct to its business in good working order
and condition, ordinary wear and tear excepted, and comply at all times with
the
provisions of all leases to which it is a party as lessee, so as to prevent
any
loss or forfeiture thereof or thereunder.
6.7
Taxes.
Cause all assessments and taxes, whether real, personal, or otherwise, due
or
payable by, or imposed, levied, or assessed against Borrowers or any of their
assets to be paid in full, before delinquency or before the expiration of any
extension period, except to the extent that the validity of such assessment
or
tax shall be the subject of a Permitted Protest. Borrowers will make timely
payment or deposit of all tax payments and withholding taxes required of it
by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Agent with proof satisfactory to Agent indicating that the applicable
Borrower has made such payments or deposits. Borrowers shall deliver
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which any Borrower is required to pay any such excise tax.
6.8
Insurance.
(a)
At Borrowers’ expense, maintain
insurance respecting its property and assets wherever located, covering loss
or
damage by fire, theft, explosion, and all other hazards and risks as ordinarily
are insured against by other Persons engaged in the same or similar businesses.
Borrowers also shall maintain business interruption, public liability, and
product liability insurance, as well as insurance against larceny, embezzlement,
and criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrowers shall deliver copies of all such policies to Agent with a
satisfactory lender’s loss payable endorsement naming Agent as sole loss payee
(with respect to the policies covering any Collateral) or additional insured,
as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.
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(b)
Administrative Borrower shall
give Agent prompt notice of any loss covered by such insurance. Agent may elect
to adjust, in its sole discretion, any losses (so long as no Default or Event
of
Default shall occur and be continuing, in excess of $250,000 or in any amount
if
a Default or Event of Default shall have occurred and be continuing) payable
under any such insurance policies covering any Collateral, without any liability
to Borrowers whatsoever in respect of such adjustments. Except as provided
in
the immediately succeeding sentence, any monies received as payment for any
loss
under any insurance policy mentioned above (other than liability insurance
policies) or as payment of any award or compensation for condemnation or taking
by eminent domain, shall be paid over to Agent to be applied at the option
of
the Required Lenders either to the prepayment of the Obligations or shall be
disbursed to Administrative Borrower under staged payment terms reasonably
satisfactory to the Required Lenders for application to the cost of repairs,
replacements, or restorations. Any monies received as payment for any loss
under
any insurance policy in respect of assets or properties of a Borrower that
do
not constitute Collateral shall be applied, within 60 days of the receipt of
such monies, at the option of such Borrower either to the prepayment of the
Advances or to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items
or
property destroyed prior to such damage or destruction.
(c)
Borrowers shall not take out
separate insurance concurrent in form or contributing in the event of loss
with
that required to be maintained under this Section 6.8, unless Agent
is included thereon as named insured with the loss payable to Agent under a
lender’s loss payable endorsement or its equivalent. Administrative Borrower
immediately shall notify Agent whenever such separate insurance is taken out,
specifying the insurer thereunder and full particulars as to the policies
evidencing the same, and copies of such policies promptly shall be provided
to
Agent.
6.9
Location
of
Inventory. Keep the Inventory only at the locations identified on
Schedule 5.5; provided, however, that Administrative Borrower may
amend Schedule 5.5 so long as such amendment occurs by written notice to Agent
not less than 30 days prior to the date on which the Inventory is moved to
such
new location, so long as such new location is within the continental United
States, and so long as, at the time of such written notification, the applicable
Borrower provides any financing statements necessary to perfect and continue
perfected the Agent’s Liens on such assets and also provides to Agent a
Collateral Access Agreement.
6.10
Compliance
with
Laws. Comply with the requirements of all applicable laws, rules,
regulations, and orders of any Governmental Authority, including the Fair Labor
Standards Act and the Americans With Disabilities Act, other than laws, rules,
regulations, and orders the non-compliance with which, individually or in the
aggregate, would not result in and reasonably could not be expected to result
in
a Material Adverse Change.
6.11
Leases.
Pay when due all rents and other amounts payable under any leases to which
any
Borrower is a party or by which any Borrower’s properties and assets are bound,
unless such payments are the subject of a Permitted Protest.
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6.12
Brokerage
Commissions. Pay any and all brokerage commission or finders fees
incurred in connection with or as a result of Borrowers’ obtaining financing
from the Lender Group under this Agreement. Borrowers agree and acknowledge
that
payment of all such brokerage commissions or finders fees shall be the sole
responsibility of Borrowers, and each Borrower agrees to indemnify, defend,
and
hold Agent and the Lender Group harmless from and against any claim of any
broker or finder arising out of Borrowers’ obtaining financing from the Lender
Group under this Agreement.
6.13
Existence. At all times preserve and keep in full force and
effect each Borrower’s valid existence and good standing and any rights and
franchises material to Borrowers’ businesses.
6.14
Environmental.
(a)
Keep any property either owned
or operated by any Borrower free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material
respects, with Environmental Laws and provide to Agent documentation of such
compliance which Agent reasonably requests, (c) promptly notify Agent of
any release of a Hazardous Material of any reportable quantity from or onto
property owned or operated by any Borrower and take any Remedial Actions
required to ▇▇▇▇▇ said release or otherwise to come into compliance with
applicable Environmental Law, and (d) promptly provide Agent with written
notice within 10 days of the receipt of any of the following: (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of any Borrower, (ii) commencement of any Environmental Action or
notice that an Environmental Action will be filed against any Borrower, and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.
6.15
Disclosure
Updates. Promptly and in no event later than 5 Business Days after
obtaining knowledge thereof, (a) notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained any untrue statement
of a material fact or omitted to state any material fact necessary to make
the
statements contained therein not misleading in light of the circumstances in
which made, and (b) correct any defect or error that may be discovered
therein or in any Loan Document or in the execution, acknowledgement, filing,
or
recordation thereof.
7.
NEGATIVE
COVENANTS.Each Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations, Borrowers will not and will not permit any of their respective
Subsidiaries to do any of the following:
7.1
Indebtedness. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to
any
Indebtedness, except:
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(a)
Indebtedness evidenced by this
Agreement and the other Loan Documents, together with Indebtedness owed to
Underlying Issuers with respect to Underlying Letters of Credit;
(b)
Indebtedness set forth on
Schedule 5.20;
(c)
Permitted Purchase Money
Indebtedness;
(d)
refinancings, renewals,
replacements or extensions of Indebtedness permitted under clauses (b) and
(c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and
conditions of such refinancings, renewals, or extensions do not, in Agent’s
judgment, materially impair the prospects of repayment of the Obligations by
Borrowers or materially impair Borrowers’ creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, except for increases in the principal amount
of such Indebtedness not exceeding the principal amount of such Indebtedness
outstanding on the Closing Date, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of
the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Borrower, and (iv) if the Indebtedness that
is refinanced, renewed, or extended was subordinated in right of payment to
the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must be include subordination terms and conditions that
are at least as favorable to the Lender Group as those that were applicable
to
the refinanced, renewed, or extended Indebtedness;
(e)
Indebtedness outstanding under
the ThermaClime Notes in an aggregate principal amount not to exceed $7,000,000
at any one time outstanding;
(f)
Indebtedness owing by
(i) any Borrower to any Guarantor or any other Borrower and (ii) any
Guarantor to any other Guarantor other than the Parent or any Borrower;
(g)
subordinated Indebtedness the
terms and conditions of which, including provisions subordinating such
Indebtedness to the Obligations, are satisfactory to the Lenders;
(h)
Indebtedness owing by any
Borrower to any Subsidiary of Parent that is not also a Subsidiary of
ThermaClime, provided that the aggregate principal amount of such Indebtedness
shall not exceed $500,000 at any time;
(i)
other unsecured Indebtedness in
an aggregate amount not to exceed $500,000 at any time;
(j)
Indebtedness composing Permitted
Investments;
(k)
Indebtedness outstanding under
the BofA Loan Agreement, provided that (i) the aggregate principal
amount of BofA Loans shall not exceed $50,000,000 (plus any paid-in-kind
interest added to the principal balance thereof) at any time, (ii) any
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prepayments
or repayments of the
principal amount of such Indebtedness shall reduce the amount of Indebtedness
permitted under this Section 7.1(k) on a dollar-for-dollar basis and
such prepaid or repaid amounts shall not be reborrowed by any Borrower without
the prior written consent of the Lenders, (iii) Borrowers shall not make
any payments in respect of such Indebtedness if an Event of Default has occurred
and is continuing or would occur as a result of the making of such payment,
except to the extent such payments are made solely from the proceeds of any
BofA
Collateral, and (iv) BofA and the Agent have entered into the BofA
Inter-Lender Agreement; and
(l)
Indebtedness owing to EDN or any
of its Subsidiaries resulting from loans from EDN or its Subsidiaries to any
Borrower or Guarantor permitted under Section 7.11(f).
7.2
Liens.
Create, incur, assume, or permit to exist, directly or indirectly, any Lien
on
or with respect to any of its assets, of any kind, whether now owned or
hereafter acquired, or any income or profits therefrom, except for Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced, renewed, replaced or extended
under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3
Restrictions
on
Fundamental Changes.
(a)
Enter into any merger,
consolidation, reorganization, or recapitalization, or reclassify its Stock.
(b)
Liquidate, wind up, or dissolve
itself (or suffer any liquidation or dissolution).
(c)
Convey, sell, lease, license,
assign, transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets.
Clauses
(a), (b) and
(c) of this Section 7.3 shall not apply to (i) the merger
or consolidation of a Borrower with and into another Borrower other than
ThermaClime, or (ii) the sale, transfer, lease or other disposal of assets
of any Borrower or any of its Subsidiaries to any other Borrower or Guarantor
(other than Parent).
7.4
Disposal
of
Assets. Other than Permitted Dispositions and as provided in
Section 7.3, convey, sell, lease, license, assign, transfer, or
otherwise dispose of any of the assets of any Borrower, except that, so long
as
no Default or Event of Default has occurred and is continuing or would result
therefrom:
(a)
a Borrower may sell or otherwise
dispose of any of its other assets, provided that (i) the proceeds from
such sale or disposition are either applied to prepay the Obligations in
accordance with Section 2.4(b) or distributed to ThermaClime and are
used by ThermaClime solely to repurchase the ThermaClime Notes, (ii) after
giving effect to the repurchase of the ThermaClime Notes in accordance with
clause (i) above, Excess Availability is not less than $15,000,000,
(iii) such assets are sold for Fair Market Value and (iv) the
aggregate Fair Market Value of all such assets sold during each fiscal year
pursuant to this Section 7.4(a) shall not exceed $4,000,000; and
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(b)
notwithstanding anything to the
contrary contained herein, any Borrower and any of its respective Subsidiaries
and Cherokee may sell, transfer or otherwise dispose of any BofA Collateral
owned by such Person so long as (i) such disposition is permitted under the
BofA Loan Agreement or if BofA otherwise consents to such sale or disposition
and (ii) the proceeds from such sale are applied in accordance with
Section 2.4(b) or, if the BofA Loan Agreement is then in effect, in
accordance with the terms of the BofA Loan Agreement.
7.5
Change
Name. Change any Borrower’s name, FEIN, corporate structure or
identity, or add any new fictitious name; provided, however, that
a Borrower may change its name or add any new fictitious name upon at least
30
days prior written notice by Administrative Borrower to Agent of such change
and
so long as, at the time of such written notification, such Borrower provides
any
financing statements or fixture filings necessary to perfect and continue
perfected Agent’s Liens.
7.6
Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except (i) by endorsement of
instruments or items of payment for deposit to the account of Borrowers or
which
are transmitted or turned over to Agent, (ii) for guarantees of
Indebtedness permitted under Section 7.1 and guarantees set forth on
Schedule 5.20 and (iii) for guarantees of performance, surety or appeal
bonds of any Borrower or Guarantor (other than the Parent).
7.7
Nature
of
Business. Make any change in the principal nature of Borrowers’
business.
7.8
Prepayments
and
Amendments.
(a)
Except in connection with a
refinancing permitted by Section 7.1(d), prepay, redeem, defease,
purchase, or otherwise acquire any Indebtedness of any Borrower or any
Guarantor, other than the Obligations in accordance with this Agreement and
as
otherwise permitted in Section 7.8(b) and
Section 7.4(b),
(b)
ThermaClime shall not repurchase
any ThermaClime Notes; provided, that ThermaClime may repurchase its
ThermaClime Notes (i) to the extent permitted in Section 7.4,
or (ii) with proceeds from a cash contribution made by Parent to
ThermaClime so long as (A) no Default or Event of Default has occurred and
is continuing or would result therefrom, (B) EBITDA for the fiscal quarter
immediately preceding the date of such repurchase is not less than $5,000,000
and (C) after giving effect to such repurchase, Excess Availability is not
less than $15,000,000, and
(c)
Except in connection with a
refinancing permitted by Section 7.1(d) and except in connection
with the ThermaClime Fifth Supplemental Indenture, directly or indirectly,
(i) amend, modify, alter, increase, or change any of the terms or
conditions of any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Sections 7.1(b), (c),
(e) or (g) or (ii) amend, modify or otherwise change (or
permit the amendment, modification or other
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change
in any manner of) any of the
provisions of Indebtedness permitted under Section 7.1(k) or of any
instrument or agreement (including, without limitation, the BofA Loan Agreement)
relating to any such Indebtedness if such amendment, modification or change
would shorten the final maturity or average life to maturity of, or require
any
payment to be made earlier than the date originally scheduled on, such
Indebtedness, would increase the principal amount of or the interest rate
applicable to such Indebtedness, would change the lien subordination provisions
of such Indebtedness, or would otherwise be materially adverse to any Borrower,
the Agent or the Lenders in any respect.
7.9
Change
of
Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.
7.10
Consignments. Consign any Inventory or sell any Inventory on
▇▇▇▇ and hold, sale or return, sale on approval, or other conditional terms
of
sale.
7.11
Distributions. Other than distributions or the declaration and
payment of dividends by a Borrower to another Borrower, make any distribution
or
declare or pay any dividends (in cash or other property, other than common
Stock) on, or purchase, acquire, redeem, or retire any of any Borrower’s Stock,
of any class, whether now or hereafter outstanding or pay any management or
similar fees; provided, that:
(a)
ThermaClime may make
distributions and pay dividends to Parent in repayment of the costs and expenses
incurred by Parent that are directly allocable to the Borrowers for Parent’s
provision of the Services (as defined in the Services Agreement) on behalf
of
the Borrowers pursuant to the Services Agreement;
(b)
each Borrower may make
distributions and pay dividends to any Guarantor (other than Parent and
Cherokee), and each Guarantor may make distributions and pay dividends to any
Borrower or Guarantor (other than Parent and Cherokee);
(c)
so long as no Default or Event
of Default has occurred and is continuing or would result therefrom,
(i) ThermaClime may make distributions and pay dividends to Parent in
respect of the management fees payable by ThermaClime to Parent in accordance
with the Management Agreement, provided that the aggregate amount of all such
payments made by Borrowers pursuant to this clause (c)(i) shall not exceed
$2,500,000 during any fiscal year of ThermaClime or the maximum management
fees
payable to Parent each calendar quarter under the Management Agreement, and
(ii) ThermaClime may make distributions and pay dividends to Parent in an
aggregate amount not to exceed, during each fiscal year, the sum of (A) 50%
of the actual consolidated net income of the Borrowers for such fiscal year
determined in accordance with GAAP, plus (B) the amounts paid to Parent
during such fiscal year in accordance with Section 7.11(d);
(d)
so long as Agent has not
exercised any of its rights or remedies following an Event of Default,
ThermaClime may make distributions and pay dividends to Parent in an aggregate
amount not to exceed, during each fiscal year, the consolidated income tax
liability of the Borrowers for such fiscal year calculated as if each the
Borrower was a separate consolidated taxpayer;
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(e)
each Borrower may make
distributions and pay dividends to any Subsidiary of Parent that is not also
a
Subsidiary of ThermaClime, provided that the aggregate amount of such
distributions and dividends shall not exceed $100,000 during each fiscal year;
and
(f)
each Borrower and Guarantor may
make advances, distributions and pay dividends to EDN and its Subsidiaries,
provided that (i) no Default or Event of Default has occurred and is
continuing or would result from the making of such distributions or dividends,
(ii) the aggregate amount of such advances, distributions and dividends
does not exceed $5,000,000 during any week, (iii) the aggregate amount of
such advances, distributions and dividends paid to EDN and its Subsidiaries
by
the Borrowers and Guarantors (other than the Parent and Cherokee) shall not
exceed the aggregate amount of advances, distributions and dividends paid by
EDN
and its Subsidiaries to the Borrowers and Guarantors (other than the Parent
and
Cherokee), and (iv) as of the end of any fiscal year, the aggregate amount
of such advances, distributions and dividends paid to EDN and its Subsidiaries
by the Borrowers and Guarantors (other than the Parent and Cherokee) during
such
year minus the aggregate amount of advances, distributions and dividends
paid by EDN and its Subsidiaries to the Borrowers and Guarantors (other than
the
Parent and Cherokee) during such year shall not exceed $10,000,000.
7.12
Accounting
Methods. Modify or change its method of accounting (other than as
may be required to conform to GAAP) or enter into, modify, or terminate any
agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage
of
Borrowers’ accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or Borrowers’
financial condition.
7.13
Investments. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment;
provided, however, that Borrowers are also permitted to make or
acquire other Investments (other than in the Cash Management Accounts) not
exceeding $1,000,000 in the aggregate outstanding at any one time.
7.14
Transactions
with
Affiliates. Except for agreements set forth on Schedule 7.14 or
transactions among the Borrowers and Guarantors, directly or indirectly enter
into or permit to exist any transaction with any Affiliate of any Borrower
except for transactions that are in the ordinary course of Borrowers’ business,
upon fair and reasonable terms, that are fully disclosed to Agent, and that
are
no less favorable to Borrowers than would be obtained in an arm’s length
transaction with a non-Affiliate.
7.15
Suspension. Suspend or go out of a substantial portion of its
business.
7.16
Compensation. Pay or accrue total cash compensation, during any
year, to its officers and senior management employees in an aggregate amount
in
excess of the amount established by the compensation committee of Parent.
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7.17
Use
of
Proceeds. Use the proceeds of the Advances and the Term Loan for
any purpose other than (a) on the Closing Date, to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and
(b) thereafter, consistent with the terms and conditions hereof, for its
lawful and permitted purposes.
7.18
Change
in Location
of Chief Executive Office; Inventory and Equipment with Bailees.
Relocate its chief executive office to a new location without Administrative
Borrower providing 30 days prior written notification thereof to Agent and
so
long as, at the time of such written notification, the applicable Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent’s Liens and also provides to Agent a Collateral
Access Agreement with respect to such new location. The Inventory and Equipment
shall not at any time now or hereafter be stored with a bailee, warehouseman,
or
similar party without Agent’s prior written consent.
7.19
Securities
Accounts. Maintain assets in any Securities Account at any time
that Advances are outstanding.
7.20
Financial
Covenants.
(a)
Fail to maintain:
(i)
Minimum
EBITDA.
EBITDA for the 12 month period ending each fiscal quarter after
September 30, 2007 of greater than $25,000,000;
(ii)
Intentionally deleted.
(iii)
Fixed
Charge Coverage
Ratio. A Fixed Charge Coverage Ratio, measured on a fiscal year-end
basis commencing with the fiscal year ending December 31, 2001, of not less
than 1.10:1.00.
(iv)
Senior
Leverage
Coverage Ratio. A Senior Leverage Coverage Ratio, measured on a
quarterly basis commencing with the fiscal quarter ending December 31,
2007, of not greater than 4.50:1.00.
(b)
Intentionally deleted.
8.
EVENTS OF DEFAULT.
Any
one or more of the following
events shall constitute an event of default (each, an “Event of Default”) under
this Agreement:
8.1
If
Borrowers
fail to pay when due and payable or when declared due and payable, all or any
portion of the Obligations (whether of principal, interest (including any
interest which, but for the provisions of the Bankruptcy Code, would have
accrued on such amounts), fees and charges due the Lender Group, reimbursement
of Lender Group Expenses, or other amounts constituting Obligations);
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8.2
If
Borrowers
fail to perform, keep, or observe any term, provision, condition, covenant,
or
agreement contained in Sections 6.1, 6.2 (but only up to three
times during any 12-month period, and only in relation to Defaults caused by
the
failure of third Persons to provide required information or reporting, and
not
in relation to Defaults caused by a Borrower), 6.3, 6.6,
6.9, 6.10, 6.11 and 6.15 of this Agreement, or
comparable provisions of the other Loan Documents, within 10 days of the date
when required (or within 5 days of the date when required in the case of
Section 6.2 or Section 6.3), or if a Borrower or
Guarantor otherwise fails to perform, keep, or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement or
in
any of the other Loan Documents;
8.3
If
any material
portion of any Borrower’s or any of its Subsidiaries’ assets is attached,
seized, subjected to a writ or distress warrant, levied upon, or comes into
the
possession of any third Person;
8.4
If
an
Insolvency Proceeding is commenced by any Borrower, any Guarantor or any of
their Subsidiaries;
8.5
If
an
Insolvency Proceeding is commenced against any Borrower, any Guarantor or any
of
their Subsidiaries, and any of the following events occur: (a) the
applicable Borrower, Guarantor or the Subsidiary consents to the institution
of
the Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted, (c) the petition
commencing the Insolvency Proceeding is not dismissed within 60 calendar days
of
the date of the filing thereof; provided, however, that, during
the pendency of such period, Agent (including any successor agent) and each
other member of the Lender Group shall be relieved of their obligation to extend
credit hereunder, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate
all
or any substantial portion of the business of, any Borrower, any Guarantor
or
any of their Subsidiaries, or (e) an order for relief shall have been
entered therein;
8.6
If
any
Borrower, any Guarantor or any of their Subsidiaries is enjoined, restrained,
or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.7
If
a notice of
Lien (other than (a) a Permitted Lien, (b) Liens on any property or
assets of the Parent and (c) Liens on any property or assets of Cherokee
that are subordinate to the Agent’s Liens), levy, or assessment securing or
otherwise with respect to Indebtedness or an obligation for the payment of
money
in an aggregate amount in excess of $100,000 is filed of record with respect
to
any Borrower’s, any Guarantor’s or any of its Subsidiaries’ assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if any taxes or debts owing at
any
time hereafter to any one or more of such entities becomes a Lien (other than
(a) a Permitted Lien, (b) Liens on any property or assets of the
Parent and (c) Liens on any property or assets of Cherokee that are
subordinate to the Agent’s Liens), whether ▇▇▇▇▇▇ or otherwise, upon any
Borrower’s, any Guarantor’s or any of its Subsidiaries’ assets and the same is
not paid on the payment date thereof;
-80-
8.8
If
a judgment
or other claim for an amount in excess of $100,000 becomes a Lien (other than
(a) Liens on any property or assets of the Parent and (b) Liens on any
property or assets of Cherokee that are subordinate to the Agent’s Liens) or
encumbrance upon any material portion of any Borrower’s, any Guarantor’s or any
of its Subsidiaries’ properties or assets;
8.9
If
there is a
default in any material agreement to which any Borrower, any Guarantor (other
than the Parent and Cherokee) or any of its Subsidiaries is a party and such
default (a)(i) occurs at the final maturity of the obligations thereunder,
or
(ii) results in a right by the other party thereto, irrespective of whether
exercised, to accelerate the maturity of the applicable Borrower’s, Guarantor’s
or its Subsidiaries’ obligations thereunder, to terminate such agreement, or to
refuse to renew such agreement pursuant to an automatic renewal right therein,
and (b) involves Indebtedness or an obligation for the payment of money in
an aggregate amount in excess of $100,000;
8.10
If
any
Borrower, any Guarantor (other than the Parent and Cherokee) or any of its
Subsidiaries makes any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of
the
subordination provisions applicable to such Indebtedness;
8.11
If
any
material misstatement or misrepresentation exists now or hereafter in any
warranty, representation, statement, or Record made to the Lender Group by
any
Borrower, any Guarantor, their Subsidiaries, or any officer, employee, agent,
or
director of any Borrower, any Guarantor or any of their Subsidiaries;
8.12
If
the
obligation of any Guarantor under its Guaranty is limited or terminated by
operation of law or by such Guarantor thereunder;
8.13
If
this
Agreement or any other Loan Document that purports to create a Lien, shall,
for
any reason not as a result of any act or omission of the Agent, fail or cease
to
create a valid and perfected and, except to the extent permitted by the terms
hereof or thereof, first priority Lien on or security interest in the Collateral
covered hereby or thereby; or
8.14
Any
provision
of any Loan Document shall at any time for any reason be declared to be null
and
void, or the validity or enforceability thereof shall be contested by any
Borrower or Guarantor, or a proceeding shall be commenced by any Borrower or
Guarantor, or by any Governmental Authority having jurisdiction over any
Borrower or Guarantor, seeking to establish the invalidity or unenforceability
thereof, or any Borrower or Guarantor shall deny that any Borrower or Guarantor
has any liability or obligation purported to be created under any Loan Document.
-81-
9.
THE LENDER GROUP’S RIGHTS
AND REMEDIES.
9.1
Rights
and
Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice
of
their election and without demand) may authorize and instruct Agent to do any
one or more of the following on behalf of the Lender Group (and Agent, acting
upon the instructions of the Required Lenders, shall do the same on behalf
of
the Lender Group), all of which are authorized by Borrowers:
(a)
Declare all Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b)
Cease advancing money or
extending credit to or for the benefit of Borrowers under this Agreement, under
any of the Loan Documents, or under any other agreement between Borrowers and
the Lender Group;
(c)
Terminate this Agreement and any
of the other Loan Documents as to any future liability or obligation of the
Lender Group, but without affecting any of the Agent’s Liens in the Collateral
and without affecting the Obligations;
(d)
Settle or adjust disputes and
claims directly with Account Debtors for amounts and upon terms which Agent
considers advisable, and in such cases, Agent will credit the Loan Account
with
only the net amounts received by Agent in payment of such disputed Accounts
after deducting all Lender Group Expenses incurred or expended in connection
therewith;
(e)
Cause Borrowers to hold all
returned Inventory in trust for the Lender Group, segregate all returned
Inventory from all other assets of Borrowers or in Borrowers’ possession and
conspicuously label said returned Inventory as the property of the Lender Group;
(f)
Without notice to or demand upon
any Borrower or Guarantor, make such payments and do such acts as Agent
considers necessary or reasonable to protect its security interests in the
Collateral. Each Borrower agrees to assemble the Collateral if Agent so
requires, and to make the Collateral available to Agent at a place that Agent
may designate which is reasonably convenient to both parties. Each Borrower
authorizes Agent to enter the premises where the Collateral is located, to
take
and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Agent’s determination appears
to conflict with the Agent’s Liens and to pay all expenses incurred in
connection therewith and to charge Borrowers’ Loan Account therefor. With
respect to any of Borrowers’ owned or leased premises, each Borrower hereby
grants Agent a license to enter into possession of such premises and to occupy
the same, without charge, in order to exercise any of the Lender Group’s rights
or remedies provided herein, at law, in equity, or otherwise;
(g)
Without notice to any Borrower
(such notice being expressly waived), and without constituting a retention
of
any collateral in satisfaction of an obligation (within the meaning of the
Code), set off and apply to the Obligations any and all (i) balances and
deposits of any Borrower held by the Lender Group (including any amounts
received in the Cash Management Accounts), or (ii) Indebtedness at any time
owing to or for the credit or the account of any Borrower held by the Lender
Group;
-82-
(h)
Hold, as cash collateral, any
and all balances and deposits of any Borrower held by the Lender Group, and
any
amounts received in the Cash Management Accounts, to secure the full and final
repayment of all of the Obligations;
(i)
Ship, reclaim, recover, store,
finish, maintain, repair, prepare for sale, advertise for sale, and sell (in
the
manner provided for herein) the Collateral. Agent is hereby granted a license
or
other right to use, without charge, for the benefit of the Lender Group, such
Borrower’s labels, patents, copyrights, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature,
as
it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and such Borrower’s rights under all licenses
and all franchise agreements shall inure to the Lender Group’s benefit;
(j)
Sell the Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrowers’ premises) as Agent determines is commercially reasonable. It is not
necessary that the Collateral be present at any such sale;
(k)
Agent shall give notice of the
disposition of the Collateral as follows:
(i)
Agent shall give Administrative
Borrower (for the benefit of the applicable Borrower) a notice in writing of
the
time and place of public sale, or, if the sale is a private sale or some other
disposition other than a public sale is to be made of the Collateral, the time
on or after which the private sale or other disposition is to be made; and
(ii)
The notice shall be personally
delivered or mailed, postage prepaid, to Administrative Borrower as provided
in
Section 12, at least 10 days before the earliest time of disposition set
forth in the notice; no notice needs to be given prior to the disposition of
any
portion of the Collateral that is perishable or threatens to decline speedily
in
value or that is of a type customarily sold on a recognized market;
(l)
Agent, on behalf of the Lender
Group may credit bid and purchase at any public sale;
(m)
Agent may seek the appointment
of a receiver or keeper to take possession of all or any portion of the
Collateral or to operate same and, to the maximum extent permitted by law,
may
seek the appointment of such a receiver without the requirement of prior notice
or a hearing;
(n)
The Lender Group shall have all
other rights and remedies available to it at law or in equity pursuant to any
other Loan Documents; and
-83-
(o)
Any deficiency that exists after
disposition of the Collateral as provided above will be paid immediately by
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Administrative Borrower (for the benefit
of
the applicable Borrower).
9.2
Remedies
Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10.
TAXES AND
EXPENSES.
If
any Borrower fails to pay any
monies (whether taxes, assessments, insurance premiums, or, in the case of
leased properties or assets, rents or other amounts payable under such leases)
due to third Persons, or fails to make any deposits or furnish any required
proof of payment or deposit, all as required under the terms of this Agreement,
then, Agent, in its sole discretion and without prior notice to any Borrower,
may do any or all of the following: (a) make payment of the same or any
part thereof, (b) set up such reserves in Borrowers’ Loan Account as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure, or (c) in the case of the failure to comply with
Section 6.8 hereof, obtain and maintain insurance policies of the
type described in Section 6.8 and take any action consistent with
the terms of this Agreement. Any such amounts paid by Agent shall constitute
Lender Group Expenses and any such payments shall not constitute an agreement
by
the Lender Group to make similar payments in the future or a waiver by the
Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
11.
WAIVERS;
INDEMNIFICATION.
11.1
Demand;
Protest;
etc. Each Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment
at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which each such Borrower may in any way be liable.
11.2
The
Lender Group’s
Liability for Collateral. Each Borrower hereby agrees that:
(a) so long as the Lender Group complies with its obligations, if any,
under the Code, Agent shall not in any way or manner be liable or responsible
for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default
of any carrier, warehouseman, bailee, forwarding agency, or other Person, and
(b) all risk of loss, damage, or destruction of the Collateral shall be
borne by Borrowers.
-84-
11.3
Indemnification. Each Borrower shall pay, indemnify, defend, and
hold the Agent-Related Persons, the Lender-Related Persons with respect to
each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an “Indemnified Person”)
harmless (to the fullest extent permitted by law) from and against any and
all
claims, demands, suits, actions, investigations, proceedings, and damages,
and
all reasonable attorneys fees and disbursements and other out-of-pocket costs
and expenses actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or
as a result of or related to the execution, delivery, enforcement, performance,
or administration of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby, and (b) with respect to any
investigation, litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any
act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the “Indemnified Liabilities”). The foregoing to the
contrary notwithstanding, Borrowers shall have no obligation to any Indemnified
Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and
the
repayment of the Obligations. If any Indemnified Person makes any payment to
any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON
WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE
OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER
PERSON.
12.
NOTICES.
Unless
otherwise provided in this
Agreement, all notices or demands by Borrowers or Agent to the other relating
to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as the
Administrative Borrower or Agent, as applicable, may designate to each other
in
accordance herewith), or telefacsimile to Borrowers in care of Administrative
Borrower or to Agent, as the case may be, at its address set forth below:
| If to Administrative Borrower: | THERMACLIME, INC. | |||||
|
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
|
||||||
| Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||
| Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ |
-85-
| with copies to: | THERMACLIME, INC. | |||||
|
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇
|
||||||
| Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. | ||||||
| Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
| If to Agent: | ▇▇▇▇▇ FARGO FOOTHILL, INC. | |||||
|
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
|
||||||
| Attn: Business Finance Division Manager | ||||||
| Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
| with copies to: | ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP | |||||
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇
|
||||||
| Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. | ||||||
| Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
Agent
and Borrowers may change the
address at which they are to receive notices hereunder, by notice in writing
in
the foregoing manner given to the other party. All notices or demands sent
in
accordance with this Section 12, other than notices by Agent in connection
with enforcement rights against the Collateral under the provisions of the
Code,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail. Each Borrower acknowledges
and agrees that notices sent by the Lender Group in connection with the exercise
of enforcement rights against Collateral under the provisions of the Code shall
be deemed sent when deposited in the mail or personally delivered, or, where
permitted by law, transmitted by telefacsimile or any other method set forth
above.
13.
CHOICE OF LAW AND VENUE;
JURY TRIAL WAIVER.
(a)
THE VALIDITY OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE
CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT),
THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b)
THE PARTIES AGREE THAT
ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL
COURTS LOCATED IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇,
-▇▇-
PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL
OR
OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING
IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
BORROWERS
AND THE LENDER
GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWERS
AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY
BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14.
ASSIGNMENTS AND
PARTICIPATIONS; SUCCESSORS.
14.1
Assignments
and
Participations.
(a)
Any Lender may, with the written
consent of Agent (provided that no written consent of Agent shall be required
in
connection with any assignment and delegation by a Lender to an Eligible
Transferee and no notice to Agent shall be required in connection with any
assignment and delegation by a Lender to an Affiliate of a Lender or a fund
or
account managed by a Lender), assign and delegate to one or more assignees
(each
an “Assignee”) all, or any ratable part of all, of the Obligations, the
Commitments and the other rights and obligations of such Lender hereunder and
under the other Loan Documents, in a minimum amount of $5,000,000 (except such
minimum amount shall not apply to any Affiliate of a Lender or to a fund or
account managed by a Lender); provided, however, that Borrowers
and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses, and
related information with respect to the Assignee, have been given to
Administrative Borrower and Agent by such Lender and the Assignee,
(ii) such Lender and its Assignee have delivered to Administrative Borrower
and Agent an Assignment and Acceptance substantially in the form of Exhibit
A-1, and (iii) the assignor Lender or Assignee has paid to Agent for
Agent’s separate account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, the consent of Agent shall
not
be required (and payment of any fees shall not be required) if such assignment
is in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of such Lender or the assignee is an Affiliate (other than individuals) of,
or a
fund, money market account, investment account or other account managed by
a
Lender or an Affiliate of a Lender.
-87-
(b)
From and after the date that
Agent notifies the assignor Lender (with a copy to Administrative Borrower,
if
applicable) that it has received an executed Assignment and Acceptance and
payment (if applicable) of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights
and
obligations hereunder have been assigned to it pursuant to such Assignment
and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights
and obligations hereunder and under the other Loan Documents have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.
(c)
By executing and delivering an
Assignment and Acceptance, the assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other parties hereto
as
follows: (1) other than as 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 the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
or
any other Loan Document furnished pursuant hereto, (2) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrowers or the performance or observance
by Borrowers of any of their obligations under this Agreement or any other
Loan
Document furnished pursuant hereto, (3) such Assignee confirms that it has
received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance, (4) such Assignee
will, independently and without reliance upon Agent, such assigning Lender
or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or
not taking action under this Agreement, (5) such Assignee appoints and
authorizes Agent to take such actions and to exercise such powers under this
Agreement as are delegated to Agent, by the terms hereof, together with such
powers as are reasonably incidental thereto, and (6) such Assignee agrees
that it will perform all of the obligations which by the terms of this Agreement
are required to be performed by it as a Lender.
(d)
Immediately upon each Assignee’s
making its processing fee payment (if applicable) under the Assignment and
Acceptance and receipt and acknowledgment by Agent of such fully executed
Assignment and Acceptance, this Agreement shall be deemed to be amended to
the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom.
The
Commitment allocated to each Assignee shall reduce such Commitments of the
assigning Lender pro tanto.
-88-
(e)
Any Lender may at any time sell
to one or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a “Participant”) participating interests in
its Obligations, the Commitment, and the other rights and interests of that
Lender (the “Originating Lender”) hereunder and under the other Loan
Documents; provided, however, that (i) the Originating Lender
shall remain a “Lender” for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations,
(iii) Borrowers, Agent, and the Lenders shall continue to deal solely and
directly with the Originating Lender in connection with the Originating Lender’s
rights and obligations under this Agreement and the other Loan Documents,
(iv) no Lender shall transfer or grant any participating interest under
which the Participant has the right to approve any amendment to, or any consent
or waiver with respect to, this Agreement or any other Loan Document, except
to
the extent such amendment to, or consent or waiver with respect to this
Agreement or of any other Loan Document would (A) extend the final maturity
date of the Obligations hereunder in which such Participant is participating,
(B) reduce the interest rate applicable to the Obligations hereunder in
which such Participant is participating, (C) release all or a material
portion of the Collateral or guaranties (except to the extent expressly provided
herein or in any of the Loan Documents) supporting the Obligations hereunder
in
which such Participant is participating, (D) postpone the payment of, or
reduce the amount of, the interest or fees payable to such Participant through
such Lender, or (E) change the amount or due dates of scheduled principal
repayments or prepayments or premiums; and (v) all amounts payable by
Borrowers hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are
due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed
to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrowers, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.
(f)
In connection with any such
assignment or participation or proposed assignment or participation, a Lender
may disclose all documents and information which it now or hereafter may have
relating to Borrowers or Borrowers’ business.
(g)
Any other provision in this
Agreement notwithstanding, any Lender may at any time create a security interest
in, or pledge, all or any portion of its rights under and interest in this
Agreement in favor of any Federal Reserve Bank in accordance with Regulation
A
of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
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14.2
Successors. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties;
provided, however, that Borrowers may not assign this Agreement or
any rights or duties hereunder without the Lenders’ prior written consent and
any prohibited assignment shall be absolutely void ab initio. No consent to
assignment by the Lenders shall release any Borrower from its Obligations.
A
Lender may assign this Agreement and the other Loan Documents and its rights
and
duties hereunder and thereunder pursuant to Section 14.1 hereof and,
except as expressly required pursuant to Section 14.1 hereof, no
consent or approval by any Borrower is required in connection with any such
assignment.
15.
AMENDMENTS;
WAIVERS.
15.1
Amendments
and
Waivers. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent with respect to any departure by
Borrowers therefrom, shall be effective unless the same shall be in writing
and
signed by the Required Lenders (or by Agent at the written request of the
Required Lenders) and Administrative Borrower (on behalf of all Borrowers)
and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however,
that no such waiver, amendment, or consent shall, unless in writing and signed
by all of the Lenders affected thereby and Administrative Borrower (on behalf
of
all Borrowers) and acknowledged by Agent, do any of the following:
(a)
increase or extend any
Commitment of any Lender,
(b)
postpone or delay any date fixed
by this Agreement or any other Loan Document for any payment of principal,
interest, fees, or other amounts due hereunder or under any other Loan Document,
(c)
reduce the principal of, or the
rate of interest on, any loan or other extension of credit hereunder, or reduce
any fees or other amounts payable hereunder or under any other Loan Document,
(d)
change the percentage of the
Commitments that is required to take any action hereunder,
(e)
amend this Section or any
provision of the Agreement providing for consent or other action by all Lenders,
(f)
release Collateral other than as
permitted by Section 16.12,
(g)
change the definition of
“Required Lenders”,
(h)
contractually subordinate any of
the Agent’s Liens,
(i)
release any Borrower or
Guarantor from any obligation for the payment of money, or
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(j)
change the definition of
Borrowing Base or the definitions of Eligible Accounts, Eligible Inventory,
Eligible Raw Inventory, Eligible Inventory, Maximum Revolver Amount, Term Loan
Amount, or change Section 2.1(b); or
(k)
amend any of the provisions of
Section 16.
and,
provided
further,
however, that no amendment, waiver or consent shall, unless in writing
and signed by Agent, Issuing Lender, or Swing Lender, affect the rights or
duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this
Agreement or any other Loan Document. The foregoing notwithstanding, any
amendment, modification, waiver, consent, termination, or release of, or with
respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and
that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2
Replacement
of
Holdout Lender. If any action to be taken by the Lender Group or
Agent hereunder requires the unanimous consent, authorization, or agreement
of
all Lenders, and a Lender (“Holdout Lender”) fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a “Replacement
Lender”), and the Holdout Lender shall have not right to refuse to be
replaced hereunder. Such notice to replace the Holdout Lender shall specify
an
effective date for such replacement, which date shall not be later than 15
Business Days after the date such notice is given.
Prior
to the effective date of such
replacement, the Holdout Lender and each Replacement Lender shall execute and
deliver an Assignment and Acceptance Agreement, subject only to the Holdout
Lender being repaid its share of the outstanding Obligations (including an
assumption of its Pro Rata Share of the Risk Participation Liability) without
any premium or penalty of any kind whatsoever. If the Holdout Lender shall
refuse or fail to execute and deliver any such Assignment and Acceptance
Agreement prior to the effective date of such replacement, the Holdout Lender
shall be deemed to have executed and delivered such Assignment and Acceptance
Agreement. The replacement of any Holdout Lender shall be made in accordance
with the terms of Section 14.1. Until such time as the Replacement
Lenders shall have acquired all of the Obligations, the Commitments, and the
other rights and obligations of the Holdout Lender hereunder and under the
other
Loan Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender’s Pro Rata Share of Advances and to purchase a participation in each
Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3
No
Waivers;
Cumulative Remedies. No failure by Agent or any Lender to exercise
any right, remedy, or option under this Agreement or, any other Loan Document,
or delay by Agent or any Lender in exercising the same, will operate as a waiver
thereof. No waiver by Agent or any Lender will be effective unless it is in
writing, and then only to the extent specifically stated. No waiver by Agent
or
any Lender on any occasion shall affect or diminish Agent’s and each Lender’s
rights thereafter to require strict performance by Borrowers of any provision
of
this Agreement. Agent’s and each Lender’s rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right
or
remedy that Agent or any Lender may have.
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16.
AGENT; THE LENDER
GROUP.
16.1
Appointment
and
Authorization of Agent. Each Lender hereby designates and appoints
Foothill as its representative under this Agreement and the other Loan Documents
and each Lender hereby irrevocably authorizes Agent to take such action on
its
behalf under the provisions of this Agreement and each other Loan Document
and
to exercise such powers and perform such duties as are expressly delegated
to
Agent by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Agent agrees to act as such
on
the express conditions contained in this Section 16. The provisions
of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of
any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding,
Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word “Agent” is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising
or
refraining from exercising any discretionary rights or taking or refraining
from
taking any actions that Agent expressly is entitled to take or assert under
or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have
the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents, (c) make Advances, for itself or on
behalf of Lenders as provided in the Loan Documents, (d) exclusively
receive, apply, and distribute the Collections as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
accounts as Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the Collateral and the
Collections, (f) perform, exercise, and enforce any and all other rights
and remedies of the Lender Group with respect to Borrowers, the Obligations,
the
Collateral, the Collections, or otherwise related to any of same as provided
in
the Loan Documents, and (g) incur and pay such Lender Group Expenses as
Agent may deem necessary or appropriate for the performance and fulfillment
of
its functions and powers pursuant to the Loan Documents.
16.2
Delegation
of
Duties. Agent may execute any of its duties under this Agreement or
any other Loan Document by or through agents, employees or attorneys-in-fact
and
shall be entitled to advice of counsel concerning all matters pertaining to
such
duties. Agent shall not be responsible for the negligence or misconduct of
any
agent or attorney-in-fact that it selects as long as such selection was made
without gross negligence or willful misconduct.
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16.3
Liability
of
Agent. None of the Agent-Related Persons shall (i) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary
or
Affiliate of any Borrower, or any officer or director thereof, contained in
this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by
Agent
under or in connection with, this Agreement or any other Loan Document, or
the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or
any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers’ Subsidiaries or Affiliates.
16.4
Reliance
by
Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected
by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until
such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may
be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request
or
consent of the Lenders and such request and any action taken or failure to
act
pursuant thereto shall be binding upon all of the Lenders.
16.5
Notice
of Default or
Event of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with respect
to defaults in the payment of principal, interest, fees, and expenses required
to be paid to Agent for the account of the Lenders, except with respect to
Events of Default of which Agent has actual knowledge, unless Agent shall have
received written notice from a Lender or Administrative Borrower referring
to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a “notice of default.” Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 16.4, Agent shall
take such action with respect to such Default or Event of Default as may be
requested by the Required Lenders in accordance with Section 9;
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provided,
however,
that unless and until Agent has received any such request, Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with
respect to such Default or Event of Default as it shall deem advisable.
16.6
Credit
Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrowers and their
Subsidiaries or Affiliates, shall be deemed to constitute any representation
or
warranty by any Agent-Related Person to any Lender. Each Lender represents
to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrowers and any other Person (other than the Lender Group) party to a Loan
Document, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement
and
to extend credit to Borrowers. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based
on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or
not taking action under this Agreement and the other Loan Documents, and to
make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of
the
Agent-Related Persons.
16.7
Costs
and Expenses;
Indemnification. Agent may incur and pay Lender Group Expenses to
the extent Agent reasonably deems necessary or appropriate for the performance
and fulfillment of its functions, powers, and obligations pursuant to the Loan
Documents, including court costs, reasonable attorneys fees and expenses, costs
of collection by outside collection agencies and auctioneer fees and costs
of
security guards or insurance premiums paid to maintain the Collateral, whether
or not Borrowers are obligated to reimburse Agent or Lenders for such expenses
pursuant to the Loan Agreement or otherwise. Agent is authorized and directed
to
deduct and retain sufficient amounts from Collections received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed
for
such costs and expenses from Collections received by Agent, each Lender hereby
agrees that it is and shall be obligated to pay to or reimburse Agent for the
amount of such Lender’s Pro Rata Share thereof. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers
and without limiting the obligation of Borrowers to do so), according to their
Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person’s gross negligence or willful misconduct nor
shall any Lender be liable for
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the
obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender’s ratable share of any costs or out-of-pocket expenses
(including attorneys fees and expenses) incurred by Agent in connection with
the
preparation, execution, delivery, administration, modification, amendment,
or
enforcement (whether through negotiations, legal proceedings or otherwise)
of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf
of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8
Agent
in Individual
Capacity. Agent and its Affiliates may make loans to, issue letters
of credit for the account of, accept deposits from, acquire equity interests
in,
and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with Borrowers and their Subsidiaries and
Affiliates and any other Person (other than the Lender Group) party to any
Loan
Documents as though Agent were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, Agent or
its
Affiliates may receive information regarding Borrowers or their Affiliates
and
any other Person (other than the Lender Group) party to any Loan Documents
that
is subject to confidentiality obligations in favor of Borrowers or such other
Person and that prohibit the disclosure of such information to the Lenders,
and
the Lenders acknowledge that, in such circumstances (and in the absence of
a
waiver of such confidentiality obligations, which waiver Agent will use its
reasonable best efforts to obtain), Agent shall not be under any obligation
to
provide such information to them. The terms “Lender” and “Lenders” include Agent
in its individual capacity.
16.9
Successor
Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon
the
acceptance of its appointment as successor Agent hereunder, such successor
Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent’s resignation hereunder as Agent, the provisions of this
Section 16 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor Agent has accepted appointment as Agent by the date which is 45 days
following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of Agent hereunder until such time, if any, as the
Lenders appoint a successor Agent as provided for above.
16.10
Lender
in
Individual Capacity. Any Lender and its respective Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial
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advisory,
underwriting or other
business with Borrowers and their Subsidiaries and Affiliates and any other
Person (other than the Lender Group) party to any Loan Documents as though
such
Lender were not a Lender hereunder without notice to or consent of the other
members of the Lender Group. The other members of the Lender Group acknowledge
that, pursuant to such activities, such Lender and its respective Affiliates
may
receive information regarding Borrowers or their Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and
that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of
such
confidentiality obligations, which waiver such Lender will use its reasonable
best efforts to obtain), such Lender not shall be under any obligation to
provide such information to them. With respect to the Swing Loans and Agent
Advances, Swing Lender shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the sub-agent of the Agent.
16.11
Withholding
Taxes.
(a)
If any Lender is a “foreign
corporation, partnership or trust” within the meaning of the IRC and such Lender
claims exemption from, or a reduction of, U.S. withholding tax under Sections
1441 or 1442 of the IRC, such Lender agrees with and in favor of Agent and
Borrowers, to deliver to Agent and Administrative Borrower:
(i)
if such Lender claims an
exemption from withholding tax pursuant to its portfolio interest exception,
(a) a statement of the Lender, signed under penalty of perjury, that it is
not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder (within the meaning of Section 881(c)(3)(B) of the
IRC), or (III) a controlled foreign corporation described in
Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form
W-8BEN, before the first payment of any interest under this Agreement and at
any
other time reasonably requested by Agent or Administrative Borrower;
(ii)
if such Lender claims an
exemption from, or a reduction of, withholding tax under a United States tax
treaty, properly completed IRS Form W-8BEN before the first payment of any
interest under this Agreement and at any other time reasonably requested by
Agent or Administrative Borrower;
(iii)
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 W-8ECI
before the first payment of any interest is due under this Agreement and at
any
other time reasonably requested by Agent or Administrative Borrower;
(iv)
such other form or forms as may
be required under the IRC or other laws of the United States as a condition
to
exemption from, or reduction of, United States withholding tax.
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Such
Lender agrees promptly to
notify Agent and Administrative Borrower of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.
(b)
If any Lender claims exemption
from, or reduction of, withholding tax under a United States tax treaty by
providing IRS Form W-8BEN and such Lender sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations of Borrowers to such
Lender, such Lender agrees to notify Agent of the percentage amount in which
it
is no longer the beneficial owner of Obligations of Borrowers to such Lender.
To
the extent of such percentage amount, Agent will treat such Lender’s IRS Form
W-8BEN as no longer valid.
(c)
If any Lender is entitled to a
reduction in the applicable withholding tax, 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 by subsection (a) of this Section are not delivered
to Agent, then 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.
(d)
If the IRS or any other
Governmental Authority of the United States or other jurisdiction asserts a
claim that Agent did not properly withhold tax from amounts paid to or for
the
account of any Lender (because the appropriate form was not delivered, was
not
properly executed, or because such Lender failed to notify Agent of a change
in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent as tax
or
otherwise, including penalties and interest, and including any taxes imposed
by
any jurisdiction on the amounts payable to Agent under this Section, together
with all costs and expenses (including attorneys fees and expenses). The
obligation of the Lenders under this subsection shall survive the payment of
all
Obligations and the resignation or replacement of Agent.
(e)
All payments made by Borrowers
hereunder or under any note or other Loan Document will be made without setoff,
counterclaim, or other defense, except as required by applicable law other
than
for Taxes (as defined below). All such payments will be made free and clear
of,
and without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now
or
hereafter imposed by any jurisdiction (other than the United States) or by
any
political subdivision or taxing authority thereof or therein (other than of
the
United States) with respect to such payments (but excluding, any tax imposed
by
any jurisdiction or by any political subdivision or taxing authority thereof
or
therein (i) measured by or based on the net income or net profits of a
Lender, or (ii) to the extent that such tax results from a change in the
circumstances of the Lender, including a change in the residence, place of
organization, or principal place of business of the Lender, or a change in
the
branch or lending office of the Lender participating in the transactions set
forth herein) and all interest, penalties or similar liabilities
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with
respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
being referred to collectively as “Taxes”). If any Taxes are so levied or
imposed, each Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts
due
under this Agreement or under any note, including any amount paid pursuant
to
this Section 16.11(e) after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein;
provided, however, that Borrowers shall not be required to
increase any such amounts payable to Agent or any Lender (i) that is not
organized under the laws of the United States, if such Person fails to comply
with the other requirements of this Section 16.11, or (ii) if
the increase in such amount payable results from Agent’s or such Lender’s own
willful misconduct or gross negligence. Borrowers will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant
to
applicable law certified copies of tax receipts evidencing such payment by
Borrowers.
16.12
Collateral
Matters.
(a)
The Lenders hereby irrevocably
authorize Agent, at its option and in its sole discretion, to release any Lien
on any Collateral (i) upon the termination of the Commitments and payment
and satisfaction in full by Borrowers of all Obligations, (ii) constituting
property being sold or disposed of if a release is required or desirable in
connection therewith and if Administrative Borrower certifies to Agent that
the
sale or disposition is permitted under Section 7.4 of this Agreement
or the other Loan Documents (and Agent may rely conclusively on any such
certificate, without further inquiry), (iii) constituting property in which
no Borrower owned any interest at the time the security interest was granted
or
at any time thereafter, or (iv) constituting property leased to a Borrower
under a lease that has expired or is terminated in a transaction permitted
under
this Agreement. Except as provided above, Agent will not execute and deliver
a
release of any Lien on any Collateral without the prior written authorization
of
(y) if the release is of all or any substantial portion of the Collateral,
all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by
Agent or Administrative Borrower at any time, the Lenders will confirm in
writing Agent’s authority to release any such Liens on particular types or items
of Collateral pursuant to this Section 16.12; provided,
however, that (1) Agent shall not be required to execute any
document necessary to evidence such release on terms that, in Agent’s opinion,
would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of)
all
interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(b)
Agent shall have no obligation
whatsoever to any of the Lenders to assure that the Collateral exists or is
owned by Borrowers or is cared for, protected, or insured or has been
encumbered, or that the Agent’s Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of
the
rights, authorities and powers
-98-
granted
or available to Agent
pursuant to any of the Loan Documents, it being understood and agreed that
in
respect of the Collateral, or any act, omission, or event related thereto,
subject to the terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its sole discretion given Agent’s own
interest in the Collateral in its capacity as one of the Lenders and that Agent
shall have no other duty or liability whatsoever to any Lender as to any of
the
foregoing, except as otherwise provided herein.
16.13
Restrictions
on
Actions by Lenders; Sharing of Payments.
(a)
Each of the Lenders agrees that
it shall not, without the express consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of Agent, set off
against the Obligations, any amounts owing by such Lender to Borrowers or any
deposit accounts of Borrowers now or hereafter maintained with such Lender.
Each
of the Lenders further agrees that it shall not, unless specifically requested
to do so by Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose any Lien on,
or
otherwise enforce any security interest in, any of the Collateral the purpose
of
which is, or could be, to give such Lender any preference or priority against
the other Lenders with respect to the Collateral.
(b)
If, at any time or times any
Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any
proceeds of Collateral or any payments with respect to the Obligations arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from Agent pursuant to
the
terms of this Agreement, or (ii) payments from Agent in excess of such
Lender’s ratable portion of all such distributions by Agent, such Lender
promptly shall (1) turn the same over to Agent, in kind, and with such
endorsements as may be required to negotiate the same to Agent, or in
immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or
warranty, an undivided interest and participation in the Obligations owed to
the
other Lenders so that such excess payment received shall be applied ratably
as
among the Lenders in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received by the
purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to
such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14
Agency
for
Perfection.Agent hereby appoints each other Lender as its agent
(and each Lender hereby accepts such appointment) for the purpose of perfecting
the Agent’s Liens in assets which, in accordance with Article 9 of the UCC can
be perfected only by possession. Should any Lender obtain possession of any
such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s
request therefor shall deliver such Collateral to Agent or in accordance with
Agent’s instructions.
16.15
Payments
by Agent
to the Lenders. All payments to be made by Agent to the Lenders
shall be made by bank wire transfer or internal transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
-99-
designate
for itself by written
notice to Agent. Concurrently with each such payment, Agent shall identify
whether such payment (or any portion thereof) represents principal, premium,
or
interest of the Obligations.
16.16
Concerning
the
Collateral and Related Loan Documents. Each member of the Lender
Group authorizes and directs Agent to enter into this Agreement and the other
Loan Documents relating to the Collateral, for the benefit of the Lender Group.
Each member of the Lender Group agrees that any action taken by Agent in
accordance with the terms of this Agreement or the other Loan Documents relating
to the Collateral and the exercise by Agent of its powers set forth therein
or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
16.17
Field
Audits and
Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports
and
Information. By becoming a party to this Agreement, each Lender:
(a)
is deemed to have requested that
Agent furnish such Lender, promptly after it becomes available, a copy of each
field audit or examination report (each a “Report” and collectively, “Reports”)
prepared by Agent, and Agent shall so furnish each Lender with such Reports,
(b)
expressly agrees and
acknowledges that Agent does not (i) make any representation or warranty as
to the accuracy of any Report, and (ii) shall not be liable for any
information contained in any Report,
(c)
expressly agrees and
acknowledges that the Reports are not comprehensive audits or examinations,
that
Agent or other party performing any audit or examination will inspect only
specific information regarding Borrowers and will rely significantly upon the
Books, as well as on representations of Borrowers’ personnel,
(d)
agrees to keep all Reports and
other material, non-public information regarding Borrowers and their
Subsidiaries and their operations, assets, and existing and contemplated
business plans in a confidential manner; it being understood and agreed by
Borrowers that in any event such Lender may make disclosures (a) to counsel
for and other advisors, accountants, and auditors to such Lender,
(b) reasonably required by any bona fide potential or actual Assignee or
Participant in connection with any contemplated or actual assignment or transfer
by such Lender of an interest herein or any participation interest in such
Lender’s rights hereunder, (c) of information that has become public by
disclosures made by Persons other than such Lender, its Affiliates, assignees,
transferees, or Participants, or (d) as required or requested by any court,
governmental or administrative agency, pursuant to any subpoena or other legal
process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation,
or court order, such Lender shall notify Administrative Borrower of any request
by any court, governmental or administrative agency, or pursuant to any subpoena
or other legal process for disclosure of any such non-public material
information concurrent with, or where practicable, prior to the disclosure
thereof, and
-100-
(e)
without limiting the generality
of any other indemnification provision contained in this Agreement, agrees:
(i) to hold Agent and any such other Lender preparing a Report harmless
from any action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to
Borrowers, or the indemnifying Lender’s participation in, or the indemnifying
Lender’s purchase of, a loan or loans of Borrowers; and (ii) to pay and
protect, and indemnify, defend and hold Agent, and any such other Lender
preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses, and other amounts (including, attorneys fees and
costs) incurred by Agent and any such other Lender preparing a Report as the
direct or indirect result of any third parties who might obtain all or part
of
any Report through the indemnifying Lender.
In
addition to the foregoing:
(x) any Lender may from time to time request of Agent in writing that Agent
provide to such Lender a copy of any report or document provided by Borrowers
to
Agent that has not been contemporaneously provided by Borrowers to such Lender,
and, upon receipt of such request, Agent shall provide a copy of same to such
Lender, (y) to the extent that Agent is entitled, under any provision of
the Loan Documents, to request additional reports or information from Borrowers,
any Lender may, from time to time, reasonably request Agent to exercise such
right as specified in such Lender’s notice to Agent, whereupon Agent promptly
shall request of Administrative Borrower the additional reports or information
reasonably specified by such Lender, and, upon receipt thereof from
Administrative Borrower, Agent promptly shall provide a copy of same to such
Lender, and (z) any time that Agent renders to Administrative Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.
16.18
Several
Obligations; No Liability. Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in
favor
of Agent in its capacity as such, and not by or in favor of the Lenders, any
and
all obligations on the part of Agent (if any) to make any credit available
hereunder shall constitute the several (and not joint) obligations of the
respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
-101-
17.
GENERAL
PROVISIONS.
17.1
Effectiveness. This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature
is
provided for on the signature pages hereof.
17.2
Section
Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
17.3
Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4
Severability
of
Provisions. Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining
the
legal enforceability of any specific provision.
17.5
Amendments
in
Writing.This Agreement only can be amended by a writing in
accordance with Section 15.1.
17.6
Counterparts;
Telefacsimile Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart
of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect
of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7
Revival
and
Reinstatement of Obligations. If the incurrence or payment of the
Obligations by any Borrower or Guarantor or the transfer to the Lender Group
of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors’ rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers
of
property (collectively, a “Voidable Transfer”), and if the Lender Group
is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then,
as
to any such Voidable Transfer, or the amount thereof that the Lender Group
is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
-102-
17.8
Integration. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to
the
transactions contemplated hereby and shall not be contradicted or qualified
by
any other agreement, oral or written, before the date hereof.
17.9
ThermaClime
as Agent
for Borrowers. Each Borrower hereby irrevocably appoints
ThermaClime as the borrowing agent and attorney-in-fact for all Borrowers (the
“Administrative Borrower”), which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed
by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent
with all notices with respect to Advances and Letters of Credit obtained for
the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) except as provided in the clause (i) above, to take
such action as the Administrative Borrower deems appropriate on its behalf
to
obtain Advances and Letters of Credit and to exercise such other powers as
are
reasonably incidental thereto to carry out the purposes of this Agreement.
It is
understood that the handling of the Loan Account and Collateral of Borrowers
in
a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender Group shall not incur liability to any Borrower as a result
hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Lender Group
to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of
the
Lender Group harmless against any and all liability, expense, loss or claim
of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (a) the handling of
the Loan Account and Collateral of Borrowers as herein provided, (b) the
Lender Group’s relying on any instructions of the Administrative Borrower, or
(c) any other action taken by the Lender Group hereunder or under the other
Loan Documents, except that Borrowers will have no liability to the relevant
Agent-Related Person or Lender-Related Person under this
Section 17.9 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from
the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.
17.10
No
Novation. This Agreement constitutes an amendment and restatement of and
supersedes the Original Loan Agreement and does not extinguish the obligations
for the payment of money outstanding under the Original Loan Agreement or
discharge or release the Obligations (including the Obligations of any
predecessor corporations) under, and as defined in, the Original Loan Agreement
except as provided herein or the Lien or priority of any mortgage, pledge,
security agreement or any other security therefor except as provided herein.
Nothing herein contained shall be construed as a substitution or novation of
the
Obligations outstanding under, and as defined in, the Original Loan Agreement
or
instruments securing the same, which shall remain in full force and effect,
except as modified hereby or by instruments or documents executed concurrently
herewith. Nothing expressed or implied in this Agreement shall be construed
as a
release or other discharge of any Borrower or Guarantor under the Original
Loan
Agreement
-103-
from
any of its obligations and
liabilities as a “Borrower” or “Guarantor” thereunder except as provided herein.
Each Borrower and Guarantor hereby (i) confirms and agrees that each Loan
Document to which it is a party is, and shall continue to be, in full force
and
effect, as modified by this Agreement and instruments or documents executed
concurrently herewith, and is hereby ratified and confirmed in all respects
except that on and after the Restatement Effective Date all references in any
such Loan Document to “the Loan Agreement,” “thereto,” “thereof,” “thereunder”
or words of like import referring to the Original Loan Agreement shall mean
the
Original Loan Agreement as amended and restated and superseded by this Agreement
and (ii) confirms and agrees that to the extent that any such Loan Document
purports to assign or pledge to the Agent a security interest in or Lien on,
any
collateral as security for the obligations of the Borrowers or the Guarantors
from time to time existing in respect of the Original Loan Agreement and the
Loan Documents, such pledge, assignment and/or grant of the security interest
or
lien is hereby ratified and confirmed in all respects, as amended hereby or
thereby.
18.
GUARANTY
18.1
Guaranty;
Limitation
of Liability. The Parent hereby, unconditionally and irrevocably,
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Borrowers now or hereafter
existing under any Loan Document, whether for principal, interest (including,
without limitation, all interest that accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of any Borrower), fees, expenses or otherwise (such obligations,
to the extent not paid by the Borrowers, being the “Guaranteed Obligations”),
and agrees to pay any and all expenses (including reasonable counsel fees and
expenses) incurred by the Agents and the Lenders in enforcing any rights under
the guaranty set forth in this Section 18. Without limiting the
generality of the foregoing, the Parent’s liability shall extend to all amounts
that constitute part of the Guaranteed Obligations and would be owed by the
Borrowers to the Agents and the Lenders under any Loan Document but for the
fact
that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Borrower.
18.2
Guaranty
Absolute. The Parent guarantees that the Guaranteed Obligations
will be paid strictly in accordance with the terms of the Loan Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agents or the
Lenders with respect thereto. The obligations of the Parent under this
Section 18 are independent of the Guaranteed Obligations, and a
separate action or actions may be brought and prosecuted against Parent to
enforce such obligations, irrespective of whether any action is brought against
the Borrowers or whether the Borrowers are joined in any such action or actions.
The liability of the Parent under this Section 18 shall be
irrevocable, absolute and unconditional irrespective of, and Parent hereby
irrevocably waives any defenses it may now or hereafter have in any way relating
to, any or all of the following:
(a)
any lack of validity or
enforceability of any Loan Document or any agreement or instrument relating
thereto;
(b)
any change in the time, manner
or place of payment of, or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent to departure
from any Loan Document, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional credit to
the
Borrowers or otherwise;
-104-
(c)
any taking, exchange, release or
non-perfection of any Collateral, or any taking, release or amendment or waiver
of or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(d)
any change, restructuring or
termination of the corporate, limited liability company or partnership structure
or existence of any Borrower; or
(e)
any other circumstance
(including, without limitation, any statute of limitations) or any existence
of
or reliance on any representation by the Agents or the Lenders that might
otherwise constitute a defense available to, or a discharge of, Parent, any
Borrower or any other guarantor or surety.
This
Section 18
shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Guaranteed Obligations is rescinded or must otherwise
be returned by a Lender or any other Person upon the insolvency, bankruptcy
or
reorganization of any Borrower or otherwise, all as though such payment had
not
been made.
18.3.
Waiver. Parent hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Section 18 and any requirement that the Agents
or the Lenders exhaust any right or take any action against the Borrowers or
any
other Person or any collateral. Parent acknowledges that it will receive direct
and indirect benefits from the financing arrangements contemplated herein and
that the waiver set forth in this Section 18.3 is knowingly made in
contemplation of such benefits. Parent hereby waives any right to revoke this
Section 18, and acknowledges that this Section 18 is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
18.4.
Continuing
Guaranty; Assignments. This Section 18 is a continuing
guaranty and shall (a) remain in full force and effect until the later of
(i) the cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this Section 18 and (ii) the Maturity
Date, (b) be binding upon Parent, its successors and assigns and
(c) inure to the benefit of and be enforceable by the Agents and the
Lenders and their successors, pledgees, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Lender may pledge,
assign or otherwise transfer all or any portion of its rights and obligations
under this Agreement (including, without limitation, all or any portion of
its
Commitments and the Advances owing to it) to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted such Lender herein or otherwise, in each case as provided in
Section 14.1.
18.5.
Subrogation. Parent will not exercise any rights that it may now
or hereafter acquire against any Borrower or any other insider guarantor that
arise from the existence, payment, performance or enforcement of Parent’s
obligations under this Section 18, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or
indemnification and
-105-
any
right to participate in any
claim or remedy of the Agents and the Lenders against any Borrower or any other
insider guarantor or any collateral, whether or not such claim, remedy or right
arises in equity or under contract, statute or common law, including, without
limitation, the right to take or receive from any Borrower or any other insider
guarantor, directly or indirectly, in cash or other property or by set-off
or in
any other manner, payment or security solely on account of such claim, remedy
or
right, unless and until all of the Guaranteed Obligations and all other amounts
payable under this Section 18 shall have been paid in full in cash
and the Maturity Date shall have occurred. If any amount shall be paid to Parent
in violation of the immediately preceding sentence at any time prior to the
later of the payment in full in cash of the Guaranteed Obligations and all
other
amounts payable under this Section 18 and the Maturity Date, such
amount shall be held in trust for the benefit of the Agents and the Lenders
and
shall forthwith be paid to the Agents and the Lenders to be credited and applied
to the Guaranteed Obligations and all other amounts payable under this
Section 18, whether matured or unmatured, in accordance with the
terms of this Agreement, or to be held as collateral for any Guaranteed
Obligations or other amounts payable under this Section 18
thereafter arising. If (i) Parent shall make payment to the Agents and the
Lenders of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this
Section 18 shall be paid in full in cash and (iii) the Maturity
Date shall have occurred, the Agents and the Lenders will, at Parent’s request
and expense, execute and deliver to Parent appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to Parent of an interest in the Guaranteed Obligations
resulting from such payment by Parent.
[Signature
page to follow.]
-106-
IN
WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed and delivered
as of
the date first above written.
| Parent: | ||
|
LSB
INDUSTRIES,
INC.,
an
Delaware
corporation
|
||
| By: |
|
|
| Title: | ||
| Borrowers: | ||
|
THERMACLIME,
INC.,
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
CHEROKEE
NITROGEN
COMPANY,
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
CLIMATE
MASTER,
INC.,
a
Delaware
corporation
|
||
| By: |
|
|
| Title: | ||
|
CLIMATECRAFT,
INC.,
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
CLIMACOOL,
CORP.,
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
INTERNATIONAL
ENVIRONMENTAL
CORPORATION,
an Oklahoma corporation
|
||
| By: |
|
|
| Title: | ||
|
THERMACLIME
TECHNOLOGIES, INC.,
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
| KOAX CORP., an Oklahoma corporation | ||
| By: |
|
|
| Title: | ||
|
LSB
CHEMICAL
CORP., an Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
XPEDIAIR,
INC., an Oklahoma corporation.
|
||
| By: |
|
|
| Title: | ||
|
EL
DORADO CHEMICAL
COMPANY,
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
CHEMEX
I
CORP., an Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
TRISON
CONSTRUCTION,
INC.,
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
CHEMEX
II
CORP.,
|
||
|
an
Oklahoma
corporation
|
||
| By: |
|
|
| Title: | ||
|
Agent
and
Lenders:
|
||
|
▇▇▇▇▇
FARGO FOOTHILL,
INC., a
California
corporation, as
Agent and as a
Lender
|
||
|
By:
|
|
|
|
Title:
|
||
|
Lender:
|
||
|
WACHOVIA
BANK,
NATIONAL
ASSOCIATION
(as successor in interest to
Congress
Financial
Corporation
(Southwest))
|
||
|
By:
|
|
|
|
Title:
|
||
TABLE
OF CONTENTS
| Page | ||
|
1.
DEFINITIONS AND
CONSTRUCTION
|
2 | |
|
1.1
Definitions
|
2 | |
|
1.2
Accounting
Terms
|
27 | |
|
1.3
Code
|
28 | |
|
1.4
Construction
|
28 | |
|
1.5
Schedules and
Exhibits
|
28 | |
|
2.
LOAN AND TERMS OF
PAYMENT
|
28 | |
|
2.1
Advances
|
28 | |
|
2.2
CapEx
Loans
|
30 | |
|
2.3
Borrowing Procedures and
Settlements
|
31 | |
|
2.4
Payments.
|
38 | |
|
2.5
Overadvances
|
41 | |
|
2.6
Interest Rates and Letter
of Credit Fee: Rates, Payments, and Calculations.
|
41 | |
|
2.7
Cash
Management
|
43 | |
|
2.8
Crediting
Payments
|
44 | |
|
2.9
Designated
Account
|
44 | |
|
2.10
Maintenance of Loan
Account; Statements of Obligations
|
44 | |
|
2.11
Fees
|
45 | |
|
2.12
Letters of
Credit
|
45 | |
|
2.13
LIBOR
Option.
|
48 | |
|
2.14
Capital
Requirements
|
51 | |
|
2.15
Joint and Several
Liability of Borrowers
|
51 | |
|
3.
CONDITIONS; TERM OF
AGREEMENT
|
53 | |
|
3.1
Conditions Precedent to
the Initial Extension of Credit
|
53 | |
|
3.2
Intentionally
Omitted
|
56 | |
|
3.3
Conditions Precedent to
all Extensions of Credit
|
57 | |
|
3.4
Term
|
57 | |
|
3.5
Effect of
Termination
|
58 | |
|
3.6
Early Termination by
Borrowers
|
58 | |
|
4.
CREATION OF SECURITY
INTEREST
|
59 | |
|
5.
REPRESENTATIONS AND
WARRANTIES.
|
62 | |
|
5.1
No
Encumbrances
|
62 | |
|
5.2
Eligible
Accounts
|
62 | |
|
5.3
Eligible
Inventory
|
63 | |
|
5.4
Equipment
|
63 | |
|
5.5
Location of
Inventory
|
63 | |
|
5.6
Inventory
Records
|
63 | |
|
5.7
Location of Chief
Executive Office; FEIN
|
63 | |
|
5.8
Due Organization and
Qualification; Subsidiaries
|
63 | |
|
5.9
Due Authorization; No
Conflict.
|
64 | |
|
5.10
Litigation
|
65 | |
|
5.11
No Material Adverse
Change
|
65 |
| Page | ||
|
5.12
Fraudulent
Transfer
|
66 | |
|
5.13
Employee
Benefits
|
66 | |
|
5.14
Environmental
Condition
|
66 | |
|
5.15
[Intentionally
Omitted]
|
66 | |
|
5.16
Intellectual
Property
|
66 | |
|
5.17
Leases
|
66 | |
|
5.18
DDAs.
|
67 | |
|
5.19
Complete
Disclosure
|
67 | |
|
5.20
Indebtedness
|
67 | |
|
6.
AFFIRMATIVE
COVENANTS
|
67 | |
|
6.1
Accounting
System
|
67 | |
|
6.2
Collateral
Reporting
|
67 | |
|
6.3
Financial Statements,
Reports, Certificates
|
68 | |
|
6.5
Return
|
71 | |
|
6.6
Maintenance of
Properties
|
71 | |
|
6.7
Taxes
|
71 | |
|
6.8
Insurance.
|
72 | |
|
6.9
Location of
Inventory
|
72 | |
|
6.10
Compliance with
Laws
|
73 | |
|
6.11
Leases
|
73 | |
|
6.12
Brokerage
Commissions
|
73 | |
|
6.13
Existence
|
73 | |
|
6.14
Environmental
|
73 | |
|
6.15
Disclosure
Updates
|
73 | |
|
7.
NEGATIVE
COVENANTS.
|
74 | |
|
7.1
Indebtedness
|
74 | |
|
7.2
Liens
|
75 | |
|
7.3
Restrictions on
Fundamental Changes
|
75 | |
|
7.4
Disposal of
Assets
|
76 | |
|
7.5
Change
Name
|
76 | |
|
7.6
Guarantee
|
76 | |
|
7.7
Nature of
Business
|
76 | |
|
7.8
Prepayments and
Amendments
|
77 | |
|
7.9
Change of
Control
|
77 | |
|
7.10
Consignments
|
77 | |
|
7.11
Distributions
|
77 | |
|
7.12
Accounting
Methods
|
78 | |
|
7.13
Investments
|
78 | |
|
7.14
Transactions with
Affiliates
|
78 | |
|
7.15
Suspension
|
79 | |
|
7.16
Compensation
|
79 | |
|
7.17
Use of
Proceeds.
|
79 | |
|
7.18
Change in Location of
Chief Executive Office; Inventory and Equipment with
Bailees
|
79 | |
|
7.19
Securities
Accounts
|
79 | |
|
7.20
Financial
Covenants
|
79 | |
|
7.21
Minimum
Availability
|
— |
-ii-
| Page | ||
|
7.22
Inactive
Subsidiaries
|
— | |
|
8.
EVENTS OF
DEFAULT
|
79 | |
|
9.
THE LENDER GROUP’S RIGHTS
AND REMEDIES
|
82 | |
|
9.1
Rights and
Remedies
|
82 | |
|
9.2
Remedies
Cumulative
|
84 | |
|
10.
TAXES AND
EXPENSES
|
84 | |
|
11.
WAIVERS;
INDEMNIFICATION
|
85 | |
|
11.1
Demand; Protest;
etc.
|
85 | |
|
11.2
The Lender Group’s
Liability for ▇▇▇▇▇▇▇▇▇▇
|
▇▇ | |
|
▇▇.▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
|
▇▇ | |
|
▇▇.
NOTICES
|
86 | |
|
13.
CHOICE OF LAW AND VENUE;
JURY TRIAL WAIVER
|
87 | |
|
14.
ASSIGNMENTS AND
PARTICIPATIONS; SUCCESSORS
|
88 | |
|
14.1
Assignments and
Participations
|
88 | |
|
14.2
Successors
|
90 | |
|
15.
AMENDMENTS;
WAIVERS
|
90 | |
|
15.1
Amendments and
Waivers
|
90 | |
|
15.2
Replacement of Holdout
Lender
|
91 | |
|
15.3
No Waivers; Cumulative
Remedies.
|
92 | |
|
16.
AGENT; THE LENDER
GROUP
|
92 | |
|
16.1
Appointment and
Authorization of Agent
|
92 | |
|
16.2
Delegation of
Duties
|
93 | |
|
16.3
Liability of
Agent
|
93 | |
|
16.4
Reliance by
Agent
|
94 | |
|
16.5
Notice of Default or
Event of Default
|
94 | |
|
16.6
Credit
Decision
|
94 | |
|
16.7
Costs and Expenses;
Indemnification.
|
95 | |
|
16.8
Agent in Individual
Capacity
|
95 | |
|
16.9
Successor
Agent.
|
96 | |
|
16.10
Lender in Individual
Capacity
|
96 | |
|
16.11
Withholding
Taxes
|
96 | |
|
16.12
Collateral
Matters
|
99 | |
|
16.13
Restrictions on Actions
by Lenders; Sharing of Payments.
|
99 | |
|
16.14
Agency for
Perfection
|
99 | |
|
16.15
Payments by Agent to the
Lenders
|
99 | |
|
16.16
Concerning the
Collateral and Related Loan Documents
|
100 | |
|
16.17
Field Audits and
Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information
|
100 | |
|
16.18
Several Obligations; No
Liability
|
101 | |
|
17.
GENERAL
PROVISIONS
|
102 | |
|
17.1
Effectiveness
|
102 | |
|
17.2
Section
Headings
|
102 | |
|
17.3
Interpretation
|
102 | |
|
17.4
Severability of
Provisions
|
102 | |
|
17.5
Amendments in
Writing
|
102 | |
|
17.6
Counterparts;
Telefacsimile Execution
|
102 |
-iii-
| Page | ||
|
17.7
Revival and Reinstatement
of Obligations
|
102 | |
|
17.8
Integration
|
103 | |
|
17.9
ThermaClime as Agent for
Borrowers
|
103 | |
|
17.10
No
Novation
|
103 | |
|
18.
GUARANTY
|
104 | |
|
18.1.
Guaranty; Limitation of
Liability
|
104 | |
|
18.2.
Guaranty
Absolute
|
104 | |
|
18.3.
Waiver
|
105 | |
|
18.4.
Continuing Guaranty;
Assignments
|
105 | |
|
18.5.
Subrogation
|
105 |
-iv-
EXHIBITS
AND SCHEDULES
| Exhibit A-1 | Form of Assignment and Acceptance | |||
| Exhibit B-1 | Form of Borrowing Base Certificate | |||
| Exhibit C-1 | Form of Compliance Certificate | |||
| Exhibit L-1 | Form of LIBOR Notice | |||
| Schedule C-1 | Commitments | |||
| Schedule E-1 | Eligible Inventory Locations | |||
| Schedule P-1 | Permitted Liens | |||
| Schedule 2.8(a) | Cash Management Banks | |||
| Schedule 3.1(m) | Collateral Access Locations | |||
| Schedule 5.5 | Locations of Inventory and Equipment | |||
| Schedule 5.7 | Chief Executive Office; FEIN | |||
| Schedule 5.8(b) | Capitalization of Borrowers | |||
| Schedule 5.8(c) | Capitalization of Borrowers’ Subsidiaries | |||
| Schedule 5.10 | Litigation | |||
| Schedule 5.14 | Environmental Matters | |||
| Schedule 5.16 | Intellectual Property | |||
| Schedule 5.18 | Demand Deposit Accounts | |||
| Schedule 5.20 | Permitted Indebtedness | |||
| Schedule 7.4(b) | Permitted LSB Indebtedness | |||
| Schedule 7.13 | Other Permitted Investments | |||
| Schedule 7.14 | Transactions with Affiliates | |||
Schedule
C-1
Commitments
|
Lender
|
Revolver Commitment |
Term
Loan Sub-facility Commitment* |
Total Commitment | ||||||
|
▇▇▇▇▇
Fargo Foothill,
Inc.
|
$ | 30,000,000 | $ | 4,500,000 | $ | 30,000,000 | |||
|
Congress
Financial Corporation
(Southwest)
|
$ | 20,000,000 | $ | 3,000,000 | $ | 20,000,000 | |||
|
All
Lenders
|
$ | 50,000,000 | $ | 7,500,000 | $ | 50,000,000 | |||
| * | The Term Loan Commitment is a sub-facility of the Revolver Commitment. |
EXHIBIT
A-1
FORM
OF ASSIGNMENT AND
ACCEPTANCE AGREEMENT
This
ASSIGNMENT
AND
ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of
between
(“Assignor”) and
(“Assignee”). Reference is made to the Agreement described in Item 2
of Annex I annexed hereto (the “Loan Agreement”). Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in
the
Loan Agreement.
In
accordance with the terms and
conditions of Section 14 of the Loan Agreement, the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes
from
the Assignor, that interest in and to the Assignor’s rights and obligations
under the Loan Documents as of the date hereof with respect to the Obligations
owing to the Assignor, and Assignor’s portion of the Total Commitments and the
Revolver Commitments, all as specified in Item 4.b and
Item 4.c of Annex I. After giving effect to such sale and
assignments, the Assignee’s portion of the Total Commitments and Revolver
Commitments will be as set forth in Item 4.b of Annex I. After
giving effect to such sale and assignment the Assignor’s amount and portion of
the Total Commitments and Revolver Commitments will be as set forth in
Item 4.d and Item 4.e of Annex I.
The
Assignor (a) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (b) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any other instrument or document furnished pursuant thereto; and
(c) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or any of its Subsidiaries
or
the performance or observance by any Borrower or any of its Subsidiaries of
any
of their respective obligations under the Loan Documents or any other instrument
or document furnished pursuant thereto.
The
Assignee (a) confirms that
it has received copies of the Loan Agreement and the other Loan Documents,
together with copies of the financial statements referred to therein and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment Agreement;
(b) agrees that it will, independently and without reliance, as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents; (c) confirms that it
is eligible as an assignee under the terms of the Loan Agreement;
(d) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Loan Documents as are delegated
to
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (e) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents
are
required to be performed by it as a Lender [and
(f) attaches
the forms
prescribed by the Internal Revenue Service of the United States certifying
as to
the Assignee’s status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Loan Agreement or such other documents as are necessary to indicate that
all
such payments are subject to such rates at a rate reduced by an applicable
tax
treaty.]
Following
the execution of this
Assignment Agreement by the Assignor and Assignee, it will be delivered by
the
Assignor to the Agent for recording by the Agent. The effective date of this
Assignment (the “Settlement Date”) shall be the later of (a) the date of
the execution hereof by the Assignor and the Assignee, the payment by Assignor
or Assignee to Agent for Agent’s sole and separate account a processing fee in
the amount of $5,000, and the receipt of any required consent of the Agent,
and
(b) the date specified in item 5 of Annex I.
Upon
recording by the Agent, as of
the Settlement Date (a) the Assignee shall be a party to the Loan Agreement
and, to the extent of the interest assigned pursuant to this Assignment
Agreement, have the rights and obligations of a Lender thereunder and under
the
other Loan Documents, and (b) the Assignor shall, to the extent of the
interest assigned pursuant to this Assignment Agreement, relinquish its rights
and be released from its obligations under the Loan Agreement and the other
Loan
Documents.
Upon
recording by the Agent, from
and after the Settlement Date, the Agent shall make all payments under the
Loan
Agreement and the other Loan Documents in respect of the interest assigned
hereby (including, without limitation, all payments or principal, interest
and
commitment fees (if applicable) with respect thereto) to the Assignee. Upon
the
Settlement Date, the Assignee shall pay to the Assignor the Assigned Share
(as
set forth in Item 4.b of Annex I) of the principal amount of any
outstanding loans under the Loan Agreement and the other Loan Documents. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Loan Agreement and the other Loan Documents for periods prior to the
Settlement Date directly between themselves on the Settlement Date.
THIS
ASSIGNMENT AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
[Remainder
of page left
intentionally blank.]
IN
WITNESS WHEREOF, the parties
hereto have caused this Assignment Agreement and Annex I hereto to be
executed by their respective officers thereunto duly authorized, as of the
first
date above written.
|
[NAME
OF
ASSIGNOR]
|
||
| as Assignor | ||
|
By
|
|
|
|
Title:
|
|
|
|
[NAME
OF
ASSIGNEE]
as
Assignee
|
||
|
By:
|
|
|
|
Title:
|
|
|
| ACCEPTED THIS DAY OF |
|
▇▇▇▇▇
FARGO FOOTHILL,
INC.,
AS
AGENT
|
||
|
By:
|
|
|
|
Title:
|
|
|
ANNEX
FOR ASSIGNMENT AND ACCEPTANCE
ANNEX
I
|
1.
|
Borrowers: ThermaClime, Inc., an Oklahoma corporation (“ThermaClime”), and each of the subsidiaries of ThermaClime and party to the below referenced Loan Agreement. | |||||||||||||
|
2.
|
Name and Date of Loan Agreement: Amended and Restated Loan and Security Agreement, dated as of October [__], 2007, among LSB Industries, Inc., an Delaware corporation, as guarantor, the Borrowers, the lenders signatory thereto as the Lenders, and ▇▇▇▇▇ Fargo Foothill, Inc., a California corporation, as the arranger and administrative agent for the Lenders. | |||||||||||||
|
3.
|
Date of Assignment Agreement: | |||||||||||||
|
4.
|
Amounts: | |||||||||||||
| a. |
Assignor’s
Total
Commitment
|
$ | ||||||||||||
| i. | Assignor’s Revolver Commitment | $ | ||||||||||||
| b. | Assigned Share of Total Commitment | % | ||||||||||||
| i. | Assigned Share of Revolver Commitment | % | ||||||||||||
| c. | Assigned Amount of Total Commitment | $ | ||||||||||||
| i. | Assigned Amount of Revolver Credit | |||||||||||||
| Commitment | $ | |||||||||||||
| d. | Resulting Amount of Assignor’s Total Commitment after giving effect to the sale and Assignment to Assignee | $ | ||||||||||||
| i. | Resulting Amount of Assignor’s Revolver Commitment $ | |||||||||||||
| e. | Assignor’s Resulting Share of Total Commitment after giving effect to the Assignment to Assignee | % | ||||||||||||
| i. | Assignor’s Resulting Share of Revolving Credit | |||||||||||||
| Commitment | % | |||||||||||||
|
5.
|
Settlement Date: | |||||||||||
|
6.
|
Notice and Payment Instructions, etc. | |||||||||||
| Assignee: | Assignor: | |||||||||||
| By: |
|
By: |
|
|||||||||
| Title: |
|
Title: |
|
|||||||||
| 7. | Agreed and Accepted: | |||||||||||
| [ASSIGNOR] | [ASSIGNEE] | |||||||||||
| By: |
|
By: |
|
|||||||||
| Title: |
|
Title: |
|
|||||||||
| Accepted: | ||
| ▇▇▇▇▇ FARGO FOOTHILL, INC., as Agent | ||
| By: |
|
|
| Title: |
|
|
EXHIBIT
C-1
(Form
of Compliance Certificate)
[on
Borrowers’ letterhead]
|
To:
|
▇▇▇▇▇
Fargo Foothill, Inc., as
Agent
under
the below-referenced
Loan Agreement
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attn:
Business Finance
Division Manager
|
| Re: | Compliance Certificate dated |
Ladies
and Gentlemen:
Reference
is made to that certain
Amended and Restated Loan and Security Agreement, dated as of October [__],
2007
(the “Loan Agreement”) among LSB Industries, Inc., an Delaware corporation
(“Parent”), ThermaClime, Inc., an Oklahoma corporation (“ThermaClime”), certain
of ThermaClime’s subsidiaries identified on the signature pages thereof (such
subsidiaries, together with ThermaClime, are collectively, jointly and
severally, the “Borrowers”), the lenders signatory thereto (the “Lenders”), and
▇▇▇▇▇ Fargo Foothill, Inc., a California corporation, as the arranger and
administrative agent for the Lenders (“Agent”). Capitalized terms used in this
Compliance Certificate have the meanings set forth in the Loan Agreement unless
specifically defined herein.
Pursuant
to Section 6.3
of the Loan Agreement, the undersigned officer of ThermaClime hereby certifies
that:
1.
The financial information of
Parent and its Subsidiaries and of ThermaClime and its Subsidiaries, as the
case
may be, furnished in Schedule 1 attached hereto, has been prepared in
accordance with GAAP (except for year-end adjustments and the lack of footnotes,
in the case of financial statements delivered under Section 6.3(a)
of the Loan Agreement) and fairly presents the financial condition of Parent
and
its Subsidiaries and of ThermaClime and its Subsidiaries, as the case may be.
2.
Such officer has reviewed the
terms of the Loan Agreement and has made, or caused to be made under his/her
supervision, a review in reasonable detail of the transactions and condition
of
the Borrowers during the accounting period covered by the financial statements
delivered pursuant to Section 6.3 of the Loan Agreement.
3.
Such review has not disclosed the
existence on and as of the date hereof, and the undersigned does not have
knowledge of the existence as of the date hereof, of any event or condition
that
constitutes a Default or Event of Default, except for such conditions or events
listed on Schedule 2 attached hereto, specifying the nature and period of
existence thereof and what action Borrowers have taken, are taking, or propose
to take with respect thereto.
4.
Borrowers are in timely
compliance with all representations, warranties, and covenants set forth in
the
Loan Agreement and the other Loan Documents, except as set forth on Schedule
2 attached hereto. Without limiting the generality of the foregoing,
Borrowers are in compliance with the covenants contained in
Section 7.20 of the Loan Agreement as demonstrated on Schedule
3 hereof.
IN
WITNESS WHEREOF, this Compliance
Certificate is executed by the undersigned this
day of
,
.
|
THERMACLIME,
INC.,
an
Oklahoma corporation,
as
Administrative
Borrower
|
||
| By: |
|
|
| Name: | ||
| Title: | ||
SCHEDULE
3
| 1. | Minimum EBITDA. |
(a)
ThermaClime’s and its
Subsidiaries’ EBITDA for the
ending
,
is
$ ,
which amount [is/is not] greater than or equal to the amount
set forth in Section 7.20(a)(i) of the Loan Agreement for the
corresponding period.
| 2. | Fixed Charge Coverage Ratio. [If Applicable] |
(a)
The Fixed Charge Coverage Ratio
of ThermaClime and its Subsidiaries, for the fiscal year ending
,
is calculated as follows
|
(i)
|
EBITDA of ThermaClime and its Subsidiaries for the 12 month period then ended: | $ | |||
|
(ii)
|
Principal Indebtedness of ThermaClime and its Subsidiaries scheduled to be paid or prepaid during such period: | $ | |||
|
(iii)
|
Gross interest expense of ThermaClime and its Subsidiaries for such period: | $ | |||
|
(iv)
|
Interest income of ThermaClime and its Subsidiaries for such period: | $ | |||
|
(v)
|
Non-cash accretion expense of ThermaClime and its Subsidiaries for such period: | $ | |||
|
(vi)
|
Non-cash
amortization of debt
origination cost of ThermaClime and its Subsidiaries
for
such
period:
|
$ | |||
|
(vii)
|
Capitalized Lease Obligations of ThermaClime and its Subsidiaries having a scheduled due date during such period: | $ | |||
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Item
(i) divided by the
sum of
Item
(ii) plus Item
(vii) plus the result of Item (iii) minus
the
sum of Item (iv) plus
Item (v) plus Item
(vi) (=
Fixed Charge
Coverage Ratio)
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: |
(b)
The Fixed Charge Coverage Ratio
set forth above [is/is not] greater than or equal to the amount
set forth in Section 7.20(a)(iii) of the Loan Agreement for the
corresponding period.
EXHIBIT
L-1
FORM
OF LIBOR NOTICE
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Fargo Foothill, Inc., as Agent
under
the below referenced Loan
Agreement
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▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Ladies
and Gentlemen:
Reference
hereby is made to that
certain Amended and Restated Loan and Security Agreement, dated as of October
[ ], 2007 (the “Loan Agreement”), among LSB
Industries, Inc., an Delaware corporation (“Parent”), ThermaClime, Inc.,
an Oklahoma corporation (“Administrative Borrower”), certain of
Administrative Borrower’s subsidiaries signatory thereto (such subsidiaries,
together with Administrative Borrower, each a “Borrower” and
collectively, the “Borrowers”), the lenders signatory thereto (the
“Lenders”), and ▇▇▇▇▇ Fargo Foothill, Inc., a California corporation,
as
the arranger and administrative agent for the Lenders (“Agent”).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.
This
LIBOR Notice represents the
Borrowers’ request to elect the LIBOR Option with respect to outstanding
Advances in the amount of
$
(the “LIBOR Rate Component”)[, and is a written confirmation of the
telephonic notice of such election given to Agent].
Such
LIBOR Rate Component will have
an Interest Period of [1, 2, or 3] month(s) commencing on
.
This
LIBOR Notice further confirms
the Borrowers’ acceptance, for purposes of determining the rate of interest
based on the LIBOR Rate under the Loan Agreement, of the LIBOR Rate as
determined pursuant to the Loan Agreement.
Administrative
Borrower, on behalf
of itself and the other Borrowers, represents and warrants that (i) as of
the date hereof, each representation or warranty contained in or pursuant to
any
Loan Document, any agreement, instrument, certificate, document or other writing
furnished at any time under or in connection with any Loan Document, and as
of
the effective date of any advance, continuation or conversion requested above
is
true and correct in all material respects (except to the extent any
representation or warranty expressly related to an earlier date), (ii) each
of the covenants and agreements contained in any Loan Document have been
performed (to the extent required to be performed on or before the date hereof
or each such effective date), and (iii) no Default or Event of Default has
occurred and is continuing on the date hereof, nor will any thereof occur after
giving effect to the request above.
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Dated:
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THERMACLIME,
INC., an
Oklahoma
corporation,
as Administrative
Borrower
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By
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Name:
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Title:
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Acknowledged
by:
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| ▇▇▇▇▇ FARGO FOOTHILL, INC., | ||
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as
Agent
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By:
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Name:
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Title:
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