EXHIBIT 10.28
$200,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF JANUARY 11, 2002
AMONG
AVIALL SERVICES, INC.
AS BORROWER
AVIALL, INC.
AS HOLDINGS
AND
THE LENDERS AND ISSUERS PARTY HERETO
AND
CITICORP USA, INC.
AS ADMINISTRATIVE AGENT
GENERAL ELECTRIC CAPITAL CORPORATION
AS SYNDICATION AGENT AND CO-ARRANGER
WACHOVIA BANK, N.A.
AS DOCUMENTATION AGENT
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
AS SOLE BOOK MANAGER AND SOLE LEAD ARRANGER
WEIL, GOTSHAL & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
TABLE OF CONTENTS
Article I Definitions, Interpretation And Accounting Terms...............................1
Section 1.1 Defined Terms...................................................1
Section 1.2 Computation of Time Periods....................................30
Section 1.3 Accounting Terms and Principles................................30
Section 1.4 Certain Terms..................................................31
Article II The Facility..................................................................31
Section 2.1 The Revolving Credit Commitments...............................31
Section 2.2 Borrowing Procedures...........................................32
Section 2.3 Swing Loans....................................................33
Section 2.4 Letters of Credit..............................................35
Section 2.5 Reduction and Termination of the Revolving Credit
Commitments....................................................39
Section 2.6 Repayment of Loans.............................................39
Section 2.7 Evidence of Debt...............................................39
Section 2.8 Optional Prepayments...........................................40
Section 2.9 Mandatory Prepayments..........................................40
Section 2.10 Interest.......................................................42
Section 2.11 Conversion/Continuation Option.................................42
Section 2.12 Fees...........................................................43
Section 2.13 Payments and Computations......................................44
Section 2.14 Special Provisions Governing Eurodollar Rate Loans.............46
Section 2.15 Capital Adequacy...............................................48
Section 2.16 Taxes..........................................................49
Section 2.17 Substitution of Lenders........................................50
Article III Conditions To Loans And Letters Of Credit.....................................51
Section 3.1 Conditions Precedent to Initial Loans and Letters of Credit....51
Section 3.2 Conditions Precedent to Each Loan and Letter of Credit.........55
Section 3.3 Determinations of Initial Borrowing Conditions.................56
Article IV Representations and Warranties................................................56
Section 4.1 Corporate Existence; Compliance with Law.......................56
Section 4.2 Corporate Power; Authorization; Enforceable Obligations........57
Section 4.3 Ownership of Holdings; Subsidiaries............................57
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TABLE OF CONTENTS
(CONTINUED)
Section 4.4 Financial Statements..........................................58
Section 4.5 Material Adverse Change.......................................59
Section 4.6 Solvency......................................................59
Section 4.7 Litigation....................................................59
Section 4.8 Taxes.........................................................59
Section 4.9 Full Disclosure...............................................60
Section 4.10 Margin Regulations............................................60
Section 4.11 No Burdensome Restrictions; No Defaults.......................60
Section 4.12 Investment Company Act; Public Utility Holding Company Act....61
Section 4.13 Use of Proceeds...............................................61
Section 4.14 Use of Proceeds of Additional Junior Capital..................61
Section 4.15 Insurance.....................................................61
Section 4.16 Labor Matters.................................................62
Section 4.17 ERISA.........................................................62
Section 4.18 Environmental Matters.........................................62
Section 4.19 Intellectual Property.........................................63
Section 4.20 Title; Real Property..........................................64
Section 4.21 Related Documents; Material Contractual Obligations...........65
Section 4.22 Regulation H..................................................66
Section 4.23 Distribution Agreements.......................................66
Section 4.24 Government Contracts..........................................67
Section 4.25 Change of Control Payments....................................67
Article V Financial Covenants...........................................................68
Section 5.1 Maximum Leverage Ratio........................................68
Section 5.2 Minimum Interest Coverage Ratio...............................68
Section 5.3 Minimum EBITDA................................................69
Section 5.4 Maintenance of Tangible Net Worth.............................69
Section 5.5 Capital Expenditures..........................................69
Article VI Reporting Covenants..........................................................70
Section 6.1 Financial Statements..........................................70
Section 6.2 Default Notices...............................................72
ii
TABLE OF CONTENTS
(CONTINUED)
Section 6.3 Litigation..............................................72
Section 6.4 Notices under Related Documents.........................72
Section 6.5 SEC Filings; Press Releases.............................72
Section 6.6 Labor Relations.........................................72
Section 6.7 Tax Returns.............................................73
Section 6.8 Insurance...............................................73
Section 6.9 ERISA Matters...........................................73
Section 6.10 Environmental Matters...................................74
Section 6.11 Borrowing Base Determination............................74
Section 6.12 Customer and Supplier Contracts.........................75
Section 6.13 Subsidiaries............................................75
Section 6.14 Other Information.......................................75
Article VII Affirmative Covenants..................................................76
Section 7.1 Preservation of Corporate Existence, Etc................76
Section 7.2 Compliance with Laws, Etc...............................76
Section 7.3 Conduct of Business.....................................76
Section 7.4 Payment of Taxes, Etc...................................76
Section 7.5 Maintenance of Insurance................................76
Section 7.6 Access..................................................77
Section 7.7 Keeping of Books........................................77
Section 7.8 Maintenance of Properties, Etc..........................77
Section 7.9 Application of Proceeds.................................78
Section 7.10 Environmental...........................................78
Section 7.11 Additional Collateral and Guaranties....................78
Section 7.12 Real Property...........................................79
Section 7.13 Landlord Waivers and Bailee's Letters...................80
Section 7.16 Cash Management.........................................80
Article VIII Negative Covenants.....................................................80
Section 8.1 Indebtedness............................................81
Section 8.2 Liens, Etc..............................................82
Section 8.3 Investments.............................................83
iii
TABLE OF CONTENTS
(CONTINUED)
Section 8.4 Sale of Assets...............................................83
Section 8.5 Restricted Payments..........................................84
Section 8.6 Restriction on Fundamental Changes...........................85
Section 8.7 Change in Nature of Business.................................85
Section 8.8 Transactions with Affiliates.................................86
Section 8.9 Restrictions on Subsidiary Distributions; No New Negative
Pledge.................................................................86
Section 8.10 Modification of Constituent Documents........................86
Section 8.11 Modification of Related Documents............................86
Section 8.12 Modification of Subordinated Debt Agreements.................87
Section 8.13 Accounting Changes; Fiscal Year..............................87
Section 8.14 Margin Regulations...........................................87
Section 8.15 Operating Leases; Sale/Leasebacks............................87
Section 8.16 Cancellation of Indebtedness Owed to It......................88
Section 8.17 No Speculative Transactions..................................88
Section 8.18 Compliance with ERISA........................................88
Article IX Events of Default...........................................................88
Section 9.1 Events of Default............................................88
Section 9.2 Remedies.....................................................90
Section 9.3 Actions in Respect of Letters of Credit......................90
Section 9.4 Rescission...................................................91
Article X The Administrative Agent.......................................................91
Section 10.1 Authorization and Action.....................................91
Section 10.2 Administrative Agent's Reliance, Etc.........................92
Section 10.3 The Administrative Agent Individually........................92
Section 10.4 Lender Credit Decision.......................................92
Section 10.5 Indemnification..............................................93
Section 10.6 Successor Administrative Agent...............................93
Section 10.7 Concerning the Collateral and the Collateral Documents.......94
Section 10.8 Collateral Matters Relating to Related Obligations...........95
Article XI Miscellaneous..............................................................96
Section 11.1 Amendments, Waivers, Etc.....................................96
iv
TABLE OF CONTENTS
(CONTINUED)
Section 11.2 Assignments and Participations.............................97
Section 11.3 Costs and Expenses........................................100
Section 11.4 Indemnities...............................................101
Section 11.5 Limitation of Liability...................................103
Section 11.6 Right of Set-off..........................................103
Section 11.7 Sharing of Payments, Etc..................................103
Section 11.8 Notices, Etc..............................................104
Section 11.9 No Waiver; Remedies.......................................105
Section 11.10 Binding Effect............................................105
Section 11.11 Governing Law.............................................105
Section 11.12 Submission to Jurisdiction; Service of Process............105
Section 11.13 Waiver of Jury Trial......................................106
Section 11.14 Marshaling; Payments Set Aside............................106
Section 11.15 Section Titles............................................107
Section 11.16 Execution in Counterparts.................................107
Section 11.17 Entire Agreement..........................................107
Section 11.18 Confidentiality...........................................107
v
TABLE OF CONTENTS
SCHEDULES
Schedule I - Revolving Credit Commitments
Schedule II - Applicable Lending Offices and Addresses for Notices
Schedule III - Designated Subsidiaries
Schedule 2.4 - Existing Letters of Credit
Schedule 4.2 - Consents
Schedule 4.3 - Ownership of Subsidiaries
Schedule 4.7 - Litigation
Schedule 4.16 - Labor Matters
Schedule 4.17 - List of Plans
Schedule 4.18 - Environmental Matters
Schedule 4.20 - Real Property
Schedule 4.23 - Distribution Agreements
Schedule 4.24 - Government Contracts
Schedule 4.25 - Change of Control Payments
Schedule 8.1 - Existing Indebtedness
Schedule 8.2 - Existing Liens
Schedule 8.3 - Existing Investments
EXHIBITS
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Revolving Credit Note
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Swing Loan Request
Exhibit E - Form of Letter of Credit Request
Exhibit F - Form of Notice of Conversion or Continuation
Exhibit G - Opinion of Counsel for the Loan Parties
Exhibit H - Form of Guaranty
Exhibit I - Form of Pledge and Security Agreement
Exhibit J - Form of Borrowing Base Certificate
vi
AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of January 11,
2002, among AVIALL SERVICES Inc., a Delaware corporation (the "Borrower"),
AVIALL, INC., a Delaware corporation ("Holdings"), the Lenders (as defined
below), the Issuers (as defined below), CITICORP USA, INC. ("CUSA"), as agent
for the Lenders and the Issuers (in such capacity, the "Administrative Agent"),
GENERAL ELECTRIC CAPITAL CORPORATION, in its capacity as syndication agent and
co-arranger for the Lenders and the Issuers (in such capacity, the "Syndication
Agent"), WACHOVIA BANK, N.A., in its capacity as documentation agent for the
Lenders and the Issuers (in such capacity, the "Documentation Agent") and SALMON
▇▇▇▇▇ ▇▇▇▇▇▇ INC., in its capacity as sole book manager and sole lead arranger
for the Lenders and the Issuers (in such capacity, the "Lead Arranger").
WITNESSETH:
WHEREAS, the parties hereto are each party to a
Credit
Agreement dated as of December 17, 2001 (the "Existing
Credit Agreement") among
the Borrower, the Lenders, the Issuers and the Administrative Agent under which
the Lenders and Issuers agreed to make available to the Borrower such revolving
credit and letter of credit facility upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Borrower, the Lenders, the Issuers and the
Administrative Agent have agreed to amend and restate the Existing
Credit
Agreement to provide for certain amendments on the terms set forth in this
Agreement, which Agreement shall become effective upon satisfaction of certain
conditions precedent set forth herein;
WHEREAS, it is the intent of the parties hereto that this
Agreement not constitute a novation of the obligation and liabilities existing
under the Existing
Credit Agreement or evidence payment of all or any of such
obligations and liabilities, that this Agreement amend and restate in its
entirety the Existing
Credit Agreement, and that from and after the Effective
Date the Existing
Credit Agreement be of no further force or effect except as to
evidence the incurrence of the obligations of the Borrowers thereunder and the
representations and warranties made thereunder;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
SECTION 1.1 DEFINED TERMS
As used in this Agreement, the following terms have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
"Account" has the meaning specified in the Pledge and Security
Agreement.
"Account Debtor" has the meaning specified in the Pledge and
Security Agreement.
1
"Additional Junior Capital" means, collectively, the
securities issued under the Equity Documents and the Mezzanine Documents,
including the Senior Unsecured Notes.
"Administrative Agent" has the meaning specified in the
preamble hereto.
"Advance Rate" means (a) up to 85% in the case of Eligible
Receivables and (b) up to 60% in the case of Eligible Inventory; provided,
however that the Advance Rate with respect to Eligible Inventory shall not be
greater than the lower of (x) 60% and (y) 85% of the twelve-month net orderly
liquidation value, as determined from time to time by a third party appraiser in
accordance with Section 6.11(b) (Borrowing Base Determination) satisfactory to
the Administrative Agent, divided by Eligible Inventory for such period.
"Affected Lender" has the meaning specified in Section 2.17
(Substitution of Lenders).
"Affiliate" means, with respect to any Person, any other
Person, directly or indirectly, controlling or that is controlled by or is under
common control with such Person, each officer, director, general partner or
joint-venturer of such Person, and each Person that is the beneficial owner of
5% or more of any class of Voting Stock of such Person. For the purposes of this
definition, "control" means the possession of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agreement" means this
Credit Agreement.
"Applicable Lending Office" means, with respect to each
Lender, its Domestic Lending Office in the case of a Base Rate Loan, and its
Eurodollar Lending Office in the case of a Eurodollar Rate Loan.
"Applicable Margin" means (a) during the period commencing on
the Closing Date and ending on the date falling 6 months after the Closing Date,
with respect to the Revolving Loans maintained as (i) Base Rate Loans, a rate
equal to 2.00% per annum and (ii) Eurodollar Rate Loans, a rate equal to 3.00%
per annum, (b) during the 6 month period commencing on the date falling 6 months
after the Closing Date, as of any date of determination, a per annum rate equal
to the rate set forth below opposite the applicable type of Loan and the then
applicable Available Credit (determined for the preceding week or month for
which a Borrowing Base Certificate is required to be and has been delivered
pursuant to Section 6.11 (Borrowing Base Determination)), and (c) thereafter, as
of any date of determination, a per annum rate equal to the rate set forth below
opposite the applicable type of Loan and the then applicable Leverage Ratio
(determined for the 12 month period ending on the last day of the most recent
Fiscal Quarter or Fiscal Year, as applicable, for which Financial Statements
have been delivered pursuant to Section 6.1 (Financial Statements)) set forth
below:
BASE RATE EURODOLLAR
AVAILABLE CREDIT LOANS RATE LOANS
---------------- --------- ----------
Greater than or equal to $50,000,000 1.75% 2.75%
Less than $50,000,000 2.00% 3.00%
2
BASE RATE EURODOLLAR
LEVERAGE RATIO LOANS RATE LOANS
-------------- --------- ----------
Greater than or equal to 3.50 to 1 2.00% 3.00%
Less than 3.50 to 1 and equal to or greater than 3.00 to 1 1.75% 2.75%
Less than 3.00 to 1 1.50% 2.50%
For purposes of determining the Applicable Margin, the Available Credit at any
date shall be the average Available Credit for the calendar week (if Borrower is
required to deliver weekly Borrowing Base Certificates pursuant to Section 6.11
(Borrowing Base Determination)) or calendar month (if Borrower is required to
deliver monthly Borrowing Base Certificate pursuant to Section 6.11 (Borrowing
Base Determination)) preceding such date, as determined by the Administrative
Agent and the Leverage Ratio at any date shall be the Leverage Ratio determined
for the period ending on the last day of the most recent Fiscal Quarter or
Fiscal Year, as applicable for which Financial Statements have been delivered
pursuant to Section 6.1 (Financial Statements).
Subsequent changes in the Applicable Margin resulting from a change in the
Available Credit shall become effective on the first day of the calendar week
(if Borrower is required to deliver weekly Borrowing Base Certificates pursuant
to Section 6.11 (Borrowing Base Determination)) or month (if Borrower is
required to deliver monthly Borrowing Base Certificate pursuant to Section 6.11
(Borrowing Base Determination)) next succeeding delivery by the Borrower to the
Administrative Agent of the weekly or monthly (as required by Section 6.11
(Borrowing Base Determination)) Borrowing Base Certificate for the preceding
week or month, as applicable. Subsequent changes in the Applicable Margin
resulting from a change in the Leverage Ratio shall become effective on the date
of delivery by the Borrower to the Administrative Agent of new financial
statements pursuant to Section 6.1(b) (Financial Statements) for each of the
first three Fiscal Quarters of each Fiscal Year and Section 6.1(c) (Financial
Statements) for each Fiscal Year.
Notwithstanding anything to the contrary set forth in this Agreement (including
the then existing Available Credit and the then existing Leverage Ratio), if the
Borrower shall fail to deliver (a) at any time the Applicable Margin is
determined by reference to Available Credit, any Borrowing Base Certificate
within time period specified in Section 6.11 (Borrowing Base Determination) or
(b) at any time, the financial statements within the time period specified in
Section 6.1(b) and Section 6.1(c), as applicable, the Applicable Margin from and
including date of such failure to but not including the date the Borrower shall
have delivered to the Administrative Agent the appropriate Financial Statement
and if the Applicable Margin is determined by reference to Available Credit,
such Borrowing Base Certificate, shall equal the highest possible Applicable
Margin provided for by this definition.
"Applicable Unused Commitment Fee Rate" means 0.50% per annum.
"Approved Deposit Account" has the meaning specified in the
Pledge and Security Agreement.
"Approved Fund" means any Fund that is advised or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or Affiliate of an
entity that administers or manages a Lender.
3
"Arranger" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., in its capacity as
sole book manager and sole lead arranger.
"Asset Sale" has the meaning specified in Section 8.4 (Sale of
Assets).
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of Exhibit A (Form of Assignment
and Acceptance).
"Australian Facility" means credit facility entered into
between Aviall Australian Pty Ltd and a lender selected by the Borrower in an
aggregate amount not exceeding 10,000,000 Australian Dollars providing for loans
and other financial accommodations to Aviall Australian Pty Ltd for the purpose
of hedging such entity's foreign currency exposure and any modifications,
refundings or refinancings thereof.
"Availability Reserve" means, as of 3 Business Days after the
date of written notice of any determination thereof to the Borrower by the
Administrative Agent, such amounts as the Administrative Agent may from time to
time establish against the Facility, in the Administrative Agent's sole
discretion exercised reasonably, in order either (a) to preserve the value of
the Collateral or the Administrative Agent's Lien thereon or (b) to provide for
the payment of unanticipated liabilities of any Loan Party arising after the
Closing Date.
"Available Credit" means, at any time, (a) the lesser of (i)
the Revolving Credit Commitments in effect at such time and (ii) the Borrowing
Base at such time, minus (b) the sum of (i) the aggregate Revolving Credit
Outstandings at such time and (ii) any Availability Reserve in effect at such
time.
"Bailee's Letter" means a letter in form and substance
acceptable to the Administrative Agent and executed by any Person (other than
the Borrower) that is in possession of Inventory on behalf of the Borrower
pursuant to which such Person acknowledges, among other things, the
Administrative Agent's Lien with respect thereto.
"Bankruptcy Code" means title 11, United States Code.
"Base Rate" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the highest of the following:
(a) the rate of interest announced publicly by Citibank in
New
York,
New York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 0.25% or, if there is no
nearest 0.25%, to the next higher 0.25%) of (i) 0.5% per annum, (ii)
the rate per annum obtained by dividing (A) the latest three-week
moving average of secondary market morning offering rates in the United
States for three-month certificates of deposit of major United States
money market banks, such three-week moving average being determined
weekly on each Monday (or, if any such day is not a Business Day, on
the next succeeding Business Day) for the three-week period ending on
the previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of
New York or, if such publication shall be suspended or
terminated, on the basis
4
of quotations for such rates received by Citibank from three
New York
certificate of deposit dealers of recognized standing selected by
Citibank, by (B) a percentage equal to 100% minus the average of the
daily percentages specified during such three-week period by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) for Citibank in respect of liabilities consisting of or
including (among other liabilities) three-month U.S. dollar nonpersonal
time deposits in the United States and (iii) the average during such
three-week period of the maximum annual assessment rates estimated by
Citibank for determining the then current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation (or any
successor) for insuring Dollar deposits in the United States; and
(c) 0.5% per annum plus the Federal Funds Rate.
"Base Rate Loan" means any Loan during any period in which it
bears interest based on the Base Rate.
"Borrowing" means a borrowing consisting of Loans made on the
same day by the Lenders ratably according to their respective Revolving Credit
Commitments.
"Borrowing Base" means, at any time, (a) the sum of (i) the
product of the Advance Rate then in effect for Eligible Receivables and the face
amount of all Eligible Receivables of the Loan Parties (calculated net of all
finance charges, late fees and other fees that are unearned, sales, excise or
similar taxes, and credits or allowances granted at such time) and (ii) the
product of the Advance Rate then in effect for Eligible Inventory and the value
of Eligible Inventory of the Loan Parties (on an average cost basis and valued,
in each case, at the lower of (x) cost and (y) market) minus (b) any Eligibility
Reserve then in effect.
"Borrowing Base Certificate" means a certificate of the
Borrower substantially in the form of Exhibit J (Form of Borrowing Base
Certificate).
"Business Day" means a day of the year on which banks are not
required or authorized to close in
New York City and, if the applicable Business
Day relates to notices, determinations, fundings and payments in connection with
the Eurodollar Rate or any Eurodollar Rate Loans, a day on which dealings in
Dollar deposits are also carried on in the London interbank market.
"Canadian Facility" means the revolving credit facility of
Aviall (Canada) Ltd. and any replacement or refinancing thereof.
"Capital Expenditures" means, with respect to any Person for
any period, the aggregate of amounts that would be reflected as additions to
property, plant or equipment on a consolidated balance sheet of such Person and
its Subsidiaries prepared in conformity with GAAP, excluding interest
capitalized during construction.
"Capital Lease" means, with respect to any Person, any lease
(or other arrangement conveying the right to use) of property by such Person as
lessee that would be accounted for as a capital lease on a balance sheet of such
Person prepared in conformity with GAAP.
5
"Capital Lease Obligations" means, with respect to any Person,
the capitalized amount of all obligations of such Person or any of its
Subsidiaries under Capital Leases, as determined on a consolidated basis in
conformity with GAAP.
"Cash Collateral Account" has the meaning specified in the
Pledge and Security Agreement.
"Cash Equivalents" means (a) securities issued or fully
guaranteed or insured by the United States government or any agency thereof, (b)
certificates of deposit, eurodollar time deposits, overnight bank deposits and
bankers' acceptances of any commercial bank organized under the laws of the
United States, any state thereof, the District of Columbia, any foreign bank, or
its branches or agencies (fully protected against currency fluctuations) that,
at the time of acquisition, are rated at least "A-1" by Standard & Poor's Rating
Services ("S&P") or "P-1" by ▇▇▇▇▇'▇ Investors Services, Inc. ("Moody's"), (c)
commercial paper of an issuer rated at least "A-1" by S&P or "P-1" by Moody's
and (d) shares of any money market fund that (i) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (a),
(b) and (c) above, (ii) has net assets of not less than $500,000,000 and (iii)
is rated at least "A-1" by S&P or "P-1" by Moody's; provided, however, that the
maturities of all obligations of the type specified in clauses (a), (b) and (c)
above shall not exceed 180 days.
"Cash Interest Expense" means, with respect to any Person for
any period, the Interest Expense of such Person for such period less the
Non-Cash Interest Expense of such Person for such period.
"Cash Pay Stock" means any preferred Stock of a Person (and
any Stock Equivalent of such preferred Stock) on which dividends (or in the case
of such Stock Equivalent, any similar payment) are paid in cash.
"Change of Control" means any of the following:
(a) any person or group of persons (within the meaning of the
Securities Exchange Act of 1934, as amended), other than Carlyle Partners III,
L.P. or its Affiliates, shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended) of 30% or more of the
issued and outstanding Voting Stock of Holdings;
(b) during any period of twelve consecutive calendar months,
individuals who, at the beginning of such period, constituted the board of
directors of Holdings (together with any new directors (i) whose election by the
board of directors of Holdings or whose nomination for election by the
stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose elections or nomination for election was previously so
approved or (ii) whose election or nomination for election by the stockholders
of Holdings was approved by a vote of the stockholders having a specific right
to designate such director) cease for any reason other than death or disability
to constitute a majority of the directors then in office;
(c) Holdings shall cease to own and control all of the
economic and voting rights associated with all of the outstanding Stock of the
Borrower; or
6
(d) any "change of control" or similar event shall occur under
any issue of Indebtedness of Holdings or its Subsidiaries in a principal amount
of $10,000,000 or more.
"Citibank" means Citibank, N.A., a national banking
association.
"CUSA" has the meaning specified in the preamble to this
Agreement.
"Closing Date" means the first date on which any Loan is made
or any Letter of Credit is Issued.
"Code" means the Internal Revenue Code of 1986 (or any
successor legislation thereto).
"Collateral" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by any Loan Party in or upon
which a Lien is granted under any Collateral Document.
"Collateral Documents" means the Pledge and Security
Agreement, the Mortgages, the Deposit Account Control Agreements, the Control
Account Agreements and any other document executed and delivered by a Loan Party
granting a Lien on any of its property to secure payment of the Secured
Obligations.
"Compliance Certificate" has the meaning specified in Section
6.1(d) (Financial Statements).
"Consolidated Current Assets" means, with respect to any
Person at any date, the total consolidated current assets (other than cash and
Cash Equivalents) of such Person and its Subsidiaries at such date, determined
in conformity with GAAP.
"Consolidated Net Income" means, for any Person for any
period, the net income (or loss) of such Person and its Subsidiaries for such
period, determined on a consolidated basis in conformity with GAAP; provided,
however, that (a) the net income of any other Person in which such Person or one
of its Subsidiaries has a joint interest with a third party (which interest does
not cause the net income of such other Person to be consolidated into the net
income of such Person in accordance with GAAP) shall be included only to the
extent of the amount of dividends or distributions paid to such Person or
Subsidiary, (b) the net income of any Subsidiary of such Person that is subject
to any restriction or limitation on the payment of dividends or the making of
other distributions shall be excluded to the extent of such restriction or
limitation, (c) the net income (or loss) of any Person acquired in a pooling of
interest transaction shall be excluded to the extent accrued prior to the date
of such acquisition and (d) extraordinary gains and losses and any one-time
increase or decrease to net income that is required to be recorded because of
the adoption of new accounting policies, practices or standards required by GAAP
shall be excluded.
"Constituent Documents" means, with respect to any Person, (a)
the articles of incorporation, certificate of incorporation or certificate of
formation (or the equivalent organizational documents) of such Person, (b) the
by-laws, operating agreement (or the equivalent governing documents) of such
Person and (c) any document setting forth the manner of election and duties of
the directors or managing members of such Person (if any) and the designation,
amount or relative rights, limitations and preferences of any class or series of
such Person's Stock.
7
"Contaminant" means any material, substance or waste that is
classified, regulated or otherwise characterized under any Environmental Law as
hazardous, toxic, a contaminant or a pollutant or by other words of similar
meaning or regulatory effect, including any petroleum or petroleum-derived
substance or waste, asbestos and polychlorinated biphenyls.
"Contractual Obligation" of any Person means any obligation,
agreement, undertaking or similar provision of any Security issued by such
Person or of any agreement, undertaking, contract, lease, indenture, mortgage,
deed of trust or other instrument (excluding a Loan Document) to which such
Person is a party or by which it or any of its property is bound or to which any
of its property is subject.
"Control Account Agreement" has the meaning specified in the
Pledge and Security Agreement.
"CUSA" has the meaning specified in the preamble to this
Agreement.
"Customary Permitted Liens" means, with respect to any Person,
any of the following Liens:
(a) Liens with respect to the payment of taxes, assessments or
governmental charges in each case that are not yet due or that are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are
being maintained to the extent required by GAAP;
(b) Liens of landlords arising by statute and liens of
suppliers, mechanics, carriers, materialmen, warehousemen or workmen
and other liens imposed by law created in the ordinary course of
business for amounts not yet due or that are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained to the
extent required by GAAP;
(c) deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other
types of social security benefits or to secure the performance of bids,
tenders, sales, contracts (other than for the repayment of borrowed
money) and surety, appeal, customs or performance bonds;
(d) encumbrances arising by reason of zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar encumbrances on the
use of real property not materially detracting from the value of such
real property or not materially interfering with the ordinary conduct
of the business conducted and proposed to be conducted at such real
property;
(e) encumbrances arising under leases or subleases of real
property that do not, in the aggregate over all such encumbrances,
materially detract from the value of such real property or interfere
with the ordinary conduct of the business conducted and proposed to be
conducted at such real property; and
(f) financing statements with respect to a lessor's rights in
and to personal property leased to such Person in the ordinary course
of such Person's business.
8
"Debt Issuance" means the incurrence of Indebtedness of the
type specified in clause (a) or (b) of the definition of "Indebtedness" by
Holdings or any of its Subsidiaries.
"Default" means any event that, with the passing of time or
the giving of notice or both, would become an Event of Default.
"Deposit Account" has the meaning specified in the Pledge and
Security Agreement.
"Deposit Account Bank" has the meaning specified in the Pledge
and Security Agreement.
"Deposit Account Control Agreement" has the meaning specified
in the Pledge and Security Agreement.
"Designated Subsidiary" means the Subsidiaries of the Borrower
designated as such on Schedule III, each of which is a Foreign Subsidiary that
is either (a) in the process of dissolving or otherwise terminating its
existence in accordance with the laws of the jurisdiction of its incorporation
through liquidation or merger with a Subsidiary that is not a Designated
Subsidiary, or (b) conducting no business activities.
"Disqualified Stock" means with respect to any Person, any
Stock that, by its terms (or by the terms of any Security into which it is
convertible or for which it is exchangeable) or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is exchangeable for Indebtedness of such Person or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
Scheduled Termination Date. Securities issued pursuant to the Equity Documents
shall not be deemed Disqualified Stock.
"Distribution Agreements" means, collectively, the Rolls-Royce
Agreements, the Honeywell Agreements and any other material distribution
agreement entered into by Holdings, the Borrower or any of its Subsidiaries.
"Documentary Letter of Credit" means any Letter of Credit that
is drawable upon presentation of documents evidencing the sale or shipment of
goods purchased by the Borrower or any of its Subsidiaries in the ordinary
course of its business.
"Dollars" and the sign "$" each mean the lawful money of the
United States of America.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule II (Applicable Lending Offices and Addresses for Notices)
or on the Assignment and Acceptance by which it became a Lender or such other
office of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"Domestic Subsidiary" means any Subsidiary of a Person
organized under the laws of any state of the United States of America or the
District of Columbia.
9
"EBITDA" means, with respect to any Person for any period, (a)
Consolidated Net Income of such Person for such period plus (b) the sum of, in
each case to the extent included in the calculation of such Consolidated Net
Income but without duplication, (i) any provision for income taxes, (ii)
Interest Expense and Non Cash Interest Expense, (iii) loss from extraordinary
items, (iv) depreciation, depletion and amortization of intangibles or
acquisition costs and (v) all other non-cash charges and non-cash losses for
such period, including the amount of any compensation deduction as the result of
any grant of Stock or Stock Equivalents to employees, officers, directors or
consultants minus (c) the sum of, in each case to the extent included in the
calculation of such Consolidated Net Income but without duplication, (i) any
credit for income tax, (ii) gains from extraordinary items for such period,
(iii) any aggregate net gain (but not any aggregate net loss) from the sale,
exchange or other disposition of capital assets by such Person and (iv) any
other non-cash gains or other items which have been added in determining
Consolidated Net Income, including any reversal of a change referred to in
clause (b)(v) above by reason of a decrease in the value of any Stock or Stock
Equivalent. For purposes of computing EBITDA, non-recurring expenses not
exceeding $3 million incurred in the Fiscal Year ending December 31, 2002
related to the implementation of the Rolls-Royce Contract shall be excluded.
"Eligibility Reserves" means, effective as of 3 Business Days
after the date of written notice of any determination thereof to the Borrower by
the Administrative Agent, such amounts as the Administrative Agent, in its sole
discretion exercised reasonably, may from time to time establish against the
gross amounts of Eligible Receivables and Eligible Inventory to reflect risks or
contingencies arising after the Closing Date that may affect any one or class of
such items and that have not already been taken into account in the calculation
of the Borrowing Base.
"Eligible Assignee" means (a) a Lender or any Affiliate or
Approved Fund of such Lender, (b) a commercial bank having total assets in
excess of $5,000,000,000, (c) a finance company, insurance company or any other
financial institution or fund, in each case reasonably acceptable to the
Administrative Agent and regularly engaged in making, purchasing or investing in
loans and having a net worth, determined in accordance with GAAP, in excess of
$250,000,000 (or, to the extent net worth is less than such amount, a finance
company, insurance company, other financial institution or fund, reasonably
acceptable to the Administrative Agent and the Borrower) or (d) a savings and
loan association or savings bank organized under the laws of the United States
or any State thereof having a net worth, determined in accordance with GAAP of
$250,000,000.
"Eligible Inventory" means the Inventory of the Loan Parties
(other than any Inventory that has been consigned by the Loan Parties) located
within the United States of America including finished goods, parts and supplies
(a) owned solely by the Loan Parties, (b) with respect to which the
Administrative Agent has a valid and perfected first priority Lien, (c) with
respect to which no representation or warranty contained in any Loan Document
has been breached, (d) which is not, in the Administrative Agent's sole
discretion, obsolete or unmerchantable, (e) with respect to which (in respect of
any Inventory labeled with a brand name or trademark and sold by any Loan Party
pursuant to a trademark owned by any Loan Party or a license granted to any Loan
Party) the Administrative Agent would have rights under such trademark or
license pursuant to the Pledge and Security Agreement or other agreement
satisfactory to the Administrative Agent to sell such Inventory in connection
with a liquidation thereof and (f) that the Administrative Agent deems to be
Eligible Inventory based on such credit and collateral considerations as the
Administrative Agent may, in its sole discretion and in
10
accordance with its customary criteria, deem appropriate. No Inventory of any
Loan Party shall be Eligible Inventory if such Inventory consists of (i) goods
returned or rejected by customers other than goods that are undamaged or are
resaleable in the normal course of business, (ii) goods to be returned to
suppliers, (iii) goods in transit (except for goods in transit between Loan
Parties as to which the Administrative Agent is satisfied that such goods are
adequately insured under policies naming the Administrative Agent as loss payee
and which comply with such other conditions determined by the Administrative
Agent) or (iv) goods located, stored, used or held at the premises of a third
party unless (A)(1) the Administrative Agent shall have received a Landlord
Waiver or Bailee's Letter or (2) in the case of Inventory located at a leased
premises, an Eligibility Reserve satisfactory to the Administrative Agent shall
have been established with respect thereto and (B) an appropriate UCC-1
financing statement shall have been executed and properly filed.
"Eligible Receivable" means the gross outstanding balance of
each Account of the Loan Parties arising out of the sale of merchandise, goods
or services in the ordinary course of business, that is made by any Loan Party
to a Person that is not an Affiliate of the Loan Parties (other than an Account
Debtor that is an Affiliate of such Loan Parties solely as a result of Carlyle
Partners III L.P. or any of its Affiliates owning any Stock of Holdings and such
Account arises in the ordinary course of their respective businesses and the
terms thereof are no less favorable to such Loan Party as would be obtained in a
comparable arm's length transaction with a Person who is not an Affiliate), that
is not in dispute and that constitutes Collateral in which the Administrative
Agent has a fully perfected first priority Lien; provided, however, that an
Account shall not be an "Eligible Receivable" if any of the following shall be
true:
(a) (i) such Account is more than 90 days past due according
to the original terms of sale or (ii) 120 days past the original
invoice date thereof; or
(b) any warranty contained in this Agreement or any other Loan
Document with respect to such specific Account is not true and correct
with respect to such Account; or
(c) the Account Debtor on such Account has disputed liability
or made any claim with respect to any other Account due from such
Account Debtor to any Loan Party but only to the extent of such dispute
or claim; or
(d) the Account Debtor on such Account has (i) filed a
petition for bankruptcy or any other relief under the Bankruptcy Code
or any other law relating to bankruptcy, insolvency, reorganization or
relief of debtors, (ii) made an assignment for the benefit of
creditors, (iii) had filed against it any petition or other application
for relief under the Bankruptcy Code or any such other law, (iv) has
failed, suspended business operations, become insolvent, called a
meeting of its creditors for the purpose of obtaining any financial
concession or accommodation or (v) had or suffered a receiver or a
trustee to be appointed for all or a significant portion of its assets
or affairs; or
(e) the Account Debtor on such Account or any of its
Affiliates is also a supplier to or creditor of any Loan Party unless
such supplier or creditor has executed a no-offset letter satisfactory
to the Administrative Agent, in its sole discretion but only to the
extent of the amount owed by the Loan Parties to such Account Debtor;
or
11
(f) the sale represented by such Account is to an Account
Debtor located outside the United States, unless the sale is on letter
of credit or acceptance terms acceptable to the Administrative Agent,
in its sole discretion; or
(g) the sale to such Account Debtor on such Account is on a
▇▇▇▇-on-hold, guaranteed sale, sale-and-return, sale-on-approval or
consignment basis; or
(h) such Account is subject to a Lien in favor of any Person
other than the Administrative Agent for the benefit of the Secured
Parties; or
(i) such Account is subject to any deduction, offset,
counterclaim, return privilege or other conditions other than volume
sales discounts given in the ordinary course of the Loan Parties
business; provided, however, that such Account shall be ineligible only
to the extent of such deduction, offset, counterclaim, return privilege
or other condition (unless otherwise deemed ineligible hereunder); or
(j) the Account Debtor on such Account is located in New
Jersey or Minnesota, unless any Loan Party (i) has received a
certificate of authority to do business and is in good standing in such
state or (ii) has filed a Notice of Business Activities Report with the
appropriate office or agency of such state for the current year; or
(k) the Account Debtor on such Account is a Governmental
Authority, unless such Loan Party has assigned its rights to payment of
such Account to the Administrative Agent pursuant to the Assignment of
Claims Act of 1940, as amended, in the case of a federal Governmental
Authority, and pursuant to applicable law, if any, in the case of any
other Governmental Authority, and such assignment has been accepted and
acknowledged by the appropriate government officers; or
(l) 50% or more of the outstanding Accounts of the Account
Debtor have become, or have been determined by the Administrative
Agent, in accordance with the provisions hereof, to be, ineligible; or
(m) the sale represented by such Account is denominated in a
currency other than Dollars; or
(n) such Account is not evidenced by an invoice or other
writing in form acceptable to the Administrative Agent, in its sole
discretion; or
(o) such Loan Party, in order to be entitled to collect such
Account, is required to perform any additional service for, or perform
or incur any additional obligation to, the Person to whom or to which
it was made; or
(p) the total Accounts of such Account Debtor to the Loan
Parties represent more than 20% of the Eligible Receivables of the Loan
Parties at such time, and, solely with respect to Standard Aircraft
Equipment Co., Inc. more than 25% of the Eligible Receivables of the
Loan Parties, but only to the extent of such excess; or
(q) the Administrative Agent, in accordance with its customary
criteria, determines, in its sole discretion, that such Account might
not be paid or is otherwise ineligible.
12
"Environmental Laws" means all applicable Requirements of Law
now or hereafter in effect and as amended or supplemented from time to time,
relating to pollution or the regulation and protection of human health, safety,
the environment or natural resources, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section
9601 et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C.
Section 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act,
as amended (7 U.S.C. Section 136 et seq.); the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Section 6901 et seq.); the Toxic Substance
Control Act, as amended (42 U.S.C. Section 7401 et seq.); the Clean Air Act, as
amended (42 U.S.C. Section 740 et seq.); the Federal Water Pollution Control
Act, as amended (33 U.S.C. Section 1251 et seq.); the Occupational Safety and
Health Act, as amended (29 U.S.C. Section 651 et seq.); the Safe Drinking Water
Act, as amended (42 U.S.C. Section 300f et seq.); and each of their state and
local counterparts or equivalents and any transfer of ownership notification or
approval statute, including the Industrial Site Recovery Act (N.J. Stat. ▇▇▇.
Section 13:1K-6 et seq.).
"Environmental Liabilities and Costs" means, with respect to
any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including all fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by
any other Person, whether based in contract, tort, implied or express warranty,
strict liability, criminal or civil statute and whether arising under any
Environmental Law, Permit, order or agreement with any Governmental Authority or
other Person, in each case relating to any environmental, health or safety
condition or to any Release or threatened Release and resulting from the past,
present or future operations of, or ownership of property by, such Person or any
of its Subsidiaries.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equity Documents" means, collectively, (i) the Securities
Purchase Agreement dated December 17, 2001 among Holdings, Carlyle Partners III,
L.P. and CP III Coinvestment, L.P., (ii) the Certificates of Designations of the
Series B Senior Convertible Participating Preferred Stock of Holdings, the
Series C Senior Participating Preferred Stock of Holdings and the Series D
Convertible Participating Preferred Stock of Holdings, (iii) the related
Registration Rights Agreement and (iv) all related stock certificates, material
agreements and other material documents.
"Equity Issuance" means the issue or sale of any Stock of
Holdings, the Borrower or any Subsidiary of the Borrower by Holdings, the
Borrower or any Subsidiary of the Borrower to any Person other than Holdings,
the Borrower or any Subsidiary of the Borrower.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with the
Borrower or any of its Subsidiaries within the meaning of Section 414 (b), (c),
(m) or (o) of the Code.
"ERISA Event" means (a) a reportable event described in
Section 4043(b) or 4043(c) of ERISA with respect to a Title IV Plan or a
Multiemployer Plan, provided in the case of any event described in Section
4043(c) of ERISA (other than an event described in Section
13
4043(c)(1) of ERISA) such event must be reported to the PBGC within 30 days
after the occurrence of such event, (b) the withdrawal of the Borrower, any of
its Subsidiaries or any ERISA Affiliate from a Title IV Plan subject to Section
4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA, (c) the complete or partial withdrawal
of the Borrower, any of its Subsidiaries or any ERISA Affiliate from any
Multiemployer Plan, (d) notice of reorganization or insolvency of a
Multiemployer Plan, (e) the filing of a notice of intent to terminate a Title IV
Plan or the treatment of a plan amendment as a termination under Section 4041 of
ERISA, (f) the institution of proceedings to terminate a Title IV Plan or
Multiemployer Plan by the PBGC, (g) the failure to make any required
contribution to a Title IV Plan or Multiemployer Plan, (h) the imposition of a
lien under Section 412 of the Code or Section 302 of ERISA on the Borrower or
any of its Subsidiaries or any ERISA Affiliate or (i) any other event or
condition that might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Federal Reserve Board.
"Eurodollar Base Rate" means, with respect to any Interest
Period for any Eurodollar Rate Loan, the rate of interest determined by the
Administrative Agent to be the rate per annum at which deposits in Dollars are
offered by the principal office of Citibank in London to major banks in the
London interbank market at 11:00 a.m. (London time) two Business Days before the
first day of such Interest Period in an amount substantially equal to the
Eurodollar Rate Loan of Citibank for a period equal to such Interest Period.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule II (Applicable Lending Offices and Addresses for Notices)
or on the Assignment and Acceptance by which it became a Lender (or, if no such
office is specified, its Domestic Lending Office) or such other office of such
Lender as such Lender may from time to time specify to the Borrower and the
Administrative Agent.
"Eurodollar Rate" means, with respect to any Interest Period
for any Eurodollar Rate Loan, an interest rate per annum equal to the rate per
annum obtained by dividing (a) the Eurodollar Base Rate by (b)(i) a percentage
equal to 100% minus (ii) the reserve percentage applicable two Business Days
before the first day of such Interest Period under regulations issued from time
to time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in
New York City
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that includes
deposits by reference to which the Eurodollar Rate is determined) having a term
equal to such Interest Period.
"Eurodollar Rate Loan" means any Loan that, for an Interest
Period, bears interest based on the Eurodollar Rate.
14
"Event of Default" has the meaning specified in Section 9.1
(Events of Default).
"Existing
Credit Agreement" has the meaning specified in the
recitals to this Agreement.
"Facility" means the Revolving Credit Commitments and the
provisions herein related to the Revolving Loans, Swing Loans and Letters of
Credit.
"Fair Market Value" means (a) with respect to any asset or
group of assets (other than a marketable Security) at any date, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale by
a willing seller to a willing purchaser dealing at arm's length and arranged in
an orderly manner over a reasonable period of time having regard to the nature
and characteristics of such asset, as reasonably determined by the Board of
Directors of the Borrower or, if such asset shall have been the subject of a
relatively contemporaneous appraisal by an independent third party appraiser,
the basic assumptions underlying which have not materially changed since its
date, the value set forth in such appraisal and (b) with respect to any
marketable Security at any date, the closing sale price of such Security on the
Business Day next preceding such date, as appearing in any published list of any
national securities exchange or the NASDAQ Stock Market or, if there is no such
closing sale price of such Security, the final price for the purchase of such
Security at face value quoted on such business day by a financial institution of
recognized standing regularly dealing in securities of such type and selected by
the Administrative Agent.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of
New York, or, if such rate is not so published
for any day that is a Business Day, the average of the quotations for such day
on such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the
United States Federal Reserve System, or any successor thereto.
"Fee Letter" shall mean the letter dated as of December 3,
2001, addressed to the Borrower from CUSA and the Arranger and accepted by the
Borrower on December 3, 2001, with respect to certain fees to be paid from time
to time to CUSA and the Arranger.
"Financial Covenant Debt" of any Person means Indebtedness of
the type specified in clauses (a), (b), (d), (e), (f) and (h) of the definition
of "Indebtedness".
"Financial Statements" means the financial statements of
Holdings and its Subsidiaries delivered in accordance with Sections 4.4
(Financial Statements) and 6.1 (Financial Statements).
"Fiscal Quarter" means each of the three month periods ending
on March 31, June 30, September 30 and December 31.
"Fiscal Year" means the twelve month period ending on December
31.
15
"Fleet Credit Agreement" means that certain Credit Agreement
dated as of December 23, 1999, as amended, between the Borrower and Fleet
National Bank, as administrative agent.
"Foreign Subsidiary" means any Subsidiary of Holdings
organized under the laws of a jurisdiction outside the United States of America.
"Fund" means any Person (other than a natural Person) that is
or will be engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its
business.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, that are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation, sovereign or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any central bank.
"Government Contract" means any bid, quotation, proposal,
contract, agreement, work authorization, lease, commitment or sale or purchase
order of Holdings or any of its Subsidiaries with the United States Government,
or any state, local or foreign government.
"Guarantor" means Holdings and each Subsidiary Guarantor.
"Guaranty" means the guaranty, in substantially the form of
Exhibit H (Form of Guaranty), executed by the Guarantors.
"Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness of another Person, if the purpose or intent of such
Person in incurring the Guaranty Obligation is to provide assurance to the
obligee of such Indebtedness that such Indebtedness will be paid or discharged,
that any agreement relating thereto will be complied with or that any holder of
such Indebtedness will be protected (in whole or in part) against loss in
respect thereof, including (a) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of
Indebtedness of another Person and (b) any liability of such Person for
Indebtedness of another Person through any agreement (contingent or otherwise)
(i) to purchase, repurchase or otherwise acquire such Indebtedness or any
security therefor or to provide funds for the payment or discharge of such
Indebtedness (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (ii) to maintain the solvency or any balance sheet
item, level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of non-performance by
any other party or parties to an agreement, (iv) to purchase, sell or lease (as
lessor or lessee) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Indebtedness or to assure
the holder of such Indebtedness against loss or (v) to supply funds to, or in
any other manner invest in, such other Person (including to pay for property or
services irrespective of whether such property is
16
received or such services are rendered), if in the case of any agreement
described under clause (b)(i), (ii), (iii), (iv) or (v) above the primary
purpose or intent thereof is as described in the preceding sentence. The amount
of any Guaranty Obligation shall be equal to the amount of the Indebtedness so
guaranteed or otherwise supported. Minimum inventory purchases under
Distribution Agreements will not be deemed to be Guaranty Obligations under
clause (iii).
"Hazardous Materials" means any chemical, pollutant,
contaminant, pesticide, petroleum or petroleum product or byproduct, radioactive
substance, solid waste (hazardous or extremely hazardous), special, dangerous or
toxic waste, hazardous or toxic substance, chemical or material regulated,
listed, referred to, limited or prohibited under any Environmental Law,
including without limitation: (i) friable or damaged asbestos,
asbestos-containing material, polychlorinated biphenyls (PCBs), solvents and
waste oil; (ii) any "hazardous substance" as defined under CERCLA or any
Environmental Law; and (iv) even if not prohibited, listed, limited or regulated
by an Environmental Law, all pollutants, contaminants or hazardous, dangerous or
toxic chemicals, materials, wastes, substances, including without limitation,
any industrial process or pollution control waste (whether or not hazardous
within the meaning of RCRA), which could pose a hazard to the environment, or
the health or safety of any person or impair the use or value of any portion of
the Property of the Borrower.
"Hedging Contracts" means all Interest Rate Contracts, foreign
exchange contracts, currency swap or option agreements, forward contracts,
commodity swap, purchase or option agreements, other commodity price hedging
arrangements and all other similar agreements or arrangements designed to alter
the risks of any Person arising from fluctuations in interest rates, currency
values or commodity prices.
"Holdings" has the meaning specified in the preamble to this
Agreement.
"Holdings' Accountants" means PriceWaterhouseCoopers LLP or
other independent nationally-recognized public accountants acceptable to the
Administrative Agent.
"Honeywell Agreements" means, collectively, (i) the T56/501
HMU Details Distribution Agreement, dated June 22, 2001, between Honeywell and
the Borrower, (ii) the Distributor Agreement, dated March 23, 2001, between
Honeywell and the Borrower, and (iii) the Distributor Agreement, dated December
28, 2000, between Honeywell and the Borrower.
"Honeywell" means Honeywell International Inc., a Delaware
corporation.
"Improvements" has the meaning specified in Section 4.20(d)
(Title; Real Property).
"Indebtedness" of any Person means without duplication (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments or that bear
interest, (c) all reimbursement and all obligations with respect to letters of
credit, bankers' acceptances, surety bonds and performance bonds, whether or not
matured, (d) all indebtedness for the deferred purchase price of property or
services, other than trade payables incurred in the ordinary course of business
that are not evidenced by a note or similar instrument and are not more than 90
days overdue, (e) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or
17
sale of such property), (f) all Capital Lease Obligations of such Person and the
present value of future rental payments under all synthetic leases, (g) all
Guaranty Obligations of such Person, (h) (I) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value prior to the
date which is 12 months after the Scheduled Termination Date any Stock or Stock
Equivalents of such Person, valued, in the case of redeemable preferred stock,
at the greater of its voluntary liquidation preference and its involuntary
liquidation preference plus accrued and unpaid dividends, and (II) all Stock and
Stock Equivalents of such Person if at such time it is Cash Pay Stock, valued in
the case of such preferred Stock or Stock Equivalent, at the greater of its
voluntary liquidation preference and its involuntary liquidation preference plus
accrued and unpaid dividends, (i) all payments that such Person would have to
make in the event of an early termination on the date Indebtedness of such
Person is being determined in respect of Hedging Contracts of such Person and
(j) all Indebtedness of the type referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property (including Accounts and general
intangibles) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness.
"Indemnified Matter" has the meaning specified in Section 11.4
(Indemnities).
"Indemnitee" has the meaning specified in Section 11.4
(Indemnities).
"Interest Coverage Ratio" means, with respect to any Person
for any period, the ratio of EBITDA of such Person for such period to Interest
Expense of such Person for such period.
"Interest Expense" means, for any Person for any period, (a)
total interest expense of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP and including, in any
event, interest capitalized during construction for such period and net costs
under Interest Rate Contracts for such period plus (b) all cash dividends paid
by such Person and its Subsidiaries during such period in respect of its Cash
Pay Stock determined on a consolidated basis minus (c) net gains of such Person
and its Subsidiaries under Interest Rate Contracts for such period determined on
a consolidated basis in conformity with GAAP minus (d) any interest income of
such Person and its Subsidiaries for such period determined on a consolidated
basis in conformity with GAAP, and minus (e) Non Cash Interest Expense.
"Interest Period" means, in the case of any Eurodollar Rate
Loan, (a) initially, the period commencing on the date such Eurodollar Rate Loan
is made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate
Loan and ending one, two, three or six months thereafter, as selected by the
Borrower in its Notice of Borrowing or Notice of Conversion or Continuation
given to the Administrative Agent pursuant to Section 2.2 (Borrowing Procedures)
or 2.11 (Conversion/Continuation Option) and (b) thereafter, if such Loan is
continued, in whole or in part, as a Eurodollar Rate Loan pursuant to Section
2.11 (Conversion/Continuation Option), a period commencing on the last day of
the immediately preceding Interest Period therefor and ending one, two, three or
six months thereafter, as selected by the Borrower in its Notice of Conversion
or Continuation given to the Administrative Agent pursuant to Section 2.11
(Conversion/Continuation Option); provided, however, that all of the foregoing
provisions relating to Interest Periods in respect of Eurodollar Rate Loans are
subject to the following:
18
(i) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, unless the
result of such extension would be to extend such Interest
Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding
Business Day;
(ii) any 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) shall end on the last
Business Day of a calendar month;
(iii) the Borrower may not select any Interest Period
that ends after the date of a scheduled principal payment on
the Loans as set forth in Article II (The Facility) unless,
after giving effect to such selection, the aggregate unpaid
principal amount of the Loans for which Interest Periods end
after such scheduled principal payment shall be equal to or
less than the principal amount to which the Loans are required
to be reduced after such scheduled principal payment is made;
(iv) the Borrower may not select any Interest Period
in respect of Loans having an aggregate principal amount of
less than $5,000,000; and
(v) there shall be outstanding at any one time no
more than ten (10) Interest Periods in the aggregate.
"Interest Rate Contracts" means all interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements and
interest rate insurance.
"Investment" means, with respect to any Person, (a) any
purchase or other acquisition by such Person of (i) any Security issued by, (ii)
a beneficial interest in any Security issued by, or (iii) any other equity
ownership interest in, any other Person, (b) any purchase by such Person of all
or a significant part of the assets of a business conducted by any other Person,
or all or substantially all of the assets constituting the business of a
division, branch or other unit operation of any other Person, (c) any loan,
advance (other than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable and similar items
made or incurred in the ordinary course of business as presently conducted) or
capital contribution by such Person to any other Person, including all
Indebtedness of any other Person to such Person arising from a sale of property
by such Person other than in the ordinary course of its business and (d) any
Guaranty Obligation incurred by such Person in respect of Indebtedness of any
other Person.
"Inventory" has the meaning specified in the Pledge and
Security Agreement.
"IRS" means the Internal Revenue Service of the United States
or any successor thereto.
"Issue" means, with respect to any Letter of Credit, to issue,
extend the expiry of, renew or increase the maximum stated amount (including by
deleting or reducing any scheduled decrease in such maximum stated amount) of,
such Letter of Credit. The terms "Issued" and "Issuance" shall have a
corresponding meaning.
19
"Issuer" means each Lender or Affiliate of a Lender that (a)
is listed on the signature pages hereof as an "Issuer" or (b) hereafter becomes
an Issuer with the approval of the Administrative Agent and the Borrower by
agreeing pursuant to an agreement with and in form and substance satisfactory to
the Administrative Agent and the Borrower to be bound by the terms hereof
applicable to Issuers.
"Land" means, in respect of any Person, all of those plots,
pieces or parcels of land now owned, leased or hereafter acquired or leased or
purported to be owned, leased or hereafter acquired or leased (including, in
respect of the Loan Parties, as reflected in the most recent Financial
Statements) by such Person.
"Landlord Waiver" means a letter in form and substance
acceptable to the Administrative Agent and executed by a landlord in respect of
Inventory of the Borrower located at any leased premises of the Borrower
pursuant to which such landlord, among other things, waives or subordinates any
Lien such landlord may have in respect of such Inventory.
"Leases" means, with respect to any Person, all of those
leasehold estates in real property of such Person, as lessee, as such may be
amended, supplemented or otherwise modified from time to time.
"Lender" means each financial institution or other entity that
(a) is listed on the signature pages hereof as a "Lender" or (b) from time to
time becomes a party hereto by execution of an Assignment and Acceptance.
"Letter of Credit" means any letter of credit issued pursuant
to Section 2.4 (Letters of Credit).
"Letter of Credit Obligations" means, at any time, without
duplication, the aggregate of all liabilities at such time of the Borrower to
all Issuers with respect to Letters of Credit, whether or not any such liability
is contingent, including the sum of (a) the Reimbursement Obligations at such
time and (b) the Letter of Credit Undrawn Amounts at such time.
"Letter of Credit Reimbursement Agreement" has the meaning
specified in Section 2.4(e) (Letters of Credit).
"Letter of Credit Request" has the meaning specified in
Section 2.4(c) (Letters of Credit).
"Letter of Credit Undrawn Amounts" means, at any time, the
aggregate undrawn face amount of all Letters of Credit outstanding at such time.
"Leverage Ratio" means, with respect to any Person for any
period, the ratio of (a) Financial Covenant Debt of such Person and its
Subsidiaries determined on a consolidated basis in accordance with GAAP as of
the last day of such period to (b) EBITDA for such Person for such period.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge, deposit arrangement, encumbrance, lien
(statutory or other), security interest or preference, priority or other
security agreement or preferential arrangement of any kind or nature
20
whatsoever intended to assure payment of any Indebtedness or the performance of
any other obligation, including any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease and any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction naming the owner of the asset to which such Lien relates as debtor.
"Loan" means any loan made by any Lender pursuant to this
Agreement.
"Loan Documents" means, collectively, this Agreement, the
Revolving Credit Notes (if any), the Guaranty, the Fee Letter, each Letter of
Credit Reimbursement Agreement, each agreement pursuant to which a Lender or an
Affiliate of a Lender provides cash management services to a Loan Party, the
Collateral Documents and each certificate, agreement or document executed by a
Loan Party and delivered to the Administrative Agent or any Lender in connection
with or pursuant to any of the foregoing.
"Loan Party" means each of the Borrower, each Guarantor and
each other Domestic Subsidiary of the Borrower that executes and delivers a Loan
Document.
"Material Adverse Change" means a material adverse change in
any of (a) the condition (financial or otherwise), business, performance,
prospects, operations or properties of Holdings and its Subsidiaries taken as a
whole, (b) the legality, validity or enforceability of any Loan Document or any
Related Document, (c) the perfection or priority of the Liens granted pursuant
to the Collateral Documents, (d) the ability of the Borrower to repay the
Obligations or of the other Loan Parties to perform their respective obligations
under the Loan Documents or (e) the rights and remedies of the Administrative
Agent, the Lenders or the Issuers under the Loan Documents.
"Material Adverse Effect" means an effect that results in or
causes, or could reasonably be expected to result in or cause, a Material
Adverse Change.
"Maximum Credit" means, at any time, (a) the lesser of (i) the
Revolving Credit Commitments in effect at such time and (ii) the Borrowing Base
at such time minus (b) the aggregate amount of any Availability Reserve in
effect at such time.
"Mezzanine Documents" means the Securities Purchase Agreement
dated as of December 17, 2001, between Holdings, the Borrower, ▇.▇. ▇▇▇▇▇▇▇
Mezzanine Fund, L.P., Whitney Private Debt Fund, L.P., Blackstone Mezzanine
Partners L.P., Blackstone Mezzanine Holdings L.P., Carlyle High Yield Partners,
L.P., Oak Hill Securities Fund, L.P., Oak Hill Securities Fund II, L.P., ▇▇▇▇▇▇
Entreprises, L.P. and P&PK Family Limited Partnership, the Senior Unsecured
Notes and common stock and any other securities issued thereunder and all
agreements and documents executed in connection therewith at any time.
"Mortgagee's Title Insurance Policy" means a mortgagee's title
policy (or policies) or marked-up unconditional binder (or binders) for such
insurance (or other evidence acceptable to the Administrative Agent proving
ownership thereof).
"Mortgages" means the mortgages, deeds of trust or other real
estate security documents made or required herein to be made by the Borrower or
any other Loan Party.
21
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower, any of its Subsidiaries or
any ERISA Affiliate has any obligation or liability, contingent or otherwise.
"Net Cash Proceeds" means proceeds received by any Loan Party
after the Closing Date in cash or Cash Equivalents from any (a) Asset Sale,
other than an Asset Sale permitted under Section 8.4 (a), (b), (c), (d) or (e)
(Sale of Assets), net of (i) the reasonable cash costs of sale, assignment or
other disposition, (ii) taxes paid or reasonably estimated to be payable as a
result thereof and (iii) any amount required to be paid or prepaid on
Indebtedness (other than the Obligations) secured by the assets subject to such
Asset Sale, provided, however, that evidence of each of (i), (ii) and (iii)
above is provided to the Administrative Agent in form and substance satisfactory
to it, (b) Property Loss Event or (c) Equity Issuance (other than any such
issuance of common Stock of Holdings occurring in the ordinary course of
business to any director, member of the management or employee of Holdings or
its Subsidiaries or an Equity Issuance to Carlyle Partners III, L.P. or its
Affiliates) or (d) any Debt Issuance (other than a Debt Issuance permitted under
Section 8.1 (Indebtedness)), in each case net of brokers' and advisors' fees and
other costs incurred in connection with such transaction; provided, however,
that in the case of these clauses (c) and (d), evidence of such costs is
provided to the Administrative Agent in form and substance satisfactory to it.
"Net Worth" of any Person means, at any date, the difference
between (i) the Total Assets of such Person at such date (other than investments
in and moneys due from Affiliate arising out of transactions not in the ordinary
course of business or on terms that are not as favorable to such Person as would
be obtained in an arm's length transaction with a Person not an Affiliate on
terms that are not arm's length) and (ii) the Total Liabilities of such Person
at such date. For purposes of computing Net Worth, no reduction shall be made
for non-recurring expenses not exceeding $3 million incurred in the Fiscal Year
ended December 31, 2002 related to the implementation of the Rolls-Royce
Contract and unusual year end reserve adjustments for the Fiscal Year ending
December 31, 2001 not exceeding $4 million.
"Non-Cash Interest Expense" means, with respect to any Person
for any period, the sum of the following amounts (a) the amount of debt discount
and debt issuances costs amortized, (b) charges relating to write-ups or
write-downs in the book or carrying value of existing Financial Covenant Debt
(c) interest payable in evidences of Indebtedness or by addition to the
principal of the related Indebtedness and (d) other non cash interest.
"Non-Consenting Lender" has the meaning specified in Section
11.1(c) (Amendments, Waivers, Etc.).
"Non-Funding Lender" has the meaning specified in Section
2.2(d) (Borrowing Procedures).
"Non-U.S. Lender" means each Lender (or the Administrative
Agent) that is not a United States person as defined in Section 7701(a)(30) of
the Code.
"Notice of Borrowing" has the meaning specified in Section
2.2(a) (Borrowing Procedures).
"Notice of Conversion or Continuation" has the meaning
specified in Section 2.11 (Conversion/Continuation Option).
22
"Obligations" means the Loans, the Letter of Credit
Obligations and all other amounts, obligations, covenants and duties owing by
the Borrower to the Administrative Agent, any Lender, any Issuer, any Affiliate
of any of them or any Indemnitee, of every type and description (whether by
reason of an extension of credit, opening or amendment of a letter of credit or
payment of any draft drawn thereunder, loan, guaranty, indemnification, foreign
exchange or currency swap transaction, interest rate hedging transaction or
otherwise), present or future, arising under this Agreement, any other Loan
Document, any Hedging Contract entered into with any Lender or any Affiliate
thereof after the date hereof in connection herewith any agreement pursuant to
which a Lender or an Affiliate thereof provides cash management services to a
Loan Party in connection with this Agreement or any other Loan Document, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired and whether or not evidenced by any note, guaranty or other instrument
or for the payment of money, including all letter of credit, cash management and
other fees, interest, charges, expenses, fees, attorneys' fees and disbursements
and other sums chargeable to the Borrower under this Agreement, any other Loan
Document, any Hedging Contract or any agreement for cash management services
entered into in connection with this Agreement or any other Loan Document and
all obligations of the Borrower under any Loan Document to provide cash
collateral for Letter of Credit Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permit" means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Requirement of Law.
"Permitted Acquisition" means the acquisition by Holdings or
any of its Subsidiaries of all or substantially all of the assets or Stock of
any Person or of any operating division thereof (the "Target"), or the merger of
the Target with or into Holdings or any Subsidiary of Holdings (with Holdings,
in the case of a merger with Holdings, being the surviving corporation) subject
to the satisfaction of each of the following conditions:
(a) the Administrative Agent shall receive at least 10 days'
prior written notice of such acquisition, which notice shall include,
without limitation, a reasonably detailed description of such
acquisition;
(b) such acquisition shall only involve assets substantially
located in the United States and comprising a business, or those assets
of a business, of the type engaged in by the Borrower and its
Subsidiaries;
(c) such acquisition shall be consensual and shall have been
approved by the Target's board of directors;
(d) no additional Indebtedness or other liabilities shall be
incurred, assumed or otherwise be reflected on a consolidated balance
sheet of Holdings and Target after giving effect to such acquisition,
except (i) Loans made hereunder, (ii) ordinary course trade payables,
accrued expenses and (iii) Indebtedness permitted under Section 8.1
(Indebtedness);
(e) the sum of all amounts payable in connection with such
acquisition and all other Permitted Acquisitions (including all
transaction costs and all Indebtedness,
23
liabilities and Guaranty Obligations incurred or assumed in connection
therewith or otherwise reflected in a consolidated balance sheet of
Holdings and Target) shall not exceed $50,000,000 or, if the Leverage
Ratio of Holdings immediately prior to the consummation of the
Permitted Acquisition is less than 2.5 to 1, shall not exceed
$75,000,000;
(f) at or prior to the closing of such acquisition, Holdings
(or the Subsidiary making such acquisition) and the Target shall have
executed such documents and taken such actions as may be required under
Sections 7.11 (Additional Collateral and Guaranties) and 7.13 (Landlord
Waivers and Bailee's Letters);
(g) concurrently with delivery of the notice referred to in
clause (a) above, the Borrower shall have delivered to the
Administrative Agent, such other financial information, financial
analysis, documentation or other information relating to such
acquisition as the Administrative Agent shall reasonably request; and
(h) at the time of such acquisition and after giving effect
thereto, (i) no Default or Event of Default shall have occurred and be
continuing and (ii) all representations and warranties contained in
Article IV (Representations and Warranties) and in the other Loan
Documents shall be true and correct in all material respects on and as
of such date with the same effect as though made on and as of such
date, except to the extent such representations and warranties
expressly relate to an earlier date.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, estate, trust, limited
liability company, unincorporated association, joint venture or other entity or
a Governmental Authority.
"Pledge and Security Agreement" means an agreement, in
substantially the form of Exhibit I (Form of Pledge and Security Agreement),
executed by the Borrower and each Guarantor.
"Pledged Notes" has the meaning specified in the Pledge and
Security Agreement.
"Pledged Stock" has the meaning specified in the Pledge and
Security Agreement.
"Projections" means those financial projections dated December
3, 2001 covering the fiscal years ending in 2001 through 2006 inclusive, to be
delivered to the Lenders by the Borrower.
"Property Loss Event" means (a) any loss of or damage to
property of any Loan Party that results in the receipt by such Person of
proceeds of insurance in excess of $1,000,000 (individually or in the aggregate
for all such losses and damages) or (b) any taking of property of any Loan Party
that results in the receipt by such Person of a compensation payment in respect
thereof in excess of $1,000,000 (individually or in the aggregate for all such
takings).
"Proposed Change" has the meaning specified in Section 11.1(c)
(Amendments, Waivers, Etc.).
24
"Protective Advances" means all expenses, disbursements and
advances incurred by the Administrative Agent pursuant to the Loan Documents
after the occurrence and during the continuance of an Event of Default that the
Administrative Agent, in its sole discretion, deems necessary or desirable to
preserve or protect the Collateral or any portion thereof or to enhance the
likelihood, or maximize the amount, of repayment of the Obligations.
"Purchasing Lender" has the meaning specified in Section 11.7
(Sharing of Payments, Etc.).
"Ratable Portion" or "ratably" means, with respect to any
Lender, the percentage obtained by dividing (a) the Revolving Credit Commitment
of such Lender by (b) the aggregate Revolving Credit Commitments of all Lenders
(or, at any time after the Revolving Credit Termination Date, the percentage
obtained by dividing the aggregate outstanding principal balance of the
Revolving Credit Outstandings owing to such Lender by the aggregate outstanding
principal balance of the Revolving Credit Outstandings owing to all Lenders).
"Real Property" means, in respect of any Person, the Land of
such Person, together with the right, title and interest of such Person, if any,
in and to the streets, the Land lying in the bed of any streets, roads or
avenues, opened or proposed, in front of, the air space and development rights
pertaining to the Land and the right to use such air space and development
rights, all rights of way, privileges, liberties, tenements, hereditaments and
appurtenances belonging or in any way appertaining thereto, all fixtures, all
easements now or hereafter benefiting the Land and all royalties and rights
appertaining to the use and enjoyment of the Land, including all alley, vault,
drainage, mineral, water, oil and gas rights, together with all of the buildings
and other improvements now or hereafter erected on the Land and any fixtures
appurtenant thereto.
"Register" has the meaning specified in Section 11.2(c)
(Assignments and Participations).
"Reimbursement Date" has the meaning specified in Section
2.4(h) (Letters of Credit).
"Reimbursement Obligations" means all matured reimbursement or
repayment obligations of the Borrower to any Issuer with respect to amounts
drawn under Letters of Credit.
"Reinvestment Deferred Amount" means, with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by any Loan Party
in connection therewith that are not initially applied to prepay the Loans
pursuant to Section 2.9 (Mandatory Prepayments) as a result of the delivery of a
Reinvestment Notice.
"Reinvestment Event" means any Asset Sale or Property Loss
Event in respect of which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice" means a written notice executed by a
Responsible Officer of Holdings stating that no Default or Event of Default has
occurred and is continuing and that Holdings (directly or indirectly through one
of its Subsidiaries) intends and expects to use all or a specified portion of
the Net Cash Proceeds of an Asset Sale or Property Loss Event to acquire
replacement assets useful in its or one of its Subsidiaries' businesses or, in
the case of a Property Loss Event, to effect repairs.
25
"Reinvestment Prepayment Amount" means, with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended or required to be expended pursuant to a Contractual Obligation
entered into prior to the relevant Reinvestment Prepayment Date to acquire
replacement assets useful in the Borrower's business or, in the case of a
Property Loss Event, to effect repairs.
"Reinvestment Prepayment Date" means, with respect to any
Reinvestment Event, the earlier of (a) the date occurring 180 days after such
Reinvestment Event and (b) the date that is five Business Days after the date on
which the Borrower shall have notified the Administrative Agent of the
Borrower's determination not to acquire replacement assets useful in the
Borrower's or a Subsidiary's business (or, in the case of a Property Loss Event,
not to effect repairs) with all or any portion of the relevant Reinvestment
Deferred Amount.
"Related Documents" means the Rolls-Royce Agreements, the
Honeywell Agreements, the Equity Documents, the Mezzanine Documents and each
other material document and instrument executed with respect to any of the
foregoing either thereof.
"Release" means, with respect to any Person, any release,
spill, emission, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration, in each case, of any Contaminant into the
indoor or outdoor environment or into or out of any property owned by such
Person, including the movement of Contaminants through or in the air, soil,
surface water, ground water or property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat or in any other way address any Contaminant in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release so that a Contaminant does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Requirement of Law" means, with respect to any Person, the
common law and all federal, state, local and foreign laws, rules and
regulations, orders, judgments, decrees and other determinations of any
Governmental Authority or arbitrator, applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Requisite Lenders" means, collectively, Lenders having more
than fifty percent (50%) of the aggregate outstanding amount of the Revolving
Credit Commitments or, after the Revolving Credit Termination Date, more than
fifty percent (50%) of the aggregate Revolving Credit Outstandings. A
Non-Funding Lender shall not be included in the calculation of "Requisite
Lenders."
"Responsible Officer" means, with respect to any Person, any
of the principal executive officers, managing members or general partners of
such Person but, in any event, with respect to financial matters, the principal
financial officer, treasurer or controller of such Person.
"Restricted Payment" means (a) any dividend, distribution or
any other payment whether direct or indirect, on account of any Stock or Stock
Equivalents of Holdings or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely in Stock or Stock Equivalents or a dividend or
distribution payable solely to the Borrower or one or more of the Subsidiary
Guarantors, (b) any redemption, retirement, sinking fund or similar payment,
purchase
26
or other acquisition for value, direct or indirect, of any Stock or Stock
Equivalents of Holdings or any of its Subsidiaries now or hereafter outstanding
other than one payable solely to the Borrower or one or more of the Subsidiary
Guarantors and (c) any payment or prepayment of principal, premium (if any),
interest, fees (including fees to obtain any waiver or consent in connection
with any Indebtedness) or other charges on, or redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Indebtedness of
Holdings or any of its Subsidiaries or any other Loan Party, other than any
required payment, prepayment, redemption, retirement, purchases or other
payments, in each case to the extent permitted by any applicable subordination
provisions and the exercise of an option to pay in cash rather than in kind
shall not be deemed a required payment.
"Revolving Credit Borrowing" means Revolving Loans made on the
same day by the Lenders ratably according to their respective Revolving Credit
Commitments.
"Revolving Credit Commitment" means, with respect to each
Lender, the commitment of such Lender to make Revolving Loans and acquire
interests in other Revolving Credit Outstandings in the aggregate principal
amount outstanding not to exceed the amount set forth opposite such Lender's
name on Schedule I (Revolving Credit Commitments) under the caption "Revolving
Credit Commitment," as amended to reflect each Assignment and Acceptance
executed by such Lender and as such amount may be reduced pursuant to this
Agreement.
"Revolving Credit Note" means a promissory note of the
Borrower payable to the order of any Lender in a principal amount equal to the
amount of such Lender's Revolving Credit Commitment evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Revolving Loans
(and, if such Lender is also the Swing Loan Lender, Swing Loans) owing to such
Lender.
"Revolving Credit Outstandings" means, at any particular time,
the sum of (a) the principal amount of the Revolving Loans outstanding at such
time, (b) the Letter of Credit Obligations outstanding at such time and (c) the
principal amount of the Swing Loans outstanding at such time.
"Revolving Credit Termination Date" shall mean the earliest of
(a) the Scheduled Termination Date, (b) the date of termination of the Revolving
Credit Commitments pursuant to Section 2.5 (Reduction and Termination of the
Revolving Credit Commitments) and (c) the date on which the Obligations become
due and payable pursuant to Section 9.2 (Remedies).
"Revolving Loan" has the meaning specified in Section 2.1 (The
Revolving Credit Commitments).
"Rolls-Royce" means Rolls-Royce Corporation.
"Rolls-Royce Agreements" means, collectively, (i) the
Rolls-Royce Contract and (ii) the Distribution Agreement, dated November 3, 1999
between ▇▇▇▇▇▇▇ Engine Company, Inc. (d/b/a Rolls-▇▇▇▇▇ ▇▇▇▇▇▇▇) and the
Borrower.
"Rolls-Royce Contract" means the Distribution Services
Agreement to be entered into between the Borrower and Rolls-Royce with respect
to the provision of certain distribution services by Borrower for Rolls-Royce
T56 engine parts.
27
"Scheduled Termination Date" means the 5th anniversary of the
Closing Date.
"Secured Obligations" means, in the case of the Borrower, the
Obligations and, in the case of any other Loan Party, the obligations of such
Loan Party under the Guaranty and the other Loan Documents to which it is a
party.
"Secured Parties" means the Lenders, the Issuers, the
Administrative Agent and any other holder of any Obligation.
"Security" means any Stock, Stock Equivalent, voting trust
certificate, bond, debenture, note or other evidence of Indebtedness, whether
secured, unsecured, convertible or subordinated, or any certificate of interest,
share or participation in, any temporary or interim certificate for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing, but shall not include any evidence of the Obligations.
"Selling Lender" has the meaning specified in Section 11.7
(Sharing of Payments, Etc.).
"Senior Unsecured Notes" means the senior unsecured notes
issued by Borrower in the aggregate original principal amount of $80,000,000 due
2007 issued pursuant to the Mezzanine Documents.
"Solvent" means, with respect to any Person, that the value of
the assets of such Person (both at fair value and present fair saleable value)
is, on the date of determination, greater than the total amount of liabilities
(including contingent and unliquidated liabilities) of such Person as of such
date and that, as of such date, such Person is able to pay all liabilities of
such Person as such liabilities mature and does not have unreasonably small
capital. In computing the amount of contingent or unliquidated liabilities at
any time, such liabilities shall be computed at the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Special Purpose Vehicle" means any special purpose funding
vehicle identified at such in writing by any Lender to the Administrative Agent.
"Standby Letter of Credit" means any Letter of Credit that is
not a Documentary Letter of Credit.
"Stock" means shares of capital stock (whether denominated as
common stock or preferred stock), beneficial, partnership or membership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or equivalent
entity, whether voting or non-voting.
"Stock Equivalents" means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.
"Subordinated Debt" has the meaning specified in Section
8.1(k) (Indebtedness).
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company or other business entity of
which an aggregate of 50% or more of the
28
outstanding Voting Stock is, at the time, directly or indirectly, owned or
controlled by such Person or one or more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Domestic Subsidiary of
Holdings (other than the Borrower) and any other Subsidiary of Holdings that is
or becomes party to the Guaranty.
"Swing Loan" has the meaning specified in Section 2.3 (Swing
Loans).
"Swing Loan Lender" means CUSA or any other Lender that
becomes the Administrative Agent or agrees, with the approval of the
Administrative Agent and the Borrower, to act as Swing Loan Lender hereunder.
"Swing Loan Request" has the meaning specified in Section
2.3(b) (Swing Loans).
"Syndication Completion Date" means the date upon which the
Arranger determines in its sole discretion that the primary syndication of the
Loans and Revolving Credit Commitments has been completed.
"Tangible Net Worth" of any Person means, at any date, the Net
Worth of such Person at such date, excluding, however, from the determination of
the Total Assets of such Person at such date, (a) all goodwill, organizational
expenses, research and development expenses, trademarks, trade names,
copyrights, patents, patent applications, licenses other than those entered into
after the Closing Date, rights in any of the foregoing, other similar
intangibles, (b) Securities not readily marketable, (c) cash held in a sinking
or other analogous fund established for the purpose of redemption, retirement,
defeasance or prepayment of any Stock or Indebtedness (d) any write-up in the
book value of any asset resulting from a revaluation thereof and (e) any items
not included in clause (a), (b), (c) or (d) above that are not expressly
excluded and that are treated as intangibles in conformity with GAAP. Tangible
Net Worth shall not be reduced by securities issued under the Equity Documents
to the extent constituting Indebtedness.
"Tax Affiliate" means, with respect to any Person, (a) any
Subsidiary of such Person and (b) any Affiliate of such Person with which such
Person files or is eligible to file consolidated, combined or unitary tax
returns.
"Tax Return" has the meaning specified in Section 4.8(a)
(Taxes).
"Taxes" has the meaning specified in Section 2.16(a) (Taxes).
"Title IV Plan" means a pension plan, other than a
Multiemployer Plan, covered by Title IV of ERISA and to which Holdings or any of
its Subsidiaries or any ERISA Affiliate has any obligation or liability
(contingent or otherwise).
"Total Assets" of any Person means, at any date, the total
assets of such Person and its Subsidiaries at such date determined on a
consolidated basis in conformity with GAAP minus (a) any minority interest in
non-wholly-owned Subsidiaries that would be reflected on a consolidated balance
sheet of such person and its Subsidiaries at such date prepared in conformity
with GAAP and (b) any Securities issued by such Person held as treasury
securities.
29
"Total Liabilities" of any Person means, at any date, all
obligations that, in conformity with GAAP, would be included in determining
total liabilities as shown on the liabilities side of a consolidated balance
sheet of such Person and its Subsidiaries at such date; provided, however, that,
regardless of whether the same would be so shown, "Total Liabilities" of any
Person shall include all Indebtedness of such Person or any of its Subsidiaries
at such date (other than intercompany Indebtedness) and shall include the
greater of the liquidation preference and the redemption price of any
outstanding Disqualified Stock of such Person at such date.
"UCC" has the meaning specified in the Pledge and Security
Agreement.
"Unused Commitment Fee" has the meaning specified in Section
2.12(a) (Fees).
"Voting Stock" means Stock of any Person having ordinary power
to vote in the election of members of the board of directors, managers, trustees
or other controlling Persons, of such Person (irrespective of whether, at the
time, Stock of any other class or classes of such entity shall have or might
have voting power by reason of the happening of any contingency).
"Wholly-Owned Subsidiary" means any Subsidiary of a Person,
all of the Stock of which (other than director's qualifying shares, as may be
required by law) is owned by such Person, either directly or indirectly through
one or more Wholly-Owned Subsidiaries.
"Withdrawal Liability" means, with respect to Holdings or any
of its Subsidiaries at any time, the aggregate liability incurred (whether or
not assessed) with respect to all Multiemployer Plans pursuant to Section 4201
of ERISA or for increases in contributions required to be made pursuant to
Section 4243 of ERISA.
SECTION 1.2 COMPUTATION OF TIME PERIODS
In this Agreement, in the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding" and the
word "through" means "to and including."
SECTION 1.3 ACCOUNTING TERMS AND PRINCIPLES
(a) Except as set forth below, all accounting terms not
specifically defined herein shall be construed in conformity with GAAP and all
accounting determinations required to be made pursuant hereto shall, unless
expressly otherwise provided herein, be made in conformity with GAAP.
(b) If any change in the accounting principles used in the
preparation of the most recent Financial Statements referred to in Section 6.1
(Financial Statements) is hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or any
successors thereto) and such change is adopted by the Borrower with the
agreement of Holdings' Accountants and results in a change in any of the
calculations required by Article V (Financial Covenants) or VIII (Negative
Covenants) had such accounting change not occurred, the parties hereto agree to
enter into negotiations in order to amend such provisions so as to equitably
reflect such change with the desired result that the criteria for evaluating
compliance with such covenants by the Borrower shall be the same after such
change as if such change had not been made; provided, however, that no change in
GAAP that would affect a calculation that measures
30
compliance with any covenant contained in Article V (Financial Covenants) or
VIII (Negative Covenants) shall be given effect until such provisions are
amended to reflect such changes in GAAP.
SECTION 1.4 CERTAIN TERMS
(a) The terms "herein," "hereof" and "hereunder" and similar
terms refer to this Agreement as a whole and not to any particular Article,
Section, subsection or clause in, this Agreement.
(b) Unless otherwise expressly indicated herein, (i)
references in this Agreement to an Exhibit, Schedule, Article , Section , clause
or sub-clause refer to the appropriate Exhibit or Schedule to, or Article ,
Section , clause or sub-clause in this Agreement and (ii) the words "above" and
"below", when following a reference to a clause or a sub-clause of any Loan
Document, refer to a clause or sub-clause within, respectively, the same Section
or clause.
(c) Each agreement defined in this Article I shall include all
appendices, exhibits and schedules thereto. Unless the prior written consent of
the Requisite Lenders is required hereunder for an amendment, restatement,
supplement or other modification to any such agreement and such consent is not
obtained, references in this Agreement to such agreement shall be to such
agreement as so amended, restated, supplemented or modified.
(d) References in this Agreement to any statute shall be to
such statute as amended or modified, together with any successor legislation, in
each case in effect at the time any such reference is operative.
(e) The term "including" when used in any Loan Document means
"including without limitation" except when used in the computation of time
periods.
(f) The terms "Lender," "Issuer" and "Administrative Agent"
include, without limitation, their respective successors.
(g) Upon the appointment of any successor Administrative Agent
pursuant to Section 10.6 (Successor Administrative Agent), references to CUSA in
Section 10.3 (The Administrative Agent Individually) and to Citibank in the
definitions of Base Rate and Eurodollar Rate shall be deemed to refer to the
financial institution then acting as the Administrative Agent or one of its
Affiliates if it so designates.
ARTICLE II
THE FACILITY
SECTION 2.1 THE REVOLVING CREDIT COMMITMENTS
On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make loans (each a "Revolving Loan")
to the Borrower from time to time on any Business Day during the period from the
date hereof until the Revolving Credit Termination Date in an aggregate
principal amount at any time outstanding (for all such loans by such Lender) not
to exceed such Lender's Revolving Credit Commitment; provided, however, that at
no time shall any Lender be obligated to make a Revolving Loan to the extent
that the
31
aggregate Revolving Credit Outstandings, after giving effect to such Revolving
Loan, would exceed the Maximum Credit in effect at such time. Within the limits
of each Lender's Revolving Credit Commitment, amounts of Revolving Loans repaid
may be reborrowed under this Section 2.1.
SECTION 2.2 BORROWING PROCEDURES
(a) Each Revolving Credit Borrowing shall be made on notice
given by the Borrower to the Administrative Agent not later than 12:00 p.m. (
New
York time) (i) on the same Business Day, in the case of a Borrowing of Base Rate
Loans and (ii) three Business Days, in the case of a Borrowing of Eurodollar
Rate Loans, prior to the date of the proposed Revolving Credit Borrowing. Each
such notice shall be in substantially the form of Exhibit C (Form of Notice of
Borrowing) (a "Notice of Borrowing"), specifying (A) the date of such proposed
Revolving Credit Borrowing, (B) the aggregate amount of such proposed Revolving
Credit Borrowing, (C) whether any portion of the proposed Revolving Credit
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, (D) the initial
Interest Period or Periods for any such Eurodollar Rate Loans and (E) the
Available Credit (after giving effect to the proposed Revolving Credit
Borrowing). The Revolving Loans shall be made as Base Rate Loans unless, subject
to Section 2.14 (Special Provisions Governing Eurodollar Rate Loans), the Notice
of Borrowing specifies that all or a portion thereof shall be Eurodollar Rate
Loans. Notwithstanding anything to the contrary contained in Section 2.3(a)
(Swing Loans), if any Notice of Borrowing requests a Revolving Credit Borrowing
of Base Rate Loans, the Administrative Agent may make a Swing Loan available to
the Borrower in an aggregate amount not to exceed such proposed Revolving Credit
Borrowing, and the aggregate amount of the corresponding proposed Revolving
Credit Borrowing shall be reduced accordingly by the principal amount of such
Swing Loan. Each Revolving Credit Borrowing shall be in an aggregate amount of
not less than $1,000,000 or an integral multiple of $500,000 in excess thereof.
(b) The Administrative Agent shall give to each Lender prompt
notice of the Administrative Agent's receipt of a Notice of Borrowing and, if
Eurodollar Rate Loans are properly requested in such Notice of Borrowing, the
applicable interest rate determined pursuant to Section 2.14(a) (Determination
of Interest Rate). Each Lender shall, before 1:00 p.m. (
New York time) on the
date of the proposed Borrowing, make available to the Administrative Agent at
its address referred to in Section 11.8 (Notices, Etc.), in immediately
available funds, such Lender's Ratable Portion of such proposed Borrowing. After
the Administrative Agent's receipt of such funds and upon fulfillment (or due
waiver in accordance with Section 11.1 (Amendments, Waivers, Etc.)) (i) on the
Closing Date, of the applicable conditions set forth in Section 3.1 (Conditions
Precedent to Initial Loans and Letters of Credit) and (ii) at any time
(including the Closing Date), of the applicable conditions set forth in Section
3.2 (Conditions Precedent to Each Loan and Letter of Credit), the Administrative
Agent shall make such funds available to the Borrower.
(c) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any proposed Borrowing that such Lender shall
not make available to the Administrative Agent such Lender's Ratable Portion of
such Borrowing, the Administrative Agent may assume that such Lender has made
such Ratable Portion available to the Administrative Agent on the date of such
Borrowing in accordance with this Section 2.2 and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such Ratable Portion available to the Administrative Agent, such Lender and
the Borrower
32
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, the Federal Funds Rate for the first Business
Day and thereafter at the interest rate applicable at the time to the Loans
comprising such Borrowing. If such Lender shall repay to the Administrative
Agent such corresponding amount, such corresponding amount so repaid shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement. If the Borrower shall repay to the Administrative Agent such
corresponding amount, such payment shall not relieve such Lender of any
obligation it may have hereunder to the Borrower.
(d) The failure of any Lender to make the Loan or any payment
required by it on the date specified (a "Non-Funding Lender"), including any
payment in respect of its participation in Swing Loans and Letter of Credit
Obligations, shall not relieve any other Lender of its obligations to make such
Loan or payment on such date but no such other Lender shall be responsible for
the failure of any Non-Funding Lender to make a Loan or payment required under
this Agreement.
SECTION 2.3 SWING LOANS
(a) On the terms and subject to the conditions contained in
this Agreement, the Swing Loan Lender may, in its sole discretion, make loans
(each a "Swing Loan") otherwise available to the Borrower under the Facility
from time to time on any Business Day during the period from the date hereof
until the Revolving Credit Termination Date in an aggregate principal amount at
any time outstanding (together with the aggregate principal amount of any other
Loans made by the Swing Loan Lender hereunder in its capacity as Lender or Swing
Loan Lender) not to exceed the lesser of $5,000,000 and the Swing Loan Lender's
Ratable Portion of the Available Credit; provided, however, that the Swing Loan
Lender shall not make any Swing Loan to the extent that, after giving effect to
such Swing Loan, the aggregate Revolving Credit Outstandings would exceed the
Maximum Credit. The Swing Loan Lender shall be entitled to rely on the most
recent Borrowing Base Certificate delivered to the Administrative Agent. Each
Swing Loan shall be a Base Rate Loan and must be repaid in full within seven
days of its making or, if sooner, upon any Revolving Credit Borrowing hereunder
and shall in any event mature no later than the Revolving Credit Termination
Date. Within the limits set forth in the first sentence of this clause (a),
amounts of Swing Loans repaid may be reborrowed under this clause (a).
(b) In order to request a Swing Loan, the Borrower shall
telecopy (or forward by electronic mail or similar means) to the Administrative
Agent a duly completed request in substantially the form of Exhibit D (Form of
Swing Loan Request), setting forth the requested amount and date of the Swing
Loan (a "Swing Loan Request"), to be received by the Administrative Agent not
later than 2:00 p.m. (
New York time) on the day of the proposed borrowing. The
Administrative Agent shall promptly notify the Swing Loan Lender of the details
of the requested Swing Loan. Subject to the terms of this Agreement, the Swing
Loan Lender shall make a Swing Loan available to the Administrative Agent and,
in turn, the Administrative Agent shall make such amounts available to the
Borrower on the date of the relevant Swing Loan Request. The Swing Loan Lender
shall not make any Swing Loan in the period commencing on the first Business Day
after it receives written notice from the Administrative Agent or any Lender
that one or more of the conditions precedent contained in Section 3.2
(Conditions Precedent to Each Loan and Letter of Credit) shall not on such date
be satisfied, and ending when
33
such conditions are satisfied. The Swing Loan Lender shall not otherwise be
required to determine that, or take notice whether, the conditions precedent set
forth in Section 3.2 (Conditions Precedent to Each Loan and Letter of Credit)
have been satisfied in connection with the making of any Swing Loan.
(c) The Swing Loan Lender shall notify the Administrative
Agent in writing (which writing may be a telecopy or electronic mail) weekly, by
no later than 10:00 a.m. (New York time) on the first Business Day of each week,
of the aggregate principal amount of its Swing Loans then outstanding.
(d) The Swing Loan Lender may demand at any time that each
Lender pay to the Administrative Agent, for the account of the Swing Loan
Lender, in the manner provided in clause (e) below, such Lender's Ratable
Portion of all or a portion of the outstanding Swing Loans, which demand shall
be made through the Administrative Agent, shall be in writing and shall specify
the outstanding principal amount of Swing Loans demanded to be paid.
(e) The Administrative Agent shall forward each notice
referred to in clause (c) above and each demand referred to in clause (d) above
to each Lender on the day such notice or such demand is received by the
Administrative Agent (except that any such notice or demand received by the
Administrative Agent after 2:00 p.m. (New York time) on any Business Day or any
such demand received on a day that is not a Business Day shall not be required
to be forwarded to the Lenders by the Administrative Agent until the next
succeeding Business Day), together with a statement prepared by the
Administrative Agent specifying the amount of each Lender's Ratable Portion of
the aggregate principal amount of the Swing Loans stated to be outstanding in
such notice or demanded to be paid pursuant to such demand, and, notwithstanding
whether or not the conditions precedent set forth in Section 3.2 (Conditions
Precedent to Each Loan and Letter of Credit) shall have been satisfied (which
conditions precedent the Lenders hereby irrevocably waive), each Lender shall,
before 11:00 a.m. (New York time) on the Business Day next succeeding the date
of such Lender's receipt of such written statement, make available to the
Administrative Agent, in immediately available funds, for the account of the
Swing Loan Lender, the amount specified in such statement. Upon such payment by
a Lender, such Lender shall, except as provided in clause (f) below, be deemed
to have made a Revolving Loan to the Borrower. The Administrative Agent shall
use such funds to repay the Swing Loans to the Swing Loan Lender. To the extent
that any Lender fails to make such payment available to the Administrative Agent
for the account of the Swing Loan Lender, the Borrower shall repay such Swing
Loan on demand.
(f) Upon the occurrence of a Default under Section 9.1(g)
(Events of Default), each Lender shall acquire, without recourse or warranty, an
undivided participation in each Swing Loan otherwise required to be repaid by
such Lender pursuant to clause (e) above, which participation shall be in a
principal amount equal to such Lender's Ratable Portion of such Swing Loan, by
paying to the Swing Loan Lender on the date on which such Lender would otherwise
have been required to make a payment in respect of such Swing Loan pursuant to
clause (e) above, in immediately available funds, an amount equal to such
Lender's Ratable Portion of such Swing Loan. If such amount is not in fact made
available by such Lender to the Swing Loan Lender on such date, the Swing Loan
Lender shall be entitled to recover such amount on demand from such Lender
together with interest accrued from such date at the Federal Funds Rate for the
first Business Day after such payment was due and thereafter at the rate of
interest then applicable to Base Rate Loans.
34
(g) From and after the date on which any Lender (i) is deemed
to have made a Revolving Loan pursuant to clause (e) above with respect to any
Swing Loan or (ii) purchases an undivided participation interest in a Swing Loan
pursuant to clause (f) above, the Swing Loan Lender shall promptly distribute to
such Lender such Lender's Ratable Portion of all payments of principal of and
interest received by the Swing Loan Lender on account of such Swing Loan other
than those received from a Lender pursuant to clause (e) or (f) above.
SECTION 2.4 LETTERS OF CREDIT
(a) On the terms and subject to the conditions contained in
this Agreement, each Issuer agrees to Issue at the request of the Borrower and
for the account of the Borrower one or more Letters of Credit from time to time
on any Business Day during the period commencing on the Closing Date and ending
on the earlier of the Revolving Credit Termination Date and 30 days prior to the
Scheduled Termination Date; provided, however, that no Issuer shall be under any
obligation to Issue any Letter of Credit upon the occurrence of any of the
following:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall purport by its terms to enjoin or
restrain such Issuer from Issuing such Letter of Credit or any
Requirement of Law applicable to such Issuer or any request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over such Issuer shall
prohibit, or request that such Issuer refrain from, the Issuance of
letters of credit generally or such Letter of Credit in particular or
shall impose upon such Issuer with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which such Issuer is
not otherwise compensated) not in effect on the date of this Agreement
or result in any unreimbursed loss, cost or expense that was not
applicable, in effect or known to such Issuer as of the date of this
Agreement and that such Issuer in good ▇▇▇▇▇ ▇▇▇▇▇ material to it;
(ii) such Issuer shall have received written notice
from the Administrative Agent, any Lender or the Borrower, on or prior
to the requested date of Issuance of such Letter of Credit, that one or
more of the applicable conditions contained in Section 3.1 (Conditions
Precedent to Initial Loans and Letters of Credit) or 3.2 (Conditions
Precedent to Each Loan and Letter of Credit) is not then satisfied;
(iii) after giving effect to the Issuance of such
Letter of Credit, the aggregate Revolving Credit Outstandings would
exceed the Maximum Credit at such time;
(iv) after giving effect to the Issuance of such
Letter of Credit, the sum of (i) the Letter of Credit Undrawn Amounts
at such time and (ii) the Reimbursement Obligations at such time
exceeds $15,000,000;
(v) any fees due in connection with a requested
Issuance have not been paid; or
(vi) such Letter of Credit is requested in any
currency other than Dollars.
None of the Lenders (other than the Issuers in their capacity as such) shall
have any obligation to Issue any Letter of Credit.
35
(b) In no event shall the expiration date of any Letter of
Credit (i) be more than one year after the date of issuance thereof or (ii) be
less than thirty (30) days prior to the Scheduled Termination Date; provided,
however, that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the expiry date referred to in clause (ii) above).
(c) In connection with the Issuance of each Letter of Credit,
the Borrower shall give the relevant Issuer and the Administrative Agent at
least two Business Days' prior written notice, in substantially the form of
Exhibit E (Form of Letter of Credit Request) (or in such other written or
electronic form as is acceptable to the Issuer), of the requested Issuance of
such Letter of Credit (a "Letter of Credit Request"). Such notice shall be
irrevocable and shall specify the Issuer of such Letter of Credit, the stated
amount of the Letter of Credit requested, which stated amount shall not be less
than $50,000, the date of Issuance of such requested Letter of Credit, the date
on which such Letter of Credit is to expire (which date shall be a Business Day)
and, in the case of an issuance, the Person for whose benefit the requested
Letter of Credit is to be issued. Such notice, to be effective, must be received
by the relevant Issuer and the Administrative Agent not later than 11:00 a.m.
(New York time) on the second Business Day prior to the requested Issuance of
such Letter of Credit.
(d) Subject to the satisfaction of the conditions set forth in
this Section 2.4, the relevant Issuer shall, on the requested date, Issue a
Letter of Credit on behalf of the Borrower in accordance with such Issuer's
usual and customary business practices. No Issuer shall Issue any Letter of
Credit in the period commencing on the first Business Day after it receives
written notice from any Lender that one or more of the conditions precedent
contained in Section 3.2 (Conditions Precedent to Each Loan and Letter of
Credit) shall not on such date be satisfied and ending when such conditions are
satisfied. The relevant Issuer shall not otherwise be required to determine
that, or take notice whether, the conditions precedent set forth in Section 3.2
(Conditions Precedent to Each Loan and Letter of Credit) have been satisfied in
connection with the Issuance of any Letter of Credit.
(e) If requested by the relevant Issuer, prior to the issuance
of each Letter of Credit by such Issuer and as a condition of such Issuance and
of the participation of each Lender in the Letter of Credit Obligations arising
with respect thereto, the Borrower shall have delivered to such Issuer a letter
of credit reimbursement agreement, in such form as the Issuer may employ in its
ordinary course of business for its own account (a "Letter of Credit
Reimbursement Agreement"), signed by the Borrower, and such other documents or
items as may be required pursuant to the terms thereof. In the event of any
conflict between the terms of any Letter of Credit Reimbursement Agreement and
this Agreement, the terms of this Agreement shall govern.
(f) Each Issuer shall comply with the following:
(i) give the Administrative Agent written notice (or
telephonic notice confirmed promptly thereafter in writing), which
writing may be a telecopy or electronic mail, of the Issuance or
renewal of a Letter of Credit issued by it, of all drawings under a
Letter of Credit issued by it and the payment (or the failure to pay
when due) by the Borrower of any Reimbursement Obligation when due
(which notice the Administrative Agent shall promptly transmit by
telecopy, electronic mail or similar transmission to each Lender);
36
(ii) upon the request of any Lender, furnish to such
Lender copies of any Letter of Credit Reimbursement Agreement to which
such Issuer is a party and such other documentation as may reasonably
be requested by such Lender; and
(iii) no later than 10 Business Days following the
last day of each calendar month, provide to the Administrative Agent
(and the Administrative Agent shall provide a copy to each Lender
requesting the same) and the Borrower separate schedules for
Documentary and Standby Letters of Credit issued by it, in form and
substance reasonably satisfactory to the Administrative Agent, setting
forth the aggregate Letter of Credit Obligations outstanding at the end
of each month and any information requested by the Borrower or the
Administrative Agent relating thereto.
(g) Immediately upon the issuance by an Issuer of a Letter of
Credit in accordance with the terms and conditions of this Agreement, such
Issuer shall be deemed to have sold and transferred to each Lender, and each
Lender shall be deemed irrevocably and unconditionally to have purchased and
received from such Issuer, without recourse or warranty, an undivided interest
and participation, to the extent of such Lender's Ratable Portion, in such
Letter of Credit and the obligations of the Borrower with respect thereto
(including all Letter of Credit Obligations with respect thereto) and any
security therefor and guaranty pertaining thereto.
(h) The Borrower agrees to pay to the Issuer of any Letter of
Credit the amount of all Reimbursement Obligations owing to such Issuer under
any Letter of Credit issued for its account no later than the date (the
"Reimbursement Date") that is the next succeeding Business Day after the
Borrower receives written notice from such Issuer that payment has been made
under such Letter of Credit, irrespective of any claim, set-off, defense or
other right that the Borrower may have at any time against such Issuer or any
other Person. In the event that any Issuer makes any payment under any Letter of
Credit and the Borrower shall not have repaid such amount to such Issuer
pursuant to this clause (h) or such payment is rescinded or set aside for any
reason, such Reimbursement Obligation shall be payable on demand with interest
thereon computed (i) from the date on which such Reimbursement Obligation arose
to the Reimbursement Date, at the rate of interest applicable during such period
to Revolving Loans that are Base Rate Loans and (ii) from the Reimbursement Date
until the date of repayment in full, at the rate of interest applicable during
such period to past due Revolving Loans that are Base Rate Loans during such
period, and such Issuer shall promptly notify the Administrative Agent, that
shall promptly notify each Lender of such failure, and each Lender shall
promptly and unconditionally pay to the Administrative Agent for the account of
such Issuer the amount of such Lender's Ratable Portion of such payment in
Dollars and in immediately available funds. If the Administrative Agent so
notifies such Lender prior to 11:00 a.m. (New York time) on any Business Day,
such Lender shall make available to the Administrative Agent for the account of
such Issuer its Ratable Portion of the amount of such payment on such Business
Day in immediately available funds. Upon such payment by a Lender, such Lender
shall, except during the continuance of a Default or Event of Default under
Section 9.1(g) (Events of Default) and notwithstanding whether or not the
conditions precedent set forth in Section 3.2 (Conditions Precedent to Each Loan
and Letter of Credit) shall have been satisfied (which conditions precedent the
Lenders hereby irrevocably waive), be deemed to have made a Revolving Loan to
the Borrower in the principal amount of such payment. Whenever any Issuer
receives from the Borrower a payment of a Reimbursement Obligation as to which
the Administrative Agent has received for the account of such Issuer any payment
from a Lender pursuant to this clause (h), such Issuer shall pay to the
Administrative Agent and the Administrative Agent shall promptly
37
pay to each Lender, in immediately available funds, an amount equal to such
Lender's Ratable Portion of the amount of such payment adjusted, if necessary,
to reflect the respective amounts the Lenders have paid in respect of such
Reimbursement Obligation.
(i) The Borrower's obligation to pay each Reimbursement
Obligation and the obligations of the Lenders to make payments to the
Administrative Agent for the account of the Issuers with respect to Letters of
Credit shall be absolute, unconditional and irrevocable and shall be performed
strictly in accordance with the terms of this Agreement, under any and all
circumstances whatsoever, including the occurrence of any Default or Event of
Default, and irrespective of any of the following:
(i) any lack of validity or enforceability of any
Letter of Credit or any Loan Document, or any term or provision
therein;
(ii) any amendment or waiver of or any consent to
departure from all or any of the provisions of any Letter of Credit or
any Loan Document;
(iii) the existence of any claim, set off, defense or
other right that the Borrower, any other party guaranteeing, or
otherwise obligated with, the Borrower, any Subsidiary or other
Affiliate thereof or any other Person may at any time have against the
beneficiary under any Letter of Credit, any Issuer, the Administrative
Agent or any Lender or any other Person, whether in connection with
this Agreement, any other Loan Document or any other related or
unrelated agreement or transaction;
(iv) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by the Issuer under a Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any
kind of the Issuer, the Lenders, the Administrative Agent or any other
Person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section 2.4, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.
Any action taken or omitted to be taken by the relevant Issuer under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not put such Issuer under any
resulting liability to the Borrower or any Lender. In determining whether drafts
and other documents presented under a Letter of Credit comply with the terms
thereof, the Issuer may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary and, in making any payment under any
Letter of Credit, the Issuer may rely exclusively on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any other
38
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms
thereof shall, in each case, be deemed not to constitute willful misconduct or
gross negligence of the Issuer.
(j) If and to the extent such Lender shall not have so made
its Ratable Portion of the amount of the payment required by clause (h) above
available to the Administrative Agent for the account of such Issuer, such
Lender agrees to pay to the Administrative Agent for the account of such Issuer
forthwith on demand such amount together with interest thereon, for the first
Business Day after payment was first due at the Federal Funds Rate and,
thereafter until such amount is repaid to the Administrative Agent for the
account of such Issuer, at the rate per annum applicable to Base Rate Loans
under the Facility. The failure of any Lender to make available to the
Administrative Agent for the account of such Issuer its Ratable Portion of any
such payment shall not relieve any other Lender of its obligation hereunder to
make available to the Administrative Agent for the account of such Issuer its
Ratable Portion of any payment on the date such payment is to be made, but no
Lender shall be responsible for the failure of any other Lender to make
available to the Administrative Agent for the account of the Issuer such other
Lender's Ratable Portion of any such payment.
SECTION 2.5 REDUCTION AND TERMINATION OF THE REVOLVING CREDIT
COMMITMENTS
(a) The Borrower may, upon at least three Business Days' prior
notice to the Administrative Agent, terminate in whole or reduce in part ratably
the unused portions of the respective Revolving Credit Commitments of the
Lenders; provided, however, that each partial reduction shall be in an aggregate
amount of not less than $1,000,000 or an integral multiple of $500,000 in excess
thereof.
(b) The then current Revolving Credit Commitments shall be
reduced on each date on which a prepayment of Revolving Loans or Swing Loans is
made pursuant to clause (i) of Section 2.9(a) (Mandatory Prepayments) or would
be required to be made had the outstanding Revolving Loans and Swing Loans
equaled the Revolving Credit Commitments then in effect, in each case in the
amount of such prepayment (or deemed prepayment) (and the Revolving Credit
Commitment of each Lender shall be reduced by its Ratable Portion of such
amount).
(c) Upon the occurrence of a Change of Control the then
current Revolving Credit Commitments of each Lender and the commitment of each
Lender and Issuer to Issue or participate in any Letter of Credit shall
automatically terminate.
SECTION 2.6 REPAYMENT OF LOANS
The Borrower promises to repay the entire unpaid principal
amount of the Revolving Loans and the Swing Loans on the Scheduled Termination
Date (it being understood that other provisions of this Agreement may require
all or part of such Obligations to be repaid earlier).
SECTION 2.7 EVIDENCE OF DEBT
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing Indebtedness of the Borrower to such
Lender resulting from each Loan of
39
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(b) The Administrative Agent shall maintain accounts in
accordance with its usual practice in which it shall record (i) the amount of
each Loan made and, if a Eurodollar Rate Loan, the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable by the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower, whether such sum
constitutes principal or interest (and the type of Loan to which it applies),
fees, expenses or other amounts due under the Loan Documents and each Lender's
share thereof, if applicable.
(c) The entries made in the accounts maintained pursuant to
clauses (a) and (b) above shall, to the extent permitted by applicable law, be
prima facie evidence of the existence and amounts of the obligations recorded
therein; provided, however, that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligations of the Borrower to repay the Loans in accordance with
their terms.
(d) Notwithstanding any other provision of the Agreement, in
the event that any Lender requests that the Borrower execute and deliver a
promissory note or notes payable to such Lender in order to evidence the
Indebtedness owing to such Lender by the Borrower hereunder, the Borrower shall
promptly execute and deliver a Revolving Credit Note or Revolving Credit Notes
to such Lender evidencing any Revolving Loans of such Lender (and, if such
Lender is also the Swing Loan Lender, Swing Loans), substantially in the form of
Exhibit B (Form of Revolving Credit Note).
SECTION 2.8 OPTIONAL PREPAYMENTS
The Borrower may prepay the outstanding principal amount of
the Revolving Loans and Swing Loans in whole or in part at any time; provided,
however, that if any prepayment of any Eurodollar Rate Loan is made by the
Borrower other than on the last day of an Interest Period for such Loan, the
Borrower shall also pay any amounts owing pursuant to Section 2.14(e) (Breakage
Costs).
SECTION 2.9 MANDATORY PREPAYMENTS
(a) Upon receipt by Holdings, the Borrower or any of their
respective Subsidiaries of Net Cash Proceeds arising (i) from an Asset Sale or
Property Loss Event, the Borrower shall immediately prepay the Loans (or provide
cash collateral in respect of Letters of Credit) in an amount equal to 100% of
such Net Cash Proceeds, (ii) from a Debt Issuance not permitted by Section 8.1
(Indebtedness), the Borrower shall immediately prepay the Loans (or provide cash
collateral in respect of Letters of Credit) in an amount equal to 100% of such
Net Cash Proceeds and (iii) from an Equity Issuance, the Borrower shall
immediately prepay the Loans in an amount equal to 75% of such Net Cash
Proceeds; provided, however, that in the case of any Net Cash Proceeds arising
from a Reinvestment Event, the Borrower shall prepay the Loans (or provide cash
collateral in respect of Letters of Credit) in an amount equal to the
Reinvestment Prepayment Amount applicable to such Reinvestment Event, if any, on
the Reinvestment Prepayment Date with respect to such Reinvestment Event and,
pending application of such proceeds as specified in the Reinvestment Notice,
shall pay the same to the Administrative Agent to be held in a Cash Collateral
Account. Any such mandatory prepayment shall be applied in accordance with
clause (b) below.
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(b) Any prepayments made by the Borrower required to be
applied in accordance with this clause (b) shall be applied as follows: first,
to repay the outstanding principal balance of the Swing Loans until such Swing
Loans shall have been repaid in full; second, to repay the outstanding principal
balance of the Revolving Loans until such Revolving Loans shall have been paid
in full; and then, to provide cash collateral for any Letter of Credit
Obligations in the manner set forth in Section 9.3 (Actions in Respect of
Letters of Credit) until all such Letter of Credit Obligations have been fully
cash collateralized in the manner set forth therein. Notwithstanding the
preceding sentence, if no Event of Default or Default has occurred and is
continuing, amounts which would otherwise be applied to outstanding Eurodollar
Rate Loans (plus any amount necessary to pay interest which will accrue on such
Eurodollar Rate Loan) will be held by the Administrative Agent in the Cash
Collateral Account and applied to each outstanding Eurodollar Rate Loan on the
last day of its Interest Period.
(c) If at any time, the aggregate principal amount of
Revolving Credit Outstandings exceed the Maximum Credit at such time, the
Borrower shall forthwith prepay the Swing Loans first and then the Revolving
Loans then outstanding in an amount equal to such excess. If any such excess
remains after repayment in full of the aggregate outstanding Swing Loans and
Revolving Loans, the Borrower shall provide cash collateral for the Letter of
Credit Obligations in the manner set forth in Section 9.3 (Actions in Respect of
Letters of Credit) in an amount equal to 105% of such excess.
(d) Upon the occurrence of a Change of Control the Borrower
shall immediately prepay all Obligations in full (or with respect to outstanding
Letters of Credit Obligations immediately provide cash collateral in the manner
set forth in Section 9.3 (Actions in Respect of Letters of Credit) in an amount
equal to 105% of such Letter of Credit Obligations)
(e) The Borrower hereby irrevocably waives the right to direct
the application of all funds in the Cash Collateral Account (other than an
amount equal to any proceeds arising from a Reinvestment Event that are held in
the Cash Collateral Account pending application of such proceeds as specified in
a Reinvestment Notice) and agrees that the Administrative Agent may and, upon
the written direction of the Requisite Lenders, shall, except as provided in
Section 2.13(f) (Payments and Computations), apply all payments in respect of
any Obligations and all available funds in the Cash Collateral Account on a
daily basis as follows: first, to repay the outstanding principal amount of the
Swing Loans until such Swing Loans have been repaid in full; second, to repay
the outstanding principal balance of the Revolving Loans until such Revolving
Loans shall have been repaid in full; and then to any other Obligation then due
and payable. The Administrative Agent agrees so to apply such funds and the
Borrower consents to such application. If, following such application, there are
no Loans outstanding and no other Obligations that are then due and payable
(and, during the continuance of an Event of Default, cash collateral has been
provided in the amount of 105% of all outstanding Letter of Credit Obligations),
then the Administrative Agent shall cause any remaining funds in the Cash
Collateral Account to be paid at the written direction of the Borrower.
41
SECTION 2.10 INTEREST
(a) Rate of Interest. All Loans and the outstanding amount of
all other Obligations shall bear interest, in the case of Loans, on the unpaid
principal amount thereof from the date such Loans are made and, in the case of
such other Obligations, from the date such other Obligations are due and payable
until, in all cases, paid in full, except as otherwise provided in clause (c)
below, as follows:
(i) if a Base Rate Loan or such other Obligation, at
a rate per annum equal to the sum of (A) the Base Rate as in effect
from time to time and (B) the Applicable Margin; and
(ii) if a Eurodollar Rate Loan, at a rate per annum
equal to the sum of (A) the Eurodollar Rate determined for the
applicable Interest Period and (B) the Applicable Margin in effect from
time to time during such Eurodollar Interest Period.
(b) Interest Payments. (i) Interest accrued on each Base Rate
Loan (other than Swing Loans) shall be payable in arrears (A) on the first
Business Day of each calendar month commencing on the first such day following
the making of such Base Rate Loan and (B) if not previously paid in full, at
maturity (whether by acceleration or otherwise) of such Base Rate Loan, (ii)
interest accrued on Swing Loans shall be payable in arrears on the first
Business Day of the immediately succeeding calendar month, (iii) interest
accrued on each Eurodollar Rate Loan shall be payable in arrears (A) on the last
day of each Interest Period applicable to such Loan and, if such Interest Period
has a duration of more than three months, on each day during such Interest
Period occurring every three months from the first day of such Interest Period,
(B) upon the payment or prepayment thereof in full or in part and (C) if not
previously paid in full, at maturity (whether by acceleration or otherwise) of
such Eurodollar Rate Loan and (iv) interest accrued on the amount of all other
Obligations shall be payable on demand from and after the time such Obligation
becomes due and payable (whether by acceleration or otherwise).
(c) Default Interest. Notwithstanding the rates of interest
specified in clause (a) above or elsewhere herein, effective immediately upon
the occurrence of an Event of Default and for as long thereafter as such Event
of Default shall be continuing, the principal balance of all Loans and the
amount of all other Obligations then due and payable shall bear interest at a
rate that is two percent per annum in excess of the rate of interest applicable
to such Loans or other Obligations from time to time.
SECTION 2.11 CONVERSION/CONTINUATION OPTION
(a) The Borrower may elect (i) at any time on any Business
Day, to convert Base Rate Loans (other than Swing Loans) or any portion thereof
to Eurodollar Rate Loans and (ii) at the end of any applicable Interest Period,
to convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans or
to continue such Eurodollar Rate Loans or any portion thereof for an additional
Interest Period; provided, however, that the aggregate amount of the Eurodollar
Loans for each Interest Period must be in the amount of at least $5,000,000 or
an integral multiple of $1,000,000 in excess thereof. Each conversion or
continuation shall be allocated among the Loans of each Lender in accordance
with such Lender's Ratable Portion. Each such election shall be in substantially
the form of Exhibit F (Form of Notice of Conversion or Continuation) (a "Notice
of Conversion or Continuation") and shall be made by giving the Administrative
Agent at least three Business Days' prior written notice specifying (A) the
amount and type of Loan being
42
converted or continued, (B) in the case of a conversion to or a continuation of
Eurodollar Rate Loans, the applicable Interest Period and (C) in the case of a
conversion, the date of conversion.
(b) The Administrative Agent shall promptly notify each Lender
of its receipt of a Notice of Conversion or Continuation and of the options
selected therein. Notwithstanding the foregoing, (i) no conversion in whole or
in part of Base Rate Loans to Eurodollar Rate Loans shall be permitted at any
time prior to the Syndication Completion Date and (ii) no conversion in whole or
in part of Base Rate Loans to Eurodollar Rate Loans and no continuation in whole
or in part of Eurodollar Rate Loans upon the expiration of any applicable
Interest Period shall be permitted at any time at which (A) a Default or an
Event of Default shall have occurred and be continuing or (B) the continuation
of, or conversion into, a Eurodollar Rate Loan would violate any provision of
Section 2.14 (Special Provisions Governing Eurodollar Rate Loans). If, within
the time period required under the terms of this Section 2.11, the
Administrative Agent does not receive a Notice of Conversion or Continuation
from the Borrower containing a permitted election to continue any Eurodollar
Rate Loans for an additional Interest Period or to convert any such Loans, then,
upon the expiration of the applicable Interest Period, such Loans shall be
automatically converted to Base Rate Loans. Each Notice of Conversion or
Continuation shall be irrevocable.
SECTION 2.12 FEES
(a) Unused Commitment Fee. The Borrower agrees to pay to each
Lender a commitment fee on the actual daily amount by which the Revolving Credit
Commitment of such Lender exceeds such Lender's Ratable Portion of the sum of
(i) the outstanding principal amount of Revolving Loans and (ii) the outstanding
amount of the Letter of Credit Obligations (the "Unused Commitment Fee") from
the Closing Date until the Revolving Credit Termination Date at the Applicable
Unused Commitment Fee Rate, payable in arrears (x) on the first Business Day of
each calendar month, commencing on the first such Business Day following the
Closing Date and (y) on the Revolving Credit Termination Date.
(b) Letter of Credit Fees. The Borrower agrees to pay the
following amounts with respect to Letters of Credit issued by any Issuer:
(i) to the Administrative Agent for the account of
each Issuer of a Letter of Credit, with respect to each Letter of
Credit issued by such Issuer, an issuance fee equal to 0.25% per annum
of the maximum amount available from time to time to be drawn under
such Letter of Credit, payable in arrears (A) on the first Business Day
of each calendar month, commencing on the first such Business Day
following the issuance of such Letter of Credit and (B) on the
Revolving Credit Termination Date;
(ii) to the Administrative Agent for the ratable
benefit of the Lenders, with respect to each Letter of Credit, a fee
accruing at a rate per annum equal to the Applicable Margin for
Revolving Loans that are Eurodollar Rate Loans minus 0.25% on the
maximum amount available from time to time to be drawn under such
Letter of Credit, payable in arrears (A) on the first Business Day of
each calendar month, commencing on the first such Business Day
following the issuance of such Letter of Credit and (B) on the
Revolving Credit Termination Date; provided, however, that during the
continuance of an Event of Default, such fee shall be increased by two
percent per annum and shall be payable on demand; and
43
(iii) to the Issuer of any Letter of Credit, with
respect to the issuance, amendment or transfer of each Letter of Credit
and each drawing made thereunder, documentary and processing charges in
accordance with such Issuer's standard schedule for such charges in
effect at the time of issuance, amendment, transfer or drawing, as the
case may be.
(c) Additional Fees. The Borrower has agreed to pay to the
Administrative Agent and the Arranger additional fees, the amount and dates of
payment of which are embodied in the Fee Letter.
SECTION 2.13 PAYMENTS AND COMPUTATIONS
(a) The Borrower shall make each payment hereunder (including
fees and expenses) not later than 11:00 a.m. (New York time) on the day when
due, in Dollars, to the Administrative Agent at its address referred to in
Section 11.8 (Notices, Etc.) in immediately available funds without set-off or
counterclaim. The Administrative Agent shall promptly thereafter cause to be
distributed immediately available funds relating to the payment of principal,
interest or fees to the Lenders, in accordance with the application of payments
set forth in clauses (e) or (f) below, as applicable, for the account of their
respective Applicable Lending Offices; provided, however, that amounts payable
pursuant to Section 2.15 (Capital Adequacy), Section 2.16 (Taxes) or Section
2.14(c) or (d) (Special Provisions Governing Eurodollar Rate Loans) shall be
paid only to the affected Lender or Lenders and amounts payable with respect to
Swing Loans shall be paid only to the Swing Loan Lender. Payments received by
the Administrative Agent after 11:00 a.m. (New York time) shall be deemed to be
received on the next Business Day.
(b) All computations of interest and of fees shall be made by
the Administrative Agent on the basis of a year of 360 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest and fees are payable. Each
determination by the Administrative Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and such extension of time shall
in such case be included in the computation of payment of interest or fees, as
the case may be; provided, however, that if such extension would cause payment
of interest on or principal of any Eurodollar Rate Loan to be made in the next
calendar month, such payment shall be made on the immediately preceding Business
Day. All repayments of any Revolving Loans shall be applied as follows: first,
to repay such Loans outstanding as Base Rate Loans and then, to repay such Loans
outstanding as Eurodollar Rate Loans, with those Eurodollar Rate Loans having
earlier expiring Eurodollar Interest Periods being repaid prior to those having
later expiring Eurodollar Interest Periods.
(d) Unless the Administrative Agent shall have received notice
from the Borrower to the Lenders prior to the date on which any payment is due
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have made such payment in full to the
Administrative Agent,
44
each Lender shall repay to the Administrative Agent forthwith on demand such
amount distributed to such Lender together with interest thereon (at the Federal
Funds Rate for the first Business Day and thereafter at the rate applicable to
Base Rate Loans) for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent.
(e) Subject to the provisions of clause (f) below (and except
as otherwise provided in Section 2.9 (Mandatory Prepayments)), all payments and
any other amounts received by the Administrative Agent from or for the benefit
of the Borrower shall be applied as follows: first, to pay principal of, and
interest on, any portion of the Loans the Administrative Agent may have advanced
pursuant to the express provisions of this Agreement on behalf of any Lender,
for which the Administrative Agent has not then been reimbursed by such Lender
or the Borrower, second, to pay all other Obligations then due and payable and
third, as the Borrower so designates. Payments in respect of Swing Loans
received by the Administrative Agent shall be distributed to the Swing Loan
Lender; payments in respect of Revolving Loans received by the Administrative
Agent shall be distributed to each Lender in accordance with such Lender's
Ratable Portion; and all payments of fees and all other payments in respect of
any other Obligation shall be allocated among such of the Lenders and Issuers as
are entitled thereto and, for such payments allocated to the Lenders, in
proportion to their respective Ratable Portions.
(f) The Borrower hereby irrevocably waives the right to direct
the application of any and all payments in respect of the Obligations and any
proceeds of Collateral after the occurrence and during the continuance of an
Event of Default and agrees that the Administrative Agent may, and, upon either
(A) the written direction of the Requisite Lenders or (B) the acceleration of
the Obligations pursuant to Section 9.2 (Remedies), shall, apply all payments in
respect of any Obligations and all funds on deposit in any Cash Collateral
Account (including all proceeds arising from a Reinvestment Event that are held
in the Cash Collateral Account pending application of such proceeds as specified
in a Reinvestment Notice) and all other proceeds of Collateral in the following
order:
First, to pay interest on and then principal of any
portion of the Revolving Loans that the Administrative Agent may have
advanced on behalf of any Lender for which the Administrative Agent has
not then been reimbursed by such Lender or the Borrower;
Second, to pay interest on and then principal of any
Swing Loan;
Third, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Administrative Agent;
Fourth, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders and the Issuers;
Fifth, to pay Obligations in respect of any fees then
due to the Administrative Agent, the Lenders and the Issuers;
Sixth, to pay interest then due and payable in
respect of the Loans and Reimbursement Obligations;
45
Seventh, to pay or prepay principal amounts on the
Loans and Reimbursement Obligations and to provide cash collateral for
outstanding Letter of Credit Undrawn Amounts in the manner described in
Section 9.3 (Actions in Respect of Letters of Credit), ratably to the
aggregate principal amount of such Loans, Reimbursement Obligations and
Letter of Credit Undrawn Amounts; and
Eighth, to the ratable payment of all other
Obligations;
provided, however, that if sufficient funds are not available to fund all
payments to be made in respect of any Obligation described in any of clauses
first, second, third, fourth, fifth, sixth, seventh and eighth above, the
available funds being applied with respect to any such Obligation (unless
otherwise specified in such clause) shall be allocated to the payment of such
Obligations ratably, based on the proportion of the Administrative Agent's and
each Lender's or Issuer's interest in the aggregate outstanding Obligations
described in such clauses. The order of priority set forth in clauses first,
second, third, fourth, fifth, sixth, seventh and eighth above may at any time
and from time to time be changed by the agreement of the Requisite Lenders
without necessity of notice to or consent of or approval by the Borrower, any
Secured Party that is not a Lender or Issuer or by any other Person that is not
a Lender or Issuer. The order of priority set forth in clauses first, second,
third, fourth and fifth above may be changed only with the prior written consent
of the Administrative Agent in addition to the Requisite Lenders.
(g) At the option of the Administrative Agent, principal on
the Swing Loans, Reimbursement Obligations, interest, fees, expenses and other
sums due and payable in respect of the Revolving Loans and Protective Advances
may be paid from the proceeds of Swing Loans or Revolving Loans. The Borrower
hereby authorizes the Swing Loan Lender to make Swing Loans pursuant to Section
2.3(a) (Swing Loans) and the Lenders to make Revolving Loans pursuant to Section
2.2(a) (Borrowing Procedures) from time to time in the Swing Loan Lender's or
such Lender's discretion, that are in the amounts of any and all principal
payable with respect to the Swing Loans and interest, fees, expenses and other
sums payable in respect of the Revolving Loans, and further authorizes the
Administrative Agent to give the Lenders notice of any Borrowing with respect to
such Swing Loans and Revolving Loans and to distribute the proceeds of such
Swing Loans and Revolving Loans to pay such amounts. The Borrower agrees that
all such Swing Loans and Revolving Loans so made shall be deemed to have been
requested by it (irrespective of the satisfaction of the conditions in Section
3.2 (Conditions Precedent to Each Loan and Letter of Credit), which conditions
the Lenders irrevocably waive) and directs that all proceeds thereof shall be
used to pay such amounts.
SECTION 2.14 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE
LOANS
(a) Determination of Interest Rate
The Eurodollar Rate for each Interest Period for Eurodollar
Rate Loans shall be determined by the Administrative Agent pursuant to the
procedures set forth in the definition of "Eurodollar Rate." The Administrative
Agent's determination shall be presumed to be correct absent manifest error and
shall be binding on the Borrower.
(b) Interest Rate Unascertainable, Inadequate or Unfair
In the event that (i) the Administrative Agent determines that
adequate and fair means do not exist for ascertaining the applicable interest
rates by reference to which the Eurodollar Rate then being determined is to be
fixed or (ii) the Requisite Lenders notify the
46
Administrative Agent that the Eurodollar Rate for any Interest Period will not
adequately reflect the cost to the Lenders of making or maintaining such Loans
for such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Lenders, whereupon each Eurodollar Loan shall automatically, on
the last day of the current Interest Period for such Loan, convert into a Base
Rate Loan and the obligations of the Lenders to make Eurodollar Rate Loans or to
convert Base Rate Loans into Eurodollar Rate Loans shall be suspended until the
Administrative Agent shall notify the Borrower that the Requisite Lenders have
determined that the circumstances causing such suspension no longer exist.
(c) Increased Costs
If at any time any Lender determines that the introduction of,
or any change in or in the interpretation of, any law, treaty or governmental
rule, regulation or order (other than any change by way of imposition or
increase of reserve requirements included in determining the Eurodollar Rate) or
the compliance by such Lender with any guideline, request or directive from any
central bank or other Governmental Authority (whether or not having the force of
law), shall have the effect of increasing the cost to such Lender of agreeing to
make or making, funding or maintaining any Eurodollar Rate Loans, then the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost. A certificate as to the amount of such increased
cost, submitted to the Borrower and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error. Any
Lender claiming additional compensation under this Section 2.14 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to reduce
or eliminate any such additional compensation which may thereafter accrue and
which efforts would not, in the sole discretion of such Lender, be otherwise
disadvantageous.
(d) Illegality
Notwithstanding any other provision of this Agreement, if any
Lender determines that the introduction of, or any change in or in the
interpretation of, any law, treaty or governmental rule, regulation or order
after the date of this Agreement shall make it unlawful, or any central bank or
other Governmental Authority shall assert that it is unlawful, for any Lender or
its Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to
fund or maintain Eurodollar Rate Loans, then, on notice thereof and demand
therefor by such Lender to the Borrower through the Administrative Agent, (i)
the obligation of such Lender to make or to continue Eurodollar Rate Loans and
to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended, and
each such Lender shall make a Base Rate Loan as part of any requested Borrowing
of Eurodollar Rate Loans and (ii) if the affected Eurodollar Rate Loans are then
outstanding, the Borrower shall immediately convert each such Loan into a Base
Rate Loan. If, at any time after a Lender gives notice under this Section
2.14(d), such Lender determines that it may lawfully make Eurodollar Rate Loans,
such Lender shall promptly give notice of that determination to the Borrower and
the Administrative Agent, and the Administrative Agent shall promptly transmit
the notice to each other Lender. The Borrower's right to request, and such
Lender's obligation, if any, to make Eurodollar Rate Loans shall thereupon be
restored. As promptly as practical, after the Lender obtains knowledge of the
facts that entitle it to compensation under this Section 2.14(d), but in any
event within 180 days after Lender acquires such knowledge, Lender shall provide
Borrower with a certificate which identifies the factual basis for this claim,
the amount or amounts that Lender has reasonably determined will compensate
hereunder, and the manner in which such amount or amounts have been calculated.
47
Any Lender claiming additional compensation under this Section 2.14(d) shall use
reasonable efforts (consistent with legal and regulatory restrictions) to reduce
or eliminate any such additional compensation which may thereafter accrue and
which efforts would not, in the sole discretion of such Lender, be otherwise
disadvantageous.
(e) Breakage Costs
In addition to all amounts required to be paid by the Borrower
pursuant to Section 2.10 (Interest) , the Borrower shall compensate each Lender,
upon demand, for all losses, expenses and liabilities (including any loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or maintain such Lender's Eurodollar
Rate Loans to the Borrower but excluding any loss of the Applicable Margin on
the relevant Loans) that such Lender may sustain (i) if for any reason a
proposed Borrowing, conversion into or continuation of Eurodollar Rate Loans
does not occur on a date specified therefor in a Notice of Borrowing or a Notice
of Conversion or Continuation given by the Borrower or in a telephonic request
by it for borrowing or conversion or continuation or a successive Interest
Period does not commence after notice therefor is given pursuant to Section 2.11
(Conversion/Continuation Option), (ii) if for any reason any Eurodollar Rate
Loan is prepaid (including mandatorily pursuant to Section 2.9 (Mandatory
Prepayments)) on a date that is not the last day of the applicable Interest
Period, (iii) as a consequence of a required conversion of a Eurodollar Rate
Loan to a Base Rate Loan as a result of any of the events indicated in clause
(d) above or (iv) as a consequence of any failure by the Borrower to repay
Eurodollar Rate Loans when required by the terms hereof. The Lender making
demand for such compensation shall deliver to the Borrower concurrently with
such demand a written statement as to such losses, expenses and liabilities, and
this statement shall be conclusive as to the amount of compensation due to such
Lender, absent manifest error.
SECTION 2.15 CAPITAL ADEQUACY
If at any time any Lender determines that (a) the introduction
of, or any change in or in the interpretation of, any law, treaty or
governmental rule, regulation or order after the date of this Agreement
regarding capital adequacy, (b) compliance with any such law, treaty, rule,
regulation or order or (c) compliance with any guideline or request or directive
from any central bank or other Governmental Authority (whether or not having the
force of law) shall have the effect of reducing the rate of return on such
Lender's (or any corporation controlling such Lender's) capital as a consequence
of its obligations hereunder or under or in respect of any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such adoption, change, compliance or interpretation, then, upon demand from
time to time by such Lender (with a copy of such demand to the Administrative
Agent), the Borrower shall pay to the Administrative Agent for the account of
such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such reduction. As promptly as
practical, after the Lender obtains knowledge of the facts that entitle it to
compensation under this Section 2.15, but in any event within 180 days after
Lender acquires such knowledge, Lender shall provide Borrower with a certificate
which identifies the factual basis for this claim, the amount or amounts that
Lender has reasonably determined will compensate hereunder, and the manner in
which such amount or amounts have been calculated. A certificate as to such
amounts submitted to the Borrower and the Administrative Agent by such Lender
shall be conclusive and binding for all purposes absent manifest error. Any
Lender claiming additional compensation under this Section 2.15 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to reduce
or eliminate any such additional compensation
48
which may thereafter accrue and which efforts would not, in the sole discretion
of such Lender, be otherwise disadvantageous.
SECTION 2.16 TAXES
(a) Any and all payments by any Loan Party under each Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding (i) in the case of each
Lender and the Administrative Agent (A) taxes measured by its net income, and
franchise taxes imposed on it, by the jurisdiction (or any political subdivision
thereof) under the laws of which such Lender or the Administrative Agent (as the
case may be) is organized and (B) any United States withholding taxes payable
with respect to payments under the Loan Documents under laws (including any
statute, treaty or regulation) in effect on the Closing Date (or, in the case of
an Eligible Assignee, the date of the Assignment and Acceptance) applicable to
such Lender or the Administrative Agent, as the case may be, but not excluding
any United States withholding taxes payable as a result of any change in such
laws occurring after the Closing Date (or the date of such Assignment and
Acceptance) and (ii) in the case of each Lender, taxes measured by its net
income and franchise taxes imposed on it as a result of a present or former
connection between such Lender and the jurisdiction of the Government Authority
imposing such tax or any taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Taxes shall be
required by law to be deducted from or in respect of any sum payable under any
Loan Document to any Lender or the Administrative Agent (w) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.16) such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (x) the relevant Loan Party shall make such deductions,
(y) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law and (z) the
relevant Loan Party shall deliver to the Administrative Agent evidence of such
payment.
(b) In addition, each Loan Party agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies of the United States or any political subdivision thereof or
any applicable foreign jurisdiction, and all liabilities with respect thereto,
in each case arising from any payment made under any Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, any Loan
Document (collectively, "Other Taxes").
(c) Each Loan Party shall indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes (including any
Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.16) paid by such Lender or the Administrative Agent (as the case may
be) and any liability (including for penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within 30 days
from the date such Lender or the Administrative Agent (as the case may be) makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or
Other Taxes, the Borrower shall furnish to the Administrative Agent, at its
address referred to in Section 11.8 (Notices, Etc.), the original or a certified
copy of a receipt evidencing payment thereof.
49
(e) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Loan Party
contained in this Section 2.16 shall survive the payment in full of the
Obligations.
(f) Prior to the Closing Date in the case of each Non-U.S.
Lender that is a signatory hereto, and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case of each other
Non-U.S. Lender and from time to time thereafter if requested by the Borrower or
the Administrative Agent, each Non-U.S. Lender that is entitled at such time to
an exemption from United States withholding tax, or that is subject to such tax
at a reduced rate under an applicable tax treaty, shall provide the
Administrative Agent and the Borrower with two completed originals of each of
the following: (i) Form W-8ECI (claiming exemption from withholding because the
income is effectively connected with a U.S. trade or business) or any successor
form, (ii) Form W-8BEN (claiming exemption from, or a reduction of, withholding
tax under an income tax treaty) or any successor form, (iii) in the case of a
Non-U.S. Lender claiming exemption under Sections 871(h) or 881(c) of the Code,
a Form W-8BEN (claiming exemption from withholding under the portfolio interest
exemption) or any successor form or (iv) any other applicable form, certificate
or document prescribed by the IRS certifying as to such Non-U.S. Lender's
entitlement to such exemption from United States withholding tax or reduced rate
with respect to all payments to be made to such Non-U.S. Lender under the Loan
Documents. Unless the Borrower and the Administrative Agent have received forms
or other documents satisfactory to them indicating that payments under any Loan
Document to or for a Non-U.S. Lender are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Borrower or the Administrative Agent shall withhold amounts
required to be withheld by applicable Requirements of Law from such payments at
the applicable statutory rate.
(g) Any Lender claiming any additional amounts payable
pursuant to this Section 2.16 shall use its reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that would be payable or may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.17 SUBSTITUTION OF LENDERS
In the event that (a) (i) any Lender makes a claim under
Section 2.14(c) (Increased Costs) or 2.15 (Capital Adequacy), (ii) it becomes
illegal for any Lender to continue to fund or make any Eurodollar Rate Loan and
such Lender notifies the Borrower pursuant to Section 2.14(d) (Illegality),
(iii) the Borrower is required to make any payment pursuant to Section 2.16
(Taxes) that is attributable to a particular Lender or (iv) any Lender becomes a
Non-Funding Lender, (b) in the case of clause (a)(i) above, as a consequence of
increased costs in respect of which such claim is made, the effective rate of
interest payable to such Lender under this Agreement with respect to its Loans
materially exceeds the effective average annual rate of interest payable to the
Requisite Lenders under this Agreement and (c) Lenders holding at least 75% of
the Revolving Credit Commitments are not subject to such increased costs or
illegality, payment or proceedings (any such Lender, an "Affected Lender"), the
Borrower may substitute another financial institution for such Affected Lender
hereunder, upon reasonable prior written notice (which written notice must be
given within 90 days following the receipt of notice of the occurrence of any of
the events described in clauses (a)(i), (ii), (iii) or (iv) above) by the
Borrower to the Administrative Agent and the Affected Lender that the Borrower
intends to make
50
such substitution, which substitute financial institution must be an Eligible
Assignee and, if not a Lender, reasonably acceptable to the Administrative
Agent; provided, however, that, if more than one Lender claims increased costs,
illegality or right to payment arising from the same act or condition and such
claims are received by the Borrower within 30 days of each other, then the
Borrower may substitute all, but not (except to the extent the Borrower has
already substituted one of such Affected Lenders before the Borrower's receipt
of the other Affected Lenders' claim) less than all, Lenders making such claims.
In the event that the proposed substitute financial institution or other entity
is reasonably acceptable to the Administrative Agent and the written notice was
properly issued under this Section 2.17, the Affected Lender shall sell and the
substitute financial institution or other entity shall purchase, pursuant to an
Assignment and Acceptance, all rights and claims of such Affected Lender under
the Loan Documents and the substitute financial institution or other entity
shall assume and the Affected Lender shall be relieved of its Revolving Credit
Commitments and all other prior unperformed obligations of the Affected Lender
under the Loan Documents (other than in respect of any damages (other than
exemplary or punitive damages, to the extent permitted by applicable law) in
respect of any such unperformed obligations). Upon the effectiveness of such
sale, purchase and assumption (that, in any event, shall be conditioned upon the
payment in full by the Borrower to the Affected Lender in cash of all fees,
unreimbursed costs and expenses and indemnities accrued and unpaid through such
effective date), the substitute financial institution or other entity shall
become a "Lender" hereunder for all purposes of this Agreement having a
Revolving Credit Commitment in the amount of such Affected Lender's Revolving
Credit Commitment assumed by it and such Revolving Credit Commitment of the
Affected Lender shall be terminated; provided, however, that all indemnities
under the Loan Documents shall continue in favor of such Affected Lender.
ARTICLE III
CONDITIONS TO LOANS AND LETTERS OF CREDIT
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS
OF CREDIT
The obligation of each Lender to make the Loans requested to
be made by it on the Closing Date and the obligation of each Issuer to Issue
Letters of Credit on the Closing Date is subject to the satisfaction or due
waiver in accordance with Section 11.1 (Amendments, Waivers, Etc.) of each of
the following conditions precedent:
(a) Certain Documents. The Administrative Agent shall have
received on the Closing Date each of the following, each dated the Closing Date
unless otherwise indicated or agreed to by the Administrative Agent, in form and
substance satisfactory to the Administrative Agent and in sufficient copies for
each Lender:
(i) this Agreement, duly executed and delivered by
the Borrower and, for the account of each Lender requesting the same, a
Revolving Credit Note or Revolving Credit Notes of the Borrower
conforming to the requirements set forth herein;
(ii) the Guaranty, duly executed by each Guarantor;
(iii) the Pledge and Security Agreement, duly
executed by the Borrower and each Guarantor, together with each of the
following:
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(A) evidence satisfactory to the
Administrative Agent that, upon the filing and recording of
instruments delivered at the Closing, the Administrative Agent
(for the benefit of the Secured Parties) shall have a valid
and perfected first priority security interest in the
Collateral, including (x) such documents duly executed by each
Loan Party as the Administrative Agent may request with
respect to the perfection of its security interests in the
Collateral (including financing statements under the UCC,
patent, trademark and copyright security agreements suitable
for filing with the Patent and Trademark Office or the
Copyright Office, as the case may be, and other applicable
documents under the laws of any jurisdiction with respect to
the perfection of Liens created by the Pledge and Security
Agreement) and (y) copies of UCC search reports as of a recent
date listing all effective financing statements that name any
Loan Party as debtor, together with copies of such financing
statements, none of which shall cover the Collateral except
for those that shall be terminated on the Closing Date);
(B) share certificates representing all of
certificated Pledged Stock being pledged pursuant to such
Pledge and Security Agreement and stock powers for such share
certificates executed in blank;
(C) all instruments representing Pledged
Notes being pledged pursuant to such Pledge and Security
Agreement duly endorsed in favor of the Administrative Agent
or in blank;
(iv) a favorable opinion of (A) ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
counsel to the Loan Parties, in substantially the form of Exhibit G
(Opinion of Counsel for the Loan Parties), (B) counsel to the Loan
Parties in Tennessee, in each case addressed to the Administrative
Agent and the Lenders and addressing such other matters as any Lender
through the Administrative Agent may reasonably request and (C) counsel
to the Administrative Agent as to the enforceability of the Credit
Agreement and the other Loan Documents to be executed on the Closing
Date;
(v) a copy of each Related Document certified as
being complete and correct by a Responsible Officer of the Borrower;
(vi) a copy of the articles or certificate of
incorporation (or equivalent Constituent Document) of each Loan Party,
certified as of a recent date by the Secretary of State of the state of
organization of such Loan Party, together with certificates of such
official attesting to the good standing of each such Loan Party;
(vii) a certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying (A) the names and true
signatures of each officer of such Loan Party who has been authorized
to execute and deliver any Loan Document or other document required
hereunder to be executed and delivered by or on behalf of such Loan
Party, (B) the by-laws (or equivalent Constituent Document) of such
Loan Party as in effect on the date of such certification, (C) the
resolutions of such Loan Party's Board of Directors (or equivalent
governing body) approving and authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents to which it
is a party and (D) that there have been no changes in the certificate
of incorporation (or equivalent Constituent Document) of such Loan
Party from the certificate of incorporation (or equivalent Constituent
Document) delivered pursuant to clause (vi) above;
52
(viii) a certificate of a Responsible Officer of
Holdings, stating that each of Holdings, the Borrower and each
Guarantor is Solvent after giving effect to the initial Loans and
Letters of Credit, the application of the proceeds thereof in
accordance with Section 7.9 (Application of Proceeds) and the payment
of all estimated legal, accounting and other fees related hereto and
thereto;
(ix) a certificate of a Responsible Officer of
Holdings to the effect that (A) the condition set forth in Section
3.2(b) (Conditions Precedent to Each Loan and Letter of Credit) has
been satisfied and (B) no litigation not listed on Schedule 4.7
(Litigation) shall have been commenced against any Loan Party or any of
its Subsidiaries that, if adversely determined, would have a Material
Adverse Effect;
(x) evidence satisfactory to the Administrative Agent
that the insurance policies required by Section 7.5 (Maintenance of
Insurance) and any Collateral Document are in full force and effect,
together with endorsements naming the Administrative Agent, on behalf
of the Secured Parties, as an additional insured or loss payee under
all insurance policies to be maintained with respect to the properties
of Holdings, the Borrower and its Subsidiaries; and
(xi) such other certificates, documents, agreements
and information respecting any Loan Party as any Lender through the
Administrative Agent may reasonably request.
(b) Material Adverse Change. Since September 30, 2001 there
shall have occurred no Material Adverse Change and there have been no events or
developments that, in the aggregate, have had a Material Adverse Effect.
(c) Fee and Expenses Paid. There shall have been paid to the
Administrative Agent, for the account of the Administrative Agent and the
Lenders, as applicable, all fees and expenses (including reasonable fees and
expenses of counsel) due and payable on or before the Closing Date (including
all such fees described in the Fee Letter).
(d) Related Documents. The Administrative Agent shall be
satisfied that (i) the terms and conditions of the Related Documents shall not
have been amended, waived or modified without the approval of the Administrative
Agent (other than non-material amendments, waivers and modifications to such
terms that do not, in the aggregate for all such amendments, waivers and
modifications, materially adversely affect the interests of the Administrative
Agent and the Lenders), (ii) the Related Documents shall have been approved by
all corporate action of Holdings or the Borrower (as the case may be) and each
of the other parties thereto, shall be in full force and effect and there shall
not have occurred and be continuing any material breach or default thereunder,
(iii) all conditions precedent to the consummation of the transactions
contemplated by the Mezzanine Documents and the Equity Documents shall have been
satisfied or waived with the consent of the Administrative Agent, (iv) the
transactions contemplated under the Equity Documents and the Mezzanine Documents
shall have been consummated in accordance with all applicable Requirements of
Law and (v) all representations and warranties contained in the Related
Documents shall be true and correct in all material respects on the Closing
Date.
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(e) Consents, Etc. Holdings and each of its Subsidiaries shall
have received all consents and authorizations required pursuant to any material
Contractual Obligation with any other Person and shall have obtained all
consents and authorizations of, and effected all notices to and filings with,
any Governmental Authority, in each case, as may be necessary to allow each of
the Loan Parties lawfully (i) to execute, deliver and perform, in all material
respects, their respective obligations hereunder and under the Loan Documents
and the Related Documents to which each of them, respectively, is, or shall be,
a party and each other agreement or instrument to be executed and delivered by
each of them, respectively, pursuant thereto or in connection therewith and (ii)
to create and perfect the Liens on the Collateral to be owned by each of them in
the manner and for the purpose contemplated by the Loan Documents.
(f) Field Examination. The Administrative Agent shall be
satisfied with the results of a field examination of the Borrower and its
Subsidiaries conducted by CUSA's internal auditors no more than seven (7) days
prior to the Closing Date.
(g) Distribution Agreements. Each of the Distribution
Agreements shall be in full force and effect and there shall not have occurred
and be continuing any material breach or default thereunder and the terms and
conditions of each Distribution Agreement shall not have been amended, waived or
modified in violation of Section 8.11 (Modification of Related Documents).
(h) Additional Junior Capital. (i) Holdings shall have
received not less than $125,000,000 in aggregate gross cash proceeds comprised
of the Series B Senior Convertible Participating Preferred Stock of Holdings
issued under the Equity Documents in an amount not less than $45,000,000 and
shall have contributed the net proceeds thereof to Borrower and (ii) Borrower
shall have received not less than $80,000,000 in aggregate gross proceeds from
the issuance of Senior Unsecured Notes. The Administrative Agent shall be
satisfied with the structure of the Additional Junior Capital and with the
corporate and capital structure of Holdings, the Borrower and its Subsidiaries.
The terms and conditions of the Equity Documents and the Mezzanine Documents
shall be satisfactory to the Administrative Agent.
(i) Minimum Available Credit. After giving effect to all Loans
made on the Closing Date the Available Credit shall not be less than
$32,000,000.
(j) Pay-off Letter. The Administrative Agent shall have
received a pay-off letter confirming to its satisfaction that the Fleet Credit
Agreement shall be terminated and the indebtedness thereunder shall be paid in
full in cash from the proceeds of the funding of the Loans to be made on the
Closing Date, and thereupon all promissory notes owing thereunder shall have
been cancelled and all Liens to secure the indebtedness under the Fleet Credit
Agreement shall have been released, in each case on terms and conditions
satisfactory to the Administrative Agent.
(k) Inventory Appraisals. The Administrative Agent shall have
received results of appraisals of the orderly liquidation value of the
Borrower's Inventory from a third party appraisal firm acceptable to the
Administrative Agent and in form, scope and substance satisfactory to the
Administrative Agent.
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(l) Financial Statements. The Financial Statements described
in Section 4.4(a) of Section 4.4 (Financial Statements) and the Projections
described in Section 4.4(c) of Section 4.4 (Financial Statements).
(m) Syndication Side Letter. The execution and delivery of a
side letter regarding post-closing syndication in form and substance
satisfactory to the Administrative Agent.
SECTION 3.2 CONDITIONS PRECEDENT TO EACH LOAN AND LETTER OF
CREDIT
The obligation of each Lender on any date (including the
Closing Date) to make any Loan and of each Issuer on any date (including the
Closing Date) to Issue any Letter of Credit is subject to the satisfaction of
each of the following conditions precedent:
(a) Request for Borrowing or Issuance of Letter of Credit.
With respect to any Loan, the Administrative Agent shall have received a duly
executed Notice of Borrowing (or, in the case of Swing Loans, a duly executed
Swing Loan Request), and, with respect to any Letter of Credit, the
Administrative Agent and the Issuer shall have received a duly executed Letter
of Credit Request.
(b) Representations and Warranties; No Defaults. The following
statements shall be true on the date of such Loan or Issuance, both before and
after giving effect thereto and, in the case of any Loan, to the application of
the proceeds therefrom:
(i) the representations and warranties set forth in
Article IV (Representations and Warranties) and in the other Loan
Documents shall be true and correct on and as of the Closing Date and
shall be true and correct in all material respects on and as of any
such date after the Closing Date with the same effect as though made on
and as of such date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representation and warranties shall have been true and correct in all
material respects as of such earlier date; and
(ii) no Default or Event of Default shall have
occurred and be continuing.
(c) Borrowing Base. The Borrower shall have delivered the
Borrowing Base Certificate required to be delivered by Section 6.11(a)
(Borrowing Base Determination). After giving effect to the Loans or Letters of
Credit requested to be made or Issued on any such date and the use of proceeds
thereof, the Revolving Credit Outstandings shall not exceed the Maximum Credit
at such time.
(d) No Legal Impediments. The making of the Loans or the
Issuance of such Letter of Credit on such date does not violate any Requirement
of Law on the date of or immediately following such Loan or Issuance of such
Letter of Credit and is not enjoined, temporarily, preliminarily or permanently.
Each submission by the Borrower to the Administrative Agent of a Notice of
Borrowing or a Swing Loan Request and the acceptance by the Borrower of the
proceeds of each Loan requested therein, and each submission by the Borrower to
an Issuer of a Letter of Credit Request, and the
55
Issuance of each Letter of Credit requested therein, shall be deemed to
constitute a representation and warranty by the Borrower as to the matters
specified in clause (b) above on the date of the making of such Loan or the
Issuance of such Letter of Credit.
SECTION 3.3 DETERMINATIONS OF INITIAL BORROWING CONDITIONS
For purposes of determining compliance with the conditions
specified in Section 3.1 (Conditions Precedent to Initial Loans and Letters of
Credit), each Lender shall be deemed to have consented to, approved, accepted or
be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lenders unless
an officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
prior to the initial Borrowing or Issuance hereunder specifying its objection
thereto and such Lender shall not have made available to the Administrative
Agent such Lender's Ratable Portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the Issuers and the Administrative
Agent to enter into this Agreement, each of Holdings and the Borrower represents
and warrants each of the following to the Lenders, the Issuers and the
Administrative Agent, on and as of the Closing Date and after giving effect to
the consummation of the transactions contemplated by the Related Documents and
the making of the Loans and the other financial accommodations on the Closing
Date and on and as of each date as required by Section 3.2(b)(i) (Conditions
Precedent to Each Loan and Letter of Credit):
SECTION 4.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW
Each of Holdings and its Subsidiaries other than the
Designated Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) is duly
qualified to do business as a foreign corporation and in good standing under the
laws of each jurisdiction where such qualification is necessary, except where
the failure to be so qualified or in good standing would not have a Material
Adverse Effect in the aggregate over all such failures, (c) has all requisite
power and authority and the legal right to own, pledge, mortgage and operate its
properties, to lease the property it operates under lease and to conduct its
business as now or currently proposed to be conducted, (d) is in compliance with
its Constituent Documents, (e) is in compliance with all applicable Requirements
of Law except where the failure to be in compliance would not, in the aggregate
over all such failures, have a Material Adverse Effect and (f) has all necessary
licenses, permits, consents or approvals from or by, has made all necessary
filings with, and has given all necessary notices to, each Governmental
Authority having jurisdiction, to the extent required for such ownership,
operation and conduct, except for licenses, permits, consents, approvals or
filings that can be obtained or made by the taking of ministerial action to
secure the grant or transfer thereof or the failure to obtain or make would not,
in the aggregate over all such failures, have a Material Adverse Effect.
56
SECTION 4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS
(a) The execution, delivery and performance by each Loan Party
of the Loan Documents to which it is a party and the consummation of the
transactions contemplated thereby:
(i) are within such Loan Party's corporate, limited
liability company, partnership or other powers;
(ii) have been or, at the time of delivery thereof
pursuant to Article III (Conditions To Loans And Letters Of Credit)
will have been duly authorized by all necessary action, including the
consent of shareholders, partners and members where required;
(iii) do not and will not (A) contravene such Loan
Party's or any of its Subsidiaries' respective Constituent Documents,
(B) violate any other Requirement of Law applicable to such Loan Party
(including Regulations T, U and X of the Federal Reserve Board), or any
order or decree of any Governmental Authority or arbitrator applicable
to such Loan Party, (C) conflict with or result in the breach of, or
constitute a default under, or result in or permit the termination or
acceleration of, any material Contractual Obligation of such Loan Party
or any of its Subsidiaries or (D) result in the creation or imposition
of any Lien upon any property of such Loan Party or any of its
Subsidiaries, other than those in favor of the Secured Parties pursuant
to the Collateral Documents; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than those listed on
Schedule 4.2 (Consents) and that have been or will be, prior to the
Closing Date, obtained or made, copies of which have been or will be
delivered to the Administrative Agent pursuant to Section 3.1
(Conditions Precedent to Initial Loans and Letters of Credit), and each
of which on the Closing Date will be in full force and effect and, with
respect to the Collateral, filings required to perfect the Liens
created by the Collateral Documents.
(b) This Agreement has been, and each of the other Loan
Documents will have been upon delivery thereof pursuant to the terms of this
Agreement, duly executed and delivered by each Loan Party party thereto. This
Agreement is, and the other Loan Documents will be, when delivered hereunder,
the legal, valid and binding obligation of each Loan Party party thereto,
enforceable against such Loan Party in accordance with its terms.
SECTION 4.3 OWNERSHIP OF HOLDINGS; SUBSIDIARIES
(a) The authorized capital stock of Holdings as of the Closing
Date will consist of (i) 80,000,000 shares of common stock, and (ii) 10,000,000
shares of preferred stock of which 800,000 shares of preferred stock have been
designated Series A Junior Participating Preferred Stock. As of November 30,
2001, (1) 18,495,990 shares of common stock are issued and outstanding and (2)
2,912,434 shares of common stock are reserved for issuance upon exercise of
options (whether vested or unvested as of the date hereof). As of Closing Date,
since November 30, 2001, Holdings has not issued any capital stock except
pursuant to the exercise of options other than pursuant to the Equity Documents
and the Mezzanine Documents. All of the outstanding capital stock of Holdings
has been validly issued, is fully paid and non-assessable.
57
No Stock of Holdings is subject to any option, warrant, right of conversion or
purchase or any similar right, except as described on Schedule 4.3 or as
provided in the Equity Documents and the Mezzanine Documents and the securities
issues thereunder.
(b) The authorized capital stock of the Borrower consists of
1,000 shares of common stock, $0.01 par value per share, of which 200 shares are
issued and outstanding. All of the outstanding capital stock of the Borrower has
been validly issued, is fully paid and non-assessable and is owned beneficially
and of record by Holdings, free and clear of all Liens other than the Lien in
favor of the Secured Parties created by the Pledge and Security Agreement. No
Stock of the Borrower is subject to any option, warrant, right of conversion or
purchase or any similar right. There are no agreements or understandings to
which the Borrower is a party with respect to the voting, sale or transfer of
any shares of Stock of the Borrower or any agreement restricting the transfer or
hypothecation of any such shares.
(c) Set forth on Schedule 4.3 (Ownership of Subsidiaries) is a
complete and accurate list showing, as of the Closing Date, all Subsidiaries of
Holdings and the Borrower and, as to each such Subsidiary, the jurisdiction of
its organization, the number of shares of each class of Stock authorized (if
applicable), the number outstanding on the Closing Date and the number and
percentage of the outstanding shares of each such class owned (directly or
indirectly) by Holdings or Borrower, as the case may be. No Stock of any
Subsidiary of Holdings and the Borrower is subject to any outstanding option,
warrant, right of conversion or purchase of any similar right. All of the
outstanding Stock of each Subsidiary of Holdings owned (directly or indirectly)
by Holdings has been validly issued, is fully paid and non-assessable (to the
extent applicable) and is owned by Holdings or a Subsidiary of Holdings, free
and clear of all Liens (other than the Lien in favor of the Secured Parties
created pursuant to the Pledge and Security Agreement), options, warrants,
rights of conversion or purchase or any similar rights. Neither Holdings nor any
such Subsidiary is a party to, or has knowledge of, any agreement restricting
the transfer or hypothecation of any Stock of any such Subsidiary, other than
the Loan Documents. Neither Holdings nor the Borrower owns or holds, directly or
indirectly, any Stock of any Person other than such Subsidiaries and Investments
permitted by Section 8.3 (Investments).
SECTION 4.4 FINANCIAL STATEMENTS
(a) The consolidated balance sheet of Holdings and its
Subsidiaries as at December 31, 2000, and the related consolidated statements of
income, retained earnings and cash flows of Holdings and its Subsidiaries for
the fiscal year then ended, certified by PriceWaterhouseCoopers LLP, and the
consolidated balance sheets of Holdings and its Subsidiaries as at September 30,
2001, and the related consolidated statements of income, retained earnings and
cash flows of Holdings and its Subsidiaries for the nine months then ended,
copies of which have been furnished to each Lender, fairly present, subject, in
the case of said balance sheets as at December 31, 2000, and said statements of
income, retained earnings and cash flows for the nine months then ended, to the
absence of footnote disclosure and normal recurring year-end audit adjustments,
the consolidated financial condition of Holdings and its Subsidiaries as at such
dates and the consolidated results of the operations of Holdings and its
Subsidiaries for the period ended on such dates, all in conformity with GAAP.
(b) Neither Holdings nor any of its Subsidiaries has any
material obligation, contingent liability or liability for taxes, long-term
leases or unusual forward or long-term commitment that is not reflected in the
Financial Statements referred to in clause (a) above or in the notes thereto and
not otherwise permitted by this Agreement.
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(c) The Projections have been prepared by Holdings and the
Borrower in light of the past operations of Holdings' and its Subsidiaries'
business, and reflect projections for the five-year period beginning on December
31, 2001 on a quarter by quarter basis for the first year and on a year by year
basis thereafter. The Projections are based upon estimates and assumptions
stated therein, all of which each of Holdings and the Borrower believes to be
reasonable and fair in light of current conditions and current facts known to it
and, as of the Closing Date, reflect the Borrower's and Holdings good faith and
reasonable estimates of the future financial performance of Holdings and its
Subsidiaries and of the other information projected therein for the periods set
forth therein. The Projections are the most recent projections prepared by
Holdings for the Lenders as of the Closing Date.
(d) The unaudited pro forma consolidated balance sheet of
Holdings and its Subsidiaries, a copy of which has been delivered to each Lender
pursuant to Section 3.1 (Conditions Precedent to Initial Loans and Letters of
Credit), has been prepared as of November 30, 2001, reflects as of such date, on
a pro forma basis, the consolidated financial condition of Holdings and its
Subsidiaries, and the assumptions expressed therein were reasonable based on the
information available to Holdings and the Borrower at the time so furnished and
on the Closing Date.
SECTION 4.5 MATERIAL ADVERSE CHANGE
Since September 30, 2001, there has been no Material Adverse
Change and there have been no events or developments that, in the aggregate over
all such developments, have had a Material Adverse Effect.
SECTION 4.6 SOLVENCY
Both before and after giving effect to (a) the Loans and
Letter of Credit Obligations to be made or extended on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or extended, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of the Borrower, (c) the consummation of the other transactions
contemplated by the Related Documents or hereby and (d) the payment and accrual
of all transaction costs in connection with the foregoing, each Loan Party is
Solvent.
SECTION 4.7 LITIGATION
There are no pending or, to the knowledge of the Borrower or
Holdings, threatened actions, investigations or proceedings affecting Holdings
or any of its Subsidiaries before any court, Governmental Authority or
arbitrator other than those that, in the aggregate over all such actions,
investigations or proceedings, are not reasonably likely to be determined
adversely to any Loan Party and, if so determined, would not have a Material
Adverse Effect. The performance of any action by any Loan Party required or
contemplated by any Loan Document or any Related Document is not restrained or
enjoined (either temporarily, preliminarily or permanently). Schedule 4.7
(Litigation) lists all litigation pending against any Loan Party at the date
hereof that, if adversely determined, would have a Material Adverse Effect.
SECTION 4.8 TAXES
(a) All federal, state, local and foreign income and franchise
and other material tax returns, reports and statements (collectively, the "Tax
Returns") required to be filed by
59
Holdings or any of its Tax Affiliates have been filed with the appropriate
Governmental Authorities in all jurisdictions in which such Tax Returns are
required to be filed, all such Tax Returns are true and correct in all material
respects, and all taxes, charges and other impositions reflected therein or
otherwise due and payable have been paid prior to the date on which any fine,
penalty, interest, late charge or loss may be added thereto for non-payment
thereof except where contested in good faith and by appropriate proceedings if
adequate reserves therefor have been established on the books of Holdings or
such Tax Affiliate in conformity with GAAP. No Tax Return is under audit or
examination by any Governmental Authority and no notice of such an audit or
examination or any assertion of any claim for Taxes has been given or made by
any Governmental Authority. Proper and accurate amounts have been withheld by
Holdings and each of its Tax Affiliates from their respective employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable Requirements of Law and such
withholdings have been timely paid to the respective Governmental Authorities.
(b) None of Holdings or any of its Tax Affiliates has (i)
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
the filing of any Tax Return or the assessment or collection of any charges,
(ii) incurred any obligation under any tax sharing agreement or arrangement
other than those of which the Administrative Agent has received a copy prior to
the date hereof or (iii) been a member of an affiliated, combined or unitary
group other than the group of which Holdings (or its Tax Affiliate) is the
common parent.
SECTION 4.9 FULL DISCLOSURE
The information prepared or furnished by or on behalf of
Holdings or the Borrower in connection with this Agreement or the Related
Documents or the consummation of the transactions contemplated hereunder and
thereunder taken as a whole, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein or herein not misleading. All facts known to Holdings or the Borrower
and material to an understanding of the financial condition, business,
properties or prospects of Borrower or Holdings and its Subsidiaries taken as
one enterprise have been disclosed to the Lenders.
SECTION 4.10 MARGIN REGULATIONS
Neither Holdings nor any of its Subsidiaries is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Federal Reserve Board), and no
proceeds of any Borrowing will be used to purchase or carry any such margin
stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock in contravention of Regulation T, U or X of the Federal
Reserve Board.
SECTION 4.11 NO BURDENSOME RESTRICTIONS; NO DEFAULTS
(a) Neither Holdings nor any of its Subsidiaries (i) is a
party to any Contractual Obligation the compliance with which would have a
Material Adverse Effect in the aggregate over all such Contractual Obligations
or the performance of which by any thereof, either unconditionally or upon the
happening of an event, would result in the creation of a Lien (other than a Lien
permitted under Section 8.2 (Liens, Etc.)) on the property or assets of any
thereof or
60
(ii) is subject to any charter or corporate restriction that would have a
Material Adverse Effect in the aggregate over all such restrictions.
(b) Neither Holdings nor any of its Subsidiaries is in default
under or with respect to any Contractual Obligation owed by it and, to the
knowledge of Holdings or the Borrower, no other party is in default under or
with respect to any Contractual Obligation owed to any Loan Party or to any
Subsidiary of a Loan Party, other than, in either case, those defaults that, in
the aggregate over all such defaults, would not have a Material Adverse Effect.
(c) No Default or Event of Default has occurred and is
continuing.
(d) To the best knowledge of Holdings and the Borrower, there
are no Requirements of Law applicable to any Loan Party or any Subsidiary of any
Loan Party the compliance with which by such Loan Party or such Subsidiary, as
the case may be, would have a Material Adverse Effect in the aggregate over all
such compliances.
SECTION 4.12 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT
Neither Holdings nor any of its Subsidiaries is (a) an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended or (b) a "holding company," or an
"affiliate" or a "holding company" or a "subsidiary company" of a "holding
company," as each such term is defined and used in the Public Utility Holding
Company Act of 1935, as amended.
SECTION 4.13 USE OF PROCEEDS
The proceeds of the Loans and the Letters of Credit are being
used by the Borrower solely (a) to finance the performance by the Borrower of
the Rolls-Royce Contract, (b) to refinance existing Indebtedness of Holdings,
the Borrower and its Subsidiaries, (c) for the payment of related transaction
costs, fees and expenses, (d) to provide working capital from time to time for
the Borrower and its Domestic Subsidiaries and (e) for other general corporate
purposes of the Borrower and its Subsidiaries.
SECTION 4.14 USE OF PROCEEDS OF ADDITIONAL JUNIOR CAPITAL
The proceeds of the securities issued pursuant to the Equity
Documents are being used by Holdings solely to contribute to the capital of the
Borrower and the proceeds of the Senior Unsecured Notes and such contribution
are being used by the Borrower solely (a) to finance the performance by the
Borrower of the Rolls-Royce Contract, (b) to refinance existing Indebtedness of
Holdings, the Borrower and its Subsidiaries, (c) for the payment of related
transaction costs, fees and expenses, (d) to provide working capital from time
to time for the Borrower and its Domestic Subsidiaries and (e) for other general
corporate purposes of the Borrower and its Subsidiaries.
SECTION 4.15 INSURANCE
All policies of insurance of any kind or nature of Holdings or
any of its Subsidiaries, including policies of life, fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity,
workers' compensation and employee health and
61
welfare insurance, are in full force and effect and are of a nature and provide
such coverage as is sufficient and as is customarily carried by businesses of
the size and character of such Person. None of Holdings or any of its
Subsidiaries has been refused insurance for any material coverage for which it
had applied or had any policy of insurance terminated (other than at its
request).
SECTION 4.16 LABOR MATTERS
(a) There are no strikes, work stoppages, slowdowns or
lockouts pending or threatened against or involving Holdings or any of its
Subsidiaries.
(b) There are no material unfair labor practices, grievances
or complaints pending, or, to Holdings or the Borrower's knowledge, threatened,
against or involving Holdings or any of its Subsidiaries, nor are there any
arbitrations or grievances threatened involving Holdings or any of its
Subsidiaries.
(c) Except as set forth on Schedule 4.16 (Labor Matters), as
of the Closing Date, there is no collective bargaining agreement covering any
employee of Holdings or any of its Subsidiaries.
(d) Schedule 4.16 (Labor Matters) sets forth, as of the date
hereof, all material consulting agreements, executive employment agreements,
executive compensation plans, deferred compensation agreements, employee stock
purchase and stock option plans and severance plans of Holdings and any of its
Subsidiaries.
SECTION 4.17 ERISA
(a) Schedule 4.17 (List of Plans) separately identifies as of
the date hereof all Title IV Plans and all Multiemployer Plans.
(b) Each employee benefit plan of Holdings or any of its
Subsidiaries intended to qualify under Section 401 of the Code does so qualify,
and any trust created thereunder is exempt from tax under the provisions of
Section 501 of the Code, except where such failures, in the aggregate over all
such failures, would not have a Material Adverse Effect.
(c) Each Title IV Plan is in compliance in all material
respects with applicable provisions of ERISA, the Code and other Requirements of
Law except for non-compliances that, in the aggregate over all such
non-compliances, would not have a Material Adverse Effect.
(d) There has been no, nor is there reasonably expected to
occur, any ERISA Event other than those that, in the aggregate over all such
ERISA Events, would not have a Material Adverse Effect.
(e) Except to the extent set forth on Schedule 4.17 (List of
Plans), none of Holdings any of its Subsidiaries or any ERISA Affiliate would
have any Withdrawal Liability as a result of a complete withdrawal as of the
date hereof from any Multiemployer Plan.
SECTION 4.18 ENVIRONMENTAL MATTERS
(a) Except as disclosed on Schedule 4.18, the operations of
Holdings and each of its Subsidiaries have been and are in compliance with all
Environmental Laws, including
62
obtaining and complying with all required environmental, health and safety
Permits, other than non-compliances that, in the aggregate over all such
non-compliances, would not have a reasonable likelihood of Holdings or any of
its Subsidiaries incurring Environmental Liabilities and Costs after the date
hereof in excess of $500,000.
(b) None of Holdings or any of its Subsidiaries or any Real
Property currently or, to the knowledge of Holdings or the Borrower, previously
owned, operated or leased by or for Holdings or any of its Subsidiaries is
subject to any pending or, to the knowledge of Holdings or the Borrower,
threatened, claim, order, agreement, notice of violation, notice of potential
liability or is the subject of any pending or threatened proceeding or
governmental investigation under or pursuant to Environmental Laws other than
those that, in the aggregate over all such claims, orders, agreements, notices,
proceedings or investigations, are not reasonably likely to result in Holdings
and its Subsidiaries incurring Environmental Liabilities and Costs in excess of
$500,000.
(c) Except as disclosed on Schedule 4.18 (Environmental
Matters), none of Holdings or any of its Subsidiaries (i) was or is a treatment,
storage or disposal facility requiring a Permit under the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq., the regulations thereunder or
any state analog (ii) was or is the owner or operator of any property which
pursuant to any Environmental Law has been placed on any list of Hazardous
Materials disposal sites, including, without limitation, the "National
Priorities List" or "CERCLIS List" or equivalent state list, (iii) has, or had,
any underground storage tanks located thereon for which Holdings or its
Subsidiaries is an owner or operator, or (iv) has ever been used as or for a
waste disposal facility, a mine, a gasoline service station or, other than for
petroleum chemical substances stored in the ordinary course of business, a
petroleum chemical products storage facility.
(d) There are no facts, circumstances or conditions arising
out of or relating to the operations or ownership of any Subsidiary of Holdings
or of Real Property owned, operated or leased by Holdings or any of its
Subsidiaries that are not specifically included in the financial information
furnished to the Lenders other than those that, in the aggregate over all such
facts, circumstances or conditions, would not have a reasonable likelihood of
Holdings and its Subsidiaries incurring Environmental Liabilities and Costs in
excess of $500,000.
(e) As of the date hereof, no Environmental Lien has attached
to any property of Holdings or any of its Subsidiaries and, to the knowledge of
Holdings and the Borrower, no facts, circumstances or conditions exist that
could reasonably be expected to result in any such Lien attaching to any such
property.
(f) Holdings and the Borrower have provided the Lenders with
copies of all environmental, health or safety audits, studies, assessments,
inspections, investigations or other environmental health and safety reports
relating to the operations of Holdings or any of its Subsidiaries or any Real
Property of any of them that are in the possession, custody or control of
Holdings or any of its Subsidiaries.
SECTION 4.19 INTELLECTUAL PROPERTY
Holdings and its Subsidiaries own or license or otherwise have
the right to use all licenses, permits, patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
copyright applications, franchises, authorizations and other intellectual
63
property rights (including all Intellectual Property as defined in the Pledge
and Security Agreement) that are necessary for the operations of their
respective businesses, without infringement upon or conflict with the rights of
any other Person with respect thereto, including all trade names associated with
any private label brands of Holdings or any of its Subsidiaries. To Holdings and
the Borrower's knowledge, no slogan or other advertising device, product,
process, method, substance, part or component, or other material now employed,
or now contemplated to be employed, by Holdings or any of its Subsidiaries
infringes upon or conflicts with any rights owned by any other Person, and no
claim or litigation regarding any of the foregoing is pending or threatened.
SECTION 4.20 TITLE; REAL PROPERTY
(a) Holdings and each of its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all Real Property and good
title to all personal property, in each case that is purported to be owned or
leased by it, including those reflected on the most recent Financial Statements
delivered by the Borrower, and none of such properties and assets is subject to
any Lien, except Liens permitted under Section 8.2 (Liens, Etc.). Holdings and
each of its Subsidiaries have received all deeds, assignments, waivers,
consents, non-disturbance and recognition or similar agreements, bills of sale
and other documents and have duly effected all recordings, filings and other
actions necessary to establish, protect and perfect Holdings' and such
Subsidiaries' right, title and interest in and to all such property.
(b) Set forth on Schedule 4.20 (Real Property) is a complete
and accurate list of all Real Property of Holdings and each of its Subsidiaries
other than the Designated Subsidiaries as of the Closing Date and showing the
current street address (including, where applicable, county, state and other
relevant jurisdictions) and record owner thereof.
(c) Neither Holdings nor any of its Subsidiaries owns or
holds, or is obligated under or a party to, any lease, option, right of first
refusal or other contractual right to purchase, acquire, sell, assign or dispose
lease of any of its Real Property.
(d) All components of all improvements included within the
Real Property of Holdings and its Subsidiaries (collectively, "Improvements"),
including the roofs and structural elements thereof and the heating,
ventilation, air conditioning, plumbing, electrical, mechanical, sewer, waste
water, storm water, paving and parking equipment, systems and facilities
included therein, are in good working order and repair. All water, gas,
electrical, steam, compressed air, telecommunication, sanitary and storm sewage
lines and systems and other similar systems serving such Real Property are
installed and operating and are sufficient to enable such Real Property to
continue to be used and operated in the manner currently being used and
operated, and neither Holdings nor any of its Subsidiaries has any knowledge of
any factor or condition that could result in the termination or material
impairment of the furnishing thereof. No Improvement or portion thereof is
dependent for its access, operation or utility on any land, building or other
Improvement not included in such Real Property.
(e) No portion of any Real Property of Holdings or any of its
Subsidiaries has suffered any material damage by fire or other casualty loss
that has not heretofore been completely repaired and restored to its original
condition. No portion of any Real Property of Holdings or any of its
Subsidiaries is located in a special flood hazard area as designated by any
federal Governmental Authority.
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(f) All Permits required to have been issued or appropriate to
enable all Real Property of Holdings or any of its Subsidiaries to be lawfully
occupied and used for all of the purposes for which they are currently occupied
and used have been lawfully issued and are in full force and effect, other than
those that, in the aggregate over all such Permits, would not have a Material
Adverse Effect.
(g) None of Holdings or any of its Subsidiaries has received
any notice, or has any knowledge, of any pending, threatened or contemplated
condemnation proceeding affecting any of its Real Property or any part thereof,
except those that, in the aggregate over all such proceedings, would not have a
Material Adverse Effect.
SECTION 4.21 RELATED DOCUMENTS; MATERIAL CONTRACTUAL
OBLIGATIONS
(a) The execution, delivery and performance by each Loan Party
of the Related Documents to which it is a party and the consummation of the
transactions contemplated thereby by such Loan Party:
(i) are within such Loan Party's respective
corporate, limited liability company, partnership or other powers;
(ii) have been duly authorized by all necessary
corporate or other action, including the consent of stockholders where
required;
(iii) do not and will not (A) contravene or violate
any Loan Party's or any of its Subsidiaries' respective Constituent
Documents, (B) violate any other Requirement of Law applicable to any
Loan Party or any order or decree of any Governmental Authority or
arbitrator, (C) conflict with or result in the breach of, constitute a
default under, or result in or permit the termination or acceleration
of, any Contractual Obligation of any Loan Party or any of its
Subsidiaries, except for those that, in the aggregate over all such
conflicts, defaults, breaches, terminations or accelerations, would not
have a Material Adverse Effect or (D) result in the creation or
imposition of any Lien upon any property of any Loan Party or any of
its Subsidiaries; and
(iv) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than those that (A)
will have been obtained at the Closing Date, each of which will be in
full force and effect on the Closing Date, none of which will on the
Closing Date impose materially adverse conditions upon the exercise of
control by Holdings over the Borrower or any other Subsidiary of
Holdings or by the Borrower over any of its Subsidiaries and (B) if not
obtained, would not have a Material Adverse Effect (in the aggregate
over all such consents, authorizations, approvals, notices and
filings).
(b) Each of the Related Documents has been or at the Closing
Date will have been, and each other material Contractual Obligation to which any
Loan Party is a party has been, duly executed and delivered by each Loan Party
party thereto and, in the case of the Related Documents, at the Closing Date
will be, and in the case of the other material Contractual Obligations are, the
legal, valid and binding obligation of each Loan Party party thereto,
enforceable against such Loan Party in accordance with its terms.
65
(c) None of the Related Documents has been amended or modified
in any respect and no provision therein has been waived, except in each case to
the extent permitted by Section 8.11 (Modification of Related Documents), and
each of the representations and warranties therein are true and correct in all
material respects and no default or event that, with the giving of notice or
lapse of time or both, would be a default has occurred thereunder.
SECTION 4.22 REGULATION H
No Mortgage encumbers improved Real Property of Holdings or
any of its Subsidiaries that is located in an area that has been identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968.
SECTION 4.23 DISTRIBUTION AGREEMENTS
(a) Set forth on Schedule 4.23 hereto is a complete and
accurate list of all Distribution Agreements of the Borrower and each of its
Subsidiaries as of the Closing Date.
(b) The execution, delivery and performance by the Borrower
and each of its Subsidiaries of the Distribution Agreements to which it is a
party and the consummation of the transactions contemplated thereby by such
Person:
(i) do not and will not (A) contravene or violate
Holdings' or any of its Subsidiaries' respective Constituent Documents,
(B) violate any other Requirement of Law applicable to Holdings or any
of its Subsidiaries, or any order or decree of any Governmental
Authority or arbitrator, (C) conflict with or result in the breach of,
or constitute a default under, or result in or permit the termination
or acceleration of, any Contractual Obligation of Holdings or any of
its Subsidiaries, except for those that in the aggregate would not have
a Material Adverse Effect or (D) result in the creation or imposition
of any Lien upon any of the property of Holdings or any of its
Subsidiaries; and
(ii) do not require the consent of, authorization by,
approval of, notice to, or filing or registration with, any
Governmental Authority or any other Person, other than those which will
have been obtained at the Closing Date, each of which will be in full
force and effect on the Closing Date.
(c) Each of the Distribution Agreements has been, or at the
Closing Date will have been, duly executed and delivered by the Borrower or its
Subsidiary that is party thereto and at the Closing Date will be the legal,
valid and binding obligation of the Borrower or such Subsidiary, enforceable
against the Borrower or such Subsidiary in accordance with its terms.
(d) None of the Distribution Agreements has been amended or
modified in any respect and no provision therein has been waived, except in each
case to the extent permitted by Section 8.11 (Modification of Related
Documents), and each of the representations and warranties therein is true and
correct in all material respects and no default or event which with the giving
of notice or lapse of time or both would be a default has occurred thereunder.
66
SECTION 4.24 GOVERNMENT CONTRACTS
Except as set forth on Schedule 4.24:
(a) None of Holdings or any of its Subsidiaries is party to
any Contractual Obligation or subject to any Requirement of Law as a result of
any conflict of interest by, between or among Holdings, the Borrower, such
Subsidiaries or otherwise that would result in the termination of any Government
Contract or that would impose any material limitation on Holdings or such
Subsidiary's ability to perform such contract or to continue its business as
presently conducted and proposed to be conducted.
(b) No payment has been made by Holdings or any of its
Subsidiaries, or by any Person authorized to act on their behalf, to any Person
in connection with any Government Contract of Holdings or any such Subsidiary,
in violation of applicable United States or foreign procurement laws or
regulations, United States criminal or civil laws relating to bribes or
gratuities, or in violation of the Foreign Corrupt Practices Act or other
Requirements of Law, which violations, individually or in the aggregate with all
such violations would have or could reasonably be expected to have a Material
Adverse Effect.
(c) With respect to each Government Contract, no termination
for convenience or termination for default has occurred within the last five
years and no cure notice or show cause notice is currently in effect pertaining
to such Government Contract.
(d) None of Holdings or any of its Subsidiaries or any of
their respective directors or officers is (or during the last five years has
been) under administrative, civil or criminal indictment by any Governmental
Authority, with respect to any alleged irregularity, misstatement or omission
arising under or relating to any Government Contract.
(e) There exist (A) no outstanding claims against Holdings or
any of its Subsidiaries, either by the United States Government or by any prime
contractor, subcontractor, vendor or other third party, arising under or
relating to any Government Contract; and (B) no disputes between Holdings or any
of its Subsidiaries and the United States Government under the Contract Disputes
Act or any other Federal statute or between Holdings or any of its Subsidiaries
and any prime contractor, subcontractor or vendor arising under or relating to
any such Government Contract.
(f) None of Holdings or any of its Subsidiaries or any of
their respective directors or officers is (or during the last five years has
been) suspended or debarred from doing business with the United States
Government or is (or during such period was) the subject of a finding of
non-responsibility or ineligibility for United States Government contracting.
(g) No Government Contract contains any provision for progress
payments or any title transfer except upon delivery or shipment of Inventory to
the applicable buyer thereof.
SECTION 4.25 CHANGE OF CONTROL PAYMENTS
Except as set forth on Schedule 4.25, neither the execution,
delivery and performance by the Borrower or Holdings or any of their
Subsidiaries of the Equity Documents and the Mezzanine Documents to which they
are a party, nor the consummation of the transaction contemplated therein (i)
shall require any payment by Holdings or any of its Subsidiaries or
67
Affiliates, in cash or kind, under any other agreement, plan, policy, commitment
or other arrangement or (ii) cause an "ownership change" under Section 382 of
the Code.
ARTICLE V
FINANCIAL COVENANTS
Each of the Borrower and Holdings agrees with the Lenders and
the Administrative Agent to each of the following as long as any Obligation or
any Revolving Credit Commitment remains outstanding and, in each case, unless
the Requisite Lenders otherwise consent in writing:
SECTION 5.1 MAXIMUM LEVERAGE RATIO
Holdings shall maintain a Leverage Ratio, as determined as of
the last day of each Fiscal Quarter set forth below, for the four Fiscal
Quarters ending on such day, of not more than the maximum ratio set forth below
opposite such Fiscal Quarter:
FISCAL QUARTER ENDING MAXIMUM LEVERAGE RATIO
--------------------- ----------------------
December 31, 2002 4.25 to 1
March 31, 2003 4.00 to 1
June 30, 2003 3.50 to 1
September 30, 2003 3.25 to 1
December 31, 2003 3.00 to 1
March 31, 2004 3.00 to 1
June 30, 2004 3.00 to 1
September 30, 2004 2.75 to 1
December 31, 2004 and thereafter 2.50 to 1
SECTION 5.2 MINIMUM INTEREST COVERAGE RATIO
Holdings shall maintain an Interest Coverage Ratio, as
determined as of the last day of each Fiscal Quarter set forth below, for the
four Fiscal Quarters ending on such day, of at least the minimum ratio set forth
below opposite such Fiscal Quarter:
MINIMUM INTEREST COVERAGE
FISCAL QUARTER ENDING RATIO
--------------------- -------------------------
December 31, 2002 2.50 to 1
March 31, 2003 2.50 to 1
June 30, 2003 2.50 to 1
September 30, 2003 2.75 to 1
December 31, 2003 2.90 to 1
March 31, 2004 3.00 to 1
June 30, 2004 3.00 to 1
September 30, 2004 3.25 to 1
December 31, 2004 and thereafter 3.50 to 1
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SECTION 5.3 MINIMUM EBITDA
Holdings shall have, as of the last day of each Fiscal Quarter
set forth below, EBITDA for the fiscal periods indicated below ending on such
day of not less than the following:
FISCAL PERIODS MINIMUM EBITDA
-------------- --------------
The Fiscal Quarter ending March 31, 2002 $12,000,000
The Two Fiscal Quarters ending June 30, 2002 $25,000,000
The Three Fiscal Quarters ending September $40,000,000
30, 2002
SECTION 5.4 MAINTENANCE OF TANGIBLE NET WORTH
Holdings shall maintain as of the last day of each Fiscal
Quarter set forth below a Tangible Net Worth of not less than the minimum amount
set forth below opposite such Fiscal Quarter:
MINIMUM TANGIBLE NET
FISCAL QUARTER ENDING WORTH
--------------------- --------------------
March 31, 2002 $142,114,000
June 30, 2002 $149,594,000
September 30, 2002 $157,857,000
December 31, 2002 $160,889,000
March 31, 2003 $169,078,000
June 30, 2003 $177,268,000
September 30, 2003 $185,457,000
December 31, 2003 $193,646,000
March 31, 2004 $201,918,000
June 30, 2004 $210,190,000
September 30, 2004 $218,462,000
December 31, 2004 $226,733,000
March 31, 2005 $237,271,000
June 30, 2005 $247,809,000
September 30, 2005 $258,347,000
December 31, 2005 $268,885,000
March 31, 2006 $280,481,000
June 30, 2006 $292,077,000
September 30, 2006 $303,673,000
December 31, 2006 $315,269,000
SECTION 5.5 CAPITAL EXPENDITURES
The Holdings shall not permit Capital Expenditures to be made
or incurred during each of the Fiscal Years set forth below to be, in the
aggregate over all such Capital Expenditures, in excess of the maximum amount
set forth below for such Fiscal Year:
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MAXIMUM CAPITAL
FISCAL YEAR EXPENDITURES
----------- ---------------
2002 $ 6,600,000
2003 $11,275,000
2004 $11,000,000
2005 $11,000,000
2006 $11,000,000
provided, however, that to the extent that actual Capital Expenditures for any
such Fiscal Year shall be less than the maximum amount set forth above for such
Fiscal Year (without giving effect to the carryover permitted by this proviso),
the difference shall, in addition, be available for Capital Expenditures in the
next succeeding Fiscal Year. Capital Expenditures funded by Reinvestment
Deferred Amounts and, to the extent, classified as a Capital Expenditure,
amounts paid in a Permitted Acquisition, shall be excluded from the calculation
of Capital Expenditures for purposes of this Section 5.5.
ARTICLE VI
REPORTING COVENANTS
Each of the Borrower and Holdings agrees with the Lenders and
the Administrative Agent to each of the following, as long as any Obligation or
any Revolving Credit Commitment remains outstanding and, in each case, unless
the Requisite Lenders otherwise consent in writing:
SECTION 6.1 FINANCIAL STATEMENTS
The Borrower shall furnish to the Administrative Agent (with
sufficient copies for each of the Lenders) each of the following:
(a) Monthly Reports. During the first 12 months following the
Closing Date and thereafter if requested by the Administrative Agent, and in
each case, within 30 days after the end of each fiscal month in each Fiscal
Year, financial information regarding Holdings and its Subsidiaries consisting
of consolidated and consolidating unaudited balance sheets as of the close of
such month and the related consolidated and consolidating statements of income
and cash flow (on a consolidated basis only) for such month and that portion of
the current Fiscal Year ending as of the close of such month, setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections or, if applicable, the latest business
plan provided pursuant to Section 6.1(e) (Financial Statements) for the current
Fiscal Year, in each case certified by a Responsible Officer of the Borrower as
fairly presenting the consolidated and consolidating financial position of
Holdings and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated in accordance with GAAP
(subject to the absence of footnote disclosure and normal year-end audit
adjustments).
(b) Quarterly Reports. Within 45 days after the end of each
Fiscal Quarter of each Fiscal Year, financial information regarding Holdings,
the Borrower and its Subsidiaries consisting of consolidated and consolidating
unaudited balance sheets as of the close of such quarter and the related
statements of income and cash flow (on a consolidated basis only) prepared along
management reporting lines for such quarter and that portion of the Fiscal Year
70
ending as of the close of such quarter, setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained
in the Projections or, if applicable, the latest business plan provided pursuant
to Section 6.1(e) (Financial Statements) for the current Fiscal Year, in each
case certified by a Responsible Officer of the Borrower as fairly presenting the
consolidated and consolidating financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flow for the periods indicated in accordance with GAAP (subject to the
absence of footnote disclosure and normal year-end audit adjustments).
(c) Annual Reports. Within 90 days after the end of each
Fiscal Year, financial information regarding Holdings and its Subsidiaries
consisting of consolidated and consolidating balance sheets of Holdings and its
Subsidiaries as of the end of such year and related statements of income and
cash flows of Holdings and its Subsidiaries for such Fiscal Year, all prepared
in conformity with GAAP and certified, in the case of such consolidated
financial statements, without qualification as to the scope of the audit or as
to the Borrower being a going concern by Holdings' Accountants, together with
the report of such accounting firm stating that (i) such financial statements
fairly present the consolidated financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations and
cash flow for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except for changes with which Holdings' Accountants
shall concur and that shall have been disclosed in the notes to the financial
statements) and (ii) the examination by Holdings' Accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards, and accompanied by a certificate stating
that in the course of the regular audit of the business of Holdings and its
Subsidiaries such accounting firm has obtained no knowledge that a Default or
Event of Default has occurred and is continuing, or, if in the opinion of such
accounting firm, a Default or Event of Default has occurred and is continuing a
statement as to the nature thereof; provided, however, that such accounting firm
shall not be liable to the Lenders for failure to obtain knowledge of any
Default or Event of Default.
(d) Compliance Certificate. Together with each delivery of any
financial statement pursuant to clause (b) or (c) above, a certificate of a
Responsible Officer of the Borrower (each, a "Compliance Certificate") (i)
showing in reasonable detail the calculations used in demonstrating compliance
with each of the financial covenants contained in Article V (Financial
Covenants) that is tested on a quarterly basis and (ii) stating that no Default
or Event of Default has occurred and is continuing or, if a Default or an Event
of Default has occurred and is continuing, stating the nature thereof and the
action the Borrower proposes to take with respect thereto.
(e) Business Plan. Not later than 30 days after the end of
each Fiscal Year, and containing substantially the types of financial
information contained in the Projections, (i) the annual business plan of
Holdings and its Subsidiaries for the next succeeding Fiscal Year approved by
the Board of Directors of Holdings, (ii) forecasts prepared by management of
Holdings and the Borrower for each fiscal month in the next succeeding Fiscal
Year and (iii) forecasts prepared by management of Holdings and the Borrower for
each of the succeeding Fiscal Years through the Fiscal Year in which the
Revolving Credit Termination Date is scheduled to occur, including, in each
instance described in clauses (ii) and (iii) above, (x) a projected year-end
consolidated consolidating balance sheet and income statement and statement of
cash flows (on a consolidated basis only) and (y) a statement of all of the
material assumptions on which such forecasts are based.
71
(f) Management Letters, Etc. Within five Business Days after
receipt thereof by any Loan Party, copies of each management letter, exception
report or similar letter or report received by such Loan Party from its
independent certified public accountants (including Holdings' Accountants).
(g) Intercompany Loan Balances. Together with each delivery of
any financial statement pursuant to clause (a) above, a summary of the
outstanding balance of all intercompany Indebtedness as of the last day of the
fiscal month covered by such financial statement, certified by a Responsible
Officer of Holdings.
SECTION 6.2 DEFAULT NOTICES
As soon as practicable, and in any event within five Business
Days after a Responsible Officer of any Loan Party has actual knowledge of the
existence of any Default, Event of Default or other event having had a Material
Adverse Effect or having any reasonable likelihood of causing or resulting in a
Material Adverse Change, the Borrower shall give the Administrative Agent notice
specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given by telephone,
shall be promptly confirmed in writing on the next Business Day.
SECTION 6.3 LITIGATION
Promptly after the commencement thereof, Holdings shall give
the Administrative Agent written notice of the commencement of all actions,
suits and proceedings before any domestic or foreign Governmental Authority or
arbitrator affecting Holdings or any of its Subsidiaries that (i) seeks
injunctive or similar relief or (ii) in the reasonable judgment of Holdings
exposes Holdings or such Subsidiary to liability in an amount aggregating
$1,000,000 or more or that, if adversely determined, would have a Material
Adverse Effect.
SECTION 6.4 NOTICES UNDER RELATED DOCUMENTS
Promptly after the sending or filing thereof, Holdings shall
send the Administrative Agent copies of all material notices, certificates or
reports delivered pursuant to, or in connection with, any Related Document.
SECTION 6.5 SEC FILINGS; PRESS RELEASES
Promptly after the sending or filing thereof, Holdings shall
send the Administrative Agent copies of (a) all reports that Holdings sends to
its security holders generally, (b) all reports and registration statements that
Holdings or any of its Subsidiaries files with the Securities and Exchange
Commission or any national or foreign securities exchange or the National
Association of Securities Dealers, Inc., (c) all press releases and (d) all
other statements concerning material changes or developments in the business of
such Loan Party made available by any Loan Party to the public.
SECTION 6.6 LABOR RELATIONS
Promptly after becoming aware of the same, the Holdings shall
give the Administrative Agent written notice of (a) any material labor dispute
to which Holdings or any of its Subsidiaries is or may become a party, including
any strikes, lockouts or other disputes
72
relating to any of such Person's plants and other facilities, and (b) any Worker
Adjustment and Retraining Notification Act or related liability incurred with
respect to the closing of any plant or other facility of any such Person.
SECTION 6.7 TAX RETURNS
Upon the request of any Lender, through the Administrative
Agent, the Borrower shall provide copies of all federal, state, local and
foreign tax returns and reports filed by Holdings or any of its Subsidiaries in
respect of taxes measured by income (excluding sales, use and like taxes).
SECTION 6.8 INSURANCE
As soon as is practicable and in any event within 90 days
after the end of each Fiscal Year, Holdings shall furnish the Administrative
Agent (in sufficient copies for each of the Lenders) with (a) a report in form
and substance satisfactory to the Administrative Agent and the Lenders outlining
all material insurance coverage maintained as of the date of such report by
Holdings and its Subsidiaries and the duration of such coverage and (b) an
insurance broker's statement that all premiums then due and payable with respect
to such coverage have been paid and confirming that the Administrative Agent has
been named as loss payee or additional insured, as applicable.
SECTION 6.9 ERISA MATTERS
The Holdings shall furnish the Administrative Agent (with
sufficient copies for each of the Lenders) each of the following:
(a) promptly and in any event within 30 days after Holdings
any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that
any ERISA Event has occurred, or if such ERISA Event is a reportable event as
described in clause (a) of the definition of ERISA Event, at the time such
reportable event is reportable to the PBGC, written notice describing such
event;
(b) promptly and in any event within 10 days after Holdings
any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that
a request for a minimum funding waiver under Section 412 of the Code has been
filed with respect to any Title IV Plan or Multiemployer Plan, a written
statement of a Responsible Officer of the Borrower describing such ERISA Event
or waiver request and the action, if any, Holdings, its Subsidiaries and ERISA
Affiliates propose to take with respect thereto and a copy of any notice filed
with the PBGC or the IRS pertaining thereto; and
(c) simultaneously with the date that Holdings any of its
Subsidiaries or any ERISA Affiliate files a notice of intent to terminate any
Title IV Plan, if such termination would require additional contributions of
greater than $1,000,000 in order to be considered a standard termination within
the meaning of Section 4041(b) of ERISA, a copy of each notice.
73
SECTION 6.10 ENVIRONMENTAL MATTERS
The Borrower shall provide the Administrative Agent promptly
and in any event within 10 days of Holdings or any Subsidiary learning of any of
the following, written notice of each of the following:
(a) that any Loan Party is or may be liable to any Person as a
result of a Release or threatened Release that could reasonably be expected to
subject such Loan Party to Environmental Liabilities and Costs of $250,000 or
more;
(b) the receipt by any Loan Party of notification that any
real or personal property of such Loan Party is or is reasonably likely to be
subject to any Environmental Lien;
(c) the receipt by any Loan Party of any notice of violation
of or potential liability under, or knowledge by such Loan Party that there
exists a condition that could reasonably be expected to result in a violation of
or liability under, any Environmental Law, except for violations and liabilities
the consequence of which, in the aggregate over all such violations and
liabilities, would not be reasonably likely to subject the Loan Parties
collectively to Environmental Liabilities and Costs of $250,000 or more;
(d) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of or liability under any
Environmental Law, that, in the aggregate over all such proceedings and
investigations, if adversely determined, would have a reasonable likelihood of
subjecting the Loan Parties collectively to Environmental Liabilities and Costs
of $250,000 or more;
(e) any proposed acquisition of stock, assets or real estate,
any proposed leasing of property or any other action by any Loan Party or any of
its Subsidiaries other than those the consequences of which, in the aggregate
over all such acquisitions, leasings and actions, have reasonable likelihood of
subjecting the Loan Parties collectively to Environmental Liabilities and Costs
of $250,000 or less;
(f) any proposed action by any Loan Party or any of its
Subsidiaries or any proposed change in Environmental Laws that, in the aggregate
over all such actions or changes, have a reasonable likelihood of requiring the
Loan Parties to obtain additional environmental, health or safety Permits or
make additional capital improvements to obtain compliance with Environmental
Laws that, in the aggregate over all such improvements, would cost $250,000 or
more or subject the Loan Parties to additional Environmental Liabilities and
Costs of $250,000 or more; and
(g) upon written request by any Lender through the
Administrative Agent, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report delivered pursuant to this Agreement.
SECTION 6.11 BORROWING BASE DETERMINATION
(a) The Borrower shall deliver, as soon as available and in
any event not later than 3 days after the end of each week, a Borrowing Base
Certificate as of the end of such week executed by a Responsible Officer of the
Borrower; provided, however, that from and after the date which is 90 days after
the Closing Date, in the event the Available Credit is greater than
74
$40,000,000, the Borrower shall deliver a Borrowing Base Certificate on a
monthly basis as of the end of such calendar month, as soon as available and in
any event not later than 3 days after the end of each fiscal month executed by a
Responsible Officer of the Borrower.
(b) The Borrower shall conduct, or shall cause to be
conducted, at its expense and upon request of the Administrative Agent, and
present to the Administrative Agent for approval, such appraisals,
investigations and reviews as the Administrative Agent shall request for the
purpose of determining the Borrowing Base, all upon notice and at such times
during normal business hours and as often as may be reasonably requested;
provided, that the Borrower shall conduct, or cause to be conducted, inventory
appraisals at its expense, no less frequently than the date which is 6 months
after the Closing Date and thereafter, on each anniversary of the Closing Date.
The Borrower shall furnish to the Administrative Agent any information that the
Administrative Agent may reasonably request regarding the determination and
calculation of the Borrowing Base including correct and complete copies of any
invoices, underlying agreements, instruments or other documents and the identity
of all Account Debtors in respect of Accounts referred to therein.
(c) The Borrower shall promptly notify the Administrative
Agent in writing in the event that at any time the Borrower receives or
otherwise gains knowledge that (i) the Borrowing Base is less than 90% of the
Borrowing Base reflected in the most recent Borrowing Base Certificate delivered
pursuant to clause (a) above, or (ii) the outstanding Revolving Credit
Outstandings exceed the Borrowing Base as a result of a decrease therein, in
which case such notice shall also include the amount of such excess.
(d) The Administrative Agent shall, at the Borrower's sole
cost and expense, make test verifications of the Accounts and physical
verifications of the Inventory, at least on a quarterly basis, in any manner and
through any medium that the Administrative Agent considers advisable, and the
Borrower shall furnish all such assistance and information as the Administrative
Agent may require in connection therewith.
SECTION 6.12 CUSTOMER AND SUPPLIER CONTRACTS
Promptly after becoming aware of the same, Holdings shall give
the Administrative Agent prior to the Closing Date written notice of any
execution, cancellation, termination or loss of any material Contractual
Obligation or other customer or supplier arrangement expected to generate
revenue in excess of $20,000,000 in any Fiscal Year.
SECTION 6.13 SUBSIDIARIES
Not less than fifteen (15) days prior to creating a Subsidiary
or acquiring the stock of, or other equity interests in, a Person, such that
such Person will become a Subsidiary, Holdings shall notify the Purchasers of
Holdings or of any of its Subsidiary's intention to create such Subsidiary or
acquire such stock or equity interests.
SECTION 6.14 OTHER INFORMATION
The Borrower and Holdings shall provide the Administrative
Agent or any Lender with such other information respecting the business,
properties, condition, financial or otherwise, or operations of Holdings or any
of its Subsidiaries as the Administrative Agent or such Lender through the
Administrative Agent may from time to time reasonably request.
75
ARTICLE VII
AFFIRMATIVE COVENANTS
Each of the Borrower and Holdings agrees with the Lenders and
the Administrative Agent to each of the following, as long as any Obligation or
any Revolving Credit Commitment remains outstanding and, in each case, unless
the Requisite Lenders otherwise consent in writing:
SECTION 7.1 PRESERVATION OF CORPORATE EXISTENCE, ETC.
Each of Holdings and the Borrower shall, and shall cause each
of their respective Subsidiaries (other than Designated Subsidiaries) to,
preserve and maintain its legal existence, rights (charter and statutory) and
franchises, except as permitted by Sections 8.3 (Investments) and 8.4 (Sale of
Assets). The Borrower will take all steps reasonably necessary to (i) cause the
Designated Subsidiaries to dissolve or otherwise terminate their existence in
accordance with the laws of their respective jurisdictions or (ii) cause all
Designated Subsidiaries to conduct no material business activities at any time
after the Closing Date.
SECTION 7.2 COMPLIANCE WITH LAWS, ETC.
Each of Holdings and the Borrower shall, and shall cause each
of their respective Subsidiaries to, comply with all applicable Requirements of
Law, Contractual Obligations and Permits, except where the failure so to comply
would not, in the aggregate over all such failures, have a Material Adverse
Effect.
SECTION 7.3 CONDUCT OF BUSINESS
Each of Holdings and the Borrower shall, and shall cause each
of their respective Subsidiaries other than Designated Subsidiaries to, (a)
conduct its business in the ordinary course consistent with past practice or as
otherwise permitted by Section 8.7 and (b) use its reasonable efforts, in the
ordinary course and consistent with past practice, to preserve its business and
the goodwill and business of the customers, advertisers, suppliers and others
having business relations with the Borrower or any of its Subsidiaries, except
in each case where the failure to comply with the covenants in each of clauses
(a) and (b) above would not, in the aggregate over all such failures, have a
Material Adverse Effect.
SECTION 7.4 PAYMENT OF TAXES, ETC.
Each of Holdings and the Borrower shall, and shall cause each
of their respective Subsidiaries to, pay and discharge before the same shall
become delinquent, all lawful governmental claims, taxes, assessments, charges
and levies, except where contested in good faith, by proper proceedings and
adequate reserves therefor have been established on the books of the Borrower or
the appropriate Subsidiary in conformity with GAAP.
SECTION 7.5 MAINTENANCE OF INSURANCE
Each of Holdings and the Borrower shall (a) maintain for, or
cause to be maintained by, each of their respective Subsidiaries, insurance with
financially sound, responsible and reputable insurance companies or associations
having a rating of "A-" or better as established
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by Best's Rating Guide (or equivalent rating with such publication of a similar
nature in current use) in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which Holdings, the Borrower or such Subsidiary
operates and which is acceptable to the Administrative Agent, and, in any event,
all insurance required by any Collateral Documents and (b) cause all such
insurance to name the Administrative Agent on behalf of the Secured Parties as
additional insured or loss payee, as appropriate, and to provide that no
cancellation, material reduction in amount or material change in coverage shall
be effective until after 30 days' written notice thereof to the Administrative
Agent. At the request of the Administrative Agent, Holdings and Borrower shall
deliver evidence of such insurance to the Administrative Agent.
SECTION 7.6 ACCESS
The Borrower and Holdings shall from time to time permit the
Administrative Agent and the Lenders, or any agents or representatives thereof,
within two Business Days after written notification of the same (except that
during the continuance of an Event of Default, no such notice shall be required)
to (a) examine and make copies of and abstracts from the records and books of
account of Holdings, the Borrower and each of their respective Subsidiaries, (b)
visit the properties of Holdings, the Borrower and each of their respective
Subsidiaries, (c) discuss the affairs, finances and accounts of Holdings, the
Borrower and each of their respective Subsidiaries with any of their respective
officers or directors and (d) communicate directly with any certified public
accountants (including Holdings' Accountants); provided, that with respect to
this clause (d) the Borrower shall have the right to participate in any
discussions or meetings with Holdings' Accountants. Holdings and the Borrower
shall authorize its certified public accountants (including Holdings'
Accountants) to disclose to the Administrative Agent or any Lender any and all
financial statements and other information of any kind, as the Administrative
Agent or any Lender reasonably requests from Holdings or the Borrower and that
such accountants may have with respect to the business, financial condition,
results of operations or other affairs of Holdings, the Borrower or any of their
respective Subsidiaries.
SECTION 7.7 KEEPING OF BOOKS
Each of Holdings and the Borrower shall, and shall cause each
of their respective Subsidiaries to keep, proper books of record and account, in
which full and correct entries shall be made in conformity with GAAP of all
financial transactions and the assets and business of the Borrower and each such
Subsidiary.
SECTION 7.8 MAINTENANCE OF PROPERTIES, ETC.
Each of Holdings and the Borrower shall, and shall cause each
of their Subsidiaries to, maintain and preserve (a) in good working order and
condition all of its properties necessary in the conduct of its business, (b)
all rights, permits, licenses, approvals and privileges (including all Permits)
used or useful or necessary in the conduct of its business and (c) all
registered patents, trademarks, trade names, copyrights and service marks with
respect to its business, except where failure to so maintain and preserve the
items set forth in clauses (a), (b) and (c) above would not, in the aggregate
over all such failures, have a Material Adverse Effect.
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SECTION 7.9 APPLICATION OF PROCEEDS
The Borrower shall use the entire amount of the proceeds of
the Loans and the Senior Unsecured Notes as provided in Section 4.13 (Use of
Proceeds) and Section 4.14 (Use of Proceeds of Additional Junior Capital), as
applicable. Holdings and the Borrower shall use the entire amount of the net
proceeds of the securities issued pursuant to the Equity Documents as provided
in Section 4.14 (Use of Proceeds of Additional Junior Capital).
SECTION 7.10 ENVIRONMENTAL
Each of Holdings and the Borrower shall, and shall cause each
of their Subsidiaries to, comply in all material respects with Environmental
Laws and, without limiting the foregoing, each of Holdings and the Borrower
shall, at its sole cost and expense, upon receipt of any notification or
otherwise obtaining knowledge of any Release or other event that has any
reasonable likelihood of Holdings and its Subsidiaries incurring Environmental
Liabilities and Costs in excess of $250,000 in the aggregate over all such
Releases and other events, (a) conduct or pay for consultants to conduct, tests
or assessments of environmental conditions at such operations or properties,
including the investigation and testing of subsurface conditions and (b) take
such Remedial Action and undertake such investigation or other action as
required by Environmental Laws or as any Governmental Authority requires or as
is appropriate and consistent with good business practice to address the Release
or event and otherwise ensure compliance with Environmental Laws.
SECTION 7.11 ADDITIONAL COLLATERAL AND GUARANTIES
To the extent not delivered to the Administrative Agent on or
before the Closing Date, each of Holdings and the Borrower agree and shall cause
any other Loan Party to agree, to do promptly each of the following:
(a) execute and deliver to the Administrative Agent such
amendments to the Collateral Documents as the Administrative Agent deems
necessary or advisable in order to grant to the Administrative Agent, for the
benefit of the Secured Parties, a perfected first priority security interest in
the Stock and Stock Equivalents and other debt Securities of any Subsidiary that
are owned by Holdings or any of its Subsidiaries and requested to be pledged by
the Administrative Agent; provided, however, that in no event shall Holdings or
any of its Subsidiaries be required to pledge in excess of 65% of the
outstanding Stock of any Subsidiary that is not a Domestic Subsidiary or any of
the stock of any Subsidiary of such Subsidiary;
(b) deliver to the Administrative Agent the certificates (if
any) representing such Stock and Stock Equivalents and other debt Securities,
together with (i) in the case of such certificated Stock and Stock Equivalents,
undated stock powers endorsed in blank and (ii) in the case of such certificated
debt Securities, endorsed in blank, in each case executed and delivered by a
Responsible Officer of Holdings or such Subsidiary, as the case may be;
(c) in the case of any such Subsidiary that is a Domestic
Subsidiary cause such new Subsidiary (i) to become a party to the Guaranty and
the applicable Collateral Documents and (ii) to take such actions necessary or
advisable to grant to the Administrative Agent for the benefit of the Secured
Parties a perfected security interest in the Collateral described in the
Collateral Documents with respect to such new Subsidiary, including the filing
of UCC financing
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statements in such jurisdictions as may be required by the Collateral Documents
or by law or as may be reasonably requested by the Administrative Agent; and
(d) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent.
SECTION 7.12 REAL PROPERTY
(a) Each of Holdings and the Borrower shall, and shall cause
each of their respective Subsidiaries to, (i) comply in all material respects
with all of their respective obligations under all of their respective Leases
now or hereafter held respectively by them with respect to their Real Property,
including the Leases set forth in Schedule 4.20 (Real Property), (ii) not
modify, amend, cancel, extend or otherwise change in any materially adverse
manner any term, covenant or condition of any such Lease, (iii) not assign or
sublet any other Lease if such assignment or sublet would have a Material
Adverse Effect, (iv) provide the Administrative Agent with a copy of each notice
of default under any material Lease received by Holdings, the Borrower or any
such Subsidiary immediately upon receipt thereof and deliver to the
Administrative Agent a copy of each notice of default sent by Holdings, the
Borrower or any such Subsidiary under any Lease simultaneously with its delivery
of such notice under such Lease and (v) notify the Administrative Agent at least
14 days prior to the date Holdings, the Borrower or any such Subsidiary takes
possession of, or becomes liable under, any new leased premises or Lease,
whichever is earlier.
(b) If, at any time, Holdings, the Borrower or any of their
respective Subsidiaries acquires a fee interest in any Real Property not covered
by a Mortgage and the value of such Real Property exceeds $1,000,000, Holdings
and the Borrower promptly shall and cause each such Subsidiary promptly to,
execute, deliver and record a first priority Mortgage in favor of the
Administrative Agent on behalf and for the ratable benefit of the Secured
Parties covering such Real Property (subordinate only to such Liens as are
permitted hereunder), in form and substance satisfactory to the Administrative
Agent, and provide the Administrative Agent with a Mortgagee's Title Insurance
Policy covering such Real Property in an amount equal to the purchase price of
such Real Property, a current ALTA survey thereof and a surveyor's certificate
in form and substance satisfactory to the Administrative Agent and such other
information reasonably requested by the Administrative Agent.
(c) At least 15 Business Days prior to (i) entering into any
Lease (other than a renewal of an existing Lease) for the principal place of
business and chief executive office of any Loan Party or any other Lease
(including any renewal) in which the annual rental payments are anticipated to
equal or exceed $1,000,000 or (ii) acquiring of any material owned Real
Property, Holdings and the Borrower shall, and shall cause such Loan Party to,
provide the Administrative Agent written notice thereof. Upon written request of
the Administrative Agent, Holdings and the Borrower shall, and shall cause such
Loan Party to, (x) provide Phase I environmental reports showing no condition
that could give rise to material Environmental Costs and Liabilities and (y)
execute and deliver to the Administrative Agent, for the benefit of the Secured
Parties, immediately upon the acquisition of any such Lease or owned Real
Property, a mortgage, deed of trust, assignment or other appropriate instrument
evidencing a Lien upon any such Lease or Real Property, together with such title
policies, certified surveys and local counsel opinions with respect thereto and
such other agreements, documents and instruments as the Administrative Agent
deems necessary or desirable, the same to be in form and substance satisfactory
to the
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Administrative Agent and to be subject only to (1) Liens permitted under Section
8.2 (Liens, Etc.) and (2) such other Liens as the Administrative Agent may
reasonably approve.
SECTION 7.13 LANDLORD WAIVERS AND BAILEE'S LETTERS
Each of Holdings and the Borrower shall use its commercially
reasonable efforts to deliver to the Administrative Agent within 90 days of the
Closing Date (or such later date as shall be acceptable to the Administrative
Agent in its sole discretion) a Landlord Waiver and/or Bailee Letter executed by
the landlord of any leased premises where Inventory is located or a bailee where
Inventory is held, as the case may be.
SECTION 7.14 MORTGAGES
Within 90 days after the Closing Date (or such later date as
shall be acceptable to the Administrative Agent in its sole discretion), the
Borrower shall have delivered to the Administrative Agent the Mortgages,
together with (A) title insurance policies and current as-built surveys in each
case satisfactory in form and substance to the Administrative Agent, in its sole
discretion, (B) evidence that the recording of counterparts of such Mortgages in
the recording offices specified in such Mortgages will create a valid and
enforceable first priority lien on property described therein in favor of the
Administrative Agent for the benefit of the Secured Parties (or in favor of such
other trustee as may be required or desired under local law) and (C) an opinion
of counsel in each state in which any such Mortgage is to be recorded in form
and substance and from counsel satisfactory to the Administrative Agent.
SECTION 7.15 DOCUMENTS REGARDING FOREIGN STOCK PLEDGES
(a) No later than 120 days following the Closing Date, the
Borrower shall provide to the Administrative Agent favorable legal opinions of
counsel in the applicable jurisdictions addressed to the Administrative Agent
and the Lenders as to the pledges of 65% of the Stock of the Foreign
Subsidiaries (other than the Designated Subsidiaries) together with all other
documents, agreements and instruments as may be required to create, perfect and
ensure the priority of the Secured Parties' Lien on such Stock, in the case of
each of the foregoing in form and substance satisfactory to the Administrative
Agent.
SECTION 7.16 CASH MANAGEMENT. No later than 60 Business Days
following the Closing Date, the procedures with respect to cash management
required by the Collateral Documents shall have been established and will be
maintained by each Loan Party, and the Administrative Agent shall have received
(A) executed lockbox agreements, (B) Deposit Account Control Agreements from all
Deposit Account Banks; and (C) Control Account Agreements from (1) all
securities intermediaries with respect to all securities accounts and securities
entitlements of the Borrower and such Guarantor and (2) all futures commission
agents and clearing houses with respect to all commodities contracts and
commodities accounts held by the Borrower and each Guarantor executed by such
Loan Party in connection therewith.
ARTICLE VIII
NEGATIVE COVENANTS
Each of the Borrower and Holdings agrees with the Lenders and
the Administrative Agent to each of the following, as long as any Obligation or
any Revolving Credit
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Commitment remains outstanding and, in each case, unless the Requisite Lenders
otherwise consent in writing:
SECTION 8.1 INDEBTEDNESS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, directly or indirectly create, incur, assume
or otherwise become or remain directly or indirectly liable with respect to any
Indebtedness except for the following:
(a) the Secured Obligations;
(b) Indebtedness under the Canadian Facility in an aggregate
amount of up to 6,000,000 Canadian Dollars, the Senior Unsecured Notes and other
Indebtedness existing on the date of this Agreement and disclosed on Schedule
8.1 (Existing Indebtedness);
(c) Indebtedness under the Australian Facility;
(d) Guaranty Obligations incurred by Holdings or any of its
Subsidiaries in respect of Indebtedness that is permitted by this Section 8.1;
(e) Capital Lease Obligations and purchase money Indebtedness
incurred by Holdings or any of its Subsidiaries to finance the acquisition of
fixed assets and renewals, extensions, refinancings and refunding thereof;
provided, however, that the Capital Expenditure related thereto is otherwise
permitted by Section 5.5 (Capital Expenditures) and that the aggregate
outstanding principal amount of all such Capital Lease Obligations and purchase
money Indebtedness and renewals, extensions, refinancings and refunding thereof
shall not exceed $5,000,000 at any time;
(f) Renewals, extensions, refinancings and refundings of
Indebtedness permitted by clause (b) above or this clause (f); provided,
however, that any such renewal, extension, refinancing or refunding is in an
aggregate principal amount not greater than the principal amount of, and is on
terms no less favorable to Holdings or such Subsidiary, including as to weighted
average maturity, than the Indebtedness being renewed, extended, refinanced or
refunded;
(g) Indebtedness arising from intercompany loans (i) from the
Borrower to any Subsidiary Guarantor, (ii) from any Subsidiary Guarantor to the
Borrower or any other Subsidiary Guarantor or (iii) from the Borrower or any
Subsidiary Guarantor to any Subsidiary of the Borrower that is not a Subsidiary
Guarantor; provided, however, that the Investment in the intercompany loan to
such Subsidiary is permitted under Section 8.3 (Investments);
(h) provided no Default or Event of Default is then continuing
or would result after giving effect thereto, secured Indebtedness in an
aggregate outstanding principal amount not exceeding at any time $25,000,000;
provided, however, that (i) any and all Liens securing such Indebtedness shall
be junior in priority to the Liens held by the Secured Parties, (ii) the holders
of such secured Indebtedness shall have entered into and there shall at all
times be effective subordination and intercreditor arrangements for the benefit
of the Secured Parties (relating to, among other things, limitations on
enforcement and priority of payments from proceeds of collateral) in form and
substance satisfactory to the Administrative Agent, and (iii) the proceeds of
such Indebtedness shall be used to finance the purchase of rights and inventory
under new distribution agreements and Permitted Acquisitions entered into by any
Loan Party;
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(i) Indebtedness arising under any performance or surety bond
entered into in the ordinary course of business, in an aggregate amount not
exceeding $1,000,000.
(j) unsecured Indebtedness not otherwise permitted under this
Section 8.1; provided, however, that the aggregate outstanding principal amount
of all such unsecured Indebtedness shall not exceed $5,000,000 at any time; and
(k) provided no Default or Event of Default is then continuing
or would result after giving effect thereto unsecured Indebtedness that is
subordinated to the payment in full of the Obligations on terms satisfactory to
the Administrative Agent (all such Indebtedness permitted to be incurred
pursuant to this clause (k) being "Subordinated Debt"); provided, however, that
the aggregate principal amount of all such unsecured Indebtedness shall not
exceed $25,000,000 at any time.
(l) to the extent constituting Indebtedness, the securities
issued under the Equity Documents.
SECTION 8.2 LIENS, ETC.
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, create or suffer to exist, any Lien upon or
with respect to any of their respective properties or assets, whether now owned
or hereafter acquired, or assign, or permit any of its Subsidiaries to assign,
any right to receive income, except for the following:
(a) Liens created pursuant to the Loan Documents;
(b) Liens existing on the date of this Agreement and disclosed
on Schedule 8.2 (Existing Liens);
(c) Liens on assets of Aviall Australia Pty Ltd securing
obligations under the Australian Facility;
(d) Customary Permitted Liens of Holdings and its
Subsidiaries;
(e) purchase money Liens granted by Holdings or any Subsidiary
of Holdings (including the interest of a lessor under a Capital Lease and Liens
to which any property is subject at the time, on or after the date hereof, of
Holdings' or such Subsidiary's acquisition thereof) securing Indebtedness
permitted under Section 8.1(e) (Indebtedness) and limited in each case to the
property purchased with the proceeds of such purchase money Indebtedness or
subject to such Capital Lease;
(f) any Lien securing the renewal, extension, refinancing or
refunding of any Indebtedness secured by any Lien permitted by clause (b), (c)
or (e) above or this clause (f) without any change in the assets subject to such
Lien;
(g) Liens in favor of lessors securing operating leases
permitted hereunder and limited to the equipment subject to such operating
lease; and
(h) Liens securing the Indebtedness and complying with the
provisions of Section 8.1(h); and
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(i) Liens not otherwise permitted by the foregoing clauses of
this Section 8.2 securing obligations or other liabilities (other than
Indebtedness) of any Loan Party; provided, however, that the aggregate
outstanding amount of all such obligations and liabilities secured by such Liens
shall not exceed $2,000,000 at any time.
SECTION 8.3 INVESTMENTS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, directly or indirectly make or maintain any
Investment except for the following:
(a) Investments existing on the date of this Agreement and
disclosed on Schedule 8.3 (Existing Investments);
(b) Investments in cash and Cash Equivalents held in a Cash
Collateral Account or a Control Account with respect to which the Administrative
Agent for the benefit of the Secured Parties has a first priority perfected
Lien;
(c) Investments in accounts, contract rights and chattel paper
(each as defined in the UCC), notes receivable and similar items arising or
acquired from the sale of Inventory in the ordinary course of business
consistent with the past practice of Holdings or the applicable Subsidiary;
(d) Investments received in settlement of amounts due to
Holdings or any of its Subsidiaries effected in the ordinary course of business;
(e) Investments (i) by Holdings in the Borrower, the Borrower
in any Subsidiary Guarantor or by any Subsidiary Guarantor in the Borrower or
any other Subsidiary Guarantor, (ii) by Holdings, the Borrower or any Subsidiary
Guarantor in connection with a Permitted Acquisition, (iii) by a Subsidiary of
the Borrower that is not a Subsidiary Guarantor in the Borrower or any other
Subsidiary of the Borrower or (iv) by Holdings, the Borrower or any Subsidiary
Guarantor in a Subsidiary that is not a Subsidiary Guarantor; provided, however,
that the aggregate outstanding amount of all such Investments pursuant to this
clause (iv) shall not exceed $15,000,000 at any time;
(f) loans or advances to employees of Holdings or any of its
Subsidiaries in the ordinary course of business; provided, however, that the
aggregate principal amount of all such loans and advances shall not exceed
$1,000,000 at any time;
(g) Investments constituting Guaranty Obligations permitted by
Section 8.1 (Indebtedness); and
(h) Investments not otherwise permitted hereby; provided,
however, that the aggregate outstanding amount of all such Investments shall not
exceed $5,000,000 at any time.
SECTION 8.4 SALE OF ASSETS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, sell, convey, transfer, lease or otherwise
dispose of, any of their respective assets or any interest therein (including
the sale or factoring at maturity or collection of any accounts) to any Person,
or permit or suffer any other Person to acquire any interest in any of their
respective
83
assets or, in the case of any Subsidiary, issue or sell any shares of such
Subsidiary's Stock or Stock Equivalent (any such disposition being an "Asset
Sale"), except for the following:
(a) the sale or disposition of Inventory in the ordinary
course of business;
(b) the sale or disposition of equipment that has become
obsolete or is replaced in the ordinary course of business; provided, however,
that the aggregate Fair Market Value of all such equipment disposed of in any
Fiscal Year shall not exceed $1,000,000;
(c) the lease or sublease of real property not constituting a
sale and leaseback, to the extent not otherwise prohibited by this Agreement;
(d) assignments and licenses of intellectual property of the
Borrower and its Subsidiaries in the ordinary course of business;
(e) any Asset Sale to the Borrower or any Subsidiary
Guarantor; and
(f) as long as no Default or Event of Default is continuing or
would result therefrom, any other Asset Sale for Fair Market Value, payable in
cash upon such sale; provided, however, that with respect to any such sale
pursuant to this clause (f), (i) the aggregate consideration received for the
sale of all assets sold during any Fiscal Year shall not exceed $10,000,000 and
(ii) all Net Cash Proceeds of such Asset Sale are applied as set forth in
Section 2.9 (Mandatory Prepayments).
SECTION 8.5 RESTRICTED PAYMENTS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment except for the following:
(a) Restricted Payments by any Subsidiary of the Borrower to
the Borrower or any Subsidiary Guarantor; and
(b) cash dividends on the Stock of the Borrower to Holdings
paid and declared in any Fiscal Year solely for the purpose of funding the
following:
(i) ordinary operating expenses and scheduled debt
service of Holdings;
(ii) payments by Holdings in respect of foreign,
federal, state or local taxes owing by Holdings in respect of Holdings
and its Subsidiaries, but not greater than the amount that would be
payable by the Borrower, on a consolidated basis, if the Borrower were
the taxpayer;
(iii) payments by Holdings of the rollover fee due
their purchaser under Section 6.12 of the Securities Purchase Agreement
forming a part of the Equity Documents as in effect on the Closing
Date;
(iv) payment by Holdings of dividends in respect of
its Series D Senior Convertible Participating Preferred Stock issued
pursuant to the Equity
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Documents made during the Fiscal Years ending December 31, 2006 and
December 31, 2007 that do not exceed in aggregate amount for each such
Fiscal Year $6 million and $7 million respectively, provided that after
giving effect to each such payment the Leverage Ratio of Holdings is
not more than 2.00 to 1;
(v) payment by Holdings of dividends in respect of
its outstanding Series C Senior Participating Preferred Stock issued
upon conversion of the Series B Senior Convertible Participating
Preferred Stock described in clause (iv) above made during the Fiscal
Years ending December 31, 2005, 2006 and 2007, that do not exceed in
aggregate amount $10 million for each such Fiscal Years; provided that
after giving effect to each such payment the Leverage Ratio of Holding
is not more that 2.0 to 1;
(c) payments by Holdings for the purposes of funding the
payments described in clauses (b)(iii), (iv) and (v)
provided, however, that the Restricted Payments described in this clauses (b)
and (c) shall not be permitted if either (A) an Event of Default or Default
shall have occurred and be continuing at the date of declaration or payment
thereof or would result therefrom or (B) such Restricted Payment is prohibited
under the terms of any Indebtedness (other than the Obligations) of the Borrower
or any of its Subsidiaries.
SECTION 8.6 RESTRICTION ON FUNDAMENTAL CHANGES
Except in connection with a Permitted Acquisition, neither
Holdings nor the Borrower shall, and neither shall permit any of its
Subsidiaries to, (a) merge or consolidate with any Person (other than mergers or
consolidation of any Loan Party into any other Loan Party (with Borrower being
the surviving corporation, if a merger involving Borrower), any Foreign
Subsidiary into any other Foreign Subsidiary or any Foreign Subsidiary into any
Loan Party (but not any Loan Party into any Foreign Subsidiary), (b) acquire all
or substantially all of the Stock or Stock Equivalents of any Person, (c)
acquire all or substantially all of the assets of any Person or all or
substantially all of the assets constituting the business of a division, branch
or other unit operation of any Person, (d) enter into any joint venture or
partnership with any Person or (e) acquire or create any Subsidiary unless,
after giving effect thereto, such Subsidiary is a Wholly-Owned Subsidiary, the
Borrower is in compliance with Section 7.11 (Additional Collateral and
Guaranties) and the Investment in such Subsidiary is permitted under Section
8.3(e) (Investments).
SECTION 8.7 CHANGE IN NATURE OF BUSINESS
(a) Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, make any material change in the nature or
conduct of its business as carried on at the date hereof except for
substantially similar or related extensions of its business occurring in the
ordinary course.
(b) Holdings shall not engage in any business or activity
other than (i) holding shares in the Stock of the Borrower and other
Subsidiaries, (ii) paying taxes, (iii) preparing reports to Governmental
Authorities and to its shareholders, (iv) holding directors and shareholders
meetings, preparing corporate records and other corporate activities required to
maintain its separate corporate structure and (v) similar activities undertaken
in the normal course of business by a holding company.
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SECTION 8.8 TRANSACTIONS WITH AFFILIATES
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, except as otherwise expressly permitted
herein, do any of the following: (a) make any Investment in an Affiliate of the
Borrower that is not a Subsidiary of the Borrower, (b) transfer, sell, lease,
assign or otherwise dispose of any asset to any Affiliate of the Borrower that
is not a Subsidiary of the Borrower, (c) merge into or consolidate with or
purchase or acquire assets from any Affiliate of the Borrower that is not a
Subsidiary of the Borrower, (d) repay any Indebtedness to any Affiliate of the
Borrower that is not a Subsidiary of the Borrower or (e) enter into any other
transaction directly or indirectly with or for the benefit of any Affiliate of
the Borrower that is not a Guarantor (including guaranties and assumptions of
obligations of any such Affiliate), except for, in each case, (i) transactions
in the ordinary course of business on a basis no less favorable to the Borrower
or such Guarantor as would be obtained in a comparable arm's length transaction
with a Person not an Affiliate, (ii) salaries and other director or employee
compensation to officers or directors of the Borrower or any of its Subsidiaries
commensurate with current compensation levels as reasonably adjusted from time
to time and (iii) dividends and fees permitted by the terms hereof and the
transactions contemplated by the Mezzanine Documents and the Equity Documents.
SECTION 8.9 RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS; NO NEW
NEGATIVE PLEDGE
Other than pursuant to the Loan Documents, the Related
Documents (as in effect on the date hereof), indebtedness permitted by Section
8.1 (h) or (k) and any agreements governing any purchase money Indebtedness or
Capital Lease Obligations permitted by Section 8.1(b), (e) or (f) (Indebtedness)
(in which latter case, any prohibition or limitation shall only be effective
against the assets financed thereby), neither Holdings nor the Borrower shall,
and shall not permit any of their respective Subsidiaries to, (a) agree to enter
into or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of such Subsidiary to pay dividends or
make any other distribution or transfer of funds or assets or make loans or
advances to or other Investments in, or pay any Indebtedness owed to, the
Borrower or any other Subsidiary of the Borrower or (b) enter into or suffer to
exist or become effective any agreement prohibiting or limiting the ability of
the Borrower or any Subsidiary to create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, to secure the Obligations, including any agreement requiring
other Indebtedness or Contractual Obligation to be equally and ratably secured
with the Obligations.
SECTION 8.10 MODIFICATION OF CONSTITUENT DOCUMENTS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, change its capital structure (including in
the terms of its outstanding Stock) or otherwise amend its Constituent
Documents, except for changes and amendments that do not materially affect the
rights and privileges of Holdings, the Borrower or any of its Subsidiaries and
do not materially affect the interests of the Administrative Agent, the Lenders
and the Issuers under the Loan Documents or in the Collateral.
SECTION 8.11 MODIFICATION OF RELATED DOCUMENTS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, (a) alter, rescind, terminate, amend,
supplement, waive or otherwise modify any provision of any Related Document
(except for modifications that do not materially affect the
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rights and privileges of Holdings, the Borrower or any of their respective
Subsidiaries under such Related Document and that do not materially affect the
interests of the Secured Parties under the Loan Documents or in the Collateral)
or (b) permit any material breach or default to exist under any Related Document
or take or fail to take any action thereunder, except for modifications which
are acceptable to the Administrative Agent.
SECTION 8.12 MODIFICATION OF SUBORDINATED DEBT AGREEMENTS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, change or amend the terms of any Subordinated
Debt (or any indenture or agreement in connection therewith) if the effect of
such amendment is to (a) increase the interest rate on such Subordinated Debt,
(b) change the dates upon which payments of principal or interest are due on
such Subordinated Debt other than to extend such dates, (c) change any default
or event of default other than to delete or make less restrictive any default
provision therein, or add any covenant with respect to such Subordinated Debt,
(d) change the redemption or prepayment provisions of such Subordinated Debt
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith or (e) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights to the holder of such Subordinated Debt in a manner
adverse to Holdings, the Borrower, any of their respective Subsidiaries, the
Administrative Agent or any Lender.
SECTION 8.13 ACCOUNTING CHANGES; FISCAL YEAR
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, change its (a) accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP or
any Requirement of Law and disclosed to the Lenders and the Administrative Agent
or (b) Fiscal Year.
SECTION 8.14 MARGIN REGULATIONS
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, use all or any portion of the proceeds of any
credit extended hereunder to purchase or carry margin stock (within the meaning
of Regulation U of the Federal Reserve Board) in contravention of Regulation U
of the Federal Reserve Board.
SECTION 8.15 OPERATING LEASES; SALE/LEASEBACKS
(a) Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, become or remain liable as lessee or
guarantor or other surety with respect to any operating lease, unless that
aggregate amount of all rents paid or accrued under all such operating leases
shall not exceed $18,000,000 in any Fiscal Year.
(b) Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, enter into any sale and leaseback transaction
if, after giving effect to such sale and leaseback transaction, the aggregate
Fair Market Value of all properties covered by sale and leaseback transactions
would exceed $2,000,000.
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SECTION 8.16 CANCELLATION OF INDEBTEDNESS OWED TO IT
Neither Holdings nor the Borrower shall, and neither shall
permit any of its Subsidiaries to, cancel any claim or Indebtedness owed to any
of them except in the ordinary course of business consistent with past practice.
SECTION 8.17 NO SPECULATIVE TRANSACTIONS
Except for the sole purpose of hedging in the normal course of
business and consistent with industry practices, neither Holdings nor the
Borrower shall, and neither shall permit any of its Subsidiaries to, engage in
any speculative transaction or in any transaction involving Hedging Contracts.
SECTION 8.18 COMPLIANCE WITH ERISA
Neither Holdings nor the Borrower shall cause or permit to
occur, and neither shall permit any of its Subsidiaries or ERISA Affiliates to
cause or permit to occur, (a) an event that could result in the imposition of a
Lien under Section 412 of the Code or Section 302 or 4068 of ERISA or (b) ERISA
Events that would have a Material Adverse Effect in the aggregate over all such
ERISA Events.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT
Each of the following events shall be an Event of Default:
(a) the Borrower shall fail to pay any principal of any Loan
or any Reimbursement Obligation when the same becomes due and payable; or
(b) the Borrower shall fail to pay any interest on any Loan,
any fee under any of the Loan Documents or any other Obligation (other than one
referred to in clause (a) above) and such non-payment continues for a period of
three Business Days after the due date therefor; or
(c) any representation or warranty made or deemed made by any
Loan Party in any Loan Document or by any Loan Party (or any of its officers) in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or
(d) any Loan Party shall fail to perform or observe (i) any
term, covenant or agreement contained in Article V (Financial Covenants),
Section 6.1 (Financial Statements), 6.2 (Default Notices), 7.1 (Preservation of
Corporate Existence, Etc.), 7.6 (Access), 7.11 (Additional Collateral and
Guaranties) or 7.13 (Landlord Waivers and Bailee's Letters) or Article VIII
(Negative Covenants) or (ii) any other term, covenant or agreement contained in
this Agreement or in any other Loan Document if such failure under this clause
(ii) shall remain unremedied for 30 days after the earlier of (A) the date on
which a Responsible Officer of the Borrower acknowledges such failure in writing
and (B) the date on which written notice thereof shall have been given to the
Borrower by the Administrative Agent or any Lender; or
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(e) (i) Holdings, the Borrower or any of its Subsidiaries
shall fail to make any payment on any Indebtedness of Holdings, the Borrower or
any such Subsidiary (other than the Obligations) or any Guaranty Obligation in
respect of Indebtedness of any other Person, and, in each case, such failure
relates to Indebtedness having a principal amount of $5,000,000 or more, when
the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), (ii) any other event shall occur
or condition shall exist under any agreement or instrument relating to any such
Indebtedness, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Indebtedness or (iii) any such
Indebtedness shall become or be declared to be due and payable, or required to
be prepaid or repurchased (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(f) The Borrower shall be in material default under any of its
material obligations under the Honeywell Agreements or the Rolls-Royce
Agreements and such default is not remedied prior to the expiration of the
applicable cure period thereunder or any such agreements are terminated.
(g) (i) the Borrower or any of its Subsidiaries other than the
Designated Subsidiaries shall generally not pay its debts as such debts become
due, shall admit in writing its inability to pay its debts generally or shall
make a general assignment for the benefit of creditors, (ii) any proceeding
shall be instituted by or against the Borrower or any of its Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts, under any Requirement of Law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a custodian, receiver,
trustee or other similar official for it or for any substantial part of its
property; provided, however, that, in the case of any such proceedings
instituted against the Borrower or any of its Subsidiaries (but not instituted
by the Borrower or any of its Subsidiaries), either such proceedings shall
remain undismissed or unstayed for a period of 60 days or more or any action
sought in such proceedings shall occur or (iii) the Borrower or any of its
Subsidiaries shall take any corporate action to authorize any action set forth
in clauses (i) and (ii) above; or
(h) one or more judgments or orders (or other similar process)
involving, in the case of a money judgment, an amount in excess of $5,000,000 in
the aggregate over all such money judgments, to the extent not covered by
insurance, shall be rendered against any Loan Party or their respective
Subsidiaries other than the Designated Subsidiaries and shall remain unpaid and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 20 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise shall not be an effect; or
(i) an ERISA Event shall occur resulting in Holdings, the
Borrower or any of their respective Subsidiaries being obligated to pay, whether
or not assessed, an amount in excess of $5,000,000 in the aggregate; or
(j) any material provision of any Collateral Document or any
material provision of the Guaranty after delivery thereof pursuant to this
Agreement or any other Loan Document shall for any reason cease to be valid and
binding on, or enforceable against, any Loan Party party thereto, or any Loan
Party shall so state in writing; or
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(k) any Collateral Document shall for any reason fail or cease
to create a valid Lien on any Collateral purported to be covered thereby or,
except as permitted by the Loan Documents, such Lien shall fail or cease to be a
perfected and first priority Lien or any Loan Party shall so state in writing;
or
(l) one or more of the Borrower and its Subsidiaries shall
have entered into one or more consent or settlement decrees or agreements or
similar arrangements with a Governmental Authority or one or more judgments,
orders, decrees or similar actions shall have been entered against one or more
of the Borrower and its Subsidiaries based on or arising from the violation of
or pursuant to any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any Contaminant and, in
connection with all the foregoing, the Borrower and its Subsidiaries are likely
to incur Environmental Liabilities and Costs in excess of $3,000,000 in the
aggregate over all such Environmental Liabilities and Costs that were not
reflected in the Projections or the Financial Statements delivered pursuant to
Section 4.4 (Financial Statements).
SECTION 9.2 REMEDIES
During the continuance of any Event of Default, the
Administrative Agent (a) may, and, at the request of the Requisite Lenders,
shall, by notice to the Borrower declare that all or any portion of the
Revolving Credit Commitments be terminated, whereupon the obligation of each
Lender to make any Loan and each Issuer to Issue any Letter of Credit shall
immediately terminate and (b) may, and, at the request of the Requisite Lenders,
shall, by notice to the Borrower, declare the Loans, all interest thereon and
all other amounts and Obligations payable under this Agreement to be forthwith
due and payable, whereupon the Loans, all such interest and all such amounts and
Obligations shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that upon the occurrence of the
Events of Default specified in Section 9.1(g) (Events of Default), (x) the
Revolving Credit Commitments of each Lender to make Loans and the commitments of
each Lender and Issuer to Issue or participate in Letters of Credit shall each
automatically be terminated and (y) the Loans, all such interest and all such
amounts and Obligations shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower. In addition to the remedies set forth
above, the Administrative Agent may exercise any remedies provided for by the
Collateral Documents in accordance with the terms thereof or any other remedies
provided by applicable law.
SECTION 9.3 ACTIONS IN RESPECT OF LETTERS OF CREDIT
Upon the Revolving Credit Termination Date or as may be
required by Section 2.9(b) or (e) (Mandatory Prepayments) the Borrower shall pay
to the Administrative Agent in immediately available funds at the Administrative
Agent's office referred to in Section 11.8 (Notices, Etc.), for deposit in a
Cash Collateral Account, an amount equal to 105% of the sum of all outstanding
Letter of Credit Obligations. The Administrative Agent may, from time to time
after funds are deposited in any Cash Collateral Account, apply funds then held
in such Cash Collateral Account to the payment of any amounts, in accordance
with Section 2.13(f) (Payments and Computations), as shall have become or shall
become due and payable by the Borrower to the Issuers or Lenders in respect of
the Letter of Credit Obligations. The Administrative Agent shall promptly give
written notice of any such application; provided, however, that the failure to
give such written notice shall not invalidate any such application.
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SECTION 9.4 RESCISSION
If at any time after termination of the Revolving Credit
Commitments or acceleration of the maturity of the Loans, the Borrower shall pay
all arrears of interest and all payments on account of principal of the Loans
and Reimbursement Obligations that shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified herein) and all Events of Default and
Defaults (other than non-payment of principal of and accrued interest on the
Loans due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to Section 11.1 (Amendments, Waivers, Etc.), then upon the
written consent of the Requisite Lenders and written notice to the Borrower, the
termination of the Revolving Credit Commitments or the acceleration and their
consequences may be rescinded and annulled; provided, however, that such action
shall not affect any subsequent Event of Default or Default or impair any right
or remedy consequent thereon. The provisions of the preceding sentence are
intended merely to bind the Lenders and the Issuers to a decision that may be
made at the election of the Requisite Lenders, and such provisions are not
intended to benefit the Borrower and do not give the Borrower the right to
require the Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
ARTICLE X
THE ADMINISTRATIVE AGENT
SECTION 10.1 AUTHORIZATION AND ACTION
(a) Each Lender and each Issuer hereby appoints CUSA as the
Administrative Agent hereunder and each Lender and each Issuer authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Administrative Agent under such agreements and to exercise such powers as
are reasonably incidental thereto. Without limiting the foregoing, each Lender
and each Issuer hereby authorizes the Administrative Agent to execute and
deliver, and to perform its obligations under, each of the Loan Documents to
which the Administrative Agent is a party, to exercise all rights, powers and
remedies that the Administrative Agent may have under such Loan Documents and,
in the case of the Collateral Documents, to act as agent for the Lenders,
Issuers and the other Secured Parties under such Collateral Documents.
(b) As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including enforcement or collection),
the Administrative Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Requisite Lenders, and such instructions shall be binding
upon all Lenders and each Issuer; provided, however, that the Administrative
Agent shall not be required to take any action that (i) the Administrative Agent
in good faith believes exposes it to personal liability unless the
Administrative Agent receives an indemnification satisfactory to it from the
Lenders and the Issuers with respect to such action or (ii) is contrary to this
Agreement or applicable law. The Administrative Agent agrees to give to each
Lender and each Issuer prompt notice of each notice given to it by any Loan
Party pursuant to the terms of this Agreement or the other Loan Documents.
(c) In performing its functions and duties hereunder and under
the other Loan Documents, the Administrative Agent is acting solely on behalf of
the Lenders and the Issuers
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and its duties are entirely administrative in nature. The Administrative Agent
does not assume and shall not be deemed to have assumed any obligation other
than as expressly set forth herein and in the other Loan Documents or any other
relationship as the agent, fiduciary or trustee of or for any Lender, Issuer or
holder of any other Obligation. The Administrative Agent may perform any of its
duties under any Loan Document by or through its agents or employees.
SECTION 10.2 ADMINISTRATIVE AGENT'S RELIANCE, ETC.
None of the Administrative Agent, any of its Affiliates or any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it, him, her or them under or in
connection with this Agreement or the other Loan Documents, except for its, his,
her or their own gross negligence or willful misconduct. Without limiting the
foregoing, the Administrative Agent (a) may treat the payee of any Revolving
Credit Note as its holder until such Revolving Credit Note has been assigned in
accordance with Section 11.2 (Assignments and Participations), (b) may rely on
the Register to the extent set forth in Section 11.2(c) (Assignments and
Participations), (c) may consult with legal counsel (including counsel to the
Borrower or any other Loan Party), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, (d) makes no warranty or representation to any Lender or
Issuer and shall not be responsible to any Lender or Issuer for any statements,
warranties or representations made by or on behalf of the Borrower or any of its
Subsidiaries in or in connection with this Agreement or any other Loan Document,
(e) shall not have any duty to ascertain or to inquire either as to the
performance or observance of any term, covenant or condition of this Agreement
or any other Loan Document, as to the financial condition of any Loan Party or
as to the existence or possible existence of any Default or Event of Default,
(f) shall not be responsible to any Lender or Issuer for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of, or the
attachment, perfection or priority of any Lien created or purported to be
created under or in connection with, this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto and (g)
shall incur no liability under or in respect of this Agreement or any other Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which writing may be a telecopy or electronic mail) or any telephone
message believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 10.3 THE ADMINISTRATIVE AGENT INDIVIDUALLY
With respect to its Ratable Portion, CUSA shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders", "Requisite Lenders" and any similar terms shall,
unless the context clearly otherwise indicates, include, without limitation, the
Administrative Agent in its individual capacity as a Lender or as one of the
Requisite Lenders. CUSA and its Affiliates may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or other business with,
any Loan Party as if CUSA were not acting as the Administrative Agent.
SECTION 10.4 LENDER CREDIT DECISION
Each Lender and each Issuer acknowledges that it shall,
independently and without reliance upon the Administrative Agent or any other
Lender conduct its own independent investigation of the financial condition and
affairs of the Borrower and each other Loan Party in
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connection with the making and continuance of the Loans and with the issuance of
the Letters of Credit. Each Lender and each Issuer also acknowledges that it
shall, independently and without reliance upon the Administrative Agent 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 and other Loan Documents.
SECTION 10.5 INDEMNIFICATION
Each Lender agrees to indemnify the Administrative Agent and
each of its Affiliates, and each of their respective directors, officers,
employees, agents and advisors (to the extent not reimbursed by the Borrower),
from and against such Lender's aggregate Ratable Portion of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements (including fees, expenses and disbursements of
financial and legal advisors) of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against, the Administrative Agent or any of
its Affiliates, directors, officers, employees, agents and advisors in any way
relating to or arising out of this Agreement or the other Loan Documents or any
action taken or omitted by the Administrative Agent under this Agreement or the
other Loan Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or such Affiliate's gross negligence or willful
misconduct. Without limiting the foregoing, each Lender agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including fees, expenses and disbursements of financial
and legal advisors) incurred by the Administrative 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 its rights or responsibilities under, this
Agreement or the other Loan Documents, to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrower or another Loan Party.
SECTION 10.6 SUCCESSOR ADMINISTRATIVE AGENT
The Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Requisite Lenders shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Requisite Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, selected from among the
Lenders. In either case, such appointment shall be subject to the prior written
approval of the Borrower (which approval may not be unreasonably withheld and
shall not be required upon the occurrence and during the continuance of an Event
of Default). Upon the acceptance of any appointment as Administrative Agent by a
successor Administrative Agent, such successor Administrative Agent shall
succeed to, and become vested with, all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. Prior to any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the retiring Administrative Agent
shall take such action as may be reasonably necessary to assign to the successor
Administrative Agent its rights as Administrative Agent under the Loan
Documents. After such resignation, the retiring Administrative Agent shall
continue to have the benefit of this Article X as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this Agreement
and the other Loan Documents.
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SECTION 10.7 CONCERNING THE COLLATERAL AND THE COLLATERAL
DOCUMENTS
(a) Each Lender and each Issuer agrees that any action taken
by the Administrative Agent or the Requisite Lenders (or, where required by the
express terms of this Agreement, a greater proportion of the Lenders) in
accordance with the provisions of this Agreement or of the other Loan Documents,
and the exercise by the Administrative Agent or the Requisite Lenders (or, where
so required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders, Issuers and other Secured
Parties. Without limiting the generality of the foregoing, the Administrative
Agent shall have the sole and exclusive right and authority to (i) act as the
disbursing and collecting agent for the Lenders and the Issuers with respect to
all payments and collections arising in connection herewith and with the
Collateral Documents, (ii) execute and deliver each Collateral Document and
accept delivery of each such agreement delivered by the Borrower or any of its
Subsidiaries, (iii) act as collateral agent for the Lenders, the Issuers and the
other Secured Parties for purposes of the perfection of all security interests
and Liens created by such agreements and all other purposes stated therein,
provided, however, that the Administrative Agent hereby appoints, authorizes and
directs each Lender and Issuer to act as collateral sub-agent for the
Administrative Agent, the Lenders and the Issuers for purposes of the perfection
of all security interests and Liens with respect to the Borrower's and its
Subsidiaries' respective Deposit Accounts maintained with, and cash and Cash
Equivalents held by, such Lender or such Issuer, (iv) manage, supervise and
otherwise deal with the Collateral, (v) take such action as is necessary or
desirable to maintain the perfection and priority of the security interests and
Liens created or purported to be created by the Collateral Documents and (vi)
except as may be otherwise specifically restricted by the terms hereof or of any
other Loan Document, exercise all remedies given to the Administrative Agent,
the Lenders, the Issuers and the other Secured Parties with respect to the
Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(b) Each of the Lenders and the Issuers hereby directs, in
accordance with the terms hereof, the Administrative Agent to release (or, in
the case of clause (ii) below, release or subordinate) any Lien held by the
Administrative Agent for the benefit of the Lenders and the Issuers against any
of the following:
(i) all of the Collateral, upon termination of the
Revolving Credit Commitments and payment and satisfaction in full of
all Loans, Reimbursement Obligations and all other Obligations that the
Administrative Agent has been notified in writing are then due and
payable (and, in respect of contingent Letter of Credit Obligations,
with respect to which cash collateral has been deposited or a back-up
letter of credit has been issued, in either case on terms satisfactory
to the Administrative Agent and the applicable Issuers);
(ii) any assets that are subject to a Lien permitted
by Section 8.2(e) or (f) (Liens, Etc.); and
(iii) any part of the Collateral sold or disposed of
by a Loan Party if such sale or disposition is permitted by this
Agreement (or permitted pursuant to a waiver or consent of a
transaction otherwise prohibited by this Agreement) or, if not pursuant
to
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such sale or disposition, against Collateral with a book value of up to
$5,000,000 in the aggregate per annum, if such release is consented to
by the Administrative Agent, or any part of the Collateral in excess of
such amount, if such release is consented to by all the Lenders.
Each of the Lenders and the Issuers hereby directs the Administrative Agent to
execute and deliver or file such termination and partial release statements and
do such other things as are necessary to release Liens to be released pursuant
to this Section 10.7 promptly upon the effectiveness of any such release.
SECTION 10.8 COLLATERAL MATTERS RELATING TO RELATED
OBLIGATIONS
The benefit of the Loan Documents and of the provisions of
this Agreement relating to the Collateral shall extend to and be available in
respect of any Secured Obligation arising under any Hedging Contract or that is
otherwise owed to Persons other than the Administrative Agent, the Lenders and
the Issuers (collectively, "Related Obligations") solely on the condition and
understanding, as among the Administrative Agent and all Secured Parties, that
(a) the Related Obligations shall be entitled to the benefit of the Loan
Documents and the Collateral to the extent expressly set forth in this Agreement
and the other Loan Documents and to such extent the Administrative Agent shall
hold, and have the right and power to act with respect to, the Guaranty and the
Collateral on behalf of and as agent for the holders of the Related Obligations,
but the Administrative Agent is otherwise acting solely as agent for the Lenders
and the Issuers and shall have no fiduciary duty, duty of loyalty, duty of care,
duty of disclosure or other obligation whatsoever to any holder of Related
Obligations, (b) all matters, acts and omissions relating in any manner to the
Guaranty, the Collateral, or the omission, creation, perfection, priority,
abandonment or release of any Lien, shall be governed solely by the provisions
of this Agreement and the other Loan Documents and no separate Lien, right,
power or remedy shall arise or exist in favor of any Secured Party under any
separate instrument or agreement or in respect of any Related Obligation, (c)
each Secured Party shall be bound by all actions taken or omitted, in accordance
with the provisions of this Agreement and the other Loan Documents, by the
Administrative Agent and the Requisite Lenders, each of whom shall be entitled
to act at its sole discretion and exclusively in its own interest given its own
Revolving Credit Commitments and its own interest in the Loans, Letter of Credit
Obligations and other Obligations to it arising under this Agreement or the
other Loan Documents, without any duty or liability to any other Secured Party
or as to any Related Obligation and without regard to whether any Related
Obligation remains outstanding or is deprived of the benefit of the Collateral
or becomes unsecured or is otherwise affected or put in jeopardy thereby, (d) no
holder of Related Obligations and no other Secured Party (except the
Administrative Agent, the Lenders and the Issuers, to the extent set forth in
this Agreement) shall have any right to be notified of, or to direct, require or
be heard with respect to, any action taken or omitted in respect of the
Collateral or under this Agreement or the Loan Documents and (e) no holder of
any Related Obligation shall exercise any right of setoff, banker's lien or
similar right except as expressly provided in Section 11.6 (Right of Set-off).
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 AMENDMENTS, WAIVERS, ETC.
(a) No amendment or waiver of any provision of this Agreement
or any other Loan Document nor consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Requisite Lenders (or by the Administrative Agent with the
consent of the Required Lenders) and, in the case of any amendment, by the
Borrower or Holdings, 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 amendment, waiver or consent shall, unless in writing
and signed by each Lender directly affected thereby, in addition to the
Requisite Lenders (or the Administrative Agent with the consent thereof), do any
of the following:
(i) waive any condition specified in Section 3.1
(Conditions Precedent to Initial Loans and Letters of Credit) or 3.2(b)
(Conditions Precedent to Each Loan and Letter of Credit), except with
respect to a condition based upon another provision hereof, the waiver
of which requires only the concurrence of the Requisite Lenders and, in
the case of the conditions specified in Section 3.1 (Conditions
Precedent to Initial Loans and Letters of Credit), subject to the
provisions of Section 3.3 (Determinations of Initial Borrowing
Conditions);
(ii) increase the Revolving Credit Commitment of such
Lender or subject such Lender to any additional obligation;
(iii) extend the scheduled final maturity of any Loan
owing to such Lender, or waive, reduce or postpone any scheduled date
fixed for the payment or reduction of principal of any such Loan (it
being understood that Section 2.9 (Mandatory Prepayments) does not
provide for scheduled dates fixed for payment) or for the reduction of
such Lender's Revolving Credit Commitment other than pursuant to
Section 2.9(a);
(iv) reduce the principal amount of any Loan or
Reimbursement Obligation owing to such Lender (other than by the
payment or prepayment thereof);
(v) reduce the rate of interest on any Loan or
Reimbursement Obligations outstanding to such Lender or any fee payable
hereunder to such Lender;
(vi) postpone any scheduled date fixed for payment of
such interest or fees owing to such Lender;
(vii) change the aggregate Ratable Portions of
Lenders required for any or all Lenders to take any action hereunder;
(viii) release all or substantially all of the
Collateral except as provided in Section 10.7(b) (Concerning the
Collateral and the Collateral Documents) or release the Borrower from
its payment obligation to such Lender under this Agreement or the
Revolving Credit Notes owing to such Lender (if any) or release any
Guarantor from its
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obligations under the Guaranty except in connection with sale or other
disposition of a Subsidiary Guarantor (or all or substantially all of
the assets thereof) permitted by this Agreement (or permitted pursuant
to a waiver or consent of a transaction otherwise prohibited by this
Agreement);
(ix) amend Section 10.7(b) (Concerning the Collateral
and the Collateral Documents), this Section 11.1 or either definition
of the terms "Requisite Lenders" or "Ratable Portion"; or
(x) increase the Advance Rate above the rates set
forth in the definition thereof;
and provided, further, that (x) no amendment, waiver or consent shall, unless in
writing and signed by any Special Purpose Vehicle that has been granted an
option pursuant to Section 11.2(f) (Assignments and Participations), affect the
grant or nature of such option or the right or duties of such Special Purpose
Vehicle hereunder and (y) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or the other Loan Documents.
(b) The Administrative Agent may, but shall have no obligation
to, with the written concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
(c) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change") requiring the consent
of all affected Lenders, the consent of Requisite Lenders is obtained but the
consent of other Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this Section 11.1 being
referred to as a "Non-Consenting Lender"), then, so long as the Lender acting as
the Administrative Agent is not a Non-Consenting Lender, at the Borrower's
request, the Administrative Agent or an Eligible Assignee acceptable to the
Administrative Agent shall have the right with the Administrative Agent's
consent and in the Administrative Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting
Lender agrees that it shall, upon the Administrative Agent's request, sell and
assign to the Lender acting as the Administrative Agent or such Eligible
Assignee, all of the Revolving Credit Commitments, and Revolving Credit
Outstandings of such Non-Consenting Lender for an amount equal to the principal
balance of all Loans held by the Non-Consenting Lender and all accrued interest
and fees with respect thereto through the date of sale, such purchase and sale
to be consummated pursuant to an executed Assignment and Acceptance.
SECTION 11.2 ASSIGNMENTS AND PARTICIPATIONS
(a) Each Lender may sell, transfer, negotiate or assign to one
or more Eligible Assignees all or a portion of its rights and obligations
hereunder (including all of its rights and obligations with respect to the
Revolving Loans, the Swing Loans and the Letters of Credit); provided, however,
that (i) if any such assignment shall be of the assigning Lender's Revolving
Credit Outstandings and Revolving Credit Commitments, such assignment shall
cover the same
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percentage of such Lender's Revolving Credit Outstandings and Revolving Credit
Commitments, (ii) the aggregate amount being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and after giving effect to
such assignment the assigning Lender holds Revolving Credit Outstandings and
Revolving Credit Commitments of at least $5,000,000, except in either case (A)
the entire amount held by the assigning Lender is assigned or (B) with the
consent of the Borrower and the Administrative Agent or (C) if such assignment
is being made to a Lender or an Affiliate or Approved Fund of such Lender and
(iii) if such Eligible Assignee is not, prior to the date of such assignment, a
Lender or an Affiliate or Approved Fund of a Lender, such assignment shall be
subject to the prior consent of the Administrative Agent and the Borrower (which
consent shall not be unreasonably withheld or delayed); and provided, further,
that, notwithstanding any other provision of this Section 11.2, the consent of
the Borrower shall not be required for any assignment occurring when any Event
of Default shall have occurred and be continuing.
(b) The parties to each assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording, an Assignment and
Acceptance, together with any Revolving Credit Note (if the assigning Lender's
Loans are evidenced by a Revolving Credit Note) subject to such assignment. Upon
such execution, delivery, acceptance and recording and the receipt by the
Administrative Agent from the assignee of an assignment fee in the amount of
$3,500 from and after the effective date specified in such Assignment and
Acceptance, (i) the assignee thereunder shall become a party hereto and, to the
extent that rights and obligations under the Loan Documents have been assigned
to such assignee pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender and, if such Lender were an Issuer, of such Issuer
hereunder and thereunder and (ii) the assignor thereunder shall, to the extent
that rights and obligations under this Agreement have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (except for
those surviving the payment in full of the Obligations) and be released from its
obligations under the Loan Documents, other than those relating to events or
circumstances occurring prior to such assignment (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under the Loan Documents, such Lender shall
cease to be a party hereto).
(c) The Administrative Agent shall maintain at its address
referred to in Section 11.8 (Notices, Etc.) a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recording of
the names and addresses of the Lenders and the Revolving Credit Commitments of
and principal amount of the Loans and Letter of Credit Obligations owing to each
Lender from time to time (the "Register"). Any assignment pursuant to this
Section 11.2 shall not be effective until such assignment is recorded in the
Register. The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Loan Parties, the Administrative Agent
and the Lenders may treat each Person whose name is recorded in the Register as
a Lender for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Administrative Agent or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Notwithstanding anything to the contrary contained in
clause (c) above, the Loans (including the Revolving Credit Notes evidencing
such Loans) are registered obligations and the right, title, and interest of the
Lenders and their assignees in and to such Loans shall be transferable only upon
notation of such transfer in the Register. A Revolving Credit Note shall only
evidence the Lender's or an assignee's right title and interest in and to the
related Loan, and
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in no event is any such Revolving Credit Note to be considered a bearer
instrument or obligation. This Section 11.2 shall be construed so that the Loans
are at all times maintained in "registered form" within the meaning of Sections
163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code and any related
regulations (or any successor provisions of the Internal Revenue Code or such
regulations). Solely for purposes of this and for tax purposes only, the
Administrative Agent shall act as the Borrower's agent for purposes of
maintaining such notations of transfer in the Register.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall, if
requested by such assignee, execute and deliver to the Administrative Agent, new
Revolving Credit Notes to the order of such assignee in an amount equal to the
Revolving Credit Commitments assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has surrendered any Revolving Credit
Note for exchange in connection with the assignment and has retained Revolving
Credit Commitments hereunder, new Revolving Credit Notes to the order of the
assigning Lender in an amount equal to the Revolving Credit Commitments retained
by it hereunder. Such new Revolving Credit Notes shall be dated the same date as
the surrendered Revolving Credit Notes and be in substantially the form of
Exhibit B (Form of Revolving Credit Note).
(f) In addition to the other assignment rights provided in
this Section 11.2, each Lender may (i) grant to a Special Purpose Vehicle the
option to make all or any part of any Loan that such Lender would otherwise be
required to make hereunder and the exercise of such option by any such Special
Purpose Vehicle and the making of Loans pursuant thereto shall satisfy (once and
to the extent that such Loans are made) the obligation of such Lender to make
such Loans thereunder, provided, however, that nothing herein shall constitute a
commitment or an offer to commit by such a Special Purpose Vehicle to make Loans
hereunder and no such Special Purpose Vehicle shall be liable for any indemnity
or other Obligation (other than the making of Loans for which such Special
Purpose Vehicle shall have exercised an option, and then only in accordance with
the relevant option agreement), and (ii) assign, as collateral or otherwise, any
of its rights under this Agreement (including rights to payments of principal or
interest on the Loans) to (x) any Federal Reserve Bank pursuant to Regulation A
of the Federal Reserve Board without notice to or consent of the Borrower or the
Administrative Agent, (y) any trustee for the benefit of the holders of such
Lender's Securities and (z) to any Special Purpose Vehicle to which such Lender
has granted an option pursuant to clause (i) above; and provided, further, that
no such assignment or grant shall release such Lender from any of its
obligations hereunder except as expressly provided in clause (i) above. The
parties hereto acknowledge and agree that, prior to the date that is one year
and one day after the payment in full of all outstanding commercial paper or
other senior debt of any such Special Purpose Vehicle, it will not institute
against, or join any other Person in instituting against, any Special Purpose
Vehicle that has been granted an option pursuant to this clause (f) any
bankruptcy, reorganization, insolvency or liquidation proceeding (such agreement
shall survive the payment in full of the Obligations).
(g) Each Lender may sell participations to one or more Persons
in or to all or a portion of its rights and obligations under the Loan Documents
(including all its rights and obligations with respect to the Revolving Loans
and Letters of Credit). The terms of such
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participation shall not, in any event, require the participant's consent to any
amendments, waivers or other modifications of any provision of any Loan
Documents, the consent to any departure by any Loan Party therefrom, or to the
exercising or refraining from exercising any powers or rights such Lender may
have under or in respect of the Loan Documents (including the right to enforce
the obligations of the Loan Parties), except if any such amendment, waiver or
other modification or consent would (i) reduce the amount, or postpone any date
fixed for, any amount (whether of principal, interest or fees) payable to such
participant under the Loan Documents, to which such participant would otherwise
be entitled under such participation or (ii) result in the release of all or
substantially all of the Collateral other than in accordance with Section
10.7(b) (Concerning the Collateral and the Collateral Documents). In the event
of the sale of any participation by any Lender, (w) such Lender's obligations
under the Loan Documents shall remain unchanged, (x) such Lender shall remain
solely responsible to the other parties for the performance of such obligations,
(y) such Lender shall remain the holder of such Obligations for all purposes of
this Agreement and (z) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Each
participant shall be entitled to the benefits of Sections 2.15 (Capital
Adequacy) and 2.16 (Taxes) and of Section 2.14(d) (Special Provisions Governing
Eurodollar Rate Loans) as if it were a Lender; provided, however, that anything
herein to the contrary notwithstanding, the Borrower shall not, at any time, be
obligated to make under Section 2.15 (Capital Adequacy) or 2.16 (Taxes) or
Section 2.14(d) (Special Provisions Governing Eurodollar Rate Loans) to the
participants in the rights and obligations of any Lender (together with such
Lender) any payment in excess of the amount the Borrower would have been
obligated to pay to such Lender in respect of such interest had such
participation not been sold.
(h) Any Issuer may at any time assign its rights and
obligations hereunder to any other Lender by an instrument in form and substance
satisfactory to the Borrower, the Administrative Agent, such Issuer and such
Lender. If any Issuer ceases to be a Lender hereunder by virtue of any
assignment made pursuant to this Section 11.2, then, as of the effective date of
such cessation, such Issuer's obligations to Issue Letters of Credit pursuant to
Section 2.4 (Letters of Credit) shall terminate and such Issuer shall be an
Issuer hereunder only with respect to outstanding Letters of Credit issued prior
to such date.
SECTION 11.3 COSTS AND EXPENSES
(a) The Borrower agrees upon demand to pay, or reimburse the
Administrative Agent for, all of the Administrative Agent's reasonable internal
and external audit, legal, appraisal, valuation, filing, document duplication
and reproduction and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of the
Administrative Agent's counsel, Weil, Gotshal & ▇▇▇▇▇▇ LLP, local legal counsel,
auditors, accountants, appraisers, printers, insurance and environmental
advisors, and other consultants and agents) incurred by the Administrative Agent
in connection with any of the following: (i) the Administrative Agent's audit
and investigation of the Borrower and its Subsidiaries in connection with the
preparation, negotiation or execution of any Loan Document or the Administrative
Agent's periodic audits of the Borrower or any of its Subsidiaries, as the case
may be, (ii) the preparation, negotiation, execution or interpretation of this
Agreement (including, without limitation, the satisfaction or attempted
satisfaction of any condition set forth in Article III (Conditions To Loans And
Letters Of Credit)), any Loan Document or any proposal letter or commitment
letter issued in connection therewith, or the making of the Loans hereunder,
(iii) the
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creation, perfection or protection of the Liens under any Loan Document
(including any reasonable fees, disbursements and expenses for local counsel in
various jurisdictions), (iv) the ongoing administration of this Agreement and
the Loans, including consultation with attorneys in connection therewith and
with respect to the Administrative Agent's rights and responsibilities hereunder
and under the other Loan Documents, (v) the protection, collection or
enforcement of any Obligation or the enforcement of any Loan Document, (vi) the
commencement, defense or intervention in any court proceeding relating in any
way to the Obligations, any Loan Party, any of the Borrower's Subsidiaries, the
Acquisition, the Related Documents, this Agreement or any other Loan Document,
(vii) the response to, and preparation for, any subpoena or request for document
production with which the Administrative Agent is served or deposition or other
proceeding in which the Administrative Agent is called to testify, in each case,
relating in any way to the Obligations, any Loan Party, any of the Borrower's
Subsidiaries, the Acquisition, the Related Documents, this Agreement or any
other Loan Document or (viii) any amendment, consent, waiver, assignment,
restatement, or supplement to any Loan Document or the preparation, negotiation,
and execution of the same.
(b) The Borrower further agrees to pay or reimburse the
Administrative Agent and each of the Lenders and Issuers upon demand for all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees (including allocated costs of internal counsel and costs of
settlement), incurred by the Administrative Agent, such Lenders or Issuers in
connection with any of the following: (i) in enforcing any Loan Document or
Obligation or any security therefor or exercising or enforcing any other right
or remedy available by reason of an Event of Default, (ii) in connection with
any refinancing or restructuring of the credit arrangements provided hereunder
in the nature of a "work-out" or in any insolvency or bankruptcy proceeding,
(iii) in commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal proceeding
relating to the Obligations, any Loan Party, any of the Borrower's Subsidiaries
and related to or arising out of the transactions contemplated hereby or by any
other Loan Document or Related Document or (iv) in taking any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) described in
clause (i), (ii) or (iii) above.
SECTION 11.4 INDEMNITIES
(a) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, the Arranger, each Lender and each Issuer and each of
their respective Affiliates, and each of the directors, officers, employees,
agents, representative, attorneys, consultants and advisors of or to any of the
foregoing (including those retained in connection with the satisfaction or
attempted satisfaction of any condition set forth in Article III (Conditions To
Loans And Letters Of Credit)) (each such Person being an "Indemnitee") from and
against any and all claims, damages, liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, disbursements and expenses of any
kind or nature (including fees, disbursements and expenses of financial and
legal advisors to any such Indemnitee) that may be imposed on, incurred by or
asserted against any such Indemnitee in connection with or arising out of any
investigation, litigation or proceeding, whether or not any such Indemnitee is a
party thereto, whether direct, indirect, or consequential and whether based on
any federal, state or local law or other statutory regulation, securities or
commercial law or regulation, or under common law or in equity, or on contract,
tort or otherwise, in any manner relating to or arising out of this Agreement,
any other Loan Document, any Obligation, any Letter of Credit, any Related
Document, or any act, event or transaction related or attendant to any thereof,
or the use or intended use of the proceeds of the
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Loans or Letters of Credit or in connection with any investigation of any
potential matter covered hereby (collectively, the "Indemnified Matters");
provided, however, that the Borrower shall not have any obligation under this
Section 11.4 to an Indemnitee with respect to any Indemnified Matter caused by
or resulting from the gross negligence or willful misconduct of that Indemnitee,
as determined by a court of competent jurisdiction in a final non-appealable
judgment or order. Without limiting the foregoing, "Indemnified Matters" include
(i) all Environmental Liabilities and Costs arising from or connected with the
past, present or future operations of the Borrower or any of its Subsidiaries
involving any property subject to a Collateral Document, or damage to real or
personal property or natural resources or harm or injury alleged to have
resulted from any Release of Contaminants on, upon or into such property or any
contiguous real estate, (ii) any costs or liabilities incurred in connection
with any Remedial Action concerning any Borrower or any of its Subsidiaries,
(iii) any costs or liabilities incurred in connection with any Environmental
Lien and (iv) any costs or liabilities incurred in connection with any other
matter under any Environmental Law, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (49 U.S.C. Section 9601 et
seq.) and applicable state property transfer laws, whether, with respect to any
such matter, such Indemnitee is a mortgagee pursuant to any leasehold mortgage,
a mortgagee in possession, the successor in interest to the Borrower or any of
its Subsidiaries, or the owner, lessee or operator of any property of the
Borrower or any of its Subsidiaries by virtue of foreclosure, except, with
respect to those matters referred to in clauses (i), (ii), (iii) and (iv) above,
to the extent (x) incurred following foreclosure by the Administrative Agent,
any Lender or any Issuer, or the Administrative Agent, any Lender or any Issuer
having become the successor in interest to the Borrower or any of its
Subsidiaries and (y) attributable solely to acts of the Administrative Agent,
such Lender or such Issuer or any agent on behalf of the Administrative Agent,
such Lender or such Issuer.
(b) The Borrower shall indemnify the Administrative Agent, the
Lenders and each Issuer for, and hold the Administrative Agent, the Lenders and
each Issuer harmless from and against, any and all claims for brokerage
commissions, fees and other compensation made against the Administrative Agent,
the Lenders and the Issuers for any broker, finder or consultant with respect to
any agreement, arrangement or understanding made by or on behalf of any Loan
Party or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement.
(c) The Borrower, at the request of any Indemnitee, shall have
the obligation to defend against such investigation, litigation or proceeding or
requested Remedial Action and the Borrower, in any event, may participate in the
defense thereof with legal counsel of the Borrower's choice. In the event that
such Indemnitee requests the Borrower to defend against such investigation,
litigation or proceeding or requested Remedial Action, the Borrower shall
promptly do so and such Indemnitee shall have the right to have legal counsel of
its choice participate in such defense. No action taken by legal counsel chosen
by such Indemnitee in defending against any such investigation, litigation or
proceeding or requested Remedial Action, shall vitiate or in any way impair the
Borrower's obligation and duty hereunder to indemnify and hold harmless such
Indemnitee.
(d) The Borrower agrees that any indemnification or other
protection provided to any Indemnitee pursuant to this Agreement (including
pursuant to this Section 11.4) or any other Loan Document shall (i) survive
payment in full of the Obligations and (ii) inure to the benefit of any Person
that was at any time an Indemnitee under this Agreement or any other Loan
Document.
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SECTION 11.5 LIMITATION OF LIABILITY
The Borrower agrees that no Indemnitee shall have any
liability (whether direct or indirect, in contract, tort or otherwise) to any
Loan Party or any of their respective Subsidiaries or any of their respective
equity holders or creditors for or in connection with the transactions
contemplated hereby and in the other Loan Documents and Related Documents,
except for direct damages (as opposed to special, indirect, consequential or
punitive damages (including, without limitation, any loss of profits, business
or anticipated savings)) determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from such Indemnitee's gross
negligence or willful misconduct. Each of Holdings and the Borrower hereby
waives, releases and agrees (each for itself and on behalf of its Subsidiaries)
not to ▇▇▇ upon any such claim for any special, indirect, consequential or
punitive damages, whether or not accrued and whether or not known or suspected
to exist in its favor.
SECTION 11.6 RIGHT OF SET-OFF
Upon the occurrence and during the continuance of any Event of
Default each Lender and each Affiliate of a Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender or its Affiliates to or for the credit or the account of the Borrower
against any and all of the Obligations now or hereafter existing whether or not
such Lender shall have made any demand under this Agreement or any other Loan
Document and even though such Obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower after any such set-off and application made by
such Lender or its Affiliates; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Lender under this Section 11.6 are in addition to the other rights and
remedies (including other rights of set-off) that such Lender may have.
SECTION 11.7 SHARING OF PAYMENTS, ETC.
(a) If any Lender obtains any payment (whether voluntary,
involuntary, through the exercise of any right of set-off or otherwise) of the
Loans owing to it, any interest thereon, fees in respect thereof or amounts due
pursuant to Section 11.3 (Costs and Expenses) or 11.4 (Indemnities) (other than
payments pursuant to Sections 2.14 (Special Provisions Governing Eurodollar
Rate Loans), 2.15 (Capital Adequacy) or 2.16 (Taxes)) in excess of its Ratable
Portion of all payments of such Obligations obtained by all the Lenders, such
Lender (a "Purchasing Lender") shall forthwith purchase from the other Lenders
(each, a "Selling Lender") such participations in their Loans or other
Obligations as shall be necessary to cause such Purchasing Lender to share the
excess payment ratably with each of them.
(b) If all or any portion of any payment received by a
Purchasing Lender is thereafter recovered from such Purchasing Lender, such
purchase from each Selling Lender shall be rescinded and such Selling Lender
shall repay to the Purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Selling Lender's ratable share
(according to the proportion of (i) the amount of such Selling Lender's required
repayment in relation to (ii) the total amount so recovered from the Purchasing
Lender) of any interest or other amount paid or payable by the purchasing Lender
in respect of the total amount so recovered.
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(c) The Borrower agrees that any Purchasing Lender so
purchasing a participation from a Selling Lender pursuant to this Section 11.7
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
SECTION 11.8 NOTICES, ETC.
All notices, demands, requests and other communications
provided for in this Agreement shall be given in writing, or by any
telecommunication device capable of creating a written record (including
electronic mail), and addressed to the party to be notified as follows:
(a) if to the Borrower:
AVIALL SERVICES, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Van Den Handel
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
Email Address: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(b) if to any Lender, at its Domestic Lending Office specified
opposite its name on Schedule II (Applicable Lending Offices and Addresses for
Notices) or on the signature page of any applicable Assignment and Acceptance;
(c) if to any Issuer, at the address set forth under its name
[on the signature page hereof] [on Schedule II (Applicable Lending Offices and
Addresses for Notices)]; and
(d) if to the Administrative Agent:
CITICORP USA, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇.▇▇▇
104
with a copy to:
WEIL, GOTSHAL & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
or at such other address as shall be notified in writing (x) in the case of the
Borrower and the Administrative Agent, to the other parties and (y) in the case
of all other parties, to the Borrower and the Administrative Agent. All such
notices and communications shall be effective upon personal delivery (if
delivered by hand, including any overnight courier service), when deposited in
the mails (if sent by mail), or when properly transmitted (if sent by a
telecommunications device or through the Internet); provided, however, that
notices and communications to the Administrative Agent pursuant to Article II
(The Facility) or X (The Administrative Agent) shall not be effective until
received by the Administrative Agent.
SECTION 11.9 NO WAIVER; REMEDIES
No failure on the part of any Lender, Issuer or the
Administrative Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 11.10 BINDING EFFECT
This Agreement shall become effective when it shall have been
executed by the Borrower and the Administrative Agent and when the
Administrative Agent shall have been notified by each Lender and Issuer that
such Lender or Issuer has executed it and thereafter shall be binding upon and
inure to the benefit of the Borrower, the Administrative Agent and each Lender
and Issuer and, in each case, their respective successors and assigns; provided,
however, that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the
Lenders.
SECTION 11.11 GOVERNING LAW
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and interpreted in accordance with,
the law of the State of New York.
SECTION 11.12 SUBMISSION TO JURISDICTION; SERVICE OF PROCESS
(a) Any legal action or proceeding with respect to this
Agreement or any other Loan Document may be brought in the courts of the State
of New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including any objection to the laying of
venue or based on the grounds of
105
forum non conveniens, that any of them may now or hereafter have to the bringing
of any such action or proceeding in such respective jurisdictions.
(b) Each of Holdings and the Borrower hereby irrevocably
designates, appoints and empowers CT Corporation (telephone no: (▇▇▇) ▇▇▇-▇▇▇▇)
(telecopy no: (▇▇▇) ▇▇▇-▇▇▇▇) (electronic mail address: ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇)
(the "Process Agent"), in the case of any suit, action or proceeding brought in
the United States of America as its designee, appointee and agent to receive,
accept and acknowledge for and on its behalf, and in respect of its property,
service of any and all legal process, summons, notices and documents that may be
served in any action or proceeding arising out of or in connection with this
Agreement or any Loan Document. Such service may be made by mailing (by
registered or certified mail, postage prepaid) or delivering a copy of such
process to the Borrower in care of the Process Agent at the Process Agent's
above address, and the Borrower hereby irrevocably authorizes and directs the
Process Agent to accept such service on its behalf. As an alternative method of
service, the Borrower irrevocably consents to the service of any and all process
in any such action or proceeding by the mailing (by registered or certified
mail, postage prepaid) of copies of such process to the Process Agent or to
Holdings or the Borrower (as the case may be) at its address specified in
Section 11.8 (Notices, Etc.). Each of Holdings and the Borrower agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
(c) Nothing contained in this Section 11.12 shall affect the
right of the Administrative Agent or any Lender to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against the Borrower, Holdings or any other Loan Party in any other
jurisdiction.
(d) If for the purposes of obtaining judgment in any court it
is necessary to convert a sum due hereunder in Dollars into another currency,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase Dollars with such
other currency at the spot rate of exchange quoted by the Administrative Agent
at 11:00 a.m. (New York time) on the Business Day preceding that on which final
judgment is given, for the purchase of Dollars, for delivery two Business Days
thereafter.
SECTION 11.13 WAIVER OF JURY TRIAL
EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUERS AND
THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
SECTION 11.14 MARSHALING; PAYMENTS SET ASIDE
None of the Administrative Agent, any Lender or any Issuer
shall be under any obligation to marshal any assets in favor of the Borrower or
any other party or against or in payment of any or all of the Obligations. To
the extent that the Borrower makes a payment or payments to the Administrative
Agent, the Lenders or the Issuers or any such Person receives payment from the
proceeds of the Collateral or exercise their rights of setoff, and such payment
or payments or the proceeds of such enforcement or setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party, then
to the extent of such recovery, the obligation or part
106
thereof originally intended to be satisfied, and all Liens, right and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
SECTION 11.15 SECTION TITLES
The Section titles contained in this Agreement are and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto, except when used to reference
such Section . If a numbered reference to a clause, sub-clause or subSection
hereof is immediately followed by a reference in parenthesis to the title of a
Section hereof containing such clause, sub-clause or subSection , the reference
is only to such clause, sub-clause or subSection and not to the Section
generally. If a numbered reference to a Section hereof is immediately followed
by a reference in parenthesis to a Section hereof, the title reference shall
govern in case of direct conflict.
SECTION 11.16 EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts
and by different parties in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Signature pages may be detached from
multiple separate counterparts and attached to a single counterpart so that all
signature pages are attached to the same document. Delivery of an executed
counterpart hereof by telecopy shall be effective as delivery of a manually
executed counterpart.
SECTION 11.17 ENTIRE AGREEMENT
This Agreement, together with all of the other Loan Documents
and all certificates and documents delivered hereunder or thereunder, embodies
the entire agreement of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. Delivery of an executed
signature page of this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart hereof. A set of the copies of
this Agreement signed by all parties shall be lodged with the Borrower and the
Administrative Agent.
SECTION 11.18 CONFIDENTIALITY
Each Lender and the Administrative Agent agree to keep
information obtained by it pursuant hereto and the other Loan Documents
confidential in accordance with such Lender's or the Administrative Agent's, as
the case may be, customary practices and agrees that it shall only use such
information in connection with the transactions contemplated by this Agreement
and not disclose any such information other than (a) to such Lender's or the
Administrative Agent's, as the case may be, employees, representatives and
agents that are or are expected to be involved in the evaluation of such
information in connection with the transactions contemplated by this Agreement
and are advised of the confidential nature of such information, (b) to the
extent such information presently is or hereafter becomes available to such
Lender or the Administrative Agent, as the case may be, on a non-confidential
basis from a source other than the Borrower, (c) to the extent disclosure is
required by law, regulation or judicial order or requested or required by bank
regulators or auditors or (d) to assignees, participants and Special Purpose
Vehicles grantees of any option described in Section 11.2(f) (Assignments and
Participations) (or potential assignees, participants or grantees) that agree to
be bound by the provisions of this Section 11.18.
107
[SIGNATURE PAGES FOLLOW]
108
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
AVIALL SERVICES, INC.
as Borrower
By: /s/ ▇▇▇▇▇▇▇▇▇ Van Den Handel
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ Van Den Handel
Title: Vice President and Treasurer
AVIALL INC.
as Holdings
By: /s/ ▇▇▇▇▇▇▇▇▇ Van Den Handel
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ Van Den Handel
Title: Vice President and Treasurer
CITICORP USA, INC.,
as Administrative Agent and Lender
By: /s/ Shapleigh ▇. ▇▇▇▇▇
-----------------------------------------
Name: Shapleigh ▇. ▇▇▇▇▇
Title: Managing Director, Vice President
CITIBANK, N.A.,
as Issuer
By: /s/ Shapleigh ▇. ▇▇▇▇▇
-----------------------------------------
Name: Shapleigh ▇. ▇▇▇▇▇
Title: Managing Director, Vice President
ALLFIRST BANK,
as Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
COMERICA BANK,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
109
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Duly Authorized Signatory
NATIONAL BANK OF CANADA,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
NATIONAL CITY BANK,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Account Officer
ORIX FINANCIAL SERVICES, INC.,
as Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
TRANSAMERICA BUSINESS CAPITAL CORPORATION,
as Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
UNITED CALIFORNIA BANK,
as Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: AVP
WACHOVIA BANK, N.A.,
as Lender
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
110