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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 27, 1998
among
KAYNAR TECHNOLOGIES INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
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as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . 2
1.1 CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.5 INTEREST AND APPLICABLE MARGINS . . . . . . . . . . . . . . . . . 8
1.6. ELIGIBLE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . 10
1.7 ELIGIBLE INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . 12
1.8 CASH MANAGEMENT SYSTEMS . . . . . . . . . . . . . . . . . . . . . 13
1.9 FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.10 RECEIPT OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 13
1.11 APPLICATION AND ALLOCATION OF PAYMENTS. . . . . . . . . . . . . . 14
1.12 LOAN ACCOUNT AND ACCOUNTING . . . . . . . . . . . . . . . . . . . 14
1.13 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.14 ACCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.15 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY . . . . . . . . . . 18
1.17 SINGLE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 CONDITIONS TO THE INITIAL LOANS . . . . . . . . . . . . . . . . . 20
2.2 FURTHER CONDITIONS TO EACH LOAN . . . . . . . . . . . . . . . . . 21
3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 21
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. . . . . . . . . . . . . 21
3.2 EXECUTIVE OFFICES; FEIN . . . . . . . . . . . . . . . . . . . . . 22
3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS.. . . . . 22
3.4 FINANCIAL STATEMENTS AND PROJECTIONS. . . . . . . . . . . . . . . 22
3.5 MATERIAL ADVERSE EFFECT . . . . . . . . . . . . . . . . . . . . . 23
3.6 OWNERSHIP OF PROPERTY; LIENS. . . . . . . . . . . . . . . . . . . 23
3.7 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.9 GOVERNMENT REGULATION . . . . . . . . . . . . . . . . . . . . . . 24
3.10 MARGIN REGULATIONS. . . . . . . . . . . . . . . . . . . . . . . . 25
3.11 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.13 FOREIGN EMPLOYEE BENEFIT MATTERS. . . . . . . . . . . . . . . . . 26
3.14 NO LITIGATION; NO ADVERSE EFFECTS . . . . . . . . . . . . . . . . 26
3.15 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.16 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . 27
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3.17 FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.18 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 27
3.19 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.20 DEPOSIT AND DISBURSEMENT ACCOUNTS . . . . . . . . . . . . . . . . 28
3.21 GOVERNMENT CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . 28
3.22 CUSTOMER AND TRADE RELATIONS. . . . . . . . . . . . . . . . . . . 29
3.23 SOLVENCY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.24 YEAR 2000 REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . 29
3.25 M&M ACQUISITION AGREEMENT . . . . . . . . . . . . . . . . . . . . 29
3.26 ELIGIBLE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . 30
3.27 ELIGIBLE INVENTORY. . . . . . . . . . . . . . . . . . . . . . . . 30
4. FINANCIAL STATEMENTS AND INFORMATION. . . . . . . . . . . . . . . . . . 30
4.1 REPORTS AND NOTICES . . . . . . . . . . . . . . . . . . . . . . . 30
4.2 COMMUNICATION WITH ACCOUNTANTS. . . . . . . . . . . . . . . . . . 30
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. . . . . . . . . 31
5.2 PAYMENT OF OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . 31
5.3 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL . . . . . . . . 32
5.5 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . . 33
5.6 SUPPLEMENTAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . 33
5.7 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . 34
5.8 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 34
5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS AND BAILEE LETTERS. . 35
5.10 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . 35
5.11 YEAR 2000 PROBLEMS. . . . . . . . . . . . . . . . . . . . . . . . 35
5.12 ERISA COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . 36
5.13 FOREIGN EMPLOYEE BENEFIT PLAN COMPLIANCE. . . . . . . . . . . . . 36
5.14 GOVERNMENT CONTRACT COMPLIANCE. . . . . . . . . . . . . . . . . . 36
5.15 FUTURE LIENS ON REAL PROPERTY . . . . . . . . . . . . . . . . . . 36
5.16 NEWLY ACQUIRED SUBSIDIARIES; EXECUTION OF GUARANTY;
PLEDGE OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . 36
6. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 MERGERS, SUBSIDIARIES, ETC. . . . . . . . . . . . . . . . . . . . 37
6.2. INVESTMENTS; LOANS AND ADVANCES . . . . . . . . . . . . . . . . . 39
6.3 INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS . . . . . . . . . . . . 41
6.5 CAPITAL STRUCTURE AND BUSINESS. . . . . . . . . . . . . . . . . . 41
6.6 ACCOMMODATION OBLIGATIONS . . . . . . . . . . . . . . . . . . . . 42
6.7 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.8 SALE OF STOCK AND ASSETS. . . . . . . . . . . . . . . . . . . . . 43
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6.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.10 FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 44
6.11 HAZARDOUS MATERIALS . . . . . . . . . . . . . . . . . . . . . . . 44
6.12 SALE-LEASEBACKS . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.13 CANCELLATION OF INDEBTEDNESS. . . . . . . . . . . . . . . . . . . 45
6.14 RESTRICTED PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 45
6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL YEAR . . . 45
6.16 RESTRICTION ON FUNDAMENTAL CHANGES. . . . . . . . . . . . . . . . 45
6.17 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS . . . . . . . . . . . . . 45
6.18 NO SPECULATIVE TRANSACTIONS . . . . . . . . . . . . . . . . . . . 46
6.19 CHANGES RELATING TO SUBORDINATED DEBT . . . . . . . . . . . . . . 46
7. TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . 46
8.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.3 WAIVERS BY CREDIT PARTIES . . . . . . . . . . . . . . . . . . . . 49
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT . . . . . . . . . . 50
9.1 ASSIGNMENT AND PARTICIPATIONS . . . . . . . . . . . . . . . . . . 50
9.2 APPOINTMENT OF AGENT. . . . . . . . . . . . . . . . . . . . . . . 51
9.3 AGENT'S RELIANCE, ETC.. . . . . . . . . . . . . . . . . . . . . . 52
9.4 GE CAPITAL AND AFFILIATES . . . . . . . . . . . . . . . . . . . . 53
9.5 LENDER CREDIT DECISION. . . . . . . . . . . . . . . . . . . . . . 53
9.6 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.7 SUCCESSOR AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.8 SETOFF AND SHARING OF PAYMENTS. . . . . . . . . . . . . . . . . . 54
9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS IN
CONCERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10. SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . . . 57
10.1 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . 57
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT . . . . . . . . . . 57
11.2 AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . 58
11.3 FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . 60
11.4 NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.5 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.6 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.7 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . 61
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11.8 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.9 CERTAIN CONSENTS AND WAIVERS OF THE BORROWER. . . . . . . . . . . 62
11.10 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.11 SECTION TITLES. . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.12 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . 64
11.13 PRESS RELEASES. . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.14 REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.15 COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. . . . . . . . . . . 65
11.16 ADVICE OF COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . 65
11.17 NO STRICT CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . 65
11.18 NO NOVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . ▇▇
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INDEX OF APPENDICES
Exhibit 1.1(a)(I) - Form of Notice of Revolving CreditAdvance
Exhibit 1.1(a)(Ii) - Form of Amended and Restated Revolving Note
Exhibit 1.1(b) - Form of Amended and Restated Term Note
Exhibit 1.1(c)(Ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B - Form of Amended and Restated Charge Over Shares
Exhibit E - Form of Subsidiary Pledge Agreement
Exhibit M - Form of Compliance Certificate
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(a) - Financial Statements
Schedule 3.4(b) - Pro Forma
Schedule 3.4(c) - Projections
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.14 - Litigation
Schedule 3.16 - Intellectual Property
Schedule 3.18 - Hazardous Materials
Schedule 3.19 - Insurance
Schedule 3.20 - Deposit and Disbursement Accounts
Schedule 3.21 - Government Contracts
Schedule 5.1 - Trade Names
Schedule 6.3 - Permitted Existing Indebtedness
Schedule 6.6 - Permitted Existing Accommodation Obligations
Schedule 6.7 - Permitted Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Schedule of Additional Closing Documents
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
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Annex I (Section 11.10) - Notice Addresses
Annex J (From Annex A) - Commitments as of Closing Date
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 27,
1998, among KAYNAR TECHNOLOGIES INC., a Delaware corporation ("BORROWER");
the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE
CAPITAL"), for itself, as Lender, and as Agent for Lenders; and the other
Lenders signatory hereto from time to time.
RECITALS
WHEREAS, the Borrower and GE Capital, as Lender, entered into the
Credit Agreement dated as of January 3, 1994 (the "FIRST CREDIT AGREEMENT");
WHEREAS, the First Credit Agreement was amended as of December 15,
1994, May 30, 1995, and August 4, 1995 (collectively, the "ORIGINAL
AMENDMENTS;" and the First Credit Agreement, as amended by the Original
Amendments, the "ORIGINAL CREDIT AGREEMENT");
WHEREAS, the Original Credit Agreement was amended and restated by
the Amended and Restated Credit Agreement dated as of August 12, 1996 (the
Original Credit Agreement, as so amended and restated, the "AMENDED AND
RESTATED AGREEMENT");
WHEREAS, the Amended and Restated Agreement has been amended as of
December 17, 1996, April 30, 1997, June 25, 1997, October 23, 1997, December
5, 1997, January 21, 1998, May 29, 1998, and June 23, 1998 (collectively, the
"SUBSEQUENT AMENDMENTS;" and the Amended and Restated Agreement, as amended
by the Subsequent Amendments, the "EXISTING CREDIT AGREEMENT");
WHEREAS, the Borrower and GE Capital desire to amend and restate the
Existing Credit Agreement in its entirety to give effect to the terms and
provisions set forth in this Second Amended and Restated Credit Agreement
(the Existing Credit Agreement, as so amended, and the Second Amended and
Restated Credit Agreement, as amended, restated, supplemented or otherwise
modified from time to time, collectively, this "AGREEMENT"), it being
understood and agreed that (i) with respect to any date or time period
occurring and ending prior to the Effective Date (as defined below), the
rights and obligations of the parties thereto shall be governed by the
provisions of the Existing Credit Agreement (including, without limitation,
the Exhibits and Schedules thereto) which for such purposes shall remain in
full force and effect and (ii) with respect to any date or time period
occurring or ending on or after the Effective Date, the rights and
obligations of the parties hereto shall be governed by this Agreement
(including, without limitation, the Exhibits and Schedules hereto).
WHEREAS, it is the intent of the Borrower, the Agent and the Lenders
that the Agent and the Lenders shall be beneficiaries under each Loan
Document executed on or before the date hereof pursuant to which the Borrower
granted a Lien to GE Capital, as Lender, in any of Borrower's Property and
that all of the Obligations shall be secured by the Liens on the Property
subject to such Loan Documents, as well as the Liens granted to GE Capital,
as Agent,
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on all other Collateral on and after the date hereof, and GE Capital, as Lender
under the Existing Credit Agreement, hereby assigns to GE Capital, as Agent for
the Lenders under this Agreement, all of its rights in and to the Collateral
under the Existing Credit Agreement.
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in ANNEX A. All Annexes, Disclosure Schedules,
Exhibits and other attachments (collectively, "APPENDICES") hereto, or
expressly identified to this Agreement, are incorporated herein by reference,
and taken together, shall constitute but a single agreement. These Recitals
shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties herein contained, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 CREDIT FACILITIES.
(a) REVOLVING CREDIT FACILITY.
(i) Subject to the terms and conditions hereof, each
Revolving Lender agrees to make available, from time to time until the
Commitment Termination Date, its Pro Rata Share of advances (each, a
"REVOLVING CREDIT ADVANCE"). The revolving loans outstanding under the
Existing Credit Agreement on the Effective Date (other than revolving
loans which are being converted to a Term Loan on the Effective Date as
set forth in SECTION 1.1(d)) shall automatically, without further action,
be deemed to be Revolving Loans outstanding under this Agreement. The
Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at
any time exceed its separate Revolving Loan Commitment. The obligations
of each Revolving Lender hereunder shall be several and not joint. The
aggregate amount of Revolving Credit Advances outstanding shall not
exceed at any time the lesser of (A) the Maximum Amount and (B) the
Borrowing Base, in each case less the sum of the Letter of Credit
Obligations and the Swing Line Loan outstanding at such time ("BORROWING
AVAILABILITY"). Until the Commitment Termination Date, Borrower may from
time to time borrow, repay and reborrow under this SECTION 1.1(a). Each
Revolving Credit Advance shall be made on notice by Borrower to the
representative of Agent identified on SCHEDULE 1.1 at the address
specified thereon. Those notices must be given no later than (1) 2:00
p.m. (New York time) on the Business Day immediately preceding the date
of the proposed Revolving Credit Advance, in the case of an Index Rate
Loan, or (2) 2:00 p.m. (New York time) on the date which is three (3)
Business Days prior to the proposed Revolving Credit Advance, in the case
of a LIBOR Loan. Each such notice (a "NOTICE OF REVOLVING CREDIT
ADVANCE") must be given in writing (by telecopy or overnight courier)
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substantially in the form of EXHIBIT 1.1(a)(i), and shall include the
information required in such Exhibit and such other information as may be
required by Agent. If Borrower desires to have the Revolving Credit
Advances bear interest by reference to a LIBOR Rate, it must comply with
SECTION 1.5(e). In lieu of delivering such a Notice of Revolving Credit
Advance, the Borrower may give the representative of the Agent telephonic
notice of any proposed Revolving Credit Advance by the time required
under this SECTION 1.1(a), if it confirms such notice by delivery of the
Notice of Revolving Credit Advance to the representative of the Agent
promptly, but in no event later than 5:00 p.m. (New York time) on the
same day. Any Notice of Revolving Credit Advance (or telephonic notice
in lieu thereof) given pursuant to this SECTION 1.1(a) shall be
irrevocable.
(ii) Borrower shall execute and deliver to each Revolving
Lender a promissory note to evidence the Revolving Loan Commitment of
that Revolving Lender as of the Effective Date. Each note shall be in
the principal amount of the Revolving Loan Commitment of the applicable
Revolving Lender, dated the Effective Date and substantially in the form
of EXHIBIT 1.1(a)(ii) (each a "REVOLVING NOTE" and, collectively, the
"REVOLVING NOTES"). Each Revolving Note shall represent the obligation
of Borrower to pay the amount of each Revolving Lender's Revolving Loan
Commitment or, if less, the applicable Revolving Lender's Pro Rata Share
of the aggregate unpaid principal amount of all Revolving Credit Advances
to Borrower together with interest thereon as prescribed in SECTION 1.5.
The entire unpaid balance of the Revolving Loan and all other
non-contingent Obligations shall be immediately due and payable in full
in immediately available funds on the Commitment Termination Date.
(b) TERM LOAN.
(i) Subject to the terms and conditions hereof, each Term
Lender agrees to make a term loan on the Effective Date to Borrower in a
net amount equal to the sum of (i) the original principal amount of its
Term Loan Commitment (the "TERM LOAN") MINUS (ii) its Pro Rata Share of
the outstanding principal balance of the term loan under the Existing
Credit Agreement, in the amount of $25,225,000, MINUS (iii) its Pro Rata
Share of the revolving loans being converted to a Term Loan as set forth
in SECTION 1.1(d). The term loans outstanding under the Existing Credit
Agreement on the Effective Date and the revolving loans which are being
converted to a Term Loan on the Effective Date as set forth in SECTION
1.1(d) shall automatically, without further action, be deemed to be Term
Loans outstanding under this Agreement. The obligations of each Term
Lender hereunder shall be several and not joint. The Term Loan shall be
evidenced by promissory notes substantially in the form of EXHIBIT 1.1(b)
(each a "TERM NOTE" and collectively the "TERM NOTES"), and Borrower
shall execute and deliver a Term Note to each Term Lender. Each Term Note
shall represent the obligation of Borrower to pay the amount of the
applicable Term Lender's Term Loan Commitment, together with interest
thereon as prescribed in SECTION 1.5.
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(ii) Borrower shall pay the principal amount of the Term
Loan in fourteen (14) consecutive quarterly installments of $200,000 each
on the first day of January, April, July and October of each year,
commencing October 1, 1998. Notwithstanding the foregoing, the aggregate
outstanding principal balance of the Term Loan shall be due and payable
in full in immediately available funds on the Commitment Termination
Date, if not sooner paid in full.
(iii) Each payment of principal with respect to the Term
Loan shall be paid to Agent for the ratable benefit of each Term Lender,
ratably in proportion to each such Term Lender's respective Term Loan
Commitment.
(c) SWING LINE FACILITY.
(i) Agent shall notify the Swing Line Lender upon
Agent's receipt of any Notice of Revolving Credit Advance. Subject to
the terms and conditions hereof, the Swing Line Lender may, in its
discretion, make available, from time to time until the Commitment
Termination Date, advances (each, a "SWING LINE ADVANCE") in accordance
with any such notice. The aggregate amount of Swing Line Advances
outstanding shall not exceed the lesser of (A) the Swing Line Commitment
and (B) the lesser of the Maximum Amount and the Borrowing Base, in each
case, less the outstanding balance of the Revolving Loan at such time
("SWING LINE AVAILABILITY"). Until the Commitment Termination Date,
Borrower may from time to time borrow, repay and reborrow under this
SECTION 1.1(c). Each Swing Line Advance shall be made pursuant to a
Notice of Revolving Credit Advance delivered by Borrower to Agent in
accordance with SECTION 1.1(a). Those notices must be given no later
than 12:00 p.m. (New York time) on the Business Day of the proposed Swing
Line Advance. Notwithstanding any other provision of this Agreement or
the other Loan Documents, the Swing Line Loan shall constitute an Index
Rate Loan. Borrower shall repay the aggregate outstanding principal
amount of the Swing Line Loan upon demand therefor by Agent.
(ii) Borrower shall execute and deliver to the Swing Line
Lender a promissory note to evidence the Swing Line Commitment. Such
note shall be in the principal amount of the Swing Line Commitment of the
Swing Line Lender, dated the Effective Date and substantially in the form
of EXHIBIT 1.1(c)(ii) (the "SWING LINE NOTE"). The Swing Line Note shall
represent the obligation of Borrower to pay the amount of the Swing Line
Commitment or, if less, the aggregate unpaid principal amount of all
Swing Line Advances made to Borrower together with interest thereon as
prescribed in SECTION 1.5. The entire unpaid balance of the Swing Line
Loan and all other non-contingent Obligations shall be immediately due
and payable in full in immediately available funds on the Commitment
Termination Date if not sooner paid in full.
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(iii) REFUNDING OF SWING LINE LOANS. The Swing Line Lender,
at any time and from time to time in its sole and absolute discretion but
no less frequently than once weekly, shall on behalf of Borrower (and
Borrower hereby irrevocably authorizes the Swing Line Lender to so act on
its behalf) request each Revolving Lender (including the Swing Line
Lender) to make a Revolving Credit Advance to Borrower (which shall be an
Index Rate Loan) in an amount equal to such Revolving Lender's Pro Rata
Share of the principal amount of the Swing Line Loan (the "REFUNDED SWING
LINE LOAN") outstanding on the date such notice is given. Unless any of
the events described in SECTIONS 8.1(h) or 8.1(i) shall have occurred (in
which event the procedures of SECTION 1.1(c)(iv) shall apply) and
regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Credit Advance are then satisfied,
each Revolving Lender shall disburse directly to Agent, its Pro Rata
Share of a Revolving Credit Advance on behalf of the Swing Line Lender,
prior to 2:00 p.m. (New York time), in immediately available funds on the
Business Day next succeeding the date such notice is given. The proceeds
of such Revolving Credit Advances shall be immediately paid to the Swing
Line Lender and applied to repay the Refunded Swing Line Loan.
(iv) PARTICIPATION IN SWING LINE LOANS. If, prior to
refunding a Swing Line Loan with a Revolving Credit Advance pursuant to
SECTION 1.1(c)(iii), one of the events described in SECTIONS 8.1(h) or
8.1(i) shall have occurred, then, subject to the provisions of
SECTION 1.1(c)(v) below, each Revolving Lender will, on the date such
Revolving Credit Advance was to have been made for the benefit of
Borrower, purchase from the Swing Line Lender an undivided participation
interest in the Swing Line Loan in an amount equal to its Pro Rata Share
of such Swing Line Loan. Upon request, each Revolving Lender will
promptly transfer to the Swing Line Lender, in immediately available
funds, the amount of its participation.
(v) REVOLVING LENDERS' OBLIGATIONS UNCONDITIONAL. Each
Revolving Lender's obligation to make Revolving Credit Advances in
accordance with SECTION 1.1(c)(iii) and to purchase participating
interests in accordance with SECTION 1.1(c)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance, including
(A) any setoff, counterclaim, recoupment, defense or other right which
such Revolving Lender may have against the Swing Line Lender, Borrower or
any other Person for any reason whatsoever; (B) the occurrence or
continuance of any Default or Event of Default; (C) any inability of
Borrower to satisfy the conditions precedent to borrowing set forth in
this Agreement on the date upon which such participating interest is to
be purchased or (D) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. If any
Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to
SECTION 1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line
Lender shall be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each day from the
date of non-payment until such amount is paid in
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full at the Federal Funds Rate for the first two Business Days and at
the Index Rate thereafter.
(d) CONVERSION OF REVOLVING LOANS TO TERM LOANS. On the
Effective Date, certain revolving loans advanced under the Existing Credit
Agreement, in the aggregate principal amount of $12,775,000, shall
automatically, without further action, be deemed to be a Term Loan outstanding
under this Agreement.
(e) RELIANCE ON NOTICES. Agent shall be entitled to rely upon,
and shall be fully protected in relying upon, any Notice of Revolving Credit
Advance, Notice of Conversion/Continuation or similar notice believed by Agent
to be genuine. Agent may assume that each Person executing and delivering such
a notice was duly authorized, unless the responsible individual acting thereon
for Agent has actual knowledge to the contrary.
1.2 LETTERS OF CREDIT. Subject to and in accordance with the
terms and conditions contained herein and in ANNEX B, Borrower shall have the
right to request, and Revolving Lenders agree to incur, or purchase
participations in, Letter of Credit Obligations in respect of Borrower.
1.3 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. Borrower may at any time on at
least five (5) days' prior written notice to Agent (i) voluntarily prepay all or
part of the Term Loan and/or (ii) voluntarily prepay all or part of the
Revolving Loan and permanently reduce (but not terminate) the Revolving Loan
Commitment; provided that (A) any such prepayments or reductions shall be in a
minimum amount of $1,000,000 and integral multiples of $250,000 in excess of
such amount and (B) the Revolving Loan Commitment shall not be reduced to an
amount less than the greater of (x) $5,000,000 and (y) the L/C Sublimit.
Borrower may at any time on at least ten (10) days' prior written notice to
Agent terminate the Revolving Loan Commitment, provided that upon such
termination all Loans and other Obligations shall be immediately due and payable
in full. Any such voluntary prepayment and any such reduction or termination of
the Revolving Loan Commitment must be accompanied by the payment of any LIBOR
funding breakage costs in accordance with SECTION 1.13(b). Upon any such
prepayment and reduction or termination of the Revolving Loan Commitment,
Borrower's right to request Revolving Credit Advances, or request that Letter of
Credit Obligations be incurred on its behalf, or request Swing Line Advances,
shall simultaneously be permanently reduced or terminated, as the case may be;
provided that a permanent reduction of the Revolving Loan Commitment shall not
require a corresponding pro rata reduction in the L/C Sublimit (as defined in
ANNEX B). Each notice of partial prepayment shall designate the Loan or other
Obligations to which such prepayment is to be applied, provided that any partial
prepayments of the Term Loan made by Borrower shall be applied to prepay the
scheduled installments of the Term Loan in inverse order of maturity.
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(b) MANDATORY PREPAYMENTS.
(i) If at any time the outstanding balance of the
Revolving Loan exceeds the lesser of (A) the Maximum Amount and (B) the
Borrowing Base, less, in each case, the outstanding Swing Line Loan at
such time, Borrower shall immediately repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such
excess. If any such excess remains after repayment in full of the
aggregate outstanding Revolving Credit Advances, Borrower shall provide
cash collateral for the Letter of Credit Obligations in the manner set
forth in ANNEX B to the extent required to eliminate such excess.
(ii) Immediately upon receipt by any Credit Party of
proceeds of any asset disposition (including condemnation proceeds, but
excluding proceeds of asset dispositions permitted by SECTION 6.8(a)) or
any sale of Stock of any Subsidiary of any Credit Party, Borrower shall
prepay the Loans in an amount equal to all such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees
and expenses properly attributable to such transaction and payable by
Borrower in connection therewith (in each case, paid to non-Affiliates),
(B) transfer taxes, (C) amounts payable to holders of senior Liens (to
the extent such Liens constitute Permitted Encumbrances hereunder), if
any, and (D) an appropriate reserve for income taxes in accordance with
GAAP in connection therewith. Any such prepayment shall be applied in
accordance with CLAUSE (c) below.
(iii) Within two (2) Business Days after the Borrower's or
any of its Subsidiaries' receipt of any Excess Proceeds of Issuance of
Stock or Indebtedness, the Borrower shall make or cause to be made a
mandatory prepayment in an amount equal to one hundred percent (100%) of
such Excess Proceeds of Issuance of Stock or Indebtedness. Any such
prepayment shall be applied in accordance with CLAUSE (c) below.
(iv) Until the Termination Date, Borrower shall, within
ninety (90) days after the end of each Fiscal Year (other than the Fiscal
Year ending in 1998), calculate Excess Cash Flow for such Fiscal Year and
shall make a mandatory prepayment of the Obligations in an amount equal
to seventy-five percent (75%) of such Excess Cash Flow. The Borrower
shall make an additional mandatory prepayment, to the extent 75% of
Excess Cash Flow determined in accordance with the annual audited
Financial Statements for the immediately preceding Fiscal Year exceeds
75% of the Borrower's preliminary calculation of Excess Cash Flow, on the
earlier of the date which is ten (10) days after (A) the date on which
Borrower's annual audited Financial Statements for the immediately
preceding Fiscal Year are delivered pursuant to ANNEX E or (B) the date
on which such annual audited Financial Statements were required to be
delivered pursuant to ANNEX E, in an amount equal to 75% of Excess Cash
Flow for the immediately preceding Fiscal Year. Any prepayments from
Excess Cash Flow paid pursuant to this CLAUSE (iv)
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shall be applied in accordance with CLAUSE (c) below. Each such
prepayment shall be accompanied by a certificate signed by Borrower's
chief financial officer certifying the manner in which Excess Cash Flow
and the resulting prepayment were calculated, which certificate shall be
in form and substance satisfactory to Agent.
(c) APPLICATION OF CERTAIN MANDATORY PREPAYMENTS. Any
prepayments made by Borrower pursuant to CLAUSES (b)(ii), (b)(iii), or (b)(iv)
above shall be applied as follows: FIRST, to Fees and Agent's expenses
reimbursable hereunder; SECOND, to interest on the Swing Line Loan; THIRD, to
principal payments on the Swing Line Loan; FOURTH, to interest on the other
Loans, ratably in proportion to the interest accrued as to each Loan; FIFTH, to
principal payments on the other Loans and to provide cash collateral for Letter
of Credit Obligations in the manner described in ANNEX B, ratably to the
aggregate, combined principal balance of the other Loans and outstanding Letter
of Credit Obligations; and SIXTH, to all other Obligations including expenses of
Lenders to the extent reimbursable under SECTION 11.3 Neither the Revolving
Loan Commitment nor the Swing Line Commitment shall be permanently reduced by
the amount of any such prepayments.
(d) APPLICATION OF PREPAYMENTS FROM INSURANCE PROCEEDS.
Prepayments from insurance proceeds in accordance with Section 5.4(c) shall be
applied as follows: insurance proceeds from casualties or losses to cash or
Inventory shall be applied FIRST to the Swing Line Loans and SECOND to the
Revolving Credit Advances; insurance proceeds from casualties or losses to
Equipment, Fixtures and Real Property shall be applied to scheduled installments
of the Term Loan in inverse order of maturity. Neither the Revolving Loan
Commitment nor the Swing Line Loan Commitment shall be permanently reduced by
the amount of any such prepayments. If the precise amount of insurance proceeds
allocable to Inventory as compared to Equipment, Fixtures and Real Property are
not otherwise determined, the allocation and application of those proceeds shall
be determined by Agent, subject to the approval of Requisite Lenders.
(e) Nothing in this SECTION 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction referred to in
CLAUSES (b)(ii) and (b)(iii) above which is not permitted by other provisions
of this Agreement or the other Loan Documents.
1.4 USE OF PROCEEDS. Borrower shall utilize that portion of
the proceeds of the Term Loan, the Revolving Loan and the Swing Line Loan
advanced on the Effective Date solely for the M&M Acquisition and Related
Transactions Costs and for the financing of Borrower's ordinary working capital
and general corporate needs (but excluding in any event the making of any
Restricted Payment not specifically permitted by SECTION 6.14). DISCLOSURE
SCHEDULE (1.4) contains a description of Borrower's sources and uses of funds as
of the Effective Date, including Loans and Letter of Credit Obligations to be
made or incurred on that date, and a funds flow memorandum detailing how funds
from each source are to be transferred to particular uses.
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1.5 INTEREST AND APPLICABLE MARGINS.
(a) Borrower shall pay interest to Agent, for the ratable
benefit of Lenders in accordance with the various Loans being made by each
Lender, in arrears on each applicable Interest Payment Date, at the following
rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus
the Applicable Revolver Index Margin per annum, based on the aggregate Revolving
Credit Advances outstanding from time to time; (ii) with respect to the Term
Loan, the Index Rate plus the Applicable Term Loan Index Margin per annum; and
(iii) with respect to the Swing Line Loan, the Index Rate plus the Applicable
Revolver Index Margin per annum.
The Index Rate shall be the Commercial Paper Rate; PROVIDED,
HOWEVER, that the Agent may elect, in its sole discretion, to convert the Index
Rate from the Commercial Paper Rate to the Prime Rate by delivering a written
notice to that effect to the Borrower at least five (5) Business Days prior to
the proposed date of such conversion.
For any day on which the Index Rate is the Prime Rate, the
Borrower may elect to pay interest to Agent, for the ratable benefit of Lenders
in accordance with the various Loans being made by each Lender, in arrears on
each applicable Interest Payment Date, at the following rates: (i) with respect
to the Revolving Credit Advances, the Applicable LIBOR Rate plus the Applicable
Revolver LIBOR Margin per annum, based on the aggregate Revolving Credit
Advances outstanding from time to time; and (ii) with respect to the Term Loan,
the Applicable LIBOR Rate plus the Applicable Term Loan LIBOR Margin per annum.
(b) If any payment on any Loan becomes due and payable on a day
other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and interest shall be made by Agent on the basis of a three hundred sixty (360)
day year, in each case for the actual number of days occurring in the period for
which such interest and Fees are payable. The Index Rate shall be determined
each day based upon the Index Rate as in effect each day. Each determination by
Agent of an interest rate and Fees hereunder shall be conclusive, absent
manifest error.
(d) So long as an Event of Default shall have occurred and be
continuing under SECTION 8.1(a), (h) or (i), or so long as any other Default or
Event of Default shall have occurred and be continuing and at the election of
Agent (or upon the written request of Requisite Lenders) confirmed by written
notice from Agent to Borrower, the interest rates applicable to the Loans and
the Letter of Credit Fees shall be increased by two percent (2%) per annum above
the rates of interest or the rate of such Fees otherwise applicable hereunder
("DEFAULT RATE"), and all outstanding Obligations shall bear interest at the
Default Rate applicable to such Obligations. Interest and Letter of Credit Fees
at the Default Rate shall accrue from the initial date of such
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Default or Event of Default until that Default or Event of Default is cured
or waived and shall be payable upon demand.
(e) For any day on which the Index Rate is the Prime Rate, and
so long as no Default or Event of Default shall have occurred and be continuing,
and subject to the additional conditions precedent set forth in SECTION 2.2,
Borrower shall have the option to (i) request that any Revolving Credit Advances
be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Loans (other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans,
(iii) convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with SECTION 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan
upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the last day of the LIBOR Period
of the Loan to be continued. Any Loan to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $500,000 and integral
multiples of $500,000 in excess of such amount. Any such election must be made
by 12:00 p.m. (New York time) on the third (3rd) Business Day prior to (1) the
date of any proposed Advance which is to bear interest at the LIBOR Rate, (2)
the end of each LIBOR Period with respect to any LIBOR Loans to be continued as
such, or (3) the date on which Borrower wishes to convert any Index Rate Loan to
a LIBOR Loan for a LIBOR Period designated by Borrower in such election. If no
election is received with respect to a LIBOR Loan by 12:00 p.m. (New York time)
on the third (3rd) Business Day prior to the end of the LIBOR Period with
respect thereto (or if a Default or an Event of Default shall have occurred and
be continuing or the additional conditions precedent set forth in SECTION 2.2
shall not have been satisfied), that LIBOR Loan shall be converted to an Index
Rate Loan at the end of its LIBOR Period. Borrower must make such election by
notice to Agent in writing, by telecopy or overnight courier. In the case of
any conversion or continuation, such election must be made pursuant to a written
notice (a "NOTICE OF CONVERSION/CONTINUATION") in the form of EXHIBIT 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this
SECTION 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "MAXIMUM LAWFUL RATE"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest which would have been received had
the interest rate payable hereunder been (but for the operation of this
paragraph) the interest rate payable since the Effective Date as otherwise
provided in this Agreement. Thereafter, interest hereunder shall be paid at the
rate(s) of interest and in the manner provided in SECTIONS 1.5(a) through (e)
above, unless and until the rate of interest again exceeds the Maximum Lawful
Rate, and at that time this paragraph shall again apply. In no event shall the
total interest received by any Lender pursuant to the terms hereof exceed the
amount which
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such Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the
Maximum Lawful Rate is calculated pursuant to this paragraph, such interest
shall be calculated at a daily rate equal to the Maximum Lawful Rate divided
by the number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this SECTION 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order
specified in SECTION 1.11 and thereafter shall refund any excess to Borrower
or as a court of competent jurisdiction may otherwise order.
1.6. ELIGIBLE ACCOUNTS. Based on the most recent Borrowing Base
Certificate delivered by Borrower to Agent and on other information available to
Agent, Agent shall in its reasonable credit judgment determine which Accounts of
Borrower shall be "ELIGIBLE ACCOUNTS" for purposes of this Agreement. In
determining whether a particular Account constitutes an Eligible Account, Agent
shall not include any such Account to which any of the exclusionary criteria set
forth below applies. Agent reserves the right, at any time and from time to
time after the Effective Date, to adjust any such criteria, to establish new
criteria and to adjust advance rates with respect to Eligible Accounts, in its
reasonable credit judgment, subject to the approval of Supermajority Revolving
Lenders in the case of adjustments, new criteria or changes in advance rates
which have the effect of making more credit available. Eligible Accounts shall
not include any Account of Borrower:
(a) which the Account Debtor has failed to pay within ninety
(90) days after the invoice date;
(b) with selling terms of more than sixty (60) days;
(c) with respect to which the Account Debtor is an officer,
employee, Affiliate or agent of the Borrower;
(d) with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, ▇▇▇▇ and hold, or other terms
by reason of which the payment by the Account Debtor may be conditional;
(e) with respect to which the Account Debtor is not a resident
of the United States, and which are not either (i) covered by credit insurance
in form and amount, and by an insurer, satisfactory to the Agent, or (ii)
supported by one or more letters of credit that are assignable and have been
delivered to the Agent in form, substance, amount and of a tenor, and issued by
a financial institution, acceptable to the Agent;
(f) with respect to which the Account Debtor is the United
States or any department, agency or instrumentality of the United States, any
state of the United States, or any city, town, municipality, or division thereof
unless such Account has been assigned to the Agent for the benefit of the
Lenders in accordance with (A) the Assignment of Claims Act of 1940, as
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amended (31 U.S.C. Section 203 ET SEQ.) with respect to the United States or
any department, agency or instrumentality of the United States or (B) any
similar statute in effect in any state of the United States, or any city,
town, municipality, or division thereof with respect to such state, city,
town, municipality or division;
(g) with respect to which the Account Debtor is a subsidiary
of, related to, has common shareholders, officers or directors with, or
otherwise controls, is controlled by or is under common control with, the
Borrower;
(h) with respect to which the Borrower is or may become liable
to the Account Debtor for goods sold or services rendered by the Account Debtor
to Borrower to the extent of the amount by which the Borrower is or may be
liable to the Account Debtor for goods sold or services rendered by the Account
Debtor;
(i) with respect to an Account Debtor whose total obligations
to the Borrower exceed ten percent (10%) of the aggregate amount of all Eligible
Accounts (other than an Account Debtor whose unsecured debt is rated as
investment grade by Standard & Poor's Corporation and ▇▇▇▇▇'▇ Investors Service)
to the extent of the obligations of such Account Debtor in excess of such
percentage;
(j) which are subject to any unapplied debits, to the extent of
such unapplied debits, and Accounts with respect to which the Account Debtor
otherwise disputes liability or makes any claim with respect thereto, or is
subject to any insolvency proceeding, or becomes insolvent, or goes out of
business;
(k) the collection of which the Agent believes to be doubtful
by reason of the Account Debtor's financial condition;
(l) owed by an Account Debtor that has failed to pay fifty
percent (50%) or more of the aggregate amount of its accounts owed to the
Borrower within ninety (90) days after the date of the applicable invoices; or
(m) which are unacceptable to Agent in its reasonable credit
judgment.
1.7 ELIGIBLE INVENTORY. Based on the most recent Borrowing
Base Certificate delivered by Borrower to Agent and on other information
available to Agent, Agent shall in its reasonable credit judgment determine
which Inventory of Borrower shall be "ELIGIBLE INVENTORY" for purposes of this
Agreement. In determining whether any particular Inventory constitutes Eligible
Inventory, Agent shall not include any such Inventory to which any of the
exclusionary criteria set forth below applies. Agent reserves the right, at any
time and from time to time after the Effective Date, to adjust any such
criteria, to establish new criteria and to adjust advance rates with to Eligible
Inventory in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments, new criteria or
changes in advance
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rates which have the effect of making more credit available. Eligible
Inventory shall not include any Inventory of Borrower:
(a) that is not owned by Borrower free and clear of all
Liens and rights of any other Person (including the rights of a purchaser
that has made progress payments and the rights of a surety that has issued a
bond to assure Borrower's performance with respect to that Inventory), except
the Liens in favor of Agent for the benefit of the Lenders;
(b) that is (i) not located on premises owned or leased by
Borrower in the District of Columbia or any state of the United States of
America or (ii) is stored with a bailee, warehouseman or similar Person,
unless Agent has given its prior consent thereto and unless (x) a
satisfactory bailee letter or landlord waiver has been delivered to Agent, or
(y) reserves satisfactory to Agent have been established with respect
thereto, or (iii) located at any site if the aggregate book value of
Inventory at any such location is less than $100,000;
(c) that is placed on consignment, is in transit or is
otherwise not located on premises owned or leased by Borrower;
(d) that is covered by a negotiable document of title,
unless such document and evidence of acceptable insurance covering such
Inventory have been delivered to Agent;
(e) that in Agent's reasonable determination is excess,
obsolete, unsalable, shopworn, seconds, damaged or unfit for sale;
(f) that consists of items other than (i) finished goods or
(ii) raw materials consisting of sheet metal, wire coil and bar stock;
(g) that consists of goods which have been returned by the
buyer for reason of defectiveness or are of a type which cannot be resold at
the same price;
(h) that is not of a type held for sale in the ordinary
course of Borrower's business;
(i) as to which Agent's Lien is not a first priority
perfected Lien;
(j) which consists of Contaminants or goods that can be
transported or sold only with licenses that are not readily available;
(k) that is not covered by casualty insurance acceptable to
Agent;
(l) with respect to which all or a portion of the value
thereof is attributable to "freight-in" charges, to the extent of such
attributable value; or
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(m) that is otherwise unacceptable to Agent in its
reasonable credit judgment.
1.8 CASH MANAGEMENT SYSTEMS. On or prior to the Effective
Date, Borrower will establish and will maintain until the Termination Date,
the cash management systems described on ANNEX C (the "CASH MANAGEMENT
SYSTEMS").
1.9 FEES.
(a) Borrower shall pay to GE Capital, individually, the Fees
specified in that certain fee letter of even date herewith between Borrower
and GE Capital (the "GE CAPITAL FEE LETTER"), at the times specified for
payment therein.
(b) As additional compensation for the Revolving Lenders,
from the date on which the Agent notifies the Borrower that its obligation to
pay fees under this SECTION 1.9(b) has commenced, the Borrower agrees to pay
to the Agent, for the ratable benefit of such Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and
on the Commitment Termination Date, a fee for Borrower's non-use of available
funds in an amount equal to 25 basis points (0.25%) per annum (calculated on
the basis of a 360 day year for actual days elapsed) of the difference
between (x) the Maximum Amount (as it may be reduced from time to time) and
(y) the average for the period of the daily closing balances of the Revolving
Loan and the Swing Line Loan outstanding during the period for which such fee
is due.
1.10 RECEIPT OF PAYMENTS. Borrower shall make each payment
under this Agreement not later than 12:00 p.m. (New York time) on the day
when due in immediately available funds in Dollars to the Collection Account.
For purposes of computing interest and Fees and determining Borrowing
Availability or Net Borrowing Availability as of any date, all payments shall
be deemed received on the day of receipt of immediately available funds
therefor in the Collection Account prior to 12:00 p.m. (New York time).
Payments received after 12:00 p.m. (New York time) on any Business Day shall
be deemed to have been received on the following Business Day.
1.11 APPLICATION AND ALLOCATION OF PAYMENTS.
(a) So long as no Default or Event of Default shall have
occurred and be continuing, (i) payments consisting of proceeds of Accounts
received in the ordinary course of business shall be applied to the Swing
Line Loan and the Revolving Loan; (ii) payments matching specific scheduled
payments then due shall be applied to those scheduled payments; (iii)
voluntary prepayments shall be applied as determined by Borrower, subject to
the provisions of SECTION 1.3(a); and (iv) mandatory prepayments shall be
applied as set forth in SECTIONS 1.3(c) and 1.3(d). All payments and
prepayments applied to a particular Loan shall be applied ratably to the
portion thereof held by each Lender as determined by its Pro Rata Share. As
to each other payment, and as to all payments made when a Default or Event or
Default shall have occurred
-14-
and be continuing or following the Commitment Termination Date, Borrower
hereby irrevocably waives the right to direct the application of any and all
payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to
apply any and all such payments against the Obligations as Agent may deem
advisable notwithstanding any previous entry by Agent in the Loan Account or
any other books and records. In the absence of a specific determination by
Agent with respect thereto, payments shall be applied to amounts then due and
payable in the following order: (1) to Fees and Agent's expenses reimbursable
hereunder; (2) to interest on the Swing Line Loan; (3) to principal payments
on the Swing Line Loan; (4) to interest on the other Loans, ratably in
proportion to the interest accrued as to each Loan; (5) to principal payments
on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in ANNEX B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of
Credit Obligations; and (6) to all other Obligations including expenses of
Lenders to the extent reimbursable under SECTION 11.3.
(b) Agent is authorized, with the consent of Supermajority
Revolving Lenders, to charge to the Revolving Loan balance on behalf of
Borrower and cause to be paid all Fees, expenses, Charges, costs (including
insurance premiums in accordance with SECTION 5.4(a)) and interest and
principal, other than principal of the Revolving Loan, owing by Borrower
under this Agreement or any of the other Loan Documents if and to the extent
Borrower fails to promptly pay any such amounts as and when due, even if such
charges would cause the aggregate balance of the Revolving Loan and the Swing
Line Loan to exceed Borrowing Availability. To the extent permitted by law,
any charges so made shall constitute part of the Revolving Loan hereunder.
1.12 LOAN ACCOUNT AND ACCOUNTING. Agent shall maintain a
loan account (the "LOAN ACCOUNT") on its books to record: all Advances and
the Term Loan, all payments made by Borrower, and all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall, absent manifest error, be presumptive
evidence of the amounts due and owing to Agent and Lenders by Borrower;
provided that any failure to so record or any error in so recording shall not
limit or otherwise affect Borrower's duty to pay the Obligations. Agent
shall render to Borrower a monthly accounting of transactions with respect to
the Loans setting forth the balance of the Loan Account. Unless Borrower
notifies Agent in writing of any objection to any such accounting
(specifically describing the basis for such objection), within thirty (30)
days after the date thereof, each and every such accounting shall, absent
manifest error, be deemed final, binding and conclusive upon Borrower in all
respects as to all matters reflected therein. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrower.
Notwithstanding any provision herein contained to the contrary, any Lender
may elect (which election may be revoked) to dispense with the issuance of
Notes to that Lender and may rely on the Loan Account as evidence of the
amount of Obligations from time to time owing to it.
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1.13 INDEMNITY.
(a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"INDEMNIFIED PERSON"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including
reasonable attorneys' fees and disbursements and other costs of investigation
or defense, including those incurred upon any appeal) which may be instituted
or asserted against or incurred by any such Indemnified Person as the result
of (a) this Agreement or the other Loan Documents, or any act, event or
transaction related or attendant thereto or to the M&M Acquisition, the
making of the Loans or the issuing, or causing the issuance of, Letters of
Credit, the management of such Loans or Letters of Credit, the use or
intended use of the proceeds of the Loans or Letters of Credit, or any of the
other transactions contemplated by the Related Transactions Documents, or (b)
any Environmental Liabilities under Environmental Laws arising from or in
connection with the past, present or future operations of the Borrower, its
Subsidiaries or any of their respective predecessors in interest, or, the
past, present or future environmental condition of any Property, the presence
of asbestos-containing materials at any Property or the Release or threatened
Release of any Contaminant (collectively, the "INDEMNIFIED LIABILITIES");
PROVIDED, HOWEVER, that the Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities to the extent
caused by or resulting from the willful misconduct or gross negligence of the
Indemnified Person (or any other Indemnified Person whose willful misconduct
or grossly negligent acts were authorized by the Indemnified Person claiming
indemnification hereunder), as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it
is violative of any law or public policy, the Borrower shall contribute the
maximum portion which it is permitted to pay and satisfy under applicable
law, to the payment and satisfaction of all Indemnified Liabilities incurred
by the Indemnitees. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO
ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on
the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in
part prior to the last day of any applicable LIBOR Period (whether that
repayment is made pursuant to any provision of this Agreement or any other
Loan Document or is the result of acceleration, by operation of law or
otherwise); (ii) Borrower shall default in payment when due of the principal
amount of or interest on any LIBOR Loan; (iii) Borrower shall default in
making any borrowing of, conversion into or
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continuation of LIBOR Loans after Borrower has given notice requesting the
same in accordance herewith; or (iv) Borrower shall fail to make any
prepayment of a LIBOR Loan after Borrower has given a notice thereof in
accordance herewith, Borrower shall indemnify and hold harmless each Lender
from and against all losses, costs and expenses resulting from or arising
from any of the foregoing. Such indemnification shall include any loss
(including loss of margin) or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate deposits from which such
funds were obtained. For the purpose of calculating amounts payable to a
Lender under this subsection, each Lender shall be deemed to have actually
funded its relevant LIBOR Loan through the purchase of a deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of that LIBOR
Loan and having a maturity comparable to the relevant LIBOR Period; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner it
sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written
calculation of all amounts payable pursuant to this SECTION 1.13(b), and such
calculation shall be binding on the parties hereto unless Borrower shall
object in writing within ten (10) Business Days of receipt thereof,
specifying the basis for such objection in detail.
1.14 ACCESS. Each Credit Party which is a party hereto
shall, during normal business hours, from time to time upon one (1) Business
Day's prior notice as frequently as Agent determines to be appropriate: (a)
provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors and employees (including officers) of each
Credit Party and to the Collateral, (b) permit Agent, and any of its
officers, employees and agents, to inspect, audit and make extracts from any
Credit Party's books and records, and (c) permit Agent, and its officers,
employees and agents, to inspect, review, evaluate and make test
verifications and counts of the Accounts, Inventory and other Collateral of
any Credit Party. If a Default or Event of Default shall have occurred and
be continuing or if access is necessary to preserve or protect the Collateral
as determined by the Agent, each such Credit Party shall provide such access
to Agent and to each Lender at all times and without advance notice.
Furthermore, so long as any Event of Default shall have occurred and be
continuing, Borrower shall provide Agent and each Lender with access to its
suppliers and customers. Each Credit Party shall make available to Agent and
its counsel, as quickly as is possible under the circumstances, originals or
copies of all books and records which Agent may request. Each Credit Party
shall deliver any document or instrument necessary for Agent, as it may from
time to time request, to obtain records from any service bureau or other
Person which maintains records for such Credit Party, and shall maintain
duplicate records or supporting documentation on media, including computer
tapes and discs owned by such Credit Party. Agent will give Lenders at least
ten (10) days' prior written notice of regularly scheduled audits.
Representatives of other Lenders may accompany Agent's representatives on
regularly scheduled audits at no charge to Borrower.
1.15 TAXES.
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(a) PAYMENT OF TAXES. Any and all payments by the Borrower
hereunder or under any Note or other document evidencing any Obligations
shall be made, in accordance with this SECTION 1.15, free and clear of and
without reduction for any and all present or future taxes, levies, imposts,
deductions, charges, withholdings, duties, and all stamp, transaction or
documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on
the value of the Property, charges or levies which arise from the execution,
delivery or registration, or from payment or performance under, or otherwise
with respect to, any of the Loan Documents or the Commitments and all other
liabilities with respect thereto (including any related interest, penalties,
fines and expenses in connection with any of them) excluding taxes imposed on
or measured by net income or overall gross receipts and capital and franchise
taxes imposed on Agent or any Lender by (i) the United States, (ii) the
Governmental Authority of any jurisdiction in which Agent or such Lender has
an office or any political subdivision thereof or (iii) the Governmental
Authority in which Agent or such Lender is organized, managed and controlled
or any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, Charges, withholdings or duties, and all liabilities
with respect thereto, being hereinafter referred to as "TAXES"). If the
Borrower shall be required by law to withhold or deduct any Taxes from or in
respect of any sum payable hereunder or under any such Note or document to
Agent or any Lender (x) the sum payable to Agent or such Lender shall be
increased as may be necessary so that after making all required withholding
or deductions (including withholding or deductions applicable to additional
sums payable under this SECTION 1.15) Agent or such Lender receives an amount
equal to the sum it would have received had no such withholding or deductions
been made, (y) the Borrower shall make such withholding or deductions, and
(z) the Borrower shall pay the full amount withheld or deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) INDEMNIFICATION. The Borrower will indemnify Agent and
each Lender against, and reimburse Agent and each Lender on demand for, the
full amount of all Taxes (including, without limitation, any Taxes imposed by
any Governmental Authority on amounts payable under this SECTION 1.15 and any
additional income or franchise taxes resulting therefrom) incurred or paid by
Agent or such Lender or any of their respective Affiliates and any liability
(including penalties, additions to tax, interest, and out-of-pocket expenses
paid to third parties) arising therefrom or with respect thereto, whether or
not such Taxes were lawfully payable. A certificate as to any additional
amount payable to any Person under this SECTION 1.15 submitted by such Person
to the Borrower shall, absent manifest error, be final, conclusive and
binding upon all parties hereto. Agent and each Lender agrees, within a
reasonable time after receiving a written request from the Borrower, to
provide the Borrower with such certificates as are reasonably required, and
take such other actions as are reasonably necessary to claim such exemptions
as such Person may be entitled to claim in respect of all or a portion of any
Taxes which are otherwise required to be paid or deducted or withheld
pursuant to this SECTION 1.15 in respect of any payments under this Agreement
or under the Notes.
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(c) RECEIPTS. Within thirty (30) days after the date of any
payment of Taxes by the Borrower, it will furnish to the Agent, at its
address referred to in SECTION 11.10, the original or a certified copy of a
receipt evidencing payment thereof.
(d) FOREIGN LENDERS. Each Lender organized under the laws
of a jurisdiction outside the United States (a "FOREIGN LENDER") as to which
payments to be made under this Agreement or under the Notes are exempt from
United States withholding tax under an applicable statute or tax treaty shall
provide to Borrower and Agent a properly completed and executed IRS Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by
the IRS or the United States certifying as to such Foreign Lender's
entitlement to such exemption (a "CERTIFICATE OF EXEMPTION"). Any foreign
Person that seeks to become a Lender under this Agreement shall provide a
Certificate of Exemption to Borrower and Agent prior to becoming a Lender
hereunder. No foreign Person may become a Lender hereunder if such Person is
unable to deliver a Certificate of Exemption.
1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY.
(a) If any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar
requirements or compliance by any Lender with any request or directive
regarding capital adequacy, reserve requirements or similar requirements
(whether or not having the force of law), in each case, adopted after the
Effective Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender and thereby
reducing the rate of return on such Lender's capital as a consequence of its
obligations hereunder, then Borrower shall from time to time upon demand by
such Lender (with a copy of such demand to Agent) pay to Agent, for the
account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of that reduction
and showing the basis of the computation thereof submitted by such Lender to
Borrower and to Agent shall, absent manifest error, be final, conclusive and
binding for all purposes.
(b) If, due to either (i) the introduction of or any change
in any law or regulation (or any change in the interpretation thereof) or
(ii) the compliance with any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of law), in
each case adopted after the Effective Date, there shall be any increase in
the cost to any Lender of agreeing to make or making, funding or maintaining
any Loan, then Borrower shall from time to time, upon demand by such Lender
(with a copy of such demand to Agent), pay to 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 Borrower and to Agent by such Lender, shall be conclusive and
binding on Borrower for all purposes, absent manifest error. Each Lender
agrees that, as promptly as practicable after it becomes aware of any
circumstances referred to above which would result in any such increased
cost, the affected Lender shall, to the extent not inconsistent with such
Lender's internal policies
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of general application, use reasonable commercial efforts to minimize costs
and expenses incurred by it and payable to it by Borrower pursuant to this
SECTION 1.16(b).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for
any Lender to agree to make or to make or to continue to fund or maintain any
LIBOR Loan, then, unless that Lender is able to make or to continue to fund
or to maintain such LIBOR Loan at another branch or office of that Lender
without, in that Lender's opinion, adversely affecting it or its Loans or the
income obtained therefrom, on notice thereof and demand therefor by such
Lender to Borrower through Agent, (i) the obligation of such Lender to agree
to make or to make or to continue to fund or maintain LIBOR Loans shall
terminate and (ii) Borrower shall forthwith prepay in full all outstanding
LIBOR Loans owing to such Lender, together with interest accrued thereon,
unless Borrower, within five (5) Business Days after the delivery of such
notice and demand, converts all such Loans into an Index Rate Loan.
(d) REPLACEMENT OF LENDER IN RESPECT OF INCREASED COSTS.
Within fifteen (15) days after receipt by Borrower of written notice and
demand from any Lender (an "AFFECTED LENDER") for payment of additional
amounts or increased costs as provided in SECTION 1.15(a), 1.16(a) or
1.16(b), Borrower may, at its option, notify Agent and such Affected Lender
of its intention to replace the Affected Lender. So long as no Default or
Event of Default shall have occurred and be continuing, Borrower, with the
consent of Agent, may obtain, at Borrower's expense, a replacement Lender
("REPLACEMENT LENDER") for the Affected Lender, which Replacement Lender must
be satisfactory to Agent. If Borrower obtains a Replacement Lender within
ninety (90) days following notice of its intention to do so, the Affected
Lender must sell and assign its Loans and Commitments to such Replacement
Lender for an amount equal to the principal balance of all Loans held by the
Affected Lender and all accrued interest and Fees with respect thereto
through the date of such sale, provided that Borrower shall have reimbursed
such Affected Lender for the additional amounts or increased costs that it is
entitled to receive under this Agreement through the date of such sale and
assignment. Notwithstanding the foregoing, Borrower shall not have the right
to obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within fifteen (15) days following its
receipt of Borrower's notice of intention to replace such Affected Lender.
Furthermore, if Borrower gives a notice of intention to replace and does not
so replace such Affected Lender within ninety (90) days thereafter,
Borrower's rights under this SECTION 1.16(d) shall terminate and Borrower
shall promptly pay all increased costs or additional amounts demanded by such
Affected Lender pursuant to SECTIONS 1.15(a), 1.16(a) and 1.16(b).
1.17 SINGLE LOAN. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until
the Termination Date, by all of its Collateral.
20 CONDITIONS PRECEDENT
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2.1 CONDITIONS TO THE INITIAL LOANS.
No Lender shall be obligated to make any Loan or incur any Letter
of Credit Obligations on the Effective Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied or
provided for in a manner satisfactory to Agent, or waived in writing by Agent
and Lenders:
(a) CREDIT AGREEMENT; LOAN DOCUMENTS. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as ANNEX D, each in form and substance satisfactory to Agent.
(b) APPROVALS. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions or (ii) an officer's
certificate in form and substance satisfactory to Agent affirming that no such
consents or approvals are required.
(c) OPENING AVAILABILITY. The Eligible Accounts and Eligible
Inventory of Borrower supporting the initial Revolving Credit Advance and the
initial Letter of Credit Obligations incurred and the amount of the Reserves to
be established on the Effective Date shall be sufficient in value, as determined
by Agent, to provide Borrower with Net Borrowing Availability, after giving
effect to the initial Revolving Credit Advance, the incurrence of any initial
Letter of Credit Obligations and the consummation of the Related Transactions
(on a pro forma basis, with trade payables being paid currently, and expenses
and liabilities being paid in the ordinary course of business and without
acceleration of sales) of at least $5,000,000.
(d) PAYMENT OF FEES. Borrower shall have paid the Fees required
to be paid on the Effective Date in the respective amounts specified in
SECTION 1.9 (including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all fees, costs and expenses of closing
presented as of the Effective Date.
(e) CAPITAL STRUCTURE: OTHER INDEBTEDNESS. The capital
structure of each Credit Party and the terms and conditions of all Indebtedness
of each Credit Party shall be acceptable to Agent in its sole discretion.
(f) CONSUMMATION OF RELATED TRANSACTIONS. Agent shall have
received fully executed copies of the M&M Acquisition Agreement and each of the
other Related Transactions Documents, each of which shall be in form and
substance satisfactory to Agent and its counsel. The M&M Acquisition and the
other Related Transactions shall have been consummated in
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accordance with the terms of the M&M Acquisition Agreement and the other
Related Transactions Documents but for the payment of the cash purchase price
payable on the Effective Date and the issuance of the Stock of the Borrower
to the existing owners of M&M pursuant to the M&M Acquisition Agreement.
2.2 FURTHER CONDITIONS TO EACH LOAN. Except as otherwise
expressly provided herein, no Lender shall be obligated to fund any Loan,
convert or continue any Loan as a LIBOR Loan or incur any Letter of Credit
Obligation, if, as of the date thereof:
(a Any representation or warranty by any Credit Party
contained herein or in any of the other Loan Documents shall be untrue or
incorrect as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement; or
(b Any event or circumstance having a Material Adverse Effect
shall have occurred since the date hereof as determined by the Requisite
Revolving Lenders; or
(c (i) Any Event of Default shall have occurred and be
continuing or would result after giving effect to any Loan (or the incurrence of
any Letter of Credit Obligations), or (ii) a Default shall have occurred and be
continuing or would result after giving effect to any Loan, and Agent or
Requisite Revolving Lenders shall have determined not to make any Loan or incur
any Letter of Credit Obligation so long as that Default is continuing; or
(d After giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations), the outstanding principal amount of the
Revolving Loan would exceed the lesser of the Borrowing Base and the Maximum
Amount, less, in each case, the then outstanding principal amount of the Swing
Line Loan; or
(e After giving effect to any Swing Line Advance, the
outstanding principal amount of the Swing Line Loan would exceed Swing Line
Availability. The request and acceptance by Borrower of the proceeds of any
Loan, the incurrence of any Letter of Credit Obligations or the conversion or
continuation of any Loan into, or as, a LIBOR Loan, as the case may be, shall be
deemed to constitute, as of the date of such request or acceptance, (i) a
representation and warranty by Borrower that the conditions in this SECTION 2.2
have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
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3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Credit
Party (a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation; (b) is duly qualified to
conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect; (c) has the requisite corporate power and authority and
the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; and (d) subject to
specific representations set forth herein regarding ERISA, Environmental Laws,
tax and other laws, is in compliance with all applicable Requirements of Law,
except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.2 EXECUTIVE OFFICES; FEIN. As of the Effective Date, the
current location of each Credit Party's chief executive office and principal
place of business is set forth in DISCLOSURE SCHEDULE (3.2), and none of such
locations have changed within the twelve (12) months preceding the Effective
Date. In addition, DISCLOSURE SCHEDULE (3.2) lists the federal employer
identification number of each Credit Party.
3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS.
The execution, delivery and performance by each Credit Party of the Loan
Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person's corporate power; (b) have been duly
authorized by all necessary or proper corporate and shareholder action; (c) do
not contravene any provision of such Person's Organizational Documents; (d) do
not violate any Requirements of Law; (e) do not conflict with or result in the
breach or termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, material agreement or other material instrument to which such
Person is a party or by which such Person or any of its property is bound; (f)
do not result in the creation or imposition of any Lien upon any of the property
of such Person other than those in favor of Agent, on behalf of itself and
Lenders, pursuant to the Loan Documents; and (g) do not require the consent or
approval of any Governmental Authority or any other Person, except those
referred to in SECTION 2.1(c), all of which will have been duly obtained, made
or complied with prior to the Effective Date. The grant and perfection of the
security interest in the Stock of the Subsidiaries of the Borrower constituting
a portion of the Collateral, as contemplated by the terms of the Loan Documents,
is not made in violation of the registration provisions of the Securities Act,
any applicable provisions of other federal securities laws, state securities or
"Blue Sky" law, foreign securities law, or applicable general corporation,
limited liability company, unlimited liability company or partnership law or in
violation of any other Requirements of Law. On or prior to the Effective Date,
each of the Loan Documents shall have been duly executed and delivered by each
Credit Party party thereto and each such Loan Document shall then constitute a
legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms.
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3.4 FINANCIAL STATEMENTS AND PROJECTIONS. Except for the
Projections, all Financial Statements concerning Borrower and its Subsidiaries
which are referenced below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed therein
and except, with respect to unaudited Financial Statements, for the absence of
footnotes and normal year-end audit adjustments) and present fairly in all
material respects the financial position of the Persons covered thereby as at
the dates thereof and the results of their operations and cash flows for the
periods then ended.
(a The following Financial Statements have been delivered on
or prior to the date hereof:
(i The audited consolidated and consolidating balance
sheets at December 31, 1996 and 1997, and the related statements of
income and cash flows of Borrower and its Subsidiaries for the Fiscal
Years then ended, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP.
(ii The unaudited balance sheet(s) at March 29, 1998,
and the related statement(s) of income and cash flows of Borrower and its
Subsidiaries for the Fiscal Quarter ended March 29, 1998.
(b PRO FORMA. The Pro Forma delivered on or prior to the date
hereof was prepared by Borrower giving pro forma effect to the Related
Transactions, was based on the unaudited consolidated and consolidating balance
sheets of Borrower and its Subsidiaries dated as of July 31, 1998, and was
prepared in accordance with GAAP, with only such adjustments thereto as would be
required in accordance with GAAP.
(c PROJECTIONS. The Projections delivered on or prior to the
date hereof have been prepared by Borrower in light of the past operations of
its businesses, but including future payments of known contingent liabilities
reflected on the balance sheet, and reflect projections for the one-year period
beginning on December 31, 1997, on a year by year basis. The Projections are
based upon estimates and assumptions stated therein, all of which Borrower
believes to be reasonable and fair in light of current conditions and current
facts known to Borrower and, as of the Effective Date, reflect Borrower's good
faith and reasonable estimates of the future financial performance of Borrower
and of the other information projected therein for the period set forth therein.
3.5 MATERIAL ADVERSE EFFECT. Between December 31, 1997, and
the Effective Date no event has occurred, which alone or together with other
events, could reasonably be expected to have a Material Adverse Effect.
3.6 OWNERSHIP OF PROPERTY; LIENS. As of the Effective Date,
the Real Property listed on DISCLOSURE SCHEDULE (3.6) constitutes all of the
Real Property owned, leased, subleased,
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or used by any Credit Party and the addresses thereof. Each Credit Party
owns good and marketable fee simple title to all of its owned Real Property,
and valid and marketable leasehold interests in all of its leased Real
Property. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal properties and assets. As of the
Effective Date, none of the properties and assets of any Credit Party are
subject to any Liens other than Permitted Encumbrances and the M&M Liens, and
there are no facts, circumstances or conditions known to any Credit Party
that may result in any Liens (including Liens arising under Environmental
Laws) other than Permitted Encumbrances. Each Credit Party has received all
deeds, assignments, waivers, consents, non-disturbance and recognition or
similar agreements, bills of sale and other documents, and has duly effected
all recordings, filings and other actions necessary to establish, protect and
perfect such Credit Party's right, title and interest in and to all such Real
Property and other properties and assets. As of the Effective Date, no
portion of any Credit Party's Real Property has suffered any material damage
by fire or other casualty loss which has not heretofore been repaired and
restored in all material respects to its original condition or otherwise
remedied. As of the Effective Date, all material permits required to have
been issued or appropriate to enable the Real Property 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.
3.7 LABOR MATTERS. As of the Effective Date (a) no strikes or
other material labor disputes against any Credit Party are pending or, to any
Credit Party's knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party comply with the Fair Labor Standards Act and each
other federal, state, local or foreign law applicable to such matter; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
there is no organizing activity involving any Credit Party pending or, to any
Credit Party's knowledge, threatened by any labor union or group of employees;
(f) there are no representation proceedings pending or, to any Credit Party's
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of any Credit Party has made a pending demand
for recognition; and (g) there are no material complaints or charges against any
Credit Party pending or, to the knowledge of any Credit Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.
3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK
AND INDEBTEDNESS. DISCLOSURE SCHEDULE (3.8) sets forth (i) the correct legal
name and jurisdiction of incorporation, and the jurisdictions in which qualified
to transact business as a foreign corporation, of each Credit Party, (ii) the
authorized, issued and outstanding shares of each class of capital Stock of each
Credit Party and the owners of such shares (other than the owners of the shares
of common stock of Borrower), and (iii) a summary of the direct and indirect
partnership, joint venture, or other equity interests, if any, of the Borrower
and each of its Subsidiaries in any Person that is not a corporation. All of
the issued and outstanding Stock of each Credit Party other than Borrower is
owned by each of the stockholders and in the amounts set forth on
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DISCLOSURE SCHEDULE (3.8). Other than the Stock Incentive Plan, there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock
or other equity securities of its Subsidiaries.
3.9 GOVERNMENT REGULATION. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940 as amended. No Credit Party is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or any other foreign, federal or state statute that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder.
3.10 MARGIN REGULATIONS. No Credit Party is engaged, nor will
it engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U or G of the Federal Reserve
Board as now and from time to time hereafter in effect (such securities being
referred to herein as "MARGIN STOCK"). No Credit Party owns any Margin Stock,
and none of the proceeds of the Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any Margin Stock
or for any other purpose which might cause any of the Loans or other extensions
of credit under this Agreement to be considered a "purpose credit" within the
meaning of Regulation G, T, U or X of the Federal Reserve Board. No Credit
Party will take or permit to be taken any action which might cause any Loan
Document to violate any regulation of the Federal Reserve Board.
3.11 TAXES. Except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, all tax returns,
reports and statements, including information returns, required by any
Governmental Authority to be filed by any Credit Party have been filed with the
appropriate Governmental Authority and all Charges have been paid prior to the
date on which any fine, penalty, interest or late charge may be added thereto
for nonpayment thereof (or any such fine, penalty, interest, late charge or loss
has been paid), excluding Charges or other amounts being contested in good faith
by appropriate proceedings and for which such Credit Party shall have set aside
on its books adequate reserves. Proper and accurate amounts have been withheld
by each Credit Party from its respective employees for all periods in full and
complete compliance with all applicable Requirements of Law and such
withholdings have been timely paid to the respective Governmental Authorities.
3.12 ERISA.
(a Except with respect to Multiemployer Plans, each Qualified
Plan has been determined by the IRS to qualify under Section 401 of the IRC, and
the trusts created thereunder have been determined to be exempt from tax under
the provisions of Section 501 of the IRC, and
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nothing has occurred which would cause the loss of such qualification or
tax-exempt status. Each Plan is in compliance with the applicable provisions
of ERISA and the IRC, including the filing of reports required under the IRC
or ERISA. No Credit Party or ERISA Affiliate has failed to make any
contribution or pay any amount due as required by the IRC or ERISA or the
terms of any such Plan. No Credit Party or ERISA Affiliate has engaged in a
prohibited transaction, as defined in Section 4975 of the IRC, in connection
with any Plan, which would subject any Credit Party to a material tax on
prohibited transactions imposed by Section 4975 of the IRC.
(b Except as set forth in DISCLOSURE SCHEDULE (3.12): (i) no
Benefit Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Benefit Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Benefit Plan with Unfunded
Pension Liabilities has been transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate; and (vi) no liability under any Benefit Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated AAA
by the Standard & Poor's Corporation or the equivalent by another nationally
recognized rating agency.
3.13 FOREIGN EMPLOYEE BENEFIT MATTERS. Each Foreign Employee
Benefit Plan is in compliance in all material respects with all laws,
regulations and rules applicable thereto and the respective requirements of the
governing documents for such Plan. The aggregate of the liabilities to provide
all of the accrued benefits under any Foreign Pension Plan does not exceed the
current Fair Market Value of the assets held in the trust or other funding
vehicle for such Plan. With respect to any Foreign Employee Benefit Plan
maintained or contributed to by any Credit Party or any ERISA Affiliate (other
than a Foreign Pension Plan), reasonable reserves have been established to the
extent required by prudent business practice or where required by ordinary
accounting practices in the jurisdiction in which such Plan is maintained. The
aggregate unfunded liabilities, after giving effect to any reserves for such
liabilities, with respect to such Plans does not exceed the current Fair Market
Value of the assets held in the trust or other funding vehicle (or reserves) for
such Plan. There are no actions, suits or claims (other than routine claims for
benefits) pending or threatened against any Credit Party or any ERISA Affiliate
with respect to any Foreign Employee Benefit Plan.
3.14 NO LITIGATION; NO ADVERSE EFFECTS.
(a No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "LITIGATION"), (i) which
challenges any Credit Party's right or power to enter into or perform any
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of its obligations under the Loan Documents to which it is a party, or the
validity or enforceability of any Loan Document or any action taken
thereunder, or (ii) which has a reasonable risk of being determined adversely
to any Credit Party and which, if so determined, could have a Material
Adverse Effect. Except as set forth on DISCLOSURE SCHEDULE (3.14), as of the
Effective Date there is no Litigation pending or threatened which seeks
injunctive relief or alleges criminal misconduct of any Credit Party or would
otherwise have, or be reasonably likely to have, a Material Adverse Effect.
(b There is no material loss contingency within the meaning of
GAAP which has not been reflected in the consolidated financial statements of
the Borrower. No Credit Party is (i) in violation of any applicable Requirements
of Law which violation would have or would be reasonably likely to have a
Material Adverse Effect, or (ii) subject to or in default with respect to any
final judgment, writ, injunction, restraining order or order of any nature,
decree, rule or regulation of any court or Governmental Authority which would
have or would be reasonably likely to have a Material Adverse Effect.
3.15 BROKERS. No broker or finder acting on behalf of any
Credit Party brought about the obtaining, making or closing of the Loans or the
Related Transactions, and no Credit Party has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith.
3.16 INTELLECTUAL PROPERTY. As of the Effective Date, each
Credit Party owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now or heretofore conducted by it or
proposed to be conducted by it, and each Patent, Trademark, Copyright and
License is listed, together with application or registration numbers, as
applicable, in DISCLOSURE SCHEDULE (3.16) hereto. Each Credit Party conducts
its business and affairs without infringement of or interference with any
Intellectual Property of any other Person.
3.17 FULL DISCLOSURE. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other reports from time to time delivered
hereunder or any written statement furnished by or on behalf of any Credit Party
to Agent or any Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. The Liens
granted to Agent, on behalf of itself and Lenders, pursuant to the Collateral
Documents will at all times be fully perfected first priority Liens in and to
the Collateral described therein, subject, as to priority, only to Permitted
Encumbrances with respect to the Collateral other than Accounts.
3.18 ENVIRONMENTAL MATTERS
(a As of the Effective Date, except as disclosed on DISCLOSURE
SCHEDULE (3.18), to the knowledge of any Credit Party: (i) the Real Property is
free of contamination from
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any Hazardous Material except for such contamination that would not adversely
impact the value or marketability of such Real Property and which would not
result in Environmental Liabilities which could reasonably be expected to
exceed $500,000; (ii) no Credit Party has caused or suffered to occur any
Release of Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Property which (A) require Remedial Action to be undertaken
where such Remedial Action is subject to review or approval by any
Governmental Authority or (B) would require a report to be made to any
Governmental Authority; (iii) the Credit Parties are and have been in
compliance with all Environmental Laws, except for such noncompliance which
would not result in Environmental Liabilities which could reasonably be
expected to exceed $500,000; (iv) the Credit Parties have obtained or applied
for, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as
presently conducted or as proposed to be conducted, except where the failure
to so obtain or comply with such Environmental Permits would not result in
Environmental Liabilities which could reasonably be expected to exceed
$500,000, and all such Environmental Permits are valid, uncontested and in
good standing; (v) no Credit Party is involved in operations or knows of any
facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any in Environmental Liabilities of
such Credit Party which could reasonably be expected to exceed $500,000; and
(vi) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statute, and to the actual knowledge of the Credit Parties,
there are no facts, circumstances or conditions that may result in any Credit
Party being identified as a "potentially responsible party" under CERCLA or
analogous state statutes.
(b Each Credit Party hereby acknowledges and agrees that Agent
(i) is not now, and has not ever been, in control of any of the Real Property or
any Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Property or compliance with Environmental Laws or Environmental Permits.
3.19 INSURANCE. DISCLOSURE SCHEDULE (3.19) lists all insurance
policies of any nature maintained, as of the Effective Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy, specifying (i) the amount thereof, (ii) the risks insured against
thereby, (iii) the name of the insurer and each insured party thereunder, (iv)
the policy or other identification number thereof, (v) the expiration date
thereof and (vi) the annual premium with respect thereto. Such insurance
policies and programs are in amounts sufficient to cover the replacement value
of the respective Property and assets of the Credit Parties.
3.20 DEPOSIT AND DISBURSEMENT ACCOUNTS. DISCLOSURE
SCHEDULE (3.20) lists all banks and other financial institutions at which any
Credit Party maintains deposits and/or other accounts as of the Effective Date,
including any Disbursement Accounts, and such Schedule correctly identifies the
name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number.
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3.21 GOVERNMENT CONTRACTS. Except as set forth in DISCLOSURE
SCHEDULE (3.21), as of the Effective Date:
(i The Credit Parties are in compliance with all
material terms and conditions of all applicable Requirements of Laws and
all Contractual Obligations pertaining to any Government Contract;
(ii No termination for default, termination for
convenience, cure notice or show cause notice is currently in effect with
respect to any Government Contract;
(iii To the best of the Borrower's knowledge, no cost
incurred pertaining to any Government Contract has been questioned or
challenged, is the subject of any investigation or has been disallowed by
any United States Governmental Authority;
(iv To the best of the Borrower's knowledge, no money
due to any Credit Party pertaining to any Government Contract has been
withheld, or has been the subject of an attempt to withhold, or reduced
through exercise of a right of set-off or otherwise;
(v There exist (A) no outstanding material Claims
against any Credit Party or any Property, either by a United States
Governmental Authority or by any prime contractor, subcontractor, vendor
or other third party, arising under or relating to any Government
Contract; and (B) no material disputes between the Borrower or any of its
Subsidiaries, on the one hand, and any United States Governmental
Authority, any prime contractor, subcontractor, vendor or other third
party, on the other hand, arising under or relating to any Government
Contract;
(vi The Borrower's cost accounting and procurement
systems with respect to Government Contracts are in compliance in all
material respects with all applicable Requirements of Law; and
(vii All Government Contracts and bids (A) are being
performed or were submitted, as the case may be, in the ordinary course
of business and (B) are or would be, as the case may be, capable of
performance in accordance with their terms without loss (determined in
accordance with GAAP, consistently applied).
3.22 CUSTOMER AND TRADE RELATIONS. As of the Effective Date,
there exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: (i) the business relationship of any Credit Party with any customer or group
of customers whose purchases during the preceding twelve (12) months
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caused them to be ranked among the ten largest customers of such Credit
Party; or (ii) the business relationship of any Credit Party with any
supplier material to its operations.
3.23 SOLVENCY. Both before and after giving effect to (a) the Loans
and Letter of Credit Obligations to be made or extended on the Effective 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 Borrower, (c) the M&M Acquisition and
the consummation of the other Related Transactions and (d) the payment and
accrual of all transaction costs in connection with the foregoing, each
Credit Party is Solvent.
3.24 YEAR 2000 REPRESENTATIONS. Each Credit Party has completed a
Year 2000 Assessment and a Year 2000 Corrective Plan.
3.25 M&M ACQUISITION AGREEMENT. As of the Effective Date, Borrower
has delivered to Agent a complete and correct copy of the M&M Acquisition
Agreement (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto
or in connection therewith). No Credit Party and no other Person party
thereto is in default in the performance or compliance with any provisions
thereof. The M&M Acquisition Agreement complies with, and the M&M
Acquisition will be consummated in accordance with, all applicable
Requirements of Law. The M&M Acquisition Agreement is in full force and
effect as of the Effective Date, has not been terminated, rescinded or
withdrawn. All requisite approvals by Governmental Authorities having
jurisdiction over Sellers, any Credit Party and other Persons referenced
therein, with respect to the transactions contemplated by the M&M Acquisition
Agreement, have been obtained, and no such approvals impose any conditions to
the consummation of the transactions contemplated by the M&M Acquisition
Agreement or to the conduct by any Credit Party of its business thereafter.
To the best of each Credit Party's knowledge, none of the Sellers'
representations or warranties in the M&M Acquisition Agreement contain any
untrue statement of a material fact or omit any fact necessary to make the
statements therein not misleading. Each of the representations and
warranties given by each applicable Credit Party in the M&M Acquisition
Agreement is true and correct in all material respects.
3.26 ELIGIBLE ACCOUNTS. From and after the Effective Date, the
Eligible Accounts are, as of the date as of which any Revolving Loan is made
or requested or any Letter of Credit is issued hereunder or a Borrowing Base
Certificate is delivered, bona fide existing obligations created by the sale
and delivery of Inventory or the rendition of services to Account Debtors in
the ordinary course of the Borrower's business, unconditionally owed to the
Borrower without defenses, disputes, offsets, counterclaims or rights of
return other than in the ordinary course of business. The property giving
rise to such Eligible Accounts has been delivered to the Account Debtor, or
to the Account Debtor's agent for immediate shipment to and unconditional
acceptance by the Account Debtor. The Borrower has not received notice of
actual or imminent bankruptcy, insolvency, or the material impairment of the
financial condition of any Account
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Debtor at the time an Eligible Account due from such Account Debtor is
created or first included in the Borrowing Base.
3.27 ELIGIBLE INVENTORY. From and after the Effective Date, all
Eligible Inventory is, as of the date as of which any Revolving Loan is made
or requested or any Letter of Credit is issued hereunder or a Borrowing Base
Certificate is delivered, of good and merchantable quality, free from
material defects.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 REPORTS AND NOTICES.
(a Each Credit Party executing this Agreement hereby agrees that
from and after the Effective Date and until the Termination Date, it shall
deliver to Agent and/or Lenders, as required, the Financial Statements,
notices, Projections and other information at the times, to the Persons and
in the manner set forth in ANNEX E.
(b Each Credit Party executing this Agreement hereby agrees that
from and after the Effective Date and until the Termination Date, it shall
deliver to Agent and/or Lenders, as required, the various Collateral Reports
(including Borrowing Base Certificates in the form of EXHIBIT 4.1(b)) at the
times, to the Persons and in the manner set forth in ANNEX F.
4.2 COMMUNICATION WITH ACCOUNTANTS. Each Credit Party executing this
Agreement authorizes Agent and, so long as a Default or Event of Default
shall have occurred and be continuing, each Lender, to communicate directly
with its independent certified public accountants including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
LLP, and authorizes and shall instruct those accountants and advisors to
disclose and make available to Agent and each Lender any and all Financial
Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and
other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Each Credit
Party shall: (a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises; (b) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; (c) at all times maintain,
preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear
and tear) and from time to time make, or cause to be made, all
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necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices; and (d) transact business only in such
corporate and trade names as are set forth in DISCLOSURE SCHEDULE (5.1).
5.2 PAYMENT OF OBLIGATIONS.
(a Subject to SECTION 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by
it, including (i) Charges imposed upon it, its income and profits, or any of
its property (real, personal or mixed) and all Charges with respect to tax,
social security and unemployment withholding with respect to its employees,
and (ii) lawful claims for labor, materials, supplies and services or
otherwise, before any thereof shall become past due.
(b Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges or claims described in
SECTION 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP, (ii) no Lien shall be imposed to secure payment of such Charges that is
superior to any of the Liens securing payment of the Obligations and such
contest is maintained and prosecuted continuously and with diligence and
operates to suspend collection or enforcement of such Charges, (iii) none of
the Collateral becomes subject to forfeiture or loss as a result of such
contest, (iv) such Credit Party shall promptly pay or discharge such
contested Charges or claims and all additional charges, interest, penalties
and expenses, if any, and shall deliver to Agent evidence acceptable to Agent
of such compliance, payment or discharge, if such contest is terminated or
discontinued adversely to such Credit Party or the conditions set forth in
this SECTION 5.2(b) are no longer met, and (v) Agent has not advised Borrower
in writing that Agent reasonably believes that nonpayment or nondischarge
thereof could have or result in a Material Adverse Effect.
5.3 BOOKS AND RECORDS. Each Credit Party shall keep adequate books
and records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and
on a basis consistent with the Financial Statements attached as DISCLOSURE
SCHEDULE (3.4(a)).
5.4 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL.
(a The Credit Parties shall, at their sole cost and
expense, maintain the policies of insurance described on DISCLOSURE SCHEDULE
(3.19) as in effect on the date hereof or otherwise in form and amounts and
with insurers acceptable to Agent. If any Credit Party at any time or times
hereafter shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, Agent may at any time
or times thereafter obtain and maintain such policies of insurance and pay
such premiums and take any other action with respect thereto which Agent
deems advisable. Agent shall have no obligation to obtain insurance for any
Credit Party or pay any premiums therefor. By doing so, Agent shall not be
deemed to
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have waived any Default or Event of Default arising from any Credit Party's
failure to maintain such insurance or pay any premiums therefor. All sums so
disbursed, including attorneys' fees, court costs and other charges related
thereto, shall be payable on demand by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral.
(b Agent reserves the right at any time upon any change in any
Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability
of such Credit Party) to require additional forms and limits of insurance to,
in Agent's opinion, adequately protect both Agent's and Lender's interests in
all or any portion of the Collateral and to ensure that each Credit Party is
protected by insurance in amounts and with coverage customary for its
industry. If requested by Agent, each Credit Party shall deliver to Agent
from time to time a report of a reputable insurance broker, satisfactory to
Agent, with respect to its insurance policies.
(c Each Credit Party shall deliver to Agent, in form and
substance satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies naming Agent, on behalf of itself and Lenders, as additional
insured. Each Credit Party irrevocably makes, constitutes and appoints Agent
(and all officers, employees or agents designated by Agent), so long as any
Default or Event of Default shall have occurred and be continuing or the
anticipated insurance proceeds exceed $5,000,000, as such Credit Party's true
and lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such "All Risk" policies of insurance, endorsing the
name of such Credit Party on any check or other item of payment for the
proceeds of such "All Risk" policies of insurance and for making all
determinations and decisions with respect to such "All Risk" policies of
insurance. Agent shall have no duty to exercise any rights or powers granted
to it pursuant to the foregoing power-of-attorney. Each Credit Party shall
promptly notify Agent of any loss, damage, or destruction to the Collateral
in the amount of $1,000,000 or more, whether or not covered by insurance.
After deducting from such proceeds the expenses, if any, incurred by Agent in
the collection or handling thereof, Agent may, at its option, apply such
proceeds to the reduction of the Obligations in accordance with SECTION
1.3(d), provided that in the case of insurance proceeds pertaining to any
Credit Party other than Borrower, such insurance proceeds shall be applied to
the Loans owing by Borrower, or permit or require such Credit Party to use
such money, or any part thereof, to replace, repair, restore or rebuild the
Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss,
damage or destruction. Notwithstanding the foregoing, if the casualty giving
rise to such insurance proceeds would not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds do not exceed $5,000,000
in the aggregate, Agent shall permit the applicable Credit Party to replace,
restore, repair or rebuild the property; provided that if such Credit Party
has not completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 180 days of such
casualty, Agent may apply such insurance proceeds to the Obligations in
accordance with SECTION 1.3(d); provided further that in the case of
insurance proceeds pertaining to any Credit Party other than Borrower, such
insurance
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proceeds shall be applied to the Loans owing by Borrower. All insurance
proceeds which are to be made available to Borrower to replace, repair,
restore or rebuild the Collateral shall be applied by Agent to reduce the
outstanding principal balance of the Revolving Loan (which application shall
not result in a permanent reduction of the Revolving Loan Commitment) and
upon such application, Agent shall establish a Reserve against the Borrowing
Base in an amount equal to the amount of such proceeds so applied. All
insurance proceeds made available to any Credit Party that is not a Borrower
to replace, repair, restore or rebuild Collateral shall be deposited in a
cash collateral account. Thereafter, such funds shall be made available to
such Credit Party to provide funds to replace, repair, restore or rebuild the
Collateral as follows: (i) Borrower shall request a Revolving Credit Advance
be made to such Credit Party in the amount requested to be released; (ii) so
long as the conditions set forth in SECTION 2.2 have been met, Revolving
Lenders shall make such Revolving Credit Advance; and (iii) in the case of
insurance proceeds applied against the Revolving Loan, the Reserve
established with respect to such insurance proceeds shall be reduced by the
amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with SECTION 1.3(d); provided that in the case of
insurance proceeds pertaining to any Credit Party other than Borrower, such
insurance proceeds shall be applied to the Loans owing by Borrower.
5.5 COMPLIANCE WITH LAWS. Each Credit Party shall comply with all
federal, state, local and foreign laws, rules and regulations applicable to
such Credit Party and to its property, assets and operations, including those
laws, rules and regulations relating to ERISA and labor matters and
Environmental Laws and Environmental Permits, except to the extent that the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.6 SUPPLEMENTAL DISCLOSURE. From time to time as may be requested
by Agent (which request will not be made more frequently than once each year
absent the occurrence and continuance of a Default or an Event of Default),
the Credit Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any
matter hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or which is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case
of any supplements to any Disclosure Schedule, such Disclosure Schedule shall
be appropriately marked to show the changes made therein); provided that (a)
no such supplement to any such Disclosure Schedule or representation shall be
or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite
Lenders in writing; and (b) no supplement shall be required as to
representations and warranties that relate solely to the Effective Date.
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5.7 INTELLECTUAL PROPERTY. Each Credit Party will conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect.
5.8 ENVIRONMENTAL MATTERS. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Property in compliance with all Environmental Laws and
Environmental Permits other than noncompliance which could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions which are
appropriate or necessary to maintain the value and marketability of the Real
Property or to otherwise comply with Environmental Laws and Environmental
Permits pertaining to the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its Real Property; (c) notify Agent
promptly after such Credit Party becomes aware of any violation of
Environmental Laws or Environmental Permits or any Release on, at, in, under,
above, to, from or about any Real Property which is reasonably likely to
result in Environmental Liabilities in excess of $25,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental
Laws or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $250,000, in each case whether or not
the Environmental Protection Agency or any Governmental Authority has taken
or threatened any action in connection with any such violation, Release or
other matter. If Agent at any time has a reasonable basis to believe that
there may be a violation of any Environmental Laws or Environmental Permits
by any Credit Party or any Environmental Liability arising thereunder, or a
Release of Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Property, which, in each case, could reasonably be expected
to have a Material Adverse Effect, then each Credit Party shall, upon
Agent's written request (i) cause the performance of such environmental
audits including subsurface sampling of soil and groundwater, and preparation
of such environmental reports, at Borrower's expense, as Agent may from time
to time reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in
form and substance acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Property for the purpose of
conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater. Borrower shall
reimburse Agent for the costs of such audits and tests and the same will
constitute a part of the Obligations secured hereunder.
5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS AND BAILEE LETTERS.
Each Credit Party (other than, prior to the Refinancing Date, M&M) shall
obtain a landlord's agreement, mortgagee agreement or bailee letter, as
applicable, from the lessor of each leased property or mortgagee of owned
property or with respect to any warehouse, processor or converter facility or
other location where Collateral is located, which agreement or letter shall
contain a waiver or subordination of all Liens or claims that the landlord,
mortgagee or bailee may assert against the Inventory or Collateral at that
location, and shall otherwise be satisfactory
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in form and substance to Agent. With respect to such locations or warehouse
space leased or owned as of the Effective Date and thereafter, if Agent has
not received a landlord or mortgagee agreement or bailee letter as of the
Effective Date (or, if later, as of the date such location is acquired or
leased), Borrower's Eligible Inventory at that location shall, in Agent's
discretion, be excluded from the Borrowing Base or be subject to such
Reserves as may be established by Agent in its reasonable credit judgment.
After the Effective Date, no real property or warehouse space shall be leased
or acquired by any Credit Party and no Inventory shall be shipped to a
processor or converter under arrangements established after the Effective
Date without the prior written consent of Agent (which consent, in Agent's
discretion, may be conditioned upon the exclusion from the Borrowing Base of
Eligible Inventory at that location or the establishment of Reserves
acceptable to Agent) or, unless and until a satisfactory landlord or
mortgagee agreement or bailee letter, as appropriate, shall first have been
obtained with respect to such location. Each Credit Party shall timely and
fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or public warehouse where any Collateral
is or may be located.
5.10 FURTHER ASSURANCES. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such
Credit Party's expense and upon request of Agent, duly execute and deliver,
or cause to be duly executed and delivered, to Agent such further instruments
and do and cause to be done such further acts as may be necessary or proper
in the reasonable opinion of Agent to carry out more effectively the
provisions and purposes of this Agreement or any other Loan Document.
Without limiting the generality of the foregoing, each Credit Party hereby
agrees and covenants to amend, supplement or otherwise modify, within ninety
(90) days after the Effective Date, all Collateral Documents and financing
statements entered into in connection with the Existing Credit Agreement
which create or perfect a Lien under the laws, rules or regulations of any
foreign jurisdiction, in order to continue the perfection of the Liens of
Agent, on behalf of Lenders, in the Collateral subject to such Liens.
5.11 YEAR 2000 PROBLEMS. On or prior to August 27, 1998, each Credit
Party shall deliver to the Agent a Year 2000 Assessment and a Year 2000
Corrective Plan. On or prior to November 30, 1998, each Credit Party shall
complete Year 2000 Corrective Actions. On or before January 29, 1999, each
Credit Party shall complete Year 2000 Implementation Testing. On or before
March 31, 1999, each Credit Party shall eliminate all Year 2000 Problems,
except where the failure to correct the same could not reasonably be expected
to have a Material Adverse Effect, individually or in the aggregate.
5.12 ERISA COMPLIANCE. Each Credit Party shall, and shall cause each
of its Domestic Subsidiaries and ERISA Affiliates to, establish, maintain and
operate all Plans to comply in all material respects with the provisions of
ERISA, the Internal Revenue Code, all other applicable laws, and the
regulations thereunder and the respective requirements of the governing
documents for such Plans.
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5.13 FOREIGN EMPLOYEE BENEFIT PLAN COMPLIANCE. Each Credit Party
shall cause each of its Foreign Subsidiaries and ERISA Affiliates to,
establish, maintain and operate all Foreign Employee Benefit Plans to comply
in all material respects with all laws and regulations applicable thereto and
the respective requirements of the governing documents for such Plans.
5.14 GOVERNMENT CONTRACT COMPLIANCE. Each Credit Party shall (a)
maintain all Permits pertaining to Government Contracts required to operate
such Credit Party's business as it is currently conducted, including, without
limitation, (i) all Facility Security Clearance(s) and Personnel Security
Clearance(s), (ii) all certifications of products manufactured by such Credit
Party which are on the "Qualified Products List" of any United States
Governmental Authority, and (iii) all Export Licenses and other similar
Permits; and (b) comply in all material respects with all applicable
Requirements of Law and Contractual Obligations pertaining to each Government
Contract.
5.15 FUTURE LIENS ON REAL PROPERTY. Each Credit Party (other than,
prior to the Refinancing Date, M&M) shall execute and deliver to the Agent,
immediately upon the acquisition or leasing of any Real Property, a mortgage,
deed of trust, assignment or other appropriate instrument evidencing a Lien
upon any such Real Property, lease or interest, together with such title
insurance policies (mortgagee's form), certified surveys, appraisals, and
local counsel opinions with respect thereto and such other agreements,
documents and instruments which the Agent deems necessary or desirable, the
same to be in form and substance substantially the same as the mortgages and
other Loan Documents relating to Real Property executed and delivered in
connection with the Existing Credit Agreement, and to be subject only to (a)
Liens permitted under SECTION 6.7 and (b) such other Liens as the Agent may
reasonably approve, it being understood that the granting of such additional
security for the Obligations is a material inducement to the execution and
delivery of this Agreement by the Agent and the Lenders.
5.16 NEWLY ACQUIRED SUBSIDIARIES; EXECUTION OF GUARANTY; PLEDGE OF
CAPITAL STOCK. The Borrower shall cause each Domestic Subsidiary that the
Borrower acquires directly or indirectly after the Effective Date (other
than, prior to the Refinancing Date, M&M) to execute and deliver to the
Agent, promptly after such Domestic Subsidiary is so acquired, a Guaranty and
any other security document requested by the Agent. The Borrower or the
Subsidiary of the Borrower that directly acquires the new Subsidiary shall,
promptly after such new Subsidiary is so acquired, pledge all of the capital
Stock of, and other equity interests in, such Subsidiary to the Agent for the
benefit of the Lenders pursuant to the Borrower Pledge Agreement (if the new
Subsidiary is acquired directly by the Borrower) or other agreement with
terms and conditions substantially identical thereto, and shall promptly
execute such stock powers, deliver such certificates and take such other
action as the Agent shall reasonably request in order to allow the Agent to
perfect its security interest in such capital Stock or other equity interests.
6. NEGATIVE COVENANTS
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Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that, without the prior written consent of
Agent and the Requisite Lenders, from and after the date hereof until the
Termination Date:
6.1 MERGERS, SUBSIDIARIES, ETC.
(a) No Credit Party shall directly or indirectly, by operation of law
or otherwise, form or acquire any Subsidiary (other than M&M Acquisition
Co.), or merge with, consolidate with, acquire all or substantially all of
the assets or capital stock of, or otherwise combine with or acquire, any
Person (other than M&M). Notwithstanding the foregoing, Borrower or any
wholly owned Subsidiary of Borrower may acquire all or substantially all of
the assets or capital Stock of any Person (the "TARGET") (in each case, a
"PERMITTED ACQUISITION") subject to the satisfaction of each of the following
conditions:
(i) the Agent shall receive at least thirty (30) Business Days'
prior written notice of such proposed Permitted Acquisition, which
notice shall include a reasonably detailed description of such proposed
Permitted Acquisition (including, without limitation, a summary of any
environmental, health or safety claims, liabilities and costs resulting
from the proposed Permitted Acquisition);
(ii) such Permitted Acquisition shall only involve a
business, or those assets of a business, located in the United States or
Canada and comprising a business, or those assets of a business, of the
type engaged in by the Borrower as of the Effective Date (but in no
event shall such acquired business engage primarily in the treatment,
recycling, storage or disposal of any Contaminant), and which acquired
business would not subject the Agent or any Lender to regulatory or
third party approvals in connection with the exercise of its rights and
remedies under this Agreement or any other Loan Documents other than
approvals applicable to the exercise of such rights and remedies with
respect to the Borrower prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual and
shall have been approved by the Target's board of directors and
shareholders (or equivalent governing bodies), as necessary;
(iv) no additional Indebtedness, Accommodation
Obligations, contingent obligations or other liabilities shall be
incurred, assumed or otherwise be reflected on a consolidated balance
sheet of Borrower and Target after giving effect to such Permitted
Acquisition, except (A) Loans made hereunder, (B) ordinary course trade
payables, accrued expenses and unsecured Indebtedness of the Target to
the extent no Default or Event of Default shall have occurred and be
continuing or would result after giving effect to such Permitted
Acquisition and (C) Indebtedness assumed pursuant to a Permitted
Acquisition, PROVIDED that (x) the aggregate principal amount of such
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Indebtedness shall be included in determining the amount of the
Investment in such Permitted Acquisition and (y) such Indebtedness shall
be paid in full on or before the second Business Day after the closing of
such Permitted Acquisition;
(v) the amount of the Investment in such Permitted
Acquisition shall not exceed $3,000,000 nor shall the aggregate amount of
all Investments in Permitted Acquisitions in any Fiscal Year exceed
$10,000,000;
(vi) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances and Liens which (A) do not apply to any Property of the
Borrower or its Subsidiaries other than the assets acquired in the
Permitted Acquisition and (B) are removed no later than the second
Business Day after the closing of the Permitted Acquisition);
(vii) at or prior to the closing of any Permitted
Acquisition, Agent will be granted a first priority perfected Lien
(subject to Permitted Encumbrances and other Liens described in CLAUSE
(vi) of this SECTION 6.1(a)) in all assets acquired pursuant thereto or
in the assets and capital stock of the Target, and Borrower and the
Target shall have executed such documents and taken such actions as may
be required by Agent in connection therewith;
(viii) within twenty (20) Business Days after the date of
such Permitted Acquisition, the Agent shall have received the agreements
entered into in connection with the Permitted Acquisition and all
opinions, certificates, lien search results, environmental reports, title
insurance policies, evidence of compliance with (or exemption from) bulk
sales laws, surveys, zoning letters, certificates of occupancy,
appraisals and other documents reasonably requested by the Agent,
including an assignment of rights in respect of the Borrower's rights
under the related Permitted Acquisition agreements, which assignment
shall be expressly permitted under such Permitted Acquisition agreement
or shall have been consented to by the Target in writing; and
(ix) at the time of such Permitted Acquisition and after
giving effect thereto, no Potential Event of Default or Event of Default
shall have occurred and be continuing or would result therefrom.
Notwithstanding the foregoing, the Accounts and Inventory of
the Target shall not be included in Eligible Accounts and Eligible Inventory
without the prior written consent of Agent and Requisite Revolving Lenders.
(b) The Credit Parties shall not, and shall cause their
Foreign Subsidiaries (other than Kaynar Femipari) not to, increase the value
of any such Subsidiary's assets by more than 25% of the value of such
Subsidiary as of the Effective Date unless the Credit Parties shall have
taken, and shall have caused such Subsidiaries to have taken, all actions
requested by the
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Agent to register and otherwise perfect the Lenders' security interest in 65%
of the capital Stock of such Subsidiaries under applicable Requirements of
Law.
(c) The Credit Parties shall not, and shall cause Kaynar
Femipari not to, allow the value of Kaynar Femipari's assets to exceed
$3,000,000 at any time.
6.2. INVESTMENTS; LOANS AND ADVANCES. Except as otherwise
expressly permitted by this SECTION 6, no Credit Party shall make or permit
to exist any Investment in, or make, accrue or permit to exist loans or
advances of money to, any Person, through the direct or indirect lending of
money, holding of securities or otherwise, except:
(i) so long as Agent has not delivered an Activation
Notice, Borrower may make Investments in the aggregate, subject to
Control Letters in favor of Agent for the benefit of Lenders or otherwise
subject to a perfected security interest in favor of Agent for the
benefit of Lenders, in Cash Equivalents; PROVIDED that at any time
Revolving Loans are outstanding, the amount of such Investments shall not
exceed $1,000,000;
(ii) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;
(iii) contributions to and payments of benefits under any
Plan (in accordance with the terms of the Plan) permitted by this
Agreement;
(iv) Investments arising from intercompany loans which
are permitted under SECTIONS 6.3(vii) and (x);
(v) Investments (in an aggregate unrecovered amount not
to exceed $5,000,000) by the Borrower in Kaynar U.K. and by Kaynar U.K.
in Recoil U.K., including, without limitation, the Borrower's ownership
of the Stock of Kaynar U.K. and Kaynar U.K.'s ownership of the Stock of
Recoil U.K.;
(vi) Investments (in each case in an aggregate unrecovered
amount not to exceed $16,000,000) by the Borrower in Recoil Holdings and
Recoil Australia Holdings and by Recoil Holdings and Recoil Australia
Holdings in Recoil, including, without limitation, the Borrower's
ownership of the Stock of Recoil Holdings and Recoil Australia Holdings
and Recoil Holdings's and Recoil Australia Holdings's ownership of the
Stock of Recoil;
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(vii) Investments (in an aggregate unrecovered amount not
to exceed $3,000,000) by the Borrower in Kaynar Femipari, including,
without limitation, the Borrower's ownership of the Stock of Kaynar
Femipari;
(viii) Investments (in an aggregate unrecovered amount not
to exceed $100,000) by the Borrower in Recoil Delaware, including,
without limitation, the Borrower's ownership of the Stock of Recoil
Delaware;
(ix) Investments (in an aggregate unrecovered amount not
to exceed $1,000,000) by the Borrower in Recoil Holdings and Recoil
Australia Holdings and by Recoil Holdings and Recoil Australia Holdings
in Recoil Thailand and Recoil Singapore, including, without limitation,
the Borrower's ownership of the Stock of Recoil Holdings and Recoil
Australia Holdings and the ownership by Recoil Holdings and Recoil
Australia Holdings of the Stock of Recoil Thailand and Recoil Singapore;
(x) Investments in the Borrower's Subsidiaries (other
than those permitted by CLAUSES (v) through (ix)) in existence, and in
the unrecovered amounts, on the Effective Date; and
(xi) Permitted Acquisitions.
6.3 INDEBTEDNESS.
(a) No Credit Party shall create, incur, assume or permit to
exist any Indebtedness, except (without duplication)
(i) the Obligations;
(ii) trade payables, wages and other accrued expenses
incurred in the ordinary course of business;
(iii) Related Transactions Costs;
(iv) to the extent permitted by ANNEX G or SECTION
6.7(iii) and in any event in an aggregate amount not to exceed
$25,000,000 at any time, Capital Leases and purchase money Indebtedness
incurred to finance the acquisition of fixed assets, and Indebtedness
incurred to refinance such Capital Leases and purchase money
Indebtedness;
(v) Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials or supplies, to the
extent that payment thereof is not required pursuant to SECTION 1.15;
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(vi) Indebtedness constituting Accommodation Obligations
permitted by SECTION 6.6;
(vii) Indebtedness arising from intercompany loans from
any of Borrower's wholly owned Subsidiaries to the Borrower, PROVIDED,
that all such Indebtedness shall be evidenced by promissory notes and
shall be subordinated in right of payment to the Obligations;
(viii) Indebtedness with respect to reasonable warranties
and indemnities made under any agreements for asset sales permitted under
SECTION 6.8;
(ix) Permitted Existing Indebtedness;
(x) Indebtedness of M&M in an aggregate amount not to
exceed $11,000,000 assumed in connection with the M&M Acquisition; and
(xi) Indebtedness arising from intercompany loans from
the Borrower to Recoil of up to $6,000,000 as evidenced by a promissory
note dated May 29, 1998 which has been delivered to the Lender pursuant
to the Security Agreement, together with an endorsement in blank relating
thereto.
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations, (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with SECTIONS 6.8(b) or (c), and (iii) other Indebtedness (excluding
Subordinated Debt) not in excess of $3,000,000.
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS. No Credit Party
shall directly or indirectly enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder or holders of more
than five percent (5%) of any class of equity Securities of the Borrower, or
with any Affiliate of the Borrower which is not its Subsidiary, on terms that
are less favorable to the Borrower or any of its Subsidiaries, as applicable,
than those that might be obtained in an arm's length transaction at the time
from Persons who are not such a holder or Affiliate. Nothing contained in this
SECTION 6.4 shall prohibit (i) any transaction expressly permitted by
SECTIONS 6.3, 6.6 or 6.14; (ii) increases in compensation and benefits for
officers and employees of a Credit Party which are customary in the industry or
consistent with the past business practice of such Credit Party, PROVIDED that
no Default or Event of Default has occurred and is continuing; (iii) payment of
customary directors' fees and indemnities; (iv) performance of any obligations
arising under the Related Transactions Documents; (v) transactions between the
Borrower and any of its Subsidiaries, PROVIDED that no Default or Event of
Default results therefrom; or (vi) the grant of Awards to Eligible Persons under
(and, in each case, as defined in) the Stock Incentive Plan, PROVIDED that no
Default or Event of Default results therefrom.
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6.5 CAPITAL STRUCTURE AND BUSINESS. No Credit Party shall (a)
make any changes in any of its business objectives, purposes or operations which
could in any way adversely affect the repayment of the Loans or any of the other
Obligations or could reasonably be expected to have or result in a Material
Adverse Effect, (b) make any change in its capital structure as described on
DISCLOSURE SCHEDULE (3.8), including the issuance of any shares of Stock,
warrants or other securities convertible into Stock or any revision of the terms
of its outstanding Stock, except that Borrower may (i) issue Stock in connection
with a Permitted Acquisition, (ii) issue shares of unregistered common Stock,
with an aggregate Fair Market Value of not more than $10,000,000, in connection
with the M&M Acquisition and (iii) make a Public Offering of its common Stock so
long as (A) the proceeds thereof are applied in prepayment of the Obligations as
required by SECTION 1.3(b)(iii), and (B) no Change of Control occurs after
giving effect thereto or (c) amend its Organizational Documents in a manner
which would adversely affect Agent or Lenders or such Credit Party's duty or
ability to repay the Obligations. No Credit Party shall engage in any business
other than the businesses currently engaged in by it or businesses reasonably
related thereto.
6.6 ACCOMMODATION OBLIGATIONS. No Credit Party shall directly
or indirectly create or become or be liable with respect to any Accommodation
Obligation, except:
(i) recourse obligations resulting from endorsement of
negotiable instruments for collection in the ordinary course of business;
(ii) Accommodation Obligations of the Borrower with
respect to Indebtedness of M&M assumed in connection with the M&M
Acquisition (to the extent permitted by SECTION 6.3(a)(x)); PROVIDED that
such Accommodation Obligations shall be terminated and unconditionally
released no later than 180 days after the Effective Date;
(iii) Permitted Existing Accommodation Obligations; and
(iv) Accommodation Obligations arising under the Loan
Documents.
6.7 LIENS. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired) except:
(i) Liens created by the Loan Documents;
(ii) Permitted Encumbrances;
(iii) purchase money Liens (including the interest of a
lessor under a Capital Lease or an Operating Lease having substantially
the same economic effect and Liens to which any Property is subject at
the time of the Credit Party's purchase thereof)
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securing an amount not to exceed $3,000,000 in the aggregate at any
time or from time to time, PROVIDED, that such Liens shall not apply
to any Property of the Borrower or its Subsidiaries other than that
purchased or subject to such Capital Lease;
(iv) M&M Liens; and
(v) Permitted Existing Liens.
In addition, no Credit Party shall become a party to any agreement, note,
indenture or instrument, or take any other action, which would prohibit the
creation of a Lien on any of its properties or other assets in favor of Agent,
on behalf of itself and Lenders, as additional collateral for the Obligations,
except operating leases, Capital Leases or Licenses which prohibit Liens upon
the assets that are subject thereto or (in the case of M&M) Indebtedness
permitted by SECTION 6.3(a)(x).
6.8 SALE OF STOCK AND ASSETS. No Credit Party shall sell,
transfer, convey, assign or otherwise dispose of any of its Property or other
assets, including the capital Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise) or any of their Accounts, other than:
(i) the sale of Property having an aggregate Fair Market
Value of not more than $1,000,000 in any Fiscal Year for cash
consideration not less than the Fair Market Value thereof, PROVIDED that
the Borrower complies with the mandatory prepayment provisions set forth
in SECTION 1.3;
(ii) the transfer of Property from a Subsidiary of the
Borrower to the Borrower;
(iii) the sale of Inventory in the ordinary course of
business;
(iv) the disposition of Equipment if (A) such Equipment
is obsolete or no longer useful in the ordinary course of the Borrower's
or such Subsidiary's business, PROVIDED, that the aggregate Fair Market
Value of all such Equipment disposed of in any Fiscal Year shall not
exceed $500,000, or (B) within six (6) months after such disposition, the
proceeds therefrom are either (I) used to finance the purchase of
replacement Equipment and the Borrower delivers to the Agent evidence of
such use and that the replacement Equipment is free and clear of all
Liens except those created under the Loan Documents or (II) delivered to
the Agent for application to the repayment of the Obligations;
(v) the licensing of General Intangibles as permitted by
the Loan Documents;
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(vi) the merger of M&M with and into M&M Acquisition Co.
pursuant to the M&M Acquisition; and
(vii) any Investment permitted under SECTION 6.2.
6.9 ERISA. No Credit Party shall:
(i) engage, or permit any ERISA Affiliate to engage, in
any prohibited transaction described in Sections 406 of ERISA or 4975 of
the IRC for which a statutory or class exemption is not available or a
private exemption has not been previously obtained from the Department of
Labor;
(ii) permit to exist any accumulated funding deficiency
(as defined in Sections 302 of ERISA and 412 of the IRC), with respect to
any Benefit Plan, whether or not waived;
(iii) fail, or permit any ERISA Affiliate to fail, to pay
timely required contributions or annual installments due with respect to
any waived funding deficiency to any Benefit Plan;
(iv) establish, maintain or otherwise become liable with
respect to, or permit any ERISA Affiliate to establish, maintain or
otherwise become liable with respect to, any Benefit Plan;
(v) fail to make any contribution or payment to any
Multiemployer Plan which Borrower or any ERISA Affiliate is required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(vi) fail, or permit any ERISA Affiliate to fail, to pay
any required installment or any other payment required under Section 412
of the IRC on or before the due date for such installment or other
payment;
(vii) amend, or permit any ERISA Affiliate to amend, a
Benefit Plan resulting in an increase in current liability for the plan
year such that the Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the IRC;
(viii) permit any unfunded liabilities with respect to any
Foreign Pension Plan; or
(ix) fail, or permit any of its Subsidiaries or ERISA
Affiliates to fail, to pay any required contributions or payments to a
Foreign Pension Plan on or before the due date for such required
installment or payment.
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6.10 FINANCIAL COVENANTS. Borrower shall not breach or fail to
comply with any of the Financial Covenants (the "FINANCIAL COVENANTS") set forth
in ANNEX G.
6.11 HAZARDOUS MATERIALS. No Credit Party shall cause or permit
a Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Property where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Property or any of the Collateral, other than
such violations or Environmental Liabilities which could not reasonably be
expected to have a Material Adverse Effect.
6.12 SALE-LEASEBACKS. No Credit Party shall become liable,
directly, by assumption or by Accommodation Obligation, with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property
(whether real or personal or mixed) (i) which it or one of its Subsidiaries
sold or transferred or is to sell or transfer to any other Person, or (ii)
which it or one of its Subsidiaries intends to use for substantially the same
purposes as any other Property which has been or is to be sold or transferred
by it or one of its Subsidiaries to any other Person in connection with such
lease.
6.13 CANCELLATION OF INDEBTEDNESS. No Credit Party shall cancel
any claim or debt owing to it, except for reasonable consideration negotiated
on an arm's-length basis and in the ordinary course of its business
consistent with past practices.
6.14 RESTRICTED PAYMENTS. No Credit Party shall make any
Restricted Payment, except (a) intercompany loans and advances between
Borrower and Guarantors to the extent permitted by SECTION 6.3 above, (b)
dividends and distributions by Subsidiaries of Borrower paid to Borrower, (c)
employee loans permitted under SECTION 6.4 above and (d) the grant of Awards
to Eligible Persons under (and, in each case, as defined in) the Stock
Incentive Plan.
6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL YEAR.
No Credit Party shall (a) change its corporate name, or (b) change its chief
executive office, principal place of business, corporate offices or
warehouses or locations at which Collateral is held or stored, or the
location of its records concerning the Collateral, in any case without at
least thirty (30) days prior written notice to Agent and after Agent's
written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in
favor of Agent, on behalf of Lenders, in any Collateral, has been completed
or taken. Without limiting the foregoing, no Credit Party shall change its
name, identity or corporate structure in any manner which might make any
financing or continuation statement filed in connection herewith seriously
misleading within the meaning of Section 9-402(7) of the Code or any other
then applicable provision of the Code except upon prior written notice to
Agent and Lenders and after Agent's written acknowledgment that any
reasonable action requested by Agent in connection therewith, including to
continue the perfection of any
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Liens in favor of Agent, on behalf of Lenders, in any Collateral, has been
completed or taken. No Credit Party shall change its Fiscal Year.
6.16 RESTRICTION ON FUNDAMENTAL CHANGES. No Credit Party shall
enter into any merger or consolidation, or liquidate, wind-up or dissolve (or
suffer any liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or
substantially all of such Credit Party's business or Property, whether now or
hereafter acquired, except for (i) transactions permitted under SECTION 6.8 and
(ii) a merger of Recoil Holdings and Recoil Australia Holdings, PROVIDED that
such merger will not result in any adverse tax consequences to Recoil Holdings,
Recoil Australia Holdings, Recoil or the Lenders.
6.17 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS. No Credit Party
shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) which could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Subsidiary
of Borrower to Borrower.
6.18 NO SPECULATIVE TRANSACTIONS. No Credit Party shall engage
in any transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.19 CHANGES RELATING TO SUBORDINATED DEBT. No Credit Party
shall 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; (e) grant
any security or collateral to secure payment of such Subordinated Debt; or (f)
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 any Credit Party,
Agent or any Lender.
7. TERM
7.1 TERMINATION. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the Loans
and all other Obligations shall be automatically due and payable in full on such
date.
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7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING
ARRANGEMENTS. Except as otherwise expressly provided for in the Loan
Documents, no termination or cancellation (regardless of cause or procedure)
of any financing arrangement under this Agreement shall in any way affect or
impair the obligations, duties and liabilities of the Credit Parties or the
rights of Agent and Lenders relating to any unpaid portion of the Loans or
any other Obligations, due or not due, liquidated, contingent or unliquidated
or any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is required after the
Commitment Termination Date. Except as otherwise expressly provided herein
or in any other Loan Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon the Credit Parties, and all
rights of Agent and each Lender, all as contained in the Loan Documents,
shall not terminate or expire, but rather shall survive any such termination
or cancellation and shall continue in full force and effect until the
Termination Date; provided however, that in all events the provisions of
SECTION 11, the payment obligations under SECTIONS 1.15 and 1.16, and the
indemnities contained in the Loan Documents shall survive the Termination
Date.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events (regardless of the reason therefor) shall constitute an
"EVENT OF DEFAULT" hereunder:
(a) Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's demand for such reimbursement or payment
of expenses.
(b) Any Credit Party shall fail or neglect to perform, keep or
observe any of the provisions of SECTIONS 1.14, 5.1, 5.8 or 6, or any of the
provisions set forth in ANNEX G, respectively.
(c) Any Credit Party shall fail or neglect to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this SECTION 8.1) and the same shall remain unremedied for fifteen (15) days
or more.
(d) A default or breach shall occur under any other agreement,
document or instrument to which any Credit Party is a party which is not cured
within any applicable grace period, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness (other than
the Obligations) of any Credit Party in excess of $100,000 in the aggregate, or
(ii) causes, or permits any holder of such Indebtedness or a trustee to cause,
Indebtedness or a portion thereof in excess of $100,000 in the aggregate to
become due
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prior to its stated maturity or prior to its regularly scheduled dates of
payment, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(e) Any information contained in any Borrowing Base Certificate
is untrue or incorrect in any respect, or any representation or warranty herein
or in any Loan Document or in any written statement, report, financial statement
or certificate (other than a Borrowing Base Certificate) made or delivered to
Agent or any Lender by any Credit Party is untrue or incorrect in any material
respect as of the date when made or deemed made.
(f) Any Change of Control shall occur.
(g) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) An involuntary case shall be commenced against any
Credit Party and the petition shall not be dismissed, stayed, bonded or
discharged within sixty (60) days after commencement of the case; or a
court having jurisdiction in the premises shall enter a decree or order
for relief in respect of any Credit Party in an involuntary case, under
any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted under
any applicable Requirements of Law; or the board of directors of any
Credit Party (or any committee thereof) adopts any resolution or
otherwise authorizes any action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in
the premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Credit
Party or over all or a substantial part of the Property of any Credit
Party shall be entered; or an interim receiver, trustee or other
custodian of any Credit Party or of all or a substantial part of the
Property of any Credit Party shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of
the Property of any Credit Party shall be issued and any such event shall
not be stayed, dismissed, bonded or discharged within sixty (60) days
after entry, appointment or issuance; or the board of directors of any
Credit Party (or any committee thereof) adopts any resolution or
otherwise authorizes any action to approve any of the foregoing.
(h) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. Any
Credit Party shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its Property; or any Credit Party
shall make any assignment for the benefit of creditors or shall be unable or
fail, or admit in writing its inability, to pay its debts as such debts become
due.
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(i) JUDGMENTS AND ATTACHMENTS. Any money judgment (other than a
money judgment covered by insurance as to which the insurance company has
acknowledged coverage), writ or warrant of attachment, or similar process
against any Credit Party or any of their respective assets involving in any
case an amount in excess of $500,000 is entered and shall remain
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days
or in any event later than five (5) days prior to the date of any proposed
sale thereunder.
(j) DISSOLUTION. Any order, judgment or decree shall be
entered against any Credit Party decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed for a period
in excess of sixty (60) days; or any Credit Party shall otherwise dissolve or
cease to exist except as specifically permitted by this Agreement.
(k) LOAN DOCUMENTS; FAILURE OF SECURITY. At any time, for
any reason, (i) any Loan Document ceases to be in full force and effect or
any Credit Party party thereto seeks to repudiate its obligations thereunder
and the Liens intended to be created thereby are, or any Credit Party seeks
to render such Liens, invalid and unperfected, or (ii) Liens in favor of the
Agent contemplated by the Loan Documents shall, at any time, for any reason,
be invalidated or otherwise cease to be in full force and effect, or such
Liens shall be subordinated or shall not have the priority contemplated by
this Agreement or the Loan Documents.
(l) TERMINATION EVENT. Any Termination Event occurs which
the Agent believes could reasonably be expected to subject either the
Borrower or any ERISA Affiliate to liability in excess of $250,000.
(m) WAIVER APPLICATION. The plan administrator of any
Benefit Plan applies under Section 412(d) of the IRC for a waiver of the
minimum funding standards of Section 412(a) of the IRC and the Agent believes
that the substantial business hardship upon which the application for the
waiver is based could subject either the Borrower or any ERISA Affiliate to
liability in excess of $250,000.
(n) SUSPENSIONS, DEBARMENT. Any suspension or debarment
with respect to Government Contracts is imposed on the Borrower, any of its
Subsidiaries or any of their respective directors, officers, employees,
consultants or agents.
(o) MATERIAL ADVERSE CHANGE. An event shall exist which has
a Material Adverse Effect.
An Event of Default shall be deemed "continuing" until cured or
waived in writing in accordance with SECTION 11.2.
8.2 REMEDIES.
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(a) If any Event of Default shall have occurred and be continuing,
or if a Default shall have occurred and be continuing and Agent or Requisite
Revolving Lenders shall have determined not to make any Advances or incur any
Letter of Credit Obligations so long as that specific Default is continuing,
Agent may (and at the written request of the Requisite Revolving Lenders
shall), without notice, suspend the Revolving Loan facility with respect to
further Advances and/or the incurrence of further Letter of Credit
Obligations whereupon any further Advances and Letter of Credit Obligations
shall be made or extended in Agent's sole discretion (or in the sole
discretion of the Requisite Revolving Lenders, if such suspension occurred at
their direction) so long as such Default or Event of Default is continuing.
If any Default or Event of Default shall have occurred and be continuing,
Agent may (and at the written request of Requisite Lenders shall), without
notice except as otherwise expressly provided herein, increase the rate of
interest applicable to the Loans and the Letter of Credit Fees to the Default
Rate.
(b) If any Event of Default shall have occurred and be continuing,
Agent may (and at the written request of the Requisite Lenders shall),
without notice, (i) terminate the Revolving Loan facility with respect to
further Advances or the incurrence of further Letter of Credit Obligations;
(ii) declare all or any portion of the Obligations, including all or any
portion of any Loan to be forthwith due and payable, and require that the
Letter of Credit Obligations be cash collateralized as provided in ANNEX B,
all without presentment, demand, protest or further notice of any kind, all
of which are expressly waived by Borrower and each other Credit Party; and
(iii) exercise any rights and remedies provided to Agent under the Loan
Documents and/or at law or equity, including all remedies provided under the
Code; provided, however, that upon the occurrence of an Event of Default
specified in SECTIONS 8.1(g), (h) or (i), the Revolving Loan facility shall
be immediately terminated and all of the Obligations, including the Revolving
Loan, shall become immediately due and payable without declaration, notice or
demand by any Person.
8.3 WAIVERS BY CREDIT PARTIES. Except as otherwise provided
for in this Agreement or by applicable law, each Credit Party waives: (a)
presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal
of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which
any Credit Party may in any way be liable, and hereby ratifies and confirms
whatever Agent may do in this regard, (b) all rights to notice and a hearing
prior to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security which might
be required by any court prior to allowing Agent to exercise any of its
remedies, and (c) the benefit of all valuation, appraisal, marshaling and
exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 ASSIGNMENT AND PARTICIPATIONS.
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(a) The Credit Parties signatory hereto consent to any Lender's
assignment of, and/or sale of participations in, at any time or times, the
Loan Documents, Loans, Letter of Credit Obligations and any Commitment or of
any portion thereof or interest therein, including any Lender's rights,
title, interests, remedies, powers or duties thereunder, whether evidenced by
a writing or not. Any assignment by a Lender shall (i) require the consent
of Agent (which shall not be unreasonably withheld or delayed) and the
execution of an assignment agreement (an "ASSIGNMENT AGREEMENT")
substantially in the form attached hereto as EXHIBIT 9.1(a) and otherwise in
form and substance satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) if a partial assignment, be in an amount at least equal to
$5,000,000 and, after giving effect to any such partial assignment, the
assigning Lender shall have retained Commitments in an amount at least equal
to $5,000,000; and (iv) include a payment to Agent of an assignment fee of
$3,500. In the case of an assignment by a Lender under this SECTION 9.1, the
assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as it would if it were a Lender hereunder. The
assigning Lender shall be relieved of its obligations hereunder with respect
to its Commitments or assigned portion thereof from and after the date of
such assignment. Borrower hereby acknowledges and agrees that any assignment
will give rise to a direct obligation of Borrower to the assignee and that
the assignee shall be considered to be a "Lender." In all instances, each
Lender's liability to make Loans hereunder shall be several and not joint and
shall be limited to such Lender's Pro Rata Share of the applicable
Commitment. In the event Agent or any Lender assigns or otherwise transfers
all or any part of the Obligations, Agent or any such Lender shall so notify
Borrower and Borrower shall, upon the request of Agent or such Lender,
execute new Notes in exchange for the Notes, if any, being assigned.
Notwithstanding the foregoing provisions of this SECTION 9.1(a), any Lender
may at any time pledge the Obligations held by it and such Lender's rights
under this Agreement and the other Loan Documents to a Federal Reserve Bank,
and any lender that is an investment fund may assign the Obligations held by
it and such Lender's rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; provided,
however, that no such pledge to a Federal Reserve Bank shall release such
Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount
of, or interest rate or Fees payable with respect to, any Loan in which such
holder participates, (ii) any extension of the scheduled amortization of the
principal amount of any Loan in which such holder participates or the final
maturity date thereof, and (iii) any release of all or substantially all of
the Collateral (other than in accordance with the terms of this Agreement,
the Collateral Documents or the other Loan Documents). Solely for purposes
of SECTIONS 1.13, 1.15, 1.16 and
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9.8, Borrower acknowledges and agrees that a participation shall give rise to
a direct obligation of Borrower to the participant and the participant shall
be considered to be a "Lender". Except as set forth in the preceding
sentence neither Borrower nor any other Credit Party shall have any
obligation or duty to any participant. Neither Agent nor any Lender (other
than the Lender selling a participation) shall have any duty to any
participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this SECTION 9.1, no
Lender shall, as between Borrower and that Lender, or Agent and that Lender,
be relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all
or any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this SECTION
9.1 as reasonably required to enable the assigning or selling Lender to
effect any such assignment or participation, including the execution and
delivery of any and all agreements, notes and other documents and instruments
as shall be requested and the preparation of informational materials for, and
the participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit
Parties and their affairs contained in any selling materials provided by it
and all other information provided by it and included in such materials,
except that any Projections delivered by Borrower shall only be certified by
Borrower as having been prepared by Borrower in compliance with the
representations contained in SECTION 3.4(c).
(e) A Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants). Each Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in SECTION 11.8.
9.2 APPOINTMENT OF AGENT. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this SECTION 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, Agent shall act solely as an agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or relationship
of agency or trust with or for any Credit Party or any other Person. Agent
shall have no duties or responsibilities except for those expressly set forth
in this Agreement and the other Loan Documents. The duties of Agent shall be
mechanical and administrative in nature and Agent shall not have, or be
deemed to have, by reason of this Agreement, any other Loan Document or
otherwise a fiduciary relationship in respect of any Lender. Neither Agent
nor any of its Affiliates nor any of their respective officers, directors,
employees, agents or representatives shall be liable to any Lender for any
action taken or omitted
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to be taken by it hereunder or under any other Loan Document, or in
connection herewith or therewith, except for damages caused by its or their
own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Requisite Revolving Lenders, Supermajority Revolving Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall
be entitled to refrain from such act or taking such action unless and until
Agent shall have received instructions from Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders, or all affected Lenders,
as the case may be, and Agent shall not incur liability to any Person by
reason of so refraining. Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Loan Document (a) if
such action would, in the opinion of Agent, be contrary to law or the terms
of this Agreement or any other Loan Document, (b) if such action would, in
the opinion of Agent, expose Agent to Environmental Liabilities or (c) if
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against Agent as a result of Agent
acting or refraining from acting hereunder or under any other Loan Document
in accordance with the instructions of Requisite Lenders, Requisite Revolving
Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable.
9.3 AGENT'S RELIANCE, ETC. Neither Agent nor any of its Affiliates
nor any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for
damages caused by its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, Agent: (a) may treat
the payee of any Note as the holder thereof until Agent receives written
notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for
any statements, warranties or representations made in or in connection with
this Agreement or the other Loan Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or the other Loan Documents
on the part of any Credit Party or to inspect the Collateral (including the
books and records) of any Credit Party; (e) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy,
telegram, cable or telex) believed by it to be genuine and signed or sent by
the proper party or parties.
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9.4 GE CAPITAL AND AFFILIATES. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise
the same as though it were not Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include GE Capital in its
individual capacity. GE Capital and its Affiliates may lend money to, invest
in, and generally engage in any kind of business with, any Credit Party, any
of their Affiliates and any Person who may do business with or own securities
of any Credit Party or any such Affiliate, all as if GE Capital were not
Agent and without any duty to account therefor to Lenders. GE Capital and
its Affiliates may accept fees and other consideration from any Credit Party
for services in connection with this Agreement or otherwise without having to
account for the same to Lenders. Each Lender acknowledges the potential
conflict of interest between GE Capital as a Lender holding disproportionate
interests in the Loans, GE Capital as a stockholder of Borrower, and GE
Capital as Agent.
9.5 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based
on the Financial Statements referred to in SECTION 3.4(a) and such other
documents and information as it has deemed appropriate, made its own credit
and financial analysis of the Credit Parties and its own decision to enter
into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon 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. Each Lender acknowledges the potential conflict of
interest of each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim based
upon, such conflict of interest.
9.6 INDEMNIFICATION. Lenders agree to indemnify Agent (to the
extent not reimbursed by Credit Parties and without limiting the obligations
of Borrower hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against Agent in any way relating to or arising out
of this Agreement or any other Loan Document or any action taken or omitted
by Agent in connection therewith; 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 Agent's gross negligence or wilful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including counsel
fees) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other
Loan Document, to the extent that Agent is not reimbursed for such expenses
by Credit Parties.
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9.7 SUCCESSOR AGENT. Agent may resign at any time by giving not
less than thirty (30) days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent,
which shall be a Lender, if a Lender is willing to accept such appointment,
or otherwise shall be a commercial bank or financial institution or a
subsidiary of a commercial bank or financial institution if such commercial
bank or financial institution is organized under the laws of the United
States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Agent has been appointed
pursuant to the foregoing, by the 30th day after the date such notice of
resignation was given by the resigning Agent, such resignation shall become
effective and the Requisite Lenders shall thereafter perform all the duties
of Agent hereunder until such time, if any, as the Requisite Lenders appoint
a successor Agent as provided above. Any successor Agent appointed by
Requisite Lenders hereunder shall be subject to the approval of Borrower,
such approval not to be unreasonably withheld or delayed; provided that such
approval shall not be required if a Default or an Event of Default shall have
occurred and be continuing. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall succeed to and
become vested with all the rights, powers, privileges and duties of the
resigning Agent. Upon the earlier of the acceptance of any appointment as
Agent hereunder by a successor Agent or the effective date of the resigning
Agent's resignation, the resigning Agent shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents, except
that any indemnity rights or other rights in favor of such resigning Agent
shall continue. After any resigning Agent's resignation hereunder, the
provisions of this SECTION 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement
and the other Loan Documents.
9.8 SETOFF AND SHARING OF PAYMENTS. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, each Lender and each holder of any Note is hereby authorized at any
time or from time to time, without notice to any Credit Party or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all balances held by it at any of its
offices for the account of Borrower or any Guarantor (regardless of whether
such balances are then due to Borrower or any Guarantor) and any other
properties or assets any time held or owing by that Lender or that holder to
or for the credit or for the account of Borrower or any Guarantor against and
on account of any of the Obligations which are not paid when due. Any Lender
or holder of any Note exercising a right to set off or otherwise receiving
any payment on account of the Obligations in excess of its Pro Rata Share
thereof shall purchase for cash (and the other Lenders or holders shall sell)
such participations in each such other Lender's or holder's Pro Rata Share of
the Obligations as would be necessary to cause such Lender to share the
amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares. Each Lender's obligation
under this SECTION 9.8 shall be in addition to and not in
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limitation of its obligations to purchase a participation in an amount equal
to its Pro Rata Share of the Swing Line Loans under SECTION 1.1. Borrower
and each Guarantor agrees, to the fullest extent permitted by law, that (a)
any Lender or holder may exercise its right to set off with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amount so set off to other Lenders and holders and (b)
any Lender or holders so purchasing a participation in the Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
set-off, bankers' lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of
the Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the set-off amount or
payment otherwise received is thereafter recovered from the Lender that has
exercised the right of set-off, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.
9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION;
ACTIONS IN CONCERT.
(a) ADVANCES; PAYMENTS.
(i) Revolving Lenders shall refund or participate in
the Swing Line Loan in accordance with CLAUSES (iii) and (iv) of
SECTION 1.1(c). If the Swing Line Lender declines to make a Swing Line
Loan or if Swing Line Availability is zero, Agent shall notify
Revolving Lenders, promptly after receipt of a Notice of Revolving
Advance and in any event prior to 1:00 p.m. (New York time) on the
date such Notice of Revolving Advance is received, by telecopy,
telephone or other similar form of transmission. Each Revolving
Lender shall make the amount of such Lender's Pro Rata Share of
such Revolving Credit Advance available to Agent in same day funds
by wire transfer to Agent's account as set forth in ANNEX H not later
than 3:00 p.m. (New York time) on the requested funding date, in the
case of an Index Rate Loan and not later than 11:00 a.m. (New York
time) on the requested funding date in the case of a LIBOR Loan.
After receipt of such wire transfers (or, in the Agent's sole
discretion, before receipt of such wire transfers), subject to the
terms hereof, Agent shall make the requested Revolving Credit Advance
to Borrower. All payments by each Revolving Lender shall be made
without setoff, counterclaim or deduction of any kind.
(ii) On the second (2nd) Business Day of each calendar
week or more frequently as aggregate cumulative payments in excess of
$2,000,000 are received with respect to the Loans (other than the Swing
Line Loan) (each, a "SETTLEMENT DATE"), Agent will advise each Lender
by telephone, or telecopy of the amount of such Lender's Pro Rata
Share of principal, interest and Fees paid for the benefit of Lenders
with respect to each applicable Loan. Provided that such Lender has
funded all payments and Advances required to be made by it and
purchased all participations required to be purchased by it under
this Agreement and the other Loan Documents as of such Settlement
Date, Agent will pay to each Lender such Lender's Pro Rata Share of
principal, interest and Fees paid
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by Borrower since the previous Settlement Date for the benefit of
that Lender on the Loans held by it. To the extent that any Lender (a
"NON-FUNDING LENDER") has failed to fund all such payments and Advances
or failed to fund the purchase of all such participations, Agent shall
be entitled to set off the funding short-fall against that Non-Funding
Lender's Pro Rata Share of all payments received from Borrower. Such
payments shall be made by wire transfer to such Lender's account (as
specified by such Lender in ANNEX H or the applicable Assignment
Agreement) not later than 1:00 p.m. (New York time) on the next
Business Day following each Settlement Date.
(b) AVAILABILITY OF LENDER'S PRO RATA SHARE. Agent may assume
that each Revolving Lender will make its Pro Rata Share of each Revolving
Credit Advance available to Agent on each funding date. If such Pro Rata
Share is not, in fact, paid to Agent by such Revolving Lender when due, Agent
will be entitled to recover such amount on demand from such Revolving Lender
without set-off, counterclaim or deduction of any kind. If any Revolving
Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent's
demand, Agent shall promptly notify Borrower and Borrower shall immediately
repay such amount to Agent. Nothing in this SECTION 9.9(b) or elsewhere in
this Agreement or the other Loan Documents shall be deemed to require Agent
to advance funds on behalf of any Revolving Lender or to relieve any
Revolving Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that Borrower may have against any Revolving Lender
as a result of any default by such Revolving Lender hereunder. To the extent
that Agent advances funds to Borrower on behalf of any Revolving Lender and
is not reimbursed therefor on the same Business Day as such Advance is made,
Agent shall be entitled to retain for its account all interest accrued on
such Advance until reimbursed by the applicable Revolving Lender.
(c) RETURN OF PAYMENTS.
(i) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not
received by Agent, then Agent will be entitled to recover such amount
from such Lender on demand without set-off, counterclaim or deduction
of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower
or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that
Agent has distributed to such Lender, together with interest at such
rate, if any, as Agent is required to pay to Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
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(d) NON-FUNDING LENDERS. The failure of any Non-Funding Lender to
make any Revolving Credit Advance or any payment required by it hereunder, or
to purchase any participation in any Swing Line Loan to be made or purchased
by it on the date specified therefor shall not relieve any other Revolving
Lender (each such other Revolving Lender, an "OTHER LENDER") of its
obligations to make such Advance or purchase such participation on such date,
but neither any Other Lender nor Agent shall be responsible for the failure
of any Non-Funding Lender to make an Advance or to purchase a participation
required hereunder. Notwithstanding anything set forth herein to the
contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Loan Document or constitute a "Lender" or a
"Revolving Lender" (or be included in the calculation of "Requisite Lenders",
"Requisite Revolving Lenders" or "Supermajority Revolving Lenders" hereunder)
for any voting or consent rights under or with respect to any Loan Document.
(e) DISSEMINATION OF INFORMATION. Agent will use reasonable
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with
notice of any Event of Default of which Agent has actually become aware and
with notice of any action taken by Agent following any Event of Default;
provided, however, that Agent shall not be liable to any Lender for any
failure to do so, except to the extent that such failure is attributable to
Agent's gross negligence or willful misconduct. Lenders acknowledge that
Borrower is required to provide Financial Statements and Collateral Reports
to Lenders in accordance with ANNEXES E and F hereto and agree that Agent
shall have no duty to provide the same to Lenders.
(f) ACTIONS IN CONCERT. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no
Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of set-off)
without first obtaining the prior written consent of Agent and Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Notes shall be taken in concert
and at the direction or with the consent of Agent.
10. SUCCESSORS AND ASSIGNS
10.1 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including,
in the case of any Credit Party, a debtor-in-possession on behalf of such
Credit Party), except as otherwise provided herein or therein. No Credit
Party may assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder or under any of the other Loan
Documents without the prior express written consent of Agent and Lenders.
Any such purported assignment, transfer, hypothecation or other conveyance by
any Credit Party without the prior express written consent of Agent and
Lenders shall be void. The terms and provisions of this Agreement are for the
purpose of defining the relative rights and obligations of each Credit Party,
Agent and Lenders
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with respect to the transactions contemplated hereby and no Person shall be a
third party beneficiary of any of the terms and provisions of this Agreement
or any of the other Loan Documents.
11. MISCELLANEOUS
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in SECTION 11.2 below. Any letter of interest, commitment letter
and/or fee letter (other than the GE Capital Fee Letter) between any Credit
Party and Agent or any Lender or any of their respective affiliates, predating
this Agreement and relating to a financing of substantially similar form,
purpose or effect shall be superseded by this Agreement.
11.2 AMENDMENTS AND WAIVERS.
(a) Except for actions expressly permitted to be taken by
Agent, no amendment, modification, termination or waiver of any provision of
this Agreement or any of the Notes, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrower, and by Requisite Lenders, Requisite
Revolving Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable. Except as set forth in CLAUSES (b) and (c) below, all such
amendments, modifications, terminations or waivers requiring the consent of any
Lenders shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement which increases the
percentage advance rates set forth in the definition of the Borrowing Base, or
which makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts and Eligible Inventory set forth in SECTIONS 1.6 and 1.7,
shall be effective unless the same shall be in writing and signed by Agent,
Supermajority Revolving Lenders and Borrower. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement which waives compliance with the conditions precedent set forth in
SECTION 2.2 to the making of any Loan or the incurrence of any Letter of Credit
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Revolving Lenders and Borrower. Notwithstanding anything
contained in this Agreement to the contrary, no waiver or consent with respect
to any Default (if in connection therewith Agent or Requisite Revolving Lenders,
as the case may be, have exercised its or their right to suspend the making or
incurrence of further Advances or Letter of Credit Obligations pursuant to
SECTION 8.2(a)) or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans or the incurrence of Letter of
Credit Obligations set forth in SECTION 2.2 unless the same shall be in writing
and signed by Agent, Requisite Revolving Lenders and Borrower.
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(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby,
do any of the following: (i) increase the principal amount of any Lender's
Commitment (which action shall be deemed to directly affect all Lenders); (ii)
reduce the principal of, rate of interest on or Fees payable with respect to any
Loan or Letter of Credit Obligations of any affected Lender; (iii) extend any
scheduled payment date or final maturity date of the principal amount of any
Loan of any affected Lender; (iv) waive, forgive, defer, extend or postpone any
payment of interest or Fees as to any affected Lender; (v) release any Guaranty
or, except as otherwise permitted herein or in the other Loan Documents,
release, or permit any Credit Party to sell or otherwise dispose of, any
Collateral with a value exceeding $5,000,000 in the aggregate (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Loans which
shall be required for Lenders or any of them to take any action hereunder; and
(vii) amend or waive this SECTION 11.2 or the definitions of the terms
"Requisite Lenders", "Requisite Revolving Lenders" or "Supermajority Revolving
Lenders" insofar as such definitions affect the substance of this SECTION 11.2.
Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent under this Agreement or any other Loan Document shall
be effective unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
SECTION 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "PROPOSED CHANGE"):
(i) 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 this CLAUSE (i) and in CLAUSES (ii),
(iii) and (iv) below being referred to as a "NON-CONSENTING LENDER"), or
(ii) requiring the consent of Supermajority Revolving
Lenders, the consent of Requisite Revolving Lenders is obtained, but the
consent of Supermajority Revolving Lenders is not obtained, or
(iii) requiring the consent of Requisite Revolving
Lenders, the consent of Revolving Lenders holding 51% or more of the
aggregate Revolving Loan
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Commitments is obtained, but the consent of Requisite Revolving
Lenders is not obtained, or
(iv) requiring the consent of Requisite Lenders, the
consent of Lenders holding 51% or more of the aggregate Commitments is
obtained, but the consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request
Agent, or a Person acceptable to Agent, shall have the right with Agent's
consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments 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 Agreement.
(e) Upon indefeasible payment in full in cash and performance
of all of the Obligations (other than indemnification Obligations under
SECTION 1.13), termination of the Commitments and a release of all claims
against Agent and Lenders, and so long as no suits, actions proceedings, or
claims are pending or threatened against any Indemnified Person asserting any
damages, losses or liabilities that are Indemnified Liabilities, Agent shall
deliver to Borrower termination statements, mortgage releases and other
documents necessary or appropriate to evidence the termination of the Liens
securing payment of the Obligations.
11.3 FEES AND EXPENSES. Borrower shall reimburse Agent for all
out-of-pocket expenses incurred in connection with the preparation of the Loan
Documents (including the reasonable fees and expenses of all of its special loan
counsel, advisors, consultants and auditors retained in connection with the Loan
Documents and the Related Transactions and advice in connection therewith).
Borrower shall reimburse Agent (and, with respect to CLAUSES (c) and (d) below,
all Lenders) for all fees, costs and expenses, including the reasonable fees,
costs and expenses of counsel or other advisors (including environmental and
management consultants and appraisers) for advice, assistance, or other
representation in connection with:
(a) the forwarding to Borrower or any other Person on behalf of
Borrower by Agent of the proceeds of the Loans;
(b) any amendment, modification or waiver of, or consent with
respect to, any of the Loan Documents or Related Transactions Documents or
advice in connection with the administration of the Loans made pursuant hereto
or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, Borrower or any other Person)
in any way relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection therewith or herewith,
whether as party, witness, or otherwise, including any
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litigation, contest, dispute, suit, case, proceeding or action, and any
appeal or review thereof, in connection with a case commenced by or against
Borrower or any other Person that may be obligated to Agent by virtue of the
Loan Documents; including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring
of the Loans during the pendency of one or more Events of Default; provided
that in the case of reimbursement of counsel for Lenders other than Agent,
such reimbursement shall be limited to one counsel for all such Lenders;
(d) any attempt to enforce any remedies of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents;
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(e) any work-out or restructuring of the Loans during the
pendency of one or more Events of Default;
(f) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of CLAUSES (a) through (f) above, all attorneys' and other
professional and service providers' fees arising from such services, including
those in connection with any appellate proceedings; and all expenses, costs,
charges and other fees incurred by such counsel and others in any way or respect
arising in connection with or relating to any of the events or actions described
in this SECTION 11.3 shall be payable, on demand, by Borrower to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and fees
may include: fees, costs and expenses of accountants, environmental advisors,
appraisers, investment bankers, management and other consultants and paralegals;
court costs and expenses; photocopying and duplication expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses for
travel, lodging and food paid or incurred in connection with the performance of
such legal or other advisory services.
11.4 NO WAIVER. Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of Agent or such Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of SECTION 11.2, none of the undertakings,
agreements, warranties, covenants and
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representations of any Credit Party contained in this Agreement or any of the
other Loan Documents and no Default or Event of Default by any Credit Party
shall be deemed to have been suspended or waived by Agent or any Lender,
unless such waiver or suspension is by an instrument in writing signed by an
officer of or other authorized employee of Agent and the applicable required
Lenders and directed to Borrower specifying such suspension or waiver.
11.5 REMEDIES. Agent's and Lenders' rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other rights and
remedies which Agent or any Lender may have under any other agreement, including
the other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 SEVERABILITY. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
11.7 CONFIDENTIALITY. Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender
applies to maintain the confidentiality of its own confidential information) to
maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and each Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender in
evaluating, approving, structuring or administering the Loans and the
Commitments; (b) to any bona fide assignee or participant or potential assignee
or participant that has agreed to comply with the covenant contained in this
SECTION 11.7 (and any such bona fide assignee or participant or potential
assignee or participant may disclose such information to Persons employed or
engaged by them as described in CLAUSE (a) above); (c) as required or requested
by any Governmental Authority or reasonably believed by Agent or such Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advise of Agent's or such Lender's counsel, required by
law; (e) in connection with the exercise of any right or remedy under the Loan
Documents or in connection with any Litigation to which Agent or such Lender is
a party; or (f) which ceases to be confidential through no fault of Agent or
such Lender.
11.8 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
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11.9 CERTAIN CONSENTS AND WAIVERS OF THE BORROWER.
(a) PERSONAL JURISDICTION.
(i) EACH OF THE AGENT, EACH LENDER AND THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF ANY CALIFORNIA STATE COURT OR FEDERAL
COURT SITTING IN LOS ANGELES, CALIFORNIA, AND ANY COURT HAVING
JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION
OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
THE BORROWER IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION AS ITS
AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO
BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. THE PARTIES HERETO
AGREE 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. THE BORROWER WAIVES IN
ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE.
(ii) THE BORROWER AGREES THAT THE AGENT AND ANY LENDER
SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A
COURT IN ANY LOCATION WHICH IS NECESSARY OR DESIRABLE TO ENABLE THE AGENT
OR SUCH LENDER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF THE AGENT OR SUCH LENDER. THE BORROWER AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE
AGENT OR ANY LENDER TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE AGENT OR SUCH LENDER. THE BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT OR
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ANY LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
(b) SERVICE OF PROCESS. THE BORROWER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS SPECIFIED
BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. THE
BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
THE LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
11.10 NOTICES. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and four (4)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this
SECTION 11.10) or (c) when delivered, if hand-delivered by reputable overnight
courier or messenger, all of which shall be addressed to the party to be
notified and sent to the address or facsimile number indicated on ANNEX I or to
such other address (or facsimile number) as may be substituted by notice given
as herein provided. The giving of any notice required hereunder may be waived
in writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other communication to any Person (other than Borrower or Agent) designated
on ANNEX I to receive copies shall in no way adversely affect the effectiveness
of such notice, demand, request, consent, approval, declaration or other
communication.
11.11 SECTION TITLES. The Section titles and Table of Contents
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.
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11.12 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT
PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.13 PRESS RELEASES. Each Credit Party executing this Agreement
agrees that neither it nor its Affiliates will in the future issue any press
releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement, the other Loan Documents or the
Related Transactions Documents without at least two (2) Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing such press release or other public disclosure.
Each Credit Party consents to the publication by Agent or any Lender of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent or such Lender shall provide a draft of
any such tombstone or similar advertising material to each Credit Party for
review and comment prior to the publication thereof. Agent reserves the right
to provide to industry trade organizations information necessary and customary
for inclusion in league table measurements with Borrower's consent which shall
not be unreasonably withheld or delayed.
11.14 REINSTATEMENT. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Borrower for liquidation or reorganization, should Borrower become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of
Borrower's assets, and shall continue to be effective or to be reinstated, as
the case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be
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reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.
11.15 COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. This
Agreement and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective as of the date
when all of the conditions set forth in SECTION 2.1 have been satisfied or duly
waived in accordance with SECTION 11.2 (the "EFFECTIVE DATE"). Subject to the
provisions of this Agreement (including, without limitation, the preliminary
statements hereto), this Agreement and each of the other Loan Documents shall be
construed to the extent reasonable to be consistent one with the other, but to
the extent that the terms and conditions of this Agreement are actually
inconsistent with the terms and conditions of any other Loan Document, this
Agreement shall govern.
11.16 ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of SECTIONS 11.9 and 11.12, with its counsel.
11.17 NO STRICT CONSTRUCTION. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
11.18 NO NOVATION. This Agreement is an amendment and
restatement of the Existing Credit Agreement. The parties hereto hereby
acknowledge and agree as follows:
(a) The Term Notes delivered by the Borrower to Agent on the
Effective Date (i) are given in renewal of and rearrangement and substitution,
but not in payment, for (A) the "Term Note" (as defined in the Existing Credit
Agreement) and (B) that portion of the "Revolving Credit Note" (as defined in
the Existing Credit Agreement) evidencing the revolving loans under the Existing
Credit Agreement being converted to a Term Loan hereunder as set forth in
SECTION 1.1(d) and (ii) evidence the additional Term Loan made on the Effective
Date.
(b) The Revolving Notes delivered by the Borrower to Agent on
the Effective Date (i) are given in renewal of and rearrangement and
substitution, but not in payment, for that portion of the "Revolving Credit
Note" (as defined in the Existing Credit Agreement) evidencing the revolving
loans under the Existing Credit Agreement not being converted to a Term Loan
hereunder and (ii) evidence the Revolving Loan Commitment as of the Effective
Date.
(c) This Agreement and the delivery of the substitute Term
Notes and Revolving Notes pursuant hereto are in no way intended to constitute a
novation of the Existing
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Credit Agreement, such "Term Note," such "Revolving Credit Note" or the
outstanding principal amount of the Indebtedness evidenced by any of them.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of
the date first written above.
BORROWER: KAYNAR TECHNOLOGIES INC.
By:
-----------------------------
Name:
Title:
AGENT: GENERAL ELECTRIC CAPITAL CORPORATION
By:
-----------------------------
Name:
Authorized Signatory
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION
By:
-----------------------------
Name:
Authorized Signatory
SIGNATURE PAGE 1 OF 2 SECOND AMENDED & RESTATED CREDIT AGMT
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers.
CREDIT PARTIES: RECOIL INC.
By:
-----------------------------
Name:
Title:
RECOIL HOLDINGS, INC.
By:
-----------------------------
Name:
Title:
RECOIL HOLDINGS AUSTRALIA, INC.
By:
-----------------------------
Name:
Title:
KTIC ACQUISITION CORP.
By:
-----------------------------
Name:
Title:
SIGNATURE PAGE 2 OF 2 SECOND AMENDED & RESTATED CREDIT AGMT
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all Section references in the following definitions shall refer to
Sections of the Agreement:
"ACCOMMODATION OBLIGATION" shall mean any Contractual
Obligation, contingent or otherwise, of one Person with respect to any
Indebtedness, obligation or liability of another, if the primary purpose or
intent thereof by the Person incurring the Accommodation Obligation is to
provide assurance to the obligee of such Indebtedness, obligation or
liability of another that such Indebtedness, obligation or liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders thereof will be protected (in whole or in part)
against loss in respect thereof including, without limitation, direct and
indirect guarantees, endorsements (except for collection or deposit in the
ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, agreements to
purchase or repurchase such Indebtedness, obligation or liability or any
security therefor or to provide funds for the payment or discharge thereof,
agreements to maintain solvency, assets, level of income, or other financial
condition, and agreements to make payment other than for value received. The
amount of any Accommodation Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported; PROVIDED, that (i) if the
liability of the Person extending such guaranty or support is limited with
respect thereto to an amount less than the obligation guaranteed or
supported, or is limited to recourse against a particular asset or assets of
such Person, the amount of the corresponding Accommodation Obligation shall
be limited (in the case of a guaranty or other support limited by amount) to
such lesser amount or (in the case of a guaranty or other support limited by
recourse to a particular asset or assets) to the higher of the Fair Market
Value of such asset or assets at the date for determination of the amount of
the Accommodation Obligation or the value at which such asset or assets
would, in conformity with GAAP, be reflected on or valued for the purposes of
preparing a consolidated balance sheet of such Person as at such
determination date; and (ii) if any obligation is guaranteed or otherwise
supported jointly and severally by a Person and others, then the amount of
the liability of such Person with respect to such guaranty or other support
to be included in the amount of such Person's Accommodation Obligation shall
be the whole principal amount so guaranteed or otherwise supported.
"ACCOUNT DEBTOR" shall mean any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account.
"ACCOUNTS" shall mean all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party and, in any event,
including (a) all accounts receivable, other receivables, book debts and other
forms of
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obligations (other than forms of obligations evidenced by Chattel Paper,
Documents or Instruments) now owned or hereafter received or acquired by or
belonging or owing to any Credit Party, whether arising out of goods sold or
services rendered by it or from any other transaction (including any such
obligations which may be characterized as an account or contract right under
the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for goods
or services, (c) all of each Credit Party's rights to any goods represented
by any of the foregoing (including unpaid sellers' rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods), (d) all monies due or to become due to any
Credit Party, under all purchase orders and contracts for the sale of goods
or the performance of services or both by such Credit Party or in connection
with any other transaction (whether or not yet earned by performance on the
part of such Credit Party) now or hereafter in existence, including the right
to receive the proceeds of said purchase orders and contracts, and (e) all
collateral security and guarantees of any kind, now or hereafter in
existence, given by any Person with respect to any of the foregoing.
"ACTIVATION EVENT" and "ACTIVATION NOTICE" shall have the meanings
set forth in ANNEX C.
"ADVANCE" shall mean any Revolving Credit Advance or Swing Line
Advance, as the context may require.
"AFFILIATE" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, ten percent (10%) or more of the
Stock having ordinary voting power in the election of directors of such Persons,
(b) each Person that controls, is controlled by or is under common control with
such Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrower, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of Borrower. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that the term "Affiliate" shall
specifically exclude Agent and each Lender.
"AGENT" shall mean GE Capital or its successor appointed pursuant
to SECTION 9.7.
"AGREEMENT" shall have the meaning assigned to it in the recitals
hereto.
"AMENDED AND RESTATED AGREEMENT" shall have the meaning assigned
to it in the recitals hereto.
"APPENDICES" shall have the meaning assigned to it in the recitals
hereto.
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"APPLICABLE MARGINS" shall mean collectively the Applicable
Revolver Index Margin, the Applicable Term Loan Index Margin, the Applicable
Revolver LIBOR Margin and the Applicable Term Loan LIBOR Margin.
"APPLICABLE REVOLVER INDEX MARGIN" shall mean 1.5% per annum as of
the Effective Date and for any day in which the Index Rate is the Commercial
Paper Rate, and shall mean 0.0% for any day in which the Index Rate is the Prime
Rate.
"APPLICABLE REVOLVER LIBOR MARGIN" shall mean 1.5% per annum as of
the Effective Date.
"APPLICABLE TERM LOAN INDEX MARGIN" shall mean 1.5% per annum as
of the Effective Date and for any day in which the Index Rate is the Commercial
Paper Rate, and shall mean 0.0% for any day in which the Index Rate is the Prime
Rate.
"APPLICABLE TERM LOAN LIBOR MARGIN" shall mean 1.5% per annum as
of the Effective Date.
"ASSIGNMENT AGREEMENT" shall have the meaning assigned to it in
SECTION 9.1(a).
"BENEFIT PLAN" shall mean a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) subject to Title IV of
ERISA (i) in respect of which the Borrower or any ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA and (ii) which is not a Foreign Pension Plan or Foreign Employee
Benefit Plan.
"BORROWER" shall have the meaning assigned to it in the preamble
hereto.
"BORROWER ACCOUNTS" shall have the meaning assigned to it in ANNEX
C.
"BORROWER PLEDGE AGREEMENT" shall mean the Pledge Agreement dated
January 3, 1994 executed by Borrower in favor of GE Capital as supplemented by
the Second Supplement to Pledge Agreement of even date herewith executed by
Borrower in favor of Agent, on behalf of itself and Lenders, pledging all Stock
of its Domestic Subsidiaries and all Intercompany Notes owing to or held by it.
"BORROWING AVAILABILITY" shall have the meaning assigned to it in
Section 1.1(a)(i).
"BORROWING BASE" shall mean, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) eighty-five percent (85%) of the book value of Borrower's
Eligible Accounts, less any Reserves established by Agent at such time;
and
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(b) fifty percent (50%) of the book value of Borrower's
Eligible Inventory valued on a first-in, first-out basis (at the lower of
cost or market), less any Reserves established by Agent at such time.
"BORROWING BASE CERTIFICATE" shall mean a certificate to be
executed and delivered from time to time by Borrower in the form of
EXHIBIT 4.1(b).
"BUSINESS DAY" shall mean a day, in the applicable local time,
which is not a Saturday, a Sunday or a legal holiday and on which banks are not
required or permitted by law or other governmental action to close in Los
Angeles, California, Chicago, Illinois or New York, New York, and in reference
to LIBOR Loans shall mean any such day that is also a LIBOR Business Day.
"CAPITAL EXPENDITURES" shall mean, for any period, the aggregate
of all expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity with
GAAP, are required to be included in or reflected by the Borrower's or any of
its Subsidiaries' fixed asset accounts as reflected in any of their respective
balance sheets; PROVIDED, HOWEVER, that Capital Expenditures shall include,
whether or not such a designation would be in conformity with GAAP, (i) that
portion of Capital Leases which is capitalized on the consolidated balance sheet
of the Borrower and its Subsidiaries and (ii) expenditures for Equipment which
is purchased simultaneously with the trade-in of existing Equipment owned by any
Credit Party, to the extent the gross purchase price of the purchased Equipment
exceeds the book value of the Equipment being traded in at such time.
"CAPITAL LEASE" shall mean, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
"CAPITAL LEASE OBLIGATION" shall mean, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"CASH EQUIVALENTS" shall mean (i) marketable direct obligations
issued or unconditionally guaranteed by the United States government and backed
by the full faith and credit of the United States government; (ii) shares of an
open-end investment company registered pursuant to the Investment Company Act of
1940, as amended, and operated as a money-market fund in accordance with Rule
2a-7 issued thereunder; and (iii) domestic and eurodollar certificates of
deposit and time deposits, bankers' acceptances and floating rate certificates
of deposit issued by 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), which, at
the time of acquisition, are rated A-1 (or better) by
-4-
▇▇▇▇▇'▇ Investors Services, Inc.; PROVIDED, that the maturities of such Cash
Equivalents shall not exceed one year.
"CASH FLOW" shall mean, for any Person for any period, the
amounts for such period (taken as a single accounting period determined in
conformity with GAAP) of such Person's (i) net income or loss determined on a
first-in-first-out method of inventory accounting basis, PLUS (ii)
depreciation and amortization expense, PLUS (iii) interest expense, PLUS (iv)
foreign, federal and state income taxes, PLUS (v) state sales taxes arising
in connection with the Purchase, to the extent included in the calculation of
net income (or loss), PLUS (vi) extraordinary losses, PLUS (vii)
Environmental Liabilities, to the extent included in the calculation of net
income (or loss), PLUS (viii) Related Transactions Costs, MINUS (ix)
extraordinary gains.
"CASH MANAGEMENT SYSTEMS" shall have the meaning assigned to it in
SECTION 1.8.
"CHANGE OF CONTROL" shall mean 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 GE Capital and 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 20% or more of the issued and
outstanding shares of capital Stock of Borrower having the right to vote for
the election of directors of Borrower under ordinary circumstances; (b)
during any period of twelve consecutive calendar months, individuals who at
the beginning of such period constituted the board of directors of Borrower
(together with any new directors whose election by the board of directors of
Borrower or whose nomination for election by the stockholders of Borrower 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) cease for
any reason other than death or disability to constitute a majority of the
directors then in office or (c) Borrower shall cease to own and control all
of the economic and voting rights associated with all of the outstanding
capital Stock of any of its Subsidiaries.
"CHARGE OVER SHARES" shall mean that certain Charge Over Shares
dated January 3, 1994, as supplemented by the Supplement to Charge Over Shares
dated as of August 12, 1996, as supplemented by the Second Supplement to Charge
Over Shares, of even date herewith, in the form of EXHIBIT B attached hereto and
made a part hereof, executed by the Borrower in favor of the Lender, pursuant to
which the Borrower pledges and grants a security interest to the Lender in 65%
of the issued and outstanding capital Stock of Kaynar U.K. and related Property,
as the same may be further amended, restated, supplemented or modified from time
to time.
"CHARGES" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
-5-
"CHATTEL PAPER" shall mean any "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located.
"CLOSING CHECKLIST" shall mean the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as ANNEX D.
"CODE" shall mean the Uniform Commercial Code as the same may,
from time to time, be enacted and in effect in the State of New York; provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of Agent's or any Lender's security
interest in any Collateral is governed by the Uniform Commercial Code as enacted
and in effect in a jurisdiction other than the State of New York, the term
"Code" shall mean the Uniform Commercial Code as enacted and in effect in such
other jurisdiction solely for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
"COLLATERAL" shall mean the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"COLLATERAL DOCUMENTS" shall mean the Security Agreement, the
Pledge Agreements, the Guaranties, the Patent Security Agreement, the Trademark
Security Agreement, and all similar agreements entered into guaranteeing payment
of, or granting a Lien upon property as security for payment of, the
Obligations.
"COLLATERAL REPORTS" shall mean the reports with respect to the
Collateral referred to in ANNEX F.
"COLLECTION ACCOUNT" shall mean that certain account of Agent,
account number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Bankers Trust Company in New
York, New York or such other account as Agent shall specify.
"COMMERCIAL PAPER RATE" shall mean the published rate (or the
mid-point in the range of such rates, if more than one rate is published) for
30-day dealer-placed commercial paper (high grade unsecured notes sold
through dealers by major corporations in multiples of $1,000) as quoted in
the "Money Rates" section of THE WALL STREET JOURNAL or, in the event such
report shall not so appear, in such other publication as Lender may, from
time to time, specify to Borrower. The Commercial Paper Rate in effect for
each month shall be determined as of the first Business Day of that month.
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"COMMITMENT TERMINATION DATE" shall mean the earliest of (a)
January 3, 2002, (b) the date of termination of Lenders' obligations to make
Advances and/or incur Letter of Credit Obligations or permit existing Loans to
remain outstanding pursuant to SECTION 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to ANNEX B, and the permanent
reduction of the Revolving Loan Commitment and the Swing Line Commitment to zero
dollars ($0).
"COMMITMENTS" shall mean (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment (including without duplication the
Swing Line Lender's Swing Line Commitment as a subset of its Revolving Loan
Commitment) and Term Loan Commitment as set forth on ANNEX J to the Agreement or
in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments (including
without duplication the Swing Line Lender's Swing Line Commitment as a subset of
its Revolving Loan Commitment) and Term Loan Commitments, which aggregate
commitment shall be Sixty-Five Million Dollars ($65,000,000) on the Effective
Date, as to each of CLAUSES (a) and (b), as such Commitments may be reduced,
amortized or adjusted from time to time in accordance with the Agreement.
"COMPLIANCE CERTIFICATE" shall have the meaning assigned to it in
ANNEX E.
"CONCENTRATION ACCOUNT" shall have the meaning assigned to it in
ANNEX C.
"CONSOLIDATED CASH FLOW" shall mean, for any period, the Cash Flow
for such period (taken as a single accounting period determined in conformity
with GAAP) of the Borrower and its Subsidiaries determined on a consolidated
basis.
"CONSOLIDATED INTEREST CHARGES" shall mean, for any period, the
amount for such period (taken as a single accounting period determined in
conformity with GAAP) of total interest expense, paid in cash (including the
interest component of Capital Leases), of the Borrower and its Subsidiaries on a
consolidated basis.
"CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, for any period,
the ratio of (i) Consolidated Cash Flow for such period to (ii) Consolidated
Interest Charges for such period.
"CONSOLIDATED TOTAL FUNDED INDEBTEDNESS" shall mean, as of any
date of determination, the amount (determined in conformity with GAAP) of (i)
Letter of Credit Obligations and Indebtedness evidenced by the Notes, PLUS (ii)
all other outstanding Indebtedness of the Borrower and its Subsidiaries,
determined on a consolidated basis, which matures more than one year from the
date such Indebtedness was incurred, created or assumed by any of such Persons,
or matures within one year from such date but is renewable or extendible, at the
option of the debtor, to a date more than one year from such date, PLUS (iii)
all other outstanding Indebtedness of the Borrower and its Subsidiaries which
arises under a revolving credit or similar agreement which obligates the lender
or lenders to extend credit during a period of more than one
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year from such date, MINUS (iv) any Indebtedness owing by the Borrower or any
of its Subsidiaries to any other of such Persons.
"CONSOLIDATED TOTAL FUNDED INDEBTEDNESS COVERAGE RATIO" shall
mean, as of any date of determination, the ratio of (i) Consolidated Total
Funded Indebtedness as such date to (ii) Consolidated Cash Flow for any period
ending on such date.
"CONTAMINANT" shall mean any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, extremely hazardous waste, special
waste, petroleum or petroleum-derived substance or waste, asbestos, PCBs, or any
constituent of any such substance or waste, and includes, but is not limited to,
these terms as defined in any Environmental Law, as well as any other substance
which is required by any Governmental Authority to be investigated, cleaned up,
removed, treated or otherwise abated or which is regulated by such Governmental
Authority.
"CONTRACTS" shall mean all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"CONTRACTUAL OBLIGATION", as applied to any Person, shall mean any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
"CONTROL LETTER" shall mean a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house with
respect to commodity accounts and commodity contracts held by any Credit Party,
whereby, among other things, the issuer, securities intermediary or futures
commission merchant disclaims any security interest in the applicable financial
assets, acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Credit Party.
"COPYRIGHT LICENSE" shall mean any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"COPYRIGHTS" shall mean all of the following now owned or
hereafter acquired by any Credit Party: (a) all copyrights and general
intangibles of like nature (whether registered or
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unregistered), now owned or existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the
United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or renewals
thereof.
"CREDIT PARTIES" shall mean Borrower and each of its Domestic
Subsidiaries.
"DEFAULT" shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"DEFAULT RATE" shall have the meaning assigned to it in
Section 1.5(d).
"DISBURSEMENT ACCOUNTS" shall have the meaning assigned to it on
ANNEX C.
"DISCLOSURE SCHEDULES" shall mean the Schedules prepared by
Borrower and denominated as DISCLOSURE SCHEDULES 1.4 through 6.7 in the Index to
the Agreement.
"DOCUMENTS" shall mean any "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"DOLLARS" or "$" shall mean lawful currency of the United States
of America.
"DOMESTIC SUBSIDIARY" shall mean, with respect to any Person, (a)
any corporation organized under the laws of any State of the United States or
the District of Columbia, of which an aggregate of more than fifty percent (50%)
of the outstanding Stock having ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether, at the time,
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned legally or beneficially by such Person and/or one
or more Subsidiaries of such Person, or with respect to which any such Person
has the right to vote or designate the vote of fifty percent (50%) or more of
such Stock whether by proxy, agreement, operation of law or otherwise, and (b)
any (i) partnership comprised of United States Persons (as defined in Section
7701(a)(30) of the IRC) or (ii) limited liability company organized under the
laws of any State of the United States, in which such Person and/or one or more
Subsidiaries of such Person shall have an interest (whether in the form of
voting or participation in profits or capital contribution) of more than fifty
percent (50%) or of which any such Person is a general partner or may exercise
the powers of a general partner.
"EBITDA" shall mean, with respect to any Person for any fiscal
period, an amount equal to (a) consolidated net income of such Person for such
period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii)
gain from extraordinary items for such period, (iv) any aggregate net gain (but
not any aggregate net loss) during such period arising from the sale, exchange
or other disposition of capital assets by such Person (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction with
the disposition of fixed
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assets and all securities), and (v) any other non-cash gains which have been
added in determining consolidated net income, in each case to the extent
included in the calculation of consolidated net income of such Person for
such period in accordance with GAAP, but without duplication, plus (c) the
sum of (i) any provision for income taxes, (ii) Interest Expense, (iii) loss
from extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included
in the calculation of consolidated net income of such Person for such period
in accordance with GAAP, but without duplication. For purposes of this
definition, the following items shall be excluded in determining consolidated
net income of a Person: (1) the income (or deficit) of any other Person
accrued prior to the date it became a Subsidiary of, or was merged or
consolidated into, such Person or any of such Person's Subsidiaries; (2) the
income (or deficit) of any other Person (other than a Subsidiary) in which
such Person has an ownership interest, except to the extent any such income
has actually been received by such Person in the form of cash dividends or
distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such
Subsidiary; (4) any restoration to income of any contingency reserve, except
to the extent that provision for such reserve was made out of income accrued
during such period; (5) any write-up of any asset; (6) any net gain from the
collection of the proceeds of life insurance policies; (7) any net gain
arising from the acquisition of any securities, or the extinguishment, under
GAAP, of any Indebtedness, of such Person, (8) in the case of a successor to
such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over
the cost to such Person of the investment in such Subsidiary.
"EFFECTIVE DATE" is defined in SECTION 11.15.
"ELIGIBLE ACCOUNTS" shall have the meaning assigned to it in
SECTION 1.6.
"ELIGIBLE INVENTORY" shall have the meaning assigned to it in
SECTION 1.7.
"ENVIRONMENTAL LAWS" shall mean all applicable Requirements of
Law, now or hereafter in effect, and in each case as amended or supplemented
from time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
Sections 9601 ET SEQ.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. Sections 5101 ET SEQ.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7
-10-
U.S.C. Sections 136 ET SEQ.); the Solid Waste Disposal Act (42 U.S.C.
Sections 6901 ET SEQ.); the Toxic Substance Control Act (15 U.S.C. Sections
2601 ET SEQ.); the Clean Air Act (42 U.S.C. Sections 7401 ET SEQ.); the
Federal Water Pollution Control Act (33 U.S.C. Sections 1251 ET SEQ.); the
Occupational Safety and Health Act (29 U.S.C. Sections 651 ET SEQ.); and the
Safe Drinking Water Act (42 U.S.C. Sections 300(f) ET SEQ.), each as from
time to time amended, and any and all regulations promulgated thereunder, and
all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.
"ENVIRONMENTAL LIABILITIES" shall mean, with respect to any
Person, all liabilities, obligations, responsibilities, response, remedial
and removal costs, investigation and feasibility study costs, capital costs,
operation and maintenance costs, losses, damages, punitive damages, property
damages, natural resource damages, consequential damages, treble damages,
costs and expenses (including all fees, disbursements and expenses of
counsel, experts and consultants), fines, penalties, sanctions and interest
incurred as a result of or related to any claim, suit, action, investigation,
proceeding or demand by any Person, whether based in contract, tort, implied
or express warranty, strict liability, criminal or civil statute or common
law, including any arising under or related to any Environmental Laws,
Environmental Permits, or in connection with any Release or threatened
Release or presence of a Hazardous Material whether on, at, in, under, from
or about or in the vicinity of any real or personal property.
"ENVIRONMENTAL LIEN" shall mean a Lien in favor of any
Governmental Authority for any (i) liabilities under any Environmental Law, or
(ii) damages arising from, or costs incurred by such Governmental Authority in
response to, a Release or threatened Release of a Contaminant into the
environment.
"ENVIRONMENTAL PERMITS" shall mean all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"EQUIPMENT" shall mean all "equipment," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located and, in any event, including all such Credit Party's machinery and
equipment, including processing equipment, conveyors, machine tools, data
processing and computer equipment with software and peripheral equipment
(other than software constituting part of the Accounts), and all engineering,
processing and manufacturing equipment, office machinery, furniture,
materials handling equipment, tools, attachments, accessories, automotive
equipment, trailers, trucks, forklifts, molds, dies, stamps, motor vehicles,
rolling stock and other equipment of every kind and nature, trade fixtures
and fixtures not forming a part of real property, all whether now owned or
hereafter acquired, and wherever situated, together with all additions and
accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals,
drawings, instructions, warranties and rights with respect thereto, and all
products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974 (or any successor legislation thereto), as amended from time to time, and
any regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean, with respect to any Credit Party,
any trade or business (whether or not incorporated) which, together with such
Credit Party, are treated as a single employer within the meaning of Sections
414(b), (c), (m) or (o) of the IRC.
"ERISA EVENT" shall mean, with respect to any Credit Party or
any ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Benefit Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Benefit 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 any Credit Party or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Benefit Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings
to terminate a Benefit Plan or Multiemployer Plan by the PBGC; (f) the
failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Benefit Plan unless such failure is
cured within 30 days; (g) any other event or condition which 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 Benefit
Plan or Multiemployer Plan or for the imposition of liability under Section
4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under
Section 4041A of ERISA or the reorganization or insolvency of a Multiemployer
Plan under Section 4241 of ERISA; (i) the loss of a Qualified Plan's
qualification or tax exempt status; or (j) the termination of a Plan
described in Section 4064 of ERISA.
"ESOP" shall mean a Plan which is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"EVENT OF DEFAULT" shall have the meaning assigned to it in
SECTION 8.1.
"EXCESS CASH FLOW" shall mean, for any Fiscal Year, an amount
equal to (i) Cash Flow for such Fiscal Year, MINUS (ii) income taxes paid in
cash during such Fiscal Year, MINUS (iii) Capital Expenditures paid in cash
during such Fiscal Year, MINUS (iv) Related Transactions Costs paid in cash
during such Fiscal Year, MINUS (v) interest on permitted Indebtedness of the
Borrower and its Subsidiaries paid in cash during such Fiscal Year,
including, without limitation, the interest component of all Capital Leases,
MINUS (vi) scheduled amortization of the principal portion of the Term Loan
during such Fiscal Year, MINUS (vii) extraordinary cash losses incurred
during such Fiscal Year, MINUS (viii) Environmental Liabilities paid in cash
during such Fiscal Year, PLUS (ix) extraordinary cash gains for such Fiscal
Year, PLUS (or MINUS) (x) any decrease (or increase) in Net Working Capital
since the last day of the then immediately preceding Fiscal Year, the amount
for such Fiscal Year in each case determined in conformity with GAAP for the
Borrower and its Subsidiaries on a consolidated basis.
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"EXCESS PROCEEDS OF ISSUANCE OF STOCK OR INDEBTEDNESS" shall
mean net cash proceeds received by the Borrower or any of its Subsidiaries at
any time after the Effective Date on account of the issuance of (i) Stock of
the Borrower or any of its Subsidiaries (other than Stock of a Subsidiary
issued to the Borrower or to a Subsidiary of the Borrower) or (ii)
Indebtedness (other than Indebtedness permitted under SECTION 6.3) of the
Borrower or any of its Subsidiaries, in each case net of all transaction
costs and underwriters' discounts with respect thereto.
"EXISTING CREDIT AGREEMENT" shall have the meaning assigned to it
in the recitals hereto.
"EXPORT LICENSE" shall mean any and all licenses,
authorizations, approvals or applications therefor relating to exports,
reexports, temporary exports, temporary imports and imports, as the case may
be, granted by or pending before the United States Department of Commerce,
the United States Department of State or any other United States Governmental
Authority.
"FACILITY SECURITY CLEARANCE" shall mean an administrative
determination by the applicable United States Government Authority that, from
a security viewpoint, a facility is eligible for access to classified
information of a certain category and all lower categories.
"FAIR MARKET VALUE" shall mean, with respect to any asset, the
value of the consideration obtainable in a sale of such asset in the open
market, 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, each having reasonable knowledge of the nature and characteristics of
such asset, neither being under any compulsion to act, determined (a) in good
faith by the board of directors of the Borrower or (b) in an appraisal of
such asset, PROVIDED, that such appraisal was performed relatively
contemporaneously with such sale by an independent third party appraiser and
the basic assumptions underlying such appraisal have not materially changed
since the date thereof.
"FEDERAL FUNDS RATE" shall mean, for any day, a floating rate
equal to the weighted average of the rates on overnight federal funds
transactions among members of the Federal Reserve System, as determined by
Agent.
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of the
Federal Reserve System, or any successor thereto.
"FEES" shall mean any and all fees payable to Agent or any Lender
pursuant to the Agreement, the GE Capital Fee Letter or any of the other Loan
Documents.
"FINANCIAL STATEMENTS" shall mean the consolidated and
consolidating income statements, statements of cash flows and balance sheets
of Borrower delivered in accordance with SECTION 3.4 and ANNEX E.
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"FIRST CREDIT AGREEMENT" shall have the meaning assigned to it in
the recitals hereto.
"FISCAL MONTH" shall mean any of the monthly accounting periods of
Borrower.
"FISCAL QUARTER" shall mean any of the quarterly accounting
periods of Borrower, ending on March 31, June 30, September 30 and December 31
of each year.
"FISCAL YEAR" shall mean any of the annual accounting periods of
Borrower ending on December 31 of each year.
"FIXTURES" shall mean any "fixtures" as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party.
"FOREIGN EMPLOYEE BENEFIT PLAN" shall mean any employee benefit
plan as defined in Section 3(3) of ERISA which is maintained or contributed
to for the benefit of the employees of the Borrower, any of its Subsidiaries
or any of its ERISA Affiliates and is not covered by ERISA pursuant to ERISA
Section 4(b)(4).
"FOREIGN PENSION PLAN" shall mean any employee benefit plan as
defined in Section 3(3) of ERISA which (i) is maintained or contributed to
for the benefit of employees of the Borrower, any of its Subsidiaries or any
of its ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section
4(b)(4) of ERISA, and (iii) under applicable local law, is required to be
funded through a trust or other funding vehicle.
"FOREIGN SUBSIDIARY" shall mean a Subsidiary which is not a
Domestic Subsidiary.
"FUNDED DEBT" shall mean, with respect to any Person, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and which by its terms matures more than
one year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and
also including, in the case of Borrower, the Obligations and, without
duplication, Accommodation Obligations consisting of guaranties of Funded
Debt of other Persons.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, consistently applied, as such term is further defined
in ANNEX G to the Agreement.
"GE CAPITAL" shall have the meaning assigned to it in the preamble
hereto.
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"GE CAPITAL FEE LETTER" shall mean that certain letter, of even
date herewith, between GE Capital and Borrower with respect to certain Fees to
be paid from time to time by Borrower to GE Capital.
"GENERAL INTANGIBLES" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, and, in any event, including all right, title and interest which such
Credit Party may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GOVERNMENT CONTRACT" shall mean any bid, quotation, proposal,
contract, agreement, work authorization, lease, commitment or sale or purchase
order of any Credit Party which is entered into with or submitted to any United
States Governmental Authority or any agency, agent or instrumentality thereof,
including, among other things, all contracts and work authorizations to supply
goods and services to the United States Government.
"GUARANTIES" shall mean, collectively, each Subsidiary Guaranty
and any other guaranty executed by any Guarantor in favor of Agent and Lenders
in respect of the Obligations.
"GUARANTORS" shall mean each Domestic Subsidiary of Borrower, and
each other Person, if any, which executes a guarantee or other similar agreement
in favor of Agent in connection with the transactions contemplated by the
Agreement and the other Loan Documents.
"HAZARDOUS MATERIAL" shall mean any substance, material or
waste which is regulated by or forms the basis of liability now or hereafter
under, any Environmental Laws,
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including any material or substance which is (a) defined as a "solid waste,"
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "pollutant," "contaminant,"
"hazardous constituent," "special waste," "toxic substance" or other similar
term or phrase under any Environmental Laws, (b) petroleum or any fraction or
by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or any
radioactive substance.
"INDEBTEDNESS" of any Person shall mean without duplication (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are not overdue by more than six (6) months unless being contested
in good faith, (b) all reimbursement and other obligations with respect to
letters of credit, bankers' acceptances and surety bonds, whether or not
matured, (c) all obligations evidenced by notes, bonds, debentures or similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Effective Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
or interest rates, in each case whether contingent or matured, (h) all
Indebtedness 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 or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations.
"INDEMNIFIED LIABILITIES" shall have the meaning assigned to it in
SECTION 1.13.
"INDEX RATE" shall mean the Commercial Paper Rate unless the Agent
shall have given the Borrower the notice referred to in SECTION 1.5(a), in which
case the Index Rate shall mean the Prime Rate.
"INDEX RATE LOAN" shall mean a Loan or portion thereof bearing
interest by reference to the Index Rate.
"INSTRUMENTS" shall mean any "instrument," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all notes and other, without limitation, evidences
of indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
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"INTELLECTUAL PROPERTY" shall mean any and all Licenses, Patents,
Copyrights, Trademarks, trade secrets and customer lists.
"INTEREST COVERAGE RATIO" shall mean, with respect to any Person
for any period, the ratio of EBITDA to Interest Expense.
"INTEREST EXPENSE" shall mean, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
"INTEREST PAYMENT DATE" shall mean (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
(b) as to any LIBOR Loan, the last day of the applicable LIBOR Period; provided
that, in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest which is then accrued under the Agreement.
"INVENTORY" shall mean any "inventory," as such term is defined in
the Code, now or hereafter owned or acquired by any Credit Party, wherever
located, and in any event including inventory, merchandise, goods and other
personal property which are held by or on behalf of any Credit Party for sale or
lease or are furnished or are to be furnished under a contract of service, or
which constitute raw materials, work in process or materials used or consumed or
to be used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies.
"INVESTMENT" shall mean, with respect to any Person, (i) any
purchase or other acquisition by that Person of Securities, or of a
beneficial interest in Securities, issued by any other Person, (ii) any
purchase by that Person of all or substantially all of the assets of a
business conducted by another Person, and (iii) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand,
prepaid expenses, accounts receivable, advances to employees and similar
items made or incurred in the ordinary course of business) or capital
contribution by that Person to any other Person, including all Indebtedness
to such Person arising from a sale of property by such Person other than in
the ordinary course of its business. The amount of any Investment shall be
the original cost of such Investment, plus the cost of all additions thereto
less the amount of any return of capital or principal to the extent such
return is in cash with respect to such Investment without any adjustments for
increases or decreases in value or write-ups, write-downs or write-offs with
respect to such Investment.
"INVESTMENT PROPERTY" shall have the meaning ascribed thereto in
Section 9-115 of the Code in those jurisdictions in which such definition has
been adopted and shall include (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited
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liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (ii) all securities entitlements of any
Credit Party, including the rights of such Credit Party to any securities
account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all securities
accounts held by any Credit Party; (iv) all commodity contracts held by any
Credit Party; and (v) all commodity accounts held by any Credit Party.
"IRC" shall mean the Internal Revenue Code of 1986, as amended,
and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"KAYNAR FEMIPARI" shall mean K.T.I. Femipari KFT, a company
organized under the laws of Hungary.
"KAYNAR INTERNATIONAL" shall mean Kaynar Technologies
International Sales Corp., a company organized under the laws of Barbados.
"KAYNAR U.K." shall mean Kaynar Technologies Limited, a company
organized under the laws of England and Wales.
"L/C ISSUER" shall have the meaning assigned to it in ANNEX B.
"L/C SUBLIMIT" shall have the meaning assigned to it in ANNEX B.
"LENDERS" shall mean GE Capital, the other Lenders named on the
signature page of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include such assignee.
"LETTER OF CREDIT FEE" has the meaning ascribed thereto in
ANNEX B.
"LETTER OF CREDIT OBLIGATIONS" shall mean all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of a reimbursement agreement or guaranty by Agent or purchase of a
participation as set forth in ANNEX B with respect to any Letter of Credit. The
amount of such Letter of Credit Obligations shall equal the maximum amount which
may be payable by Agent or Lenders thereupon or pursuant thereto.
"LETTERS OF CREDIT" shall mean commercial or standby letters of
credit issued for the account of Borrower by any L/C Issuer, and bankers'
acceptances issued by Borrower, for which Agent and Lenders have incurred Letter
of Credit Obligations.
"LIBOR BUSINESS DAY" shall mean a Business Day on which banks in
the city of London are generally open for interbank or foreign exchange
transactions.
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"LIBOR LOAN" shall mean a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR PERIOD" shall mean, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two or three months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in SECTION 1.5(e); provided
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(i) if any LIBOR Period would otherwise end on a day that
is not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in which
event such LIBOR Period shall end on the immediately preceding LIBOR
Business Day;
(ii) any LIBOR Period that would otherwise extend beyond
the Commitment Termination Date shall end two (2) LIBOR Business Days
prior to such date;
(iii) any LIBOR Period pertaining to a LIBOR Loan that
begins on the last LIBOR 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 LIBOR Period) shall end on the last LIBOR Business Day
of a calendar month;
(iv) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(v) Borrower shall select LIBOR Periods so that there
shall be no more than five (5) separate LIBOR Loans in existence at any
one time.
"LIBOR RATE" shall mean for each LIBOR Period, a rate of interest
determined by Agent equal to:
(i) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period which appears on Telerate Page
3750 as of 11:00 a.m., London time, on the second full LIBOR Business Day
next preceding the first day of each LIBOR Period (unless such date is
not a Business Day, in which event the next succeeding Business Day will
be used); divided by
(ii) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day which is two (2) LIBOR Business
Days prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under
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any regulations of the Board of Governors of the Federal Reserve system
or other governmental authority having jurisdiction with respect
thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board which are required to be maintained by a
member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate
News Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower.
"LICENSE" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"LIEN" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"LITIGATION" shall have the meaning assigned to it in
SECTION 3.13.
"LOAN ACCOUNT" shall have the meaning assigned to it in
SECTION 1.12.
"LOAN DOCUMENTS" shall mean the Agreement, the Notes, the
Collateral Documents and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to,
or in favor of, Agent and/or Lenders and including all other pledges, powers
of attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of any
Credit Party, or any employee of any Credit Party, and delivered to Agent or
any Lender in connection with the Agreement or the transactions contemplated
hereby. Any reference in the Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and
shall refer to such Agreement as the same may be in effect at any and all
times such reference becomes operative.
"LOANS" shall mean the Revolving Loan, the Swing Line Loan and the
Term Loan.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of any Credit Party, (b) Borrower's ability to pay any of the Loans or any of
the other Obligations in accordance with the terms of the Agreement, (c) the
ability of any Guarantor to honor its obligations under the
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appropriate Guaranty, (d) the Collateral or Agent's Liens, on behalf of
itself and Lenders, on the Collateral or the priority of such Liens, or (e)
Agent's or any Lender's rights and remedies under the Agreement and the other
Loan Documents.
"MAXIMUM AMOUNT" shall mean, at any particular time, an amount
equal to the Revolving Loan Commitment of all Lenders.
"M&M" shall mean (a) prior to the M&M Acquisition, M&M Machine
and Tool Co., a California corporation, and (b) on and after the M&M
Acquisition, M&M Machine and Tool Co., a Delaware corporation formerly known as
KTIC Acquisition Corp..
"M&M ACQUISITION" shall mean the merger of M&M with and into M&M
Acquisition Co.
"M&M ACQUISITION AGREEMENT" shall mean (a) the Agreement and Plan
of Merger dated as of the Effective Date entered into among the Borrower, M&M
Acquisition Co. and M&M and (b) the Stockholders Agreement dated as of the
Effective Date among the Borrower and the stockholders of M&M.
"M&M ACQUISITION CO." shall mean, prior to the M&M Acquisition,
KTIC Acquisition Corp., a Delaware corporation.
"M&M LIENS" shall mean Liens on the assets of M&M securing
Indebtedness of M&M assumed in connection with the M&M Acquisition; PROVIDED
that such Liens do not apply to any Property of the Borrower or its Subsidiaries
other than Property of M&M.
"MORTGAGED PROPERTIES" shall have the meaning assigned to it in
ANNEX D.
"MORTGAGES" shall mean each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
with respect to the Mortgaged Properties, all in form and substance satisfactory
to Agent.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate
is making, is obligated to make, has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"NET BORROWING AVAILABILITY" shall mean as of any date of
determination, the lesser of (i) the Maximum Amount and (ii) the Borrowing Base,
in each case less the sum of the Revolving Loan and Swing Line Loan then
outstanding.
"NET WORKING CAPITAL" shall mean, as of any date of
determination, the excess, if any, of (i) consolidated current assets, except
cash and Cash Equivalents, over (ii) consolidated
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current liabilities, except current maturities of long-term debt as of such
date, in each case for the Borrower and its Subsidiaries on a consolidated
basis.
"NON-FUNDING LENDER" shall have the meaning assigned to it in
SECTION 9.9(a)(ii).
"NOTES" shall mean the Revolving Notes, the Swing Line Note and
the Term Notes, collectively.
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning
assigned to it in SECTION 1.5(e).
"NOTICE OF REVOLVING CREDIT ADVANCE" shall have the meaning
assigned to it in SECTION 1.1(a).
"OBLIGATIONS" shall mean all loans, advances, debts, liabilities
and obligations, for the performance of covenants, tasks or duties or for
payment of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest which accrues after the commencement of any case or proceeding in
bankruptcy after the insolvency of, or for the reorganization of any Credit
Party, whether or not allowed in such proceeding), Fees, Charges, expenses,
attorneys' fees and any other sum chargeable to any Credit Party under the
Agreement or any of the other Loan Documents.
"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to any
corporation, limited liability company, unlimited liability company or
partnership (i) the articles/certificate of incorporation (or the equivalent
organizational documents) of such corporation or limited liability company,
(ii) the partnership agreement executed by the partners in the partnership,
(iii) the certificate of registration and memorandum and articles of association
of such unlimited liability company, (iv) the by-laws (or the equivalent
governing documents) of the corporation, limited liability company, unlimited
liability company or partnership, and (iv) any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such corporation's capital Stock or such limited liability
company's, unlimited liability company's or partnership's equity or ownership
interests.
"ORIGINAL AMENDMENTS" shall have the meaning assigned to it in
the recitals hereto.
"ORIGINAL CREDIT AGREEMENT" shall have the meaning assigned to it
in the recitals hereto.
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"OPERATING LEASE" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
thereunder that is not a Capital Lease.
"PATENT SECURITY AGREEMENT" shall mean the Patent Security
Agreement dated as of January 3, 1994, as amended and supplemented by that
certain Amendment and Supplement to Patent and Security Agreement dated as of
August 12, 1996, and as amended and supplemented by the Second Amendment and
Supplement to Patent Security Agreement made in favor of Agent, on behalf of
itself and Lenders, by each applicable Credit Party.
"PATENT LICENSE" shall mean rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right with
respect to any invention on which a Patent is in existence.
"PATENTS" shall mean all of the following in which any Credit
Party now holds or hereafter acquires any interest: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State or Territory thereof, or any other country, and (b)
all reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"PERMITS" shall mean any license, permit, variance, interim
permit, permit application, approval, consent, certification, qualification or
other authorization under any Requirements of Law applicable to the Borrower or
any of its Subsidiaries or otherwise required by any Governmental Authority in
connection with the business or operations of the Borrower or any of its
Subsidiaries, including, without limitation, any license, permit, consent,
certification, approval, authorization or qualification relating to any
Government Contract.
"PERMITTED ACQUISITION" shall have the meaning assigned to it in
SECTION 6.1.
"PERMITTED ENCUMBRANCES" shall mean the following encumbrances:
(a) Liens for taxes or assessments or other governmental Charges not yet due and
payable; (b) pledges or deposits of money securing statutory obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA), so long as
all such Liens in connection with worker's compensation, unemployment insurance
or other types of social security benefits deposits shall secure obligations in
an aggregate principal amount not exceeding $50,000 at any time outstanding; (c)
pledges or deposits of money securing bids, tenders, contracts (other than
contracts for the payment of money) or leases to which any Credit Party is a
party as lessee made in the ordinary course of business; (d) inchoate and
unperfected workers', mechanics' or similar liens arising in the
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ordinary course of business, so long as such Liens attach only to Equipment,
Fixtures and/or Real Property; (e) carriers', warehousemen's, suppliers' or
other similar possessory liens arising in the ordinary course of business and
securing liabilities in an outstanding aggregate amount not in excess of
$100,000 at any time, so long as such Liens attach only to Inventory; (f)
deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under SECTION 8.1(j); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Property or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value,
or marketability of such Real Property; (i) presently existing or hereinafter
created Liens in favor of Agent, on behalf of Lenders; (j) Liens expressly
permitted under CLAUSES (b) and (c) of SECTION 6.7; and (k) temporary Liens
on assets acquired by the Borrower in a Permitted Acquisition (and not on any
other assets) securing Indebtedness permitted by SECTION 6.1(iv), PROVIDED
that such temporary Liens shall be released on or before the fifth Business
Day following the closing of such Permitted Acquisition.
"PERMITTED EXISTING ACCOMMODATION OBLIGATIONS" shall mean the
Accommodation Obligations of the Credit Parties identified as such on DISCLOSURE
SCHEDULE (6.6).
"PERMITTED EXISTING INDEBTEDNESS" shall mean the Indebtedness of
the Credit Parties identified as such on DISCLOSURE SCHEDULE (6.3).
"PERMITTED EXISTING LIENS" shall mean the Liens on the Property
of the Credit Parties identified as such on DISCLOSURE SCHEDULE (6.7).
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"PERSONNEL SECURITY CLEARANCE" shall mean an administrative
determination by the applicable United States Governmental Authority that an
individual is eligible, from a security point of view, for access to classified
information of the same or lower category as the level of the personnel
clearance being granted.
"PLAN" shall mean, at any time, an employee benefit plan, as
defined in Section 3(3) of ERISA, which any Credit Party maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any Credit Party.
"PLEDGE AGREEMENTS" shall mean the Charge Over Shares, the
Borrower Pledge Agreement, the Subsidiary Pledge Agreements and any other pledge
agreement entered into on or after the Effective Date by any Credit Party (as
required by the Agreement or any other Loan Document).
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"PRIME RATE" shall mean, for any day, a floating rate equal to
the higher of (i) the highest prime or base rate of interest published in
New York City by any of ▇▇▇▇▇▇ Guaranty Trust Company of New York, Citibank,
N.A. and Chase Manhattan Bank (whether or not such rate is actually charged
by any such bank) and (ii) the latest published rate for 90-day directly placed
commercial paper (or the mid-point in the range of such rates, if more than one
rate is published) as quoted either in the Federal Reserve Rate Report which
customarily appears in the Friday issue of THE WALL STREET JOURNAL under
"Money Rates" or in such other publication as the Lender may, from time to time
hereafter, designate in writing.
"PROCEEDS" shall mean "proceeds," as such term is defined in the
Code and, in any event, shall include (a) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Credit Party from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to any Credit Party from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of governmental authority), (c) any claim of
any Credit Party against third parties (i) for past, present or future
infringement of any Patent or Patent License, or (ii) for past, present or
future infringement or dilution of any Copyright, Copyright License, Trademark
or Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party against
third parties with respect to any litigation or dispute concerning any of the
Collateral, and (e) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral, upon disposition or
otherwise.
"PRO FORMA" shall mean the unaudited consolidated and
consolidating balance sheet of Borrower and its Subsidiaries as of July 31,
1998, after giving pro forma effect to the Related Transactions.
"PROJECTIONS" shall mean Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash
flow statements; and (d) capitalization statements, all prepared on a Subsidiary
by Subsidiary or division by division basis, if applicable, and otherwise
consistent with the historical Financial Statements of Borrower, together with
appropriate supporting details and a statement of underlying assumptions.
"PROPERTY" shall mean any Real Property or personal property,
plant, building, facility, structure, underground storage tank or unit,
Equipment, Inventory, General Intangible, Account, or other asset owned, leased
or operated by the Borrower or its Subsidiaries, as applicable, (including any
surface water thereon or adjacent thereto, and soil and groundwater thereunder).
"PRO RATA SHARE" shall mean with respect to all matters relating
to any Lender (a) with respect to the Revolving Loan (including the Swing Line
Loan as a subset of the Swing Lien Lender's Revolving Loan), the percentage
obtained by dividing (i) the Revolving Loan Commitment (including the Swing Line
Commitment as a subset of the Swing Line Lender's
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Revolving Loan Commitment), by (ii) the aggregate Revolving Loan Commitments,
(b) with respect to the Term Loan, the percentage obtained by dividing (i)
the Term Loan Commitment of that Lender by (ii) the aggregate Term Loan
Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to SECTION 9.1, (c) with respect to all Loans,
the percentage obtained by dividing (i) the aggregate Commitments of that
Lender by (ii) the aggregate Commitments of all Lenders, and (d) with respect
to all Loans on and after the Commitment Termination Date, the percentage
obtained by dividing (i) the aggregate outstanding principal balance of the
Loans held by that Lender, by (ii) the outstanding principal balance of the
Loans held by all Lenders.
"PUBLIC OFFERING" shall mean a firm underwritten public offering
of common stock registered on form ▇-▇, ▇-▇ or S-3 under the Securities Act of
1933, as amended, by a nationally recognized investment banking firm and after
giving effect to which the issuer shall be qualified for listing on the NASDAQ
National Market, the American Stock Exchange or the New York Stock Exchange.
"QUALIFIED PLAN" shall mean a Plan which is intended to be
tax-qualified under Section 401(a) of the IRC.
"REAL PROPERTY" shall mean all of the Borrower's and each of its
Subsidiaries' respective present and future right, title and interest
(including, without limitation, any leasehold estate) in (i) any plots, pieces
or parcels of land, (ii) any improvements, buildings, structures and fixtures
now or hereafter located or erected thereon or attached thereto of every nature
whatsoever (the rights and interests described in CLAUSE (i) or (ii) above being
the "Premises"), (iii) all easements, rights of way, gores of land or any lands
occupied by streets, ways, alleys, passages, sewer rights, water courses, water
rights and powers, and public places adjoining such land, and any other
interests in property constituting appurtenances to the Premises, or which
hereafter shall in any way belong, relate or be appurtenant thereto, (iv) all
hereditaments, gas, oil, minerals (with the right to extract, sever and remove
such gas, oil and minerals), and easements, of every nature whatsoever, located
in or on the Premises and (v) all other rights and privileges thereunto
belonging or appertaining and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to or of any of the rights
and interests described in CLAUSE (iii) or (iv) above.
"RECOIL" shall mean Recoil Pty, an unlimited liability company
organized under the laws of the State of Victoria, Australia.
"RECOIL AUSTRALIA HOLDINGS" shall mean Recoil Australia Holdings,
Inc., a Delaware corporation.
"RECOIL BELGIUM" shall mean Recoil Marketing BVBA, a company
organized under the laws of Belgium.
"RECOIL DELAWARE" shall mean Recoil Inc., a Delaware corporation.
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"RECOIL HOLDINGS" shall mean Recoil Holdings, Inc., a Delaware
corporation.
"RECOIL SINGAPORE" shall mean Recoil Pty Limited, a company
organized under the laws of Singapore.
"RECOIL THAILAND" shall mean Recoil Thailand, a company organized
under the laws of Thailand.
"RECOIL U.K." shall mean Recoil (Europe) Limited, a company
organized under the laws of England and Wales.
"REFINANCING DATE" shall mean the date on which Indebtedness of
M&M permitted by SECTION 6.3(a)(x) is refinanced with the prior written consent
of the Requisite Lenders with Indebtedness which permits the granting of Liens
in favor of the Agent to secure the Obligations.
"REFUNDED SWING LINE LOAN" shall have the meaning assigned to it
in SECTION 1.1(c)(iii).
"RELATED TRANSACTIONS" shall mean each borrowing under the
Revolving Loan and the Term Loan on the Effective Date, the M&M Acquisition, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.
"RELATED TRANSACTIONS COSTS" shall mean the fees, costs and
expenses payable by the Borrower and its Subsidiaries in connection with the
execution, delivery and performance of the Related Transactions Documents.
"RELATED TRANSACTIONS DOCUMENTS" shall mean the Loan Documents
and the M&M Acquisition Agreement.
"RELEASE" shall mean any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"REMEDIAL ACTION" means actions required to (i) clean up, remove,
treat or in any other way address Hazardous Materials in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Hazardous Materials; or (iii) investigate and determine if a
remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
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"REQUIREMENTS OF LAW" shall mean, as to any Person, the
Organizational Documents of such Person, and any law, rule or regulation, or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject including, without
limitation, the Securities Act, the Securities Exchange Act, ERISA, the Fair
Labor Standards Act and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit or environmental,
labor, employment, occupational safety or health law, ordinance, rule,
regulation or common law.
"REQUISITE LENDERS" shall mean (a) Lenders having more than
sixty-six and two-thirds percent (66 2/3%) of the Commitments of all Lenders,
or (b) if the Commitments have been terminated, more than sixty-six and
two-thirds percent (66 2/3%) of the aggregate outstanding amount of the Loans.
"REQUISITE REVOLVING LENDERS" shall mean (a) Lenders having
more than sixty-six and two-thirds percent (66 2/3%) of the Revolving Loan
Commitments of all Lenders, or (b) if the Revolving Loan Commitments have
been terminated, more than sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of the Revolving Loan.
"RESERVES" shall mean, with respect to the Borrowing Base of
Borrower (a) reserves established by Agent from time to time against Eligible
Inventory pursuant to SECTION 5.9, (b) reserves established pursuant to
SECTION 5.4(c), and (c) such other reserves against Eligible Accounts, Eligible
Inventory or Borrowing Availability of Borrower which Agent may, in its
reasonable credit judgment, establish from time to time. Without limiting the
generality of the foregoing, Reserves established to ensure the payment of
accrued Interest Expenses or Indebtedness shall be deemed to be a reasonable
exercise of Agent's credit judgment.
"RESTRICTED PAYMENT" shall mean (a) the declaration or payment of
any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of a Person's Stock,
(b) any payment on account of the purchase, redemption, defeasance, sinking fund
or other retirement of a Person's Stock or any other payment or distribution
made in respect thereof, either directly or indirectly, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Person now or hereafter outstanding; (e)
any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such
Person's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Person other than payment of compensation in the ordinary
course to stockholders who are employees of such Person; and (g) any payment of
management fees (or
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other fees of a similar nature) by such Person to any Stockholder of such
Person or their Affiliates.
"RETIREE WELFARE PLAN" shall mean, at any time, a Plan that is a
"welfare plan" as defined in Section 3(2) of ERISA, that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at
the sole expense of the participant or the beneficiary of the participant.
"REVOLVING CREDIT ADVANCE" shall have the meaning assigned to it in
SECTION 1.1(a)(i).
"REVOLVING LENDERS" shall mean, as of any date of determination, Lenders
having a Revolving Loan Commitment.
"REVOLVING LOAN" shall mean, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal
balance of the Revolving Loan shall include the outstanding balance of Letter
of Credit Obligations.
"REVOLVING LOAN COMMITMENT" shall mean (a) as to any Revolving Lender,
the aggregate commitment of such Revolving Lender to make Revolving Credit
Advances (including without duplication Swing Line Advances as a subset of
the Swing Line Lender's Revolving Loan Commitment) and/or incur Letter of
Credit Obligations as set forth on ANNEX J to the Agreement or in the most
recent Assignment Agreement executed by such Revolving Lender and (b) as to
all Revolving Lenders, the aggregate commitment of all Revolving Lenders to
make Revolving Credit Advances (including without duplication Swing Line
Advances as a subset of the Swing Line Lender's Revolving Loan Commitment)
and/or incur Letter of Credit Obligations, which aggregate commitment shall
be Fifteen Million Dollars ($15,000,000) on the Effective Date, as such
amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"REVOLVING NOTE" shall have the meaning assigned to it in SECTION
1.1(a)(ii).
"SECURITIES" shall mean any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or any certificates of
interest, shares, or participations in temporary or interim certificates 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.
"SECURITY AGREEMENT" shall mean the Amended and Restated Security
Agreement of even date herewith entered into among Agent, on behalf of itself
and Lenders, and each Credit Party that is a signatory thereto.
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"SELLER" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, collectively.
"SOLVENT" shall mean, with respect to any Person on a particular date,
that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent
liabilities, of such Person; (b) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probably liability of such Person on its debts as they become absolute and
matured; (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (d) such Person is not engaged in a
business or transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities (such as
litigation, guarantees and pension plan liabilities) at any time shall be
computed as the amount which, in light of all the facts and circumstances
existing at the time, represents the amount which can be reasonably be
expected to become an actual or matured liability.
"STOCK" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated) of
or in a corporation, partnership or equivalent entity whether voting or
nonvoting, including common stock, preferred stock or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"STOCK INCENTIVE PLAN" shall mean the 1997 Stock Incentive Plan of the
Borrower in the form previously delivered to the Agent.
"SUBORDINATED DEBT" shall mean any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent
and Lenders in their sole discretion, as to right and time of payment and as
to any other rights and remedies thereunder.
"SUBSEQUENT AMENDMENTS" shall have the meaning assigned to it in the
recitals hereto.
"SUBSIDIARIES" shall mean the Domestic Subsidiaries and the Foreign
Subsidiaries, collectively.
"SUBSIDIARY GUARANTY" shall mean the Amended and Restated Guaranty,
Indemnity and Contribution Agreement of even date herewith executed by Recoil
Holdings, Inc., Recoil Inc. and Recoil Australia Holdings, Inc. in favor of
Agent, on behalf of itself and Lenders.
"SUBSIDIARY PLEDGE AGREEMENT" shall mean the Pledge Agreement dated as
of May 29, 1998 as amended and supplemented by the Amendment and Supplement
to Pledge
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Agreement executed by Recoil Holdings, Inc. for the benefit of Agent,
substantially in the form of EXHIBIT E.
"SUPERMAJORITY REVOLVING LENDERS" shall mean (a) Lenders having eighty
percent (80%) or more of the Revolving Loan Commitments of all Lenders, or
(b) if the Revolving Loan Commitments have been terminated, eighty percent
(80%) or more of the aggregate outstanding amount of the Revolving Loan (with
the Swing Line Loan being attributed to the Lender making such Loan) and
Letter of Credit Obligations.
"SWING LINE ADVANCE" has the meaning assigned to it in SECTION 1.1(c)(i).
"SWING LINE AVAILABILITY" has the meaning assigned to it in SECTION
1.1(c)(i).
"SWING LINE COMMITMENT" shall mean, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Loans as set forth on
ANNEX J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"SWING LINE LENDER" shall mean GE Capital.
"SWING LINE LOAN" shall mean at any time, the aggregate amount of Swing
Line Advances outstanding to Borrower.
"SWING LINE NOTE"shall have the meaning assigned to it in SECTION
1.1(c)(ii).
"TARGET" shall have the meaning assigned to it in SECTION 6.1.
"TAXES"shall have the meaning assigned to it in SECTION 1.15.
"TERM LENDERS" shall mean those Lenders having Term Loan Commitments.
"TERM LOAN" shall have the meaning assigned to it in SECTION 1.1(b)(i).
"TERM LOAN COMMITMENT" shall mean (a) as to any Term Lender, the
commitment of such Term Lender to make its Pro Rata Share of the Term Loan as
set forth on ANNEX J to the Agreement or in the most recent Assignment
Agreement executed by such Term Lender, and (b) as to all Term Lenders, the
aggregate commitment of all Term Lenders to make the Term Loan, which
aggregate commitment shall be Fifty Million Dollars ($50,000,000) on the
Effective Date, as to each of CLAUSES (a) and (b), as such Term Loan
Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement.
"TERM NOTE" shall have the meaning assigned to it in SECTION 1.1(b)(i).
-31-
"TERMINATION DATE" shall mean the date on which the Loans have been
indefeasibly repaid in full and all other Obligations under the Agreement and
the other Loan Documents have been completely discharged and Letter of Credit
Obligations have been cash collateralized, canceled or backed by stand-by
letters of credit in accordance with ANNEX B, and Borrower shall not have any
further right to borrow any monies under the Agreement.
"THIRD PARTY INTERACTIVES" shall mean all Persons with whom any Credit
Party exchanges data electronically in the ordinary course of business,
including, without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"TRADEMARK SECURITY AGREEMENTS" shall mean the Trademark Security
Agreement dated as of January 3, 1994 and the Supplemental Trademark
Security Agreement dated as of March 10, 1994, as amended and supplemented by
the Amendment and Supplement to Trademark Security Agreements dated as of
August 12, 1996, and as amended and supplemented by the Second Amendment and
Supplement to Trademark Security Agreements executed on the date herewith
made in favor of Agent, on behalf of Lenders, by each applicable Credit Party.
"TRADEMARK LICENSE" shall mean rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"TRADEMARKS" shall mean all of the following now owned or hereafter
acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or
agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof; (b) all reissues, extensions or
renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"UNFUNDED PENSION LIABILITY" shall mean, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of
all accrued benefits under each Benefit Plan exceeds the fair market value of
all assets of such Benefit Plan allocable to such benefits in accordance with
Benefit of ERISA, all determined as of the most recent valuation date for
each such Benefit Plan using the actuarial assumptions for funding purposes
in effect under such Benefit Plan, and (b) for a period of five (5) years
following a transaction which might reasonably be expected to be covered by
Section 4069 of ERISA, the liabilities (whether or not accrued) that could be
avoided by any Credit Party or any ERISA Affiliate as a result of such
transaction.
"YEAR 2000 ASSESSMENT" shall mean a comprehensive written assessment of
the nature and extent of each Credit Party's Year 2000 Problems and Year 2000
Date-Sensitive
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Systems/Components, including, without limitation, Year 2000 Problems
regarding data exchanges with Third Party Interactives.
"YEAR 2000 CORRECTIVE ACTIONS" shall mean, as to each Credit Party, all
actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation, computer code enhancements and revisions, upgrades and
replacements of Year 2000 Date-Sensitive Systems/Components, and coordination
of such enhancements, revisions, upgrades and replacements with Third Party
Interactives.
"YEAR 2000 CORRECTIVE PLAN" shall mean, with respect to each Credit
Party, a comprehensive plan to eliminate all of its Year 2000 Problems on or
before March 31, 1999, including without limitation (i) computer code
enhancements or revisions, (ii) upgrades or replacements of Year 2000
Date-Sensitive Systems/Components, (iii) test and validation procedures, (iv)
an implementation time line and budget and (v) designation of specific
employees who will be responsible for planning, coordinating and implementing
each phase or subpart of the Year 2000 Corrective Plan.
"YEAR 2000 DATE-SENSITIVE SYSTEM/COMPONENT" shall mean, as to any
Person, any system software, network software, applications software, data
base, computer file, embedded microchip, firmware or hardware that accepts,
creates, manipulates, sorts, sequences, calculates, compares or outputs
calendar-related data accurately; such systems and components shall include,
without limitation, mainframe computers, file server/client systems, computer
workstations, routers, hubs, other network-related hardware, and other
computer-related software, firmware or hardware and information processing
and delivery systems of any kind and telecommunications systems and other
communications processors, security systems, alarms, elevators and HVAC
systems.
"YEAR 2000 IMPLEMENTATION TESTING" shall mean, as to each Credit Party,
(i) the performance of test and validation procedures regarding Year 2000
Corrective Actions on a unit basis and on a systemwide basis; (ii) the
performance of test and validation procedures regarding data exchanges among
the Credit Parties' Year 2000 Date-Sensitive Systems/Components and data
exchanges with Third Party Interactives, and (iii) the design and
implementation of additional Corrective Actions, the need for which has been
demonstrated by test and validation procedures.
"YEAR 2000 PROBLEMS" shall mean, with respect to each Credit Party,
limitations on the capacity or readiness of any such Credit Party's Year 2000
Date-Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after January 1, 2000 (including leap year computations), including, without
limitation, exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Credit Parties and exchanges of information among
the Credit Parties and Year 2000 Date-Sensitive Systems/Components of Third
Party Interactives and functionality of peripheral interfaces, firmware and
embedded microchips.
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All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code as in effect in the State of New York to the extent the same are used or
defined therein. Unless otherwise specified, references in the Agreement or
any of the Appendices to a preamble, recital, Section, subsection or clause
refer to such preamble, recital, Section, subsection or clause as contained
in the Agreement. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to the Agreement as a whole, including all
Annexes, Exhibits and Schedules, as the same may from time to time be
amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes"
and "include" shall be deemed to be followed by the words "without
limitation"; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan
Documents) or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any
successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit
Party, such words are intended to signify that such Credit Party has actual
knowledge or awareness of a particular fact or circumstance or that such
Credit Party, if it had exercised reasonable diligence, would have known or
been aware of such fact or circumstance.
-34-
ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) ISSUANCE. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower and for
Borrower's account, Letter of Credit Obligations by causing Letters of Credit to
be issued (by a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an "L/C ISSUER")) for
Borrower's account and guaranteed by Agent; provided, however, that if the L/C
Issuer is a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall, subject to the terms
and conditions hereinafter set forth, purchase (or be deemed to have purchased)
risk participations in all such Letters of Credit issued with the written
consent of Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the least of (i) One Million Dollars ($1,000,000) (the "L/C SUBLIMIT"),
and (ii) the Maximum Amount less the aggregate outstanding principal balance of
the Revolving Credit Advances and the Swing Line Loan, and (iii) the Borrowing
Base less the aggregate outstanding principal balance of the Revolving Credit
Advances and the Swing Line Loan. No such Letter of Credit shall have an expiry
date which is more than one year following the date of issuance thereof, and
neither Agent nor Revolving Lenders shall be under any obligation to incur
Letter of Credit Obligations in respect of, or purchase risk participations in,
any Letter of Credit having an expiry date which is later than the Commitment
Termination Date.
(b)(i) ADVANCES AUTOMATIC; PARTICIPATIONS. In the event that
Agent or any Revolving Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance under Section 1.1(a) of the Agreement
regardless of whether a Default or Event of Default shall have occurred and be
continuing and notwithstanding Borrower's failure to satisfy the conditions
precedent set forth in SECTION 2, and each Revolving Lender shall be obligated
to pay its Pro Rata Share thereof in accordance with the Agreement. The failure
of any Revolving Lender to make available to Agent for Agent's own account its
Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or
in respect of a Letter of Credit shall not relieve any other Revolving Lender of
its obligation hereunder to make available to Agent its Pro Rata Share thereof,
but no Revolving Lender shall be responsible for the failure of any other
Revolving Lender to make available such other Revolving Lender's Pro Rata Share
of any such payment.
(ii) If it shall be illegal or unlawful for Borrower to
incur Revolving Credit Advances as contemplated by paragraph (b)(i) above
because of an Event of Default described in SECTION 8.1(h) or (i) or otherwise
or if it shall be illegal or unlawful for any Revolving Lender to be deemed to
have assumed a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Revolving Lender, then (i)
-1-
immediately and without further action whatsoever, each Revolving Lender
shall be deemed to have irrevocably and unconditionally purchased from Agent
(or such L/C Issuer, as the case may be) an undivided interest and
participation equal to such Revolving Lender's Pro Rata Share (based on the
Revolving Loan Commitments) of the Letter of Credit Obligations in respect of
all Letters of Credit then outstanding and (ii) thereafter, immediately upon
issuance of any Letter of Credit, each Revolving Lender shall be deemed to
have irrevocably and unconditionally purchased from Agent (or such L/C
Issuer, as the case may be) an undivided interest and participation in such
Revolving Lender's Pro Rata Share (based on the Revolving Loan Commitments)
of the Letter of Credit Obligations with respect to such Letter of Credit on
the date of such issuance. Each Revolving Lender shall fund its
participation in all payments or disbursements made under the Letters of
Credit in the same manner as provided in the Agreement with respect to
Revolving Credit Advances.
(c) CASH COLLATERAL. If Borrower is required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement prior
to the Commitment Termination Date, Borrower will pay to Agent for the benefit
of Revolving Lenders cash or cash equivalents acceptable to Agent ("CASH
EQUIVALENTS") in an amount equal to 105% of the maximum amount then available to
be drawn under each applicable Letter of Credit outstanding. Such funds or Cash
Equivalents shall be held by Agent in a cash collateral account (the "CASH
COLLATERAL ACCOUNT") maintained at a bank or financial institution acceptable to
Agent. The Cash Collateral Account shall be in the name of Borrower and shall
be pledged to, and subject to the control of, Agent, for the benefit of Agent
and Lenders, in a manner satisfactory to Agent. Borrower hereby pledges and
grants to Agent, on behalf of Lenders, a security interest in all such funds and
Cash Equivalents held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of all amounts due in respect of
the Letter of Credit Obligations and other Obligations, whether or not then due.
The Agreement, including this ANNEX B, shall constitute a security agreement
under applicable law.
If any Letter of Credit Obligations, whether or not then due and
payable, shall for any reason be outstanding on the Commitment Termination Date,
Borrower shall either (i) provide cash collateral therefor in the manner
described above, or (ii) cause all such Letters of Credit and guaranties thereof
to be canceled and returned, or (iii) deliver a stand-by letter (or letters) of
credit in guarantee of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to 105% of the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to
Agent in its sole discretion.
From time to time after funds are deposited in the Cash Collateral
Account by Borrower, whether before or after the Commitment Termination Date,
Agent may apply such funds or Cash Equivalents then held in the Cash Collateral
Account to the payment of any amounts, in such order as Agent may elect, as
shall be or shall become due and payable by Borrower to Lenders with respect to
such Letter of Credit Obligations of Borrower and, upon the
-2-
satisfaction in full of all Letter of Credit Obligations of Borrower, to any
other Obligations then due and payable.
Neither Borrower nor any Person claiming on behalf of or through
Borrower shall have any right to withdraw any of the funds or Cash Equivalents
held in the Cash Collateral Account, except that upon the termination of all
Letter of Credit Obligations and the payment of all amounts payable by Borrower
to Lenders in respect thereof, any funds remaining in the Cash Collateral
Account shall be applied to other Obligations when due and owing and upon
payment in full of such Obligations, any remaining amount shall be paid to
Borrower or as otherwise required by law.
(d) FEES AND EXPENSES. Borrower agrees to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (x) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (y) for
each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "LETTER OF CREDIT FEE") in an amount equal to one
percent (1%) per annum multiplied by the maximum amount available from time to
time to be drawn under the applicable Letter of Credit. Such fee shall be paid
to Agent for the benefit of the Revolving Lenders in arrears, on the first day
of each month. In addition, Borrower shall pay to any L/C Issuer, on demand,
such fees (including all per annum fees), charges and expenses of such L/C
Issuer in respect of the issuance, negotiation, acceptance, amendment, transfer
and payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) REQUEST FOR INCURRENCE OF LETTER OF CREDIT OBLIGATIONS.
Borrower shall give Agent at least three (3) Business Days prior written notice
requesting the incurrence of any Letter of Credit Obligation, specifying the
date such Letter of Credit Obligation is to be incurred, identifying the
beneficiary to which such Letter of Credit Obligation relates and describing the
nature of the transactions proposed to be supported thereby. The notice shall
be accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) to be guarantied and, to the extent not previously delivered to
Agent, copies of all agreements between Borrower and the L/C Issuer pertaining
to the issuance of Letters of Credit. Notwithstanding anything contained herein
to the contrary, Letter of Credit applications by Borrower and approvals by
Agent and the L/C Issuer may be made and transmitted pursuant to electronic
codes and security measures mutually agreed upon and established by and among
Borrower, Agent and the L/C Issuer.
(f) OBLIGATION ABSOLUTE. The obligation of Borrower to
reimburse Agent and Revolving Lenders for payments made with respect to any
Letter of Credit Obligation shall be absolute, unconditional and irrevocable,
without necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrower and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following circumstances:
-3-
(i) any lack of validity or enforceability of any Letter
of Credit or the Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, set-off, defense or
other right which Borrower or any of its Affiliates or any Lender may at
any time have against a beneficiary or any transferee of any Letter of
Credit (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection
with the Agreement, the Letter of Credit, the transactions contemplated
herein or therein or any unrelated transaction (including any underlying
transaction between Borrower or any of its Affiliates and the beneficiary
for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any 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;
(iv) payment by Agent (except as otherwise expressly
provided in paragraph (g)(ii)(C) below) or any L/C Issuer under any
Letter of Credit or guaranty thereof against presentation of a demand,
draft or certificate or other document which does not comply with the
terms of such Letter of Credit or such guaranty;
(v) any other circumstance or happening whatsoever,
which is similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default shall
have occurred and be continuing.
(g) INDEMNIFICATION; NATURE OF LENDERS' DUTIES.
(i) In addition to amounts payable as elsewhere provided
in the Agreement, Borrower hereby agrees to pay and to protect,
indemnify, and save harmless Agent and each Lender from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including attorneys' fees and allocated costs of internal
counsel) which Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or guaranty thereof, or (B) the failure of Agent or any Lender
seeking indemnification or of any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of any
act or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Governmental Authority, in each case
other than to the extent solely as a result of the gross negligence or
willful misconduct of Agent or such Lender (as finally determined by a
court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrower,
Borrower assumes all risks of the acts and omissions of, or misuse of any
Letter of Credit by
-5-
beneficiaries of any Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law
neither Agent nor any Lender shall be responsible: (A) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any
document issued by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) for failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to
demand payment under such Letter of Credit; provided that, in the case of
any payment by Agent under any Letter of Credit or guaranty thereof,
Agent shall be liable to the extent such payment was made solely as a
result of its gross negligence or willful misconduct (as finally
determined by a court of competent jurisdiction) in determining that the
demand for payment under such Letter of Credit or guaranty thereof
complies on its face with any applicable requirements for a demand for
payment under such Letter of Credit or guaranty thereof; (D) for errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) for errors in interpretation of technical terms;
(F) for any loss or delay in the transmission or otherwise of any
document required in order to make a payment under any Letter of Credit
or guaranty thereof or of the proceeds thereof; (G) for the credit of the
proceeds of any drawing under any Letter of Credit or guaranty thereof;
and (H) for any consequences arising from causes beyond the control of
Agent or any Lender. None of the above shall affect, impair, or prevent
the vesting of any of Agent's or any Lender's rights or powers hereunder
or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or
to expand any waivers, covenants or indemnities made by Borrower in favor
of any L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between Borrower
and such L/C Issuer.
-5-
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Borrower shall establish and maintain the Cash Management Systems
described below:
(a) On or before the Effective Date and until the Termination
Date, Borrower shall (i) establish lock boxes ("LOCK BOXES") at one or more of
the banks set forth on DISCLOSURE SCHEDULE (3.20), and shall request in writing
and otherwise take such reasonable steps to ensure that all Account Debtors
forward payment directly to such Lock Boxes, and (ii) deposit and cause its
Subsidiaries to deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral (whether or not otherwise
delivered to a Lock Box) into bank accounts in Borrower's name or any such
Subsidiary's name (collectively, the "BORROWER ACCOUNTS") at banks set forth on
DISCLOSURE SCHEDULE (3.20) (each, a "RELATIONSHIP BANK"). On or before the
Effective Date, Borrower shall have established one or more concentration
accounts in its name (the "CONCENTRATION ACCOUNTS") at the bank which shall be
designated as the Concentration Account bank for Borrower on DISCLOSURE SCHEDULE
(3.20) (the "CONCENTRATION ACCOUNT BANK") which bank shall be satisfactory to
Agent.
(b) On or before the Effective Date, the Concentration Account
Bank, each bank where a Disbursement Account is located and all other
Relationship Banks, shall have entered into tri-party blocked account agreements
with Agent, for the benefit of itself and Lenders, and Borrower and Subsidiaries
thereof, as applicable, in form and substance acceptable to Agent, which shall
become operative on or prior to the Effective Date. Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank for Agent, on behalf of Lenders, (ii) the bank
executing such agreement has no rights of setoff or recoupment or any other
claim against such account, as the case may be, other than for payment of its
service fees and other charges directly related to the administration of such
account and for returned checks or other items of payment, and (iii) from and
after the Effective Date (A) with respect to banks at which a Borrower Account
is located, such bank agrees, from and after the receipt of a notice (an
"ACTIVATION NOTICE") from Agent (which Activation Notice may be given by Agent
at any time at which (1) a Default or Event of Default shall have occurred and
be continuing, (2) Agent reasonably believes based upon information available to
it that a Default or an Event of Default is likely to occur; (3) Agent
reasonably believes that an event or circumstance which is likely to have a
Material Adverse Effect has occurred, or (4) Agent reasonably has grounds to
question the integrity of Borrower's Cash Management Systems or Borrower's
compliance with the provisions of this ANNEX C or any other provisions of the
Loan Documents to the extent related to such Cash Management Systems (any of the
foregoing being referred to herein as an "ACTIVATION EVENT")), to forward
immediately all amounts in each
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Borrower Account to the Concentration Account Bank and to commence the
process of daily sweeps from such Borrower Account into the Concentration
Account and (B) with respect to the Concentration Account Bank, such bank
agrees from and after the receipt of an Activation Notice from Agent upon the
occurrence of an Activation Event, to immediately forward all amounts
received in the Concentration Account to the Collection Account through daily
sweeps from such Concentration Account into the Collection Account. From and
after the date Agent has delivered an Activation Notice to any bank with
respect to any Borrower Account(s), Borrower shall not, and shall not cause
or permit any Subsidiary thereof to, accumulate or maintain cash in
disbursement or payroll accounts as of any date of determination in excess of
checks outstanding against such accounts as of that date and amounts
necessary to meet minimum balance requirements.
(c) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend DISCLOSURE SCHEDULE (3.20) to add or replace a
Relationship Bank, Lock Box or Borrower Account or to replace any Concentration
Account or any Disbursement Account; PROVIDED, HOWEVER, THAT (i) Agent shall
have consented in writing in advance to the opening of such account or Lock Box
with the relevant bank and (ii) prior to the time of the opening of such account
or Lock Box, Borrower and/or the Subsidiaries thereof, as applicable, and such
bank shall have executed and delivered to Agent a tri-party blocked account
agreement, in form and substance satisfactory to Agent. Borrower shall close any
of its accounts (and establish replacement accounts in accordance with the
foregoing sentence) promptly and in any event within thirty (30) days of notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within sixty (60) days of notice from Agent that the operating
performance, funds transfer and/or availability procedures or performance with
respect to accounts or lockboxes of the bank holding such accounts or Agent's
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent's reasonable judgment.
(d) The Lock Boxes, Borrower Accounts, Disbursement Accounts
and the Concentration Account shall be cash collateral accounts, with all cash,
checks and other similar items of payment in such accounts securing payment of
the Loans and all other Obligations, and in which Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(e) All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with SECTION 1.10 of the Agreement and
shall be applied (and allocated) by Agent in accordance with SECTION 1.11 of the
Agreement. In no event shall any amount be so applied unless and until such
amount shall have been credited in immediately available funds to the Collection
Account.
(f) Borrower may maintain, in its name, an account (each a
"DISBURSEMENT ACCOUNT" and collectively, the "DISBURSEMENT ACCOUNTS") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing
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Line Advances made to Borrower pursuant to SECTION 1.1 for use by Borrower
solely in accordance with the provisions of SECTION 1.4.
(g) Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "RELATED PERSON") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by Borrower or any such Related Person, and (ii) within one (1)
Business Day after receipt by Borrower or any such Related Person of any checks,
cash or other items or payment, deposit the same into a Borrower Account.
Borrower and each Related Person thereof acknowledges and agrees that all cash,
checks or items of payment constituting proceeds of Collateral are the property
of Agent and Lenders. All proceeds of the sale or other disposition of any
Collateral, shall be deposited directly into Borrower Accounts.
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ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
SCHEDULE OF ADDITIONAL CLOSING DOCUMENTS
In addition to, and not in limitation of, the conditions described
in SECTION 2.1, pursuant to SECTION 2.1(a), the following items must be received
by Agent in form and substance satisfactory to Agent on or prior to the
Effective Date, except those items so noted by an "*" in SCHEDULE 1 to this
Annex (each capitalized term used but not otherwise defined herein shall have
the meaning ascribed thereto in ANNEX A):
A. APPENDICES. All Appendices to the Agreement, in form and
substance satisfactory to Agent. (See SCHEDULE 1 (2)-(4))
B. REVOLVING NOTES, SWING LINE NOTE AND TERM NOTES. Duly
executed originals of the Revolving Notes, Swing Line Note and Term Notes for
each applicable Lender, dated the Effective Date. (See SCHEDULE 1 (5a)-(5c))
C. SECURITY AGREEMENT. Duly executed originals of the
Security Agreement, dated the Effective Date, and all instruments, documents and
agreements executed pursuant thereto. (See SCHEDULE 1 (6a))
D. INSURANCE. Satisfactory evidence that the insurance
policies required by SECTION 5.4 are in full force and effect, together with
appropriate evidence showing loss payable and/or additional insured clauses or
endorsements, as requested by Agent, in favor of Agent, on behalf of Lenders.
(See SCHEDULE 1 (10))
E. SECURITY INTERESTS AND CODE FILINGS.
(a) Evidence satisfactory to Agent that Agent (for the benefit
of itself and Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly executed by each
Credit Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Agent may request in order to perfect its security interests in the
Collateral and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together with copies
of such financing statements, none of which shall cover the Collateral, except
for those relating to the Prior Lender Obligations (all of which shall be
terminated on the Effective Date). (See SCHEDULE 1 (11))
(b) Evidence satisfactory to Agent, including copies, of all
UCC-1 and other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Inventory may be consigned. (See
SCHEDULE 1 (11))
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F. INTELLECTUAL PROPERTY SECURITY AGREEMENTS. Duly executed
originals of the Trademark Security Agreement and Patent Security Agreement,
each dated the Effective Date and signed by each Credit Party which owns
Trademarks and/or Patents, as applicable, all in form and substance satisfactory
to Agent, together with all instruments, documents and agreements executed
pursuant thereto. (See SCHEDULE 1 (6f)-(6g))
G. SUBSIDIARY GUARANTIES. Guaranties executed by and each
direct and indirect Domestic Subsidiary of Borrower in favor of Agent, for the
benefit of Lenders. (See SCHEDULE 1 (6e))
H. INITIAL BORROWING BASE CERTIFICATE. Duly executed
originals of an initial Borrowing Base Certificate from Borrower, dated the
Effective Date, reflecting information concerning Eligible Accounts and Eligible
Inventory of Borrower as of a date not more than seven (7) days prior to the
Effective Date. (See SCHEDULE 1 (12))
I. INITIAL NOTICE OF REVOLVING CREDIT ADVANCE. Duly executed
originals of a Notice of Revolving Credit Advance, dated the Effective Date,
with respect to the initial Revolving Credit Advance to be requested by Borrower
on the Effective Date, and corresponding direction with respect to the
disbursement on the Effective Date of the proceeds of the Term Loan and the
initial Revolving Credit Advance. (See SCHEDULE 1 (13))
K. CASH MANAGEMENT SYSTEM; BLOCKED ACCOUNT AGREEMENTS.
Evidence satisfactory to Agent that, as of the Effective Date, Cash Management
Systems complying with Annex C have been established and are currently being
maintained in the manner set forth in ANNEX C, together with copies of duly
executed tri-party blocked account and lock box agreements, satisfactory to
Agent, with the banks as required by ANNEX C. (See SCHEDULE 1 (15)-(16))
L. CHARTER AND GOOD STANDING. For each Credit Party, such
Person's (a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Effective Date and
certified by the applicable Secretary of State or other authorized Governmental
Authority. (See SCHEDULE 1 (17a)-(17c))
M. BYLAWS AND RESOLUTIONS. For each Credit Party, (a) such
Person's bylaws, together with all amendments thereto and (b) resolutions of
such Person's Board of Directors approving and authorizing the execution,
delivery and performance of the Loan Documents to which such Person is a party
and the transactions to be consummated in connection therewith, each certified
as of the Effective Date by such Person's corporate secretary or an assistant
secretary as being in full force and effect without any modification or
amendment. (See SCHEDULE 1 (17d)-(17e))
-2-
N. INCUMBENCY CERTIFICATES. For each Credit Party, signature
and incumbency certificates of the officers of each such Person executing any of
the Loan Documents, certified as of the Effective Date by such Person's
corporate secretary or an assistant secretary as being true, accurate, correct
and complete. (See SCHEDULE 1 (17f))
O. OPINIONS OF COUNSEL. Duly executed originals of opinions
of O'Melveny & ▇▇▇▇▇ LLP, counsel for the Credit Parties in form and substance
satisfactory to Agent and its counsel, dated the Effective Date, and accompanied
by a letter addressed to such counsel from the Credit Parties, authorizing and
directing such counsel to address its opinion to Agent, on behalf of Lenders,
and to include in such opinion an express statement to the effect that Agent and
Lenders are authorized to rely on such opinion. (See Schedule 1 (18))
P. PLEDGE AGREEMENTS. Duly executed originals of each of the
Pledge Agreement and the Subsidiary Pledge Agreement accompanied by (as
applicable) (a) share certificates representing all of the outstanding Stock
being pledged pursuant to such Pledge Agreement and stock powers for such share
certificates executed in blank and (b) the original Intercompany Notes and other
instruments evidencing Indebtedness being pledged pursuant to such Pledge
Agreement, duly endorsed in blank. (See SCHEDULE 1 (6c)-(6d))
Q. ACCOUNTANTS' LETTERS. A letter from the Credit Parties to
their independent auditors authorizing the independent certified public
accountants of the Credit Parties to communicate with Agent and Lenders in
accordance with SECTION 4.2, and a letter from such auditors acknowledging
Lenders' reliance on the auditor's certification of past and future Financial
Statements. (See SCHEDULE 1 (19))
R. CHARGE OVER SHARES. Duly executed originals of the Charge
Over Shares, dated as of the Effective Date, and all instruments, documents, and
agreements executed pursuant thereto. (See SCHEDULE 1 (6b))
S. FEE LETTER. Duly executed originals of the GE Capital Fee
Letter. (See SCHEDULE 1 (21))
T. OFFICER'S CERTIFICATE. Agent shall have received duly
executed originals of a certificate of the Chief Financial Officer of Borrower,
dated the Effective Date, stating that, since May 24, 1998, (a) no event or
condition has occurred or is existing which could reasonably be expected to have
a Material Adverse Effect; (b) there has been no material adverse change in the
industry in which Borrower operates; (c) no Litigation has been commenced which,
if successful, would have a Material Adverse Effect or could challenge any of
the transactions contemplated by the Agreement and the other Loan Documents; (d)
there have been no Restricted Payments made by any Credit Party; and (e) there
has been no material increase in liabilities, liquidated or contingent, and no
material decrease in assets of Borrower or any of its Subsidiaries. (See
SCHEDULE 1 (22))
-3-
U. WAIVERS. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters and mortgagee agreements in form
and substance satisfactory to Agent, in each case as required pursuant to
SECTION 5.9. (See SCHEDULE 1 (23a))
V. MORTGAGES. Mortgages covering all of the Real Property
(the "MORTGAGED PROPERTIES") together with: (a) title insurance policies,
current as-built surveys, zoning letters and certificates of occupancy, in each
case satisfactory in form and substance to Agent, in its sole discretion; and
(b) evidence that counterparts of the Mortgages have been recorded in all places
to the extent necessary or desirable, in the judgment of Agent, to create a
valid and enforceable first priority lien (subject to Permitted Encumbrances) on
each Mortgaged Property in favor of Agent for the benefit of itself and Lenders
(or in favor of such other trustee as may be required or desired under local
law). (See SCHEDULE 1 (24a)-(24c))
X. ENVIRONMENTAL REPORTS. Agent shall have received Phase I
Environmental Site Assessment Reports, consistent with American Society of
Testing and Materials (ASTM) Standard E 1527-94, and applicable state
requirements, on all of the Real Property to be acquired pursuant to the M&M
Acquisition, dated no more than 6 months prior to the Effective Date, prepared
by environmental engineers satisfactory to Agent, all in form and substance
satisfactory to Agent, in its sole discretion. (See SCHEDULE 1 (25))
Y. AUDITED FINANCIALS; FINANCIAL CONDITION. Agent shall have
received Borrower's final Financial Statements for its Fiscal Year ended
December 31, 1997, audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP. Borrower shall have
provided Agent with its current operating statements, a consolidated and
consolidating balance sheet and statement of cash flows, the Pro Forma,
Projections and a Borrowing Base Certificate with respect to Borrower certified
by its Chief Financial Officer, in each case in form and substance satisfactory
to Agent, and Agent shall be satisfied, in its sole discretion, with all of the
foregoing. Agent shall have further received a certificate of the Chief
Financial Officer of Borrower, based on such Pro Forma and Projections, to the
effect that (a) Borrower will be Solvent upon the consummation of the
transactions contemplated herein; (b) the Pro Forma fairly presents the
financial condition of Borrower as of the date thereof after giving effect to
the transactions contemplated by the Loan Documents; (c) the Projections are
based upon estimates and assumptions stated therein, all of which Borrower
believes to be reasonable and fair in light of current conditions and current
facts known to Borrower and, as of the Effective Date, reflect Borrower's good
faith and reasonable estimates of its future financial performance and of the
other information projected therein for the period set forth therein; and (d)
containing such other statements with respect to the solvency of Borrower and
matters related thereto as Agent shall request. (See SCHEDULE 1 (26))
Z. ASSIGNMENT OF REPRESENTATIONS, WARRANTIES, COVENANTS,
INDEMNITIES AND RIGHTS. Agent shall have received a duly executed copy of an
Assignment of Representations, Warranties, Covenants, Indemnities and Rights
in respect of Borrower's and M&M Acquisition Co.'s rights under the M&M
Acquisition Agreement, which assignment shall be expressly permitted under
the M&M Acquisition Agreement or shall have been consented to by the Sellers
in writing. (See SCHEDULE 1 (8b))
-4-
AA. OTHER DOCUMENTS. Such other certificates, documents and
agreements respecting any Credit Party as Agent may, in its sole discretion,
request.
-5-
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agent or to
Agent and Lenders, as indicated, the following:
(a) MONTHLY REPORTS. To Agent and Lenders, as soon as
practicable, and in any event within thirty (30) days after the end of each
calendar month in each Fiscal Year, the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such
period and the related consolidated and consolidating statements of income,
stockholders' equity and cash flow of the Borrower and its Subsidiaries for
such calendar month and for the period from the beginning of the then current
Fiscal Year to the end of such calendar month, setting forth in each case in
comparative form the corresponding figures for the corresponding calendar
periods in the previous Fiscal Year and the corresponding figures from the
consolidated financial forecast for the current Fiscal Year delivered
pursuant to CLAUSE (f) of this ANNEX E, certified by the chief financial
officer of the Borrower as fairly presenting the consolidated and
consolidating financial position of the Borrower and its Subsidiaries as at
the dates indicated and the results of their operations and cash flow for the
calendar months indicated in accordance with GAAP, subject to normal year end
adjustments.
(b) QUARTERLY REPORTS. To Agent and Lenders, as soon as
practicable, and in any event within forty-five (45) days after the end of
each fiscal quarter in each Fiscal Year, the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as at the end of such
period and the related consolidated and consolidating statements of income,
stockholders' equity and cash flow of the Borrower and its Subsidiaries for
such fiscal quarter and for the period from the beginning of the then current
Fiscal Year to the end of such fiscal quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the consolidated
financial forecast for the current Fiscal Year delivered pursuant to CLAUSE
(f) of this ANNEX E, certified by the chief financial officer of the Borrower
as fairly presenting the consolidated and consolidating financial position of
the Borrower 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 normal year end adjustments.
(c) ANNUAL REPORTS. To Agent and Lenders, as soon as
practicable, and in any event within one hundred twenty (120) days after the
end of each Fiscal Year, (i) the consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as at the end of such Fiscal Year
and the related consolidated and consolidating statements of income,
stockholders' equity and cash flow of the Borrower and its Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the
corresponding figures for the previous Fiscal Year and the corresponding
figures from the consolidated financial forecast for the current Fiscal Year
delivered pursuant to CLAUSE (f) of this ANNEX E, and (ii) a report thereon
of ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ & Co. or other independent certified public accountants of
recognized standing and otherwise acceptable to the Lender, which report
shall be unqualified and shall state that such financial statements fairly
present the consolidated and consolidating financial position of each of the
Borrower 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or any such other independent certified public
accountants, if applicable, shall concur and which shall have been disclosed
in the notes to the financial statements) and that the examination by such
accountants in connection with such consolidated and consolidating financial
statements has been made in accordance with generally accepted auditing
standards.
(d) CERTIFICATES. To Agent and Lenders, together with each
delivery of any financial statement pursuant to CLAUSES (b) and (c) of this
ANNEX E, (i) an officer's certificate of the Borrower stating that the
officer signatory thereto has reviewed the terms of the Loan Documents, and
has made, or caused to be made under his supervision, a review in reasonable
detail of the transactions and consolidated and consolidating financial
condition of the Borrower and its Subsidiaries during the accounting period
covered by such financial statements, that such review has not disclosed the
existence during or at the end of such accounting period, and that such
officer does not have knowledge of the existence as at the date of such
certificate, of any condition or event which constitutes a Default or Event
of Default, or, if any such condition or event existed or exists, specifying
the nature and period of existence thereof and what action the Borrower or
any of its Subsidiaries has taken, is taking and proposes to take with
respect thereto, and that the information presented in the financial
statements and reports attached to such certificate is true, correct and
complete in all material respects; and (ii) a certificate substantially in
the form of EXHIBIT M attached hereto and made a part hereof (the "COMPLIANCE
CERTIFICATE"), signed by the Borrower's chief financial officer, setting
forth calculations and the methods of determination thereof (with such
specificity as the Lender may reasonably request) for the period then ended
which demonstrate compliance, when applicable, with the provisions of ANNEX G.
(e) ACCOUNTANT'S STATEMENT AND PRIVITY LETTER. To Agent, on
behalf of itself and Lenders, together with each delivery of the financial
statements referred to in CLAUSE (c) of this ANNEX E, a written statement of
the firm of independent certified public accountants giving the report
thereon (i) stating that their audit examination has included a review of the
terms of this Agreement as it relates to accounting matters, (ii) stating
whether, in connection with their audit examination, any condition or event
which constitutes a Default or Event of Default has come to their attention,
and if such condition or event has come to their attention, specifying the
nature and period of existence thereof; PROVIDED, that such accountants shall
not be liable by reason of any failure to obtain knowledge of any such
condition or event that would not be disclosed in the course of their audit
examination, and (iii) stating that based on their audit examination nothing
has come to their attention which causes them to believe that the information
contained in either or both of the certificates delivered therewith pursuant
to CLAUSE (d) of this ANNEX E is not correct or that the matters set forth in
the Compliance Certificate delivered therewith for the applicable Fiscal Year
are not stated in accordance with the terms of this Agreement. The statement
referred to above shall be accompanied by (x) a copy of the
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management letter or any similar report delivered to the Borrower or to any
officer or employee thereof by such accountants in connection with such
financial statements and (y) a letter from the Borrower to such accountants
informing such accountants that the Lenders are relying upon the financial
statements audited by such accountants and delivered to the Agent pursuant to
CLAUSE (c) of this ANNEX E and that a primary intent of the Borrower in
having such financial statements audited is to induce the Lenders to continue
to make Loans to the Borrower under this Agreement. The Agent may, with the
consent of the Borrower (which consent shall not be unreasonably withheld),
communicate directly with such accountants.
(f) BUDGETS; BUSINESS PLANS; FINANCIAL PROJECTIONS. To Agent
and Lenders, as soon as practicable and in any event not later than thirty
(30) days prior to the commencement of each Fiscal Year of the Borrower, (i)
a monthly budget for such Fiscal Year; (ii) an annual business plan for such
Fiscal Year, in form and substance acceptable to the Agent, accompanied by a
report reconciling all changes and departures from the business plan
delivered to the Agent for the preceding Fiscal Year; and (iii) a
consolidated plan and financial forecast, prepared in accordance with the
Borrower's normal accounting procedures applied on a consistent basis, for
such Fiscal Year and the two (2) immediately succeeding Fiscal Years,
including, without limitation, (A) a forecasted consolidated balance sheet
and a consolidated statement of changes in financial position of the Borrower
for such Fiscal Years, (B) forecasted consolidated balance sheets, statements
of earnings and retained earnings, and changes in financial position of the
Borrower for and as of the end of each fiscal quarter of such Fiscal Years,
(C) a budget in reasonable detail of the types and amounts of Capital
Expenditures to be made during such Fiscal Years and the amount of forecasted
Excess Cash Flow for such Fiscal Years, and (D) forecasted compliance with
the provisions of ARTICLE G for such Fiscal Years.
(g) OPERATIONS REPORTS. Accompanying the reports to be
delivered by the Borrower each fiscal quarter in each Fiscal Year pursuant to
CLAUSE (b) of this ANNEX E and, in addition to the foregoing, within seven
(7) days after the Agent's request therefor, the Borrower shall deliver to
the Agent a report detailing the operations of the Borrower and its
Subsidiaries, which report shall include a management discussion and analysis
with respect to the Borrower's and its Subsidiaries' financial performance
during such period, including a comparison of actual sales versus budgeted
sales for such fiscal quarter, a discussion of bookings, a listing of
significant new customers and new products developed for sale, an explanation
of any cost saving measures implemented, together with a discussion of the
general business environment and results of operations, including an
explanation of any material changes in consolidated and consolidating
statements of income, stockholders' equity and cash flow of the Borrower and
its Subsidiaries for such period from such statements for the corresponding
period of the previous Fiscal Year and the corresponding figures from the
consolidated financial forecast for the current Fiscal Year pursuant to
CLAUSE (f) of this ANNEX E (the "MANAGEMENT DISCUSSION AND ANALYSIS").
(h) MANAGEMENT LETTERS. To Agent and Lenders, within five (5)
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received
by such Credit Party from its independent certified public accountants.
-3-
(i) EVENTS OF DEFAULT. To Agent and Lenders, promptly upon any
of the chief executive officer, chief operating officer, chief financial
officer, treasurer or controller of the Borrower obtaining knowledge (a) of
any condition or event which constitutes a Default or Event of Default, or
becoming aware that the Agent has given any notice with respect to a claimed
Default or Event of Default under this Agreement, (b) that any Person has
given any notice to any Credit Party or taken any other action with respect
to a claimed default or event or condition of the type referred to in SECTION
8.1(d), or (c) of any condition or event which has or is reasonably likely to
have a Material Adverse Effect or affect the value of, or any Lender's
interest in, Collateral with a value in excess of $500,000 in any material
respect, the Borrower shall deliver to the Agent a certificate of the
President or any Vice President specifying (A) the nature and period of
existence of any such claimed default, Default, Event of Default, condition
or event, (B) the notice given or action taken by such Person in connection
therewith, and (C) what action the Borrower has taken, is taking and proposes
to take with respect thereto.
(j) SEC FILINGS AND PRESS RELEASES. To Agent and Lenders,
promptly upon their becoming available, copies of: (i) all Financial
Statements, reports, notices and proxy statements made publicly available by
any Credit Party to its security holders; (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by
any Credit Party with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority; and
(iii) all press releases and other statements made available by any Credit
Party to the public concerning material changes or developments in the
business of any such Person.
(k) SUBORDINATED DEBT AND EQUITY NOTICES. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person,
and, within two (2) Business Days after any Credit Party obtains knowledge of
any matured or unmatured event of default with respect to any Subordinated
Debt, notice of such event of default.
(l) SUPPLEMENTAL SCHEDULES. To Agent, supplemental disclosures,
if any, required by SECTION 5.6 of the Agreement.
(m) LITIGATION. To Agent, (i) promptly upon the Borrower
obtaining knowledge of the institution of, or written threat of, any action,
suit, proceeding, governmental investigation or arbitration against or
affecting the Borrower or any of its Subsidiaries or any Property of the
Borrower or any of its Subsidiaries not previously disclosed to Agent, which
action, suit, proceeding, governmental investigation or arbitration exposes,
or in the case of multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same general allegations or
circumstances which expose, in the Borrower's reasonable judgment, the
Borrower or any of its Subsidiaries to liability in an amount aggregating
$100,000 or more (exclusive of claims covered by insurance policies of the
Borrower or any of its Subsidiaries unless the insurers of such claims have
disclaimed coverage or reserved the right to disclaim coverage on such
claims), the Borrower shall give written notice thereof to the Agent and
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provide such other information as may be reasonably available to enable the
Agent and its counsel to evaluate such matters; (ii) as soon as practicable
and in any event within forty-five (45) days after the end of each fiscal
quarter of the Borrower, the Borrower shall provide a written quarterly
report to the Agent covering the institution of, or written threat of, any
action, suit, proceeding, governmental investigation or arbitration (not
previously reported) against or affecting the Borrower or any of its
Subsidiaries or any Property of the Borrower or any of its Subsidiaries not
previously disclosed by the Borrower to the Agent, and shall provide such
other information at such time as may be reasonably available to enable the
Agent and its counsel to evaluate such matters (but excluding such
information at to which the Borrower in good faith has asserted or will
assert a legal privilege in objection to disclosure of the information by the
Borrower in the action, suit, proceeding, investigation or arbitration); and
(iii) in addition to the requirements set forth in CLAUSES (m)(i) and (m)(ii)
of this ANNEX E, the Borrower upon request of the Agent shall promptly give
written notice of the status of any action, suit, proceeding, governmental
investigation or arbitration covered by a report delivered pursuant to CLAUSE
(i) or (ii) above and provide such other information as may be reasonably
available to it to enable the Agent and its counsel to evaluate such matters.
(n) INSURANCE. As soon as practicable and in any event by the
last day of April in each Fiscal Year, the Borrower shall deliver to the
Agent (i) a report in form and substance reasonably satisfactory to the Agent
outlining all material insurance coverage maintained as of the date of such
report by the Borrower and its Subsidiaries and the duration of such coverage
and (ii) evidence that all premiums with respect to such coverage have been
paid when due.
(o) ERISA NOTICES. The Borrower shall deliver or cause to be
delivered to the Agent, at the Borrower's expense, the following information
and notices as soon as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that a Termination Event has
occurred, a written statement of the chief financial officer of the
Borrower describing such Termination Event and the action, if any, which
the Borrower or any ERISA Affiliate has taken, is taking or proposes to
take with respect thereto, and when known, any action taken or
threatened by the IRS, Department of Labor or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Borrower or any
of its Subsidiaries knows or has reason to know that an assessment of a
prohibited transaction excise tax under Section 4975 of the Internal
Revenue Code has occurred, a statement of the chief financial officer of
the Borrower describing such transaction and the action which the
Borrower or any ERISA Affiliate has taken, is taking or proposes to take
with respect thereto;
(iii) upon the request of the Agent, copies of each annual
report (form 5500 series), including Schedule B thereto, filed with the
Department of Labor, IRS or PBGC with respect to each Benefit Plan;
-5-
(iv) within ten (10) Business Days after the filing of the
same with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by the Borrower or
any ERISA Affiliate with respect to such request;
(v) within ten (10) Business Days after the occurrence any
material increase in the benefits of any existing Benefit Plan or the
establishment of any new Benefit Plan or the commencement of
contributions to any Benefit Plan to which the Borrower or any ERISA
Affiliate was not previously contributing, notification of such
increase, establishment or commencement;
(vi) within three (3) Business Days after the Borrower or any
ERISA Affiliate receives notice of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit
Plan, copies of each such notice;
(vii) within ten (10) Business Days after the Borrower or any
of its Subsidiaries receives notice of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the IRC, copies of each such letter;
(viii) within ten (10) Business Days after the Borrower or any
ERISA Affiliate receives notice from a Multiemployer Plan regarding the
imposition of withdrawal liability, copies of each such notice;
(ix) within three (3) Business Days after the Borrower or any
ERISA Affiliate fails to make a required installment or any other
required payment under Section 412 of the IRC on or before the due date
for such installment or payment, a notification of such failure;
(x) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know (A) a Multiemployer Plan has
been terminated, (B) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (C) the
PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan; and
(xi) within ten (10) Business Days after the Borrower receives
written notice from the Agent requesting the same, copies of any Foreign
Employee Benefit Plan and related documents, reports and correspondence
specified in such notice.
For purposes of this CLAUSE (o) of ANNEX E, the Borrower and any ERISA Affiliate
shall be deemed to know all facts known by the Administrator of any Plan of
which the Borrower or any ERISA Affiliate is the plan sponsor.
(p) ENVIRONMENTAL NOTICES.
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(i) The Borrower shall notify the Agent in writing,
within five (5) days after the Borrower's learning thereof, of any: (A)
notice or claim to the effect that the Borrower or any of its
Subsidiaries is or can reasonably be expected to be liable to any Person
as a result of the Release or threatened Release of any Contaminant; (B)
notice that the Borrower or any of its Subsidiaries is subject to
investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to the Release or threatened Release
of any Contaminant; (C) notice that any Property of the Borrower or any
of its Subsidiaries is subject to an Environmental Lien; (D) notice of
violation to the Borrower or any of its Subsidiaries of any Environmental
Law; (E) condition which might reasonably result in a violation of any
Environmental Law; (F) commencement or threat of any judicial or
administrative proceeding alleging a violation by the Borrower or any of
its Subsidiaries of any Environmental Law; (G) new or proposed changes to
any existing Environmental Law that could result in a Material Adverse
Effect; (H) any Release of a Contaminant which requires, or is
reasonably likely to require, (1) remedial action which is subject to
review or approval by any Governmental Authority or (2) reporting to any
Governmental Authority; or (I) any proposed acquisition of stock, assets,
real estate, or leasing of property, or any other action by the Borrower
or any of its Subsidiaries that is reasonably likely to subject the
Borrower or any of its Subsidiaries to Environmental Liabilities.
(ii) Within forty-five (45) days after the end of each
Fiscal Year, the Borrower shall submit to the Agent a report summarizing
the status of environmental, health or safety compliance, hazard or
liability issues identified in notices required pursuant to CLAUSE (p)(i)
of this ANNEX E, disclosed on DISCLOSURE SCHEDULE (3.18) or identified in
any notice or report required herein.
(q) LABOR MATTERS. The Borrower shall notify the Agent in
writing, promptly upon the Borrower's learning thereof, of (i) any material
labor dispute to which the Borrower or any of its Subsidiaries may become a
party, including, without limitation, any strikes, lockouts or other disputes
relating to such Persons' plants and other facilities and (ii) any liability
incurred with respect to the closing of any plant or other facility of the
Borrower or any of its Subsidiaries.
(r) GOVERNMENT CONTRACT NOTICES. The Borrower shall notify the
Agent in writing, within three (3) Business Days after the Borrower's learning
thereof, of any of the following:
(i) The Department of Defense, any other United States
Governmental Authority, any prime contractor, subcontractor or other
Person has notified the Borrower or any of its Subsidiaries that the
Borrower or such Subsidiary has breached or violated in any material
respect any applicable Requirements of Law, or any certification,
representation, clause, provision or requirement pertaining to any
Government Contract;
-7-
(ii) A termination for default, termination for convenience,
cure notice or show cause notice is in effect with respect to any
Government Contract;
(iii) Any cost incurred pertaining to any Government Contract
has been questioned or challenged, is the subject of any investigation
or has been disallowed by any United States Governmental Authority;
(iv) Any money due to the Borrower or any of its Subsidiaries
pertaining to any Government Contact is withheld, or is the subject of
an attempt to withhold, or is reduced through exercise of a right of
set-off or otherwise;
(v) The commencement or threat of any action, suit,
investigation or proceeding relating to any Government Contact, or
relating to any proposed suspension or debarment of the Borrower, any of
its Subsidiaries or any of their respective employees or agents, against
the Borrower, such Subsidiary, such other Person or any Property;
(vi) The discovery of any irregularity, misstatement or
omission arising under or relating to any Government Contract that could
reasonably be expected to lead to (A) an administrative, civil or
criminal investigation, indictment or information with respect to the
Borrower, any of its Subsidiaries or any of their respective directors,
officers, employees, consultants or agents, (B) disclosure of such
irregularity, misstatement or omission to any Governmental Authority or
(C) material damage, penalty assessment, recoupment of payment or
disallowance of cost; or
(vii) The existence of (A) any outstanding material claims
against the Borrower, its Subsidiaries or any Property, either by a
United States Governmental Authority or by any prime contractor,
subcontractor, vendor or other third party, arising under or relating to
any Government Contract, or (B) any material dispute between the Borrower
or any of its Subsidiaries, on the one hand, and any United States
Governmental Authority, any prime contractor, subcontractor, vendor or
other third party, on the other hand, arising under or relating to any
Government Contract.
(s) OTHER INFORMATION. Promptly upon receiving a request
therefor from the Agent, the Borrower shall prepare and deliver to the Agent
such other information with respect to the Borrower, any of its Subsidiaries,
or the Collateral, including, without limitation, schedules identifying and
describing the Collateral and any dispositions thereof, as from time to time
may be reasonably requested by the Agent.
-8-
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) Upon the request of the Agent, the Borrower shall
deliver to the Agent, in form and substance acceptable to the Agent, a
summary aged trial balance of all then existing Accounts specifying the
names, addresses, face amount and dates of invoices for each Account the
Borrower obligated on an Account so listed ("SCHEDULE OF ACCOUNTS"), and upon
demand, the original or copies, as request, of all documents, including,
without limitation, proofs of delivery, repayment histories and present
status reports, relating to the Accounts so scheduled and such other matters
and information relating to the status of Accounts as the Agent shall
reasonably request.
(b) Promptly upon, but in no event later than ten (10)
Business Days after, the Borrower's learning thereof, inform the Agent, in
writing, of (i) any material delay in the Borrower's performance of any of
its obligations to any material Account Debtor and of any assertion of any
material claims, offsets or counterclaims by any Account Debtor and of any
material allowances, credits or other monies granted by the Borrower to any
Account Debtor, and (ii) all material adverse information relating to the
financial condition of any material Account Debtor.
(c) Upon the request of the Agent, the Borrower shall
deliver to Agent, in form and substance acceptable to the Agent, a report
summarizing, on a LIFO and FIFO basis, the kind, type, quality and quantity
of Inventory as of the end of such month, the Borrower's cost therefor, and
summaries of Inventory by categories or classifications and by location.
(d) The Borrower shall provide the Agent with copies of all
agreements between the Borrower and any warehouse at which Inventory may from
time to time be kept and all leases or similar agreements between the
Borrower or any of its Affiliates and any other Person, whether the Borrower
or its Affiliate is lessor or lessee thereunder.
(e) As soon as practicable and in any event not less than
fifteen (15) calendar days after the end of each monthly accounting period of
the Borrower and, additionally, promptly upon request, a Borrowing Base
Certificate as at the last day of such accounting period (or as at the date
of such request).
(f) Such other reports, statements and reconciliations with
respect to the Borrowing Base or Collateral of any or all Credit Parties as
Agent shall from time to time request in its reasonable discretion.
-1-
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in
accordance with GAAP consistently applied:
(a) CONSOLIDATED CASH FLOW. Consolidated Cash Flow, as
determined as of each date set out below for the 12-month period ending on
such date, shall not be less than the amount set out below opposite such date:
DATE MINIMUM AMOUNT
---- --------------
June 30, 1998 $12,000,000
September 30, 1998 $12,000,000
December 31, 1998 $15,000,000
March 31, 1999 $20,000,000
June 30, 1999 $20,000,000
September 30, 1999 $20,000,000
December 31, 1999 $20,000,000
March 31, 2000 $25,000,000
June 30, 2000 $25,000,000
September 30, 2000 $25,000,000
December 31, 2000 $25,000,000
March 31, 2001 $25,000,000
June 30, 2001 $25,000,000
September 30, 2001 $25,000,000
December 31, 2001 $25,000,000
(b) CONSOLIDATED INTEREST COVERAGE RATIO. The Consolidated
Interest Coverage Ratio, as determined as of the last day of each Fiscal
Quarter ending June 30, 1998, and thereafter for the 12-month period ending
on such date, shall not be less than 3.00 to 1.
(c) CONSOLIDATED TOTAL FUNDED INDEBTEDNESS COVERAGE RATIO.
The Consolidated Total Funded Indebtedness Coverage Ratio, as determined as
of the last day of each Fiscal Quarter ending June 30, 1998, and thereafter
for the twelve month period ending on such date, shall not be greater than
3.5 to 1.
(d) CAPITAL EXPENDITURES. The Borrower shall not make or
incur, and shall not permit any of its Subsidiaries to make or incur, Capital
Expenditures, in any Fiscal Year ending December 31, 1998, and thereafter, in
an aggregate amount greater than $20,000,000, PROVIDED, HOWEVER, that solely
for purposes of calculating compliance with this CLAUSE (d) of ANNEX G, the
amount of Capital Expenditures made or incurred by the Borrower and its
Subsidiaries in any
-1-
Fiscal Year shall not include Capital Expenditures made or incurred in such
Fiscal Year as a direct result of (i) the Borrower's or any of its
Subsidiaries' response to any Release of a Contaminant, (ii) any remedial
action taken by the Borrower or any of its Subsidiaries in respect of any
Environmental Liabilities or (iii) any efforts or activities of the Borrower
or any of its Subsidiaries to comply with any Environmental Law.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed in accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. If any "ACCOUNTING
CHANGES" (as defined below) occur and such changes result in a change in the
calculation of the financial covenants, standards or terms used in the
Agreement or any other Loan Document, then Borrower, Agent and Lenders agree
to enter into negotiations in order to amend such provisions of the Agreement
so as to equitably reflect such Accounting Changes with the desired result
that the criteria for evaluating Borrower's and its Subsidiaries' financial
condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made; provided, however, that the agreement
of Requisite Lenders to any required amendments of such provisions shall be
sufficient to bind all Lenders. "Accounting Changes" means (a) changes in
accounting principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants (or successor thereto or
any agency with similar functions), (b) changes in accounting principles
concurred in by Borrower's certified public accountants; (c) purchase
accounting adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and the
application of the accounting principles set forth in FASB 109, including the
establishment of reserves pursuant thereto and any subsequent reversal (in
whole or in part) of such reserves; and (d) the reversal of any reserves
established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Effective Date
(including capitalization of costs and expenses or payment of pre-Effective
Date liabilities) shall be treated as expenses in the period the expenditures
are made and deducted as part of the calculation of EBITDA in such period.
If Agent, Borrower and Requisite Lenders agree upon the required amendments,
then after appropriate amendments have been executed and the underlying
Accounting Change with respect thereto has been implemented, any reference to
GAAP contained in the Agreement or in any other Loan Document shall, only to
the extent of such Accounting Change, refer to GAAP, consistently applied
after giving effect to the implementation of such Accounting Change. If
Agent, Borrower and Requisite Lenders cannot agree upon the required
amendments within thirty (30) days following the date of implementation of
any Accounting Change, then all Financial Statements delivered and all
calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change.
-2-
ANNEX H (Section 9.9(a))
to
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
-1-
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Finance Group - Department Counsel
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
and to:
Sidley & Austin
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, III, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to the Borrower, at:
Kaynar Technologies Inc.
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
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▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
ANNEX J (from ANNEX A - Commitments Definition)
to
CREDIT AGREEMENT
--------------------------------------------------------------------------------------
Swing Loan Commitment
Term Loan Revolving Loan (included in Revolving Total
Lender Commitment Commitment Loan Commitment) Commitment
--------------------------------------------------------------------------------------
GE Capital $50,000,000 $15,000,000 $1,500,000 $65,000,000
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-2-