Exhibit 10.2(a)
[EXECUTION VERSION]
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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 23, 1998
among
KAYNAR TECHNOLOGIES INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent, Co-Agent and Lender
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[EXECUTION VERSION]
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...............................................9
1.6. ELIGIBLE ACCOUNTS............................................................11
1.7 ELIGIBLE INVENTORY...........................................................13
1.8 CASH MANAGEMENT SYSTEMS......................................................14
1.9 FEES.........................................................................14
1.10 RECEIPT OF PAYMENTS..........................................................15
1.11 APPLICATION AND ALLOCATION OF PAYMENTS.......................................15
1.12 LOAN ACCOUNT AND ACCOUNTING..................................................16
1.13 INDEMNITY....................................................................16
1.14 ACCESS.......................................................................18
1.15 TAXES........................................................................18
1.16 CAPITAL ADEQUACY; INCREASED COSTS; ILLEGALITY................................19
1.17 SINGLE LOAN..................................................................21
2. CONDITIONS TO LOANS.................................................................21
2.1 CONDITIONS PRECEDENT TO THE INITIAL LOANS....................................21
2.2 FURTHER CONDITIONS PRECEDENT TO EACH LOAN....................................23
2.3 CONDITIONS SUBSEQUENT TO THE INITIAL LOANS...................................23
3. REPRESENTATIONS AND WARRANTIES......................................................24
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.....................................24
3.2 EXECUTIVE OFFICES; FEIN......................................................24
3.3 CORPORATE POWER, AUTHORIZATION, ENFORCEABLE OBLIGATIONS......................24
3.4 FINANCIAL STATEMENTS AND PROJECTIONS.........................................25
3.5 MATERIAL ADVERSE EFFECT......................................................26
3.6 OWNERSHIP OF PROPERTY; LIENS.................................................26
3.7 LABOR MATTERS................................................................26
3.8 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND INDEBTEDNESS....27
3.9 GOVERNMENT REGULATION........................................................27
3.10 MARGIN REGULATIONS...........................................................27
3.11 TAXES........................................................................28
3.12 ERISA........................................................................28
3.13 FOREIGN EMPLOYEE BENEFIT MATTERS.............................................28
3.14 NO LITIGATION; NO ADVERSE EFFECTS............................................29
3.15 BROKERS......................................................................29
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[EXECUTION VERSION]
3.16 INTELLECTUAL PROPERTY........................................................29
3.17 FULL DISCLOSURE..............................................................30
3.18 ENVIRONMENTAL MATTERS........................................................30
3.19 INSURANCE....................................................................31
3.20 DEPOSIT AND DISBURSEMENT ACCOUNTS............................................31
3.21 GOVERNMENT CONTRACTS.........................................................31
3.22 CUSTOMER AND TRADE RELATIONS.................................................32
3.23 SOLVENCY.....................................................................32
3.24 YEAR 2000 REPRESENTATIONS....................................................32
3.25 ▇▇▇▇▇▇ STOCK PURCHASE DOCUMENTS..............................................32
3.26 ELIGIBLE ACCOUNTS............................................................33
3.27 ELIGIBLE INVENTORY...........................................................33
4. FINANCIAL STATEMENTS AND INFORMATION................................................33
4.1 REPORTS AND NOTICES..........................................................33
4.2 COMMUNICATION WITH ACCOUNTANTS...............................................33
5. AFFIRMATIVE COVENANTS...............................................................34
5.1 MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS.............................34
5.2 PAYMENT OF OBLIGATIONS.......................................................34
5.3 BOOKS AND RECORDS............................................................35
5.4 INSURANCE; DAMAGE TO OR DESTRUCTION OF COLLATERAL............................35
5.5 COMPLIANCE WITH LAWS.........................................................36
5.6 SUPPLEMENTAL DISCLOSURE......................................................37
5.7 INTELLECTUAL PROPERTY........................................................37
5.8 ENVIRONMENTAL MATTERS........................................................37
5.9 LANDLORDS' AGREEMENTS, MORTGAGEE AGREEMENTS AND BAILEE LETTERS...............38
5.10 FURTHER ASSURANCES...........................................................38
5.11 YEAR 2000 PROBLEMS...........................................................39
5.12 ERISA COMPLIANCE.............................................................39
5.13 FOREIGN EMPLOYEE BENEFIT PLAN COMPLIANCE.....................................39
5.14 GOVERNMENT CONTRACT COMPLIANCE...............................................39
5.15 FUTURE LIENS ON REAL PROPERTY................................................39
5.16 NEWLY ACQUIRED SUBSIDIARIES; EXECUTION OF GUARANTY; PLEDGE OF CAPITAL STOCK..40
5.17 ADDITIONAL CREDIT PARTIES....................................................40
5.18 POST-CLOSING COVENANTS.......................................................41
6. NEGATIVE COVENANTS..................................................................41
6.1 MERGERS, SUBSIDIARIES, ETC...................................................41
6.2. INVESTMENTS; LOANS AND ADVANCES..............................................43
6.3 INDEBTEDNESS.................................................................44
6.4 EMPLOYEE LOANS AND AFFILIATE TRANSACTIONS....................................46
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[EXECUTION VERSION]
6.5 CAPITAL STRUCTURE AND BUSINESS...............................................46
6.6 ACCOMMODATION OBLIGATIONS....................................................47
6.7 LIENS........................................................................47
6.8 SALE OF STOCK AND ASSETS.....................................................48
6.9 ERISA........................................................................48
6.10 FINANCIAL COVENANTS..........................................................49
6.11 HAZARDOUS MATERIALS..........................................................49
6.12 SALE-LEASEBACKS..............................................................49
6.13 CANCELLATION OF INDEBTEDNESS.................................................50
6.14 RESTRICTED PAYMENTS..........................................................50
6.15 CHANGE OF CORPORATE NAME OR LOCATION; CHANGE OF FISCAL YEAR..................50
6.16 RESTRICTION ON FUNDAMENTAL CHANGES...........................................50
6.17 NO IMPAIRMENT OF INTERCOMPANY TRANSFERS......................................50
6.18 NO SPECULATIVE TRANSACTIONS..................................................51
6.19 CHANGES RELATING TO SUBORDINATED DEBT........................................51
7. TERM................................................................................51
7.1 TERMINATION..................................................................51
7.2 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF FINANCING ARRANGEMENTS...........51
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES..............................................52
8.1 EVENTS OF DEFAULT............................................................52
8.2 REMEDIES.....................................................................54
8.3 WAIVERS BY CREDIT PARTIES....................................................55
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.................................55
9.1 ASSIGNMENT AND PARTICIPATIONS................................................55
9.2 APPOINTMENT OF AGENT AND CO-AGENT............................................57
9.3 AGENT'S RELIANCE, ETC........................................................58
9.4 AGENT, CO-AGENT AND AFFILIATES...............................................58
9.5 LENDER CREDIT DECISION.......................................................59
9.6 INDEMNIFICATION..............................................................59
9.7 SUCCESSOR AGENT..............................................................59
9.8 SETOFF AND SHARING OF PAYMENTS...............................................60
9.9 ADVANCES; PAYMENTS; NON-FUNDING LENDERS; INFORMATION; ACTIONS IN CONCERT.....61
9.10 THE CO-AGENT.................................................................63
9.11 SUCCESSOR CO-AGENT...........................................................64
10. SUCCESSORS AND ASSIGNS..............................................................64
10.1 SUCCESSORS AND ASSIGNS.......................................................64
11. MISCELLANEOUS.......................................................................64
11.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT................................64
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[EXECUTION VERSION]
11.2 AMENDMENTS AND WAIVERS.......................................................65
11.3 FEES AND EXPENSES............................................................67
11.4 NO WAIVER....................................................................68
11.5 REMEDIES.....................................................................68
11.6 SEVERABILITY.................................................................68
11.7 CONFIDENTIALITY..............................................................69
11.8 GOVERNING LAW................................................................69
11.9 CERTAIN CONSENTS AND WAIVERS OF THE BORROWER.................................69
11.10 NOTICES......................................................................71
11.11 SECTION TITLES...............................................................71
11.12 WAIVER OF JURY TRIAL.........................................................71
11.13 PRESS RELEASES...............................................................72
11.14 REINSTATEMENT................................................................72
11.15 COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES.................................72
11.16 ADVICE OF COUNSEL............................................................73
11.17 NO STRICT CONSTRUCTION.......................................................73
11.18 NO NOVATION..................................................................73
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[EXECUTION VERSION]
INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
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 5.16(a) - Form of Unlimited Guaranty
Exhibit 5.16(b) - Form of Limited Guaranty
Exhibit 5.16(c) - Form of Subsidiary Security Agreement
Exhibit 5.16(d) - Form of Subsidiary Patent Security Agreement
Exhibit 5.16(e) - Form of Subsidiary Trademark Security Agreement
Exhibit 5.16(f) - Form of Subsidiary Pledge Agreement
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit M - Form of Compliance Certificate
Exhibit O - Form of Omnibus Reaffirmation Agreement
Exhibit P - Form of Collateral Assignment
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(a) - Real Estate and Leases
Schedule 3.6(b) - Mortgaged Properties
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding
Stock
Schedule 3.12 - ERISA Plans
Schedule 3.14 - Litigation
Schedule 3.16 - Intellectual Property
Schedule 3.18 - Environmental Matters
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
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[EXECUTION VERSION]
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
Annex I (Section 11.10) - Notice Addresses
Annex J (From Annex A) - Commitments as of Closing Date
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[EXECUTION VERSION]
THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October
23, 1998, among KAYNAR TECHNOLOGIES INC., a Delaware corporation
("BORROWER"); the other Credit Parties signatory hereto; each financial
institution from time to time party hereto as a lender (together with its
successors and permitted assigns, a "LENDER"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation (in its individual capacity, "GE CAPITAL"),
for itself, as Lender, as agent for Lenders (in such capacity, "AGENT"), and as
co-agent for Lenders (in such capacity, "CO-AGENT").
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 was 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, and subsequently was
further amended and restated as of July 27, 1998 (as so amended and restated,
the "EXISTING CREDIT AGREEMENT");
WHEREAS, the Borrower, the Agent and the Lenders desire to amend
and restate the Existing Credit Agreement in its entirety to give effect to the
terms and provisions set forth in this Third Amended and Restated Credit
Agreement (the Existing Credit Agreement, as so amended and restated, and this
Third 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, the
Co-Agent and the Lenders that the Agent, the Co-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, or to
the Agent, for the benefit of itself and the Lenders, in any of Borrower's
Property and that all of the Obligations shall be secured by the Liens on the
Property
[EXECUTION VERSION]
subject to such Loan Documents, as well as the Liens granted to the Agent, for
the benefit of itself and the Lenders, on all other Collateral on and after the
date hereof.
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 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) 12:00 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) 12:00 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) 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, including,
without limitation, the amount of such Revolving Credit Advance to be
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[EXECUTION VERSION]
advanced in respect of the KTI Borrowing Base and the amount to be
advanced in respect of the ▇▇▇▇▇▇ Borrowing Base. 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 $49,900,000. The term loans
outstanding under the Existing Credit Agreement on the Effective Date
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.
(ii) Borrower shall pay the principal amount of the Term
Loan in seventeen (17) consecutive quarterly installments of $425,000
each on the first day of January, April, July and October of each year,
commencing January 1, 1999.
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[EXECUTION VERSION]
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 by the Agent to the Swing Line
Lender no later than 12:00 p.m. (New York time) on the Business Day of
the proposed Swing Line Advance. Unless the Swing Line Lender has
received at least one Business Day's prior written notice from Agent or
Requisite Revolving Lenders instructing it not to make the Swing Line
Advance, the Swing Line Lender shall, notwithstanding the failure of any
condition precedent set forth in SECTION 2.2 hereof (other than the
condition precedent set forth in SECTION 2.2(e) hereof), be entitled to
fund such Swing Line Advance and, in connection with such Swing Line
Advance, to have each Revolving Lender make Revolving Credit Advances in
accordance with SECTION 1.1(c)(iii) or to purchase participating
interests in accordance with SECTION 1.1(c)(iv). 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
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[EXECUTION VERSION]
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.
(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
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[EXECUTION VERSION]
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 full at the Federal
Funds Rate for the first two Business Days and at the Index Rate
thereafter.
(d) 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.
- 6 -
[EXECUTION VERSION]
(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 prepay the
Obligations 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 are
required to be delivered pursuant to this Agreement, in an amount equal
to seventy-five percent (75%) of Excess Cash Flow for the immediately
preceding Fiscal Year; PROVIDED, HOWEVER, that no such prepayment shall
be required with respect to the Fiscal Year ending December 31, 1998.
Any prepayments from Excess Cash Flow paid pursuant to this CLAUSE (iv)
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,
- 7 -
[EXECUTION VERSION]
to Fees and Agent's and Co-Agent's expenses (if any) 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, Co-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.
(a) 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 ▇▇▇▇▇▇ 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.
(b) Borrower shall utilize that portion of the proceeds of any
Revolving Credit Advance or Swing Line Advance advanced on or after the
Effective Date in respect of the ▇▇▇▇▇▇ Borrowing Base solely to make the
intercompany loans to ▇▇▇▇▇▇ permitted under SECTION 6.3(a)(xii).
- 8 -
[EXECUTION VERSION]
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 or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR 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 or, at the election of Borrower, the applicable LIBOR
Rate plus the Applicable Term Loan LIBOR Margin per annum; and (iii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver
Index Margin per annum.
The Applicable Revolver Index Margin, Applicable Revolver LIBOR
Margin, Applicable Term Loan Index Margin, Applicable Term Loan LIBOR Margin and
Applicable Unused Line Fee Margin, will be 0.0%, 1.5%, 0.0%, 1.5% and 0.25% per
annum, respectively, as of the Effective Date. The Applicable Margins will be
adjusted (up or down) prospectively on a quarterly basis as determined by
Borrower's consolidated financial performance for the trailing twelve months
most recently ended, commencing at least five (5) days after the date of
delivery of Borrower's quarterly Financial Statements to Agent for the Fiscal
Quarter ending April 4, 1999. Adjustments in Applicable Margins will be
determined by reference to the following grids:
IF CONSOLIDATED TOTAL FUNDED LEVEL OF
INDEBTEDNESS COVERAGE RATIO IS APPLICABLE MARGINS:
------------------------------ -------------------
less than 2.5:1 Level I
greater than or equal to 2.5:1 but less than or equal to 3.0:1 Level II
greater than 3.0:1 Level III
APPLICABLE MARGINS
-------------------------------
LEVEL I LEVEL II LEVEL III
------- -------- ---------
Applicable Revolver Index Margin 0.000% 0.000% 0.000%
Applicable Revolver LIBOR Margin 1.500% 1.750% 2.000%
Applicable Term Loan Index Margin 0.000% 0.000% 0.000%
Applicable Term Loan LIBOR Margin 1.500% 1.750% 2.000%
Applicable Unused Line Fee Margin 0.250% 0.250% 0.375%
- 9 -
[EXECUTION VERSION]
All adjustments in the Applicable Margins after April 4, 1999,
will be implemented quarterly on a prospective basis, for each calendar month
commencing at least five (5) days after the date of delivery of the quarterly
unaudited or annual audited (as applicable) Financial Statements of the Credit
Parties evidencing the need for an adjustment. Concurrently with the delivery of
those Financial Statements, Borrower shall deliver to Agent and Lenders a
certificate, signed by its chief financial officer, setting forth in reasonable
detail the basis for the continuance of, or any change in, the Applicable
Margins. If a Default or an Event of Default shall have occurred or be
continuing at the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day of the first
calendar month following the date on which such Default or Event of Default is
waived or cured.
(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 Default or Event
of Default until that Default or Event of Default is cured or waived and shall
be payable upon demand.
(e) 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
- 10 -
[EXECUTION VERSION]
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 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
- 11 -
[EXECUTION VERSION]
reasonable credit judgment determine which Accounts of Borrower and ▇▇▇▇▇▇ 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 or ▇▇▇▇▇▇:
(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 such Credit Party;
(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 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, such Credit Party;
(h) with respect to which such Credit Party is or may become
liable to the Account Debtor for goods sold or services rendered by the Account
Debtor to such Credit Party
- 12 -
[EXECUTION VERSION]
to the extent of the amount by which such Credit Party 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
such Credit Party exceed ten percent (10%) of the aggregate amount of all
Eligible Accounts of such Credit Party (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 such
Credit Party 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 and ▇▇▇▇▇▇ 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 rates which have the effect of making more credit available.
Eligible Inventory shall not include any Inventory of Borrower or ▇▇▇▇▇▇:
(a) that is not owned by such Credit Party 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 such Credit Party's performance with respect to that Inventory), except
Liens in favor of Agent for the benefit of the Lenders;
(b) that is (i) not located on premises owned or leased by such
Credit Party 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
- 13 -
[EXECUTION VERSION]
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 such Credit Party;
(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
such Credit Party'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
(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.
- 14 -
[EXECUTION VERSION]
(b) As additional compensation for the Revolving Lenders, 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 the Applicable Unused Line Fee
Margin per annum (calculated on the basis of a 360 day year for actual days
elapsed) multiplied by 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 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 or Co-Agent's expenses (if any) 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.
- 15 -
[EXECUTION VERSION]
(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, Co-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.
1.13 INDEMNITY.
(a) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and hold harmless each of Agent, Co-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 ▇▇▇▇▇▇ 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
- 16 -
[EXECUTION VERSION]
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 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
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[EXECUTION VERSION]
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.
(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, Co-Agent or any Lender by (i) the United States, (ii) the Governmental
Authority of any jurisdiction in which Agent, Co-Agent or such Lender has an
office or any political subdivision thereof or (iii) the Governmental Authority
in which Agent, Co-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
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[EXECUTION VERSION]
deduct any Taxes from or in respect of any sum payable hereunder or under any
such Note or document to Agent, Co-Agent or any Lender (x) the sum payable to
Agent, Co-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,
Co-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, Co-Agent
and each Lender against, and reimburse Agent, Co-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, Co-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, Co-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.
(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.
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[EXECUTION VERSION]
(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 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.
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[EXECUTION VERSION]
(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.
2. CONDITIONS TO LOANS
2.1 CONDITIONS PRECEDENT 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, Co-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 identified in the Closing
Checklist attached hereto as ANNEX D as conditions precedent to the initial
loans, each in form and substance satisfactory to Agent.
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[EXECUTION VERSION]
(b) REPAYMENT OF PRIOR LENDER OBLIGATIONS; SATISFACTION OF
OUTSTANDING L/cs. (i) Agent shall have received a fully executed original of a
pay-off letter satisfactory to Agent confirming that all of the Prior Lender
Obligations will be repaid in full from the proceeds of the Term Loan and the
initial Revolving Credit Advance and all Liens upon any of the property of
Borrower or any of its Subsidiaries in favor of Prior Lender shall be terminated
by Prior Lender immediately upon such payment; and (ii) all letters of credit
issued or guaranteed by Prior Lender shall have been cash collateralized,
supported by a guaranty of Agent or supported by a Letter of Credit issued
pursuant to ANNEX B, as mutually agreed upon by Agent, Borrower and Prior
Lender.
(c) 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.
(d) OPENING AVAILABILITY. The Eligible Accounts and Eligible
Inventory 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.
(e) 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 and Co-Agent for all fees, costs and expenses of closing (if
any) presented as of the Effective Date.
(f) 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.
(g) CONSUMMATION OF RELATED TRANSACTIONS. Agent shall have
received fully executed copies of the ▇▇▇▇▇▇ Stock Purchase Documents and each
of the other Related Transactions Documents, each of which shall be in form and
substance satisfactory to Agent and its counsel. The ▇▇▇▇▇▇ Acquisition and the
other Related Transactions shall have been consummated in accordance with the
terms of the ▇▇▇▇▇▇ Stock Purchase Documents and the other Related Transactions
Documents but for the payment of the cash purchase price payable on the
Effective Date pursuant to the ▇▇▇▇▇▇ Stock Purchase Documents.
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[EXECUTION VERSION]
2.2 FURTHER CONDITIONS PRECEDENT 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, and Agent or Requisite Revolving
Revolvers shall have determined not to make such Loan, convert or continue such
Loan as a LIBOR Loan or incur such Letter of Credit Obligation due to the fact
that such warranty or representation is untrue or incorrect; 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) Any Default or 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 Obligation, and Agent or Requisite Revolving Lenders shall
have determined not to make such Loan, convert or continue such Loan as a LIBOR
Loan or incur such Letter of Credit Obligation on the basis of such Default or
Event of Default; 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.
2.3 CONDITIONS SUBSEQUENT TO THE INITIAL LOANS. In addition to
the conditions precedent described in SECTION 2.1, the following items must be
received by Agent in form and substance satisfactory to Agent on the Effective
Date:
(a) all items identified in the Closing Checklist attached hereto
as ANNEX D as conditions subsequent to the initial loans;
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[EXECUTION VERSION]
(b) counterparts of this Agreement delivered to Agent pursuant to
SECTION 5.17(b) hereof; and
(c) an intercompany note made by ▇▇▇▇▇▇ in favor of Borrower
evidencing the NationsCredit Payoff Loan, such note to be delivered to Agent on
the Effective Date pursuant to the Pledge Agreement.
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, Co-Agent and each
Lender with respect to all Credit Parties, each and all of which shall survive
the execution and delivery of this Agreement.
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
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[EXECUTION VERSION]
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.
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) FINANCIAL STATEMENTS. 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 June 28, 1998, and
the related statement(s) of income and cash flows of Borrower and its
Subsidiaries for the Fiscal Quarter ended June 28, 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 September 27, 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
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[EXECUTION VERSION]
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(a)) constitutes all of the Real
Property owned, leased, subleased, 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. Except as set forth in DISCLOSURE SCHEDULE
(3.7), 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) no Credit Party is a party
to or bound by any collective bargaining agreement (and true and complete copies
of any agreements described on DISCLOSURE SCHEDULE (3.7) have been delivered to
Agent); (e) 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
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[EXECUTION VERSION]
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 complaints or charges against any Credit
Party which are pending or, to the knowledge of any Credit Party, threatened to
be filed with any Governmental Authority or arbitrator and which are 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 and which have a
reasonable risk of being determined adversely to any Credit Party and which, if
so determined, could have a Material Adverse Effect.
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 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.
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[EXECUTION VERSION]
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 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
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[EXECUTION VERSION]
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 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
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[EXECUTION VERSION]
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,
Co-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 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 none of
Agent, Co-Agent or any Lender (i) is now, or has ever been, in control of any of
the Real Property or any
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[EXECUTION VERSION]
Credit Party's affairs, nor (ii) has 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.
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
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[EXECUTION VERSION]
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 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 ▇▇▇▇▇▇ 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 (other than the
Marcliff Subsidiaries) has completed and delivered to Agent a Year 2000
Assessment and a Year 2000 Corrective Plan.
3.25 ▇▇▇▇▇▇ STOCK PURCHASE DOCUMENTS. As of the Effective Date,
Borrower has delivered to Agent complete and correct copies of the ▇▇▇▇▇▇ Stock
Purchase Documents (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
▇▇▇▇▇▇ Stock Purchase Documents comply with, and the ▇▇▇▇▇▇ Acquisition will be
consummated in accordance with, all applicable Requirements of Law. The ▇▇▇▇▇▇
Stock Purchase Documents are in full force and effect as of the Effective Date
and have 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 ▇▇▇▇▇▇ Stock Purchase Documents, have been obtained, and no such
approvals impose any conditions to the consummation of the transactions
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[EXECUTION VERSION]
contemplated by the ▇▇▇▇▇▇ Stock Purchase Documents 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 ▇▇▇▇▇▇
Stock Purchase Documents 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
▇▇▇▇▇▇ Stock Purchase Documents are 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 or ▇▇▇▇▇▇'▇ business, as the case may be,
unconditionally owed to such Person 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. Neither the Borrower nor ▇▇▇▇▇▇,
as the case may be, has received notice of actual or imminent bankruptcy,
insolvency, or the material impairment of the financial condition of any Account
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) Borrower hereby agrees that from and after the Effective Date
and until the Termination Date, it shall deliver to Agent, Co-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) Borrower hereby agrees that from and after the Effective Date
and until the Termination Date, it shall deliver to Agent, Co-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, Co-Agent and each Lender, to communicate
directly with its independent
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[EXECUTION VERSION]
certified public accountants, including ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP, and authorizes and
shall instruct those accountants and advisors to disclose and make available to
Agent, Co-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 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
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[EXECUTION VERSION]
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 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 any of Agent's, Co-Agent's and Lenders' 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
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[EXECUTION VERSION]
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 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.
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[EXECUTION VERSION]
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.
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
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[EXECUTION VERSION]
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 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.
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[EXECUTION VERSION]
5.11 YEAR 2000 PROBLEMS.
(a) On or prior to March 31, 1999, the Marcliff Subsidiaries
shall complete and deliver to the Agent a Year 2000 Assessment, and on or prior
to April 30, 1999, the Marcliff Subsidiaries shall complete and deliver to Agent
a Year 2000 Corrective Plan. On or prior to May 31, 1999, the Marcliff
Subsidiaries shall complete Year 2000 Corrective Actions. On or before June 30,
1999, the Marcliff Subsidiaries shall complete Year 2000 Implementation Testing.
On or before July 30, 1999, the Marcliff Subsidiaries 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.
(b) On or prior to November 30, 1998, each Credit Party (other
than the Marcliff Subsidiaries) shall complete Year 2000 Corrective Actions. On
or before January 29, 1999, each Credit Party (other than the Marcliff
Subsidiaries) shall complete Year 2000 Implementation Testing. On or before
March 31, 1999, each Credit Party (other than the Marcliff Subsidiaries) 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.
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
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[EXECUTION VERSION]
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, the Co-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 on or after the Effective Date (and, on
or prior to the Refinancing Date, shall cause M&M) to execute and deliver to the
Agent, promptly after such Domestic Subsidiary is so acquired, a Guaranty, a
Subsidiary Security Agreement 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.
5.17 ADDITIONAL CREDIT PARTIES.
(a) The initial Credit Parties shall be such of the Borrower and
such of its Domestic Subsidiaries as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional Subsidiaries of the
Borrower, including but not limited to the Marcliff Subsidiaries, may become
parties hereto, as additional Credit Parties (each an "ADDITIONAL CREDIT
PARTY"), by executing a counterpart of this Agreement, including supplemental
Disclosure Schedules with respect to such Additional Credit Party. Upon delivery
of any such counterpart to Agent, notice of which is hereby waived by the Credit
Parties, each such Additional Credit Party shall be a Credit Party and shall be
fully a party hereto as of the date of execution of such counterpart, including,
without limitation, with respect to the making, as of such date, of the
representations and warranties and the entering into of the covenants and
agreements set forth herein. Each Credit Party expressly agrees that its
obligations arising hereunder shall not be affected or diminished by the
addition or release of any other Credit Party hereunder, nor by any election of
Agent not to cause any Subsidiary of the Borrower to become an Additional Credit
Party hereunder. This Agreement shall be fully effective as to any Credit Party
that is or becomes a party hereto regardless of whether any other Person becomes
or fails to become or ceases to be a Credit Party hereunder.
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[EXECUTION VERSION]
(b) On the Closing Date and immediately upon the consummation of
the ▇▇▇▇▇▇ Acquisition, the Marcliff Subsidiaries will become parties hereto by
executing and delivering to Agent a counterpart of this Agreement, together with
all appropriate supplemental Disclosure Schedules and the documents set forth in
SECTION 2.3.
5.18 POST-CLOSING COVENANTS.
(a) Within thirty (30) days after the Effective Date, the
Marcliff Subsidiaries shall have established and shall maintain Cash Management
Systems complying with ANNEX C, and shall have delivered duly executed tri-party
blocked account and lock box agreements, satisfactory to Agent, as required by
ANNEX C.
(b) Within ten (10) days after the Effective Date, the Marcliff
Subsidiaries shall have delivered insurance certificates with respect to the
insurance policies required by SECTION 5.4., showing loss payable and/or
additional insured clauses or endorsements, as requested by Agent, in favor of
Agent, on behalf of itself and Lenders.
(c) ▇▇▇▇▇▇ shall use its best efforts to wind-up and dissolve
▇▇▇▇▇▇ Canada, and to cause all of the assets of ▇▇▇▇▇▇ Canada to be distributed
to ▇▇▇▇▇▇, within one hundred eighty (180) days after the Effective Date.
6. NEGATIVE COVENANTS
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 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 as contemplated by the
▇▇▇▇▇▇ Acquisition. Notwithstanding the foregoing prohibition, Borrower or any
wholly owned Domestic 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);
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[EXECUTION VERSION]
(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, Co-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
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;
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[EXECUTION VERSION]
(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 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;
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[EXECUTION VERSION]
(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(a)(ix) through (xii);
(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;
(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):
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[EXECUTION VERSION]
(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;
(vi) Indebtedness constituting Accommodation Obligations
permitted by SECTION 6.6;
(vii) Indebtedness with respect to reasonable and
customary warranties and indemnities made under any agreements for asset
sales permitted under SECTION 6.8;
(viii) Permitted Existing Indebtedness;
(ix) 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;
(x) 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;
(xi) Indebtedness of M&M in an aggregate amount not to
exceed $11,000,000 assumed in connection with the M&M Acquisition; and
(xii) Indebtedness arising from (A) the NationsCredit
Payoff Loan and (ii) other intercompany loans from the Borrower to
▇▇▇▇▇▇ in an aggregate amount which may not exceed, as of any date of
determination, the amount set forth in the ▇▇▇▇▇▇ Borrowing Base section
of the most recent Borrowing Base Certificate delivered by Borrower to
Agent, such intercompany loans to be evidenced by a promissory note
dated
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[EXECUTION VERSION]
October 27, 1998, which will be delivered to the Lender on the Effective
Date pursuant to the Borrower Pledge 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 6.8(c), (iii) other Indebtedness (excluding Subordinated
Debt) not in excess of $3,000,000 and (iv) Indebtedness of a Credit Party to the
Borrower.
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.
6.5 CAPITAL STRUCTURE AND BUSINESS. Other than the Related
Transactions, 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, (iii)
repurchase outstanding shares of its common Stock with an aggregate Fair Market
Value of not more than $10,000,000 and (iv) 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, Co-Agent or Lenders or such Credit
Party's duty or ability to repay the Obligations. No Credit Party shall
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[EXECUTION VERSION]
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 January 25, 1999;
(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) 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)(xi).
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[EXECUTION VERSION]
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; and
(vi) 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;
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[EXECUTION VERSION]
(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.
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
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[EXECUTION VERSION]
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 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 required under SECTION 5.18 or
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
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[EXECUTION VERSION]
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, Co-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.
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, Co-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,
Co-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.
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[EXECUTION VERSION]
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,
Co-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, 2.3, 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 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, Co-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
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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.
(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
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[EXECUTION VERSION]
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) ERISA EVENT. Any ERISA 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.
(a) If any Default or Event of Default shall have occurred and be
continuing, Agent may (and at the written request of 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 the incurrence of further 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;
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[EXECUTION VERSION]
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.
(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
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[EXECUTION VERSION]
applicable Commitment. In the event Agent, Co-Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent, Co-Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent, Co-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 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, Co-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, or
Co-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
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[EXECUTION VERSION]
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 11.7.
9.2 APPOINTMENT OF AGENT AND CO-AGENT.
(a) GE Capital is hereby appointed to act on behalf of all
Lenders as initial Agent under this Agreement and the other Loan Documents. GE
Capital is hereby appointed to serve as Co-Agent and to replace the Agent during
any period in which the Agent then serving is unwilling or unable to serve as
Agent (such period, to be declared by the Agent at any time and from time to
time, in its sole discretion, a "RECUSAL PERIOD") or upon the resignation of the
Agent pursuant to SECTION 9.7 and pending the appointment of a successor Agent;
PROVIDED, HOWEVER, that the Agent may at any time during a Recusal Period, in
its sole discretion (unless the Agent has resigned as Agent in accordance with
SECTION 9.7), resume its duties and responsibilities as Agent by giving not less
than five (5) days' prior written notice thereof to Co-Agent, Lenders and
Borrower. The provisions of this SECTION 9.2(a) are solely for the benefit of
the Agent, Co-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.
(b) 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 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.
(c) If Agent or Co-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 or
Co-Agent, as the case may be, shall be entitled to refrain from such act or
taking such action unless and until such Person shall have received instructions
from Requisite Lenders, Requisite Revolving Lenders, Supermajority Revolving
Lenders or all
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[EXECUTION VERSION]
affected Lenders, as the case may be, and neither Agent nor Co-Agent shall incur
liability to any Person by reason of so refraining. Each of Agent and Co-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 such
Person, be contrary to law or the terms of this Agreement or any other Loan
Document, (b) if such action would, in the opinion of such Person, expose such
Person to Environmental Liabilities or (c) if Agent or Co-Agent, as the case may
be, 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 or Co-Agent, as the case
may be, as a result of such Person 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
Co-Agent or any Lender and shall not be responsible to Co-Agent or 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 Co-Agent or 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.
9.4 AGENT, CO-AGENT AND AFFILIATES. With respect to their
respective Commitments hereunder, each of Agent and Co-Agent 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 or Co-Agent, as the
case may be; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include Agent or Co-Agent, as applicable, in its individual
capacity. Agent, Co-Agent and their respective Affiliates may lend money to,
invest in, and generally engage in any kind of business with, any Credit Party,
any of their
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Affiliates and any Person who may do business with or own securities of any
Credit Party or any such Affiliate, all as if Agent were not Agent and Co-Agent
were not Co-Agent and without any duty to account therefor to Lenders. Agent,
Co-Agent and their respective 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 Agent, Co-Agent or Lenders.
Co-Agent and 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. Co-Agent and each Lender acknowledges
that it has, independently and without reliance upon Agent, Co-Agent or any
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. Co-Agent and each Lender also acknowledges that it
will, independently and without reliance upon Agent, Co-Agent or any 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 and
Co-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 or Co-Agent, as the case may be, in any way relating to
or arising out of this Agreement or any other Loan Document or any action taken
or omitted by Agent or Co-Agent, as applicable, 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 or Co-Agent's gross
negligence or wilful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent and Co-Agent, as the case may be, promptly upon demand
for its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by Agent or Co-Agent, as applicable, 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 or Co-Agent is not
reimbursed for such expenses by Credit Parties.
9.7 SUCCESSOR AGENT. The Agent may temporarily recuse itself or
permanently resign as Agent at any time by giving not less than five (5) days'
prior written notice thereof to Co-Agent, Lenders and Borrower; upon such
recusal or resignation, Co-Agent shall automatically become the Agent pending
the end of the Recusal Period or the appointment of a successor
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Agent, as the case may be, subject to SECTION 9.2(a) hereof. Any subsequent
Agent (other than GE Capital) may resign (but not recuse itself) at any time by
giving not less than thirty (30) days' prior written notice thereof to Lenders
and Borrower. Upon any such subsequent resignation, the Requisite Lenders shall
have the right to appoint a successor Agent and the Co-Agent shall resume its
duties and responsibilities as Co-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 as Agent 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. Agent may be
removed at the written direction of the Lenders holding two-thirds or more of
the Commitments; provided that in so doing, such Lenders shall be deemed to have
waived and released any and all claims they may have against Agent.
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
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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 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
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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 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
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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.
(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 nor Co-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.
9.10 THE CO-AGENT. The Co-Agent shall not have, and the Co-Agent
hereby expressly disclaims, any rights or duties hereunder beyond those of a
Lender. Except with respect to its rights and duties as a Lender, neither the
Co-Agent nor any of its officers, directors, employees or agents shall be liable
to any Person for any action taken or omitted by them hereunder or under any of
the Loan Documents. Without limitation of the generality of the foregoing,
Co-Agent: (a) 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; (b) makes no warranty or representation to
Agent or any Lender and shall not be responsible to Agent or
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any Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (c) 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; (d) shall not be
responsible to Agent or 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 (e) 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.
9.11 SUCCESSOR CO-AGENT. The Co-Agent may resign as Co-Agent at
any time by giving not less than thirty (30) days' prior written notice thereof
to Agent, Lenders and Borrower. Upon any resignation by a Co-Agent, the Agent
may, on behalf of Lenders, appoint a successor Co-Agent, which shall be a
Lender, if a Lender is willing to accept such appointment. Upon the earlier of
the acceptance of any appointment as Co-Agent hereunder by a successor Co-Agent
or the effective date of the resigning Co-Agent's resignation, the resigning
Co-Agent shall be discharged from its duties and obligations as Co-Agent under
this Agreement and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Co-Agent shall continue. After any
resigning Co-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 Co-Agent under this Agreement and the other Loan Documents.
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, Co-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,
Co-Agent and Lenders 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
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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, Co-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), (c) and (d) 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 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.
(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
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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 GE Capital and 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,
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 NonConsenting 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.
(d) 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,
Co-Agent and Lenders, and so long as no suits, actions proceedings, or claims
are pending or threatened against any Indemnified Person
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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 and
Co-Agent for all out-of-pocket expenses (if any) 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 Co-Agent (and, with
respect to CLAUSES (c) and (d) below, all Lenders) for all fees, costs and
expenses (if any), 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, Co-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 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, Co-Agent or any
Lender against any or all of the Credit Parties or any other Person that may be
obligated to Agent, Co-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;
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(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 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, Co-Agent's and Lenders' rights and
remedies under this Agreement shall be cumulative and nonexclusive of any other
rights and remedies which Agent, Co-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.
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11.7 CONFIDENTIALITY. Agent, Co-Agent and each Lender agree to
use commercially reasonable efforts (equivalent to the efforts Agent, Co-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, Co-Agent and each Lender
may disclose such information (a) to Persons employed or engaged by Agent,
Co-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,
Co-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 Co-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, Co-Agent or such Lender is a party; or (f) which
ceases to be confidential through no fault of Agent, Co-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.
11.9 CERTAIN CONSENTS AND WAIVERS OF THE BORROWER.
(a) PERSONAL JURISDICTION.
(i) EACH OF THE AGENT, CO-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
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[EXECUTION VERSION]
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, THE CO-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, CO-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, CO-AGENT OR SUCH
LENDER. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT, CO-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, CO-AGENT OR SUCH LENDER. THE BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT,
CO-AGENT OR 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
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RIGHT OF THE AGENT, CO-AGENT OR ANY 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.
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, CO-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.
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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 or the other Loan 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, Co-Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement. Agent, Co-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 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 to the
signatories hereto, 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"), and shall become effective as to each Additional Credit
Party upon the execution of a counterpart hereof by such Additional Credit Party
(whether or not a counterpart hereof shall have been executed by any other
Additional Credit Party) and delivery thereof to Agent. 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.
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[EXECUTION VERSION]
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 the "Term Note" (as defined in the Existing Credit
Agreement) 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 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 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 AND CO-AGENT: GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Authorized Signatory
LENDER: GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Authorized Signatory
S-1
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers.
CREDIT PARTIES: RECOIL INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: V. P.
RECOIL HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: V. P.
RECOIL HOLDINGS AUSTRALIA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: V. P.
M&M MACHINE & TOOL CO.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: V. P.
S-2
The following additional Persons are signatory to this Agreement,
in their capacity as Credit Parties and not as Borrowers, as of the 27th day of
October 1998.
CREDIT PARTIES: MARCLIFF CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: ▇. ▇.
▇▇▇▇▇▇ CREATIVE FASTENER, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: V. P.
S-3