EXHIBIT 4.2(a)
EXECUTION COPY
CREDIT AGREEMENT
DATED AS OF NOVEMBER 19, 2003
by and among
TELEX COMMUNICATIONS, INC.
as Borrower
and
THE OTHER PERSONS PARTY HERETO THAT ARE
DESIGNATED AS CREDIT PARTIES
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Agent, L/C Issuer and a Lender
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
as Lenders
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TABLE OF CONTENTS
PAGE
SECTION 1. AMOUNTS AND TERMS OF LOANS................................................................ 2
1.1. Loans................................................................................ 2
1.2. Interest and Applicable Margins...................................................... 5
1.3. Fees................................................................................. 6
1.4. Payments............................................................................. 8
1.5. Prepayments; Reduction or Termination of Commitment.................................. 8
1.6. Maturity............................................................................. 9
1.7. Eligible Accounts.................................................................... 9
1.8. Eligible Inventory................................................................... 11
1.9. Eligible Real Estate................................................................. 13
1.10. Loan Accounts........................................................................ 13
1.11. Yield Protection; Illegality......................................................... 14
1.12. Taxes................................................................................ 15
1.13. Alternative Lending Office........................................................... 16
SECTION 2. AFFIRMATIVE COVENANTS..................................................................... 16
2.1. Compliance With Laws and Contractual Obligations..................................... 16
2.2. Insurance; Damage to or Destruction of Collateral.................................... 17
2.3. Inspection; Lender Meeting........................................................... 18
2.4. Organizational Existence............................................................. 18
2.5. Environmental Matters................................................................ 18
2.6. Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases................................................................ 19
2.7. Conduct of Business.................................................................. 19
2.8. Further Assurances................................................................... 20
2.9. Cash Management Systems.............................................................. 21
SECTION 3. NEGATIVE COVENANTS........................................................................ 21
3.1. Indebtedness......................................................................... 21
3.2. Liens and Related Matters............................................................ 23
3.3. Investments.......................................................................... 24
3.4. Contingent Obligations............................................................... 25
3.5. Restricted Payments.................................................................. 26
3.6. Restriction on Fundamental Changes................................................... 27
3.7. Disposal of Assets or Subsidiary Stock............................................... 30
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.8. Transactions with Affiliates......................................................... 30
3.9. Conduct of Business.................................................................. 31
3.10. Changes Relating to Indebtedness..................................................... 31
3.11. Fiscal Year.......................................................................... 31
3.12. Press Release; Public Offering Materials............................................. 31
3.13. Subsidiaries......................................................................... 31
3.14. Bank Accounts........................................................................ 32
3.15. Hazardous Materials.................................................................. 32
3.16. ERISA................................................................................ 32
3.17. Sale-Leasebacks...................................................................... 32
3.18. Prepayments of Other Indebtedness.................................................... 32
3.19. Changes to Material Contracts........................................................ 32
3.20. Change of Name or Location........................................................... 32
3.21. Changes Relating to Senior Debt...................................................... 33
SECTION 4. FINANCIAL COVENANTS/REPORTING............................................................. 33
4.1. Omitted.............................................................................. 33
4.2. Omitted.............................................................................. 33
4.3. Minimum EBITDA....................................................................... 33
4.4. Omitted.............................................................................. 33
4.5. Omitted.............................................................................. 33
4.6. Omitted.............................................................................. 33
4.7. Omitted.............................................................................. 33
4.8. Omitted.............................................................................. 33
4.9. Financial Statements and Other Reports............................................... 33
4.10. Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement... 37
SECTION 5. REPRESENTATIONS AND WARRANTIES............................................................ 38
5.1. Disclosure........................................................................... 38
5.2. No Material Adverse Effect........................................................... 38
5.3. No Conflict.......................................................................... 38
5.4. Organization, Powers, Capitalization and Good Standing............................... 38
5.5. Financial Statements and Projections................................................. 39
5.6. Intellectual Property................................................................ 39
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.7. Investigations, Audits, Etc.......................................................... 40
5.8. Employee Matters..................................................................... 40
5.9. Solvency............................................................................. 40
5.10. Litigation; Adverse Facts............................................................ 40
5.11. Use of Proceeds; Margin Regulations.................................................. 40
5.12. Ownership of Property; Liens......................................................... 40
5.13. Environmental Matters................................................................ 41
5.14. ERISA................................................................................ 42
5.15. Brokers.............................................................................. 42
5.16. Deposit and Disbursement Accounts.................................................... 43
5.17. Agreements and Other Documents....................................................... 43
5.18. Insurance............................................................................ 43
5.19. Restructuring........................................................................ 43
5.20. Designated Senior Debt............................................................... 43
SECTION 6. DEFAULT, RIGHTS AND REMEDIES.............................................................. 43
6.1. Event of Default..................................................................... 43
6.2. Suspension or Termination of Commitments............................................. 45
6.3. Acceleration and other Remedies...................................................... 45
6.4. Performance by Agent................................................................. 46
6.5. Application of Proceeds.............................................................. 46
SECTION 7. CONDITIONS TO LOANS....................................................................... 47
7.1. Conditions to Initial Loans.......................................................... 47
7.2. Conditions to All Loans.............................................................. 47
SECTION 8. ASSIGNMENT AND PARTICIPATION.............................................................. 47
8.1. Assignment and Participations........................................................ 47
8.2. Agent................................................................................ 49
8.3. Set Off and Sharing of Payments...................................................... 53
8.4. Disbursement of Funds................................................................ 53
8.5. Disbursements of Advances; Payment................................................... 54
SECTION 9. MISCELLANEOUS............................................................................. 55
9.1. Indemnities.......................................................................... 55
9.2. Amendments and Waivers............................................................... 56
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TABLE OF CONTENTS
(CONTINUED)
PAGE
9.3. Notices.............................................................................. 57
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative................................ 58
9.5. Marshaling; Payments Set Aside....................................................... 58
9.6. Severability......................................................................... 58
9.7. Lenders' Obligations Several; Independent Nature of Lenders' Rights.................. 58
9.8. Headings............................................................................. 58
9.9. Applicable Law....................................................................... 58
9.10. Successors and Assigns............................................................... 59
9.11. No Fiduciary Relationship; Limited Liability......................................... 59
9.12. Construction......................................................................... 59
9.13. Confidentiality...................................................................... 59
9.14. CONSENT TO JURISDICTION.............................................................. 59
9.15. WAIVER OF JURY TRIAL................................................................. 60
9.16. Survival of Warranties and Certain Agreements........................................ 60
9.17. Entire Agreement..................................................................... 60
9.18. Counterparts; Effectiveness.......................................................... 61
9.19. Replacement of Lenders............................................................... 61
9.20. Delivery of Termination Statements and Mortgage Releases............................. 62
9.21. Subordination of Intercompany Debt................................................... 62
9.22. Prepayment Collateral Account........................................................ 63
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INDEX OF APPENDICES
Annexes
Annex A - Definitions
Annex B - Pro Rata Shares and Commitment Amounts
Annex C - Closing Checklist
Annex D - Pro Forma
Annex E - Lenders' Bank Accounts
Exhibits
Exhibit 1.1(a)(i) - Revolving Note
Exhibit 1.1(a)(ii) - Notice of Revolving Credit Advance
Exhibit 1.2(e) - Notice of Continuation/Conversion
Exhibit 4.9(d) - Borrowing Base Certificate
Exhibit 4.9(l) - Compliance Certificate
Exhibit 8.1 - Assignment Agreement
Schedules
Schedule 2.7 - Corporate and Trade Names
Schedule 3.1(i) - Indebtedness
Schedule 3.2 - Liens
Schedule 3.3(j) Existing Investments and Commitments
Schedule 3.4 - Contingent Obligations
Schedule 3.8 - Affiliate Transactions
Schedule 3.9 - Business Description
Schedule 3.19 - Material Contracts
Schedule 5.4(a) - Jurisdictions of Organization and Qualifications
Schedule 5.4(b) - Capitalization
Schedule 5.6 - Intellectual Property
Schedule 5.7 - Investigations and Audits
Schedule 5.8 - Employee Matters
Schedule 5.10 - Litigation
Schedule 5.11 - Use of Proceeds
Schedule 5.12 - Real Estate
Schedule 5.13 - Environmental Matters
Schedule 5.14 - ERISA
Schedule 5.16 - Deposit and Disbursement Accounts
Schedule 5.17 - Agreements and Other Documents
Schedule 5.18 - Insurance
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CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of November 19, 2003 and entered into
by and among TELEX COMMUNICATIONS, INC., a Delaware corporation ("Borrower"),
the other persons designated as "Credit Parties" on the signature pages hereof,
the financial institutions who are or hereafter become parties to this Agreement
as "Lenders", and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(in its individual capacity "GE Capital"), as the initial L/C Issuer and as
Agent.
R E C I T A L S:
WHEREAS, Borrower desires that Lenders extend a revolving credit
facility to Borrower to fund the repayment of certain indebtedness of Borrower,
to provide working capital financing for Borrower and its Subsidiaries and to
provide funds for other general corporate purposes of Borrower and its
Subsidiaries;
WHEREAS, Borrower desires to secure all of its Obligations (as
hereinafter defined) under the Loan Documents (as hereinafter defined) by
granting to Agent, for the benefit of Agent and Lenders, a security interest in
and lien upon substantially all of its personal and real property;
WHEREAS, TELEX COMMUNICATIONS INTERMEDIATE HOLDINGS, LLC, a Delaware
limited liability company ("Parent") that owns all of the Stock of Borrower is
willing to guaranty all of the Obligations and to pledge to Agent, for the
benefit of Agent and Lenders, all of the Stock of Borrower and Parent's other
Subsidiaries to secure the Obligations;
WHEREAS, TELEX COMMUNICATIONS HOLDINGS, INC., a Delaware corporation
("Holdings") that owns all of the Stock of Parent is willing to guaranty all of
the Obligations and to pledge to Agent, for the benefit of Agent and Lenders,
all of the Stock of Parent to secure the Obligations;
WHEREAS, Borrower is willing to pledge to Agent, for the benefit of
Agent and Lenders, all of the Stock of its Domestic Subsidiaries and Borrower
and Borrower's Domestic Subsidiaries are willing to pledge to Agent, for the
benefit of Agent and Lenders, 65% of the Voting Stock and 100% of the Non-Voting
Stock of each Subsidiary that is not a Domestic Subsidiary and that is directly
owned by Borrower or a Domestic Subsidiary;
WHEREAS, Borrower has acquired substantially all assets and assumed
substantially all liabilities (other than the Senior Subordinated Discount Notes
and certain other agreements) of Holdings;
WHEREAS, Parent has issued, in exchange for $102,102,604 in initial
principal amount of the Senior Subordinated Discount Notes, the Senior
Subordinated Notes, as a result of which there are $2,997,898 in initial
principal amount of Senior Subordinated Discount Notes outstanding;
WHEREAS, Borrower has issued the Senior Notes and applied to the
proceeds thereof to the Prior Lender Obligations;
WHEREAS, each of Borrower's Domestic Subsidiaries is willing to
guaranty all of the Obligations of Borrower and to grant to Agent, for the
benefit of Agent and Lenders, a security interest in and lien upon substantially
all of its personal and real property to secure the Obligations; and
WHEREAS, all capitalized terms herein shall have the meanings ascribed
thereto in Annex A hereto which is incorporated herein by reference.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Credit Parties, Lenders and
Agent agree as follows:
SECTION 1.
AMOUNTS AND TERMS OF LOANS
1.1. Loans. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrower and the
other Credit Parties contained herein:
(a) Revolving Loans.
(i) Each Revolving Lender agrees, severally and
not jointly, to make available to Borrower from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each a "Revolving
Credit Advance") requested by Borrower hereunder. The Pro Rata Share of the
Revolving Loan of any Revolving Lender shall not at any time exceed its separate
Revolving Loan Commitment. Revolving Credit Advances may be repaid and
reborrowed; provided, that the amount of any Revolving Credit Advance to be made
at any time shall not exceed Borrowing Availability. Borrowing Availability may
be further reduced by Reserves imposed by Agent in its reasonable credit
judgment. All Revolving Loans shall be repaid in full on the Commitment
Termination Date. Borrower shall execute and deliver to each Revolving Lender a
note to evidence the Revolving Loan Commitment of that Revolving Lender. Each
note shall be in the maximum principal amount of the Revolving Loan Commitment
of the applicable Revolving Lender, dated the date hereof and substantially in
the form of Exhibit 1.1(a)(i) (as amended, modified, extended, substituted or
replaced from time to time, each a "Revolving Note" and, collectively, the
"Revolving Notes"). If at any time the outstanding Revolving Loans exceed the
Borrowing Base (any such excess Revolving Loans are herein referred to
collectively as "Overadvances"), Lenders shall not be obligated to make
Revolving Credit Advances, no additional Letters of Credit shall be issued and,
except as provided in Section 1.1(a)(ii) below, Revolving Loans must be repaid
immediately and Letters of Credit cash collateralized in an amount sufficient to
eliminate any Overadvances. All Overadvances shall constitute Index Rate Loans
and shall bear interest at the Default Rate. Revolving Credit Advances which are
to be made as Index Rate Loans may be requested in any amount with one (1)
Business Day's prior written notice required for funding requests equal to or
greater than $5,000,000. For funding requests for such Loans less than
$5,000,000, written notice must be provided by noon (Chicago time) 1:00 p.m.
(New York time) on the Business Day on which such Revolving Credit Advance is to
be made. All requests for Revolving Credit Advances that are to be made as LIBOR
Loans require three (3) Business Days prior written notice. Written notices for
funding requests shall be in the form attached as Exhibit 1.1(a)(ii) ("Notice of
Revolving Credit Advance"). Each Revolving Credit Advance shall be in a minimum
amount of $100,000.
(ii) Omitted.
(b) Letters of Credit. The Revolving Loan Commitment may,
in addition to advances under the Revolving Loan, be utilized, upon the request
of Borrower, for the issuance of Letters of Credit. Immediately upon the
issuance by an L/C Issuer of a Letter of Credit, and without further action on
the part of Agent or any of the Lenders, each Revolving Lender shall be deemed
to have purchased from such L/C Issuer a participation in such Letter of Credit
(or in its obligation under a risk participation agreement with respect thereto)
equal to such Revolving Lender's Pro Rata Share of the aggregate amount
available to be drawn under such Letter of Credit.
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(i) Maximum Amount. The aggregate amount of
Letter of Credit Obligations with respect to all Letters of Credit outstanding
or unreimbursed at any time shall not exceed $3,000,000 ("L/C Sublimit").
(ii) Reimbursement. Borrower shall be irrevocably
and unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse any L/C Issuer on demand in
immediately available funds for any amounts paid by such L/C Issuer with respect
to a Letter of Credit, including all reimbursement payments, Fees, Charges,
costs and expenses paid by such L/C Issuer. Borrower hereby authorizes and
directs Agent, at Agent's option, to debit Borrower's account (by increasing the
outstanding principal balance of the Revolving Credit Advances) in the amount of
any payment made by an L/C Issuer with respect to any Letter of Credit. All
amounts paid by an L/C Issuer with respect to any Letter of Credit that are not
immediately repaid by Borrower with the proceeds of a Revolving Credit Advance
or otherwise shall bear interest at the interest rate applicable to Revolving
Loans which are Index Rate Loans plus, at the election of Agent or Requisite
Lenders, an additional two percent (2.00%) per annum. Each Revolving Lender
agrees to fund its Pro Rata Share of any Revolving Loan made pursuant to this
Section 1.1(b)(ii). In the event Agent elects not to debit Borrower's account
and Borrower fails to reimburse the L/C Issuer in full on the date of any
payment in respect of a Letter of Credit, Agent shall promptly notify each
Revolving Lender of the amount of such unreimbursed payment and the accrued
interest thereon and each Revolving Lender, on the next Business Day prior to
3:00 p.m. (New York time), shall deliver to Agent an amount equal to its Pro
Rata Share thereof in same day funds. Each Revolving Lender hereby absolutely
and unconditionally agrees to pay to the L/C Issuer upon demand by the L/C
Issuer such Revolving Lender's Pro Rata Share of each payment made by the L/C
Issuer in respect of a Letter of Credit and not immediately reimbursed by
Borrower or satisfied through a debit of Borrower's account. Each Revolving
Lender acknowledges and agrees that its obligations pursuant to this subsection
in respect of Letters of Credit are absolute and unconditional and shall not be
affected by any circumstance whatsoever, including setoff, counterclaim, the
occurrence and continuance of a Default or an Event of Default or any failure by
Borrower to satisfy any of the conditions set forth in Section 7.2. If any
Revolving Lender fails to make available to the L/C Issuer the amount of such
Revolving Lender's Pro Rata Share of any payments made by the L/C Issuer in
respect of a Letter of Credit as provided in this Section 1.1(b)(ii), the L/C
Issuer shall be entitled to recover such amount on demand from such Revolving
Lender together with interest at the Index Rate.
(iii) Request for Letters of Credit. Borrower
shall give Agent at least three (3) Business Days prior written notice
specifying the date a Letter of Credit is requested to be issued (or the amount
of any existing Letter of Credit increased or the expiry date of any Letter of
Credit extended, each of which (other than an automatic extension) shall
constitute an "issuance" of a Letter of Credit), the amount and the name and
address of the beneficiary and a description of the transactions proposed to be
supported thereby. If Agent informs Borrower that the L/C Issuer cannot issue
the requested Letter of Credit directly, Borrower may request that the L/C
Issuer arrange for the issuance of the requested Letter of Credit under a risk
participation agreement with another financial institution reasonably acceptable
to Agent, the L/C Issuer and Borrower. The issuance of any Letter of Credit
under this Agreement shall be subject to the conditions that the Letter of
Credit (i) supports a transaction entered into in the ordinary course of
business of Borrower and (ii) is in a form, is for an amount and contains such
terms and conditions as are reasonably satisfactory to the L/C Issuer and, in
the case of standby letters of credit, Agent. The initial notice requesting the
issuance of a Letter of Credit shall be accompanied by the form of the Letter of
Credit and the Master Standby Agreement or Master Documentary Agreement, as
applicable, and an application for a letter of credit, if any, then required by
the L/C Issuer completed in a manner satisfactory to such L/C Issuer. If any
provision of any application or reimbursement agreement is inconsistent with the
terms of this Agreement, then the provisions of this Agreement, to the extent of
such inconsistency, shall control.
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(iv) Expiration Dates of Letters of Credit. The
expiration date of each Letter of Credit shall be on a date which is not later
than the earlier of (a) one year from its date of issuance or (b) the thirtieth
(30th) day prior to the date set forth in clause (a) of the definition of the
term Commitment Termination Date. Notwithstanding the foregoing, a Letter of
Credit may provide for automatic extensions of its expiration date for one (1)
or more successive one (1) year periods provided that the L/C Issuer has the
right to terminate such Letter of Credit on each such annual expiration date and
no renewal term may extend the term of the Letter of Credit to a date that is
later than the thirtieth (30th) day prior to the date set forth in clause (a) of
the definition of the term Commitment Termination Date. The L/C Issuer may elect
not to renew any such Letter of Credit and, upon direction by Agent or Requisite
Lenders, shall not renew any such Letter of Credit at any time during the
continuance of an Event of Default, provided that, in the case of a direction by
Agent or Requisite Lenders, the L/C Issuer receives such directions prior to the
date notice of non-renewal is required to be given by the L/C Issuer and the L/C
Issuer has had a reasonable period of time to act on such notice.
(v) Obligations Absolute. The obligation of
Borrower to reimburse the L/C Issuer, Agent and Lenders for payments made in
respect of Letters of Credit issued by the L/C Issuer shall be unconditional and
irrevocable and shall be paid under all circumstances strictly in accordance
with the terms of this Agreement, including the following circumstances: (a) any
lack of validity or enforceability of any Letter of Credit; (b) any amendment or
waiver of or any consent or departure from all or any of the provisions of any
Letter of Credit or any Loan Document; (c) the existence of any claim, set-off,
defense or other right which Borrower, any of its Subsidiaries or Affiliates or
any other Person may at any time have against any beneficiary of any Letter of
Credit, Agent, any L/C Issuer, any Lender or any other Person, whether in
connection with this Agreement, any other Loan Document or any other related or
unrelated agreements or transactions; (d) any draft or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; (e) payment under any Letter of Credit against presentation of a
draft or other document that does not substantially comply with the terms of
such Letter of Credit; or (f) any other act or omission to act or delay of any
kind of any L/C Issuer, Agent, any Lender or any other Person or any other event
or circumstance whatsoever that might, but for the provisions of this Section
1.1(b)(v), constitute a legal or equitable discharge of Borrower's obligations
hereunder.
(vi) Obligations of L/C Issuers. Each L/C Issuer
(other than GE Capital) hereby agrees that it will not issue a Letter of Credit
hereunder until it has provided Agent with written notice specifying the amount
and intended issuance date of such Letter of Credit and Agent has returned a
written acknowledgment of such notice to L/C Issuer. Each L/C Issuer (other than
GE Capital) further agrees to provide to Agent: (a) a copy of each Letter of
Credit issued by such L/C Issuer promptly after its issuance; (b) a weekly
report summarizing available amounts under Letters of Credit issued by such L/C
Issuer, the dates and amounts of any draws under such Letters of Credit, the
effective date of any increase or decrease in the face amount of any Letters of
Credit during such week and the amount of any unreimbursed draws under such
Letters of Credit; and (c) such additional information reasonably requested by
Agent from time to time with respect to the Letters of Credit issued by such L/C
Issuer. Without limiting the generality of the foregoing, it is expressly
understood and agreed by Borrower that the absolute and unconditional obligation
of Borrower to Agent and Lenders hereunder to reimburse payments made under a
Letter of Credit will not be excused by the gross negligence or willful
misconduct of the L/C Issuer. However, the foregoing shall not be construed to
excuse an L/C Issuer from liability to Borrower to the extent of any direct
damages (as opposed to consequential damages, with Borrower hereby waiving all
claims for any consequential damages to the extent permitted by applicable law)
suffered by Borrower that are subject to indemnification under the Master
Standby Agreement or the Master Documentary Agreement.
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(c) Funding Authorization. The proceeds of all Loans made
pursuant to this Agreement on or subsequent to the Closing Date are to be funded
by Agent by wire transfer to the account designated by Borrower below (the
"Disbursement Account"):
Bank: US Bank
ABA No.: ▇▇▇▇▇▇▇▇▇
Bank Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Account No.: 1702 2514 0525
Reference: Borrowing Proceeds
Borrower shall provide Agent with written notice of any change in the foregoing
instructions at least three (3) Business Days before the desired effective date
of such change.
1.2. Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable
benefit of Lenders, in arrears on each applicable Interest Payment Date, with
respect to the Revolving Credit Advances which are designated as Index Rate
Loans (and for all other Obligations not otherwise set forth below), the Index
Rate plus the Applicable Revolver Index Margin per annum or, with respect to
Revolving Credit Advances which are designated as LIBOR Loans, the applicable
LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum;
The Applicable Margins are as follows:
Applicable Revolver Index Margin 1.00%
Applicable Revolver LIBOR Margin 2.50%
(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 360-day year, in
each case for the actual number of days occurring in the period for which such
Fees and interest are payable. The Index Rate is a floating rate determined for
each day. Each determination by Agent of an interest rate and Fees hereunder
shall be final, binding and conclusive on Borrower, absent manifest error.
(d) So long as an Event of Default has occurred and is
continuing under Section 6.1(a), (f) or (g) and without notice of any kind, or
so long as any other Event of Default has occurred and is 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 Fee shall be increased by two percentage points
(2%) per annum above the rates of interest or the rate of such Fee 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 Event of Default until that Event of Default is cured or waived and shall
be payable upon demand, but in any event, shall be payable on the next regularly
scheduled payment date set forth herein for such Obligation.
(e) Borrower shall have the option to (i) request that
any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time
all or any part of outstanding Loans from Index Rate
5
Loans to LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan,
subject to payment of the LIBOR Breakage Fee in accordance with Section 1.3(e)
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 as a LIBOR
Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last day
of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans
having the same proposed LIBOR Period 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 $100,000 in excess of such amount. Any such election must be made
by 1:00 p.m. (New York time) on the 3rd Business Day prior to (1) the date of
any proposed Revolving Credit 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 an existing LIBOR Loan by
1:00 p.m. (New York time) on the 3rd Business Day prior to the end of the LIBOR
Period with respect thereto, 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 fax 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 1.2(e). No Loan
shall be made, converted into or continued as a LIBOR Loan, if an Event of
Default has occurred and is continuing and Agent or Requisite Lenders have
determined not to make or continue any Loan as a LIBOR Loan as a result thereof.
(f) Notwithstanding anything to the contrary set forth in
this Section 1.2, if a court of competent jurisdiction determines in a final
order that any 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, such rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; provided, however, that if
at any time thereafter such 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 that would have been received
had such interest rate payable hereunder been (but for the operation of this
paragraph) such interest rate payable since the Closing Date as otherwise
provided in this Agreement. Thereafter, such interest hereunder shall be paid at
the rate(s) of interest and in the manner provided in Sections 1.2(a) through
(e), unless and until such 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 that 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 1.2(f), a court of competent
jurisdiction shall determine by a final, non-appealable order 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 as
specified in Section 1.5(e) and thereafter shall refund any excess to Borrower
or as such court of competent jurisdiction may otherwise order.
1.3. Fees.
(a) Fee Letter. Borrower shall pay to GE Capital,
individually, the Fees specified in that certain fee letter dated as of October
24, 2003 between Borrower and GE Capital (the "GE Capital Fee Letter"), at the
times specified for payment therein.
(b) Unused Line Fee. As additional compensation for the
Revolving Lenders, Borrower shall pay to Agent, for the ratable benefit of such
Lenders, in arrears, on the first Business Day
6
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 one half of one percent (0.50%) per annum 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
outstanding during the period for which such Fee is due.
(c) Omitted.
(d) Letter of Credit Fee. Borrower agrees to pay to Agent
for the benefit of Revolving Lenders, as compensation to such Revolving Lenders
for Letter of Credit Obligations incurred hereunder, (i) all costs and expenses
incurred by Agent or any Lender on account of such Letter of Credit Obligations,
and (ii) for each month during which any Letter of Credit Obligation shall
remain outstanding, a fee (the "Letter of Credit Fee") in an amount equal to two
and one half of one percent (2.50%) per annum multiplied by the average daily
maximum amount available from time to time to be drawn under the applicable
Letter of Credit. Such fee shall be paid to Agent for the benefit of the
Revolving Lenders in arrears, on the first Business Day of each month and on the
Commitment Termination Date. In addition, Borrower shall pay to each L/C Issuer,
on demand, such fees (including all per annum fees), charges and expenses of
such L/C Issuer in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable pursuant to
the application and related documentation under which such Letter of Credit is
issued.
(e) LIBOR Breakage Fee. Upon (i) any default by Borrower
in making any borrowing of, conversion into or continuation of any LIBOR Loan
following Borrower's delivery to Agent of any LIBOR Loan request in respect
thereof or (ii) any payment of a LIBOR Loan on any day that is not the last day
of the LIBOR Period applicable thereto (regardless of the source of such
prepayment and whether voluntary, by acceleration or otherwise), Borrower shall
pay Agent, for the benefit of all Lenders that funded or were prepared to fund
any such LIBOR Loan, the LIBOR Breakage Fee.
(f) Expenses and Attorneys' Fees. Borrower agrees to
promptly pay all fees, charges, costs and expenses (including reasonable
attorneys' fees and expenses and the reasonably allocated cost of internal legal
staff) incurred by Agent in connection with any matters contemplated by or
arising out of the Loan Documents, in connection with the examination, review,
due diligence investigation, documentation, negotiation, closing and syndication
of the transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments, modifications,
consents and waivers. Borrower agrees to reimburse Agent for all due and payable
out of pocket costs (including reasonable fees and expenses) as incurred by
Agent to third party auditors and appraisers and a fee of $750 per audit day per
in-house auditor, plus out of pocket expenses incurred by any such appraisers
and auditors. Borrower agrees to promptly pay reasonable documentation charges
assessed by Agent for amendments, waivers, consents and any of the documentation
prepared by Agent's internal legal staff. Borrower agrees to promptly pay all
fees, charges, costs and expenses (including fees, charges, costs and reasonable
expenses of attorneys, auditors (whether internal or external), appraisers,
consultants and advisors and the reasonably allocated cost of internal legal
staff) incurred by Agent in connection with any Event of Default, work-out or
action to enforce any Loan Document or to collect any payments due from Borrower
or any other Credit Party. In addition, in connection with any work-out or
action to enforce any Loan Document or to collect any payments due from Borrower
or any other Credit Party, Borrower agrees to promptly pay all fees, charges,
costs and expenses incurred by Lenders for one (1) counsel acting for all
Lenders other than Agent. All fees, charges, costs and expenses for which
Borrower is responsible under this Section 1.3(f) shall be deemed part of the
Obligations when incurred, payable upon demand or in accordance with the final
sentence of Section 1.4 and secured by the Collateral.
7
1.4. Payments. All payments by Borrower of the Obligations shall be
without deduction, defense, setoff or counterclaim (except to the extent
provided in Section 1.12) and shall be made in same day funds and delivered to
Agent, for the benefit of Agent and Lenders, as applicable, by wire transfer to
the following account or such other place as Agent may from time to time
designate in writing.
ABA No. ▇▇▇-▇▇▇-▇▇▇
Account Number ▇▇▇-▇▇▇-▇▇
Bankers Trust Company
New York, New York
ACCOUNT NAME: GECC/CAF DEPOSITORY
Reference: GE Capital re Telex Communications, Inc. CFN 5345
Borrower shall receive credit on the day of receipt for funds received by Agent
by 2:00 p.m. (New York time). In the absence of timely receipt, such funds shall
be deemed to have been paid on the next Business Day. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a Business Day,
the payment may be made on the next succeeding Business Day and such extension
of time shall be included in the computation of the amount of interest and Fees
due hereunder.
Borrower hereby authorizes Lenders to make Revolving Credit Advances on
the basis of their Pro Rata Shares, for the payment of interest, Fees and
expenses, Letter of Credit reimbursement obligations and any amounts required to
be deposited with respect to outstanding Letter of Credit Obligations pursuant
to Sections 1.5(g) or 6.3.
1.5. Prepayments; Reduction or Termination of Commitment.
(a) Voluntary Prepayments of Loans. At any time, Borrower
may prepay the Loans, in whole or in part, without premium or penalty subject to
the payment of LIBOR Breakage Fees, if applicable.
(b) Termination and Reduction of Revolving Loan
Commitment. Upon not less than five (5) Business Days prior irrevocable written
notice to Agent, Borrower at any time may (i) terminate the Revolving Loan
Commitment and on the date specified in such notice the Revolving Loan
Commitment shall terminate and all Obligations shall become immediately due and
payable or (ii) reduce, in part in increments of not less than $1,000,000 or
amounts in excess thereof in integral multiples of $500,000, the Revolving Loan
Commitment of each Lender pro rata, so long as at the time of giving of any such
notice and at the time of the effective date of such notice the Revolving Loan
does not exceed the Revolving Loan Commitment.
(c) Prepayments from Asset Dispositions. Except as
otherwise provided in Section 1.5(f) hereof, immediately upon receipt of any Net
Proceeds in excess of $100,000 for any single transaction or series of related
transactions other than in respect of Asset Dispositions by a Subsidiary, other
than a Domestic Subsidiary, of Borrower, Borrower shall repay the Revolving
Credit Advances (without reduction of the Revolving Loan Commitment) by an
amount equal to the amount of such Net Proceeds until all Revolving Credit
Advances shall have been paid in full. Borrower or any Subsidiary may reinvest
all remaining Net Proceeds of such Asset Disposition, within three hundred and
sixty-five (365) days, in productive replacement assets of a kind then used or
usable in the business of Borrower.
(d) Prepayments from Issuance of Securities. Immediately
upon the receipt by Holdings, Borrower or any of its Subsidiaries of the
proceeds of the issuance of Stock (other than (1) proceeds of the issuance of
Stock by Holdings received on or before the date hereof, (2) proceeds from the
issuance of Stock to members of the management of Holdings or Borrower and (3)
proceeds of
8
the issuance of Stock to Borrower or any Subsidiary of Borrower), Borrower shall
prepay the Revolving Credit Advances in an amount equal to such proceeds, net of
underwriting discounts and commissions and other reasonable costs associated
therewith. The payments shall be applied in accordance with Section 1.5(e).
(e) Application of Proceeds. With respect to the
prepayments described in Sections 1.5(a), 1.5(c) and 1.5(d), such prepayments
shall be applied to the Revolving Credit Advances outstanding but not as a
permanent reduction of the Revolving Loan Commitment. Considering each type of
Loan being prepaid separately, any such prepayment shall be applied first to
Index Rate Loans of the type required to be prepaid before application to LIBOR
Loans of the type required to be prepaid, in each case in a manner which
minimizes any resulting LIBOR Breakage Fee. In the event that Sections 1.5(c) or
1.5(d) shall require any prepayment to be made during an Interest Period, and
there is no other election which Borrower can make to avoid same, then upon
receipt of such prepayment and to the extent requested by Borrower, Agent shall
hold such prepaid amount as cash collateral (provided that Borrower shall have
executed and delivered such documents as Agent shall have reasonably requested
in connection with such cash collateral) and, so long as no Default or Event of
Default shall be continuing, shall not apply such cash collateral to prepayment
of Loans under this Section 1.5(e) until the last day of such Interest Period.
Such cash collateral shall be invested in Cash Equivalents as directed by
Borrower in accordance with such documents. Interest earned on such cash
collateral shall accrue for the account of Borrower, shall constitute additional
cash collateral and (assuming no Default or Event of Default shall be
continuing) shall be released to Borrower on the last day of such Interest
Period.
(f) Application of Prepayments from Insurance Proceeds.
Prepayments from insurance in accordance with Section 2.2 or condemnation
proceeds shall be applied to the Revolving Credit Advances. The Revolving Loan
Commitment shall not be permanently reduced by the amount of any such
prepayments.
(g) Letter of Credit Obligations. In the event any
Letters of Credit are outstanding at the time that the Revolving Loan Commitment
is terminated, Borrower shall (1) deposit with Agent for the benefit of all
Revolving Lenders cash in an amount equal to 105% of the aggregate outstanding
Letter of Credit Obligations to be available to Agent to reimburse payments of
drafts drawn under such Letters of Credit and pay any Fees and expenses related
thereto and (2) prepay the fee payable under Section 1.3(d) with respect to such
Letters of Credit for the full remaining terms of such Letters of Credit. Upon
termination of any such Letter of Credit, the unearned portion of such prepaid
fee attributable to such Letter of Credit shall be refunded to Borrower.
1.6. Maturity. All of the Obligations shall become due and payable
as otherwise set forth herein, but in any event all of the remaining Obligations
shall become due and payable upon termination of this Agreement. Until all
Obligations have been fully paid and satisfied (other than contingent
indemnification obligations to the extent no unsatisfied claim has been
asserted), the Revolving Loan Commitment has been terminated and all Letters of
Credit have been terminated or otherwise secured to the satisfaction of Agent
pursuant to the terms of Section 1.5(g), Agent shall be entitled to retain the
security interests in the Collateral granted under the Collateral Documents and
the ability to exercise all rights and remedies available to them under the Loan
Documents and applicable laws. Notwithstanding anything contained in this
Agreement to the contrary, upon any termination of the Revolving Loan
Commitment, including by virtue of the occurrence of the Commitment Termination
Date, all of the Obligations shall be immediately due and payable.
1.7. Eligible Accounts. All of the Accounts owned by Borrower and
reflected in the most recent Borrowing Base Certificate delivered by Borrower to
Agent shall be "Eligible Accounts" for purposes of this Agreement, except any
Account to which any of the exclusionary criteria set forth below
9
applies. Agent shall have the right to establish, modify or eliminate Reserves
against Eligible Accounts from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the date hereof, to adjust any of the criteria set forth below, 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, or new criteria or changes in advance rates
which have the effect of making more credit available. Eligible Accounts shall
not include any Account of Borrower:
(a) that does not arise from the sale of goods or the
performance of services by Borrower in the ordinary course of its business;
(b) (i) upon which Borrower's right to receive payment is
not absolute or is contingent upon the fulfillment of any condition whatsoever
or (ii) as to which Borrower is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process, or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to Borrower's completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;
(c) in the event that any defense, counterclaim, setoff
or dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably
acceptable to Agent in form and substance, has not been sent to the applicable
Account Debtor;
(f) that (i) is not owned by Borrower or (ii) is subject
to any right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders, and
Permitted Encumbrances of the type described in clauses (a), (d), (e), (g), (h),
(j) or (l) of the definition of such term that are subordinate to the Lien in
favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer,
other employee or Affiliate of any Credit Party, or to any entity that has any
common officer or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is
the United States government or a political subdivision thereof, or any state,
county or municipality or department, agency or instrumentality thereof unless
Agent, in its sole discretion, has agreed to the contrary in writing and
Borrower, if necessary or desirable, has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable
state, county or municipal law restricting the assignment thereof with respect
to such obligation;
(i) that is the obligation of an Account Debtor located
in a foreign country other than Canada unless payment thereof is assured by a
letter of credit assigned and delivered to Agent, satisfactory to Agent as to
form, amount and issuer;
(j) to the extent Borrower or any Subsidiary thereof is
liable for goods sold or services rendered by the applicable Account Debtor to
Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
10
(k) that arises with respect to goods that are delivered
on a ▇▇▇▇-and-hold, cash-on-delivery basis or placed on consignment, guaranteed
sale or other terms by reason of which the payment by the Account Debtor is or
may be conditional;
(l) that is in default; provided, that, without limiting
the generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier
of: 60 days following its due date or 90 days following its original invoice
date;
(ii) the Account Debtor obligated upon such
Account suspends business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come due; or
(iii) a petition is filed by or against any
Account Debtor obligated upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial) receivership, insolvency
relief or other law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or
more of the Dollar amount of all Accounts owing by that Account Debtor are
ineligible under the other criteria set forth in this Section 1.7;
(n) as to which Agent's Lien thereon, on behalf of itself
and Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties
in the Loan Documents are untrue;
(p) to the extent such Account is evidenced by a
judgment, Instrument or Chattel Paper;
(q) to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment;
(r) to the extent that such Account, together with all
other Accounts owing to such Account Debtor and its Affiliates as of any date of
determination exceeds 20% of all Eligible Accounts;
(s) that is payable in any currency other than Dollars;
or
(t) that is otherwise unacceptable to Agent in its
reasonable credit judgment.
1.8. Eligible Inventory. All of the Inventory owned by the Borrower
and reflected in the most recent Borrowing Base Certificate delivered by
Borrower to Agent shall be "Eligible Inventory" for purposes of this Agreement,
except any Inventory to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish, modify, or eliminate Reserves
against Eligible Inventory from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the date hereof, to adjust any of the criteria set forth below, to establish new
criteria and to adjust advance rates with respect 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 that:
11
(a) is not owned by Borrower free and clear of all Liens
and rights of any other Person (including the rights of a purchaser that has
made progress payments and the rights of a surety that has issued a bond to
assure Borrower's performance with respect to that Inventory), except the Liens
in favor of Agent, on behalf of itself and Lenders, and Permitted Encumbrances
of the type described in clauses (a), (d), (e), (g), (h), (j) or (l) of the
definition of such term that are subordinate to the Lien in favor of Agent, on
behalf of itself and Lenders;
(b) (i) is not located on premises owned, leased or
rented by Borrower and set forth in Disclosure Schedule (5.12) or (ii) is stored
at a leased location, unless Agent has given its prior consent thereto and
unless (x) a reasonably satisfactory landlord waiver (or subordination
agreement) has been delivered to Agent, or (y) Reserves satisfactory to Agent
have been established with respect thereto, (iii) is stored with a bailee or
warehouseman unless a reasonably satisfactory, acknowledged bailee letter has
been received by Agent and Reserves reasonably satisfactory to Agent have been
established with respect thereto, or (iv) is located at an owned location
subject to a mortgage in favor of a lender other than Agent, unless (A) a
reasonably satisfactory mortgagee waiver (or subordination agreement) has been
delivered to Agent or (B) Reserves reasonably satisfactory to Agent have been
established with respect thereto, or (v) is located at any site if the aggregate
book value of Inventory at any such location is less than $100,000;
(c) is placed on consignment or is in transit, except for
Inventory in transit between domestic locations of Credit Parties as to which
Agent's Liens have been perfected at origin and destination;
(d) is covered by a negotiable document of title, unless
such document has been delivered to Agent with all necessary endorsements, free
and clear of all Liens except those in favor of Agent and Lenders;
(e) is excess, obsolete, unsaleable, shopworn, seconds,
damaged, unfit for sale, phase-out or discontinued product;
(f) consists of display items or packing or shipping
materials, manufacturing supplies, work-in-process Inventory or replacement
parts;
(g) consists of goods which have been returned by the
buyer that are not otherwise resalable in the ordinary course of business;
(h) is not of a type held for sale in the ordinary course
of Borrower's business;
(i) is not subject to a first priority lien in favor of
Agent on behalf of itself and Lenders subject to Permitted Encumbrances of the
type described in clauses (a), (d), (e), (g), (h), (j) or (l) of the definition
of such term that are subordinate to the Lien in favor of Agent, on behalf of
itself and Lenders;
(j) breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents;
(k) consists of any costs associated with "freight-in"
charges to the extent identifiable;
(l) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available;
12
(m) is not covered by casualty insurance reasonably
acceptable to Agent;
(n) consists of service Inventory used for repair
purposes and any associated overhead costs;
(o) consists of drop ship vendor Inventory; or
(p) is otherwise unacceptable to Agent in its reasonable
credit judgment.
1.9. Eligible Real Estate. Eligible Real Estate shall be that real
estate of Borrower and improvements thereon that Agent has specifically
identified and approved in writing and as to which, following an independent
appraisal thereof in accordance with FIRREA, Agent has assigned an Appraised
Forced Liquidation Value and to which none of the criteria below applies. Agent
shall have the right to establish, modify or eliminate Reserves against Eligible
Real Estate from time to time in its reasonable credit judgment. In addition,
Agent reserves the right, at any time and from time to time after the Closing
Date, to adjust any of the criteria set forth below, to establish new criteria
and to adjust advance rates with respect to Eligible Real Estate in its
reasonable credit judgment, subject to the approval of the Supermajority
Revolving Lenders in the case of adjustments, new criteria or changes in advance
rates that have the effect of making more credit available. Eligible Real Estate
shall not include any real estate:
(a) that is not owned by such Borrower free and clear of
all Liens and rights of any other Person, except the Liens in favor of Agent, on
behalf of itself and Lenders and Permitted Encumbrances of the type described in
clauses (a), (d), (e), (g), (h), (j) or (l) of the definition of such term that
are subordinate to the Lien in favor of Agent, on behalf of itself and Lenders;
(b) as to which Agent has not received a loan policy of
title insurance in favor of Agent and in form and amount, and issued by a title
insurance company, satisfactory to Agent, in its sole discretion (it being
understood that the title insurance policies delivered as to properties in
Minnesota on or about the date hereof are not satisfactory to Agent), together
with such endorsements thereto as Agent shall require, in its sole discretion
(provided such endorsements are available in the jurisdiction where such Real
Estate is located);
(c) as to which Agent has not received an environmental
report satisfactory to Agent, in its sole discretion;
(d) that is not subject to a first priority Lien in favor
of Agent on behalf of itself and Lenders subject only to Permitted Encumbrances
of the type described in clauses (a), (d), (e), (g), (h), (j) or (l) of the
definition of such term that are subordinate to the Lien in favor of Agent, on
behalf of itself and Lenders;
(e) that breaches any of the representations or
warranties pertaining to Real Estate set forth in the Loan Documents; or
(f) that is not covered by casualty insurance reasonably
acceptable to Agent.
1.10. Loan Accounts. Agent shall maintain a loan account (the "Loan
Account") on its books to record: all Advances, all payments made by Borrower,
and all other debits and credits as provided in this Agreement with respect to
the Loans or any other Obligations. All entries in the Loan Account shall be
made in accordance with Agent's customary accounting practices as in effect from
time to time. The balance in the Loan Account, as recorded on Agent's most
recent printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agent and Lenders
13
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 for the immediately
preceding month. Unless Borrower notifies Agent in writing of any objection to
any such accounting (specifically describing the basis for such objection),
within sixty (60) days after the date thereof, each and every such accounting
shall, absent manifest error, be deemed final, binding and conclusive on
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.
1.11. Yield Protection; Illegality.
(a) Capital Adequacy and Other Adjustments. In the event
that any Lender shall have determined that the adoption after the date hereof of
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 or any corporation controlling such
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by such Lender or any corporation controlling such Lender and
thereby reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder, then Borrower shall from
time to time within fifteen (15) days after notice and demand from such Lender
(together with the certificate referred to in the next sentence and with a copy
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 such cost and showing the basis of the computation of such cost
submitted by such Lender to Borrower and Agent shall, absent manifest error, be
final, conclusive and binding for all purposes.
(b) Increased LIBOR Funding Costs; Illegality.
Notwithstanding anything to the contrary contained herein, if the introduction
of or any change in any law, rule, regulation, treaty or directive (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 LIBOR Loans into Index Rate Loans. If, after the date hereof, the
introduction of, change in or interpretation of any law, rule, regulation,
treaty or directive would impose or increase reserve requirements (other than as
taken into account in the definition of LIBOR) or otherwise increase the cost to
any Lender of making or maintaining a LIBOR Loan, then Borrower shall from time
to time within fifteen (15) days after notice and demand from Agent (together
with the certificate referred to in the next sentence) pay to Agent, for the
account of all such affected Lenders, additional amounts sufficient to
compensate such Lenders for such increased cost. A certificate as to the amount
of such cost and showing the basis of the computation of such cost submitted by
Agent on behalf of all such affected Lenders to Borrower shall, absent manifest
error, be final, conclusive and binding for all purposes.
14
1.12. Taxes.
(a) No Deductions. Except as provided in Section 1.12(c),
any and all payments or reimbursements made hereunder or under the Notes shall
be made free and clear of and without deduction for any and all Charges, taxes,
levies, imposts, deductions or withholdings, and all liabilities with respect
thereto of any nature whatsoever imposed by any taxing authority, excluding such
taxes measured by or imposed upon the overall net income of Agent or any Lender
or Lender's applicable lending office, or any branch or affiliate thereof, and
all franchise or overall gross receipts taxes of Agent or any Lender or Lender's
applicable lending office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes, imposed: (i) by the jurisdiction under the
laws of which Agent or such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal executive office
is located, or any nation within which such jurisdiction is located or any
political subdivision thereof; or (ii) by reason of any connection between the
jurisdiction imposing such tax and Agent or such Lender, applicable lending
officer, branch or affiliate other than a connection arising solely from Agent
or such Lender, applicable lending office, branch or affiliate other than a
connection arising solely from Agent or such Lender having executed, delivered
or performed its obligations, or received payments under or enforced, this
Credit Agreement or any Notes. If Borrower shall be required by law to deduct
any such amounts from or in respect of any sum payable hereunder to any Lender
or Agent, then, except as provided in Section 1.12(c), the sum payable hereunder
shall be increased as may be necessary so that, after making all required
deductions, such Lender or Agent receives an amount equal to the sum it would
have received had no such deductions been made.
(b) Changes in Tax Laws. In the event that, subsequent to
the date hereof, (1) any changes in any existing law, regulation, treaty or
directive or in the official interpretation or application thereof by a
Governmental Authority (whether or not having the force of law) or (2) any new
law, regulation, treaty or directive enacted or any official interpretation or
application thereof by a Governmental Authority (whether or not having the force
of law):
(i) does or shall subject Agent or any Lender to
any tax of any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or Letters of Credit issued hereunder, or change the
basis of taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder (except for net income taxes, or
franchise taxes imposed in lieu of net income taxes, imposed generally by
federal, state or local taxing authorities with respect to interest or
commitment Fees or other Fees payable hereunder or changes in the rate of tax on
the overall net income of Agent or such Lender); or
(ii) does or shall impose on Agent or any Lender
any other condition or increased cost in connection with the transactions
contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Agent or any
such Lender of issuing any Letter of Credit or making or continuing any Loan
hereunder, as the case may be, or to reduce any amount receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or such Lender,
upon its demand, any additional amounts necessary to compensate Agent or such
Lender, on an after-tax basis, for such additional cost or reduced amount
receivable, as determined by Agent or such Lender with respect to this Agreement
or the other Loan Documents. If Agent or such Lender becomes entitled to claim
any additional amounts pursuant to this Section 1.12(b), it shall promptly
notify Borrower of the event by reason of which Agent or such Lender has become
so entitled. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by Agent or such Lender to Borrower (with a copy to
Agent) shall, absent manifest error, be final, conclusive and binding for all
purposes.
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(c) Foreign Lenders. Each Lender organized under the laws
of a jurisdiction outside the United States (a "Foreign Lender") shall provide
to Borrower and Agent a properly completed and executed IRS Form W-8BEN or Form
W-8ECI or other applicable form, certificate or document prescribed by the IRS
of the United States certifying as to such Foreign Lender's entitlement to an
exemption from deductions and withholding with respect to payments to be made to
such Foreign Lender under this Agreement and under the Notes (a "Certificate of
Exemption"). Prior to becoming a Lender under this Agreement and within fifteen
(15) days after a reasonable written request of Borrower or Agent from time to
time thereafter, each Foreign Lender that becomes a Lender under this Agreement
shall provide a Certificate of Exemption to Borrower and Agent. If a Foreign
Lender does not provide a Certificate of Exemption to Borrower and Agent within
the time periods set forth in the preceding sentence, Borrower shall withhold
taxes from payments to such Foreign Lender at the applicable statutory rates and
Borrower shall not be required to pay any additional amounts as a result of such
withholding, provided that all such withholding shall cease upon delivery by
such Foreign Lender of a Certificate of Exemption to Borrower and Agent. Each
Lender that is not a Foreign Lender and is not exempt from backup withholding
under the Code with respect to payments made under this Agreement shall provide
a properly completed and executed IRS Form W-9 to the Borrower promptly after
becoming a Lender under this Agreement. If a Lender fails to comply with its
obligations under the preceding sentence and Borrower pays backup withholding as
a result of such failure, Borrower shall not be required to increase payments to
the Lender under this Agreement on account of such backup withholding.
1.13. Alternative Lending Office. The Agent shall promptly notify
the Borrower of any event of which it has knowledge, occurring after the date
hereof, which will or may entitle any Lender to compensation pursuant to
Sections 1.11 or 1.12 and will designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of the applicable Lender, be otherwise
disadvantageous to it.
SECTION 2.
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:
2.1. Compliance With Laws and Contractual Obligations. Each Credit
Party will (a) comply with and shall cause each of its Subsidiaries to comply
with (i) the requirements of all applicable laws, rules, regulations and orders
of any Governmental Authority (including, without limitation, laws, rules,
regulations and orders relating to taxes, employer and employee contributions,
securities, employee retirement and welfare benefits, environmental protection
matters and employee health and safety) as now in effect and which may be
imposed in the future in all jurisdictions in which any Credit Party or any of
its Subsidiaries is now doing business or may hereafter be doing business and
(ii) the obligations, covenants and conditions contained in all Contractual
Obligations of such Credit Party or any of its Subsidiaries other than those
laws, rules, regulations, orders and provisions of such Contractual Obligations
the noncompliance with which could not be reasonably expected to have, either
individually or in the aggregate, a Material Adverse Effect, and (b) maintain or
obtain and shall cause each of its Subsidiaries to maintain or obtain all
licenses, qualifications and permits now held or hereafter required to be held
by such Credit Party or any of its Subsidiaries, for which the loss, suspension,
revocation or failure to obtain or renew, could reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect. This Section
2.1 shall not preclude any Credit Party or its Subsidiaries from contesting any
taxes or other payments, if they are being diligently contested in good faith in
a manner which stays enforcement thereof and if appropriate expense provisions
have been recorded in conformity with GAAP, subject to Section 3.2. Each Credit
Party represents and warrants that it (i) is in compliance
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and each of its Subsidiaries is in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental Authority and
the obligations, covenants and conditions contained in all Contractual
Obligations other than those laws, rules, regulations, orders and provisions of
such Contractual Obligations the noncompliance with which could not be
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect, and (ii) maintains and each of its Subsidiaries maintains all
licenses, qualifications and permits referred to above.
2.2. 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 Schedule 5.18 as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. 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 that 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
reasonable attorneys' fees, court costs and other charges related thereto, shall
be payable on demand by Borrower to Agent and shall be additional Obligations
hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change
in any Credit Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential liability of
such Credit Party) to require additional forms and limits of insurance to, in
Agent's opinion, adequately protect both Agent's and 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 reasonably requested by Agent, each Credit Party shall deliver to Agent from
time to time a report of a reputable insurance broker, reasonably satisfactory
to Agent, with respect to its insurance policies, provided that Agent shall not
request same more frequently than annually while no Event of Default is
continuing.
(c) Each Credit Party shall deliver to Agent, in form and
substance reasonably satisfactory to Agent, endorsements to or assignments of
(i) all "All Risk" and business interruption insurance naming Agent, on behalf
of itself and Lenders, as loss payee or assignee, 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 has occurred and is continuing or the
anticipated insurance proceeds exceed $500,000, as each 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 each Credit Party on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Borrower shall promptly notify Agent of any loss,
damage, or destruction to the Collateral in the amount of $500,000 or more,
whether or not covered by insurance. After deducting from any insurance 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 1.5(f), provided that in the case of
insurance proceeds
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pertaining to any Credit Party other than Borrower, such insurance proceeds
shall be applied to the Loans owing by Borrower, or may permit or require Each
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 could not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds do not exceed $500,000 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 365 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.5(f); 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 that 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 or release from the cash collateral account be made to such Credit Party
in the amount requested to be released; (ii) so long as the conditions set forth
in Section 7.2 have been met and subject to the provisions of any Mortgage
encumbering such Collateral, Revolving Lenders shall make such Revolving Credit
Advance or Agent shall release funds from the cash collateral account; 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 1.5(f); 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.
2.3. Inspection; Lender Meeting. Each Credit Party shall permit any
authorized representatives of Agent to visit, audit and inspect any of the
properties of such Credit Party and its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and business with its
and their officers and certified public accountants, at such reasonable times
during normal business hours and as often as may be reasonably requested.
Representatives of each Lender will be permitted to accompany representatives of
Agent during each visit, inspection and discussion referred to in the
immediately preceding sentence. Without in any way limiting the foregoing, each
Credit Party will participate and will cause key management personnel of each
Credit Party and its Subsidiaries to participate in a meeting with Agent and
Lenders at least once during each year, which meeting shall be held at such time
and such place as may be reasonably requested by Agent.
2.4. Organizational Existence. Except as otherwise permitted by
Section 3.6, each Credit Party will and will cause its Subsidiaries to at all
times preserve and keep in full force and effect its organizational existence
and all rights and franchises material to its business.
2.5. 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 Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of
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the Real Estate 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 Estate; (c) notify Agent promptly after
such Credit Party or any Person within its control 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 Estate that is reasonably likely to
result in Environmental Liabilities to a Credit Party or its Subsidiaries in
excess of $100,000; 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 or any Person within its control 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 $100,000, 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 Person under its control 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 Estate, that, in each case, could reasonably be
expected to have a Material Adverse Effect, then each Credit Party and its
Subsidiaries shall, upon Agent's written request (i) cause the performance of
such environmental audits including subsurface sampling of soil and groundwater,
and preparation of such environmental reports, at Borrower's expense, as Agent
may from time to time reasonably request, which shall be conducted by reputable
environmental consulting firms reasonably acceptable to Agent and shall be in
form and substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have reasonable access to all Real Estate 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.
2.6. Landlords' Agreements, Mortgagee Agreements, Bailee Letters
and Real Estate Purchases. Each Credit Party shall use reasonable efforts (which
shall not require the expenditure of cash or the making of any material
concessions under the relevant lease) to obtain a landlord's agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each
leased property, mortgagee of owned property or bailee with respect to any
warehouse, processor or converter facility or other location where Collateral is
stored or 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 Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the date hereof and
thereafter, if Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Closing Date (or, if later, as of the date such location
is acquired or leased), the Eligible Inventory at that location shall, in
Agent's discretion, be subject to such Reserves as may be established by Agent
in its reasonable credit judgment. After the Closing Date, no real property or
warehouse space shall be leased by any Credit Party or its Subsidiary and no
Inventory having a value in excess of $500,000 shall be shipped to a processor
or converter under arrangements established after the date hereof 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 agreement or bailee letter, as appropriate,
shall first have been obtained with respect to such location. Each Credit Party
shall and shall cause its Subsidiaries to timely and fully pay and perform their
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located.
2.7. Conduct of Business. Each Credit Party shall 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
19
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; continue to conduct its business substantially as now
conducted (it being understood that Borrower shall conduct the business
heretofore conducted by Holdings) or as otherwise permitted hereunder; and
transact business only in such corporate and trade names as are set forth in
Schedule 2.7.
2.8. Further Assurances.
(a) Each Credit Party shall, from time to time, execute
or authorize the execution of such guaranties, financing statements, documents,
control agreements, security agreements and reports as Agent or Requisite
Lenders at any time may reasonably request to evidence, perfect or otherwise
implement the guaranties and security for repayment of the Obligations
contemplated by the Loan Documents.
(b) In the event any Credit Party acquires an ownership
interest in real property after the date hereof, such Credit Party shall deliver
to Agent a fully executed mortgage or deed of trust over such real property in
form and substance satisfactory to Agent, together with such title insurance
policies, surveys, appraisals, evidence of insurance, legal opinions,
environmental assessments and other documents and certificates as shall be
required by Agent.
(c) Each Credit Party shall (i) cause each Person, upon
its becoming a Domestic Subsidiary of such Credit Party (provided that this
shall not be construed to constitute consent by any of the Lenders to any
transaction referred to above which is not expressly permitted by the terms of
this Agreement), (x) promptly to guaranty the Obligations, (y) to grant to
Agent, for the benefit of Agent and Lenders, a security interest in the real,
personal and mixed property of such Person to secure the Obligations and (z) to
become a party to the Intercreditor Agreements and (ii) pledge, or cause to be
pledged, to Agent, for the benefit of Agent and Lenders, all of the Stock of
such Subsidiary to secure the Obligations and 65% of the Voting Stock and 100%
of the Non-Voting Stock of each Subsidiary that is not a Domestic Subsidiary and
that is directly owned by Borrower or a Domestic Subsidiary to secure the
Obligations. The documentation for such guaranty, security and pledge shall be
substantially similar to the Loan Documents executed concurrently herewith with
such modifications as are reasonably requested by Agent and shall be accompanied
by such legal opinions and other documents as Agent may reasonably request.
(d) Promptly, and in any event within thirty (30) days
after the acquisition by any Credit Party of assets or personal property of the
type that would have constituted Collateral on the date hereof, including
investments of the type that would have constituted Collateral on the date
hereof, such Credit Party will take all necessary action, including (i) the
filing of appropriate financing statements under the applicable provisions of
the UCC, applicable foreign, domestic or local laws, rules or regulations in
each of the offices where such filing is necessary or appropriate, (ii) the
execution and delivery of Control Agreements, and (iii) the notation of the Lien
of Agent on any certificate of title, in each case, to create and perfect a Lien
in such Collateral (or comparable interest under foreign law in the case of
foreign Collateral) pursuant to and to the full extent required by the Security
Agreements and this Agreement.
(e) Leasehold Mortgages and Filings.
(i) At Agent's request, Borrower and each of its
Domestic Subsidiaries shall deliver Mortgages with respect to Borrower's or such
Domestic Subsidiary's leasehold interests in premises (other than office space)
of at least 100,000 square feet (the "Leased Premises") occupied by
20
Borrower or such Domestic Subsidiary pursuant any lease entered into after the
date hereof for a term of at least five (5) years (collectively, the "Leases",
and individually, a "Lease").
(ii) Prior to the effective date of any Lease,
Borrower or such Domestic Subsidiary shall provide to Agent all of the items
described in subclauses (A) and (B) below and in addition shall use their
respective reasonable commercial efforts to obtain an agreement executed by the
lessor under the Lease, whereby the lessor consents to the Mortgage and waives
or subordinates its landlord Lien (whether granted by the instrument creating
the leasehold estate or by applicable law), if any, and which shall be entered
into by Agent.
(A) Agent shall have received
mortgagee's title insurance policies in favor of Agent, as mortgagee
for the ratable benefit of Agent and Lenders in amounts and in form and
substance and issued by insurers reasonably acceptable to Agent, with
respect to the property purported to be covered by such Mortgage,
insuring that title to such property is marketable and that the
interests created by the Mortgage constitute valid Liens thereon free
and clear of all Liens, defects and encumbrances other than Permitted
Liens, and such policies shall also include, to the extent available, a
revolving credit endorsement and such other endorsements as Agent shall
reasonably request and shall be accompanied by evidence of the payment
in full of all premiums thereon; and
(B) Borrower shall deliver to Agent,
with respect to each of the Leased Premises, such filings, surveys,
local counsel opinions and fixture filings, along with such other
documents, instruments, certificates and agreements, as Agent and its
counsel shall reasonably request.
2.9. Cash Management Systems. Each Credit Party shall enter into
Control Agreements with respect to each deposit account maintained by such
Credit Party or any Domestic Subsidiary of such Credit Party as of or after the
Closing Date. Each such Control Agreement shall be in form and substance
satisfactory to Agent. Borrower shall enter into lockbox agreements in form and
substance and with banks acceptable to Agent and shall direct all Account
Debtors to make payments on all Accounts into the lockboxes established under
such agreements; provided that (i) while Borrowing Availability is greater than
or equal to $5,000,000 and while no Event of Default is continuing, the lockbox
banks shall be entitled to remit all payments received in the applicable lockbox
to Borrower and (ii) while Borrowing Availability is less than $5,000,000 or
while an Event of Default is continuing, Agent may instruct the lockbox banks to
transfer all amounts held or deposited from time to time in the lockboxes to
Agent's account on a daily basis.
SECTION 3.
NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof until the
Termination Date:
3.1. Indebtedness. The Credit Parties shall not and shall not cause
or permit their Subsidiaries directly or indirectly to create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness (other than pursuant to a Contingent Obligation permitted under
Section 3.4) except:
(a) the Obligations;
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(b) (i) subject to the last sentence of this Section 3.1,
Indebtedness consisting of intercompany loans and advances made by Borrower to
any Credit Party (other than Parent and Holdings) that is a Guarantor, or by any
Domestic Subsidiary to Borrower or any Guarantor, (ii) subject to the limits and
conditions imposed by clauses (x) and (y) of Section 3.3(l), Indebtedness
consisting of intercompany loans and advances made by the Borrower or any
Domestic Subsidiary to any Subsidiary, other than a Domestic Subsidiary, of
Borrower or (iii) subject to clause (z) of the proviso to this Section 3.1(b),
Indebtedness consisting of intercompany loans and advances made by any
Subsidiary, other than a Domestic Subsidiary, of Borrower to another Subsidiary,
other than a Domestic Subsidiary, of Borrower; provided, that: (u) the borrower
under such loan or advance shall have executed and delivered to the lender
thereunder, on the Closing Date, a demand note (as amended, modified, extended,
substituted or replaced from time to time, collectively, the "Intercompany
Notes") to evidence any such intercompany Indebtedness owing at any time by such
borrower to such lender, which Intercompany Notes shall be in form and substance
reasonably satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the applicable Pledge Agreement or Security Agreement as additional
collateral security for the Obligations; (v) each such lender shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (w) the obligations of each borrower under any such
Intercompany Notes shall be subordinated to the Obligations in a manner
reasonably satisfactory to Agent; (x) at the time any such intercompany loan or
advance is made by any lender and after giving effect thereto, such lender shall
be Solvent; (y) no Default or Event of Default would occur and be continuing
after giving effect to any such proposed intercompany loan; and (z) the
aggregate amount of such intercompany loans owing by any Subsidiary of Borrower
(other than a Domestic Subsidiary) to any other Subsidiary of Borrower (other
than a Domestic Subsidiary) shall not exceed $40,000,000 at any one time
outstanding;
(c) subject to the last sentence of this Section 3.1,
Indebtedness not to exceed $5,000,000 in the aggregate at any time outstanding
secured by purchase money Liens or incurred with respect to Capital Leases;
(d) Indebtedness of Parent in respect of the Senior
Subordinated Notes;
(e) Indebtedness of Borrower and its Domestic
Subsidiaries in respect of the Senior Notes;
(f) Indebtedness of Holdings in respect of the Senior
Subordinated Discount Notes not exchanged in the Exchange Offer;
(g) subject to the last sentence of this Section 3.1,
Indebtedness of Borrower (as assignee from Holdings) in the principal amount of
approximately $3,000,000 in respect of certain management fees owing to
Greenwich Street Capital Partners, Inc.;
(h) Indebtedness of Subsidiaries of Borrower, other than
Domestic Subsidiaries, and any guarantee thereof, the aggregate principal amount
of which Indebtedness outstanding at any time does not exceed, as to all such
Subsidiaries, $11,000,000, plus the amount by which the Dollar equivalent of the
principal amount of such Indebtedness exceeds $11,000,000 as a result of
currency fluctuations;
(i) subject to the last sentence of this Section 3.1,
Indebtedness of Borrower or any Subsidiary thereof outstanding on the date
hereof and listed on Schedule 3.1(i) hereto, but excluding any increase thereof;
(j) subject to the last sentence of this Section 3.1,
Indebtedness of the Borrower and its Domestic Subsidiaries arising under any
Interest Rate Agreement; provided, however, that such
22
Interest Rate Agreements are entered into for the purpose of fixing or hedging
interest rates with respect to any fixed or variable rate Indebtedness that is
permitted by this Agreement to be outstanding to the extent that the notional
amount of any obligation under such Interest Rate Agreement does not exceed the
principal amount of Indebtedness to which such Interest Rate Agreement relates;
(k) subject to the last sentence of this Section 3.1,
Indebtedness of Borrower and its Subsidiaries under Currency Agreements;
provided that such Currency Agreements are entered into in order to hedge
currency exposure in the ordinary course of business and not for speculation and
in the case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Borrower or its Domestic
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(l) subject to the last sentence of this Section 3.1,
Indebtedness of any Credit Party or its Subsidiaries arising from the honoring
by a bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however, that
such Indebtedness is extinguished within five Business Days of incurrence;
(m) subject to the last sentence of this Section 3.1,
Indebtedness of Borrower and its Subsidiaries in respect of (A) commercial
letters of credit, or other letters of credit or other similar instruments or
obligations, issued in connection with liabilities incurred in the ordinary
course of business (including those issued to governmental entities in
connection with self-insurance under applicable workers' compensation statutes);
provided that such letters of credit, similar instruments or obligations shall
be unsecured and (B) surety, judgment, appeal, performance and other similar
bonds, instruments or obligations provided in the ordinary course of business;
(n) Indebtedness which is deemed to have been incurred by
Borrower as a result of a change in GAAP after the date hereof and which relates
to Borrower's off-balance-sheet financing of its facilities located in
Burnsville, Minnesota on May 9, 2000; provided, however, that the aggregate
principal amount of such Indebtedness outstanding at any time does not exceed
the aggregate principal amount of Indebtedness that would have been deemed
outstanding on the date hereof had the change in GAAP occurred prior to the date
hereof; and
(o) subject to the last sentence of this Section 3.1, any
other unsecured Indebtedness.
The principal amount of Indebtedness that may be outstanding under paragraph (b)
(other than clauses (ii) and (iii) of paragraph (b)), (c), (g), (i) (other than
with respect to intercompany loans listed on Schedule 3.1(i)), (j), (k), (l),
(m) and (o) of this Section 3.1 shall at no time exceed $20,000,000 in the
aggregate.
3.2. Liens and Related Matters.
(a) No Liens. The Credit Parties shall not and shall not
cause or permit their Subsidiaries to directly or indirectly create, incur,
assume or permit to exist any Lien on or with respect to any property or asset
of such Credit Party or any such Subsidiary, whether now owned or hereafter
acquired, or any income or profits therefrom, except Permitted Encumbrances
(including, without limitation, those Liens constituting Permitted Encumbrances
existing on the date hereof and renewals and extensions thereof, as set forth on
Schedule 3.2).
(b) No Negative Pledges. The Credit Parties shall not and
shall not cause or permit their Domestic Subsidiaries to directly or indirectly
enter into or assume any agreement (other than the
23
Loan Documents, the Senior Subordinated Notes Indenture (as in effect on the
date hereof) and the Senior Notes Indenture (as in effect on the date hereof))
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
(c) No Restrictions on Subsidiary Distributions to
Borrower. Except as provided herein, the Senior Subordinated Notes Indenture (as
in effect on the date hereof) and the Senior Notes Indenture (as in effect on
the date hereof) the Credit Parties shall not and shall not cause or permit
their Subsidiaries to directly or indirectly create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to: (1) pay dividends or make any
other distribution on any of such Subsidiary's Stock owned by Borrower or any
other Subsidiary; (2) pay any Indebtedness owed to Borrower or any other
Subsidiary; (3) make loans or advances to Borrower or any other Subsidiary; or
(4) transfer any of its property or assets to Borrower or any other Subsidiary.
3.3. Investments. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to directly or indirectly make or own any
Investment in any Person except:
(a) Borrower and its Subsidiaries may make and own
Investments in Cash Equivalents which in the case of Borrower and its Domestic
Subsidiaries shall be subject to Control Agreements in favor of Agent; provided
that such Cash Equivalents are not subject to setoff rights;
(b) Borrower and its Subsidiaries may make intercompany
loans to other Credit Parties to the extent permitted by Section 3.1(b)(i), and
Borrower's Subsidiaries that are not Domestic Subsidiaries may make intercompany
loans to other Subsidiaries of Borrower that are not Domestic Subsidiaries to
the extent permitted under Section 3.1(b)(iii) and ;
(c) Borrower and its Subsidiaries may make loans and
advances to employees for moving, entertainment, travel and other similar
expenses in the ordinary course of business not to exceed $250,000 in the
aggregate at any time outstanding;
(d) Borrower and its Subsidiaries may make capital
contributions to their wholly-owned Domestic Subsidiaries that are Guarantors in
an amount not to exceed $250,000 in the aggregate reduced by the amount of
Investments made pursuant to Section 3.3(b);
(e) Holdings may make Investments in Stock of Parent and
Parent may make Investments in Stock of Borrower;
(f) Borrower and its Subsidiaries may permit their
respective Investments in their respective Subsidiaries outstanding on the date
hereof to remain outstanding; and
(g) any Subsidiary, other than a Domestic Subsidiary, may
make Investments in any other Subsidiary that is not a Domestic Subsidiary;
(h) Borrower and its Subsidiaries may make Investments in
Interest Rate Agreements and Currency Agreements permitted by Section 3.1(j) and
Section 3.1(k).
(i) Borrower and its Subsidiaries may make Investments in
Indebtedness of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers in exchange for claims against such trade creditors
or customers;
24
(j) Borrower and its Subsidiaries may hold Investments in
existence on the date hereof set forth on Schedule 3.3(j) and may make
Investments pursuant to legally binding written commitments and described on
Schedule 3.3(j);
(k) Borrower and its Subsidiaries may make Permitted
Acquisitions in accordance with Section 3.6(b);
(l) Borrower and its Domestic Subsidiaries may make
intercompany loans to and Investments in Subsidiaries, other than Domestic
Subsidiaries, of Borrower (including as such an Investment under this clause (l)
any Permitted Acquisition (i) of a Target that upon acquisition thereof would
become a Subsidiary, other than a Domestic Subsidiary, of Borrower, or (ii)
involving assets, a majority of which are located outside of the United States
of America) and may incur Contingent Obligations in respect of Indebtedness of a
Subsidiary, other than a Domestic Subsidiary, of Borrower, so long as (x) any
such intercompany loan, Investment or Contingent Obligation (the outstanding
amount of Contingent Obligations being equal at any time to the outstanding
amount of the Indebtedness subject to such Contingent Obligation at such time),
together with the outstanding amount of all other such intercompany loans (other
than those listed on Schedule 3.1(i)), Investments (other than those listed on
Schedule 3.3(j)) and Continent Obligations theretofore or concurrently made,
does not exceed $15,000,000 outstanding at any time, (y) after giving effect to
any such intercompany loan, Investment or Contingent Obligation, Borrowing
Availability is at least $5,000,000 and (z) any such intercompany loan is
permitted by clauses (u) through (y) of the proviso to Section 3.1(b); and
(m) Borrower and its Subsidiaries may make additional
Investments not exceeding $3,000,000 at any time outstanding.
3.4. Contingent Obligations. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly create or
become or be liable with respect to any Contingent Obligation except:
(a) Letter of Credit Obligations;
(b) those resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(c) those existing on the date hereof and described in
Schedule 3.4;
(d) those arising under indemnity agreements to title
insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;
(e) those arising with respect to customary
indemnification obligations incurred in connection with Asset Dispositions
permitted hereunder;
(f) those incurred in the ordinary course of business
with respect to surety and appeal bonds, performance and return-of-money bonds
and other similar obligations not exceeding at any time outstanding $500,000 in
aggregate liability;
(g) (i) those incurred by Domestic Subsidiaries of
Borrower with respect to Indebtedness of Borrower or other Domestic Subsidiaries
of Borrower permitted by paragraphs (c), (e), (j), (k), (l), (m) or (o) or, to
the extent in effect as of the date hereof, (n), of Section 3.1 and (ii) those
incurred by Subsidiaries, other than Domestic Subsidiaries, of Borrower, in
respect of Indebtedness of any other Subsidiary, other than a Domestic
Subsidiary, of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ (▇), (▇), (▇),
▇▇
(▇), (▇) and (o) of Section 3.1; provided that any such Contingent Obligation
(under clause (i) or (ii)) is subordinated to the Obligations to the same extent
as the Indebtedness to which it relates is subordinated to the Obligations;
(h) those incurred by Holdings or Parent with respect to
Borrower's financing of the facilities located in Burnsville, Minnesota and any
contract, mortgage, asset or liability transferred by Holdings to Borrower in
connection with the Restructuring;
(i) those incurred by Borrower with respect to any
contract, mortgage, asset or liability not assigned or transferred by Holdings
to Borrower in the Restructuring because of the failure to obtain any necessary
consent thereto of any third party; and
(j) those incurred by Borrower or any Domestic Subsidiary
of Borrower in respect of Indebtedness of a Subsidiary, other than a Domestic
Subsidiary, of Borrower to the extent that such Contingent Obligation is
permitted by Section 3.3(l);
(k) any other Contingent Obligation not expressly
permitted by clauses (a) through (g) above, so long as any such other Contingent
Obligations, in the aggregate at any time outstanding, do not exceed $500,000.
3.5. Restricted Payments. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly declare, order,
pay, make or set apart any sum for any Restricted Payment, except that:
(a) Borrower and its Subsidiaries may make dividends,
payments or distributions to Parent or Holdings to satisfy Borrower's or such
Subsidiary's obligations under or in respect of the Tax Sharing Agreement as in
effect on the date hereof or as amended with the prior written consent of the
Requisite Lenders;
(b) Wholly-owned Subsidiaries of Borrower may make
Restricted Payments to Borrower or to the direct parent corporation of such
Wholly-owned Subsidiary;
(c) Borrower may pay dividends to Parent and Parent shall
use such dividends to make interest payments that have become due and payable in
cash on the Senior Subordinated Notes (as in effect on the date hereof) so long
as (i) at the time of such dividend, Parent would not be prohibited from making
such interest payment under the subordination terms of the Senior Subordinated
Notes (as in effect on the date hereof), (ii) after giving effect to such
dividend and payment, on a pro forma basis (assuming such dividend and payment
were made on the first day of the most recently completed period of twelve
consecutive months) Holdings and its Subsidiaries are in compliance with all
covenants and there is no Default or Event of Default and (iii) the aggregate
amount of all dividend payments made under this paragraph (c) shall not exceed
$5,000,000;
(d) (x) Borrower may pay directly to the holders thereof,
in order to, or may pay dividends to Parent and Parent shall use such dividends
to pay dividend payments to Holdings and Holdings shall use such dividend
payments in order to to redeem or repurchase (and concurrently cancel) the Old
Notes and (y) Borrower may pay dividends to Parent and Parent shall use such
dividends to pay dividend payments to Holdings and Holdings shall use such
dividend payments to pay principal at scheduled maturity (and in no event
earlier than November 15, 2006) of Senior Subordinated Discount Notes, so long
as (i) at the time of such dividend, Holdings would not be prohibited from
making such payment under the subordination terms of the Senior Subordinated
Discount Notes, (ii) after giving effect to such dividend and payment or
redemption or repurchase, as applicable, Borrowing Availability shall be
26
at least $5,000,000 and there is no Default or Event of Default and (iii) the
aggregate amount of such principal payments and redemptions and repurchases does
not exceed $5,000,000;
(e) Borrower may pay dividends to Parent and Parent may
use such dividends to pay dividends to Holdings, to enable Holdings or Parent,
as applicable, to pay permitted directors' fees and to pay accounting, legal,
insurance, consulting, management, trustee and agent fee, transfer agent fee,
and similar or other customary business expenses not exceeding $1,500,000 in any
Fiscal Year incurred in the ordinary course of business in which it is permitted
to engage hereunder, in each case, so long as no Default or Event of Default is
continuing at the time of or would occur as a result of any such payment;
(f) Borrower may pay dividends to Parent and Parent may
use such dividends to pay dividends to Holdings to enable Holdings to satisfy as
and when due and payable in accordance with their respective terms as of the
date hereof, liabilities with respect to any contract, mortgage, asset or
liability not assigned or transferred by Holdings to Borrower in the
Restructuring because of the failure to obtain any necessary consent thereto of
any third party; and
(g) Borrower may pay dividends to Parent and Parent may
use such dividends to pay dividends to Holdings to permit Holdings to repurchase
Stock owned by employees of Borrower whose employment with Borrower and its
Affiliates has been terminated, provided that such dividend payments shall not
exceed $500,000 in any fiscal year or $1,000,000 during the term of this
Agreement and provided that no Event of Default exists at the time of such
Restricted Payment or would occur as a result thereof.
3.6. Restriction on Fundamental Changes.
(a) The Credit Parties shall not and shall not cause or
permit their Subsidiaries to directly or indirectly:
(i) amend, modify or waive any term or provision
of its organizational documents, including its articles of incorporation,
certificates of designations pertaining to preferred stock, by-laws, partnership
agreement or operating agreement unless required by law, to the extent that any
such amendment, modification or waiver has had, or could reasonably be expected
to have, an adverse effect on the Lenders;
(ii) enter into any transaction of merger or
consolidation except, upon not less than five (5) Business Days' prior written
notice to Agent, (x) any wholly-owned Domestic Subsidiary of Borrower may be
merged with or into any other wholly-owned Domestic Subsidiary of Borrower or,
so long as the Borrower is the survivor of such merger, into Borrower, and (y)
any Subsidiary of Borrower, other than a Domestic Subsidiary, may be merged with
another Subsidiary of Borrower, other than a Domestic Subsidiary, or with a
Domestic Subsidiary of Borrower so long as such Domestic Subsidiary is the
survivor of such merger and any liabilities incurred by such Domestic Subsidiary
as a consequence of such merger do not result in a Default or Event of Default;
(iii) liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution); or
(iv) acquire by purchase or otherwise the Stock
or all or any substantial part of the business or assets of any other Person
except as set forth in paragraph (b) below.
27
(b) Notwithstanding the foregoing, Borrower or a
Subsidiary of Borrower may acquire all or substantially all of the assets or
Stock of any Person (the "Target") (in each case, a "Permitted Acquisition")
subject to the satisfaction of each of the following conditions:
(i) Agent shall receive at least 30 Business
Days' prior written notice of such proposed Permitted Acquisition, which notice
shall include a reasonably detailed description of such proposed Permitted
Acquisition;
(ii) (x) if such Permitted Acquisition is being
made by Borrower or a Domestic Subsidiary of Borrower, such Permitted
Acquisition shall only involve assets located in the United States of America or
the United States of America and Canada so long as a majority of the assets are
located in the United States of America and, if Stock is being acquired, shall
only involve a Target that, upon acquisition of its Stock, would become a
Domestic Subsidiary and (y) shall only involve assets comprising a business, or
those assets of a business, of the type engaged in by Borrower as of the date
hereof, and which business would not subject 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 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;
(iv) no additional Indebtedness, Guaranteed
Indebtedness, 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 and (B) ordinary course trade payables, accrued expenses and
unsecured Indebtedness of the Target to the extent no Default or Event of
Default has occurred and is continuing or would result after giving effect to
such Permitted Acquisition;
(v) the sum of all amounts payable in connection
with all Permitted Acquisitions (including all transaction costs and all
Indebtedness, liabilities and Contingent Obligations incurred or assumed in
connection therewith or otherwise reflected on a consolidated balance sheet of
Borrower and Target) shall not exceed $15,000,000 and the portion thereof
allocable to goodwill and intangible assets for all such Permitted Acquisitions
during the term hereof shall not exceed $15,000,000;
(vi) the Target shall not have incurred an
operating loss for the trailing twelve-month period preceding the date of the
Permitted Acquisition, as determined based upon the Target's financial
statements for its most recently completed fiscal year and its most recent
interim financial period completed within sixty (60) days prior to the date of
consummation of such Permitted Acquisition;
(vii) the business and assets acquired in such
Permitted Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(viii) at or prior to the closing of any Permitted
Acquisition, (x) if such Permitted Acquisition is being made by Borrower or a
Domestic Subsidiary of Borrower Agent will be granted a first priority perfected
Lien in all assets acquired pursuant thereto (subject to Permitted Encumbrances)
or, if applicable, in the assets (subject to Permitted Encumbrances) and if upon
acquisition thereof the Target will become a Domestic Subsidiary, the Stock of
the Target, and the acquirer and the Target shall have executed such documents
and taken such actions as may be required by Agent in connection therewith or
(y) if upon acquisition thereof, the Target shall become a direct
28
Subsidiary, other than a Domestic Subsidiary, of Borrower or of a Domestic
Subsidiary, Agent shall be granted a first priority Lien in 65% of any Stock of
the Target acquired in such Permitted Acquisition and the acquirer shall have
executed such documents and taken such actions as may be required by Agent in
connection therewith;
(ix) Concurrently with delivery of the notice
referred to in clause (i) above, Borrower shall have delivered to Agent, in form
and substance reasonably satisfactory to Agent:
(A) a pro forma consolidated balance
sheet, income statement and cash flow statement of Borrower and its
Subsidiaries (the "Acquisition Pro Forma"), based on recent financial
statements, which shall be complete and shall fairly present in all
material respects the assets, liabilities, financial condition and
results of operations of Borrower and its Subsidiaries in accordance
with GAAP consistently applied, but taking into account such Permitted
Acquisition and the funding of all Loans in connection therewith, and
such Acquisition Pro Forma shall reflect that (x) on a pro forma basis,
Borrower and its Subsidiaries would have had a Leverage Ratio not in
excess of 3.7 to 1.0 for the four quarter period reflected in the
Compliance Certificate most recently delivered to Agent pursuant to
Section 4.9(l) prior to the consummation of such Permitted Acquisition
(after giving effect to such Permitted Acquisition and all Loans funded
in connection therewith as if made on the first day of such period),
(y) average daily Borrowing Availability for the 90-day period
preceding the consummation of such Permitted Acquisition would have
exceeded the greater of (i) 50% of the Borrowing Base reflected in the
Borrowing Base Certificate most recently delivered to Agent pursuant to
Section 4.9(d) and (ii) $5,000,000 on a pro forma basis (after giving
effect to such Permitted Acquisition and all Loans funded in connection
therewith as if made on the first day of such period) and the
Acquisition Projections (as hereinafter defined) shall reflect that
such Borrowing Availability shall continue for at least 90 days after
the consummation of such Permitted Acquisition, and (z) on a pro forma
basis, no Event of Default has occurred and is continuing or would
result after giving effect to such Permitted Acquisition and Borrower
would have been in compliance with the financial covenant set forth in
Section 4 for the four quarter period reflected in the Compliance
Certificate most recently delivered to Agent pursuant to Section 4.9(l)
prior to the consummation of such Permitted Acquisition (after giving
effect to such Permitted Acquisition and all Loans funded in connection
therewith as if made on the first day of such period);
(B) updated versions of the most
recently delivered Projections covering the 3 year period commencing on
the date of such Permitted Acquisition and otherwise prepared in
accordance with the Projections (the "Acquisition Projections") and
based upon historical financial data of a recent date reasonably
satisfactory to Agent, taking into account such Permitted Acquisition;
and
(C) a certificate of the chief
financial officer of Borrower to the effect that: (w) Borrower (after
taking into consideration all rights of contribution and indemnity
Borrower has against Holdings and each other Subsidiary of Holdings)
will be Solvent upon the consummation of the Permitted Acquisition; (x)
the Acquisition Pro Forma fairly presents the financial condition of
Borrower and its Subsidiaries (on a consolidated basis) as of the date
thereof after giving effect to the Permitted Acquisition; (y) the
Acquisition Projections are reasonable estimates of the future
financial performance of Borrower and its Subsidiaries subsequent to
the date thereof based upon the historical performance of Borrower and
its Subsidiaries and the Target and show that Borrower and its
Subsidiaries shall continue to be in compliance with the financial
covenants set forth in Section 4 for the 3-year period thereafter; and
(z) Borrower and its Subsidiaries have completed their due diligence
investigation with respect to the Target and such Permitted
Acquisition, which investigation was conducted in a manner
29
similar to that which would have been conducted by a prudent purchaser
of a comparable business and the results of which investigation were
delivered to Agent and Lenders;
(x) on or prior to the date of such Permitted
Acquisition, Agent shall have received, in form and substance reasonably
satisfactory to Agent, copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates, lien search results
and other documents reasonably requested by Agent, including those specified in
the last sentence of Section 2.6;
(xi) in the event that such Permitted Acquisition
involves the acquisition of Stock of the Target, Borrower or the applicable
Subsidiary of Borrower shall have acquired all issued and outstanding shares of
Stock of the Target, other than, where applicable, any directors' qualifying
shares, and
(xii) at the time of such Permitted Acquisition
and after giving effect thereto, no Default or Event of Default has occurred and
is continuing.
Notwithstanding the foregoing, the Accounts, Inventory and Real Estate of the
Target shall not be included in Eligible Accounts, Eligible Inventory or
Eligible Real Estate unless such Accounts, Inventory and Real Estate have become
owned by Borrower or a Domestic Subsidiary that shall have become, with the
prior written consent of the Requisite Lenders and pursuant to such amendments
to this Agreement and the other Loan Documents as Agent shall have requested, a
"borrower" hereunder, and unless the Agent shall have given its prior written
consent thereto.
3.7. Disposal of Assets or Subsidiary Stock. The Credit Parties
shall not and shall not cause or permit their Subsidiaries to directly or
indirectly convey, sell, lease, sublease, license, assign, transfer or otherwise
dispose of, or grant any Person an option to acquire, in one transaction or a
series of related transactions, any of its property, business or assets, whether
now owned or hereafter acquired, except for (a) sales of inventory in good faith
to customers for fair value in the ordinary course of business and dispositions
of obsolete equipment not used or useful in the business and (b) Asset
Dispositions by Borrower and its Subsidiaries (excluding sales of Accounts and
sales of Stock of any of Holdings' Subsidiaries) if all of the following
conditions are met: (i) the market value of assets sold or otherwise disposed of
in any single transaction or series of related transactions (except in the case
of the sale of EVI Audio (Aust) Pty Limited) does not exceed $1,000,000 and the
aggregate market value of assets sold or otherwise disposed of in any Fiscal
Year (except in the case of the sale of EVI Audio (Aust) Pty Limited) does not
exceed $5,000,000; (ii) the consideration received is at least equal to the fair
market value of such assets; (iii) 75% of the consideration received is cash;
(iv) the Net Proceeds of such Asset Disposition are applied as required by
Section 1.5(c); (v) after giving effect to the Asset Disposition and the
repayment of Indebtedness with the proceeds thereof, Borrower is in compliance
on a pro forma basis with the covenants set forth in Section 4 recomputed for
the most recently ended Fiscal Quarter for which information is available and is
in compliance with all other terms and conditions of this Agreement; and (vi) no
Default or Event of Default then exists or would result from such Asset
Disposition.
3.8. Transactions with Affiliates. The Credit Parties shall not and
shall not cause or permit their Subsidiaries to directly or indirectly enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any management, consulting,
investment banking, advisory or other similar services) with any Affiliate or
with any director, officer or employee of any Credit Party, except (a) as set
forth on Schedule 3.8, (b) transactions in the ordinary course of and pursuant
to the reasonable requirements of the business of any such Credit Party or any
of its Subsidiaries and upon fair and reasonable terms which are fully disclosed
to Agent and are no less favorable to any such Credit Party or any of its
Subsidiaries than would be obtained in a comparable arm's length transaction
with a Person that is not an Affiliate, (c) payment of reasonable compensation
30
and benefits to officers and employees for services actually rendered to any
such Credit Party or any of its Subsidiaries, (d) payment of director's fees not
to exceed $250,000 in the aggregate for any Fiscal Year of Borrower and (e)
payment of indemnities to officers, directors and employees of Borrower as
determined in good faith by Borrower's Board of Directors or senior management,
to the extent payment of such indemnification is lawful and not covered by
insurance.
3.9. Conduct of Business. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to directly or indirectly engage in any
business other than businesses of the type described on Schedule 3.9.
3.10. Changes Relating to Indebtedness. The Credit Parties shall not
and shall not cause or permit their Domestic Subsidiaries to directly or
indirectly change or amend the terms of any of its Indebtedness permitted by
Section 3.1 (d), (e), (f) or (g) if the effect of such amendment is to: (a)
increase the interest rate on such Indebtedness; (b) change the dates upon which
payments of principal or interest are due on or principal amount of such
Indebtedness; (c) change any event of default or add or make more restrictive
any covenant with respect to such Indebtedness; (d) change the redemption or
prepayment provisions of such Indebtedness; (e) change the subordination
provisions thereof (or the subordination terms (if any) of any guaranty
thereof); (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 on the holder of such Indebtedness in a manner adverse to any Credit
Party or Lenders; or (g) increase the portion of interest payable in cash with
respect to any Indebtedness for which interest is payable by the issuance of
payment-in-kind notes or is permitted to accrue.
3.11. Fiscal Year. No Credit Party shall change its Fiscal Year or
permit any of its Subsidiaries to change their respective fiscal years.
3.12. Press Release; Public Offering Materials. 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, including any
prospectus, proxy statement or other materials filed with any Governmental
Authority relating to a public offering of the Stock of any Credit Party, using
the name of GE Capital or its affiliates or referring to this Agreement, the
other Loan Documents or the Related Transactions Documents without at least two
(2) Business Days' prior notice to GE Capital and without the prior written
consent of GE Capital unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with GE Capital before issuing such press
release or other public disclosure. Each Credit Party consents to the
publication by Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement.
Agent or such Lender shall provide a draft of any such tombstone or similar
advertising material to each Credit Party for review and comment prior to the
publication thereof. Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
3.13. Subsidiaries. The Credit Parties shall not and shall not cause
or permit their Subsidiaries to directly or indirectly establish, create or
acquire any new Subsidiary, except (i) as a Permitted Acquisition, (ii) the
establishment (other than in connection with an acquisition) by Borrower or a
Domestic Subsidiary of a Domestic Subsidiary, if such new Domestic Subsidiary
(A) agrees in a writing reasonably satisfactory to Agent to be bound by this
Agreement, (B) executes and delivers such guaranties, security agreements and
other Loan Documents, in form substantially similar to those provided by the
other Domestic Subsidiaries, (C) provides to Agent a first priority perfected
security interest (subject only to Permitted Encumbrances) in all present and
future assets of such Domestic Subsidiary, and (D) provides to Agent such legal
opinions and documents and taken such actions, as Agent may reasonably request
in connection therewith and (iii) the establishment (other than in
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connection with an acquisition) by a Subsidiary, other than a Domestic
Subsidiary, of Borrower of a Subsidiary, other than a Domestic Subsidiary, of
Borrower.
3.14. Bank Accounts. The Credit Parties shall not and shall not
cause or permit their Domestic Subsidiaries to establish any new bank accounts
without prior written notice to Agent and unless Agent and the bank at which the
account is to be opened enter into a tri-party agreement regarding such bank
account pursuant to which such bank acknowledges the security interest of Agent
in such bank account, agrees to comply with instructions originated by Agent
directing disposition of the funds in the bank account without further consent
from such Credit Party or Subsidiary, and agrees to subordinate and limit any
security interest the bank may have in the bank account on terms satisfactory to
Agent.
3.15. Hazardous Materials. The Credit Parties shall not and shall
not cause or permit their Subsidiaries to cause or permit a Release of any
Hazardous Material on, at, in, under, above, to, from or about any of the Real
Estate where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities by the Credit Parties or any of their
Subsidiaries under, any Environmental Laws or Environmental Permits or (b)
otherwise adversely impact the value or marketability of any of the Real Estate
or any of the Collateral, other than such violations or Environmental
Liabilities that could not reasonably be expected to have a Material Adverse
Effect.
3.16. ERISA. The Credit Parties shall not and shall not cause or
permit any ERISA Affiliate to, cause or permit to occur an ERISA Event to the
extent such ERISA Event could reasonably be expected to have a Material Adverse
Effect.
3.17. Sale-Leasebacks. The Credit Parties shall not and shall not
cause or permit any of their Subsidiaries to engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets.
3.18. Prepayments of Other Indebtedness. No Credit Party shall,
directly or indirectly, (a) voluntarily purchase, redeem, defease or prepay any
principal of, premium, if any, interest or other amount payable in respect of
any Indebtedness (including, without limitation, in connection with any asset
sale or change of control), 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 Section 3.7(b), (iii)
intercompany Indebtedness reflecting amounts owing to Borrower or a Guarantor
and (iv) repurchase or redemption of Old Notes to the extent permitted by
Section 3.5(d), or (b) (i) make any offer to purchase or redeem or purchase or
redeem any Senior Subordinated Notes in respect of any "Asset Disposition" or
"Change of Control" (as such terms are defined in the Senior Subordinated Notes
Indenture) in connection therewith or (ii) make any "Net Proceeds Offer" or
"Change of Control Offer" (as such terms are defined in the Senior Notes
Indenture) or make any payment or redeem or purchase any Senior Notes in
connection therewith.
3.19. Changes to Material Contracts. The Credit Parties shall not
and shall not cause or permit any of their Domestic Subsidiaries to change or
amend the terms of any of the material contracts listed on Schedule 3.19 in a
manner that would likely have a Material Adverse Effect or confer additional
material rights on the counterparty to any such material contract in a manner
adverse to any Credit Party or the Lenders.
3.20. Change of Name or Location. No Credit Party shall (a) change
its name as it appears in official filings in the state of its incorporation or
organization, (b) change its offices or warehouses or locations at which
Collateral is held or stored, or the location of its records concerning the
Collateral, (c) change the type of entity that it is, (d) change its
organization identification number, if any, issued by its state of incorporation
or organization, or (e) change its state of incorporation or organization, in
each
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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;
provided that any such new location shall be in the continental United States.
Without limiting the foregoing, no Credit Party shall change its name, identity
or corporate structure in any manner that might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-506 or 9-507 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.
3.21. Changes Relating to Senior Debt. Borrower shall not and shall
not cause or permit any of its Subsidiaries to grant any security or collateral
to secure payment of the Senior Secured Notes unless and until Borrower and its
Subsidiaries have granted a first priority perfected Lien on such collateral in
favor of Agent on behalf of itself and Lenders.
SECTION 4.
FINANCIAL COVENANTS/REPORTING
Borrower, Parent and Holdings each covenants and agrees that from and
after the date hereof until the Termination Date, Borrower shall perform and
comply with, and shall cause each of the other Credit Parties to perform and
comply with, all covenants in this Section 4 applicable to such Person.
4.1. Omitted.
4.2. Omitted.
4.3. Minimum EBITDA. Borrower and its Subsidiaries shall have on a
consolidated basis at the end of each Fiscal Quarter, EBITDA for the 12 month
period then ended of not less $15,000,000.
4.4. Omitted.
4.5. Omitted.
4.6. Omitted.
4.7. Omitted.
4.8. Omitted.
4.9. Financial Statements and Other Reports. Borrower will
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of Financial Statements in conformity with GAAP (it being
understood that monthly Financial Statements are not required to have footnote
disclosures). Borrower will deliver each of the Financial Statements and other
reports described below to Agent (and each Lender in the case of the Financial
Statements and other reports described in Sections 4.9(a), (b), (d), (f), (g),
(h), and (k)).
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(a) Monthly Financials. As soon as available and in any
event within thirty (30) days after the end of each month (including the last
month of Borrower's Fiscal Year), Borrower will deliver (1) the consolidated
balance sheets of Borrower and its Subsidiaries, as at the end of such month,
and the related consolidated statements of income, stockholders' equity and cash
flow for such month and for the period from the beginning of the then current
Fiscal Year of Borrower to the end of such month, (2) the consolidated balance
sheets of Borrower and its Domestic Subsidiaries, as at the end of such month,
and the related consolidated statements of income, stockholders' equity and cash
flow for such month and for the period from the beginning of the then current
Fiscal Year of Borrower to the end of such month, (3) a report setting forth in
comparative form the corresponding figures for the corresponding periods of the
previous Fiscal Year and the corresponding figures from the most recent
Projections for the current Fiscal Year delivered pursuant to Section 4.9(f) and
(4) a schedule of the outstanding Indebtedness for borrowed money of Borrower
and its Subsidiaries describing in reasonable detail each such debt issue or
loan outstanding and the principal amount and amount of accrued and unpaid
interest with respect to each such debt issue or loan.
(b) Year-End Financials. As soon as available and in any
event within ninety (90) days after the end of each Fiscal Year of Borrower,
Borrower will deliver (1) the consolidated balance sheets of Borrower and its
Subsidiaries, as at the end of such year, and the related consolidated
statements of income, stockholders' equity and cash flow for such Fiscal Year,
(2) the consolidated balance sheets of Borrower and its Domestic Subsidiaries,
as at the end of such year, and the related consolidated statements of income,
stockholders' equity and cash flow for such Fiscal Year, (3) a schedule of the
outstanding Indebtedness for borrowed money of Borrower and its Subsidiaries
describing in reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with respect to each
such debt issue or loan and (4) a report with respect to the consolidated
Financial Statements from a firm of Certified Public Accountants selected by
Borrower and reasonably acceptable to Agent, which report shall be prepared in
accordance with Statement of Auditing Standards No. 58 (the "Statement")
"Reports on Audited Financial Statements" and such report shall be "Unqualified"
(as such term is defined in such Statement).
(c) Accountants' Reports. Promptly upon receipt thereof,
Borrower will deliver copies of all significant reports submitted by Borrower's
firm of certified public accountants in connection with each annual, interim or
special audit or review of any type of the Financial Statements or related
internal control systems of Borrower or its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their services.
(d) Additional Deliveries.
(i) To Agent, upon its request, and in any event
no less frequently than noon New York time on, ten (10) Business Days after the
end of each Fiscal Month (together with a copy of any of the following reports
requested by any Lender in writing after the date hereof), each of the following
reports, each of which shall be prepared by Borrower as of the last day of the
immediately preceding Fiscal Month or the date 2 days prior to the date of any
such request:
(A) a Borrowing Base Certificate with
respect to Borrower, accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable
discretion (in substantially the same form as Exhibit 4.9(d), the
"Borrowing Base Certificate") as at the last day of such period;
(B) with respect to Borrower, a summary
of Inventory by location and type with a supporting perpetual Inventory
report, in each case accompanied by such
34
supporting detail and documentation as shall be requested by Agent in
its reasonable discretion; and
(C) with respect to Borrower, a monthly
trial balance showing Accounts outstanding aged from due date as
follows: 1 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or
more, accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion.
(ii) To Agent, on a monthly basis or at such more
frequent intervals as Agent may reasonably request from time to time (together
with a copy of all or any part of such delivery requested by any Lender in
writing after the date hereof), collateral reports with respect to Borrower,
including all additions and reductions (cash and non-cash) with respect to
Accounts of Borrower, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion each
of which shall be prepared by Borrower as of the last day of the immediately
preceding month or the date 2 days prior to the date of any request;
(iii) To Agent, at the time of delivery of each of
the monthly Financial Statements delivered pursuant to this Section 4.9:
(A) a reconciliation of the most recent
Borrowing Base, general ledger and month-end Inventory reports of
Borrower to Borrower's general ledger and monthly Financial Statements
delivered pursuant to this Section 4.9, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent
in its reasonable discretion;
(B) a reconciliation of the perpetual
Inventory by location to Borrower's most recent Borrowing Base
Certificate, general ledger and monthly Financial Statements delivered
pursuant to this Section 4.9, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in
its reasonable discretion;
(C) an aging of accounts payable
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(D) a reconciliation of the outstanding
Loans as set forth in the monthly Loan Account statement provided by
Agent to Borrower's general ledger and monthly Financial Statements
delivered pursuant to this Section 4.9, in each case accompanied by
such supporting detail and documentation as shall be requested by Agent
in its reasonable discretion;
(iv) To Agent, at the time of delivery of each of
the annual Financial Statements delivered pursuant to this Section 4.9, (i) a
listing of government contracts of Borrower subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration of
any Patent, Trademark or Copyright filed by any Credit Party with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar United States office or agency in the prior Fiscal Quarter.
(e) Appraisals; Inspections.
(i) From time to time, if Agent or any Lender
determines that obtaining appraisals is necessary in order for Agent or such
Lender to comply with applicable laws or regulations, Agent will, at Borrower's
expense, obtain appraisal reports in form and substance and from appraisers
satisfactory to Agent stating the then current fair market values of all or any
portion of the Real Estate owned by Credit Parties. In addition to the
foregoing, at Borrower's expense, at any time while and so
35
long as an Event of Default shall have occurred and be continuing, and in the
absence of a Default or Event of Default not more than once during each calendar
year, Agent may obtain appraisal reports in form and substance and from
appraisers satisfactory to Agent stating the then current market values of all
or any portion of the Real Estate and personal property owned by any of the
Credit Parties.
(ii) Borrower, at its own expense, shall deliver
to Agent the results of each physical verification, if any, that Borrower or any
of its Subsidiaries may in their discretion have made, or caused any other
Person to have made on their behalf, of all or any portion of their Inventory
(and, if a Default or an Event of Default has occurred and is continuing,
Borrower shall, upon the request of Agent, conduct, and deliver the results of,
such physical verifications of any of Borrower's or any of its Domestic
Subsidiaries' Inventory as Agent may require).
(iii) Borrower, at its own expense, shall (x)
cause to be delivered to Agent an appraisal, performed by an independent
appraiser acceptable to Agent, of Borrower's inventory once in each Fiscal Year
(and at the time during such Fiscal Year determined by Agent and upon reasonable
prior written notice) and (y) permit Agent to perform audits of Borrowers'
accounts and inventory twice during each Fiscal Year (and at times during such
Fiscal Year determined by Agent).
(f) Projections. As soon as available and in any event no
later than the last day of each of Borrower's Fiscal Years, Borrower will
deliver Projections of Borrower and its Subsidiaries for the forthcoming Fiscal
Year, month by month.
(g) SEC Filings and Press Releases. Promptly upon their
becoming available, Borrower will deliver copies of (1) all Financial
Statements, reports, notices and proxy statements sent or made available by
Borrower or any of its Subsidiaries to its Stockholders or holders of
Subordinated Debt or Senior Notes, (2) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by Borrower or any of
its Subsidiaries with any securities exchange or with the Securities and
Exchange Commission, any Governmental Authority or any private regulatory
authority, and (3) all press releases and other statements made available by
Borrower or any of its Subsidiaries to the public concerning developments in the
business of any such Person.
(h) Events of Default, Etc. Promptly upon any officer of
any Credit Party obtaining knowledge of any of the following events or
conditions, Borrower shall deliver copies of all notices given or received by
such Credit Party or any of its Subsidiaries with respect to any such event or
condition and a certificate of Borrower's chief executive officer specifying the
nature and period of existence of such event or condition and what action such
Credit Party or Subsidiary thereof has taken, is taking and proposes to take
with respect thereto: (1) any condition or event that constitutes, or which
could reasonably be expected to result in the occurrence of, an Event of Default
or Default; (2) any notice that any Person has given to any Credit Party or any
of its Subsidiaries or any other action taken with respect to a claimed default
or event or condition of the type referred to in Section 6.1(b); (3) any event
or condition that could reasonably be expected to result in any Material Adverse
Effect; or (4) any default or event of default with respect to any Indebtedness
of any Credit Party or any of its Subsidiaries.
(i) Litigation. Promptly upon any officer of any Credit
Party obtaining knowledge of (1) the institution of any material action, charge,
claim, demand, suit, proceeding, petition, governmental investigation, tax audit
or arbitration now pending or, to the best knowledge of such Credit Party after
due inquiry, threatened against or affecting any Credit Party or any of its
Subsidiaries or any property of any Credit Party or any of its Subsidiaries
("Litigation") not previously disclosed by Borrower to Agent or (2) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting any Credit Party or any
property of any Credit Party which, in each case, could reasonably be expected
to have a Material Adverse Effect, Borrower will
36
promptly give notice thereof to Agent and provide such other information as may
be reasonably available to them to enable Agent and its counsel to evaluate such
matter.
(j) Notice of Corporate and other Changes. Borrower shall
provide prompt written notice of (1) all jurisdictions in which a Credit Party
becomes qualified after the date hereof to transact business, (2) any change
after the date hereof in the authorized and issued Stock of any Credit Party or
any Subsidiary of any Credit Party or any amendment to their articles or
certificate of incorporation, by-laws, partnership agreement or other
organizational documents, (3) any Subsidiary created or acquired by any Credit
Party or any of its Subsidiaries after the date hereof, such notice, in each
case, to identify the applicable jurisdictions, capital structures or
Subsidiaries, as applicable, and (4) any other event that occurs after the date
hereof which would cause any of the representations and warranties in Section 5
of this Agreement or in any other Loan Document to be untrue or misleading in
any material respect. The foregoing notice requirement shall not be construed to
constitute consent by any of the Lenders to any transaction referred to above
which is not expressly permitted by the terms of this Agreement.
(k) Omitted.
(l) Compliance Certificate. Together with each delivery
of Financial Statements of Borrower and its Subsidiaries pursuant to Sections
4.9(a) and (b), Borrower will deliver a fully and properly completed Compliance
Certificate (in substantially the same form as Exhibit 4.9(l) (the "Compliance
Certificate") signed by Borrower's chief executive officer or chief financial
officer.
(m) Other Information. With reasonable promptness,
Borrower will deliver such other information and data with respect to any Credit
Party or any Subsidiary of any Credit Party as from time to time may be
reasonably requested by Agent.
(n) Taxes. Borrower shall provide prompt written notice
of (i) the execution or filing with the IRS or any other Governmental Authority
of any agreement or other document extending, or having the effect of extending,
the period for assessment or collection of any Charges by any Credit Party or
any of its Subsidiaries and (ii) any agreement by any Credit Party or any of its
Subsidiaries or request directed to any Credit Party or any of its Subsidiaries
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which could reasonably be expected to have a
Material Adverse Effect.
4.10. Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent pursuant to Section 4.9 or any other section (unless
specifically indicated otherwise) shall be prepared in accordance with GAAP as
in effect at the time of such preparation; provided that no Accounting Change
shall affect financial covenants, standards or terms in this Agreement; provided
further that Borrower shall prepare footnotes to the Financial Statements
required to be delivered hereunder that show the differences between the
Financial Statements delivered (which reflect such Accounting Changes) and the
basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). All such adjustments described in clause (c) of the
definition of the term Accounting Changes resulting from expenditures made
subsequent to the date hereof (including capitalization of costs and expenses or
payment of pre-Closing Date liabilities) shall be treated as expenses in the
period the expenditures are made.
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SECTION 5.
REPRESENTATIONS AND WARRANTIES
To induce Agent and Lenders to enter into the Loan Documents, to make
Loans and to issue or cause to be issued Letters of Credit, Borrower and the
other Credit Parties executing this Agreement, jointly and severally, represent,
warrant and covenant to Agent and each Lender that the following statements are
and, after giving effect to the Related Transactions, will remain true, correct
and complete until the Termination Date with respect to all Credit Parties
5.1. Disclosure. No representation or warranty of any Credit Party
contained in this Agreement, the Financial Statements referred to in Section
5.5, the other Related Transactions Documents or any other document, certificate
or written statement furnished to Agent or any Lender by or on behalf of any
such Person for use in connection with the Loan Documents or the Related
Transactions Documents contains any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made.
5.2. No Material Adverse Effect. Since December 31, 2002 there have
been no events or changes in facts or circumstances affecting any Credit Party
or any of its Subsidiaries which individually or in the aggregate have had or
could reasonably be expected to have a Material Adverse Effect and that have not
been disclosed herein or in the attached Disclosure Schedules.
5.3. No Conflict. The consummation of the Related Transactions does
not and will not violate or conflict with any laws, rules, regulations or orders
of any Governmental Authority or violate, conflict with, result in a breach of,
or constitute a default (with due notice or lapse of time or both) under any
Contractual Obligation or organizational documents of any Credit Party or any of
its Subsidiaries except if such violations, conflicts, breaches or defaults
could not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect. None of the Credit Parties is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company" or a "subsidiary company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
5.4. Organization, Powers, Capitalization and Good Standing.
(a) Organization and Powers. Each of the Credit Parties
and each of their Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and qualified to do
business in all states where such qualification is required except where failure
to be so qualified could not reasonably be expected to have a Material Adverse
Effect; provided, that Borrower will file to qualify to do business to do
business as a foreign corporation in Minnesota, Nebraska and Arkansas not later
than 2 Business Days after the date hereof. The jurisdiction of organization and
all jurisdictions in which each Credit Party is qualified to do business are set
forth on Schedule 5.4(a). Each of the Credit Parties and each of their
Subsidiaries has all requisite organizational power and authority to own and
operate its properties, to carry on its business as now conducted and proposed
to be conducted, to enter into each Related Transactions Document to which it is
a party and to incur the Obligations, grant liens and security interests in the
Collateral and carry out the Related Transactions.
(b) Capitalization. As of the date hereof: (i) the
authorized Stock of each of the Credit Parties and each of their first-tier
Subsidiaries is as set forth on Schedule 5.4(b); (ii) all issued and outstanding
Stock of each of the Credit Parties and each of their first-tier Subsidiaries is
duly authorized
38
and validly issued, fully paid, nonassessable, free and clear of all Liens other
than those in favor of Agent for the benefit of Agent and Lenders and Permitted
Encumbrances of the type described in clauses (a), (d), (e), (g), (h), (j) or
(l) of the definition of such term that are subordinate to the Lien in favor of
Agent, on behalf of itself and Lenders, and such Stock was issued in material
compliance with all applicable state, federal and foreign laws concerning the
issuance of securities; (iii) the identity of the holders of the Stock of each
of the Credit Parties (other than Holdings) and each of their first-tier
Subsidiaries and the percentage of their fully-diluted ownership of the Stock of
each of the Credit Parties (other than Holdings) and each of their first-tier
Subsidiaries is set forth on Schedule 5.4(b); and (iv) no Stock of any Credit
Party or any of their first-tier Subsidiaries, other than those described above,
are issued and outstanding. Except as provided in Schedule 5.4(b), as of the
date hereof, there are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Credit Party or any of their first-tier
Subsidiaries of any Stock of any such entity.
(c) Binding Obligation. This Agreement is, and the other
Related Transactions Documents when executed and delivered will be, the legally
valid and binding obligations of the applicable parties thereto, each
enforceable against each of such parties, as applicable, in accordance with
their respective terms, subject to any applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally and to
principles of equity.
5.5. Financial Statements and Projections. All Financial Statements
concerning Borrower and its Subsidiaries which have been or will hereafter be
furnished to Agent pursuant to this Agreement, including those listed below,
have been or will be prepared in accordance with GAAP consistently applied
(except as disclosed therein) and do or will present fairly the financial
condition of the entities covered thereby as at the dates thereof and the
results of their operations for the periods then ended, subject to, in the case
of unaudited Financial Statements, the absence of footnotes and normal year-end
adjustments.
(a) The consolidated balance sheets at December 31, 2002
and the related statement of income of Borrower and its Subsidiaries, for the
Fiscal Year then ended, audited by Ernst & Young LLP.
(b) The consolidated balance sheet at June 30, 2003 and
the related statement of income of Borrower and its Subsidiaries for the six (6)
months then ended.
The Projections delivered on or prior to the date hereof and the updated
Projections delivered pursuant to Section 4.9(f) as of the date thereof were
prepared or will be prepared, as applicable, in good faith and are based on
reasonable assumptions.
5.6. Intellectual Property. Each of the Credit Parties and its
Subsidiaries owns, is licensed to use or otherwise has the right to use, all
Intellectual Property used in or necessary for the conduct of its business as
currently conducted that is material to the condition (financial or other),
business or operations of such Credit Party and its Subsidiaries. All
registrations and applications in respect of such Intellectual Property owned by
any Credit Party are identified on Schedule 5.6 and duly and properly
registered, filed or issued in the appropriate office and jurisdictions for such
registrations, filings or issuances (it being understood that recordings in the
United States Patent and Trademark Office of Intellectual Property being
acquired by Borrower in the Restructuring will occur no later than the second
Business Day following the date hereof and in all foreign jurisdictions as soon
as reasonably practicable thereafter). Except as disclosed in Schedule 5.6, to
their knowledge, the use of such Intellectual Property by the Credit Parties and
their Subsidiaries and the conduct of their businesses does not and has not been
alleged by any Person to infringe on the rights of any Person.
39
5.7. Investigations, Audits, Etc. As of the date hereof, except as
set forth on Schedule 5.7, no Credit Party or any of its Subsidiaries, to such
Credit Party's knowledge, is the subject of any review or audit by the IRS or
any governmental investigation concerning the violation or possible violation of
any law.
5.8. Employee Matters. Except as set forth on Schedule 5.8, (a) no
Credit Party or Subsidiary of a Credit Party nor any of their respective
employees is subject to any collective bargaining agreement, (b) no petition for
certification or union election is pending with respect to the employees of any
Credit Party or any of their Subsidiaries and no union or collective bargaining
unit has sought such certification or recognition with respect to the employees
of any Credit Party or any of their Subsidiaries, (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
any Credit Party after due inquiry, threatened between any Credit Party or any
of their Subsidiaries and its respective employees, other than employee
grievances arising in the ordinary course of business which could not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect and (d) hours worked by and payment made to employees of each Credit
Party and each of their Subsidiaries comply in all material respects to the
extent applicable, with the Fair Labor Standards Act and each other federal,
state, local or foreign law applicable to such matters. Except as set forth on
Schedule 5.8, neither Borrower nor any of its Domestic Subsidiaries is party to
an employment contract.
5.9. Solvency. Each of Borrower and its Domestic Subsidiaries is
Solvent.
5.10. Litigation; Adverse Facts. Except as set forth on Schedule
5.10, there are no judgments outstanding against any Credit Party or any of its
Subsidiaries or affecting any property of any Credit Party or any of its
Subsidiaries, nor is there any Litigation pending, or to the best knowledge of
any Credit Party threatened, against any Credit Party or any of its Subsidiaries
which could reasonably be expected to result in any Material Adverse Effect.
5.11. Use of Proceeds; Margin Regulations.
(a) No part of the proceeds of any Loan will be used for
"buying" or "carrying" "margin stock" within the respective meanings of such
terms under Regulation U of the Board of Governors of the Federal Reserve System
as now and from time to time hereafter in effect or for any other purpose that
violates the provisions of the regulations of the Board of Governors of the
Federal Reserve System. If requested by Agent, each Credit Party will furnish to
Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in
Regulation U.
(b) Borrower shall utilize the proceeds of the Loans
solely for the financing of Borrower's ordinary working capital and general
corporate needs. Schedule 5.11 contains a description of Borrower's sources and
uses of funds as of the date hereof, and a funds flow memorandum detailing how
funds from each source are to be transferred for particular uses. No Revolving
Credit Advances shall be made and no Letter of Credit shall be issued on the
date hereof.
5.12. Ownership of Property; Liens. As of the date hereof, the real
estate ("Real Estate") listed in Schedule 5.12 constitutes all of the real
property owned, leased, subleased, or used by any Credit Party or any of its
Domestic Subsidiaries. Each of the Credit Parties and each of its Domestic
Subsidiaries owns good and marketable fee simple title to all of its owned Real
Estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Schedule 5.12, and copies of all such leases or a
summary of terms thereof reasonably satisfactory to Agent have been delivered to
Agent. Schedule 5.12 further describes any Real Estate with respect to which any
Credit Party or any of its Domestic Subsidiaries is a lessor, sublessor or
assignor as of the date hereof. Each of the Credit Parties
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and each of its Domestic Subsidiaries also has good and marketable title to, or
valid leasehold interests in, all of its personal property and assets, subject
to Permitted Encumbrances. Except as described on Schedule 5.12, as of the date
hereof, none of the properties and assets of any Credit Party or any of its
Subsidiaries are subject to any Liens other than Permitted Encumbrances, and
there are no facts, circumstances or conditions known to Borrower that may
result in any Liens (including Liens arising under Environmental Laws) other
than Permitted Encumbrances against the properties or assets of any Credit Party
or any of its Subsidiaries. Each of the Credit Parties and each of its Domestic
Subsidiaries has received all deeds, assignments, waivers, consents,
nondisturbance and attornment 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 or Domestic
Subsidiary's right, title and interest in and to all such Real Estate and other
properties and assets. Schedule 5.12 also describes any purchase options, rights
of first refusal or other similar contractual rights pertaining to any Real
Estate. As of the date hereof, no portion of any Credit Party's or any of its
Subsidiaries' Real Estate has suffered any material damage by fire or other
casualty loss that has not heretofore been repaired and restored in all material
respects to its original condition or otherwise remedied. As of the date hereof,
all material permits required to have been issued or appropriate to enable the
Real Estate to be lawfully occupied and used for all of the purposes for which
it is currently occupied and used have been lawfully issued and are in full
force and effect.
5.13. Environmental Matters.
(a) Except as set forth in Schedule 5.13, as of the date
hereof: (i) the Real Estate is free of contamination from any Hazardous Material
except for such contamination that could not reasonably be expected to adversely
impact the value or marketability of such Real Estate and that could not
reasonably be expected to result in Environmental Liabilities of the Credit
Parties or their Subsidiaries in excess of $1,000,000 in the aggregate; (ii) no
Credit Party and no Subsidiary of a Credit Party has caused or suffered to occur
any Release of Hazardous Materials on, at, in, under, above, to, from or about
any of their Real Estate; (iii) the Credit Parties and their Subsidiaries are
and have been in compliance with all Environmental Laws, except for such
noncompliance that could not reasonably be expected to result in Environmental
Liabilities of the Credit Parties or their Subsidiaries in excess of $1,000,000
in the aggregate; (iv) the Credit Parties and their Subsidiaries have obtained,
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 could not reasonably be expected to result in
Environmental Liabilities of the Credit Parties or their Subsidiaries in excess
of $1,000,000 in the aggregate, and all such Environmental Permits are valid,
uncontested and in good standing; (v) no Credit Party and no Subsidiary of a
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 Environmental Liabilities of such Credit Party or Subsidiary that
could reasonably be expected to be in excess of $1,000,000 in the aggregate, and
no Credit Party or Subsidiary of a Credit Party has permitted any current or
former tenant or occupant of the Real Estate to engage in any such operations;
(vi) there is no Litigation arising under or related to any Environmental Laws,
Environmental Permits or Hazardous Material that seeks damages, penalties,
fines, costs or expenses in excess of $1,000,000 in the aggregate or injunctive
relief against, or that alleges criminal misconduct by any Credit Party or any
Subsidiary of a Credit Party; (vii) no notice has been received by any Credit
Party or any Subsidiary of a Credit Party identifying any of them as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties, there are
no facts, circumstances or conditions that may result in any of the Credit
Parties or their Subsidiaries being identified as a "potentially responsible
party" under CERCLA or analogous state statutes; and (viii) the Credit Parties
have provided to Agent copies of all existing environmental reports, reviews and
audits and all written information pertaining to actual or potential
Environmental Liabilities, in each case relating to any of the Credit Parties or
their Subsidiaries.
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(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or affairs of such Credit Party or its Subsidiaries, and (ii) does not
have the capacity through the provisions of the Loan Documents or otherwise to
influence any Credit Party's or its Subsidiaries' conduct with respect to the
ownership, operation or management of any of their Real Estate or compliance
with Environmental Laws or Environmental Permits.
5.14. ERISA.
(a) Schedule 5.14 lists all Plans and separately
identifies all Pension Plans, including Title IV Plans, Multiemployer Plans,
ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of all such
listed Plans, together with a copy of the latest form IRS/DOL 5500-series for
each such Plan have been delivered to Agent. Except with respect to
Multiemployer Plans, a timely determination letter request has been filed and is
pending with respect to each Qualified Plan, and to Borrower's knowledge, the
Qualified Plans qualify under Section 401 of the IRC, 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 that would cause the loss of
such qualification or tax-exempt status. Each Plan is in material compliance
with the applicable provisions of law including ERISA and the IRC, including the
timely filing of all reports required under the IRC or ERISA, including the
statement required by 29 CFR Section 2520.104-23. Neither any Credit Party nor
ERISA Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the terms
of any such Plan. Neither any Credit Party nor ERISA Affiliate has engaged in a
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975 of
the IRC, in connection with any Plan, that would subject any Credit Party to a
material tax on prohibited transactions imposed by Section 502(i) of ERISA or
Section 4975 of the IRC.
(b) Except as set forth in Schedule 5.14 with respect to
conditions that exist on the date hereof: (i) no Title IV Plan has any material
Unfunded Pension Liability; (ii) no ERISA Event or event described in Section
4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably
expected to occur; (iii) there are no pending, or to the knowledge of Borrower,
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 Title IV Plan of any Credit Party or ERISA Affiliate has been
terminated, whether or not in a "standard termination" as that term is used in
Section 404(b)(1) of ERISA, nor has any Title IV Plan of any Credit Party or
ERISA Affiliate (determined at any time within the past five years) with
Unfunded Pension Liabilities been transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate; (vi) except in the case of any ESOP, Stock of all Credit
Parties and their ERISA Affiliates makes up, in the aggregate, no more than 10%
of fair market value of the assets of any Plan measured on the basis of fair
market value as of the latest valuation date of any Plan; and (vii) no liability
under any Title IV Plan has been satisfied with the purchase of a contract from
an insurance company that is not rated AAA by S&P or an equivalent rating by
another nationally recognized rating agency.
5.15. Brokers. No broker or finder acting on behalf of any Credit
Party or Affiliate thereof brought about the obtaining, making or closing of the
Loans or the Related Transactions, and no Credit Party or Affiliate thereof has
any obligation to any Person in respect of any finder's or brokerage fees in
connection therewith other than under the Management Services Agreement and
other fees payable to ▇▇▇▇▇▇▇▇▇ & Company, Inc. in connection with the placement
of the Senior Notes and ▇▇▇▇▇▇▇▇▇ & Company, Inc. in connection with the
Exchange Offer with respect to the Senior Subordinated Notes.
42
5.16. Deposit and Disbursement Accounts. Schedule 5.16 lists all
banks and other financial institutions at which any Credit Party maintains
deposit or other accounts as of the date hereof, 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 therefor.
5.17. Agreements and Other Documents. As of the date hereof, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which is listed in Schedule
5.17: supply agreements and purchase agreements not terminable by such Credit
Party within sixty (60) days following written notice issued by such Credit
Party and involving transactions in excess of $1,000,000 per annum; leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $500,000 per annum; licenses and permits
held by the Credit Parties, the absence of which could reasonably be expected to
have a Material Adverse Effect; instruments and documents evidencing any
Indebtedness or Guaranteed Indebtedness of such Credit Party and any Lien
granted by such Credit Party with respect thereto; and instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Credit Party.
5.18. Insurance. Schedule 5.18 lists all insurance policies of any
nature maintained, as of the date hereof, for current occurrences by each Credit
Party, as well as a summary of the key business terms of each such policy such
as deductibles, coverage limits and term of policy.
5.19. Restructuring. Borrower delivered to Agent prior to the date
hereof (i) all documents executed and delivered by Holdings, Parent and Borrower
in connection with the Restructuring, (ii) all documents executed and delivered
by Parent and Holdings in connection with the Exchange Offer and the issuance of
the Senior Subordinated Notes and the Consent Solicitation, and (iii) all
documents executed and delivered by Borrower and its Domestic Subsidiaries in
connection with the issuance of the Senior Notes. All such documents comply with
and the transactions contemplated thereby comply with all applicable laws. All
requisite approvals by Governmental Authorities having jurisdiction over any
Credit Party with respect to the transactions contemplated by such documents
have been obtained and no such approvals impose any conditions to the
consummation of the transactions contemplated by such documents or to the
conduct of business by the Credit Parties.
5.20. Designated Senior Debt. This Agreement and the credit
facilities created hereunder constitute "Senior Credit Facilities" or "Senior
Credit Agreement" under and as such terms are defined in the Senior Subordinated
Notes Indenture and all present and future Obligations constitute "Bank
Indebtedness", "Designated Senior Indebtedness" and "Senior Indebtedness" under
and as such terms are defined in the Senior Subordinated Notes Indenture. This
Agreement constitutes a "Credit Agreement" as such term is defined in the Senior
Notes Indenture.
SECTION 6.
DEFAULT, RIGHTS AND REMEDIES
6.1. Event of Default. "Event of Default" shall mean the occurrence
or existence of any one or more of the following:
(a) Payment. (1) Failure to pay any installment or other
payment of principal of any Loan when due, or to repay Revolving Loans to reduce
their balance to the maximum amount of Revolving Loans then permitted to be
outstanding or to reimburse any L/C Issuer for any payment made
43
by such L/C Issuer under or in respect of any Letter of Credit when due or (2)
failure to pay, within three (3) days after the due date, any interest on any
Loan or any other amount due under this Agreement or any of the other Loan
Documents; or
(b) Default in Other Agreements. (1) Any Credit Party or
any of its Subsidiaries fails to pay when due or within any applicable grace
period any principal or interest on Indebtedness (other than the Loans) or any
Contingent Obligations or (2) breach or default of any Credit Party or any of
its Subsidiaries, or the occurrence of any condition or event, with respect to
any Indebtedness (other than the Loans) or any Contingent Obligations, if the
effect of such breach, default or occurrence is to cause or to permit the holder
or holders then to cause, Indebtedness and/or Contingent Obligations having an
individual principal amount in excess of $250,000 or having an aggregate
principal amount in excess of $500,000 to become or be declared due prior to
their stated maturity; or
(c) Breach of Certain Provisions; Breach of Warranty.
Failure of any Credit Party to perform or comply with any term or condition
contained in that portion of Section 2.2 relating to the Credit Parties'
obligation to maintain insurance, Section 2.3, Section 3 or Section 4; or
(d) Borrowing Base Certificate. Any information contained
in any Borrowing Base Certificate is untrue or incorrect in any respect (other
than inadvertent, immaterial errors not exceeding $250,000 in the aggregate in
any Borrowing Base Certificate), or any representation or warranty herein or in
any Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
(without duplication of materiality qualifiers contained therein) as of the date
when made or deemed made; or
(e) Other Defaults Under Loan Documents. Any Credit Party
defaults in the performance of or compliance with any term contained in this
Agreement or the other Loan Documents (other than occurrences described in other
provisions of this Section 6.1 for which a different grace or cure period is
specified, or for which no cure period is specified and which constitute
immediate Events of Default) and such default is not remedied or waived within
thirty (30) days after the earlier of (1) receipt by Borrower of notice from
Agent or Requisite Lenders of such default or (2) actual knowledge of Borrower
or any other Credit Party of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(1) A court enters a decree or order for relief with respect to any Credit Party
in an involuntary case under the Bankruptcy Code, which decree or order is not
stayed or other similar relief is not granted under any applicable federal or
state law; or (2) the continuance of any of the following events for forty-five
(45) days unless dismissed, bonded or discharged: (a) an involuntary case is
commenced against any Credit Party, under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect; or (b) a decree or order of a
court 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 its property, is entered; or (c) a receiver,
trustee or other custodian is appointed without the consent of a Credit Party,
for all or a substantial part of the property of the Credit Party; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc.
(1) any Credit Party commences a voluntary case under the Bankruptcy Code, or
consents 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
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or (2) any Credit
Party makes any assignment for the benefit of creditors; or (3) the Board of
Directors of any Credit Party adopts any resolution or otherwise authorizes
action to approve any of the actions referred to in this Section 6.1(g); or
44
(h) Judgment and Attachments. Any money judgment, writ or
warrant of attachment, or similar process (other than those described elsewhere
in this Section 6.1) involving an amount in the aggregate at any time in excess
of $1,000,000 (in either case to the extent not adequately covered by insurance
in Agent's sole discretion as to which the insurance company has acknowledged
coverage) is entered or filed against one or more of the Credit Parties or any
of their respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than five (5)
Business Days prior to the date of any proposed sale thereunder; or
(i) Dissolution. Any order, judgment or decree is entered
against any Credit Party decreeing the dissolution or split up of such Credit
Party and such order remains undischarged or unstayed for a period in excess of
fifteen (15) days; or
(j) Solvency. Borrower or any Domestic Subsidiary ceases
to be Solvent, fails to pay its debts as they become due or admits in writing
its present or prospective inability to pay its debts as they become due; or
(k) Invalidity of Loan Documents. Any of the Loan
Documents for any reason, other than a partial or full release in accordance
with the terms thereof, ceases to be in full force and effect or is declared to
be null and void, or any Credit Party denies that it has any further liability
under any Loan Documents to which it is party, or gives notice to such effect;
or
(l) Damage; Casualty. Any event occurs, whether or not
insured or insurable, as a result of which revenue-producing activities cease or
are substantially curtailed at any facility of any Credit Party generating more
than 15% of the consolidated revenues of Borrower and its Subsidiaries for the
Fiscal Year preceding such event and such cessation or curtailment continues for
more than 30 days; or
(m) Business Activities. Holdings or Parent engage in any
type of business activity other than the ownership of Stock of Parent and
Borrower, respectively, and performance of their obligations under the Related
Transaction Documents to which they are a party; or
(n) Change of Control. A Change of Control occurs; or
(o) Subordinated Indebtedness. The failure of any Credit
Party or any creditor of Borrower or any of its Subsidiaries to comply with the
terms of any subordination or intercreditor agreement or any subordination or
intercreditor provisions of the Senior Subordinated Notes Indenture, the Senior
Subordinated Discount Notes Indenture, the Parent Senior Notes Indenture or the
Senior Notes Indenture or any other note or other document to the extent such
provisions run to the benefit of Agent or Lenders, or if any such note, document
or provision becomes null and void or any party denies further liability under
any such document or provides notice to that effect.
6.2. Suspension or Termination of Commitments. Upon the occurrence
of any Default or Event of Default, Agent may, and at the request of Requisite
Lenders Agent shall, without notice or demand, immediately suspend or terminate
all or any portion of Lenders' obligations to make additional Loans or issue or
cause to be issued Letters of Credit under the Revolving Loan Commitment;
provided that, in the case of a Default, if the subject condition or event is
waived by Requisite Lenders or cured within any applicable grace or cure period,
the Revolving Loan Commitment shall be reinstated.
6.3. Acceleration and other Remedies. Upon the occurrence of any
Event of Default described in Sections 6.1(f) or 6.1(g), the Commitments shall
be immediately terminated and all of the Obligations, including the Revolving
Loans, shall automatically become immediately due and payable,
45
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind, all of which are hereby
expressly waived by Borrower, and the Commitments shall thereupon terminate.
Upon the occurrence and during the continuance of any other Event of Default,
Agent may, and at the request of the Requisite Lenders, Agent shall, by written
notice to Borrower (a) reduce the aggregate amount of the Commitments from time
to time, (b) declare all or any portion of the Loans and all or any portion of
the other Obligations to be, and the same shall forthwith become, immediately
due and payable together with accrued interest thereon, (c) terminate all or any
portion of the obligations of Agent, L/C Issuers and Lenders to make Revolving
Credit Advances and issue Letters of Credit, (d) demand that Borrower
immediately deliver cash to Agent for the benefit of L/C Issuers (and Borrower
shall then immediately so deliver) in an amount equal to 105% of the aggregate
outstanding Letter of Credit Obligations and (e) exercise any other remedies
which may be available under the Loan Documents or applicable law. Borrower
hereby grants to Agent, for the benefit of L/C Issuers and each Lender with a
participation in any Letters of Credit then outstanding, a security interest in
such cash collateral to secure all of the Letter of Credit Obligations. Any such
cash collateral shall be made available by Agent to L/C Issuers to reimburse L/C
Issuers for payments of drafts drawn under such Letters of Credit and any Fees,
Charges and expenses of L/C Issuers with respect to such Letters of Credit and
the unused portion thereof, after all such Letters of Credit shall have expired
or been fully drawn upon, shall be applied to repay any other Obligations. After
all such Letters of Credit shall have expired or been fully drawn upon and all
Obligations shall have been satisfied and paid in full, the balance, if any, of
such cash collateral shall be returned to Borrower. Borrower shall from time to
time execute and deliver to Agent such further documents and instruments as
Agent may request with respect to such cash collateral.
6.4. Performance by Agent. If any Credit Party shall fail to
perform any covenant, duty or agreement contained in any of the Loan Documents,
Agent may perform or attempt to perform such covenant, duty or agreement on
behalf of such Credit Party after the expiration of any cure or grace periods
set forth herein. In such event, such Credit Party shall, at the request of
Agent, promptly pay any amount reasonably expended by Agent in such performance
or attempted performance to Agent, together with interest thereon at the highest
rate of interest in effect upon the occurrence of an Event of Default as
specified in Section 1.2(d) from the date of such expenditure until paid.
Notwithstanding the foregoing, it is expressly agreed that Agent shall not have
any liability or responsibility for the performance of any obligation of any
Credit Party under this Agreement or any other Loan Document.
6.5. Application of Proceeds. Notwithstanding anything to the
contrary contained in this Agreement, upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Agent from or on behalf of Borrower, and Agent shall have the
continuing and exclusive right to apply and to reapply any and all payments
received at any time or times after the occurrence and during the continuance of
an Event of Default against the Obligations in such manner as Agent may deem
advisable notwithstanding any previous application by Agent and (b) in the
absence of a specific determination by Agent with respect thereto, the proceeds
of any sale of, or other realization upon, all or any part of the Collateral
shall be applied: first, to all Fees, costs and expenses incurred by or owing to
Agent and any Lender with respect to this Agreement, the other Loan Documents or
the Collateral; second, to accrued and unpaid interest on the Obligations
(including any interest which but for the provisions of the Bankruptcy Code,
would have accrued on such amounts); third, to the principal amount of the
Obligations outstanding; and fourth to any other Obligations of Borrower owing
to Agent or any Lender under the Loan Documents. Any balance remaining shall be
delivered to Borrower or to whomever may be lawfully entitled to receive such
balance or as a court of competent jurisdiction may direct.
46
SECTION 7.
CONDITIONS TO LOANS
The obligations of Lenders and L/C Issuers to make Loans and to issue
or cause to be issued Letters of Credit are subject to satisfaction of all of
the applicable conditions set forth below.
7.1. Conditions to Initial Loans. The obligations of Lenders and
L/C Issuers to make the initial Loans and to issue or cause to be issued Letters
of Credit on the Closing Date are, in addition to the conditions precedent
specified in Section 7.2, subject to the delivery of all documents listed on,
the taking of all actions set forth on and the satisfaction of all other
conditions precedent listed on the Closing Checklist attached hereto as Annex C,
all in form and substance, or in a manner, satisfactory to Agent and Lenders.
7.2. Conditions to All Loans. Except as otherwise expressly
provided herein, no Lender or L/C Issuer shall be obligated to fund any Advance
or incur any Letter of Credit Obligation, if, as of the date thereof (the
"Funding Date"):
(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is untrue or incorrect in any
material respect (without duplication of any materiality qualifier contained
therein) as of such date, except to the extent that such representation or
warranty expressly relates to an earlier date, and Agent or Requisite Lenders
have determined not to make such Advance or incur such Letter of Credit
Obligation as a result of the fact that such warranty or representation is
untrue or incorrect;
(b) any Default or Event of Default has occurred and is
continuing or would result after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligation), and Agent or Requisite Lenders shall have
determined not to make any Advance or incur any Letter of Credit Obligation as a
result of that Default or Event of Default; or
(c) after giving effect to any Advance (or the incurrence
of any Letter of Credit Obligations), the outstanding amount of the Revolving
Loan would exceed remaining Borrowing Availability.
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrower that the conditions
in this Section 7.2 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. Letter of Credit Obligations shall be
deemed incurred by the issuance of a new Letter of Credit, by the extension
(other than an automatic extension) of the expiry date of an existing Letter of
Credit and by the increase in amount of an existing Letter of Credit.
SECTION 8.
ASSIGNMENT AND PARTICIPATION
8.1. Assignment and Participations.
(a) Subject to the terms of this Section 8.1, any Lender
may make an assignment to a Qualified Assignee of, or sale of participations in,
at any time or times, the Loan Documents, Loans,
47
Letter of Credit Obligations and any Commitment or any portion thereof or
interest therein, including any Lender's rights, title, interests, remedies,
powers or duties thereunder. Any assignment by a Lender shall: (i) require the
consent of Agent (which consent shall not be unreasonably withheld or delayed
with respect to a Qualified Assignee) and the execution of an assignment
agreement (an "Assignment Agreement" substantially in the form attached hereto
as Exhibit 8.1 and otherwise in form and substance reasonably satisfactory to,
and acknowledged by, Agent); (ii) be conditioned on such assignee Lender (a)
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 and (b) providing the
Borrower and Agent with a properly completed and executed IRS form ▇-▇, ▇-▇▇▇▇
or W-8ECI, as applicable; (iii) after giving effect to any such partial
assignment, the assignee Lender shall have Commitments in an amount at least
equal to $2,000,000 and the assigning Lender shall have retained Commitments in
an amount at least equal to $2,000,000; (iv) require a payment to Agent of an
assignment fee of $3,500 and (v) so long as no Event of Default has occurred and
is continuing, require the consent of Borrower, which shall not be unreasonably
withheld or delayed and shall be deemed granted if not objected to within five
(5) Business Days following notice thereof to Borrower; provided that no such
consent shall be required for an assignment to a Qualified Assignee.
Notwithstanding the above, Agent may in its sole and absolute discretion permit
any assignment by a Lender to a Person or Persons that are not Qualified
Assignees, provided that such permission shall be subject to any required
consent of Borrower contemplated by this Section 8.1. In the case of an
assignment by a Lender under this Section 8.1, the assignee shall have, to the
extent of such assignment, the same rights, benefits and obligations as all
other Lenders 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 shall give rise to a direct obligation of
Borrower to the assignee and that the assignee shall be considered to be a
"Lender." In all instances, each Lender's liability to make Loans hereunder
shall be several and not joint and shall be limited to such Lender's Pro Rata
Share of the applicable Commitment. In the event Agent or any Lender assigns or
otherwise transfers all or any part of the Obligations, Agent or any such Lender
shall so notify Borrower and Borrower shall, upon the request of Agent or such
Lender, execute new Notes in exchange for the Notes, if any, being assigned.
Notwithstanding the foregoing provisions of this Section 8.1(a), (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, (b) 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 or pledge such
Obligations and rights to trustee for the benefit of its investors and (c) any
Lender may assign the Obligations to an Affiliate of such Lender or to a Person
that is a Lender prior to the date of such assignment.
(b) Any participation by a Lender of all or any part of
its Commitments shall be conditioned on the participant providing Borrower and
Agent with a properly completed and executed IRS Form ▇-▇, ▇-▇▇▇▇ or W-8ECI, as
applicable, in accordance with the provisions of Section 1.12(c) applicable to
Lenders and 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 1.11,
1.12, 8.3 and 9.1, Borrower acknowledges and agrees that a participation shall
give rise to a direct obligation of Borrower to the participant and the
participant (a) shall be considered to be a "Lender" and (b) shall have the same
rights, benefits and obligations as all other Lenders thereunder.
48
Except as set forth in the preceding sentence neither Borrower nor any other
Credit Party shall have any obligation or duty to any participant. Neither Agent
nor any Lender (other than the Lender selling a participation) shall have any
duty to any participant and may continue to deal solely with the Lender selling
a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 8.1, no
Lender shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party shall assist each Lender permitted
to sell assignments or participations under this Section 8.1 as 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 prompt
preparation of informational materials for, and the participation of management
in meetings with, potential assignees or participants, all on a timetable
established by Agent in its sole discretion. Each Credit Party executing this
Agreement shall certify the correctness, completeness and accuracy of all
descriptions of the Credit Parties and their respective affairs contained in any
selling materials provided by it and all other information provided by it and
included in such materials, except that any Projections delivered by Borrower
shall only be certified by Borrower as having been prepared by Borrower in
compliance with the representations contained in Section 5.5. Agent shall
maintain, on behalf of Borrower, in its offices located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ a "register" for recording the name,
address, commitment and Loans owing to each Lender. The entries in such register
shall be presumptive evidence of the amounts due and owing to each Lender in the
absence of manifest error. Borrower, Agent and each Lender may treat each Person
whose name is recorded in such register pursuant to the terms hereof as a Lender
for all purposes of this Agreement. The register described herein shall be
available for inspection by Borrower and any Lender, at any reasonable time upon
reasonable prior notice.
(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); provided
that such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 9.13.
8.2. Agent.
(a) Appointment. Each Lender hereby designates and
appoints GE Capital as its Agent under this Agreement and the other Loan
Documents, and each Lender hereby irrevocably authorizes Agent to execute and
deliver the Collateral Documents and to take such action or to refrain from
taking such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers as are set forth herein or
therein, together with such other powers as are reasonably incidental thereto.
Agent is authorized and empowered to amend, modify, or waive any provisions of
this Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in this Section 8.2 and Section 9.2. The provisions of this Section 8.2
are solely for the benefit of Agent and Lenders and neither Borrower nor any
other Credit Party shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this
Agreement, Agent shall act solely as 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 Borrower or any other Credit Party. Agent may
perform any of its duties hereunder, or under the Loan Documents, by or through
its agents or employees.
49
(b) Nature of Duties. The duties of Agent shall be
mechanical and administrative in nature. Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Nothing in this
Agreement or any of the Loan Documents, express or implied, is intended to or
shall be construed to impose upon Agent any obligations in respect of this
Agreement or any of the Loan Documents except as expressly set forth herein or
therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of each Credit Party in connection with the
extension of credit hereunder and shall make its own appraisal of the
creditworthiness of each Credit Party, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto (other than as
expressly required herein). If Agent seeks the consent or approval of any
Lenders to the taking or refraining from taking any action hereunder, then Agent
shall send notice thereof to each Lender. Agent shall promptly notify each
Lender any time that the Requisite Lenders or Supermajority Revolving Lenders
have instructed Agent to act or refrain from acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted by them hereunder or under any of the Loan
Documents, or in connection herewith or therewith, except that Agent shall be
liable to the extent of its own gross negligence or willful misconduct as
determined by a final non-appealable order by a court of competent jurisdiction.
Agent shall not be liable for any apportionment or distribution of payments made
by it in good faith and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Lender to whom payment was due but not made, shall be to recover from other
Lenders any payment in excess of the amount to which they are determined to be
entitled (and such other Lenders hereby agree to return to such Lender any such
erroneous payments received by them). In no event shall Agent be liable for
punitive, special, consequential, incidental, exemplary or other similar
damages. In performing its functions and duties hereunder, Agent shall exercise
the same care which it would in dealing with loans for its own account, but
neither Agent nor any of its agents or representatives shall be responsible to
any Lender for any recitals, statements, representations or warranties herein or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility, or sufficiency of this Agreement or any of the Loan Documents or
the transactions contemplated thereby, or for the financial condition of any
Credit Party. Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Loan Documents or the financial condition of any
Credit Party, or the existence or possible existence of any Default or Event of
Default. Agent may at any time request instructions from Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders with respect to any
actions or approvals which by the terms of this Agreement or of any of the Loan
Documents Agent is permitted or required to take or to grant. If such
instructions are promptly requested, Agent shall be absolutely entitled to
refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from the Requisite Lenders, Supermajority Revolving
Lenders or such other portion of the Lenders as shall be prescribed by this
Agreement. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting under this Agreement or any of the other Loan Documents in accordance
with the instructions of Requisite Lenders, Supermajority Revolving Lenders or
all affected Lenders, as applicable; and, notwithstanding the instructions of
Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders, as
applicable, Agent shall have no obligation to take any action if it believes, in
good faith, that such action is deemed to be illegal by Agent or exposes Agent
to any liability for which it has not received satisfactory indemnification in
accordance with Section 8.2(e).
(d) Reliance. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any written or oral notices, statements,
certificates, orders or other documents or any telephone
50
message or other communication (including any writing, telex, fax or telegram)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder. Agent shall be entitled to rely upon the advice of legal counsel,
independent accountants, and other experts selected by Agent in its sole
discretion.
(e) Indemnification. Lenders will reimburse and indemnify
Agent for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, attorneys' fees and expenses), advances or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any of the Loan
Documents or any action taken or omitted by Agent under this Agreement or any of
the Loan Documents, in proportion to each Lender's Pro Rata Share, but only to
the extent that any of the foregoing is not reimbursed by Borrower; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements to the extent resulting from Agent's gross
negligence or willful misconduct as determined by a final non-appealable order
by a court of competent jurisdiction. If any indemnity furnished to Agent for
any purpose shall, in the opinion of Agent, be insufficient or become impaired,
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against even if so directed by the Requisite Lenders,
Supermajority Revolving Lenders or such other portion of the Lenders as shall be
prescribed by this Agreement until such additional indemnity is furnished. The
obligations of Lenders under this Section 8.2(e) shall survive the payment in
full of the Obligations and the termination of this Agreement.
(f) GE Capital Individually. With respect to its
Commitments hereunder, GE Capital shall have and may exercise the same rights
and powers hereunder and is subject to the same obligations and liabilities as
and to the extent set forth herein for any other Lender. The terms "Lenders",
"Requisite Lenders," "Supermajority Revolving Lenders" or any similar terms
shall, unless the context clearly otherwise indicates, include GE Capital in its
individual capacity as a Lender or one of the Requisite Lenders, or
Supermajority Revolving Lenders. GE Capital, either directly or through
strategic affiliations, may lend money to, acquire equity or other ownership
interests in, provide advisory services to and generally engage in any kind of
banking, trust or other business with any Credit Party as if it were not acting
as Agent pursuant hereto and without any duty to account therefor to Lenders. GE
Capital, either directly or through strategic affiliations, may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
(g) Successor Agent.
(i) Resignation. Agent may resign from the
performance of all its agency functions and duties hereunder at any time by
giving at least thirty (30) Business Days' prior written notice to Borrower and
Lenders. Such resignation shall take effect upon the acceptance by a successor
Agent of appointment pursuant to clause (ii) below or as otherwise provided in
clause (ii) below.
(ii) Appointment of Successor. Upon any such
notice of resignation pursuant to clause (i) above, Requisite Lenders shall
appoint a successor Agent which, unless an Event of Default has occurred and is
continuing, shall be reasonably acceptable to Borrower. If a successor Agent
shall not have been so appointed within the thirty (30) Business Day period
referred to in clause (i) above, the retiring Agent, upon notice to Borrower,
shall then appoint a successor Agent who shall serve as Agent until such time,
if any, as Requisite Lenders appoint a successor Agent as provided above.
51
(iii) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Agent's resignation as Agent, the provisions of
this Section 8.2 shall continue to inure to its benefit as to any actions taken
or omitted to be taken by it in its capacity as Agent.
(h) Collateral Matters.
(i) Release of Collateral. Lenders hereby
irrevocably authorize Agent, at its option and in its discretion, to release any
Lien granted to or held by Agent upon any Collateral (x) upon termination of the
Commitments and payment and satisfaction of all Obligations (other than
contingent indemnification obligations to the extent no claims giving rise
thereto have been asserted) or (y) constituting property being sold or disposed
of if Borrower certifies to Agent that the sale or disposition is made in
compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry).
(ii) Confirmation of Authority; Execution of
Releases. Without in any manner limiting Agent's authority to act without any
specific or further authorization or consent by Lenders (as set forth in Section
8.2(h)(i)), each Lender agrees to confirm in writing, upon request by Agent or
Borrower, the authority to release any Collateral conferred upon Agent under
clauses (x) and (y) of Section 8.2(h)(i). Upon receipt by Agent of any required
confirmation from the Requisite Lenders of its authority to release any
particular item or types of Collateral, and upon at least ten (10) Business
Days' prior written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to Agent upon such Collateral; provided,
however, that (x) Agent shall not be required to execute any such document on
terms which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (y) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
any Credit Party, in respect of), all interests retained by any Credit Party,
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral.
(iii) Absence of Duty. Agent shall have no
obligation whatsoever to any Lender, L/C Issuer or any other Person to assure
that the property covered by the Collateral Documents exists or is owned by
Borrower or any other Credit Party or is cared for, protected or insured or has
been encumbered or that the Liens granted to Agent have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this Section 8.2(h) or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by the Collateral
Documents or any act, omission or event related thereto, Agent may act in any
manner it may deem appropriate, in its discretion, given Agent's own interest in
property covered by the Collateral Documents as one of the Lenders and that
Agent shall have no duty or liability whatsoever to any of the other Lenders,
provided that Agent shall exercise the same care which it would in dealing with
loans for its own account.
(i) Agency for Perfection. Agent and each Lender hereby
appoint each other Lender as agent for the purpose of perfecting Agent's
security interest in assets which, in accordance with the Code in any applicable
jurisdiction, can be perfected by possession or control. Should any Lender
(other than Agent) obtain possession or control of any such assets, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such assets to Agent or in accordance with Agent's
52
instructions or transfer control to Agent in accordance with Agent's
instructions. Each Lender agrees that it will not have any right individually to
enforce or seek to enforce any Collateral Document or to realize upon any
collateral security for the Loans unless instructed to do so by Agent in
writing, it being understood and agreed that such rights and remedies may be
exercised only by Agent.
(j) Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default except
with respect to defaults in the payment of principal, interest and Fees required
to be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default". Agent will use reasonable efforts to notify each Lender of its receipt
of any such notice, unless such notice is with respect to defaults in the
payment of principal, interest and fees, in which case Agent will notify each
Lender of its receipt of such notice. Agent shall take such action with respect
to such Default or Event of Default as may be requested by Requisite Lenders in
accordance with Section 6. Unless and until Agent has received any such request,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interests of Lenders.
(k) Lender Actions Against Collateral. Each Lender agrees
that it will not take any action, nor institute any actions or proceedings, with
respect to the Loans, against Borrower or any Credit Party hereunder or under
the other Loan Documents or against any of the Real Estate encumbered by
Mortgages without the consent of the Required Lenders. With respect to any
action by Agent to enforce the rights and remedies of Agent and the Lenders
under this Agreement and the other Loan Documents, each Lender hereby consents
to the jurisdiction of the court in which such action is maintained, and agrees
to deliver its Notes to Agent to the extent necessary to enforce the rights and
remedies of Agent for the benefit of the Lenders under the Mortgages in
accordance with the provisions hereof.
8.3. Set Off 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, during the continuance of any Event of Default, each Lender is
hereby authorized by Borrower at any time or from time to time, with reasonably
prompt subsequent notice to Borrower (any prior or contemporaneous notice being
hereby expressly waived) to set off and to appropriate and to apply any and all
(A) balances held by such Lender at any of its offices for the account of
Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to Borrower or its Subsidiaries), and (B) other property at any time
held or owing by such Lender to or for the credit or for the account of Borrower
or any of its Subsidiaries, against and on account of any of the Obligations;
except that no Lender shall exercise any such right without the prior written
consent of Agent. Any Lender exercising a right to set off shall purchase for
cash (and the other Lenders shall sell) interests in each of such other Lender's
Pro Rata Share of the Obligations as would be necessary to cause all Lenders to
share the amount so set off with each other Lender in accordance with their
respective Pro Rata Shares. Borrower agrees, to the fullest extent permitted by
law, that any Lender may exercise its right to set off with respect to amounts
in excess of its Pro Rata Share of the Obligations and upon doing so shall
deliver such amount so set off to the Agent for the benefit of all Lenders in
accordance with their Pro Rata Shares.
8.4. Disbursement of Funds. Agent may, on behalf of Lenders,
disburse funds to Borrower for Loans requested. Each Lender shall reimburse
Agent on demand for all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Loan before
Agent disburses same to Borrower. If Agent elects to require that each Lender
make funds available to Agent prior to a disbursement by Agent to Borrower,
Agent shall advise each Lender by telephone or fax of the amount of such
Lender's Pro Rata Share of the Loan requested by Borrower no later than 1:00
p.m. (New York time) on the Funding Date applicable thereto, and each such
Lender shall pay Agent such
53
Lender's Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent's account on such Funding Date. If any Lender fails to pay the
amount of its Pro Rata Share within one (1) Business Day after Agent's demand,
Agent shall promptly notify Borrower, and Borrower shall immediately repay such
amount to Agent. Any repayment required pursuant to this Section 8.4 shall be
without premium or penalty. Nothing in this Section 8.4 or elsewhere in this
Agreement or the other Loan Documents, including the provisions of Section 8.5,
shall be deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its commitments hereunder or
to prejudice any rights that Agent or Borrower may have against any Lender as a
result of any default by such Lender hereunder.
8.5. Disbursements of Advances; Payment.
(a) Advances; Payments.
(i) Agent shall notify Revolving Lenders,
promptly after receipt of a Notice of Revolving Credit Advance and in any event
prior to 1:00 p.m. (New York time) on the date such Notice of a Revolving Credit
Advance is received, by fax, 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 Section 1.4 not later than 3:00 p.m.
(New York time) on the requested Funding Date in the case of an Index Rate Loans
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) At least once each calendar week or more
frequently at Agent's election (each, a "Settlement Date"), Agent shall advise
each Lender by telephone or fax of the amount of such Lender's Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that each 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 shall 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 such Lender on the Loans held by it. Such payments shall be
made by wire transfer to such Lender's account (as specified by such Lender in
Annex E or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the next Business Day following each Settlement Date. 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.
(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
setoff, 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 8.5(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
54
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 setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to Borrower or
paid to any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any other Loan
Document, Agent will not be required to distribute any portion thereof to any
Lender. In addition, each Lender will repay to Agent on demand any portion of
such amount that Agent has distributed to such Lender, together with interest at
such rate, if any, as Agent is required to pay to Borrower or such other Person,
without setoff, 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 shall not relieve any other Lender (each such other Revolving Lender,
an "Other Lender") of its obligations to make such Advance or purchase such
participation on such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make an Advance,
purchase a participation or make any other payment 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" or "Supermajority Revolving Lenders"
hereunder) for any voting or consent rights under or with respect to any Loan
Document.
(e) Dissemination of Information. Agent shall 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,
that Agent shall not be liable to any Lender for any failure to do so.
(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 setoff) 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 or Requisite Lenders. Agent is authorized
to issue all notices to be issued by or on behalf of the Lenders with respect to
the Senior Subordinated Notes and the Senior Notes.
SECTION 9.
MISCELLANEOUS
9.1. Indemnities. Borrower agrees to indemnify, pay, and hold
Agent, each Lender, each L/C Issuer and their respective officers, directors,
employees, agents, and attorneys (the "Indemnitees")
55
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs and expenses (including all
reasonable fees and expenses of counsel to such Indemnitees) of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against the
Indemnitee as a result of such Indemnitees being a party to this Agreement or
the transactions consummated pursuant to this Agreement or otherwise relating to
any of the Related Transactions; provided, that Borrower shall have no
obligation to an Indemnitee hereunder with respect to liabilities to the extent
resulting from the gross negligence or willful misconduct of that Indemnitee as
determined by a court of competent jurisdiction. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, Borrower agrees to
make the maximum contribution to the payment and satisfaction thereof which is
permissible under applicable law.
9.2. 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 other Loan Document, 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 Borrower, and by Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable. Except
as set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of
or consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Borrowing Base, or
that makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts, Eligible Inventory and Eligible Real Estate set forth in
Exhibit 4.9(d), 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 that waives compliance with the conditions precedent set forth
in Section 7.2 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 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 7.2 unless the same shall be in writing
and signed by Agent, Requisite Lenders and Borrower.
(c) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender directly affected
thereby: (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 (which action shall be deemed only to
affect those Lenders to whom such payments are made); (v) release any Guaranty
or, except as otherwise permitted in Section 3.7, release Collateral with a book
value exceeding 5% of the book value of all assets in the aggregate in any one
(1) year (which action shall be deemed to directly affect all Lenders); (vi)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Loans that shall be required for Lenders or any of them to take
any action hereunder; and (vii) amend or waive this Section 9.2 or the
definitions of the terms "Requisite Lenders" or "Supermajority Revolving
Lenders" insofar as such definitions affect the substance of this Section 9.2.
Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent or L/C Issuers under this Agreement or any other Loan
Document shall be effective unless in writing and signed by Agent or L/C
56
Issuers, as the case may be, 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 9.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of the
Notes.
9.3. Notices. Any notice or other communication required shall be
in writing addressed to the respective party as set forth below and may be
personally served, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by fax, on the date of transmission if transmitted
on a Business Day before 4:00 p.m. New York time; (c) if delivered by overnight
courier, one (1) Business Day after delivery to the courier properly addressed;
or (d) if delivered by U.S. mail, four (4) Business Days after deposit with
postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower: TELEX COMMUNICATIONS, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: STROOCK & STROOCK & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent or GE Capital: GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ATTN: Telex Communications, Inc. -
Account Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ATTN: Corporate Counsel
Corporate Financial Services - Global
Sponsor Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
57
And
GENERAL ELECTRIC CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: Corporate Counsel
Corporate Financial Services - Global
Sponsor Finance
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Lender: To the address set forth on the
signature page hereto or in the
applicable Assignment Agreement
9.4. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Agent or any Lender to exercise, nor any partial
exercise of, any power, right or privilege hereunder or under any other Loan
Documents shall impair such power, right, or privilege or be construed to be a
waiver of any Default or Event of Default. All rights and remedies existing
hereunder or under any other Loan Document are cumulative to and not exclusive
of any rights or remedies otherwise available.
9.5. Marshaling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to marshal any assets in payment of any or all of
the Obligations. To the extent that Borrower makes payment(s) or Agent enforces
its Liens or Agent or any Lender exercises its right of set-off, and such
payment(s) or the proceeds of such enforcement or set-off is subsequently
invalidated, declared to be fraudulent or preferential, set aside, or required
to be repaid by anyone, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.
9.6. Severability. The invalidity, illegality, or unenforceability
in any jurisdiction of any provision under the Loan Documents shall not affect
or impair the remaining provisions of the Loan Documents.
9.7. Lenders' Obligations Several; Independent Nature of Lenders'
Rights. The obligation of each Lender hereunder is several and not joint and no
Lender shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Agent or any
Lender pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.
9.8. Headings. Section and subsection headings are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes or be given substantive effect.
9.9. Applicable Law. THIS AGREEMENT AND EACH OF THE OTHER LOAN
DOCUMENTS WHICH DOES NOT EXPRESSLY SET FORTH APPLICABLE LAW SHALL BE GOVERNED BY
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF
58
LAW PRINCIPLES WHICH SHALL BE DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW.
9.10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that Borrower may not assign its rights or obligations
hereunder without the written consent of all Lenders.
9.11. No Fiduciary Relationship; Limited Liability. No provision in
the Loan Documents and no course of dealing between the parties shall be deemed
to create any fiduciary duty owing to any Credit Party by Agent or any Lender.
Each Credit Party agrees that neither Agent nor any Lender shall have liability
to such Credit Party (whether sounding in tort, contract or otherwise) for
losses suffered by such Credit Party in connection with, arising out of, or in
any way related to the transactions contemplated and the relationship
established by the Loan Documents, or any act, omission or event occurring in
connection therewith, unless and to the extent that it is determined that such
losses resulted from the gross negligence or willful misconduct of the party
from which recovery is sought as determined by a final non-appealable order by a
court of competent jurisdiction. Neither Agent nor any Lender shall have any
liability with respect to, and each Credit Party hereby waives, releases and
agrees not to ▇▇▇ for, any special, indirect or consequential damages suffered
by such Credit Party in connection with, arising out of, or in any way related
to the Loan Documents or the transactions contemplated thereby.
9.12. Construction. Agent, each Lender, Borrower and each other
Credit Party acknowledge that each of them has had the benefit of legal counsel
of its own choice and has been afforded an opportunity to review the Loan
Documents with its legal counsel and that the Loan Documents shall be construed
as if jointly drafted by Agent, each Lender, Borrower and each other Credit
Party.
9.13. Confidentiality. Agent and each Lender agree to exercise their
best efforts to keep confidential any non-public information delivered pursuant
to the Loan Documents and identified as such by Borrower and not to disclose
such information to Persons other than to potential assignees or participants or
to Persons employed by or engaged by Agent, a Lender or a Lender's assignees or
participants including attorneys, auditors, professional consultants, rating
agencies, insurance industry associations and portfolio management services. The
confidentiality provisions contained in this Section 9.13 shall not apply to
disclosures (i) required to be made by Agent or any Lender to any regulatory or
governmental agency or pursuant to legal process or (ii) consisting of general
portfolio information that does not identify Borrower. The obligations of Agent
and Lenders under this Section 9.13 shall supersede and replace the obligations
of Agent and Lenders under any confidentiality agreement in respect of this
financing executed and delivered by Agent or any Lender prior to the date
hereof. Notwithstanding anything to the contrary set forth herein or in any
other agreement to which the parties hereto are parties or by which they are
bound, the obligations of confidentiality contained herein and therein, as they
relate to the transactions contemplated by the Credit Agreement and the other
loan documents (the "Transaction"), shall not apply to the federal tax structure
or federal tax treatment of the Transaction, and each party hereto (and any
employee, representative, agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the federal tax structure and federal
tax treatment of the Transaction. The preceding sentence is intended to cause
the Transaction to be treated as not having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of the
Internal Revenue Code of 1986, as amended, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the federal tax structure of the
Transaction or any federal tax matter or federal tax idea related to the
Transaction.
9.14. CONSENT TO JURISDICTION. BORROWER AND CREDIT PARTIES HEREBY
CONSENT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ AND IRREVOCABLY AGREE THAT, SUBJECT TO
AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS.
BORROWER AND CREDIT PARTIES EXPRESSLY SUBMIT AND CONSENT TO THE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. BORROWER
AND CREDIT PARTIES HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND
AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON BORROWER AND CREDIT
PARTIES BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
BORROWER, AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE SHALL
BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED. IN ANY LITIGATION,
TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ALL THEN-CURRENT DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS OF BORROWER, CREDIT PARTIES OR ANY OF THEIR
RESPECTIVE SUBSIDIARIES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF
BORROWER OR SUCH CREDIT PARTY FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES
REGARDING THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A
DEPOSITION, AT TRIAL OR OTHERWISE). BORROWER AND CREDIT PARTIES AGREE THAT
AGENT'S OR ANY LENDER'S COUNSEL IN ANY SUCH DISPUTE RESOLUTION PROCEEDING MAY
EXAMINE ANY OF THESE INDIVIDUALS AS IF UNDER CROSS-EXAMINATION AND THAT ANY
DISCOVERY DEPOSITION OF ANY OF THEM MAY BE USED IN THAT PROCEEDING AS IF IT WERE
AN EVIDENCE DEPOSITION. BORROWER AND CREDIT PARTIES IN ANY EVENT WILL USE ALL
COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY AGENT OR ANY LENDER, ALL
PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER
THINGS UNDER THEIR CONTROL AND RELATING TO THE DISPUTE.
9.15. WAIVER OF JURY TRIAL. BORROWER, CREDIT PARTIES, AGENT AND EACH
LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. BORROWER, CREDIT PARTIES, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. BORROWER, CREDIT PARTIES, AGENT AND EACH LENDER WARRANT AND
REPRESENT THAT EACH HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS.
9.16. Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, issuances of Letters of
Credit and the execution and delivery of the Notes. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of Borrower set
forth in Sections 1.3(f), 1.10, 1.11, 1.12, 2.5 and 9.1 shall survive the
repayment of the Obligations and the termination of this Agreement.
9.17. Entire Agreement. This Agreement, the Notes and the other Loan
Documents embody the entire agreement among the parties hereto and supersede all
prior commitments, agreements, representations, and understandings, whether oral
or written, relating to the subject matter hereof, and
60
may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto. All Exhibits,
Schedules and Annexes referred to herein are incorporated in this Agreement by
reference and constitute a part of this Agreement.
9.18. Counterparts; Effectiveness. This Agreement and any
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which counterparts together shall constitute but one in the same instrument.
This Agreement shall become effective upon the execution of a counterpart hereof
by each of the parties hereto.
9.19. Replacement of Lenders.
(a) Within fifteen (15) days after receipt by Borrower of
written notice and demand from any Lender for payment pursuant to Section 1.11
or 1.12 or, as provided in this Section 9.19(c), in the case of certain refusals
by any Lender to consent to certain proposed amendments, modifications,
terminations or waivers with respect to this Agreement that have been approved
by Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders,
as applicable (any such Lender demanding such payment or refusing to so consent
being referred to herein as an "Affected Lender"), Borrower may, at its option,
notify Agent and such Affected Lender of its intention to do one of the
following:
(i) Borrower may obtain, at Borrower's expense,
a replacement Lender ("Replacement Lender") for such Affected Lender, which
Replacement Lender shall be reasonably satisfactory to Agent. In the event
Borrower obtains a Replacement Lender that will purchase all outstanding
Obligations owed to such Affected Lender and assume its Commitments hereunder
within ninety (90) days following notice of Borrower's intention to do so, the
Affected Lender shall sell and assign all of its rights and delegate all of its
obligations under this Agreement to such Replacement Lender in accordance with
the provisions of Section 8.1, provided that Borrower has reimbursed such
Affected Lender for any administrative fee payable pursuant to Section 8.1 and,
in any case where such replacement occurs as the result of a demand for payment
pursuant to Section 1.11 or 1.12, paid all amounts required to be paid to such
Affected Lender pursuant to Section 1.11 or 1.12 through the date of such sale
and assignment; or
(ii) Borrower may, with Agent's consent, prepay
in full all outstanding Obligations owed to such Affected Lender and terminate
such Affected Lender's Pro Rata Share of the Revolving Loan Commitment, in which
case the Revolving Loan Commitment will be reduced by the amount of such Pro
Rata Share. Borrower shall, within ninety (90) days following notice of its
intention to do so, prepay in full all outstanding Obligations owed to such
Affected Lender (including, in any case where such prepayment occurs as the
result of a demand for payment for increased costs, such Affected Lender's
increased costs for which it is entitled to reimbursement under this Agreement
through the date of such prepayment), and terminate such Affected Lender's
obligations under the Revolving Loan Commitment.
(b) In the case of a Non-Funding Lender pursuant to
Section 8.5(a), 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 any Non-Funding Lender, and each
Non-Funding Lender agrees that it shall, at Agent's request, sell and assign to
Agent or such Person, all of the Loans and Commitments of that Non-Funding
Lender for an amount equal to the principal balance of all Loans held by such
Non-Funding 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.
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(c) If, in connection with any proposed amendment,
modification, waiver or termination pursuant to Section 9.2 (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 in this clause (i) and in clause (ii) below being
referred to as a "Non-Consenting Lender"), or
(ii) requiring the consent of Supermajority
Revolving Lenders, the consent of Requisite 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 reasonably acceptable to Agent, shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Loans and Commitments of such Non-Consenting Lenders for an amount
equal to the principal balance of all Loans held by the Non-Consenting Lenders
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.
9.20. Delivery of Termination Statements and Mortgage Releases. Upon
payment in full in cash and performance of all of the Obligations (other than
indemnification Obligations), termination of the Commitments and a release of
all claims against Agent and Lenders, and so long as no suits, actions
proceedings, or claims are pending or threatened against any Indemnitee
asserting any damages, losses or liabilities that are indemnified liabilities
hereunder, 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.
9.21. Subordination of Intercompany Debt.
(a) Each Credit Party hereby agrees that any intercompany
Indebtedness or other intercompany payables or receivables, or intercompany
advances directly or indirectly made by or owed to such Credit Party by any
other Credit Party (collectively, "Intercompany Debt"), of whatever nature at
any time outstanding shall be subordinate and subject in right of payment to the
prior payment in full in cash of the Obligations. Each Credit Party hereby
agrees that it will not, while any Event of Default is continuing, accept any
payment, including by offset, on any Intercompany Debt until the Termination
Date, in each case, except with the prior written consent of Agent.
(b) In the event that any payment on any Intercompany
Debt shall be received by a Credit Party if prohibited by this Section 9.21
before the Termination Date, such Credit Party shall receive such payments and
hold the same in trust for, segregate the same from its own assets and shall
immediately pay over to, the Agent for the benefit of the Agent and Lenders all
such sums to the extent necessary so that Agent and the Lenders shall have been
paid in full, in cash, all Obligations owed or which may become owing.
(c) Upon any payment or distribution of any assets of any
Credit Party of any kind or character, whether in cash, property or securities
by set-off, recoupment or otherwise, to creditors in any liquidation or other
winding-up of such Credit Party or in the event of any Proceeding, Agent and
Lenders shall first be entitled to receive payment in full in cash, in
accordance with the terms of the Obligations and of this Agreement, of all
amounts payable under or in respect of such Obligations, before any payment or
distribution is made on, or in respect of, any Intercompany Debt, in any such
Proceeding, any
62
distribution or payment, to which Agent or any Lender would be entitled except
for the provisions hereof shall be paid by such Credit Party, or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution directly to Agent (for the benefit of Agent
and the Lenders) to the extent necessary to pay all such Obligations in full in
cash, after giving effect to any concurrent payment or distribution to Agent and
Lenders (or to Agent for the benefit of Agent and Lenders).
9.22. Prepayment Collateral Account.
(a) There shall be established with Agent an account (the
"Prepayment Collateral Account") in the name of Agent (for the benefit of Agent,
Lenders and L/C Issuers), into which Borrower may from time to time deposit
Dollars pursuant to, and in accordance with Section 1.5(e) or Section 1.5(g).
Except to the extent otherwise provided in this Section 9.22, the Prepayment
Collateral Account shall be under the sole dominion and control of Agent.
(b) (i) Agent is hereby authorized and directed to
invest and reinvest the funds from time to time deposited into the Prepayment
Collateral Account so long as no Event of Default has occurred and is
continuing, on the instructions of Borrower (provided that any such instructions
given orally shall be confirmed promptly in writing) or, if Borrower shall fail
to give such instructions upon delivery of any such funds, in the sole
discretion of Agent; provided that in no event may Borrower give instructions to
Agent to, or may Agent in its discretion, invest or reinvest funds in the
Prepayment Collateral Account in any Investment other than cash held in a
deposit account with a Lender meeting the requirements of clause (iv) of the
definition of Cash Equivalent or a time deposit issued by a Lender meeting the
requirements of clause (iv) of the definition of Cash Equivalent.
(ii) Any net income or gain on the investment of
funds from time to time held in the Prepayment Collateral Account shall be for
the account of Borrower and shall be promptly reinvested by Agent as a part of
the Prepayment Collateral Account; and any net loss on any such investment shall
be for the account of Borrower and shall be charged against the Prepayment
Collateral Account.
(iii) None of Agent, the Lenders or the L/C
Issuers shall be a trustee for any of the Credit Parties, or shall have any
obligations or responsibilities, or shall be liable for anything done or not
done, in connection with the Prepayment Collateral Account, except as expressly
provided herein and except that Agent shall have the obligations of a secured
party under the Code. None of the Agent, the Lenders or the L/C Issuers shall
have any obligation or responsibility or shall be liable in any way for any
investment decision made in accordance with this Section 9.22 or for any
decrease in the value of the investments held in the Prepayment Collateral
Account.
(c) For value received and to induce each of the L/C
Issuers to issue Letters of Credit and the Lenders to enter into this Credit
Agreement, to make Loans, and to acquire participations in Letters of Credit
from time to time, all as provided for in this Credit Agreement, as security for
the payment of all of the Obligations, each of the Credit Parties hereby assigns
to Agent (for the benefit of Agent, Lenders and L/C Issuers) and grants to Agent
(for the benefit of Agent, Lenders and L/C Issuers), a first and prior Lien upon
all of such Credit Party's rights in and to the Prepayment Collateral Account,
all cash, documents, instruments, securities and other investment property from
time to time held therein, and all rights pertaining to investments of funds in
the Prepayment Collateral Account and all products and proceeds of any of the
foregoing. All cash, documents, instruments, securities and other investment
property from time to time on deposit in the Prepayment Collateral Account, and
all rights pertaining to investments of funds in the Prepayment Collateral
Account shall immediately and without any need for any further action on the
part of any of the Credit Parties, Agent, any Lender or L/C Issuers, become
63
subject to the Lien set forth in this Section 9.22(c), be deemed Collateral for
all purposes hereof and the Security Agreement and be subject to the provisions
of this Credit Agreement and the Security Agreement.
[signature page follows]
64
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
TELEX COMMUNICATIONS, INC.,
AS BORROWER
By: _________________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
TELEX COMMUNICATIONS INTERNATIONAL,
LTD., AS A CREDIT PARTY
By: _________________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
TELEX COMMUNICATIONS INTERMEDIATE
HOLDINGS, LLC, AS A CREDIT PARTY
By: _________________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
TELEX COMMUNICATIONS HOLDINGS, INC.,
AS A CREDIT PARTY
By: _________________________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
GENERAL ELECTRIC CAPITAL
CORPORATION,
AS AGENT, AN L/C ISSUER AND A LENDER
By: _________________________________________________
Name:
Title: Its Duly Authorized Signatory
SIGNATURE PAGE TO TELEX CREDIT AGREEMENT
ANNEX A
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"Accounting Changes" means: (a) changes in accounting principles
required by GAAP and implemented by Borrower or any of its Subsidiaries; (b)
changes in accounting principles recommended by Borrower's certified public
accountants and implemented by Borrower; and (c) changes in carrying value of
Borrower's or any of its Subsidiaries' assets, liabilities or equity accounts
resulting from (i) the application of purchase accounting principles (SFAS 141,
A.P.B. 16 and/or 17 and EITF 88-16 and FASB 109) to the Related Transactions or
(ii) as the result of any other adjustments that, in each case, were applicable
to, but not included in, the Pro Forma (other than any adjustments in respect of
costs incurred in connection with the Restructuring to the extent in excess of
amounts estimated in good faith therefor as of the date hereof and so long as
such estimated amounts were included in the Pro Forma).
"Accounts" means all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments), (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Credit Party for property sold, leased, licensed, assigned
or otherwise disposed of, for a policy of insurance issued or to be issued, for
a secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all healthcare insurance receivables, and (f) all collateral
security of any kind, now or hereafter in existence, given by any Account Debtor
or other Person with respect to any of the foregoing.
"Acquisition Pro Forma" has the meaning ascribed to it in Section
3.6(b).
"Acquisition Projections" has the meaning ascribed to it in Section
3.6(b).
"Advances" means any Revolving Credit Advance.
"Affected Lender" has the meaning ascribed to it in Section 9.19(a).
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 10% or more of the Stock
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having ordinary voting power in the election of directors of such Person, (b)
each Person that controls, is controlled by or is under common control with such
Person, (c) each of such Person's officers, directors, joint venturers and
partners and (d) in the case of Borrower, the immediate family members, spouses
and lineal descendants of individuals who are Affiliates of Borrower. For the
purposes of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that the term "Affiliate" shall
specifically exclude Agent and each Lender.
"Agent" means GE Capital in its capacity as Agent for Lenders or its
successor appointed pursuant to Section 8.2.
"Agreement" means this Credit Agreement (including all schedules,
subschedules, annexes and exhibits hereto), as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Applicable Margins" means collectively the Applicable Revolver Index
Margin and the Applicable Revolver LIBOR Margin
"Applicable Revolver Index Margin" means the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.2(a).
"Applicable Revolver LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate applicable
to the Revolving Loan, as determined by reference to Section 1.2(a).
"Appraised Forced Liquidation Value" shall mean, at any time, as to any
Real Estate owned by Borrower, the appraised forced liquidation value determined
most recently at or prior to such time in writing by an independent real estate
appraiser mutually agreed upon by Agent and Borrower and in accordance with
FIRREA, such determination to be made using the same basis and or approach to
valuation consistent with the approach used in the initial determination.
"Asset Disposition" means the disposition whether by sale, lease,
transfer, loss, damage, destruction, casualty, condemnation or otherwise of any
of the following: (a) any of the Stock or other equity or ownership interest of
Holdings or any of Holdings' Subsidiaries or (b) any or all of the assets of
Borrower or any of its Subsidiaries other than sales of Inventory in the
ordinary course of business.
"Assignment Agreement" has the meaning ascribed to it in Section
8.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the United States
Code, 11 U.S.C. Sections 101 et seq. or other applicable bankruptcy, insolvency
or similar laws.
"Borrower" has the meaning ascribed to it in the preamble to the
Agreement.
"Borrowing Availability" means as of any date of determination the
lesser of (i) the Maximum Amount less the Revolving Loan then outstanding
(including, without duplication, the outstanding balance of Letter of Credit
Obligations) and (ii) the Borrowing Base less the sum of (a) the Revolving Loan
then outstanding (including, without duplication, the outstanding balance of
Letter of Credit Obligations) and (b) Reserves required by Agent in its
reasonable credit judgment.
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"Borrowing Base" means, as of any date of determination by Agent, an
amount equal to the sum at such time of:
(a) up to 85% of the book value of Borrower's Eligible
Accounts at such time;
(b) up to 60% of the book value of Borrower's Eligible
Inventory consisting of finished goods and up to 10% of the book value
of Borrower's Eligible Inventory consisting of raw materials, in each
case valued at the lower of cost (determined on a first-in, first-out
basis) or market;
(c) up to the lesser of (i) $5,000,000 and (ii) 55% of
the Appraised Forced Liquidation Value of Borrower's Eligible Real
Estate at such time; less
(d) any Reserves Agent may have applied thereto.
"Borrowing Base Certificate" has the meaning ascribed to it in Section
4.9(d).
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York
or the State of Minnesota and in reference to LIBOR Loans shall mean any such
day that is also a LIBOR Business Day.
"Canadian Security Agreement" means the Canadian Security Agreement
entered into on or after the date hereof by and among Agent, on behalf of itself
and Lenders, and each Credit Party that is a signatory thereto, as amended,
modified and supplemented from time to time.
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Equivalents" means: (i) marketable securities (A) issued or
directly and unconditionally guaranteed as to interest and principal by the
United States government or (B) issued by any agency of the United States
government the obligations of which are backed by the full faith and credit of
the United States, in each case maturing within one (1) year after acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after acquisition
thereof and having, at the time of acquisition, a rating of at least A-1 from
S&P or at least P-1 from ▇▇▇▇▇'▇; (iii) commercial paper maturing no more than
one year from the date of acquisition and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from ▇▇▇▇▇'▇; (iv) certificates
of deposit or bankers' acceptances issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that is at least (A) "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (B) has Tier 1 capital (as defined in such regulations) of not
less than $250,000,000, in each case maturing within one year after issuance or
acceptance thereof; and (v) shares of any money market mutual or similar funds
that (A) has substantially all of its assets invested continuously in the types
of investments referred to in clauses (i) through (iv) above, (B) has net assets
of not less than $500,000,000 and (C) has the highest rating obtainable from
either S&P or ▇▇▇▇▇'▇.
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"Certificate of Exemption" has the meaning ascribed to it in Section
1.12(c).
"Change of Control" means any event, transaction or occurrence as a
result of which (a) if any Person or group (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities Act
of 1934) other than any Affiliate of Greenwich Street Partners, Inc., FS Private
Investments III LLC (d/b/a Jefferies Capital Partners), CFSC Wayland Advisers,
Inc. or any entity advised or managed by Greenwich Street Partners, Inc., FS
Private Investments III LLC (d/b/a Jefferies Capital Partners), CFSC Wayland
Advisers, Inc. or any Affiliate of any of them acquires more than 25% of the
issued and outstanding shares of Voting Stock of Holdings, (b) the occurrence of
a "Change of Control" or "Change in Control" (as such term is defined in the
Senior Subordinated Notes Indenture or the Senior Notes Indenture), (c) during
any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of Holdings
(together with any new directors whose election by the board of directors of
Holdings or whose nomination for election by the Stockholders of Holdings was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office, (d) Holdings ceases to own and control all of the economic and voting
rights associated with all of the outstanding Stock of Parent, (e) Parent ceases
to own and control all of the economic and voting rights associated with all of
the outstanding Stock of Borrower or (f) Borrower ceases to own and control all
of the economic and voting rights associated with all of the outstanding Stock
of any of its wholly-owned Subsidiaries.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including premiums and other amounts owed
to the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (d) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party, wherever located.
"Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex C.
"Closing Date" shall be changed to the date of the initial funding of a
Revolving Credit Advance or issuance of a Letter of Credit under this Agreement.
"Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
A-4
"Collateral" means the property covered by the Collateral Documents and
any other property, real or personal, tangible or intangible, now existing or
hereafter acquired, that may at any time be or become subject to a security
interest or Lien in favor of Agent, on behalf of itself and Lenders, to secure
the Obligations or any portion thereof.
"Collateral Documents" means the Security Agreements, the Pledge
Agreements, the Guaranties, the Mortgages, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security Agreement, the Control
Agreements and all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations or any
portion thereof.
"Collateral Trustee" means GE Capital in its capacity as collateral
trustee under the Intercreditor Agreement referred to in clause (i) of the
definition of "Intercreditor Agreements" or any successor in such capacity prior
to the Termination Date.
"Commitment Termination Date" means the earliest of (a) July 12, 2008,
(b) the date of termination of Lenders' obligations to make Advances and to
incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 6.3, and (c) the date of (i) prepayment in full
in cash by Borrower of the Loans, (ii) the cancellation and return (or stand-by
guarantee) of all Letters of Credit or the cash collateralization of all Letter
of Credit Obligations pursuant to Section 1.5(g), and (iii) the permanent
reduction of the Commitments to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment and as set forth on Annex B to the Agreement
or in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments which
aggregate commitment shall be fifteen million dollars ($15,000,000) on the date
hereof, as such Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in Section
4.9(k).
"Consent Solicitation" means the solicitation by Holdings of the
holders of the Senior Subordinated Discount Notes made pursuant to the Consent
Solicitation and Exchange Offer Document.
"Consent Solicitation and Exchange Offer Document" means the Consent
Solicitation Statement and Exchange Offer Memorandum dated October 22, 2003,
together with the accompanying Consent and Letter of Transmittal dated October
22, 2003 pursuant to which Holdings offered to exchange the Senior Subordinated
Discount Notes for the Senior Subordinated Notes.
"Consolidated Net Income" has the meaning ascribed to it in Section 4.3
of Schedule 2 to Exhibit 4.9(l).
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability of that Person: (i) with respect to Guaranteed Indebtedness
and with respect to any Indebtedness, lease, dividend or other obligation of
another Person if the purpose or intent of the Person incurring such liability,
or the effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (iii) under
any foreign exchange contract, currency swap agreement, interest rate swap
agreement or other similar agreement or arrangement designed to alter the risks
of that Person
A-5
arising from fluctuations in currency values or interest rates, (iv) any
agreement, contract or transaction involving commodity options or future
contracts, (v) to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement, or (vi) pursuant
to any agreement to purchase, repurchase or otherwise acquire any obligation or
any property constituting security therefor, to provide funds for the payment or
discharge of such obligation or to maintain the solvency, financial condition or
any balance sheet item or level of income of another. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if not a fixed and determined amount, the
maximum amount so guaranteed.
"Contractual Obligations" means, as applied to any Person, any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject including
the Related Transactions Documents.
"Control Agreements" means tri-party deposit account, securities
account or commodities account control agreements by and among the applicable
Credit Party, Agent and the depository bank, securities intermediary or
commodities intermediary, and each in form and substance satisfactory in all
respects to Agent and in any event providing to Agent "control" of such deposit
account, securities account and related financial assets and securities
entitlements or commodities account and related commodities contracts within the
meaning of Articles 8 and 9 of the Code.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyright Security Agreement" means the Copyright Security Agreement
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party, as amended, modified or supplemented from time to time.
"Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" means Holdings, Parent, Borrower, and each of their
respective Domestic Subsidiaries and each other Person who executes this
Agreement as a "Credit Party" or executes a Guaranty or who grants a Lien on all
or part of its assets to secure all of part of the Obligations.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect Borrower
or its Domestic Subsidiaries against fluctuations in currency values.
"Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section 1.2(d).
"Disbursement Account" has the meaning ascribed to it in Section
1.1(c).
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"Disclosure Schedules" means the Schedules prepared by Credit Parties
and denominated as Schedules 2.7 through 5.18 in the index to the Agreement.
"Documents" means any "document," as such term is defined in the Code,
including electronic documents, now owned or hereafter acquired by any Credit
Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of America.
"Domestic Subsidiary" means a Subsidiary of Borrower that is organized
under the laws of the United States of America or any state thereof.
"EBITDA" has the meaning ascribed to it in Section 4.3 of Schedule 2 to
Exhibit 4.9(l).
"Eligible Accounts" has the meaning ascribed to it in Schedule 1 to
Exhibit 4.9(d).
"Eligible Inventory" has the meaning ascribed to it in Schedule 1 to
Exhibit 4.9(d).
"Eligible Real Estate" has the meaning ascribed to it in Schedule 1 to
Exhibit 4.9(d).
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. Sections 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42
U.S.C. Sections 7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. Sections 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Sections
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located and, in
any event, including all such Credit Party's
A-7
machinery and equipment, including processing equipment, conveyors, machine
tools, data processing and computer equipment, including embedded software and
peripheral equipment and all engineering, processing and manufacturing
equipment, office machinery, furniture, materials handling equipment, tools,
attachments, accessories, automotive equipment, trailers, trucks, forklifts,
molds, dies, stamps, motor vehicles, rolling stock and other equipment of every
kind and nature, trade fixtures and fixtures not forming a part of real
property, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any trade or
business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the loss of a Qualified Plan's qualification or tax exempt status; or (j) the
termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section 6.1.
"Excess Cash Flow" has the meaning ascribed to it in Schedule 2 to
Exhibit 4.9(l).
"Exchange Offer" means the offer by Parent to exchange Senior
Subordinated Discount Notes for Senior Subordinated Notes pursuant to the
Consent Solicitation and Exchange Offer Document.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C.Section 201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
A-8
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fees" means any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Statements" means the consolidated income statements,
statements of cash flows and balance sheets of Borrower and its Subsidiaries
delivered in accordance with Section 4.9.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time.
"Fiscal Month" means any of the monthly accounting periods of Borrower.
"Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of Borrower
ending on December 31 of each year.
"Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
"Foreign Lender" has the meaning ascribed to it in Section 1.12(c).
"Funded Debt" means, with respect to any Person, without duplication,
all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and that by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrower, the Obligations (including Letter of Credit Obligations) and, without
duplication, Guaranteed Indebtedness consisting of guaranties of Funded Debt of
other Persons.
"Funding Date" has the meaning ascribed to it in Section 7.2.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied.
"GE Capital" has the meaning ascribed to it in the Preamble.
"GE Capital Fee Letter" has the meaning ascribed to it in Section
1.3(a).
"General Intangibles" means "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contractual Obligation, all payment intangibles,
customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in Intellectual
Property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models,
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drawings, materials and records, goodwill (including the goodwill associated
with any Trademark or Trademark License), all rights and claims in or under
insurance policies (including insurance for fire, damage, loss and casualty,
whether covering personal property, real property, tangible rights or intangible
rights, all liability, life, key man and business interruption insurance, and
all unearned premiums), uncertificated securities, chooses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights to receive dividends, distributions, cash, Instruments and
other property in respect of or in exchange for pledged Stock and Investment
Property, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, including all tapes, cards, computer
runs and other papers and documents in the possession or under the control of
such Credit Party or any computer bureau or service company from time to time
acting for such Credit Party.
"German Pledge Agreement" has the meaning ascribed to it in the
Intercreditor Agreement described in clause (i) of the definition of
"Intercreditor Agreements".
"Goods" means any "goods," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, including
embedded software to the extent included in "goods" as defined in the Code,
manufactured homes, standing timber that is cut and removed for sale and unborn
young of animals.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" means, as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, the Guaranty of even date herewith
executed by Holdings, Parent and each Domestic Subsidiary of Borrower and any
other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantors" means Holdings, Parent, each Domestic Subsidiary of
Borrower, and each other Person, if any, that executes a guaranty or other
similar agreement in favor of Agent, for itself and the ratable benefit of
Lenders, in connection with the transactions contemplated by the Agreement and
the other Loan Documents.
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"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Holdings" has the meaning ascribed thereto in the recitals to this
Agreement.
"Indebtedness" means, with respect to any Person, without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred six (6) months or more,
but excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than six (6) months unless
being contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the date hereof) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, (i) "earnouts"
and similar payment obligations, and (j) the Obligations.
"Indemnitees" has the meaning ascribed to it in Section 9.1.
"Index Rate" means, for any day, a floating rate equal to the higher of
(i) the rate publicly quoted from time to time by The Wall Street Journal as the
"base rate on corporate loans posted by at least 75% of the nation's 30 largest
banks" (or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.
"Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
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"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Intercompany Debt" has the meaning ascribed to it in Section 9.21.
"Intercompany Notes" has the meaning ascribed to it in Section 3.1.
"Intercreditor Agreements" means (i) the intercreditor agreement dated
as of the date hereof entered into by and among the Credit Parties, Agent and
the Senior Notes Trustee and (ii) the intercreditor agreement dated as of the
Closing Date entered into by and among the Credit Parties, Agent and the Senior
Subordinated Notes Trustee; in each case, as amended, modified or supplemented
from time to time in accordance with their respective terms.
"Interest Expense" has the meaning ascribed to it in Schedule 2 to
Exhibit 4.9(l).
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided that,
in the case of any LIBOR Period greater than three months in duration, interest
shall be payable at three month intervals and on the last day of such LIBOR
Period; and provided further that in addition to the foregoing, each of (x) the
date upon which all of the Commitments have been terminated and the Loans have
been paid in full and (y) the Commitment Termination Date shall be deemed to be
an "Interest Payment Date" with respect to any interest that has then accrued
under the Agreement.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar agreement
or arrangement designed to protect Borrower and its Domestic Subsidiaries
against fluctuations in interest rates.
"Inventory" means any "inventory," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located, including
inventory, merchandise, goods and other personal property that are held by or on
behalf of any Credit Party for sale or lease or are furnished or are to be
furnished under a contract of service, or that constitute raw materials, work in
process, finished goods, returned goods, supplies or materials of any kind,
nature or description used or consumed or to be used or consumed in such Credit
Party's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including all supplies and embedded software.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries of any Stock, or other
ownership interest in, any other Person, and (ii) any direct or indirect loan,
advance or capital contribution by Borrower or any of its Subsidiaries to any
other Person, including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business. The outstanding amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"Investment Property" means all "investment property," as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including: (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money
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owing by any securities intermediary with respect to that account; (iii) all
securities accounts of any Credit Party; (iv) all commodity contracts of any
Credit Party; and (v) all commodity accounts held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"L/C Issuer" means GE Capital or a Subsidiary thereof or a bank or
other legally authorized Person selected by or acceptable to Agent in its sole
discretion, in such Person's capacity as an issuer of Letters of Credit
hereunder.
"L/C Sublimit" has the meaning ascribed to it in Section 1.1(b).
"Leased Premises" has the meaning ascribed to it in Section 2.8(e).
"Lease" has the meaning ascribed to it in Section 2.8(e).
"Lenders" means GE Capital, the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations in accordance with the provisions of this
Agreement, such term shall include any assignee of such Lender.
"Letters of Credit" means documentary or standby letters of credit
issued for the account of Borrower by L/C Issuers, and bankers' acceptances
issued by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.
"Letter of Credit Fee" has the meaning ascribed to it in Section
1.3(d).
"Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of any Letters of Credit by any L/C Issuer or the purchase of a
participation as set forth in Section 1.1(b) with respect to any Letter of
Credit. The amount of such Letter of Credit Obligations shall equal the maximum
amount that may be payable by Agent and Lenders thereupon or pursuant thereto.
"Leverage Ratio" has the meaning ascribed to it in Schedule 2 to
Exhibit 4.9(l).
"LIBOR Breakage Fee" means an amount equal to the amount of any losses,
expenses, liabilities (including, without limitation, any loss (including
interest paid) and lost opportunity cost in connection with the re-employment of
such funds) that any Lender may sustain as a result of (i) any default by
Borrower in making any borrowing of, conversion into or continuation of any
LIBOR Loan following Borrower's delivery to Agent of any LIBOR Loan request in
respect thereof or (ii) any payment of a LIBOR Loan on any day that is not the
last day of the LIBOR Period applicable thereto (regardless of the source of
such prepayment and whether voluntary, by acceleration or otherwise). For
purposes of calculating amounts payable to a Lender under Section 1.3(e), each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at LIBOR in an amount equal to the
amount of that LIBOR Loan and having a maturity and repricing characteristics
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
Section 1.3(e).
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"LIBOR Business Day" means a Business Day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"LIBOR Loans" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.2(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that
is not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond
the date set forth in clause (a) of the definition of "Commitment
Termination Date" shall end two (2) LIBOR Business Days prior to such
date;
(c) any LIBOR Period that begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;
(d) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower shall select LIBOR Periods so that there
shall be no more than 10 separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the higher of (i) 1.50% per annum and (ii) the
offered rate for deposits in United States Dollars for the applicable
LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the
first day of such LIBOR Period (unless such date is not a Business Day,
in which event the next succeeding Business Day will be used); divided
by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day that is two (2) LIBOR
Business Days prior to the beginning of such LIBOR Period (including
basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental
Authority having jurisdiction with respect thereto, as now and from
time to time in effect) for Eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of the Federal Reserve
Board that are required to be maintained by a member bank of the
Federal Reserve System.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be available to Agent.
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"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 4.9(i).
"Loan Account" has the meaning ascribed to it in Section 1.10.
"Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the GE Capital Fee Letter, the Intercreditor Agreements, the Trust
Agreements and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent or any Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.
"Loans" means the Revolving Loan.
"Master Documentary Agreement" has the meaning ascribed to it in Annex
C.
"Master Standby Agreement" has the meaning ascribed to it in Annex C.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of the
Credit Parties considered as a whole, (b) Borrower's ability to pay any of the
Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and Lenders,
on the Collateral or the priority of such Liens, or (d) Agent's or any Lender's
rights and remedies under the Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, any event or occurrence adverse to one
or more Credit Parties which results or could reasonably be expected to result
in costs and/or liabilities in excess of $2,500,000 shall constitute a Material
Adverse Effect.
"Maximum Amount" means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in Section 1.2(f).
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ Investor's Services, Inc.
"Mortgages" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to any real property owned, leased, subleased
A-15
or used by any Credit Party or any of its Subsidiaries, in each case, as
amended, modified or supplemented from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making,
is obligated to make or has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.
"Net Proceeds" means (i) cash proceeds received by Borrower or any of
its Subsidiaries from any Asset Disposition (including insurance proceeds,
awards of condemnation, and payments under notes or other debt securities
received in connection with any Asset Disposition), net of (a) the costs of such
Asset Disposition (including taxes attributable to such sale, lease or transfer)
and (b) amounts applied to repayment of Indebtedness (other than the
Obligations) secured by a Lien on the asset or property disposed, and (ii) cash
proceeds attributable to any working capital, earnings, balance sheet or similar
adjustment under the Acquisition Agreement.
"Non-Consenting Lender" has the meaning ascribed to it in Section
9.19(c).
"Non-Funding Lender" has the meaning ascribed to it in Section 8.5(a).
"Non-Voting Stock" means Stock that is not Voting Stock.
"Notes" means the Revolving Notes.
"Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.2(e).
"Notice of Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable), including
obligations pursuant to Letter of Credit Obligations, owing by any Credit Party
to Agent, Security Trustee, Collateral Trustee or any Lender, and all covenants
and duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under the Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such case or proceeding), Fees, Charges, expenses, attorneys'
fees and any other sum chargeable to any Credit Party under the Agreement or any
of the other Loan Documents.
"Old Notes" means Holdings' 11% senior subordinated notes and Holdings'
10 1/2% senior subordinated notes, in each case, to the extent outstanding on
the date hereof (plus any subsequent accretion of principal on such senior
subordinated notes in accordance with the terms thereof as in effect on the
Closing Date).
"Other Lender" has the meaning ascribed to it in Section 8.5(d).
"Overadvance" has the meaning ascribed to it in Section 1.1(a).
"Parent" has the meaning ascribed thereto in the recitals to this
Agreement.
"Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
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"Patent Security Agreement" means the Patent Security Agreement made in
favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party, as amended, modified or supplemented from time to time.
"Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a plan described in Section 3(2) of ERISA.
"Permitted Acquisition" has the meaning ascribed to it in Section
3.6(b).
"Permitted Encumbrances" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or that are being contested in good faith and by appropriate proceedings and for
which adequate reserves shall have been set aside on its books in accordance
with GAAP and which have not obtained priority to the Lien of Agent; (b) pledges
or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities for sums not more than 30
days delinquent, so long as such Liens attach only to Inventory; (f) deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to which
any Credit Party is a party; (g) any attachment or judgment lien not
constituting an Event of Default under Section 6.1; (h) zoning restrictions,
easements, licenses, or other restrictions on the use of any Real Estate or
other minor irregularities in title (including leasehold title) thereto, so long
as the same do not materially impair the use, value, or marketability of such
Real Estate; (i) presently existing or hereafter created Liens in favor of
Agent, on behalf of Lenders; (j) Liens existing on the date hereof and renewal,
and extensions thereof which Liens are set forth on Schedule 3.2; (k) Liens
securing Indebtedness permitted by Section 3.1(c), provided that the Liens
attach only to the assets financed by such Indebtedness, and Liens securing
Indebtedness permitted by Section 3.1(n) in property subject to such Lien as of
the date hereof; (l) Liens securing the Senior Notes and related obligations
arising under the Senior Notes Indenture, to the extent such Liens are on
Collateral and are subject to an Intercreditor Agreement and the intercreditor
provisions of the Senior Notes Indenture. (m) Liens upon specific items of
Inventory or other goods and proceeds thereof of any Person and securing such
Person's obligations in respect of bankers' acceptances issued or created for
the account of such Person to facilitate the purchase, shipment or storage of
such Inventory or other goods, provided, that any Inventory subject to any such
Lien shall not constitute Eligible Inventory; (n) Liens on property of any
Subsidiary, other than a Domestic Subsidiary, of Borrower, securing Indebtedness
permitted by Section 3.1(h), (o) Liens on property of any Subsidiary, other than
a Domestic Subsidiary, of Borrower, securing obligations of a Subsidiary, other
than a Domestic Subsidiary, of Borrower, in respect of a Currency Agreement
permitted by Section 3.1(k) and (p) Liens created by Borrower on a deposit
account and amounts credited thereto securing letters of credit issued by
JPMorgan Chase Bank (f/ka The Chase Manhattan Bank) in an aggregate face amount
of $351,180.00.
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"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute.
"Pledge Agreements" means the Pledge Agreement of even date herewith
entered into by and among Agent, on behalf of itself and Lenders, Holdings,
Parent, Borrower and certain Domestic Subsidiaries of Borrower, the various
pledge agreements of even date herewith entered into by and among, inter alia,
Agent (or the Security Trustee or Collateral Trustee) and TCI and any other
pledge agreement entered into after the date hereof by any Credit Party, in each
case, as amended, modified or supplemented from time to time.
"Prepayment Collateral Account" has the meaning ascribed to it in
Section 9.22(a).
"Prior Lender" means the holder of the Prior Lender Obligations.
"Prior Lender Obligations" means (i) the obligations under the Credit
Agreement dated as of May 6, 1997, by and among Holdings (as successor to EV
International, Inc.), JPMorgan Chase Bank (f/ka The Chase Manhattan Bank) as
administrative agent and the financial institutions party thereto from time to
time as lenders, as amended, restated, modified or supplemented from time to
time, (ii) the Senior Secured Notes issued pursuant to that certain Amended and
Restated Note Purchase Agreement, dated as of November 21, 2001, by and among
Holdings, GSCP Recovery (US) LLC and Golden Tree Asset Management, LLC, as
Co-Agents, and the purchasers party thereto, (iii) all other Indebtedness
assumed by Borrower from Holdings.
"Pro Forma" means the unaudited consolidated balance sheets of Borrower
and its Subsidiaries prepared in accordance with GAAP as of the date hereof
after giving effect to the Related Transactions. The Pro Forma is annexed hereto
as Annex D.
"Pro Rata Share" means with respect to all matters relating to any
Lender (a) with respect to the Revolving Loan prior to the Commitment
Termination Date, the percentage obtained by dividing (i) the Revolving Loan
Commitment of that Lender by (ii) the aggregate Revolving Loan Commitments of
all Lenders and (b) with respect to all Loans on and after the Commitment
Termination Date, the percentage obtained by dividing (i) the aggregate
outstanding principal balance of the Loans held by that Lender, by (ii) the
outstanding principal balance of the Loans held by all Lenders, as any such
percentages may be adjusted by assignments pursuant to Section 8.1.
"Projections" means Borrower's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; (c) cash flow statements; and (d)
capitalization statements, all prepared on a Subsidiary by Subsidiary or
division-by-division basis, if applicable, and otherwise consistent with the
historical Financial Statements of Borrower, together with appropriate
supporting details and a statement of underlying assumptions.
"Proposed Change" has the meaning ascribed to it in Section 9.19(c).
"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender
and, with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
A-18
an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from ▇▇▇▇▇'▇ at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to Borrower
without the imposition of any withholding or similar taxes; provided that no
Person determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee and no Person or
Affiliate of such Person (other than a Person that is already a Lender) holding
Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Real Estate" has the meaning ascribed to it in Section 5.12.
"Refinancing" means the repayment in full by Borrower of the Prior
Lender Obligations on the date hereof.
"Related Transactions" means the financing contemplated by this
Agreement, the Restructuring, the Refinancing, the Exchange Offer, the issuance
of the Senior Subordinated Notes, the issuance of the Senior Notes, the payment
of all Fees, costs and expenses associated with all of the foregoing and the
execution and delivery of all of the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents, the Senior
Subordinated Notes, the Senior Subordinated Notes Indenture, the Senior Notes,
the Senior Notes Indenture, the Consent Solicitation and Exchange Offer Document
and the documents evidencing, creating or governing the Refinancing, and all
other agreements or instruments executed in connection with the Related
Transactions.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Replacement Lender" has the meaning ascribed to it in Section 9.19(a).
"Requisite Lenders" means Lenders having (a) more than 50% of the
Commitments of all Lenders, or (b) if the Commitments have been terminated, more
than 50% of the aggregate outstanding amount of the Loans.
"Reserves" means, with respect to the Borrowing Base (a) reserves
established by Agent from time to time against Eligible Accounts, Eligible
Inventory and Eligible Real Estate pursuant to Exhibit 4.9(d) and (b) such other
reserves against Eligible Accounts, Eligible Inventory, Eligible Real Estate or
Borrowing Availability that Agent may, in its reasonable credit judgment,
establish from time to time. Without limiting the generality of the foregoing,
Reserves established to ensure the payment of accrued Interest Expenses or
Indebtedness shall be deemed to be a reasonable exercise of Agent's credit
judgment.
"Restricted Payment" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other
A-19
property or assets in respect of Stock; (b) any payment on account of the
purchase, redemption, defeasance, sinking fund or other retirement of such
Credit Party's Stock or any other payment or distribution made in respect
thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to, any
Subordinated Debt; (d) any payment made to redeem, purchase, repurchase or
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire Stock of such Credit Party now or hereafter outstanding;
(e) any payment of a claim for the rescission of the purchase or sale of, or for
material damages arising from the purchase or sale of, any shares of such Credit
Party's Stock or of a claim for reimbursement, indemnification or contribution
arising out of or related to any such claim for damages or rescission; (f) any
payment, loan, contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of compensation in the
ordinary course of business to Stockholders who are employees of such Credit
Party; (g) any payment of management fees (or other fees of a similar nature) or
out-of-pocket expenses in connection therewith by such Credit Party to any
Stockholder of such Credit Party or its Affiliates; and (h) any payment in
respect of the Indebtedness owing to Greenwich Street Capital Partners, Inc. and
referred to in Section 3.1(g).
"Restructuring" means (i) the transfer by Holdings to Borrower of
substantially all of its assets and the assumption by Borrower of substantially
all of the liabilities of Holdings, other than the Senior Subordinated Discount
Notes and certain other agreements related to Holdings' stock, (ii) the
contribution to Parent of all Stock of Borrower in exchange for all Stock of
Parent, and (iii) the change of the name of Holdings from "Telex Communications,
Inc." to "Telex Communications Holdings, Inc."
"Retiree Welfare Plan" means, at any time, a Welfare Plan that provides
for continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Revolving Credit Advance" has the meaning ascribed to it in Section
1.1(a).
"Revolving Lenders" means those Lenders having a Revolving Loan
Commitment.
"Revolving Loan(s)" means, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" means (a) as to any Lender, the commitment
of such Lender to make its Pro Rata Share of Revolving Credit Advances or incur
its Pro Rata Share of Letter of Credit Obligations as set forth on Annex B or in
the most recent Assignment Agreement, if any, executed by such Lender and (b) as
to all Lenders, the aggregate commitment of all Lenders to make the Revolving
Credit Advances or incur Letter of Credit Obligations, which aggregate
commitment shall be fifteen million dollars ($15,000,000) on the date hereof, as
such amount may be adjusted, if at all, from time to time in accordance with the
Agreement.
"Revolving Notes" has the meaning ascribed to it in Section 1.1(a).
"S&P" means Standard & Poor's Ratings Services, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
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"Security Agreements" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto, together with each other security
agreement entered into by any Credit Party in favor of Agent, in each case, as
amended, modified and supplemented from time to time.
"Security Trustee" means Agent in its capacity as security trustee
under one or more Trust Agreements.
"Senior Notes" means $125,000,000 in principal amount of senior secured
notes issued on the date hereof by Borrower pursuant to the Senior Notes
Indenture (together with replacements and substitutions thereof due to loss or
mutilation), in each case, as amended, modified or supplemented from time to
time in accordance with this Agreement.
"Senior Notes Indenture" means the Indenture, dated as of November 19,
2003, by and between BNY Midwest Trust Company, as Trustee, and Borrower, as
Issuer, as such Indenture may be amended, modified or supplemented from time to
time in accordance with this Agreement.
"Senior Notes Trustee" means, at any time, the trustee under the Senior
Notes Indenture at such time.
"Senior Subordinated Discount Notes" means the 13% Senior Subordinated
Discount Notes due 2006, issued by Holdings, of which, prior to the consummation
of the Exchange Offer, $105,100,502 in aggregate principal amount was
outstanding and immediately following consummation of the Exchange Offer
$2,997,898 in aggregate principal amount was outstanding.
"Senior Subordinated Discount Notes Indenture" means the Indenture,
dated as of November 21, 2001 between Holdings and BNY Midwest Trust Company, as
supplemented, amended or modified as of the date hereof and as hereafter
supplemented, amended or modified in accordance with the terms thereof and
hereof.
"Senior Subordinated Notes" means those certain 13% Senior Subordinated
Discount Notes due 2009 issued by Parent in an aggregate original principal
amount of $129,115,891 pursuant to the Senior Subordinated Notes Indenture.
"Senior Subordinated Notes Indenture" means the Indenture, dated as of
November 19, 2003 by and between BNY Midwest Trust Company, as Trustee, and
Parent, as Issuer, as such Indenture may be amended, modified or supplemented
from time to time in accordance with this Agreement.
"Senior Subordinated Notes Trustee" means, at any time, the trustee
under the Senior Subordinated Notes Indenture at such time.
"Settlement Date" has the meaning ascribed to it in Section 8.5(a)(ii).
"Software" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including subordinated and contingent
liabilities, of such Person; (b) the present fair saleable value of the assets
of such Person is
A-21
not less than the amount that will be required to pay the probable liability of
such Person on its debts and liabilities, including subordinated and contingent
liabilities as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person's property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
Litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"Statement" has the meaning ascribed to it in Section 4.9(b).
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder of Stock
of such Person.
"Subordinated Debt" means the Indebtedness of Parent evidenced by the
Senior Subordinated Notes, the Indebtedness of Holdings evidenced by the Senior
Subordinated Discount Notes and any other Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent in
its sole discretion, as to right and time of payment and as to any other rights
and remedies thereunder.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrower.
"Supermajority Revolving Lenders" means Lenders having (a) 80% or more
of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan.
"Target" has the meaning ascribed to it in Section 3.6(b).
"Tax Sharing Agreement" means that certain Tax Sharing Agreement dated
as of November 19, 2003 by and among Holdings, Parent and Borrower.
"TCI" means Telex Communications International, Ltd., a Delaware
corporation.
A-22
"Termination Date" means the date on which (a) the Loans have been
repaid in full in cash, (b) all other Obligations under the Agreement and the
other Loan Documents have been completely discharged, (c) all Letter of Credit
Obligations have been cash collateralized in the amount set forth in Section
1.5(g), cancelled or backed by standby letters of credit acceptable to Agent and
(d) Borrower shall not have any further right to borrow any monies under the
Agreement.
"Title IV Plan" means a Pension Plan (other than a Multiemployer Plan),
that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark Security Agreement" means the Trademark Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party, in each case, as amended, modified or supplemented from time to
time.
"Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, internet domain
names, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"Transaction" has the meaning ascribed to it in Section 9.13.
"Trust Agreement" means and includes each Trust Agreement by and among
GE Capital as Security Trustee, Agent, TCI, Borrower and if any, one or more
other Credit Parties, as amended, modified or supplemented from time to time.
"Unfunded Pension Liability" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of 5 years following a transaction
which might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Credit Party
or any ERISA Affiliate as a result of such transaction.
"Voting Stock" of any Person means Stock having the right to vote for
election of directors of such Person under ordinary circumstances.
"Welfare Plan" means a Plan described in Section 3(l) of ERISA.
"Wholly-owned Subsidiary" means a Subsidiary of Borrower, all of whose
Stock, other than directors' qualifying shares, are owned, directly or
indirectly, by Borrower.
A-23
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth or referred to in
this Annex A. All other undefined terms contained in any of the Loan Documents
shall, unless the context indicates otherwise, have the meanings provided for by
the Code to the extent the same are used or defined therein; in the event that
any term is defined differently in different Articles or Divisions of the Code,
the definition contained in Article or Division 9 shall control. Unless
otherwise specified, references in the Agreement or any of the Appendices to a
Section, subsection or clause refer to such Section, subsection or clause as
contained in the Agreement. The words "herein," "hereof" and "hereunder" and
other words of similar import refer to the Agreement as a whole, including all
Annexes, Exhibits and Schedules, as the same may from time to time be amended,
restated, modified or supplemented, and not to any particular section,
subsection or clause contained in the Agreement or any such Annex, Exhibit or
Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
A-24
ANNEX B (FROM ANNEX A - COMMITMENTS DEFINITION)
TO
CREDIT AGREEMENT
PRO RATA SHARES AND COMMITMENT AMOUNTS
Revolving Loan Commitment Lender(s)
$15,000,000 General Electric Capital Corporation
B-1
ANNEX C
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
PART I: FINANCIAL CLOSING CHECKLIST
A. DOCUMENTS
1. Credit Agreement: This Agreement or counterparts hereof shall have been
duly executed by, and delivered to, each Credit Party, Agent and
Lenders.
2. Revolving Notes: Duly executed originals of the Revolving Notes for
each applicable Lender, dated the date hereof, if requested by the
respective Lenders, shall have been delivered to Agent.
3. Master Agreement for Documentary Letters of Credit: Duly executed
original of the Master Agreement for Documentary Letters of Credit,
dated as of the date hereof, shall have been delivered to the Agent (as
amended, modified or supplemented from time to time, the "Master
Documentary Agreement").
4. Master Agreement for Standby Letters of Credit: Duly executed original
of the Master Agreement for Standby Letters of Credit, dated as of the
date hereof, shall have been delivered to the Agent (as amended,
modified or supplemented from time to time, the "Master Standby
Agreement").
5. Guaranty: Duly executed originals of the Guaranty from Holdings, Parent
and each Domestic Subsidiary of Borrower dated the date hereof, and all
documents, instruments and agreements executed pursuant thereto shall
have been delivered to Agent.
6. Security Agreement: Duly executed originals of the Security Agreement
executed by each Credit Party, dated the date hereof, and all
instruments, documents and agreements executed pursuant thereto shall
have been delivered to Agent.
7. Canadian Security Agreement: Duly executed originals of the Canadian
Security Agreement executed by each Credit Party that is a signatory
thereto, dated the date hereof, and all instruments, documents and
agreements executed pursuant thereto shall have been delivered to
Agent.
8. Pledge Agreements: Duly executed originals of (i) the Pledge Agreement
dated as of the date hereof accompanied by (as applicable) share
certificates representing all of the outstanding Stock being pledged
pursuant to the Pledge Agreement and stock powers for such share
certificates executed in blank, in form and substance satisfactory to
Agent shall have been delivered to Agent; (ii) the Security Over Shares
Agreement dated the date hereof between Borrower and Security Trustee
with respect to the shares of Telex Communications (UK) Ltd. and Telex
Holdings (UK) Ltd. and all instruments, documents and agreements
executed pursuant thereto shall have been delivered to Agent; (iii) the
German Pledge Agreement and all instruments, documents and agreements
executed pursuant thereto shall have been delivered to the Collateral
C-1
Trustee; (iv) the Pledge Agreement dated the date hereof between TCI
and Agent with respect to the shares of EVI Audio Japan, Ltd. and all
instruments, documents and agreements executed pursuant thereto shall
have been delivered to Agent; (v) the Shares Charge dated the date
hereof between TCI and Security Trustee with respect to the shares of
EVI Audio (Hong Kong) Ltd. and all instruments, documents and
agreements executed pursuant thereto shall have been delivered to Agent
provided, that the delivery of pledged shares certificates and
accompanying stock powers of EVI Audio (Hong Kong) Ltd. shall not be a
condition to funding of any Revolving Credit Advance or issuance of any
Letter of Credit until the 15th Business Day following the date hereof;
and (vi) the Share Charge dated within sixty (60) days following the
date hereof between TCI and Security Trustee with respect to the shares
of Telex Communications (SEA) PTE, Ltd., and all instruments, documents
and agreements executed pursuant thereto shall have been delivered to
Agent within sixty (60) days following the date hereof.
9. Trust Agreements: Duly executed originals of each Trust Agreement
executed by Borrower and TCI, as applicable, shall have been delivered
to Agent.
10. Mortgages: Duly executed originals of the Mortgages executed by each
Credit Party, as applicable, shall have been delivered to Agent, along
with all related documents and opinions listed in Part II of this Annex
C.
11. Insurance: Satisfactory evidence shall have been delivered to Agent
that the insurance policies required by Section 2.2 are in full force
and effect, together with appropriate evidence showing loss payable
and/or additional insured clauses or endorsements, as requested by
Agent, in favor of Agent, on behalf of Lenders.
12. Assignment of Business Interruption Insurance: A duly executed
assignment of business interruption insurance policy to Agent in form
and substance reasonably satisfactory to Agent, obtaining the insurer's
consent thereto.
13. Security Interests and Code Filings.
(a) Evidence satisfactory to Agent shall have been delivered to
Agent that Agent (for the benefit of itself and Lenders) has a
valid and perfected (to the extent possible under applicable
law following filing of the relevant documents, including UCC
financing statements, Personal Property Security Act (Ontario)
financing statements, filings with the US Copyright Office and
US Patent and Trademark Office, and obtaining control as to
deposit accounts and securities accounts) first priority
security interest in the Collateral, including (i) such
documents duly executed by each Credit Party (including
financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to
the perfection of Liens) as Agent may request in order to
perfect its security interests in the Collateral and (ii)
copies of Code search reports listing all effective financing
statements that name any Credit Party as debtor, together with
copies of such financing statements, none of which shall cover
the Collateral, except for those relating to Permitted
Encumbrances (it being understood that recordings in the US
Patent and Trademark Office of Intellectual Property being
acquired by Borrower in the Restructuring will occur no later
than the second Business Day following the date hereof and
thus recordings of Liens thereon cannot be made prior to such
second Business Day, and recordings in all foreign
jurisdictions of Intellectual Property being acquired by
Borrower in the Restructuring will occur as soon as reasonably
practicable following the date hereof).
C-2
(b) UCC-3 or other appropriate termination statements and payoff
letters, each in form and substance reasonably satisfactory to
Agent, releasing all liens on the Collateral of each Credit
Party shall have been delivered to Agent, as well as
termination of all control agreements, blocked account
agreements, bank agency agreements or other similar agreements
or arrangements in favor of any creditors other than Lenders
and the Senior Notes Trustee.
14. Intellectual Property Security Agreements: Duly executed originals of
the Trademark Security Agreement, Patent Security Agreement and
Copyright Security Agreement, each dated the date hereof and signed by
each Credit Party that owns Trademarks, Patents and/or Copyrights as
applicable, all in form and substance reasonably satisfactory to Agent,
together will instruments, documents and agreements executed pursuant
thereto shall have been delivered to Agent.
15. Lockbox Account Agreements and Blocked Account Agreements: Duly
executed originals of tri-party lockbox account agreements and blocked
account agreements in form and substance reasonably satisfactory to
Agent shall have been delivered to Agent with respect to all bank
accounts of the Credit Parties and creating lockboxes and lockbox
accounts as required by Section 2.9; provided, that notwithstanding the
foregoing (i) no tri-party control agreement shall be required as a
condition to funding of any Revolving Credit Advance or issuance of any
Letter of Credit with respect to deposit account number 6301465195509
or deposit account number 323116272, each maintained at JPMorgan Chase
Bank until March 31, 2004, so long as not more than $50,000 in the
aggregate is held in such deposit accounts and Borrower continues to
use reasonable efforts to obtain such tri-party control agreement, and
(ii) no tri-party control agreement shall be required for deposit
account number 218742 maintained at Pinnacle Bank or deposit account
number ▇▇▇▇▇▇▇▇▇▇ maintained at ▇▇▇▇▇▇ County Bank until the thirtieth
(30th) day following the date hereof and so long as not more than
$5,000 is held in either such deposit account.
16. Funding of Senior Notes: Agent shall have received (i) evidence
satisfactory to it that Borrower shall have received (or shall be
deemed to have received) not less than (x) $125,000,000 (less discounts
and commissions) in cash in consideration of the issuance of Senior
Notes pursuant to the Senior Notes Indenture, (ii) duly executed copies
of the Senior Notes Indenture on terms and in form and substance
reasonably satisfactory to it and (iii) duly executed originals of the
Intercreditor Agreements, and all documents, instruments and agreements
executed pursuant thereto.
17. The Exchange Offer. The Exchange Offer shall have been consummated on
terms satisfactory to Agent, and Parent shall have issued in exchange
for the Senior Subordinated Discount Notes tendered therein, at least
$129,115,891 in initial principal amount of Senior Subordinated Notes
equal to 101% of accreted value of Senior Subordinated Discount Notes
and Agent shall have received duly executed copies of the Senior
Subordinated Notes Indenture on terms and in form reasonably
satisfactory to Agent.
18. Consent Solicitation. The Consent Solicitation shall have been
consummated on terms satisfactory to Agent pursuant to the Consent
Solicitation and Exchange Offer Document, and those Senior Subordinated
Discount Notes which are not exchanged in the Exchange Offer will
remain obligations of Holdings (and no other Credit Party) and will be
subordinated to the Obligations of Borrower hereunder in a manner
reasonably satisfactory to Agent.
C-3
19. Restructuring. Agent shall have received (i) evidence satisfactory to
it that the Restructuring shall have been consummated on terms
reasonably satisfactory to it and (ii) duly executed copies of all
documents executed and delivered by the Credit Parties in connection
therewith.
20. Certificate of Formation and Good Standing: For each Credit Party, (a)
its articles or certificate of incorporation or certificate of
formation, as applicable, and all amendments thereto, (b) good standing
certificates (including verification of tax status) in its state of
incorporation or formation, as applicable, and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires
such qualification, each dated a recent date prior to the date hereof
and certified by the applicable Secretary of State or other authorized
Governmental Authority shall have been delivered to Agent; provided,
that Borrower will file to qualify to do business as a foreign
corporation in Minnesota, Nebraska and Arkansas not later than 2
Business Days after the date hereof.
21. By-laws and Resolutions: For each Credit Party, (a) its by-laws or
operating agreement, as applicable, together with all amendments
thereto and (b) resolutions of such Person's Board of Directors or
Board of Members, as applicable, approving and authorizing the
execution, delivery and performance of the Loan Documents to which it
is a party and the transactions to be consummated in connection
therewith, each certified as of the date hereof by such Person's
secretary or an assistant secretary as being in full force and effect
without any modification or amendment shall have been delivered to
Agent.
22. Incumbency Certificates: For each Credit Party, signature and
incumbency certificates of the officers of such Person executing any of
the Loan Documents, certified as of the date hereof by such Person's
secretary or an assistant secretary as being true, accurate, correct
and complete shall have been delivered to Agent.
23. Opinions of Counsel: Duly executed originals of an opinion of Stroock &
Stroock & ▇▇▇▇▇ LLP, special New York counsel for the Credit Parties,
duly executed originals of an opinion of Felhaber ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇,
P.A., special Minnesota counsel for Borrower, duly executed originals
of an opinion of ▇▇▇▇▇ ▇▇▇▇, LLP, special Nebraska counsel for
Borrower, duly executed originals of an opinion of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, special German counsel for TCI, duly executed originals of an
opinion of ▇▇▇▇ ▇▇▇ & Co., special Hong Kong counsel for TCI, duly
executed originals of an opinion of ▇▇▇▇▇▇▇▇ Mori, special Japanese
counsel for TCI and duly executed originals of an opinion of Osler,
▇▇▇▇▇▇ and Harcourt, special Canadian counsel for the Lenders, each
dated the date hereof, shall have been delivered to Agent.
24. Accountants' Letter: A letter from the Credit Parties to the
independent auditors authorizing the independent certified public
accountants of the Credit Parties to communicate with Agent and Lenders
in accordance with Section 2.3 and acknowledging Lenders' reliance on
the auditor's certification of past and future Financial Statements
shall have been delivered to Agent.
25. Borrowing Base Certificate. A Borrowing Base Certificate for Borrower.
26. GE Capital Fee Letter: Duly executed originals of the GE Capital Fee
Letter in form and substance satisfactory to GE Capital shall have been
delivered to Agent.
27. Officer's Certificate: Duly executed originals of a certificate of an
authorized officer of each Credit Party, dated the date hereof, stating
that, since December 31, 2002 (a) no event or condition has occurred or
is existing which could reasonably be expected to have a Material
C-4
Adverse Effect and that has not been disclosed in this Agreement or in
the Schedules hereto; (b) there has been no material adverse change in
the assets, liabilities, properties, prospects or condition, financial
or otherwise of Borrower or any Subsidiary; (c) no Litigation has been
commenced against such Credit Party which, if successful, would have a
Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Loan Documents and that has
not been disclosed in this Agreement or in the Schedules hereto; (d)
there have been no Restricted Payments made by any Credit Party except
as permitted by Section 3.5 of this Agreement; (e) there has been no
material increase in liabilities, liquidated or contingent, and no
material decrease in assets of Borrower or any of their Subsidiaries
and (f) Borrowing Availability after giving effect to the initial
fundings and issuances of Letters of Credit under the Credit Agreement
and the application of proceeds thereof, exceeds $5,000,000.
28. Waivers: Landlord's waivers and consents, bailee letters and mortgagee
agreements in form and substance reasonably satisfactory to Agent, in
each case as required pursuant to Section 2.6 shall have been delivered
to Agent.
29. Environmental Reports: Agent and its environmental consultant shall
have approved the scope and content of any environmental audit reports
required by Agent to be provided by the Credit Parties with respect to
real property owned or leased by the Credit Parties and shall be
satisfied that there are no existing or potential environmental
liabilities which could have an adverse impact on the financial
condition of the Borrowers and that has not been disclosed in this
Agreement or in the Schedules hereto. Any environmental audit report
required by Agent must be prepared by a nationally recognized
environmental engineering firm acceptable to Agent and delivered at
least 10 days prior to the date hereof and addressed to Agent.
30. Audited Financials; Financial Condition: The Financial Statements and
Projections specifically identified in Section 5.5, all certified by an
authorized officer of Borrower shall have been delivered and
satisfactory to Agent. Agent shall have further received a certificate
of an authorized officer of Borrower and each Domestic Subsidiary to
the effect that (a) Borrower and each Domestic Subsidiary will be
Solvent upon the consummation of the transactions contemplated herein;
(b) the Projections are based upon estimates and assumptions stated
therein, all of which Borrower and each Domestic Subsidiary believes to
be reasonable and fair in light of current conditions and current facts
known to Borrower and each Domestic Subsidiary and, as of the date
hereof, reflect Borrower's and each such Domestic Subsidiary's good
faith and reasonable estimates of its future financial performance and
of the other information projected therein for the period set forth
therein; and (c) containing such other statements with respect to the
Solvency of Borrower and each Domestic Subsidiary and matters related
thereto as Agent shall request.
31. Approvals: Copies of any material third-party, Governmental Authority
or other regulatory approvals and consents necessary to consummate the
Loan Documents shall have been delivered to Agent.
32. Closing Covenants: Agent shall have received evidence satisfactory to
it that Borrowing Availability after giving effect to the initial
fundings and issuances of Letters of Credit under the Credit Agreement
and the application of proceeds thereof, exceeds $5,000,000.
33. Pro Forma: Copies of the Pro Forma in form and substance satisfactory
to Agent.
C-5
34. Evidence of Retirement of Prior Lender Obligations: Agent shall have
received payoff letters from the Prior Lenders, each in form and
substance reasonably satisfactory to Agent, as to the Prior Lender
Obligations.
35. Tax Forms: Borrower Representative and Agent shall have received a
properly completed and executed IRS Form ▇-▇, ▇-▇▇▇▇ ▇▇ ▇-▇▇▇▇
(whichever is applicable) or other applicable form, certificate or
document from each Lender.
36. Intercreditor Agreements: Duly executed originals of the Intercreditor
Agreements, and all documents, instruments and agreements executed
pursuant thereto.
37. Other Documents: Agent shall have received such other certificates,
documents and agreements respecting any Credit Party as Agent may, in
its sole discretion, request.
B. NON-DOCUMENTARY CONDITIONS
1. Payment of Fees: Borrower shall have paid the Fees required to be paid
on the Closing Date, including but not limited to such Fees specified
in the GE Capital Fee Letter.
2. Capital Structure; Other Indebtedness: The organizational documents,
terms of equity interests, ownership, capital, corporate, tax and legal
structure of each Credit Party and the terms and conditions of all
Indebtedness of each Credit Party shall be reasonably acceptable to
Agent.
3. Due Diligence: Agent shall have completed its business, legal and
environmental due diligence with results reasonably satisfactory to
Agent.
4. Borrowing Availability: The Revolving Credit Advance made, together
with all Letters of Credit issued, on the date hereof shall not exceed
$0.
5. Retirement of Prior Lender Obligations: Borrower shall have paid and
satisfied in full the Prior Lender Obligations, except the letters of
credit issued by JPMorgan Chase Bank (f/ka The Chase Manhattan Bank) in
an aggregate face amount of $351,180.00.
6. Other Requirements: Such other requirements of any Credit Party as
Agent may, in its sole discretion, request.
C-6
PART II: REAL ESTATE CLOSING CHECKLIST
GECC FINANCING - LOAN CLOSING CHECKLIST
Agent's Counsel: ▇▇▇▇▇▇▇▇ Chance US LLP ("CC")
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Mortgagor: Telex Communications, Inc.
Mortgagor's General Counsel: Stroock & Stroock & ▇▇▇▇▇ LLP ("SSL")
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Mortgagor's Local Counsel (Minnesota): Felhaber ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇
US Bank Place
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Mortgagor's Local Counsel (Nebraska): ▇▇▇▇▇ ▇▇▇▇
The Omaha Building
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Title Company: Fidelity National Title Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
C-7
Real Estate: (i) ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇
(Fairbuilt County) - OWNED SITE
(ii) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
(▇▇▇▇▇▇ County) - OWNED SITE
(iii) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇
(Lancaster County) - OWNED SITE
C-8
RESPONSIBILITY STATUS
-------------- ------
A. CLOSING DOCUMENTS TO BE PREPARED BY AGENT'S COUNSEL
1. Credit Agreement CC See corporate checklist
2. Mortgage to encumber ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇ CC Draft circulated 11/17.
3. Assignment of Leases and Rents to encumber 1930 West 1st CC Draft circulated 11/17.
Street, Blue Earth, MN
4. UCC-1 Fixture Filing relating to ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, Blue CC Draft circulated 11/17.
Earth, MN, to be filed with Fairbuilt County Recorder
5. Mortgage to encumber ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ CC Draft circulated 11/17.
6. Assignment of Leases and Rents to encumber ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ Draft circulated 11/17.
Street, Glencoe, MN
7. UCC-1 Fixture Filing relating to ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ Draft circulated 11/17.
Glencoe, MN, to be filed with ▇▇▇▇▇▇ County Recorder
8. Deed of Trust to encumber ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ Draft circulated 11/17.
Lincoln, NE
9. Assignment of Leases and Rents to encumber 8601 East CC Draft circulated 11/17.
Cornhusker Highway, Lincoln, NE
10. UCC-1 Fixture Filing relating to 8601 East Cornhusker CC Draft circulated 11/17.
Highway, Lincoln, NE, to be filed with Lancaster County Recorder
B. CLOSING DOCUMENTS TO BE PREPARED OR DELIVERED BY COUNSEL TO
MORTGAGOR
1. Incumbency Confirmation and Board Resolutions for Mortgagor SSL See Corporate Checklist
2. Certificate of Incorporation for Mortgagor SSL See Corporate Checklist
3. By-Laws of Mortgagor SSL See Corporate Checklist
C-9
RESPONSIBILITY ▇▇▇▇▇▇
-------------- ------
4. Good Standing Certificate from the Secretary of State of SSL See Corporate Checklist
Delaware for Mortgagor
5. Certificate of authorization/good standing for Mortgagor to SSL See Corporate Checklist
conduct business in Minnesota delivered to Agent within
thirty (30) days following the date hereof
6. Certificate of authorization/good standing for Mortgagor to SSL See Corporate Checklist
conduct business in Nebraska delivered to Agent within
thirty (30) days following the date hereof
7. Opinion Letters from Mortgagor's general and local counsel SSL & To be delivered; form
in form and substance acceptable to Agent Mortgagor's provided by CC
Local Counsel
C. MORTGAGOR'S PRE-CLOSING SUBMISSIONS TO LENDER'S COUNSEL
1. For each property, Loan Policy based on a search run through TC& SSL Title commitments ordered.
a date on or after the date hereof and on or prior to the tenth
Business Day (which may be after the Closing Date) after the
date hereof (in the case of the Minnesota properties) or as of
November 19, 2003 (in the case of the Nebraska property)
together with a copy of all underlying documents forming
exceptions thereto, including the following endorsements,
subject to availability:
(i) Public Street Access
(ii) 3.1 Zoning*
(iii) Survey
(iv) Lender's Comprehensive (ALTA-9 or CLTA-100)
(v) Address (Location)
(vi) Separate Tax Lot
(vii) Subdivision
(viii) Environmental Lien
(ix) Contiguity
(x) Usury
(xi) Variable Rate
(xii) Revolving Credit
(xiii) First Loss
(xiv) Last Dollar
(xv) Tie-In
(xvi) Creditor's Rights
(xvii) Mechanic's Lien
* Letter from municipality confirming zoning
C-10
RESPONSIBILITY STATUS
-------------- ------
compliance may be substituted
2. Other Property Matters for each Property
(a) Current ALTA as-built survey for each property, SSL To be delivered
certified to Agent provided such surveys shall not be
required as a condition to funding of any Revolving
Credit Advance or issuance of any Letter of Credit
until the forty-fifth (45th) day following the date
hereof.
(b) Flood insurance for properties located in flood zone SSL To be delivered
(c) Insurance certificate for each property showing Agent and SSL See Corporate Checklist
its successors and assigns as loss payee
C-11
ANNEX D
TO
CREDIT AGREEMENT
PRO FORMA
SEE ATTACHED.
D-1
ANNEX E
TO
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Deutsche Bank Trust Company Americas
New York, New York
ABA #: ▇▇▇▇▇▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇
Account Name: GECC/CAF Depository
Reference: CFC Telex Communications, Inc.
E-1
EXHIBIT 4.9(d)
BORROWING BASE CERTIFICATE
TELEX COMMUNICATIONS, INC.
DATE: ___________, ______
This Certificate is given by Telex Communications, Inc. ("Borrower")
pursuant to subsection 4.9(d) of that certain Credit Agreement dated as of
November 19, 2003 among Borrower, the other Credit Parties party thereto, the
Lenders from time to time party thereto and General Electric Capital
Corporation, as agent for the Lenders (as such agreement may have been amended,
restated, supplemented or otherwise modified from time to time the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this
Certificate on behalf of Borrower. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) Attached hereto as Schedule 1 is a calculation of the proposed
Borrowing Base for Borrower as of the above date;
(b) Based on such schedule, the proposed Borrowing Base as of the
above date is:
$_____________________
(c) Agent shall have the right to establish or modify or eliminate
Reserves against Eligible Accounts, Eligible Inventory and
Eligible Real Estate from time to time in its reasonable
credit judgment based on events or occurrences after the date
hereof that adversely affect the collectibility of Accounts or
the saleability of Inventory. In addition, the Borrower
understands that the Agent reserves the right at any time to
adjust any of the criteria set forth below and to establish
new criteria in its reasonable credit judgment, subject to the
approval of Supermajority Revolving Lenders in the case of
adjustments which have the effect of making more credit
available. Borrower acknowledges that the exercise by Agent of
any right pursuant to this clause (c) shall have the effect of
adjusting the proposed Borrowing Base set forth above.
IN WITNESS WHEREOF, Borrower has caused this Certificate to be executed
by its ________________ this ____ day of _________,______.
TELEX COMMUNICATIONS, INC.
By:________________________
Name:
Title:
1
SCHEDULE 1
to Exhibit 4.9(d)
BORROWING BASE CALCULATION
TELEX COMMUNICATIONS, INC.
Accounts of the Borrower reflected as accounts receivable on the Borrower's
consolidated balance sheet (as of the date above), but solely to the extent of
the unpaid portion of the obligations stated on the respective invoices issued
to a customer of Borrower or any of its Subsidiaries with respect to inventory
sold and shipped or services performed in the ordinary course of business, net
of any credits, rebates or offsets owed by Borrower to the respective customer. $_____________
Less: Ineligible Accounts:
Accounts that do not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of its business; ______________
Accounts (i) upon which Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition
whatsoever or (ii) as to which Borrower is not able to bring suit or
otherwise enforce its remedies against the Account Debtor through
judicial process, or (iii) if the Account represents a progress billing
consisting of an invoice for goods sold or used or services rendered
pursuant to a contract under which the Account Debtor's obligation to
pay that invoice is subject to Borrower's completion of further
performance under such contract or is subject to the equitable lien of
a surety bond issuer; ______________
Any Account in the event that any defense, counterclaim, setoff or
dispute is asserted as to such Account; ______________
Accounts that are not true and correct statements of bona fide
indebtedness incurred in the amount of such Account for merchandise
sold to or services rendered and accepted by the applicable Account
Debtor; ______________
Accounts with respect to which an invoice, reasonably acceptable to
Agent in form and substance, has not been sent to the applicable
Account Debtor; ______________
Accounts that (i) are not owned by Borrower or (ii) are subject to any
right, claim, security interest or other interest of any other Person,
other than Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a), (d), (e),
(g), (h), (j) or (l) of the definition of such term
1
that are subordinate to the Lien in favor of Agent, on behalf of itself
and Lenders;
Accounts that arise from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity that has
any common officer or director with any Credit Party; ______________
Accounts that are the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, or any
state, county or municipality or department, agency or instrumentality
thereof unless Agent, in its sole discretion, has agreed to the
contrary in writing and Borrower, if necessary or desirable, has
complied with respect to such obligation with the Federal Assignment of
Claims Act of 1940, or any applicable state, county or municipal law
restricting the assignment thereof with respect to such obligation; ______________
Accounts that are the obligations of an Account Debtor located in a
foreign country other than Canada unless payment thereof is assured by
a letter of credit assigned and delivered to Agent, satisfactory to
Agent as to form, amount and issuer; ______________
Accounts to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to
Borrower or any Subsidiary thereof but only to the extent of the
potential offset; ______________
Accounts that arise with respect to goods that are delivered on a
▇▇▇▇-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the
Account Debtor is or may be conditional; ______________
Accounts that are in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon
the occurrence of any of the following:
(i) the Account is not paid within the earlier of: 60 days
following its due date or 90 days following its original
invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come
due; or
(iii) a petition is filed by or against any Account Debtor obligated
upon such Account under any bankruptcy law or any other
federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors; ______________
2
Accounts that are the obligations of an Account Debtor if 50% or more
of the Dollar amount of all Accounts owing by that Account Debtor are
ineligible under the other criteria set forth in this Schedule 1 to
Exhibit 4.9(d); ______________
Accounts as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien; ______________
Accounts as to which any of the representations or warranties in the Loan
Documents are untrue; ______________
Accounts that are evidenced by a judgment, Instrument or Chattel Paper; ______________
Accounts to the extent such Account exceeds any credit limit
established by Agent, in its reasonable credit judgment; ______________
Accounts to the extent that such Account, together with all other
Accounts owing to such Account Debtor and its Affiliates as of any date
of determination exceed 20% of all Eligible Accounts; ______________
Accounts that are payable in any currency other than Dollars; or ______________
Accounts that are otherwise unacceptable to Agent in its reasonable
credit judgment. ______________
Total Ineligible Accounts $_____________
Total Eligible Accounts (Accounts less Total Ineligible Accounts) $_____________
Advance Rate ______________%
Accounts Availability $_____________
Dilution Reserve $_____________
Net Accounts Availability $_____________
Inventory owned by, and in the possession of the Borrower or any of its
Subsidiaries, and located in the United States of America or Canada, reflected as
inventory on the Borrower's consolidated balance sheet (as of the date above),
valued at the lower of cost or market (including adequate reserves for obsolete,
slow moving or excess quantities), on a first-in, first-out basis $_____________
3
Less: Ineligible Inventory:
Inventory that is not owned by Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has issued a
bond to assure Borrower's performance with respect to that Inventory),
except the Liens in favor of Agent, on behalf of itself and Lenders and
Permitted Encumbrances of the type described in clauses (a), (d), (e),
(g), (h), (j) or (l) of the definition of such term that are
subordinate to the Lien in favor of Agent, on behalf of itself and
Lenders; ______________
Inventory that (i) is not located on premises owned, leased or rented
by Borrower and set forth in Disclosure Schedule 5.12 or (ii) is stored
at a leased location, unless Agent has given its prior consent thereto
and unless (x) a reasonably satisfactory landlord waiver (or
subordination agreement) has been delivered to Agent, or (y) Reserves
satisfactory to Agent have been established with respect thereto, (iii)
is stored with a bailee or warehouseman unless a reasonably
satisfactory, acknowledged bailee letter has been received by Agent and
Reserves reasonably satisfactory to Agent have been established with
respect thereto, or (iv) is located at an owned location subject to a
mortgage in favor of a lender other than Agent, unless (A) a reasonably
satisfactory mortgagee waiver (or subordination agreement) has been
delivered to Agent or (B)Reserves reasonably satisfactory to Agent have
been established with respect thereto, or (v) is located at any site if
the aggregate book value of Inventory at any such location is less than
$100,000; ______________
Inventory that is placed on consignment or is in transit, except for
Inventory in transit between domestic locations of Credit Parties as to
which Agent's Liens have been perfected at origin and destination; ______________
Inventory that is covered by a negotiable document of title, unless
such document has been delivered to Agent with all necessary
endorsements, free and clear of all Liens except those in favor of
Agent and Lenders; ______________
Inventory that is excess, obsolete, unsaleable, shopworn, seconds,
damaged, unfit for sale, phase-out or discontinued products; ______________
Inventory that consists of display items or packing or shipping
materials, manufacturing supplies, work-in-process Inventory or
replacement parts; ______________
Inventory that consists of goods which have been returned by the buyer
that are not otherwise resellable in the ordinary course of business; ______________
4
Inventory that is not of a type held for sale in the ordinary course of
Borrower's business; ______________
Inventory that is not subject to a first priority lien in favor of
Agent on behalf of itself and Lenders subject to Permitted Encumbrances
of the type described in clauses (a), (d), (e), (g), (h), (j) or (l) of
the definition of such term that are subordinate to the Lien in favor
of Agent, on behalf of itself and Lenders; ______________
Inventory that breaches any of the representations or warranties
pertaining to Inventory set forth in the Loan Documents; ______________
Inventory that consists of any costs associated with "freight-in"
charges to the extent identifiable; ______________
Inventory that consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available; ______________
Inventory that is not covered by casualty insurance reasonably
acceptable to Agent; ______________
Inventory that consists of service Inventory used for repair purposes and
any associated overhead costs; ______________
Inventory that consists of drop ship vendor Inventory; or ______________
Inventory that is otherwise unacceptable to Agent in its reasonable
credit judgment. ______________
Total Ineligible Inventory $_____________
Total Eligible Inventory (Inventory less Total
Ineligible Inventory) $_____________
Advance Rate ______________%
Inventory Availability $_____________
Real Estate, and improvements thereon, of the Borrower that Agent has
specifically identified and approved in writing and as to which, following an
independent appraisal thereof, Agent has assigned an Appraised Forced Liquidation Value $_____________
Less: Ineligible Real Estate
5
Real Estate that is not owned by such Borrower free and clear of all
Liens and rights of any other Person, except the Liens in favor of
Agent, on behalf of itself and Lenders and Permitted Encumbrances of
the type described in clauses (a), (d), (e), (g), (h), (j) or (l) of
the definition of such term that are subordinate to the Lien in favor
of Agent, on behalf of itself and Lenders; ______________
Real Estate as to which Agent has not received a loan policy of title
insurance in favor of Agent and in form and amount and issued by a
title insurance company satisfactory to Agent, in its sole discretion,
together with such endorsements thereto as Agent shall require, in its
sole discretion (provided such endorsements are available in the
jurisdiction where such Real Estate is located); ______________
Real Estate as to which Agent has not received an environmental report
satisfactory to Agent, in its sole discretion; ______________
Real Estate that is not subject to a first priority Lien in favor of
Agent on behalf of itself and Lenders subject only to Permitted
Encumbrances of the type described in clauses (a), (d), (e), (g), (h),
(j) or (l) of the definition of such term that are subordinate to the
Lien in favor of Agent, on behalf of itself and Lenders;; ______________
Real Estate that breaches any of the representations or warranties
pertaining to Real Estate set forth in the Loan Documents; or ______________
Real Estate that is not covered by casualty insurance reasonably
acceptable to Agent. ______________
Total Ineligible Real Estate $_____________
Total Eligible Real Estate (Real Estate less Total Ineligible Real Estate) $_____________
Advance Rate ______________%
Real Estate Availability $_____________
Borrowing Base (net Accounts Availability plus Inventory Availability plus Real ______________
Estate Availability)
6
Exhibit 4.9(l)
COMPLIANCE CERTIFICATE
TELEX COMMUNICATIONS, INC.
DATE: __________, _____
This Certificate is given by Telex Communications, Inc. ("Borrower")
pursuant to Section 4.9(l) of that certain Credit Agreement dated as of November
19, 2003 among Borrower, the other Credit Parties party thereto, the Lenders
from time to time party thereto and General Electric Capital Corporation, as
agent for the Lenders (as such agreement may have been amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement.
The undersigned is duly authorized to execute and deliver this
Certificate on behalf of Borrower. By executing this Certificate such officer
hereby certifies to Agent and Lenders that:
(a) the financial statements delivered with this Certificate in
accordance with Section 4.9(a) and/or 4.9(b) of the Credit Agreement fairly
present in all material respects the results of operations and financial
condition of Borrower and its Subsidiaries as of the dates of such financial
statements;
(b) I have reviewed the terms of the Credit Agreement and have
made, or caused to be made under my supervision, a review in reasonable detail
of the transactions and conditions of the Credit Parties during the accounting
period covered by such financial statements;
(c) such review has not disclosed the existence during or at the
end of such accounting period, and I have no knowledge of the existence as of
the date hereof, of any condition or event that constitutes a Default or an
Event of Default, except as set forth on Schedule 1 hereto, which includes a
description of the nature and period of existence of such Default or an Event of
Default and what action Borrower has taken, is taking and proposes to take with
respect thereto;
(d) except as set forth on Schedule 2 hereto, Borrower is in
compliance with the covenants contained in Sections 3.1, 3.3, 3.4, 3.5, 3.7 and
3.8 and Section 4 of the Credit Agreement, as demonstrated on Schedule 2 hereto
[NOTE TO BORROWER: THE PORTION OF SCHEDULE 2 PERTAINING TO FINANCIAL COVENANTS
IS ONLY REQUIRED TO BE COMPLETED AS OF THE END OF EACH FISCAL QUARTER];
(e) except as set forth on Schedule 3 hereto, subsequent to the
date of the most recent Certificate submitted by Borrower pursuant to Section
4.9(l) of the Credit Agreement, no Credit Party has (i) changed its name as it
appears in official filings in the jurisdiction of its organization, (ii)
changed its chief executive office, principal place of business, corporate
offices, warehouses or locations at which Collateral is held or stored, or the
location of its records concerning Collateral, (iii) changed the type of entity
that it is, (iv) changed (or has had changed) its organization identification
number, if any, issued by its jurisdiction of organization, (v) changed its
jurisdiction of organization, (vi) changed the end of its Fiscal Year, or (vii)
formed any new Subsidiary or entered into any partnership or joint venture with
any other Person; and
(f) except as set forth on Schedule 4 hereto, subsequent to the
date of the most recent Certificate submitted by Borrower pursuant to Section
4.9(l) of the Credit Agreement, there has been no event which would alter any of
the disclosures set forth on Schedule 5.4(b) of the Credit Agreement.
1
IN WITNESS WHEREOF, Borrower has caused this Certificate to be executed
by its __________________ this ____ day of __________,_______.
TELEX COMMUNICATIONS, INC.
By:________________________
Name:
Title:
2
EXHIBIT 1.1(a)(i)
TO
CREDIT AGREEMENT
FORM OF REVOLVING NOTE
(SINGLE BORROWER)
New York, New York
November 19, 2003
$15,000,000
FOR VALUE RECEIVED, the undersigned, TELEX COMMUNICATIONS, INC., a
Delaware corporation ("Borrower"), HEREBY PROMISES TO PAY to the order of
GENERAL ELECTRIC CAPITAL CORPORATION ("Lender"), at the offices of GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as Agent for Lenders
("Agent"), at its address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or at such other place as Agent may designate from time to time in
writing, in lawful money of the United States of America and in immediately
available funds, the amount of FIFTEEN MILLION DOLLARS AND NO CENTS
($15,000,000) or, if less, the aggregate unpaid amount of all Revolving Credit
Advances made to the undersigned under the "Credit Agreement" (as hereinafter
defined). All capitalized terms used but not otherwise defined herein have the
meanings given to them in the Credit Agreement or in Annex A thereto.
This Revolving Note is one of the Revolving Notes issued pursuant to
that certain Credit Agreement dated as of November 19, 2003 by and among
Borrower, the other Persons named therein as Credit Parties, Agent, Lender and
the other Persons signatory thereto from time to time as Lenders (including all
annexes, exhibits and schedules thereto, and as from time to time amended,
restated, supplemented or otherwise modified, the "Credit Agreement"), and is
entitled to the benefit and security of the Credit Agreement, the Security
Agreement and all of the other Loan Documents referred to therein. Reference is
hereby made to the Credit Agreement for a statement of all of the terms and
conditions under which the Loans evidenced hereby are made and are to be repaid.
The date and amount of each Revolving Credit Advance made by Lenders to
Borrower, the rates of interest applicable thereto and each payment made on
account of the principal thereof, shall be recorded by Agent on its books;
provided that the failure of Agent to make any such recordation shall not affect
the obligations of Borrower to make a payment when due of any amount owing under
the Credit Agreement or this Revolving Note in respect of the Revolving Credit
Advances made by Lender to Borrower.
The principal amount of the indebtedness evidenced hereby shall be
payable in the amounts and on the dates specified in the Credit Agreement, the
terms of which are hereby incorporated herein by reference. Interest thereon
shall be paid until such principal amount is paid in full at such interest rates
and at such times, and pursuant to such calculations, as are specified in the
Credit Agreement. The terms of the Credit Agreement are hereby incorporated
herein by reference.
If any payment on this Revolving Note becomes due and payable on a day
other than a Business Day, the payment thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
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Upon and after the occurrence of any Event of Default, this Revolving
Note may, as provided in the Credit Agreement, and without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other legal
requirement of any kind (all of which are hereby expressly waived by Borrower),
be declared, and immediately shall become, due and payable.
Time is of the essence of this Revolving Note.
Except as provided in the Credit Agreement, this Revolving Note may not
be assigned by Lender to any Person.
THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES.
[TO BE USED WHEN THIS REVOLVING NOTE REPLACES AN EXISTING REVOLVING
NOTE: THIS REVOLVING NOTE IS ISSUED IN [FULL/PARTIAL] SUBSTITUTION FOR AND
REPLACEMENT OF, BUT NOT IN PAYMENT OF THE REVOLVING NOTE OF BORROWER DATED
_______, PAYABLE TO THE ORDER OF ___________ IN THE ORIGINAL PRINCIPAL AMOUNT OF
_________ DOLLARS AND ___ CENTS ($________)]
TELEX COMMUNICATIONS, INC.
By:________________________
Name:
Title:
2
EXHIBIT 1.1(a)(ii)
TO
CREDIT AGREEMENT
FORM OF NOTICE OF REVOLVING CREDIT ADVANCE
___________, _____
General Electric Capital Corporation,
for itself, as Lender, and as Agent
for Lenders
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Telex Communications, Inc.
Account Manager
Ladies and Gentlemen:
The undersigned, Telex Communications, Inc. ("Borrower") refers to the
Credit Agreement, dated as of November 19, 2003 (the "Credit Agreement," the
terms defined therein being used herein as therein defined), by and among
Borrower, the other Credit Parties signatory thereto, General Electric Capital
Corporation, for itself, as Lender, and as Agent for Lenders, and Lenders, and
hereby gives you notice, irrevocably, pursuant to Section 1.1(a) of the Credit
Agreement, that the undersigned hereby requests a Revolving Credit Advance under
the Credit Agreement, and in that connection sets forth below the information
relating to such Revolving Credit Advance as required by Section 1.1(a) of the
Credit Agreement:
(i) The date of the requested Revolving Credit Advance is
__________, ____.
(ii) The aggregate amount of the requested Revolving Credit Advance
is $____________.
(iii) The requested Revolving Credit Advance is [an Index Rate Loan]
[a LIBOR Loan with a LIBOR Period of ________].
(iv) The requested Revolving Credit Advance is to be sent to:
[Name of Bank]
[City of Bank]
Beneficiary:
Account No.: [number]
ABA No.: [number]
Attn: [name]
(v) [Compliance with Indentures]
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The undersigned hereby certifies that all of the statements contained
in Section 7.2 of the Credit Agreement are true and correct in all material
respects on the date hereof, and will be true in all material respects on the
date of the requested Revolving Credit Advance, before and after giving effect
thereto and to the application of the proceeds therefrom.
TELEX COMMUNICATIONS, INC.
By: _______________________________
Name:
Title:
2
EXHIBIT 1.2(e)
TO
CREDIT AGREEMENT
FORM OF NOTICE OF CONVERSION/CONTINUATION
Reference is made to that certain Credit Agreement dated as of November
19, 2003 by and among the undersigned ("Borrower"), the other Persons named
therein as Borrowers, the other Persons named therein as Credit Parties, General
Electric Capital Corporation ("Agent") and the Lenders from time to time
signatory thereto (including all annexes, exhibits or schedules thereto, and as
from time to time amended, restated, supplemented or otherwise modified, the
"Credit Agreement"). Capitalized terms used herein without definition are so
used as defined in the Credit Agreement.
Borrower hereby gives irrevocable notice, pursuant to Section 1.2(e) of
the Credit Agreement, of its request to:
(a) on [ date ] convert $[________]of the aggregate outstanding
principal amount of the [_______] Loan, bearing interest at the [________] Rate,
into a(n) [________] Loan [and, in the case of a LIBOR Loan, having a LIBOR
Period of [_____] month(s)];
[(b) on [ date ] continue $[________]of the aggregate outstanding
principal amount of the [_______] Loan, bearing interest at the LIBOR Rate, as a
LIBOR Loan having a LIBOR Period of [_____] month(s)].
Borrower certifies that the conversion and/or continuation of the Loans
requested above is for the separate account of the Borrower in the following
amount: [$_____________].
Borrower hereby (i) certifies that all of the statements contained in
Section 7.2 of the Credit Agreement are true and correct in all material
respects on the date hereof, and will be true in all material respects on the
date of the requested conversion/continuation, before and after giving effect
thereto and (ii) reaffirms the guaranty and continuance of Agent's Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.
TELEX COMMUNICATIONS, INC.
By:_____________________________
Name:
Title:
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EXHIBIT 8.1
TO
CREDIT AGREEMENT
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Agreement") is made as of ___________
__, ____ by and between __________________________________ ("Assignor Lender")
and ________________________ ("Assignee Lender") and acknowledged and consented
to by GENERAL ELECTRIC CAPITAL CORPORATION, as agent ("Agent"). All capitalized
terms used in this Agreement and not otherwise defined herein will have the
respective meanings set forth in the Credit Agreement as hereinafter defined.
RECITALS:
WHEREAS, ___________________, a _________ corporation, ______________,
a __________ corporation, and ____________, a _________ corporation ("Credit
Parties"), Agent, Assignor Lender and other Persons signatory thereto as Lenders
have entered into that certain Credit Agreement dated as of November 19, 2003
(as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") pursuant to which Assignor Lender has agreed to make certain
Loans to, and incur certain Letter of Credit Obligations for, Borrowers;
WHEREAS, Assignor Lender desires to assign to Assignee Lender [ALL/A
PORTION] of its interest in the Loans (as described below), the Letter of Credit
Obligations and the Collateral and to delegate to Assignee Lender [ALL/A
PORTION] of its Commitments and other duties with respect to such Loans, Letter
of Credit Obligations and Collateral;
WHEREAS, Assignee Lender desires to become a Lender under the Credit
Agreement and to accept such assignment and delegation from Assignor Lender; and
WHEREAS, Assignee Lender desires to appoint Agent to serve as agent for
Assignee Lender under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions, and covenants herein contained, Assignor Lender and Assignee Lender
agree as follows:
1. ASSIGNMENT, DELEGATION, AND ACCEPTANCE
1.1 Assignment. Assignor Lender hereby transfers and assigns to
Assignee Lender, without recourse and without representations or warranties of
any kind (except as set forth in Section 3.2), [ALL/SUCH PERCENTAGE] of Assignor
Lender's right, title, and interest in [THE REVOLVING LOAN ], [THE LOANS],
[LETTER OF CREDIT OBLIGATIONS], Loan Documents and the Collateral as will result
in Assignee Lender having as of the Effective Date (as hereinafter defined) a
Pro Rata Share thereof, as follows:
Assignee Lender's Loans Principal Amount Pro Rata Share
----------------------- ---------------- --------------
Revolving Loan $____________ ____%
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1.2 Delegation. Assignor Lender hereby irrevocably assigns and
delegates to Assignee Lender [ALL/A PORTION] of its Commitments and its other
duties and obligations as a Lender under the Loan Documents equivalent to the
Pro Rata Shares set forth above.
1.3 Acceptance by Assignee Lender. By its execution of this
Agreement, Assignee Lender irrevocably purchases, assumes and accepts such
assignment and delegation and agrees to be a Lender with respect to the
delegated interest under the Loan Documents and to be bound by the terms and
conditions thereof. By its execution of this Agreement, Assignor Lender agrees,
to the extent provided herein, to relinquish its rights and be released from its
obligations and duties under the Credit Agreement.
1.4 Effective Date. Such assignment and delegation by Assignor
Lender and acceptance by Assignee Lender will be effective and Assignee Lender
will become a Lender under the Loan Documents as of [THE DATE OF THIS
AGREEMENT][_____ __, ____] ("Effective Date") and upon payment of the Assigned
Amount and the Assignment Fee (as each term is defined below). [INTEREST AND
FEES ACCRUED PRIOR TO THE EFFECTIVE DATE ARE FOR THE ACCOUNT OF ASSIGNOR LENDER,
AND INTEREST AND FEES ACCRUED FROM AND AFTER THE EFFECTIVE DATE ARE FOR THE
ACCOUNT OF ASSIGNEE LENDER.]
2. INITIAL PAYMENT AND DELIVERY OF NOTES
2.1 Payment of the Assigned Amount. Assignee Lender will pay to
Assignor Lender, in immediately available funds, not later than 12:00 noon (New
York time) on the Effective Date, an amount equal to its Pro Rata Share of the
then outstanding principal amount of the Loans as set forth above in Section 1.1
[TOGETHER WITH ACCRUED INTEREST, FEES AND OTHER AMOUNTS AS SET FORTH ON SCHEDULE
2.1] (the "Assigned Amount").
2.2 Payment of Assignment Fee. [Assignor Lender and/or Assignee
Lender] will pay to Agent, for its own account in immediately available funds,
not later than 12:00 noon (New York time) on the Effective Date, the assignment
fee in the amount of $3,500 (the "Assignment Fee") as required pursuant to
Section 8.1(a) of the Credit Agreement.
2.3 Execution and Delivery of Notes. Following payment of the
Assigned Amount and the Assignment Fee, Assignor Lender will deliver to Agent
the Notes previously delivered to Assignor Lender for redelivery to Borrowers
and Agent will obtain from Borrowers for delivery to [ASSIGNOR LENDER AND]
Assignee Lender, new executed Notes evidencing Assignee Lender's [AND ASSIGNOR
LENDER'S RESPECTIVE] Pro Rata Share[s] in the Loans after giving effect to the
assignment described in Section 1. Each new Note will be issued in the aggregate
maximum principal amount of the [APPLICABLE] Commitment [OF THE LENDER TO WHOM
SUCH NOTE IS ISSUED] OR [THE ASSIGNEE LENDER].
3. REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Assignee Lender's Representations, Warranties and Covenants.
Assignee Lender hereby represents, warrants, and covenants the following to
Assignor Lender and Agent:
(a) This Agreement is a legal, valid, and binding
agreement of Assignee Lender, enforceable according to its terms;
(b) The execution and performance by Assignee Lender of
its duties and obligations under this Agreement and the Loan Documents will not
require any registration with, notice to, or consent or approval by any
Governmental Authority;
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(c) Assignee Lender is familiar with transactions of the
kind and scope reflected in the Loan Documents and in this Agreement;
(d) Assignee Lender has made its own independent
investigation and appraisal of the financial condition and affairs of each
Credit Party, has conducted its own evaluation of the Loans and Letter of Credit
Obligations, the Loan Documents and each Credit Party's creditworthiness, has
made its decision to become a Lender to Borrowers under the Credit Agreement
independently and without reliance upon Assignor Lender or Agent, and will
continue to do so;
(e) Assignee Lender is entering into this Agreement in
the ordinary course of its business, and is acquiring its interest in the Loans
and Letter of Credit Obligations for its own account and not with a view to or
for sale in connection with any subsequent distribution; provided, however, that
at all times the distribution of Assignee Lender's property shall, subject to
the terms of the Credit Agreement, be and remain within its control;
(f) No future assignment or participation granted by
Assignee Lender pursuant to Section 8.1 of the Credit Agreement will require
Assignor Lender, Agent, or Borrower to file any registration statement with the
Securities and Exchange Commission or to apply to qualify under the blue sky
laws of any state;
(g) Assignee Lender has no loans to, written or oral
agreements with, or equity or other ownership interest in any Credit Party;
(h) Assignee Lender will not enter into any written or
oral agreement with, or acquire any equity or other ownership interest in, any
Credit Party without the prior written consent of Agent; and
(i) As of the Effective Date, Assignee Lender (i) is
entitled to receive payments of principal and interest in respect of the
Obligations without deduction for or on account of any taxes imposed by the
United States of America or any political subdivision thereof [, (ii) is not
subject to capital adequacy or similar requirements under Section 1.11(a) of the
Credit Agreement, (iii) does not require the payment of any increased costs
under Section 1.11(b) of the Credit Agreement, and (iv) is not unable to fund
LIBOR Loans under Section 1.11(b) of the Credit Agreement, ] and Assignee Lender
will indemnify Agent from and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, or expenses that result
from Assignee Lender's failure to fulfill its obligations under the terms of
Section 1.12(c) of the Credit Agreement [or from any other inaccuracy in the
foregoing].
3.2 Assignor Lender's Representations, Warranties and Covenants.
Assignor Lender hereby represents, warrants and covenants the following to
Assignee Lender:
(a) Assignor Lender is the legal and beneficial owner of
the Assigned Amount;
(b) This Agreement is a legal, valid and binding
agreement of Assignor Lender, enforceable according to its terms;
(c) The execution and performance by Assignor Lender of
its duties and obligations under this Agreement and the Loan Documents will not
require any registration with, notice to or consent or approval by any
Governmental Authority;
3
(d) Assignor Lender has full power and authority, and has
taken all action necessary to execute and deliver this Agreement and to fulfill
the obligations hereunder and to consummate the transactions contemplated
hereby;
(e) Assignor Lender is the legal and beneficial owner of
the interests being assigned hereby, free and clear of any adverse claim, lien,
encumbrance, security interest, restriction on transfer, purchase option, call
or similar right of a third party; and
(f) This Assignment by Assignor Lender to Assignee Lender
complies, in all material respects, with the terms of the Loan Documents.
4. LIMITATIONS OF LIABILITY
Neither Assignor Lender (except as provided in Section 3.2) nor Agent
makes any representations or warranties of any kind, nor assumes any
responsibility or liability whatsoever, with regard to (a) the Loan Documents or
any other document or instrument furnished pursuant thereto or the Loans, Letter
of Credit Obligations or other Obligations, (b) the creation, validity,
genuineness, enforceability, sufficiency, value or collectibility of any of
them, (c) the amount, value or existence of the Collateral, (d) the perfection
or priority of any Lien upon the Collateral, or (e) the financial condition of
any Credit Party or other obligor or the performance or observance by any Credit
Party of its obligations under any of the Loan Documents. Neither Assignor
Lender nor Agent has or will have any duty, either initially or on a continuing
basis, to make any investigation, evaluation, appraisal of, or any
responsibility or liability with respect to the accuracy or completeness of, any
information provided to Assignee Lender which has been provided to Assignor
Lender or Agent by any Credit Party. Nothing in this Agreement or in the Loan
Documents shall impose upon the Assignor Lender or Agent any fiduciary
relationship in respect of the Assignee Lender.
5. FAILURE TO ENFORCE
No failure or delay on the part of Agent or Assignor Lender in the
exercise of any power, right, or privilege hereunder or under any Loan Document
will impair such power, right, or privilege or be construed to be a waiver of
any default or acquiescence therein. No single or partial exercise of any such
power, right, or privilege will preclude further exercise thereof or of any
other right, power, or privilege. All rights and remedies existing under this
Agreement are cumulative with, and not exclusive of, any rights or remedies
otherwise available.
6. NOTICES
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given will be in writing and addressed
to the respective party as set forth below its signature hereunder, or to such
other address as the party may designate in writing to the other.
7. AMENDMENTS AND WAIVERS
No amendment, modification, termination, or waiver of any provision of
this Agreement will be effective without the written concurrence of Assignor
Lender, Agent and Assignee Lender.
8. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law. In the event
any provision of this Agreement is or is held to be
4
invalid, illegal, or unenforceable under applicable law, such provision will be
ineffective only to the extent of such invalidity, illegality, or
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of the Agreement. In addition, in the event any provision
of or obligation under this Agreement is or is held to be invalid, illegal, or
unenforceable in any jurisdiction, the validity, legality, and enforceability of
the remaining provisions or obligations in any other jurisdictions will not in
any way be affected or impaired thereby.
9. SECTION TITLES
Section and Subsection titles in this Agreement are included for
convenience of reference only, do not constitute a part of this Agreement for
any other purpose, and have no substantive effect.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
11. APPLICABLE LAW
THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE.
12. COUNTERPARTS
This Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so executed and delivered, will be
deemed an original and all of which shall together constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
5
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
ASSIGNEE LENDER: ASSIGNOR LENDER:
By: _________________________ By: _________________________
Title: Title:
Notice Address: Notice Address:
______________________________ _______________________________
______________________________ _______________________________
ACKNOWLEDGED AND CONSENTED TO:
GENERAL ELECTRIC CAPITAL CORPORATION
By: _____________________________________________
Title: _____________________________________________
6