EXHIBIT 10.16 AMENDED AND RESTATED CREDIT AGREEMENT WITH NATIONSBANK
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 3, 1998
AMONG
PENTACON, INC.
AS BORROWER,
NATIONSBANK, N.A.,
AS ADMINISTRATIVE AGENT,
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC,
AS LEAD ARRANGER,
AND
THE LENDERS SIGNATORY HERETO
$175,000,000 SENIOR CREDIT FACILITIES
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE......................................1
Section 1.02 CERTAIN DEFINED TERMS....................................1
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS.....................19
ARTICLE II COMMITMENTS
Section 2.01 LOANS AND LETTERS OF CREDIT.............................19
Section 2.02 BORROWINGS,CONTINUATIONS AND CONVERSIONS, LETTERS OF
CREDIT..................................................21
Section 2.03 CHANGES OF COMMITMENTS..................................23
Section 2.04 FEES....................................................24
Section 2.05 SEVERAL OBLIGATIONS.....................................26
Section 2.06 NOTES...................................................26
Section 2.07 PREPAYMENTS.............................................27
Section 2.08 ASSUMPTION OF RISKS.....................................28
Section 2.09 OBLIGATION TO REIMBURSE AND TO PREPAY...................29
Section 2.10 LENDING OFFICES.........................................30
Section 2.11 EQUITY EVENT/SUBORDINATED DEBT EVENT....................30
ARTICLE III PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 PRINCIPAL...............................................30
Section 3.02 INTEREST................................................31
ARTICLE IV PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS................................................32
Section 4.02 PRO RATA TREATMENT......................................32
Section 4.03 COMPUTATIONS............................................33
Section 4.04 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT........33
Section 4.05 SET-OFF, SHARING OF PAYMENTS, ETC.......................33
Section 4.06 TAXES...................................................34
ARTICLE V CHANGE IN CIRCUMSTANCES
Section 5.01 INCREASED COST AND REDUCED RETURN.......................36
Section 5.02 LIMITATION ON TYPES OF LOANS............................37
Section 5.03 ILLEGALITY..............................................38
Section 5.04 TREATMENT OF AFFECTED LOANS.............................38
Section 5.05 COMPENSATION............................................38
Section 5.06 REPLACEMENT LENDERS.....................................39
ARTICLE VI CONDITIONS PRECEDENT
Section 6.01 INITIAL FUNDING.........................................40
Section 6.02 INITIAL AND SUBSEQUENT LOANS AND LETTERS OF CREDIT .....41
Section 6.03 CONDITIONS RELATING TO LETTERS OF CREDIT................42
Section 6.04 CONDITIONS RELATING TO ACQUISITION OF TARGET COMPANY....42
ARTICLE VII REPRESENTATIONS AND WARRANTIES
Section 7.01 CORPORATE EXISTENCE.....................................43
Section 7.02 FINANCIAL CONDITION.....................................44
Section 7.03 LITIGATION..............................................44
Section 7.04 NO BREACH...............................................45
Section 7.05 AUTHORITY...............................................45
Section 7.06 APPROVALS...............................................45
Section 7.07 USE OF LOANS............................................45
Section 7.08 ERISA...................................................45
Section 7.09 TAXES...................................................46
Section 7.10 TITLES, ETC.............................................47
Section 7.11 NO MATERIAL MISSTATEMENTS...............................47
Section 7.12 INVESTMENT COMPANY ACT..................................47
Section 7.13 PUBLIC UTILITY HOLDING COMPANY ACT......................47
Section 7.14 SUBSIDIARIES............................................47
Section 7.15 LOCATION OF BUSINESS AND OFFICES........................48
Section 7.16 DEFAULTS................................................48
Section 7.17 ENVIRONMENTAL MATTERS...................................48
Section 7.18 COMPLIANCE WITH THE LAW.................................49
Section 7.19 INSURANCE...............................................49
Section 7.20 HEDGING AGREEMENTS......................................49
Section 7.21 RESTRICTION ON LIENS....................................50
Section 7.22 MATERIAL AGREEMENTS.....................................50
Section 7.23 REGISTRATION STATEMENT..................................50
Section 7.24 YEAR 2000 COMPLIANCE....................................50
ARTICLE VIII AFFIRMATIVE COVENANTS
Section 8.01 FINANCIAL STATEMENTS....................................50
Section 8.02 LITIGATION..............................................52
Section 8.03 MAINTENANCE, ETC........................................52
Section 8.04 ENVIRONMENTAL MATTERS...................................53
Section 8.05 FURTHER ASSURANCES......................................53
Section 8.06 PERFORMANCE OF OBLIGATIONS..............................53
Section 8.07 ERISA INFORMATION AND COMPLIANCE........................54
Section 8.08 SUBSIDIARY SECURITY.....................................54
Section 8.09 INSPECTION..............................................54
Section 8.10 RELEASE OF LIENS; SEARCH CERTIFICATES...................55
ARTICLE IX NEGATIVE COVENANTS
Section 9.01 DEBT....................................................55
Section 9.02 LIENS...................................................56
Section 9.03 INVESTMENTS, LOANS AND ADVANCES.........................56
Section 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS................57
Section 9.05 SALES AND LEASEBACKS....................................57
Section 9.06 NATURE OF BUSINESS......................................58
Section 9.07 MERGERS, ETC............................................58
Section 9.08 PROCEEDS OF NOTES.......................................58
Section 9.09 ERISA COMPLIANCE........................................58
Section 9.10 SALE OR DISCOUNT OF RECEIVABLES.........................59
Section 9.11 CAPITAL EXPENDITURES....................................59
Section 9.12 NET WORTH...............................................59
Section 9.13 LEVERAGE RATIO..........................................59
Section 9.14 SENIOR DEBT LEVERAGE RATIO..............................60
Section 9.15 FIXED CHARGE COVERAGE RATIO.............................61
Section 9.16 SALE OF PROPERTIES......................................62
Section 9.17 ENVIRONMENTAL MATTERS...................................62
Section 9.18 TRANSACTIONS WITH AFFILIATES............................62
Section 9.19 SUBSIDIARIES............................................62
Section 9.20 NEGATIVE PLEDGE AGREEMENTS..............................62
Section 9.21 FISCAL YEAR.............................................63
ARTICLE X EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT......................................63
Section 10.02 REMEDIES...............................................65
ARTICLE XI THE ADMINISTRATIVE AGENT
Section 11.01 APPOINTMENT, POWERS AND IMMUNITIES.....................66
Section 11.02 RELIANCE BY ADMINISTRATIVE AGENT.......................66
Section 11.03 DEFAULTS...............................................67
Section 11.04 RIGHTS AS A LENDER.....................................67
Section 11.05 INDEMNIFICATION........................................67
Section 11.06 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.68
Section 11.07 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT.........68
ARTICLE XII MISCELLANEOUS
Section 12.01 WAIVER.................................................69
Section 12.02 NOTICES................................................69
Section 12.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC..................69
Section 12.04 AMENDMENTS, ETC........................................70
Section 12.05 SUCCESSORS AND ASSIGNS.................................70
Section 12.06 ASSIGNMENTS AND PARTICIPATIONS.........................70
Section 12.07 INVALIDITY.............................................72
Section 12.08 COUNTERPARTS...........................................72
Section 12.09 REFERENCES.............................................72
Section 12.10 SURVIVAL...............................................72
Section 12.11 CAPTIONS...............................................73
Section 12.12 NO ORAL AGREEMENTS.....................................73
SECTION 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION..............73
Section 12.14 INTEREST...............................................74
Section 12.15 CONFIDENTIALITY........................................75
Section 12.16 EXCULPATION PROVISIONS.................................75
ANNEXES, EXHIBITS AND SCHEDULES
Annex I - List of Percentage Shares, Maximum Revolving Credit Amounts,
and Revolver Term Loans
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Revolver Term Note
Exhibit A-3 - Form of Swing Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - List of Security Instruments
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Acquisition Certificate
Schedule 7.02 - Liabilities
Schedule 7.03 - Litigation
Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.17 - Environmental Matters
Schedule 7.20 - Hedging Agreements
Schedule 7.22 - Material Agreements
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
Schedule 9.13 - Extraordinary or Non-Recurring Expenses
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 3,
1998 is among PENTACON, INC., a corporation formed under the laws of the State
of Delaware (the "BORROWER"); each of the lenders that is a signatory hereto or
which becomes a signatory hereto as provided in Section 12.06 (individually,
together with its successors and assigns, a "LENDER" and, collectively, the
"LENDERS"); NATIONSBANK, N.A., a national banking association (in its individual
capacity, "NATIONSBANK"), as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the "ADMINISTRATIVE
AGENT"), and NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC, as lead arranger (the "LEAD
ARRANGER").
R E C I T A L S
A. The Borrower has requested that the Lenders amend, extend, increase and
rearrange all of the Prior Debt (as defined in Section 1.02) and provide certain
loans to and extensions of credit on behalf of the Borrower; and
B. The Lenders have agreed to amend, extend, increase and rearrange the
Prior Debt and make such loans and extensions of credit subject to the terms and
conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree to amend and restate the Prior Credit
Agreement (as defined in Section 1.02) as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 TERMS DEFINED ABOVE. As used in this Agreement, the
terms "ADMINISTRATIVE AGENT," "BORROWER," "LEAD ARRANGER," "LENDER," "LENDERS"
and "NATIONSBANK" shall have the meanings indicated above.
Section 1.02 CERTAIN DEFINED TERMSSECTION As used herein, the
following terms shall have the following meanings (all terms defined in this
Article I or in other provisions of this Agreement in the singular to have the
same meanings when used in the plural and VICE VERSA):
"ACQUISITION" shall mean the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest at
the time it becomes exercisable by the holder thereof), whether by purchase of
such equity interest or upon exercise of an option or warrant for, or conversion
of securities into, such equity interest, or (ii) assets of another Person which
constitute all or substantially all of the assets of such Person or of a line or
lines of business conducted by such Person.
"ADDITIONAL COSTS" shall have the meaning assigned such term in Section
5.01(a).
"ADJUSTED EURODOLLAR RATE" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Administrative Agent to be equal to the
quotient obtained by dividing (a) the Eurodollar Rate for such Eurodollar Loan
for such Interest Period by (b) 1 minus the Reserve Requirement for such
Eurodollar Loan for such Interest Period.
"AFFECTED LOANS" shall have the meaning assigned such term in
Section 5.04.
"AFFILIATE" of any Person shall mean (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person, (ii)
any director or officer of such first Person or of any Person referred to in
clause (i) above and (iii) if any Person in clause (i) above is an individual,
any member of the immediate family (including parents, spouse and children) of
such individual and any trust whose principal beneficiary is such individual or
one or more members of such immediate family and any Person who is controlled by
any such member or trust. For purposes of this definition, any Person which owns
directly or indirectly 5% or more of the securities having ordinary voting power
for the election of directors or other governing body of a corporation or 5% or
more of the partnership or other ownership interests of any other Person (other
than as a limited partner of such other Person) will be deemed to "CONTROL"
(including, with its correlative meanings, "CONTROLLED BY" and "UNDER COMMON
CONTROL with") such corporation or other Person.
"AGREEMENT" shall mean this Amended and Restated Credit Agreement, as the
same may from time to time be amended or supplemented.
"AGGREGATE COMMITMENTS" at any time shall equal the sum of the Aggregate
Revolving Credit Commitments and the Aggregate Revolver Term Commitments.
"AGGREGATE MAXIMUM REVOLVER TERM LOAN AMOUNTS" at any time shall equal the
sum of the Maximum Revolver Term Amounts of the Lenders ($40,000,000), as the
same may be reduced pursuant to Section 2.03(b).
"AGGREGATE MAXIMUM REVOLVING CREDIT AMOUNTS" at any time shall equal the
sum of the Maximum Revolving Credit Amounts of the Lenders ($135,000,000), as
the same may be reduced pursuant to Section 2.03(a).
"AGGREGATE REVOLVING CREDIT COMMITMENTS" at any time shall equal the
amount calculated in accordance with Section 2.03(a).
"AGGREGATE REVOLVER TERM LOAN COMMITMENTS" at any time shall equal the
amount calculated in accordance with Section 2.03(b).
"APPLICABLE LENDING OFFICE" shall mean, for each Lender and for each Type
of Loan, the lending office of such Lender (or an Affiliate of such Lender)
designated for such Type of Loan on the signature pages hereof or such other
offices of such Lender (or of an Affiliate of such Lender) as such Lender may
from time to time specify to the Administrative Agent and the Borrower by
written notice in accordance with the terms hereof as the office by which its
Loans of such Type are to be made and maintained.
"APPLICABLE MARGIN" shall mean for each period identified below the
applicable per annum percentage set forth at the appropriate intersection in the
table shown below, based on the Leverage Ratio, for the four quarterly periods
ending on and determined as of the immediately preceding Quarterly Date:
---------------------------------------------------------------------
APPLICABLE MARGIN FOR APPLICABLE MARGIN
LEVERAGE RATIO EURODOLLAR LOANS FOR BASE RATE LOANS
---------------------------------------------------------------------
Less than or equal to
1.50 0.75% 0%
---------------------------------------------------------------------
Less than or equal to
2.00, but greater than
1.50 1.00% 0%
---------------------------------------------------------------------
Less than or equal to
2.50, but greater than
2.00 1.25% 0%
---------------------------------------------------------------------
Less than or equal to
3.00, but greater than
2.50 1.50% 0%
---------------------------------------------------------------------
Less than or equal to
3.50, but greater than
3.00 1.75% 0.25%
---------------------------------------------------------------------
Greater than 3.50 2.125% 0.50%
---------------------------------------------------------------------
PROVIDED, HOWEVER, on the first Determination Date (hereinafter defined)
following the occurrence of an Equity Event, "Applicable Margin" shall mean for
each period identified below the applicable per annum percentage set forth at
the appropriate intersection in the table shown below, based on the Leverage
Ratio, for the four quarterly periods ending on and determined as of the
immediately preceding Quarterly Date:
---------------------------------------------------------------------
APPLICABLE MARGIN FOR APPLICABLE MARGIN
LEVERAGE RATIO EURODOLLAR LOANS FOR BASE RATE LOANS
---------------------------------------------------------------------
Less than or equal to
1.50 0.75% 0%
---------------------------------------------------------------------
Less than or equal to
2.00, but greater than
1.50 1.00% 0%
---------------------------------------------------------------------
Less than or equal to
2.50, but greater than
2.00 1.25% 0%
---------------------------------------------------------------------
Greater than 2.50 1.50% 0%
---------------------------------------------------------------------
and FURTHER PROVIDED, HOWEVER, on the first Determination Date (hereinafter
defined) following the occurrence of a Subordinated Debt Event, "Applicable
Margin" shall mean for each period identified below the applicable per annum
percentage set forth at the appropriate intersection in the table shown below,
based on the Leverage Ratio, for the four quarterly periods ending on and
determined as of the immediately preceding Quarterly Date:
---------------------------------------------------------------------
APPLICABLE MARGIN FOR APPLICABLE MARGIN
LEVERAGE RATIO EURODOLLAR LOANS FOR BASE RATE LOANS
---------------------------------------------------------------------
Less than or equal to
1.50 0.75% 0%
---------------------------------------------------------------------
Less than or equal to
2.00, but greater than
1.50 1.00% 0%
---------------------------------------------------------------------
Less than or equal to
2.50, but greater than
2.00 1.25% 0%
---------------------------------------------------------------------
Less than or equal to
3.00, but greater than
2.50 1.375% 0%
---------------------------------------------------------------------
Less than or equal to
3.50, but greater than
3.00 1.50% 0%
---------------------------------------------------------------------
Greater than 3.50 1.75% 0.25%
---------------------------------------------------------------------
If both an Equity Event and a Subordinated Debt Event shall occur, the
Applicable Margin shall be determined based on the table for the occurrence of
an Equity Event.
The Applicable Margin shall be established following each Quarterly Date (each,
a "DETERMINATION DATE"). Any change in the Applicable Margin following each
Determination Date shall be determined based upon the computations set forth in
the Compliance Certificate furnished to the Administrative Agent pursuant to
Section 8.01(i) or Section 9.03(i), subject to review and approval of such
computations by the Administrative Agent. Each change in the Applicable Margin
shall be effective commencing as of the next Business Day following the date
such certificate is received (including, without limitation, in respect of
Eurodollar Loans then outstanding notwithstanding that such change occurs during
an Interest Period), and shall remain in effect until the date that is the next
Business Day following the first to occur of the date on which (i) a new
certificate is delivered for which a change in the Applicable Margin occurs or
(ii) is required to be delivered; PROVIDED, HOWEVER; if the Borrower shall fail
to deliver any such certificate within the time period required by Section
8.01(i), then the Applicable Margin shall be the highest percentage amount
stated for each Type of Loan as set forth in the then applicable table until the
appropriate certificate is so delivered. From the Closing Date to the first
Determination Date, the Applicable Margin for Eurodollar Loans shall be 2.125%.
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning assigned such term
in Section 12.06(b).
"BASE RATE" shall mean, with respect to any Base Rate Loan, for any day,
the rate per annum equal to the higher of (i) the Federal Funds Rate for any
such day plus 1/2 of 1% or (ii) the Prime Rate for such day. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or Federal
Funds Rate.
"BASE RATE LOANS" shall mean Loans that bear interest at rates based upon
the Base Rate.
"BUSINESS DAY" shall mean any day other than a day on which commercial
banks are authorized or required to close in Houston, Texas and, where such term
is used in the definition of "Quarterly Date" or if such day relates to a
borrowing or continuation of, a payment or prepayment of principal of or
interest on, or a conversion of or into, or the Interest Period for, a
Eurodollar Loan or a notice by the Borrower with respect to any such borrowing
or continuation, payment, prepayment, conversion or Interest Period, any day
which is also a day on which dealings in Dollar deposits are carried out in the
London interbank market.
"CAPITAL EXPENDITURES" shall mean, with respect to the Borrower and its
Subsidiaries, for any period the sum of (without duplication) (a) all
expenditures (whether paid in cash or accrued as liabilities) by the Borrower or
any Subsidiary during such period for items that would be classified as
"property, plant or equipment" or comparable items on the consolidated balance
sheet of the Borrower and its Subsidiaries, including without limitation all
transactional costs incurred in connection with such expenditures provided the
same have been capitalized, excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty insurance as evidenced in
writing and submitted to the Administrative Agent together with any Compliance
Certificate delivered pursuant to Section 8.01(i), and (b) with respect to any
Capital Lease entered into by the Borrower or its Subsidiaries during such
period, the present value of the lease payments due under such Capital Lease
over the term of such Capital Lease applying a discount rate equal to the
interest rate provided in such lease (or in the absence of a stated interest
rate, that rate used in the preparation of the financial statements described in
Section 8.01(a) and (b)), all of the foregoing in accordance with GAAP applied
on a Consistent Basis; PROVIDED, HOWEVER, it shall not include (x) Capital
Expenditures required by the Agreement and Plan of Organization dated December
1, 1997 between Alatec Products, Inc. and the Borrower and (y) Capital
Expenditures incurred in conjunction with Acquisitions permitted pursuant to
Section 9.03(i).
"CAPITAL LEASES" shall mean all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time including
Statement No. 13 of the Financial Accounting Standards Board and any successor
thereof.
"CHANGE OF CONTROL" shall mean, at any time:
(A) With respect to the Borrower,
(i) any "person" or "group" (each as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) other than the group consisting of one or
more stockholders of the Borrower who collectively owned 30% or more of
one or more of the Founding Companies immediately prior to the Acquisition
thereof by the Borrower, voting as a single unit, (each an "Existing
Control Group") either (A) becomes the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of voting stock
of the Borrower (or securities convertible into or exchangeable for such
voting stock) representing 30% or more of the combined voting power of all
voting stock of the Borrower (on a fully diluted basis) or (B) otherwise
has the ability, directly or indirectly, to elect a majority of the board
of directors of the Borrower (PROVIDED that if an event described in this
clause (i) shall occur solely by reason of the death of one or more
members of the Existing Control Group, then a "Change of Control" shall
not be deemed to have occurred so long as the voting stock of the decedent
is owned of record by the estate or immediately family of such decedent);
(ii) during any period of up to 24 consecutive months, commencing on
the Closing Date, individuals who at the beginning of such 24-month period
were directors of the Borrower shall cease for any reason (other than the
death, disability or retirement of a director or of an officer of the
Borrower that is serving as a directory at such time so long as another
officer of the Borrower replaces such Person as a director) to constitute
a majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert other than
the Existing Control Group shall have acquired by contract or otherwise,
or shall have consummated a contract or arrangement that results in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of the Borrower; or
(B) with respect to any Subsidiary,
(i) the Borrower shall cease to own, directly or indirectly, 100% of
the voting stock of each currently existing Subsidiary, except JITCO, LLC;
or
(ii) any Person or two or more Persons acting in concert other than
the Borrower shall have acquired by contract or otherwise, or shall have
consummated a contract or arrangement that results in its or their
acquisition of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of such Subsidiary.
"CLOSING DATE" shall mean September 3, 1998.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time and any successor statute.
"COMMITMENTS" shall mean for any Lender, its Revolving Credit Commitment,
Revolver Term Loan Commitment, and/or Swing Line Commitment, as applicable.
"COMPLIANCE CERTIFICATE" shall mean a certificate in the form of EXHIBIT C
hereto executed by a Responsible Officer.
"CONSISTENT BASIS" in reference to the applicable GAAP shall mean the
accounting principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited financial
statements of the Borrower referred to in Section 7.02.
"CONSOLIDATED NET INCOME" shall mean with respect to the Borrower and its
Consolidated Subsidiaries, for any period, the aggregate of the net income (or
loss) of the Borrower and its Consolidated Subsidiaries after allowances for
taxes for such period, determined on a consolidated basis in accordance with
GAAP; PROVIDED that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (i) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and its Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in cash in such period by such other Person to the
Borrower or to a Consolidated Subsidiary, as the case may be; (ii) the net
income (but not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary to the Borrower is not at the time
permitted by operation of the terms of its charter or any agreement, instrument
or Governmental Requirement applicable to such Consolidated Subsidiary, or is
otherwise restricted or prohibited in each case determined in accordance with
GAAP; (iii) any extraordinary gains including gains attributable to Property
sales not in the ordinary course of business; and (iv) the cumulative effect of
a change in accounting principles and any gains attributable to writeups of
assets.
"CONSOLIDATED SUBSIDIARIES" shall mean each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower in accordance with GAAP.
"CONTINUE", "CONTINUATION", and "CONTINUED" shall refer to the
continuation pursuant to Section 5.01 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"CONVERT", "CONVERSION", and "CONVERTED" shall refer to a conversion
pursuant to Section 5.01 of one Type of Loan into another Type of Loan.
"DEBT" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person (whether
contingent or otherwise) in respect of bankers' acceptances, letters of credit,
surety or other bonds and similar instruments; (iii) all obligations of such
Person to pay the deferred purchase price of Property or services (other than
for borrowed money); (iv) all obligations under leases which shall have been, or
should have been, in accordance with GAAP, recorded as capital leases in respect
of which such Person is liable (whether contingent or otherwise); (v) all
obligations under leases which require such Person or its Affiliate to make
payments over the term of such lease, including payments at termination, which
are substantially equal to at least eighty percent (80%) of the purchase price
of the Property subject to such lease plus interest at an imputed rate of
interest; (vi) all Debt (as described in the other clauses of this definition)
and other obligations of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person; (vii) all Debt (as described
in the other clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the debtor or obligations of others; (viii) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt (as described in the
other clauses of this definition) or Property of others; (ix) obligations to
deliver goods or services in consideration of advance payments ; (x) obligations
to pay for goods or services whether or not such goods or services are actually
received or utilized by such Person; (xi) any capital stock of such Person in
which such Person has a mandatory obligation to redeem such stock; (xii) any
Debt (as described in the other clause of this definition) of a Special Entity
for which such Person is
liable either by agreement or because of a Governmental Requirement; and (xiii)
all obligations of such Person under Hedging Agreements.
"DEFAULT" shall mean an Event of Default or an event which with notice or
lapse of time or both would become an Event of Default.
"DOLLARS" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent deducted
from Consolidated Net Income in such period: interest, taxes, depreciation,
depletion and amortization, minus all non cash other income added to
Consolidated Net Income in such period.
"ELIGIBLE ASSIGNEE" shall mean (i) a Lender, (ii) an Affiliate of a Lender
and (iii) any other Person approved by the Administrative Agent and, unless an
Event of Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 12.06, the Borrower, such approval not to be
unreasonably withheld or delayed by the Borrower and such approval to be deemed
given by the Borrower if no objection is received by the assigning Lender and
the Administrative Agent from the Borrower within two Business Days after notice
of such proposed assignment has been provided by the assigning Lender to the
Borrower; PROVIDED, HOWEVER, that neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.
"ENVIRONMENTAL LAWS" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all jurisdictions
in which the Borrower or any Subsidiary is conducting or at any time has
conducted business, or where any Property of the Borrower or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. The term "oil" shall
have the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (ii)
to the extent the laws of the state in which any Property of the Borrower or any
Subsidiary is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
"EQUITY EVENT" shall mean the consummation of the sale of capital stock of
the Borrower resulting in net cash proceeds to the Borrower of not less than
$75,000,000.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA AFFILIATE" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA EVENT" shall mean (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (other than such an event
with respect to which the requirement to give
notice has been waived) (ii) the withdrawal of the Borrower, any Subsidiary or
any ERISA Affiliate from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii) the
filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041(c) of ERISA, (iv) the institution
of proceedings to terminate a Plan by the PBGC or (v) any other event or
condition which could reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"EURODOLLAR LOANS" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "Adjusted
Eurodollar Rate".
"EURODOLLAR RATE" shall mean, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "Eurodollar Rate" shall mean, for any Eurodollar
Loan for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; PROVIDED, HOWEVER, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
to the nearest 1/100 of 1%).
"EVENT OF DEFAULT" shall have the meaning assigned such term in Section
10.01.
"EXCEPTED LIENS" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or
statutory landlord's liens, each of which is in respect of obligations that have
not been outstanding more than 90 days or which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
maintained in accordance with GAAP; (iv) encumbrances (other than to secure the
payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property of the
Borrower or any Subsidiary for the purpose of roads, pipelines, transmission
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights of
way or other Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such rights of
way and other Property are held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (v) deposits of cash or
securities to secure the performance of bids, trade contracts, leases, statutory
obligations and other obligations of a like nature incurred in the ordinary
course of business; and (vi) Liens permitted or created by the Security
Instruments.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with a member of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the date for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to NationsBank on such day on such transactions as determined by
the Administrative Agent.
"FINAL MATURITY DATE" shall mean the earlier to occur of (i) August 31,
2003, and (ii) the date that the Revolver Term Notes are prepaid in full
pursuant to Section 2.07 at any time after the Revolver Term Loan Conversion
Date.
"FINANCIAL STATEMENTS" shall mean the financial statement or statements of
the Borrower and its Consolidated Subsidiaries described or referred to in
Section 7.02.
"FOUNDING COMPANIES" shall mean Alatec Products, Inc., AXS Solutions,
Inc., Capitol Bolt & Supply, Inc., Maumee Industries, Inc. and Sales Systems,
Limited.
"FRONTING BANK" shall mean NationsBank or any other Lender agreed to
between the Borrower and the Administrative Agent to issue Letters of Credit.
"FUNDED DEBT" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person (whether
contingent or otherwise) in respect of bankers' acceptances, letters of credit,
surety or other bonds and similar instruments; (iii) all obligations of such
Person to pay the deferred purchase price of Property or services (other than
for borrowed money) excluding accounts payable (for the deferred purchase price
of Property or services) from time to time incurred in the ordinary course of
business which, if greater than 90 days past the invoice or billing date, are
being contested in good faith by appropriate proceedings if reserves adequate
under GAAP shall have been established therefor; (iv) all obligations under
leases which shall have been, or should have been, in accordance with GAAP,
recorded as capital leases in respect of which such Person is liable (whether
contingent or otherwise); (v) all obligations under leases which require such
Person or its Affiliate to make payments over the term of such lease, including
payments at termination, which are substantially equal to at least eighty
percent (80%) of the purchase price of the Property subject to such lease plus
interest at an imputed rate of interest; (vi) all Debt and other obligations of
others guaranteed by such Person or in which such Person otherwise assures a
creditor against loss of the debtor or obligations of others; (vii) any capital
stock of such Person in which such Person has a mandatory obligation to redeem
such stock; (viii) any Debt of a Special Entity for which such Person is liable
either by agreement or because of a Governmental Requirement; and (ix) all
obligations of such Person under Hedging Agreements.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Borrower, the Subsidiaries or any of their Property or the Administrative Agent,
any Lender or any Applicable Lending Office.
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"GUARANTORS" shall mean each Subsidiary and any other Person who becomes
party to a Guaranty Agreement pursuant to the terms of Section 8.08.
"GUARANTY AGREEMENT" shall mean an agreement executed by the Guarantors in
form and substance satisfactory to the Administrative Agent guarantying,
unconditionally, payment of the Indebtedness, as the same may be amended,
modified or supplemented from time to time.
"HEDGING AGREEMENTS" shall mean any commodity, interest rate or currency
swap, cap, floor, collar, forward agreement or other exchange or protection
agreements or any option with respect to any such transaction.
"HIGHEST LAWFUL RATE" shall mean, with respect to each Lender, the maximum
nonusurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Notes or on other
Indebtedness under laws applicable to such Lender which are presently in effect
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.
"INDEBTEDNESS" shall mean any and all amounts owing or to be owing by the
Borrower to the Administrative Agent, the Fronting Bank and/or Lenders in
connection with the Loan Documents, the Letter of Credit Agreements, and any
Hedging Agreements now or hereafter arising between the Borrower and any Lender
and permitted by the terms of this Agreement and all renewals, extensions and/or
rearrangements of any of the above.
"INDEMNIFIED PARTIES" shall have the meaning assigned such term in Section
12.03(b).
"INDEMNITY MATTERS" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands and
causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent
negligence of such Person seeking indemnification.
"INITIAL FUNDING" shall mean the funding of the initial Loans or issuance
of the initial Letters of Credit pursuant to Section 6.01 hereof.
"INTEREST PERIOD" shall mean, with respect to any Eurodollar Loan, the
period commencing on the date such Eurodollar Loan is made and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Borrower may select as provided in Section 2.02 (or
such longer period as may be requested by the Borrower and agreed to by the
Majority Lenders), except that each Interest Period which commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may commence before
and end after the Revolving Credit Termination Date; (ii) no Interest Period for
any Eurodollar Loan may end after the due date of any installment, if any,
provided for in Section 3.01 hereof to the extent that such Eurodollar Loan
would need to be prepaid prior to the end of such Interest Period in order for
such installment to be paid when due; (iii) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and (iv) no
Interest Period shall have a
duration of less than one month and, if the Interest Period for any Eurodollar
Loans would otherwise be for a shorter period, such Loans shall not be available
hereunder.
"LC COMMITMENT" at any time shall mean $5,000,000.
"LC EXPOSURE" at any time shall mean the aggregate face amount of all
undrawn and uncancelled Letters of Credit and the aggregate of all amounts drawn
under all Letters of Credit and not yet reimbursed.
"LETTER AGREEMENT" shall mean that certain letter agreement from the
Administrative Agent and the Lead Arranger to the Borrower dated July 29, 1998,
and any agreements or instruments executed in connection therewith, as the same
may be amended or replaced from time to time.
"LETTER OF CREDIT AGREEMENTS" shall mean the written agreements with the
Fronting Bank, executed or hereafter executed in connection with the issuance by
the Fronting Bank of the Letters of Credit, such agreements to be on the
Fronting Bank's customary form for letters of credit of comparable amount and
purpose as from time to time in effect or as otherwise agreed to by the Borrower
and the Fronting Bank.
"LETTERS OF CREDIT" shall mean the letters of credit issued pursuant to
Section 2.01(b) and all reimbursement obligations pertaining to any such letters
of credit, and "Letter of Credit" shall mean any one of the Letters of Credit
and the reimbursement obligations pertaining thereto.
"LEVERAGE RATIO" shall mean the ratio described in Section 9.13.
"LIEN" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (i)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. The term "LIEN" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
Property. For the purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person in a transaction intended to create a financing.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes and the Security
Instruments.
"LOANS" shall mean Revolving Credit Loans, Swing Line Loans and/or
Revolver Term Loans, as the context so requires.
"MAJORITY LENDERS" shall mean, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating greater than 50% of the
aggregate Credit Exposures of all the Lenders on such date. For purposes of the
preceding sentence, the amount of the "Credit Exposure" of each Lender shall be
equal to the aggregate principal amount of the Loans owing to such Lender plus
the aggregate unutilized amounts of such Lender's Revolving Credit Commitment
(without regard to any Swing Line Outstandings) plus the amount of such Lender's
Percentage Share of LC Exposure, plus, during the Revolver Term Revolving Credit
Period, the unutilized amount of such Lender's Revolver Term Commitment,
provided that, (i) if any Lender shall have failed to honor its obligation to
make any Loan or other advance hereunder, it shall not be deemed to have any
Credit Exposure, (ii) if any Lender shall have failed to pay to the Fronting
Bank its Percentage Share of any drawing under any Letter of Credit, such
Lender's Credit Exposure attributable to LC Exposure shall be deemed to be held
by the Fronting
Bank for purposes of this definition and (iii) if any Lender shall have failed
to pay to NationsBank its Percentage Share of any Swing Line Loan, such Lender's
Credit Exposure attributable to all Swing Line Outstandings shall be deemed to
be held by NationsBank for purposes of this definition.
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Borrower and the Subsidiaries taken as a whole or from the facts
represented or warranted in any Loan Document, or (ii) the ability of the
Borrower and the Subsidiaries taken as a whole to carry out their business as at
the Closing Date or as proposed as of the Closing Date to be conducted or meet
their obligations under the Loan Documents on a timely basis.
"MAXIMUM REVOLVER TERM LOAN AMOUNT" shall mean, as to each Lender, the
amount set forth opposite such Lender's name on Annex I under the caption
"Maximum Revolver Term Loan Amounts" (as the same may be reduced pursuant to
Section 2.03(b)(ii) hereof pro rata to each Lender based on its Percentage
Share) as modified from time to time to reflect any assignments permitted by
Section 12.06(b).
"MAXIMUM REVOLVING CREDIT AMOUNT" shall mean, as to each Lender, the
amount set forth opposite such Lender's name on Annex I under the caption
"Maximum Revolving Credit Amounts" (as the same may be reduced pursuant to
Section 2.03(a)(ii) hereof pro rata to each Lender based on its Percentage
Share) as modified from time to time to reflect any assignments permitted by
Section 12.06(b).
"MORTGAGED PROPERTY" shall mean the Property owned by the Borrower and
which is subject to the Liens existing and to exist under the terms of the
Security Instruments.
"MULTIEMPLOYER PLAN" shall mean a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.
"NET WORTH" shall mean, as at any date, the sum of the following for the
Borrower and its Consolidated Subsidiaries determined (without duplication) in
accordance with GAAP:
(i) the amount of preferred stock and common stock at par plus the
amount of surplus of the Borrower, PLUS
(ii) the retained earnings (or, in the case of retained earnings
deficit, MINUS the amount of such deficit), MINUS
(iii) the cost of treasury shares.
"NOTES" shall mean the Notes provided for by Section 2.06, together with
any and all renewals, extensions for any period, increases, rearrangements,
substitutions or modifications thereof. The Notes shall include the Revolving
Credit Notes, the Revolver Term Notes, and the Swing Line Note.
"OTHER TAXES" shall have the meaning assigned such term in Section
4.06(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.
"PERCENTAGE SHARE" shall mean the percentage of the Aggregate Commitments
to be provided by a Lender under this Agreement as indicated on Annex I hereto,
as modified from time to time to reflect any assignments permitted by Section
12.06(b).
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or
any other form of entity.
"PLAN" shall mean any employee pension benefit plan, as defined in Section
3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Borrower, any Subsidiary or an ERISA Affiliate.
"POST-DEFAULT RATE" shall mean, in respect of any principal of any Loan or
any other amount payable by the Borrower under this Agreement or any Note, a
rate per annum during the period commencing on the date of an Event of Default
until such amount is paid in full or all Events of Default are cured or waived
equal to 2% per annum above the Base Rate as in effect from time to time plus
the Applicable Margin (if any), but in no event to exceed the Highest Lawful
Rate provided that, for a Eurodollar Loan, the "Post-Default Rate" for such
principal shall be, for the period commencing on the date of the Event of
Default and ending on the earlier to occur of the last day of the Interest
Period therefor or the date all Events of Default are cured or waived, 2% per
annum above the interest rate for such Loan as provided in Section 3.02(a)(ii),
but in no event to exceed the Highest Lawful Rate.
"PRIME RATE" shall mean the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the lowest
rate of interest charged by NationsBank to its customers.
"PRINCIPAL OFFICE" shall mean the principal office of the Administrative
Agent, presently located at ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ or such
other location as designated by the Administrative Agent
from time to time.
"PRIOR CREDIT AGREEMENT" shall mean that certain Credit Agreement dated as
of March 13, 1998 among the Borrower, the Administrative Agent, and the lenders
party thereto, as amended.
"PRIOR DEBT" shall mean the outstanding Debt under the Prior Credit
Agreement.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"QUARTERLY DATES" shall mean the last day of each March, June, September,
and December, in each year, the first of which shall be September 30, 1998.
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"REGISTRATION STATEMENT" shall mean that certain Registration Statement of
the Borrower on Form S-1 filed with the SEC on December 3, 1997, as amended by
each of the first amendment through sixth amendment, which sixth amendment is
dated March 9, 1998.
"REGULATORY CHANGE" shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including Regulation D)
or the adoption or making after such date of any interpretations, directives or
requests applying to a class of lenders (including such Lender or its Applicable
Lending Office) of or under any Governmental Requirement (whether or not having
the force of law) by any Governmental Authority charged with the interpretation
or administration thereof.
"REQUIRED PAYMENT" shall have the meaning assigned such term in Section
4.04.
"RESERVE REQUIREMENT" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against Eurodollar
Loans, "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
reflect any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by reference
to which the Adjusted Eurodollar Rate is to be determined, or (ii) any category
of extensions of credit or other assets which include Eurodollar Loans. The
Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"RESPONSIBLE OFFICER" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with respect to
financial matters, the term "Responsible Officer" shall include the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Borrower.
"RESTRICTED PAYMENT" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or any of its Subsidiaries (other than those payable or distributable solely to
the Borrower) now or hereafter outstanding, except a dividend payable solely in
shares of a class of stock to the holders of that class; (b) any redemption,
conversion, exchange, retirement or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
of Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower) now or hereafter outstanding; (c) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock of Borrower or
any of its Subsidiaries now or hereafter outstanding; and (d) any issuance and
sale of capital stock of any Subsidiary of the Borrower (or any option, warrant
or right to acquire such stock) other than to the Borrower.
"REVOLVER TERM LOAN COMMITMENT" shall mean, as to each Lender, its
obligation to make a Revolver Term Loan in the amount set forth opposite such
Lender's name under "Revolver Term Loans" on ANNEX I, as the same may be
modified from time to time to reflect any assignment permitted by Section
12.06(b).
"REVOLVER TERM LOAN CONVERSION DATE" shall mean the earlier to occur of
(i) August 31, 1999, or (ii) the date that the Revolver Term Commitments are
sooner terminated pursuant to Section 2.03(b) or Section 10.02.
"REVOLVER TERM LOAN LOANS" shall mean the term loans made pursuant to
Section 2.01(b).
"REVOLVER TERM LOAN NOTES" shall mean the promissory note or notes
(whether one or more) of the Borrower described in Section 2.06 and being in the
form of EXHIBIT A-2.
"REVOLVER TERM LOAN REVOLVING CREDIT PERIOD" shall mean the period from
the Closing Date to, but excluding, the Revolver Term Conversion Date.
"REVOLVING CREDIT COMMITMENT" shall mean, for any Lender, its obligation
to make Revolving Credit Loans and participate in the issuance of Letters of
Credit as provided in Section 2.01(d) up to such Lender's Maximum Revolving
Credit Amount.
"REVOLVING CREDIT LOANS" shall mean Loans made pursuant to Section
2.01(a).
"REVOLVING CREDIT NOTES" shall mean the promissory note or notes (whether
one or more) of the Borrower described in Section 2.06 and being in the form of
EXHIBIT A-1.
"REVOLVING CREDIT TERMINATION DATE" shall mean, the earlier to occur of
(i) August 31, 2003, or (ii) the date that the Aggregate Revolving Credit
Commitments are sooner terminated pursuant to Sections 2.03(a) or 10.02.
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"SECURITY INSTRUMENTS" shall mean the Letters of Credit, the Letter of
Credit Agreements, the Letter Agreement, the agreements or instruments described
or referred to in EXHIBIT D, and any and all other agreements or instruments now
or hereafter executed and delivered by the Borrower or any other Person (other
than participation or similar agreements between any Lender and any other lender
or creditor with respect to any Indebtedness pursuant to this Agreement) in
connection with, or as security for the payment or performance of the Prior
Debt, the Indebtedness, the Notes, this Agreement or reimbursement obligations
under the Letters of Credit, as such agreements may be amended, supplemented or
restated from time to time.
"SENIOR DEBT" shall mean all Funded Debt excluding Subordinated Debt.
"SPECIAL ENTITY" shall mean any joint venture, limited liability company
or partnership, general or limited partnership or any other type of partnership
or company other than a corporation in which the Borrower or one or more of its
other Subsidiaries is a member, owner, partner or joint venturer and owns,
directly or indirectly, at least a majority of the equity of such entity or
controls such entity, but excluding any tax partnerships that are not classified
as partnerships under state law. For purposes of this definition, any Person
which owns directly or indirectly an equity investment in another Person which
allows the first Person to manage or elect managers who manage the normal
activities of such second Person will be deemed to "control" such second Person
(E.G. a sole general partner controls a limited partnership).
"SUBORDINATED DEBT" shall mean any Debt of the Borrower expressly
subordinated to the Indebtedness, on terms specifically including, without
limitation, that payments on such Debt shall be prohibited if a Default exists
or would result from such payment, and other terms and conditions and pursuant
to documentation, all in form and substance satisfactory to the Majority
Lenders.
"SUBORDINATED DEBT EVENT" shall mean the consummation of the issuance of
Subordinated Debt resulting in net cash proceeds to the Borrower of at least
$100,000,000, but not to exceed $125,000,000, upon terms and conditions and
pursuant to documentation, all in form and substance satisfactory to the
Majority Lenders.
"SUBSIDIARY" shall mean (i) any corporation of which at least a majority
of the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not 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 or
controlled by the Borrower or one or more of its Subsidiaries or by the Borrower
and one or more of its Subsidiaries, (ii) any Special Entity and (iii) each
Founding Company prior to the date it becomes a Subsidiary. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Borrower.
"SWING LINE COMMITMENT" shall mean, for the Swing Line Lender, its
obligation to make Swing Line Loans up to $10,000,000.
"SWING LINE FACILITY" shall mean the facility pursuant to Section
2.01(c).
"SWING LINE LENDER" shall mean NationsBank or such other Lender as
Administrative Agent, Borrower and such Lender shall agree.
"SWING LINE LOANS" shall mean the Loans made pursuant to Section 2.01(c).
"SWING LINE NOTE" shall mean the promissory note or notes (whether one or
more) of the Borrower described in Section 2.01(c) and being in the form of
EXHIBIT A-3.
"TARGET COMPANY" shall mean West Coast Aero Products Holding
Corporation, Inc., a Delaware corporation and its Subsidiaries.
"TAXES" shall have the meaning assigned such term in Section 4.06(a).
"TERM LOAN PERIOD" shall mean the period commencing on the Revolver Term
Conversion Date and ending on the Final Maturity Date.
"TRANSFER" shall have the meaning assigned to such term in Section 9.16.
"TYPE" shall mean, with respect to any Loan, a Base Rate Loan or a
Eurodollar Loan.
"WHOLLY-OWNED SUBSIDIARY" shall mean, as to the Borrower, any Subsidiary
of which all of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect the board of directors of such corporation, other
than directors' qualifying shares, are owned or controlled by the Borrower or
one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or more
of the Wholly-Owned Subsidiaries.
Section 1.03 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder
shall be prepared, in accordance with GAAP, applied on a basis consistent with
the audited financial statements of the Borrower referred to in Section 7.02
(except for changes concurred with by the Borrower's independent public
accountants).
ARTICLE II
COMMITMENTS
Section 2.01 LOANS AND LETTERS OF CREDIT
(a) REVOLVING CREDIT LOANS. Each Lender severally agrees, on the terms of
this Agreement, to make Loans to the Borrower during the period from and
including (i) the Closing Date or (ii) such later date that such Lender becomes
a party to this Agreement as provided in Section 12.06(a), to but excluding, the
Revolving Credit Termination Date in an aggregate principal amount at any one
time outstanding up to but not exceeding the amount of such Lender's Revolving
Credit Commitment; PROVIDED, HOWEVER, that the aggregate principal amount of all
such Revolving Credit Loans by all Lenders hereunder at any one time
outstanding, plus the LC Exposure, plus the amount outstanding under the Swing
Line Facility shall not exceed the Aggregate Revolving Credit Commitments.
Subject to the terms of this Agreement, during the period from the Closing Date
to but excluding, the Revolving Credit Termination Date, the Borrower may
borrow, repay and reborrow the amount described in this Section 2.01(a).
(b) REVOLVER TERM LOANS. Each Lender severally agrees, on the terms and
conditions of this Agreement, to make loans to the Borrower during the Revolver
Term Loan Revolving Credit Period in an aggregate principal amount at any one
time outstanding up to, but not exceeding, the amount of such Lender's Revolver
Term Commitment as then in effect. Subject to the terms of this Agreement,
during the Revolver Term Loan Revolving Credit Period, the Borrower may borrow,
repay and reborrow the amount described in this Section 2.01(b).
(c) SWING LINE. Notwithstanding any other provision of this Agreement to
the contrary, in order to administer the revolving facility under Section
2.01(a) above in an efficient manner and to minimize the transfer of funds
between the Administrative Agent and the Lenders, the Swing Line Lender shall
make available Swing Line Loans to the Borrower at the election of Borrower
prior to the Revolving Credit Termination Date. The Swing Line Lender shall not
make any Swing Line Loan pursuant hereto (i) if the Borrower is not in
compliance with all the conditions to the making of Loans set forth in this
Agreement, (ii) if after giving effect to such Swing Line Loan, the outstanding
Swing Line Loans exceed the Swing Line Commitment, or (iii) if after giving
effect to such Swing Line Loan, the sum of all Revolving Credit Loans and Swing
Line Loans then outstanding, plus LC Exposure exceeds the Aggregate Revolving
Credit Commitments. Loans made pursuant to this Section 2.01(c) shall be limited
to Loans bearing interest at the Base Rate or such other rate of interest as
agreed upon by the Borrower and the Swing Line Lender. The indebtedness of the
Borrower to the Swing Line Lender resulting from the advances under this Section
2.01(c) shall be evidenced by the Swing Line Note made by the Borrower, which
Swing Line Note shall be in a principal amount equal to the Swing Line
Commitment.
(i) Subject to the terms of this Agreement, during the period from
the Closing Date to but excluding, the Revolving Credit Termination Date,
the Borrower may borrow, repay and reborrow Swing Line Loans under this
Section 2.01(c). Each repayment of a Swing Line Loan shall be in integral
multiples of $100,000 or the unpaid amount of the Swing Line Loans
outstanding. The minimum outstanding amount of Swing Line Loans shall be
$100,000.
(ii) If the Borrower instructs the Swing Line Lender to debit its
demand deposit account in an amount of any payment with respect to a Swing
Line Loan, or the Swing Line Lender otherwise receives repayment after
2:00 P.M. Houston, Texas time, on a Business Day, such payment shall be
deemed received on the next Business Day.
(iii) The Borrower and each Lender which is or may become a party
hereto acknowledge that all Swing Line Loans are to be made solely by the
Swing Line Lender to the Borrower, but that each Lender shall share the
risk of loss with respect to such Loans in an amount equal to such
Lender's Percentage Share of such Swing Line Loan. Upon demand made by the
Swing Line Lender, each Lender (including the Swing Line Lender) shall,
according to its Percentage Share of such Swing Line Loan, promptly
provide to the Swing Line Lender its purchase price therefor in an amount
equal to its Percentage Share therein, in which case such Swing Line Loan
shall be deemed from and after such date a Loan made under Section
2.01(a). The obligation of each Lender to so provide its purchase price to
the Swing Line Lender shall be absolute and unconditional and shall not be
affected by the occurrence of an Event of Default or any other occurrence
or event.
(iv) The Borrower at its option (and, if the Swing Line Loan is a
Eurodollar Loan, subject to Section 5.05 hereof) may request a Revolving
Credit Loan pursuant to Section 2.01(a) in an amount sufficient to repay
any or all Swing Line Loans on any date (subject to three (3) Business
Days prior notice in the case of Eurodollar Loans), and the Administrative
Agent shall upon the receipt of such Revolving Credit Loan provide to the
Swing Line Lender the amount necessary to repay such Swing Line Loan or
Loans (which the Swing Line Lender shall then apply to such repayment) and
credit any balance of the Revolving Credit Loan in immediately
available funds to the Borrower's account. The proceeds of such Revolving
Credit Loans shall be paid to the Swing Line Lender for application to the
outstanding Swing Line Loans and the Lenders shall then be deemed to have
made Revolving Credit Loans pursuant to Section 2.01(a) in the amount of
such advances. The obligation of the Swing Line Lender to fund the Swing
Line Loans shall cease upon the earlier of (i) the occurrence of a
Default, or (ii) the Revolving Credit Termination Date; provided that when
a Default is no longer continuing, the Swing Line Lender shall be
obligated to provide Swing Line Loans provided all other conditions to
making Loans are satisfied.
(d) LETTERS OF CREDIT. During the period from and including the Closing
Date to but excluding the Revolving Credit Termination Date, the Fronting Bank,
as issuing bank for the Lenders, agrees to extend credit for the account of the
Borrower at any time and from time to time by issuing renewing, extending or
reissuing Letters of Credit; provided however, the LC Exposure at any one time
outstanding shall not exceed the lesser of (i) the LC Commitment or (ii) the
Aggregate Revolving Credit Commitments, as then in effect, minus the aggregate
principal amount of all Revolving Credit Loans and Swing Line Loans then
outstanding. The Lenders shall participate in such Letters of Credit according
to their respective Percentage Shares.
(e) LIMITATION ON TYPES OF LOANS. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Loans (other
than Swing Line Loans) may be Base Rate Loans or Eurodollar Loans; provided
that, without the prior written consent of the Majority Lenders, no more than
seven (7) Eurodollar Loans may be outstanding at any time to any Lender. All
Swing Line Loans shall be Base Rate Loans.
Section 2.02 BORROWINGS, CONTINUATIONS AND CONVERSIONS, LETTERS OF CREDIT
(a) BORROWINGS. The Borrower shall give the Administrative Agent (which
shall promptly notify the Lenders) advance notice as hereinafter provided of
each borrowing hereunder, which shall specify the aggregate amount of such
borrowing, the Type and the date (which shall be a Business Day) of the Loans to
be borrowed and (in the case of Eurodollar Loans) the duration of the Interest
Period therefor.
(b) MINIMUM AMOUNTS. All borrowings other than Swing Line Loans shall be
in amounts of at least $1,000,000 or any whole multiple of $100,000 in excess
thereof. All Swing Line Loans shall be in amounts of at least $100,000 or any
whole multiple of $100,000 in excess thereof.
(c) NOTICES. All borrowings, continuations and conversions shall require
advance written notice to the Administrative Agent (which shall promptly notify
the Lenders) in the form of EXHIBIT B hereto (or telephonic notice promptly
confirmed by such a written notice), which in each case shall be irrevocable,
from the Borrower to be received by the Administrative Agent not later than
11:00 a.m. Houston, Texas time at least one Business Day prior to the date of
each Base Rate Loan borrowing and three Business Days prior to the date of each
Eurodollar Loan borrowing, continuation or conversion. Without in any way
limiting the Borrower's obligation to confirm in writing any telephonic notice,
the Administrative Agent may act without liability upon the basis of telephonic
notice believed by the Administrative Agent in good faith to be from the
Borrower prior to receipt of written confirmation. In each such case, the
Borrower hereby waives the right to dispute the Administrative Agent's record of
the terms of such telephonic notice except in the case of gross negligence or
willful misconduct by the Administrative Agent.
(d) CONTINUATION OPTIONS. Subject to the provisions made in this Section
2.02(d), the Borrower may elect to continue all or any part of any Eurodollar
Loan beyond the expiration of the then
current Interest Period relating thereto by giving advance notice as provided in
Section 2.02(c) to the Administrative Agent (which shall promptly notify the
Lenders) of such election, specifying the amount of such Loan to be continued
and the Interest Period therefor. In the absence of such a timely and proper
election, the Borrower shall be deemed to have elected to convert such
Eurodollar Loan to a Base Rate Loan pursuant to Section 2.02(e). All or any part
of any Eurodollar Loan may be continued as provided herein, provided that (i)
any continuation of any such Loan shall be (as to each Loan as continued for an
applicable Interest Period) in amounts of at least $1,000,000 or any whole
multiple of $100,000 in excess thereof and (ii) no Default shall have occurred
and be continuing. If a Default shall have occurred and be continuing, each
Eurodollar Loan shall be converted to a Base Rate Loan on the last day of the
Interest Period applicable thereto.
(e) CONVERSION OPTIONS. The Borrower may elect to convert all or any part
of any Eurodollar Loan on the last day of the then current Interest Period
relating thereto to a Base Rate Loan by giving advance notice to the
Administrative Agent (which shall promptly notify the Lenders) of such election.
Subject to the provisions made in this Section 2.02(e), the Borrower may elect
to convert all or any part of any Base Rate Loan (other than a Swing Line Loan)
at any time and from time to time to a Eurodollar Loan by giving advance notice
as provided in Section 2.02(c) to the Administrative Agent (which shall promptly
notify the Lenders) of such election. All or any part of any outstanding Loan
may be converted as provided herein, provided that (i) any conversion of any
Base Rate Loan into a Eurodollar Loan shall be (as to each such Loan into which
there is a conversion for an applicable Interest Period) in amounts of at least
$1,000,000 or any whole multiple of $100,000 in excess thereof and (ii) no
Default shall have occurred and be continuing. If a Default shall have occurred
and be continuing, no Base Rate Loan may be converted into a Eurodollar Loan.
(f) ADVANCES. Not later than 11:00 a.m. Houston, Texas time on the date
specified for each borrowing hereunder, each Lender shall make available the
amount of the Loan to be made by it on such date to the Administrative Agent, to
an account which the Administrative Agent shall specify, in immediately
available funds, for the account of the Borrower. The amounts so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower by depositing the same, in
immediately available funds, in an account of the Borrower, designated by the
Borrower and maintained at the Principal Office.
(g) LETTERS OF CREDIT. The Borrower shall give the Fronting Bank (which
shall promptly notify the Lenders of such request) advance notice to be received
by the Fronting Bank not later than 11:00 a.m. Houston, Texas time not less than
three (3) Business Days prior thereto of each request for the issuance and at
least ten (10) Business Days prior to the date of the renewal or extension of a
Letter of Credit hereunder which request shall specify the amount of such Letter
of Credit, the date (which shall be a Business Day) such Letter of Credit is to
be issued, renewed or extended, the duration thereof, the name and address of
the beneficiary thereof, the form of the Letter of Credit and such other
information as the Fronting Bank may reasonably request all of which shall be
reasonably satisfactory to the Fronting Bank. Subject to the terms and
conditions of this Agreement, on the date specified for the issuance, renewal or
extension of a Letter of Credit, the Fronting Bank shall issue such Letter of
Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the Borrower
shall execute a Letter of Credit Agreement. In the event of any conflict between
any provision of a Letter of Credit Agreement and this Agreement, the Borrower,
the Fronting Bank, the Administrative Agent and the Lenders hereby agree that
the provisions of this Agreement shall govern.
The Fronting Bank will send to the Borrower and each Lender, upon issuance
of any Letter of Credit, or an amendment thereto, a true and complete copy of
such Letter of Credit, or such amendment thereto.
Section 2.03 CHANGES OF COMMITMENTS
(a) REVOLVING CREDIT COMMITMENT.
(i) The Aggregate Revolving Credit Commitments shall at all times be
equal to the Aggregate Maximum Revolving Credit Amounts after adjustments
resulting from reductions pursuant to Section 2.03(a)(ii) hereof.
(ii) The Borrower shall have the right to terminate or to reduce the
amount of the Aggregate Maximum Revolving Credit Amounts at any time or
from time to time upon not less than three (3) Business Days' prior notice
to the Administrative Agent (which shall promptly notify the Lenders) of
each such termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction (which shall
not be less than $5,000,000 or any whole multiple of $1,000,000 in excess
thereof) and shall be irrevocable and effective only upon receipt by the
Administrative Agent.
(iii) The Aggregate Maximum Revolving Credit Amounts once terminated
or reduced may not be reinstated.
(b) REVOLVER TERM LOAN COMMITMENT.
(i) The Aggregate Revolver Term Loan Commitments shall at all times
be equal to the Aggregate Maximum Revolver Term Loan Amounts after
adjustments resulting from reductions pursuant to Section 2.03(b)(ii)
hereof.
(ii) The Borrower shall have the right to terminate or to reduce the
amount of the Aggregate Maximum Revolver Term Loan Amounts at any time or
from time to time upon not less than three (3) Business Days' prior notice
to the Administrative Agent (which shall promptly notify the Lenders) of
each such termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction (which shall
not be less than $5,000,000 or any whole multiple of $1,000,000 in excess
thereof) and shall be irrevocable and effective only upon receipt by the
Administrative Agent.
(iii) The Aggregate Maximum Revolver Term Loan Amounts once
terminated or reduced may not be reinstated.
Section 2.04 FEES
(a) COMMITMENT FEE. The Borrower shall pay to the Administrative Agent for
the account of each Lender a commitment fee on the daily average unused amount
(not to include Swing Line Loans) of the Aggregate Revolving Credit Commitments,
plus, during the Revolver Term Revolving Credit Period, the Aggregate Revolver
Term Commitments, for each period identified below from and including the
Closing Date up to, but excluding, the earlier of the date the Aggregate
Revolving Credit Commitments (and the Aggregate Revolver Term Loan Commitments,
if applicable) are terminated or the Revolving Credit Termination Date at a rate
per annum equal to the applicable per annum percentage set forth at the
appropriate intersection in the table shown below, based on the Leverage Ratio
for the four quarterly periods ending and determined as of the immediately
preceding Quarterly Date:
--------------------------------------------------
COMMITMENT FEE
LEVERAGE RATIO PERCENTAGE
--------------------------------------------------
Less than or equal to
1.50 .20%
--------------------------------------------------
Less than or equal to
2.00, but greater than
1.50 .25%
--------------------------------------------------
Less than or equal to
2.50 but greater than
2.00 .25%
--------------------------------------------------
Less than or equal to
3.00, but greater than
2.50 .30%
--------------------------------------------------
Less than or equal to
3.50, but greater than
3.00 .375%
--------------------------------------------------
Greater than 3.50 .50%
--------------------------------------------------
PROVIDED, HOWEVER, on the first Determination Date (hereinafter defined)
following the occurrence of an Equity Event, the commitment fee shall be
determined in the manner described above, but pursuant to the following table:
--------------------------------------------------
COMMITMENT FEE
LEVERAGE RATIO PERCENTAGE
--------------------------------------------------
Less than or equal to
1.50 .20%
--------------------------------------------------
Less than or equal to
2.00, but greater than
1.50 .25%
--------------------------------------------------
Less than or equal to
2.50 but greater than
2.00 .25%
--------------------------------------------------
Greater than 2.50 .30%
--------------------------------------------------
and further PROVIDED, HOWEVER, on the first Determination Date (hereinafter
defined) following the occurrence of a Subordinated Debt Event, the commitment
fee shall be determined in the manner described above, but pursuant to the
following table:
--------------------------------------------------
COMMITMENT FEE
LEVERAGE RATIO PERCENTAGE
--------------------------------------------------
Less than or equal to
1.50 .20%
--------------------------------------------------
Less than or equal to
2.00, but greater than
1.50 .25%
--------------------------------------------------
Less than or equal to
2.50 but greater than
2.00 .25%
--------------------------------------------------
Less than or equal to
3.00, but greater than
2.50 .30%
--------------------------------------------------
Less than or equal to
3.50, but greater than
3.00 .30%
--------------------------------------------------
Greater than 3.50 .375%
--------------------------------------------------
If both an Equity Event and a Subordinated Debt Event shall occur, the
commitment fee percentage shall be determined based on the table for the
occurrence of an Equity Event.
The applicable commitment fee percentage shall be established at the end of each
Quarterly Date (the "DETERMINATION DATE"). Any change in the applicable
commitment fee percentage following each Determination Date shall be determined
based upon the computations set forth in the Compliance Certificate furnished to
the Administrative Agent pursuant to Section 8.01(i), subject to review and
approval of such computations by the Administrative Agent and each change in the
commitment fee percentage shall be effective commencing as of the next Business
Date following the date such certificate is received and remain in effect (or,
if earlier, the date such certificate was required to be delivered) until the
date that is the next Business Day following the first to occur of the date on
which (i) a new certificate is delivered for which a change in the commitment
fee percentage occurs or (ii) is required to be delivered; PROVIDED, HOWEVER; if
the Borrower shall fail to deliver any such certificate within the time period
required by Section 8.01(i), then the applicable commitment fee percentage shall
be the highest percentage amount set forth in the then applicable table until
the appropriate certificate is so delivered. From the Closing Date to the first
Determination Date, the commitment fee percentage shall be determined based upon
the Compliance Certificate delivered pursuant to 6.01(d).
Accrued commitment fees shall be payable quarterly in arrears on each Quarterly
Date and on the earlier of the date the Aggregate Revolving Credit Commitments
(and the Aggregate Revolver Term Loan Commitments, if applicable) are terminated
or the Revolving Credit Termination Date.
(b) LETTER OF CREDIT FEES.
(i) The Borrower agrees to pay the Administrative Agent, for the
account of each Lender, commissions for issuing the Letters of Credit on
the daily average outstanding of the maximum liability of the Fronting
Bank existing from time to time under such Letter of Credit (calculated
separately for each Letter of Credit) at the rate per annum equal to the
Applicable Margin then in effect for Eurodollar Loans, provided that each
Letter of Credit shall bear a minimum commission of $350. Until the
termination date provided therein, each Letter of Credit shall be deemed
to be outstanding up to the full face amount of the Letter of Credit until
the Fronting Bank has received the canceled Letter of Credit or a written
cancellation of the Letter of Credit from the beneficiary of such Letter
of Credit in form and substance acceptable to the Fronting Bank, or for
any reductions in the amount of the Letter of Credit (other than from a
drawing), written notification from the beneficiary of such Letter of
Credit. Such commissions are payable quarterly in arrears on each
Quarterly Date.
(ii) The Borrower agrees to pay the Fronting Bank, for its own
account, an issuing fee for issuing Letters of Credit on the daily average
outstanding of the maximum liability of the Fronting Bank existing from
time to time under such Letter of Credit (calculated separately for each
Letter of Credit) at the rate of one-eighth of one percent (.125%) per
annum, payable quarterly in arrears on each Quarterly Date and upon
cancellation or expiration of each such Letter of Credit.
(c) LETTER AGREEMENT. The Borrower shall pay to the Administrative Agent
for its account such other fees as are set forth in the Letter Agreement on the
dates specified therein to the extent not paid prior to the Closing Date.
Section 2.05 SEVERAL OBLIGATIONS. The failure of any Lender to make
any Loan to be made by it or to provide funds for
disbursements or reimbursements under Letters of Credit on the date specified
therefor shall not relieve any other Lender of its obligation to make its Loan
or provide funds on such date, but no Lender shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender or to
provide funds to be provided by such other Lender.
Section 2.06 NOTES. The Revolving Credit Loans (other than Swing
Line Loans) made by each Lender shall be evidenced by a single promissory note
of the Borrower in substantially the form of EXHIBIT A-1 hereto, dated (i) the
Closing Date or (ii) the effective date of an Assignment and Acceptance pursuant
to Section 12.06(a), payable to the order of such Lender in a principal amount
equal to its Maximum Revolving Credit Amount as in effect and otherwise duly
completed and such substitute Revolving Credit Notes as required by Section
12.06(a). The Revolver Term Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of EXHIBIT A-2,
dated as of (i) the Closing Date or (ii) the effective date of an Assignment and
Acceptance pursuant to Section 12.06(b), payable to the order of such Lender in
a principal amount equal to its Revolver Term Commitment and otherwise duly
completed and such substitute Revolver Term Notes as required by Section
12.06(a). The date, amount, Type, interest rate and Interest Period of each Loan
made by each Lender, and all payments made on account of the principal thereof,
shall be recorded by such Lender on its books for its Notes, and, prior to any
transfer, may be endorsed by such Lender on a schedule attached to such Notes or
any continuation thereof or on any separate record maintained by such Lender.
Failure to make any such notation or to attach a schedule shall not affect any
Lender's or the Borrower's rights or obligations in respect of such Loans or
affect the validity of such transfer by any Lender of its Notes. The Swing Line
Loans made by the Swing Line Lender shall be evidenced by a single promissory
note of the Borrower substantially in the form of EXHIBIT A-3, dated the Closing
Date, payable to the order of the Swing Line Lender in a principal amount equal
to the Swing Line Commitment and otherwise duly completed.
Section 2.07 PREPAYMENTS.
(a) VOLUNTARY PREPAYMENTS. The Borrower may prepay the Base Rate Loans
upon not less than one (1) Business Day's prior notice to the Administrative
Agent (which shall promptly notify the Lenders), which notice shall specify the
prepayment date (which shall be a Business Day) and the amount of the prepayment
(which shall be at least $1,000,000 for all Loans other than Swing Line Loans
and at least $100,000 for Swing Line Loans or the remaining aggregate principal
balance outstanding on the Notes prepaid) and shall be irrevocable and effective
only upon receipt by the Administrative Agent, provided that interest on the
principal prepaid, accrued to the prepayment date, shall be paid on the
prepayment date. The Borrower may prepay Eurodollar Loans on the same condition
as for Base Rate Loans (except that prior notice to the Administrative Agent
shall be not less than three (3) Business Days for Eurodollar Loans) and in
addition such prepayments of Eurodollar Loans shall be subject to the terms of
Section 5.05 and shall be in an amount equal to all of the Eurodollar Loans for
the Interest Period prepaid.
(b) MANDATORY PREPAYMENTS.
(i) If, after giving effect to any termination or reduction of the
Aggregate Maximum Revolving Credit Amounts pursuant to Section
2.03(a)(ii), the outstanding aggregate principal amount of the Revolving
Credit Loans and the Swing Line Loans, plus the LC Exposure exceeds the
Aggregate Maximum Revolving Credit Amounts, the Borrower shall (i) prepay
the Revolving Credit Loans on the date of such termination or reduction in
an aggregate principal amount equal to the excess, together with interest
on the principal amount paid accrued to the date of such prepayment, (ii)
if any excess remains after prepaying all Revolving Credit Loans, prepay
the Swing Line Loans on the date of such termination or reduction in an
aggregate principal amount equal to such remaining excess, together with
interest on the principal amount paid accrued to the date of such
prepayment, and (iii) if any excess remains after prepaying all of the
Revolving
Credit Loans and Swing Line Loans because of LC Exposure, pay to the
Administrative Agent on behalf of the Lenders an amount equal to such
remaining excess to be held as cash collateral as provided in Section
2.09(b) hereof.
(ii) If, after giving effect to any termination or reduction of the
Aggregate Maximum Revolver Term Loan Amounts pursuant to Section
2.03(b)(ii), the outstanding aggregate principal amount of the Revolver
Term Loan Loans exceeds the Aggregate Maximum Revolver Term Loan Amounts,
the Borrower shall (i) prepay the Revolver Term Loan Loans on the date of
such termination or reduction in an aggregate principal amount equal to
the excess, together with interest on the principal amount paid accrued to
the date of such prepayment.
(iii) The Borrower shall, and shall cause any Subsidiary to, use the
net cash proceeds received from any Transfers to the extent that during
any consecutive 12 month period such net cash proceeds exceed $500,000,
based on the net book value of the Property sold or the net proceeds
received to promptly repay the Revolver Term Loans.
(c) GENERALLY. Prepayments permitted or required under this Section 2.07
shall be without premium or penalty, except as required under Section 5.05 for
prepayment of Eurodollar Loans. Any prepayments on the Revolving Credit Loans
and Swing Line Loans may be reborrowed subject to the then effective Aggregate
Revolving Credit Commitments. Any prepayments on the Revolver Term Loans made
during the Revolver Term Loan Revolving Credit Period may be reborrowed during
the Revolver Term Loan Revolving Credit Period and any prepayments on the
Revolver Term Loans made during the Term Loan Period may not be reborrowed and
shall be applied to installments on the Revolver Term Notes in the inverse order
of maturity.
Section 2.08 ASSUMPTION OF RISKS. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit or any transferee
thereof with respect to its use of such Letter of Credit. Neither the Fronting
Bank (except in the case of willful misconduct or bad faith on the part of the
Fronting Bank or any of its employees), its correspondents nor any Lender shall
be responsible for the validity or genuineness of certificates or other
documents or any endorsements thereon, even if such certificates or other
documents should in fact prove to be invalid, fraudulent or forged; for errors,
omissions, interruptions or delays in transmissions or delivery of any messages
by mail, telex, or otherwise, whether or not they be in code; for errors in
translation or for errors in interpretation of technical terms; the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; the failure of any beneficiary or any transferee of
any Letter of Credit to comply fully with conditions required in order to draw
upon any Letter of Credit; or for any other consequences arising from causes
beyond the Fronting Bank's control or the control of the Fronting Bank's
correspondents. In addition, neither the Fronting Bank nor any Lender shall be
responsible for any error, neglect, or default of any of the Fronting Bank's
correspondents; and none of the above shall affect, impair or prevent the
vesting of any of the Fronting Bank's, the Administrative Agent's or any
Lender's rights or powers hereunder or under the Letter of Credit Agreements,
all of which rights shall be cumulative. The Fronting Bank and its
correspondents may accept certificates or other documents that appear on their
face to be in order, without responsibility for further investigation of any
matter contained therein regardless of any notice or information to the
contrary. In furtherance and not in limitation of the foregoing provisions, the
Borrower agrees that any action, inaction or omission taken or not taken by the
Fronting Bank or by any correspondent for the Fronting Bank in good faith in
connection with any Letter of Credit, or any related drafts, certificates,
documents or instruments, shall be binding on the Borrower and shall not put the
Fronting Bank or its correspondents under any resulting liability to the
Borrower.
Section 2.09 OBLIGATION TO REIMBURSE AND TO PREPAY.
(a) If a disbursement by the Fronting Bank is made under any Letter of
Credit, the Borrower shall pay to the Administrative Agent within two (2)
Business Days after notice of any such disbursement is received by the Borrower,
the amount of each such disbursement made by the Fronting Bank under the Letter
of Credit (if such payment is not sooner effected as may be required under this
Section 2.09 or under other provisions of the Letter of Credit), together with
interest on the amount disbursed from and including the date of disbursement
until payment in full of such disbursed amount at a varying rate per annum equal
to (i) the then applicable interest rate for Base Rate Loans through the second
Business Day after notice of such disbursement is received by the Borrower and
(ii) thereafter, the Post-Default Rate for Base Rate Loans (but in no event to
exceed the Highest Lawful Rate) for the period from and including the third
Business Day following the date of such disbursement to and including the date
of repayment in full of such disbursed amount. The obligations of the Borrower
under this Agreement with respect to each Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid or performed strictly in
accordance with the terms of this Agreement under all circumstances whatsoever,
including, without limitation, but only to the fullest extent permitted by
applicable law, the following circumstances: (i) any lack of validity or
enforceability of this Agreement, any Letter of Credit or any of the Security
Instruments; (ii) any amendment or waiver of (including any default), or any
consent to departure from this Agreement (except to the extent permitted by any
amendment or waiver), any Letter of Credit or any of the Security Instruments;
(iii) the existence of any claim, set-off, defense or other rights which the
Borrower may have at any time against the beneficiary of any Letter of Credit or
any transferee of any Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Administrative Agent, any
Lender or any other Person, whether in connection with this Agreement, any
Letter of Credit, the Security Instruments, the transactions contemplated hereby
or any unrelated transaction; (iv) any statement, certificate, draft, notice or
any other document presented under any Letter of Credit proves to have been
forged, fraudulent or invalid in any respect or any statement therein proves to
have been untrue or inaccurate in any respect whatsoever; and (v) payment by the
Fronting Bank under any Letter of Credit against presentation of a draft or
certificate which appears on its face to comply, but does not comply, with the
terms of such Letter of Credit.
Notwithstanding anything in this Agreement to the contrary, the Borrower will
not be liable for payment or performance that results from the gross negligence
or willful misconduct of the Fronting Bank, except (i) where the Borrower
actually recovers the proceeds for itself or the Fronting Bank of any payment
made by the Fronting Bank in connection with such gross negligence or willful
misconduct or (ii) in cases where the Fronting Bank makes payment to the named
beneficiary of a Letter of Credit.
(b) In the event of the occurrence of any Event of Default, a payment or
prepayment pursuant to Sections 2.07(b) and (c) hereof or the maturity of the
Notes, whether by acceleration or otherwise, an amount equal to the LC Exposure
(or the excess in the case of Sections 2.07(b) and (c)) shall be deemed to be
forthwith due and owing by the Borrower to the Fronting Bank, the Administrative
Agent and the Lenders as of the date of any such occurrence; and the Borrower's
obligation to pay such amount shall be absolute and unconditional, without
regard to whether any beneficiary of any such Letter of Credit has attempted to
draw down all or a portion of such amount under the terms of a Letter of Credit,
and, to the fullest extent permitted by applicable law, shall not be subject to
any defense or be affected by a right of set-off, counterclaim or recoupment
which the Borrower may now or hereafter have against any such beneficiary, the
Fronting Bank, the Administrative Agent, the Lenders or any other Person for any
reason whatsoever. Such payments shall be held by the Administrative Agent as
cash collateral securing the LC Exposure in an interest bearing account or
accounts at the Principal Office; and the Borrower hereby grants to and by its
deposit with the Administrative Agent grants to the Administrative Agent for the
benefit of the Lenders a security interest in such cash collateral (and the
accrued interest thereon which shall be a part of the cash collateral). In the
event of any such payment by the Borrower of amounts contingently owing under
outstanding Letters of Credit and in the event that thereafter drafts or other
demands for payment complying with the terms of such Letters of Credit are not
made prior to the respective expiration dates thereof, the Administrative Agent
agrees, if no Event of Default has occurred
and is continuing or if no other amounts are outstanding under this Agreement,
the Notes or the Security Instruments, to remit to the Borrower amounts for
which the contingent obligations evidenced by the Letters of Credit have ceased
plus any interest accrued thereon.
(c) Each Lender severally and unconditionally agrees that it shall
promptly reimburse the Fronting Bank an amount equal to such Lender's Percentage
Share of any disbursement made by the Fronting Bank under any Letter of Credit
that is not reimbursed according to this Section 2.09.
Section 2.10 LENDING OFFICES. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type.
Section 2.11 EQUITY EVENT/SUBORDINATED DEBT EVENT.
(a) OFFICER'S CERTIFICATE. Upon delivery of the Compliance
Certificate following the occurrence of an Equity Event or Subordinated
Debt Event, the Borrower will deliver to the Agent a certificate from a
Responsible Officer certifying that an Equity Event or Subordinated Debt
Event, as applicable, has occurred as defined herein.
(b) RELEASES. So long as no Default has occurred and is continuing,
upon the occurrence of an Equity Event, at the request of the Borrower,
the Administrative Agent will release all Liens in the Borrower's and its
Subsidiaries' Properties securing the Indebtedness, except for the Liens
in the stock of the Subsidiaries of the Borrower, and at Borrower's
expense will execute and deliver such instruments as may be appropriate to
effect such release.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 PRINCIPAL.
(a) REVOLVING CREDIT LOANS AND SWING LINE LOANS. On the Revolving Credit
Termination Date the Borrower shall repay the outstanding aggregate principal
under the Revolving Credit Notes and the Swing Line Notes.
(b) REVOLVER TERM LOANS. Commencing with a payment on September 30, 1999
and on each Quarterly Date thereafter and the Final Maturity Date, the aggregate
principal amount of the Revolver Term Notes outstanding on the Revolver Term
Conversion Date shall be payable in sixteen (16) equal consecutive quarterly
installments sufficient to amortize the outstanding principal amount equally
over the Term Loan Period with final payment of any remaining principal balance
on the Revolver Term Notes due on the Final Maturity Date.
(c) GENERALLY. The Borrower will pay to the Administrative Agent, for the
account of each Lender, the principal payments required by this Section 3.01.
Section 3.02 INTEREST.
(a) INTEREST RATES. The Borrower will pay to the Administrative Agent, for
the account of each Lender or the Swing Line Lender, as appropriate, interest on
the unpaid principal amount of each
Loan made by such Lender for the period commencing on the date such Loan is made
to but excluding the date such Loan shall be paid in full, at the following
rates per annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as in effect
from time to time) plus the Applicable Margin (as in effect from time to
time), but in no event to exceed the Highest Lawful Rate; and
(ii) if such a Loan is a Eurodollar Loan, for each Interest Period
relating thereto, the Eurodollar Rate for such Loan plus the Applicable
Margin (as in effect from time to time), but in no event to exceed the
Highest Lawful Rate.
(b) POST-DEFAULT RATE. Notwithstanding the foregoing, the Borrower will
pay to the Administrative Agent, for the account of each Lender interest at the
applicable Post-Default Rate on any principal of any Loan made by such Lender,
and (to the fullest extent permitted by law) on any other amount payable by the
Borrower hereunder, under any Loan Document or under any Note held by such
Lender to or for account of such Lender, for the period commencing on the date
of an Event of Default until the same is paid in full or all Events of Default
are cured or waived.
(c) DUE DATES. Accrued interest on Base Rate Loans shall be payable on
each Quarterly Date commencing on September 30, 1998, and accrued interest on
each Eurodollar Loan shall be payable on the last day of the Interest Period
therefor and, if such Interest Period is longer than three months at three-month
intervals following the first day of such Interest Period, except that interest
payable at the Post-Default Rate shall be payable from time to time on demand
and interest on any Eurodollar Loan that is converted into a Base Rate Loan
(pursuant to Section 5.04) shall be payable on the date of conversion (but only
to the extent so converted). Any accrued and unpaid interest on the Revolving
Credit Loans and Swing Line Loans shall be paid on the Revolving Credit
Termination Date and any accrued and unpaid interest on the Revolver Term Loans
shall be paid on the Final Maturity Date.
(d) DETERMINATION OF RATES. Promptly after the determination of any
interest rate provided for herein or any change therein, the Administrative
Agent shall notify the Lenders to which such interest is payable and the
Borrower thereof. Each determination by the Administrative Agent of an interest
rate or fee hereunder shall, except in cases of manifest error, be final,
conclusive and binding on the parties.
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; COMPUTATIONS; ETC.
Section 4.01 PAYMENTS. Except to the extent otherwise provided
herein, all payments TS of principal, interest and other amounts to be made by
the Borrower under the Loan Documents shall be made in Dollars, in immediately
available funds, to the Administrative Agent at such account as the
Administrative Agent shall specify by notice to the Borrower from time to time,
not later than 11:00 a.m. Houston, Texas time on the date on which such payments
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). Such payments
shall be made without (to the fullest extent permitted by applicable law)
defense, set-off or counterclaim. Each payment received by the Administrative
Agent under this Agreement or any Note for account of a Lender shall be paid
promptly to such Lender in immediately available funds. Except as provided in
clause (iii) of the definition of "Interest Period", if the due date of any
payment under this Agreement or any Note would otherwise fall on a day which is
not a Business Day such date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended for the period
of such extension. At the time of each payment to the Administrative Agent of
any principal of or interest on any borrowing, the Borrower shall notify the
Administrative Agent of the Loans to which such payment shall apply. In the
absence of such notice the Administrative Agent may specify the Loans to which
such payment shall apply, but to the extent possible such payment or prepayment
will be applied first to the Loans comprised of Base Rate Loans.
Section 4.02 PRO RATA TREATMENT. Except for Swing Line Loans and as
otherwise provided herein each Lender agrees that: (i) each borrowing from the
Lenders under Section 2.01 and each continuation and conversion under Section
2.02 shall be made from the Lenders pro rata in accordance with their Percentage
Share, each payment of commitment fee or other fees under Sections 2.04(a) and
(b) shall be made for account of the Lenders pro rata in accordance with their
Percentage Share, each termination or reduction of the amount of the Aggregate
Maximum Revolving Credit Amounts under Section 2.03(a)(ii) shall be applied to
the Revolving Credit Commitment of each Lender, pro rata according to the
amounts of its respective Revolving Credit Commitment, and each termination or
reduction of the amount of the Aggregate Maximum Revolver Loan Term Amounts
under Section 2.03(a)(ii) shall be applied to the Revolver Term Commitment of
each Lender, pro rata according to the amounts of its respective Revolver Term
Loan Commitment; (ii) each payment of principal of any Loans by the Borrower
shall be made for account of the Lenders pro rata in accordance with the
respective unpaid principal amount of such Loans held by the Lenders; and (iii)
each payment of interest on any Loans by the Borrower shall be made for account
of the Lenders pro rata in accordance with the amounts of interest due and
payable to the respective Lenders; and (iv) each reimbursement by the Borrower
of disbursements under Letters of Credit shall be made for account of the
Fronting Bank or, if funded by the Lenders, pro rata for the account of the
Lenders, in accordance with the amounts of reimbursement obligations due and
payable to each respective Lender.
Section 4.03 COMPUTATIONS. Interest on Eurodollar Loans and fees
shall be computed on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which such interest is payable, unless such calculation would exceed the Highest
Lawful Rate, in which case interest shall be calculated on the per annum basis
of a year of 365 or 366 days, as the case may be. Interest on Base Rate Loans
shall be computed on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 4.04 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE Agent.
Unless the Administrative Agent shall have been notified by a Lender or the
Borrower prior to the date on which such notifying party is scheduled to make
payment to the Administrative Agent (in the case of a Lender) of the proceeds of
a Loan or a payment under a Letter of Credit to be made by it hereunder or (in
the case of the Borrower) a payment to the Administrative Agent for account of
one or more of the Lenders hereunder (such payment being herein called the
"REQUIRED PAYMENT"), which notice shall be effective upon receipt, that it does
not intend to make the Required Payment to the Administrative Agent, the
Administrative Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient(s) on such date and, if such Lender
or the Borrower (as the case may be) has not in fact made the Required Payment
to the Administrative Agent, the recipient(s) of such payment shall, on demand,
repay to the Administrative Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the date
such amount was so made available by the Administrative Agent until but
excluding the date the Administrative Agent recovers such amount at a rate per
annum which, for any Lender as recipient, will be equal to the Federal Funds
Rate, and for the Borrower as recipient, will be equal to the Base Rate plus the
Applicable Margin.
Section 4.05 SET-OFF, SHARING OF PAYMENTS, ETC.
(a) Upon the occurrence and during the continuance of any Event of
Default, each Lender (and each of its Affiliates) is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender (or any of its Affiliates) to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note or Notes held by such Lender,
irrespective of whether such Lender shall have made any demand under this
Agreement or such Note and although such obligations may be unmatured. Each
Lender agrees promptly to notify the Borrower after any such set-off and
application made by such Lender; PROVIDED, HOWEVER, that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender may have.
(b) If any Lender (a "BENEFITTED LENDER") shall at any time receive any
payment of all or part of the Loans owing to it or interest thereon (or
reimbursement as to any Letter of Credit), or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans owing to it or interest
thereon (or reimbursement as to any Letter of Credit), such benefitted Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it (or participations in
Letters of Credit), or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Borrower agrees that any Lender so purchasing a participation from a Lender
pursuant to this Section 4.05 may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Person were the direct
creditor of the Borrower in the amount of such participation.
Section 4.06 TAXES.
(a) Any and all payments by the Borrower to or for the account of any
Lender or the Administrative Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, EXCLUDING, in the case of each Lender and
the Administrative Agent, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the laws of which such Lender (or its
Applicable Lending Office) or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof (all such non-excluded taxes,
duties, levies, imposts, deductions, charges, withholdings, and liabilities
being hereinafter referred to as "TAXES"). Assuming compliance with Section
4.06(d) hereof to the extent applicable, if the Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable under this
Agreement or any other Loan Document to any Lender or the Administrative Agent,
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 4.06) such Lender or the Administrative Agent receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the
Administrative Agent, at its address set forth on the signature pages hereof an
original or a certified copy of a receipt evidencing payment thereof, provided,
Borrower shall not be required to take said action in respect of any foreign
Lender that has not complied with Section 4.06(d).
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "OTHER TAXES").
(c) THE BORROWER AGREES TO INDEMNIFY EACH LENDER AND THE ADMINISTRATIVE
AGENT FOR THE FULL AMOUNT OF TAXES AND OTHER TAXES (INCLUDING, WITHOUT
LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY JURISDICTION ON
AMOUNTS PAYABLE UNDER THIS SECTION 4.06) PAID BY SUCH LENDER OR THE
ADMINISTRATIVE AGENT (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING
PENALTIES, INTEREST, AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Administrative Agent (but only so long as such Lender remains lawfully
able to do so), shall provide the Borrower and the Administrative Agent with (i)
Internal Revenue Service Form 1001 or 4224, as appropriate, or any successor
form prescribed by the Internal Revenue Service, certifying that such Lender is
entitled to benefits under an income tax treaty to which the United States is a
party which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States, (ii)
Internal Revenue Service Form W-8 or W-9, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and (iii) any other form or
certificate required by any taxing authority (including any certificate required
by Sections 871(h) and 881(c) of the Internal Revenue Code), certifying that
such Lender is entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Agreement or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Administrative Agent with the appropriate form pursuant to
Section 4.06(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to indemnification
under Section 4.06(a) or
4.06(b) with respect to Taxes imposed by the United States; PROVIDED, HOWEVER,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 4.06, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender and, in the event of the refund of any
such payments, shall promptly pay same to Borrower along with any interest (if
any) received with such refund.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Administrative Agent the original or a certified
copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 4.06 shall survive the termination of the Commitments and the
payment in full of the Notes.
ARTICLE V
CHANGE IN CIRCUMSTANCES
Section 5.01 INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable law, rule,
or regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Loans, its
Notes, or its obligation to make Eurodollar Loans, or change the basis of
taxation of any amounts payable to such Lender (or its Applicable Lending
Office) under this Agreement or its Notes in respect of any Eurodollar
Loans (other than taxes imposed on the overall net income of such Lender
by the jurisdiction in which such Lender has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment or similar requirement (other than the Reserve
Requirement utilized in the determination of the Adjusted Eurodollar Rate)
relating to any extensions of credit or other assets of, or any deposits
with or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Commitments of such Lender
hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending Office)
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting this Agreement or its Notes
or any of such extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Agreement or its Notes
with respect to any Eurodollar Loans, then the Borrower shall pay to such Lender
on demand such amount or amounts as will compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by the Borrower
under this Section 5.01(a), the Borrower may, by notice to such Lender (with a
copy to the Administrative Agent), suspend the obligation of such Lender to make
or Continue Loans of the Type with respect to which such compensation is
requested, or to Convert Loans of any other Type into Loans of such Type, until
the event or condition giving rise to such request ceases to be in effect (in
which case the provisions of Section 5.04 shall be applicable); PROVIDED that
such suspension shall not affect the right of such Lender to receive the
compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Lender to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section shall furnish to the Borrower and the
Administrative Agent a statement setting forth the additional amount or amounts
to be paid to it hereunder which shall be conclusive in the absence of manifest
error. In determining such amount, such Lender may use any reasonable averaging
and attribution methods.
Section 5.02 LIMITATION ON TYPES OF LOANS. If on or prior to the
first day of any Interest Period for any Eurodollar Loan:
(a) the Administrative Agent determines (which determination shall
be conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Majority Lenders determine (which determination shall be
conclusive) and notify the Administrative Agent that the Adjusted
Eurodollar Rate will not adequately and fairly reflect the cost to the
Lenders of funding Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof
specifying the relevant Type of Loans and the relevant amounts or periods, and
so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Loans of such Type, Continue Loans of such Type,
or to Convert Loans of any other Type into Loans of such Type and the Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Loans of the affected Type, either prepay such Loans or Convert such
Loans into another Type of Loan in accordance with the terms of this Agreement.
Section 5.03 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans hereunder,
then such Lender shall promptly notify the Borrower thereof and such Lender's
obligation to make or Continue Eurodollar Loans and to Convert other Types of
Loans into Eurodollar Loans shall be suspended until such time as such Lender
may again make, maintain, and fund Eurodollar Loans (in which case the
provisions of Section 5.04 shall be applicable).
Section 5.04 TREATMENT OF AFFECTED LOANS. If the obligation of any
Lender to make a Eurodollar Loan or to Continue, or to Convert Loans of any
other Type into, Loans of a particular Type shall be suspended pursuant to
Section 5.01 or 5.03 hereof (Loans of such Type being herein called "AFFECTED
LOANS" and such Type being herein called the "AFFECTED TYPE"), such Lender's
Affected Loans shall be automatically Converted into Base Rate Loans on the last
day(s) of the then current Interest Period(s) for Affected Loans (or, in the
case of a Conversion required by Section 5.03 hereof, on such earlier date as
such Lender may specify to the Borrower with a copy to the Administrative Agent)
and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 5.01 or 5.03 hereof that gave rise to such
Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Loans of the Affected Type shall be made or Continued instead as
Base Rate Loans, and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead into
(or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 5.01 or 5.03 hereof that gave
rise to the Conversion of such Lender's Affected Loans pursuant to this Section
5.04 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Loans of the Affected Type made
by other Lenders are outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Loans of the Affected Type, to the extent
necessary so that, after giving effect thereto, all Loans held by the Lenders
holding Loans of the Affected Type and by such Lender are held pro rata (as to
principal amounts, Types, and Interest Periods) in accordance with their
respective Commitments.
Section 5.05 COMPENSATION. Upon the request of any Lender, the
Borrower shall pay to such Lender such amount or amounts as shall be sufficient
(in the reasonable opinion of such Lender) to compensate it for any loss, cost,
or expense (including loss of anticipated profits) incurred by it as a result
of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 10.02) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article 6
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
on the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, Continuation,
or Conversion under this Agreement.
Section 5.06 REPLACEMENT LENDERS.
(a) If any Lender has notified the Borrower and the Administrative Agent
of its incurring additional costs under Section 5.01 hereof or has required the
Borrower to make payments for Taxes under Section 4.06 hereof, then the Borrower
may, unless such Lender has notified the Borrower and the Administrative Agent
that the circumstances giving rise to such notice no longer apply, terminate, in
whole but not in part, the Commitments of any Lender (other than the
Administrative Agent) (the "TERMINATED LENDER") at any time upon five (5)
Business Days' prior written notice to the Terminated Lender and the
Administrative Agent (such notice referred to herein as a "NOTICE OF
TERMINATION").
(b) In connection with the termination of the Commitments of the
Terminated Lender, the Borrower shall either: (i) obtain an agreement with one
or more Lenders to increase their Commitments, (ii) request any one or more
other banking institutions to become parties to this Agreement in place and
instead of such Terminated Lender and agree to accept the Commitments or reduce
the total of the Aggregate Maximum Revolving Credit Amounts or Aggregate Maximum
Revolver Term Loan Amounts (if applicable) by the amount(s) held by the
Terminated Lender; PROVIDED, HOWEVER, that such one or more other substitute
banking institutions are reasonably acceptable to the Administrative Agent and
become parties by executing an Assignment and Acceptance (the Lenders or other
banking institutions that agree to accept in whole or in part the Commitments of
the Terminated Lender being referred to herein as the "REPLACEMENT LENDERS"),
such that the aggregate increased and/or accepted Commitments of the Replacement
Lenders under clauses (i) and (ii) above equal the Commitments of the Terminated
Lender.
(c) The Notice of Termination shall include the name of the Terminated
Lender, the date the termination will occur (the "TERMINATION Date"), and the
Replacement Lender or Replacement Lenders to which the Terminated Lender will
assign its Commitments and, if there will be more than one Replacement Lender,
the portion of the Terminated Lender's Commitments to be assigned to each
Replacement Lender.
(d) On the Termination Date, (i) the Terminated Lender shall by execution
and delivery of an Assignment and Acceptance assign its Commitment to the
Replacement Lender or Replacement Lenders (pro rata, if there is more than one
Replacement Lender, in proportion to the portion of the Terminated Lender's
Commitment to be assigned to each Replacement Lender) indicated in the Notice of
Termination and shall assign to the Replacement Lender or Replacement Lenders
each of its Loans (if any) then outstanding and participation interests in
Letters of Credit (if any) then outstanding pro rata as aforesaid), (ii) the
Terminated Lender shall endorse its Notes, payable without recourse,
representation or warranty to the order of the Replacement Lender or Replacement
Lenders (pro rata as aforesaid), (iii) the Replacement Lender or Replacement
Lenders shall purchase the Notes held by the Terminated Lender (pro rata as
aforesaid) at a price equal to the unpaid principal amount thereof plus interest
and facility and other fees accrued and unpaid to the Termination Date, and (iv)
the Replacement Lender or Replacement Lenders will thereupon (pro rata as
aforesaid) succeed to and be substituted in all respects for the Terminated
Lender with like effect as if becoming a Lender pursuant to the terms of Section
12.06(a), and the Terminated Lender will have the rights and benefits of an
assignor under Section 12.06(a). To the extent not in conflict, the terms of
Section 12.06(a) shall supplement the provisions of this Section 5.06(d). For
each assignment made under this Section 5.06, the Replacement Lender shall pay
to the Administrative Agent the processing fee provided for in Section 12.06(a).
The Borrower will be responsible for the payment of any breakage costs
associated with termination of the Terminated Lender, as set forth in Section
5.05.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 INITIAL FUNDING.
The obligation of the Lenders to make the Initial Funding is subject
to the receipt by the Administrative Agent and the Lenders of all fees payable
pursuant to Section 2.04 on or before the Closing Date and the receipt by the
Administrative Agent of the following documents and satisfaction of the other
conditions provided in this Section 6.01, each of which shall be satisfactory to
the Administrative Agent in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Borrower setting forth (i) resolutions of its board of directors with respect to
the authorization of the Borrower to execute and deliver the Loan Documents to
which it is a party and to enter into the transactions contemplated in those
documents, (ii) the officers of the Borrower (y) who are authorized to sign the
Loan Documents to which Borrower is a party and (z) who will, until replaced by
another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and
(iv) the articles or certificate of incorporation and bylaws of the Borrower,
certified as being true and complete. The Administrative Agent and the Lenders
may conclusively rely on such certificate until the Administrative Agent
receives notice in writing from the Borrower to the contrary.
(b) A certificate of the Secretary or an Assistant Secretary of each
Subsidiary setting forth (i) resolutions of its board of directors with respect
to the authorization of such Subsidiary to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of such Subsidiary (y) who are authorized
to sign the Loan Documents to which such Subsidiary is a party and (z) who will,
until replaced by another officer or officers duly authorized for that purpose,
act as its representative for the purposes of signing documents and giving
notices and other communications in connection with this Agreement and the
transactions contemplated hereby, (iii) specimen signatures of the authorized
officers, and (iv) the articles or certificate of incorporation and bylaws of
such Subsidiary, certified as being true and complete. The Administrative Agent
and the Lenders may conclusively rely on such certificate until they receive
notice in writing from the Borrower to the contrary.
(c) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Borrower and Subsidiaries.
(d) A Compliance Certificate dated as of the date of the Initial Funding.
(e) The Notes, duly completed and executed.
(f) The Security Instruments, including those described on EXHIBIT D, duly
completed and executed in sufficient number of counterparts for recording, if
necessary.
(g) Opinions of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., special counsel to the Borrower
and the Subsidiaries, and Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special California
counsel to the Administrative Agent, each in form and substance satisfactory to
the Administrative Agent, as to such matters incident to the transactions herein
contemplated as the Administrative Agent may reasonably request.
(h) Evidence satisfactory to the Administrative Agent that the Borrower
and each Subsidiary are carrying insurance in accordance with Section 7.19
hereof.
(i) The Administrative Agent shall have been furnished with appropriate
UCC search certificates reflecting no prior Liens, except those Liens to be
released by the releases to be delivered pursuant to Section 6.04(d).
(j) A certificate of insurance coverage of the Borrower and each
Subsidiary evidencing that the Borrower and each Subsidiary are carrying
insurance in accordance with Section 8.03.
(k) Such other documents as the Administrative Agent or any Lender or
special counsel to the Administrative Agent may reasonably request.
Section 6.02 INITIAL AND SUBSEQUENT LOANS AND LETTERS OF CREDIT. The
obligation of the Lenders to make Loans to the Borrower upon the occasion of
each borrowing hereunder and to issue, renew, extend or reissue Letters of
Credit for the account of the Borrower (including the Initial Funding and for
the Acquisition of the Target Company) is subject to the further conditions
precedent that, as of the date of such Loans and after giving effect thereto:
(a) no Default shall have occurred and be continuing;
(b) no Material Adverse Effect shall have occurred; and
(c) the representations and warranties made by the Borrower in Article VII
and in the Security Instruments shall be true on and as of the date of the
making of such Loans or issuance, renewal, extension or reissuance of a Letter
of Credit with the same force and effect as if made on and as of such date and
following such new borrowing, except to the extent such representations and
warranties are expressly limited to an earlier date, or are untrue because of an
event not prohibited hereby, or the Majority Lenders may expressly consent in
writing to the contrary.
Each request for a borrowing or issuance, renewal, extension or reissuance
of a Letter of Credit by the Borrower hereunder shall constitute a certification
by the Borrower to the effect set forth in the preceding sentence (both as of
the date of such notice and, unless the Borrower otherwise notifies the
Administrative Agent prior to the date of and immediately following such
borrowing or issuance, renewal, extension or reissuance of a Letter of Credit as
of the date thereof).
Section 6.03 CONDITIONS RELATING TO LETTERS OF CREDIT. In addition
to the satisfaction of all other conditions precedent set forth in this Article
VI, the issuance, renewal, extension or reissuance of the Letters of Credit
referred to in Section 2.01(b) hereof is subject to the following conditions
precedent:
(a) At least three (3) Business Days prior to the date of the issuance and
at least ten (10) Business Days (or such lesser time period as may be provided
therein) prior to the date of the renewal, extension or reissuance of each
Letter of Credit, the Administrative Agent shall have received a written request
for a Letter of Credit.
(b) Each of the Letters of Credit shall (i) be issued by the Fronting
Bank, (ii) contain such terms and provisions as are reasonably required by the
Administrative Agent, (iii) be for the account of the Borrower and (iv) expire
not later than the earlier of one (1) year from the date of issuance, renewal,
extension or reissuance or two (2) days before the Revolving Credit Termination
Date.
(c) The Borrower shall have duly and validly executed and delivered to the
Fronting Bank a Letter of Credit Agreement pertaining to the Letter of Credit.
Section 6.04 CONDITIONS RELATING TO ACQUISITION OF TARGET Company.
The obligation of the Lenders to make Loans to the Borrower and to issue Letters
of Credit for the Acquisition of the Target Company is subject to all of the
above plus the receipt by the Administrative Agent of the following documents
and satisfaction of the other conditions provided in this Section 6.04, each of
which shall be satisfactory to the Administrative Agent in form and substance.
(a) A certificate in the form of EXHIBIT F relating to the Target Company,
including without limitation, the Compliance Certificate required thereby dated
as of the date of such borrowing.
(b) The Security Instruments not previously delivered pursuant to Section
6.01(f), duly completed and executed in sufficient number of counterparts for
recording, if necessary.
(c) An opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., special counsel to the Borrower
and the Subsidiaries, in form and substance satisfactory to the Administrative
Agent, as to such matters incident to the Acquisition of the Target Company
herein contemplated as the Administrative Agent may reasonably request.
(d) The Borrower shall deliver or cause to be delivered to the
Administrative Agent releases of all Liens (other than Permitted Liens)
encumbering the Property of the Target Company or otherwise deliver commitments
from the secured parties or mortgagors of such Liens to release such Liens upon
satisfaction of the obligations thereby secured.
(e) The Administrative Agent shall have received, reviewed and be
satisfied with the results of its review of the executed agreements relating to
the Acquisition of the Target Company, and such agreements shall not have been
amended, supplemented or otherwise modified without the prior written consent of
the Lenders.
(f) The Acquisition of the Target Company shall be consummated
concurrently with such Loans pursuant to the agreements described in Section
6.04(e) and in compliance with all Governmental Requirements.
(g) The Administrative Agent shall have received evidence that all
consents or approvals (including consents or approvals from Governmental
Authorities), including without limitation consents or approvals required by the
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Act, necessary or, in the reasonable opinion of the
Administrative Agent desirable, in connection with the Acquisition of the Target
Company have been obtained, and all waiting periods required by any Governmental
Requirement, if any, shall have expired.
(h) The Administrative Agent shall have completed its review and be
satisfied with the corporate capital and ownership structure (including articles
of incorporation and by-laws) of the Borrower and its Subsidiaries, the
shareholder agreements and the management of the Borrower and its Subsidiaries
(after giving effect to the Acquisition of the Target Company and any other
Acquisitions by the Borrower or its Subsidiaries within the previous year),
including without limitation, as affected by the execution of employment
contracts, non-compete contracts, equity interests and the issuance of key man
life insurance covering key executives of the Borrower.
(i) Such other documents as the Administrative Agent or any Lender or
special counsel to the Administrative Agent may reasonably request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the
Lenders that (each representation and warranty herein is given as of the Closing
Date and shall be deemed repeated and reaffirmed on the dates of each borrowing
and issuance, renewal, extension or reissuance of a Letter of Credit as provided
in Section 6.02):
Section 7.01 CORPORATE EXISTENCE. Each of the Borrower and each
Subsidiary: (i) is a corporation or entity duly organized, legally existing and
in good standing under the laws of the jurisdiction of its incorporation or
formation; (ii) has all requisite power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Material Adverse Effect.
Section 7.02 FINANCIAL CONDITION. The audited consolidated balance
sheet of each of the Founding Companies as at December 31, 1996 and the related
consolidated statement of income, stockholders' equity and cash flow of each of
the Founding Companies for the fiscal year ended on said date, (except unaudited
statements for Capital Bolt & Supply, Inc.) with the opinion thereon of Ernst &
Young L.L.P. (except in the case of Alatec Products, Inc. - with the opinion
thereon of McGladrey & ▇▇▇▇▇▇, LLP) heretofore furnished to the Administrative
Agent and the audited consolidated balance sheet of each of the Founding
Companies (except unaudited statements for Capital Bolt & Supply, Inc.) as at
September 30, 1997 and their related consolidated statements of income,
stockholders' equity and cash flow of each of the Founding Companies for the
nine-month period ended on such date heretofore furnished to the Administrative
Agent, are complete and correct in all material respects and fairly present the
consolidated financial condition of each of the Founding Companies as at said
dates and the results of its operations for the nine-month period ending on said
date, all in accordance with GAAP, as applied on a consistent basis (subject, in
the case of the interim financial statements, to normal year-end adjustments).
The pro forma combined balance sheets of the Borrower and the Subsidiaries
heretofore furnished to the Administrative Agent are complete and correct in all
material respects and fairly present the financial condition of the Borrower and
the Subsidiaries as of the acquisition thereof by the Borrower based upon the
aforesaid financial statements of the Founding Companies, all in accordance with
GAAP, applied on a consistent basis. Each of the audited consolidated balance
sheets of the Target Company as at December 31 for each of the years 1995, 1996,
and 1997, and the related consolidated statements of income, stockholders'
equity and cash flow of the Target Company for the fiscal years ended December
31, 1996 and 1997, with the opinion thereon of McGladrey & ▇▇▇▇▇▇, LLP,
heretofore furnished to the Administrative Agent and the unaudited consolidated
balance sheet of the Target Company as at June 30, 1998 and the related
consolidated statement of income of the Target Company for the six month period
ended on such date heretofore furnished to the Administrative Agent, are
complete and correct and fairly present the consolidated financial condition of
the Target Company as at said dates and the results of its operations for the
fiscal years 1995, 1996, and 1997 and the six month period ended on June 30,
1998, all in accordance with GAAP, as applied on a consistent basis (subject,
only in the case of the interim financial statements, to normal year-end
adjustments). None of the Borrower or any Subsidiary has on the Closing Date any
material Debt, contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Financial
Statements or in SCHEDULE 7.02. Since December 31, 1997, there has been no
change or event having a Material Adverse Effect. Since the date of the
Financial Statements, neither the business nor the Properties of the Borrower or
any Subsidiary have been
materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any Governmental Authority, riot,
activities of armed forces or acts of God or of any public enemy.
Section 7.03 LITIGATION. Except as disclosed to the Lenders in
SCHEDULE 7.03 hereto, at the Closing Date there is no litigation, legal,
administrative or arbitral proceeding, investigation or other action of any
nature pending or, to the knowledge of the Borrower threatened against or
affecting the Borrower or any Subsidiary which involves the possibility of any
judgment or liability against the Borrower or any Subsidiary not fully covered
by insurance (except for normal deductibles), and which would have a Material
Adverse Effect.
Section 7.04 NO BREACH. Neither the execution and delivery of the
Loan Documents, nor compliance with the terms and provisions hereof will
conflict with or result in a breach of, or require any consent which has not
been obtained as of the Closing Date under, the respective formation and
governance documents (e.g. charter, partnership or limited liability agreement,
and by-laws) of the Borrower or any Subsidiary, or any Governmental Requirement
or any agreement or instrument to which the Borrower or any Subsidiary is a
party or by which it is bound or to which it or its Properties are subject, or
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Borrower or any Subsidiary pursuant to the terms of any such agreement or
instrument other than the Liens created by the Loan Documents.
Section 7.05 AUTHORITY. The Borrower and each Subsidiary have all
necessary power and authority to execute, deliver and perform its obligations
under the Loan Documents to which it is a party; and the execution, delivery and
performance by the Borrower and each Subsidiary of the Loan Documents to which
it is a party, have been duly authorized by all necessary action on its part;
and the Loan Documents constitute the legal, valid and binding obligations of
the Borrower and each Subsidiary, enforceable in accordance with their terms.
Section 7.06 APPROVALS. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by the Borrower or any Subsidiary of
the Loan Documents or for the validity or enforceability thereof, except for the
recording and filing of the Security Instruments as required by this Agreement.
Section 7.07 USE OF LOANS. The proceeds of the Loans shall be used
(i) to refinance the Prior Debt, (ii) to pay in full the existing Debt of the
Target Company, (iii) to finance Borrower's acquisition of the Target Company,
(iv) for working capital, capital expenditures, acquisitions and other corporate
purposes, including intercompany loans from time to time to the Guarantors, and
(v) to pay the fees and expenses incurred by the Borrower in connection with the
acquisition of the Target Company and the refinancing transaction contemplated
by this Agreement. The Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying margin stock
(within the meaning of Regulation G, U or X of the Board of Governors of the
Federal Reserve System) and no part of the proceeds of any Loan hereunder will
be used to buy or carry any margin stock.
Section 7.08 ERISA. Except (i) as provided in Schedule 7.08 or (ii)
as would not have a Material Adverse Effect:
(a) The Borrower, each Subsidiary and each ERISA Affiliate have complied
with ERISA and, where applicable, the Code regarding each Plan.
(b) Each Plan is, and has been, maintained in compliance with ERISA and,
where applicable, the Code (this representation being made to the knowledge of
Borrower with respect to any Plan which is a Multiemployer Plan).
(c) No act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.
(d) No liability to the PBGC (other than for the payment of current
premiums which are not past due) by the Borrower, any Subsidiary or any ERISA
Affiliate has been or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with respect
to any Plan has occurred.
(e) To Borrower's knowledge, full payment when due has been made of all
amounts which the Borrower, any Subsidiary or any ERISA Affiliate is required
under the terms of each Plan or applicable law to have paid as contributions to
such Plan, and no accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the Code), whether or not waived, exists with respect
to any Plan.
(f) Except as required by a collective bargaining agreement, none of the
Borrower, any Subsidiary or any ERISA Affiliate sponsors, maintains, or
contributes to an employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by the
Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any time
without any material liability.
(g) None of the Borrower, any Subsidiary or any ERISA Affiliate owes or
potentially owes any liability to any Multiemployer Plan.
(h) None of the Borrower, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the Plan.
Section 7.09 TAXES. Except as set out in SCHEDULE 7.09, each of the
Borrower and the Subsidiaries has filed all United States Federal income tax
returns and all other tax returns which are required to be filed by them and
have paid all material taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary. The charges, accruals and
reserves on the books of the Borrower and the Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Borrower, adequate. No
tax lien has been filed and, to the knowledge of the Borrower, no claim is being
asserted with respect to any such tax, fee or other charge.
Section 7.10 TITLES, ETC.
(a) Except as set out in SCHEDULE 7.10, each of the Borrower and the
Subsidiaries has good and defensible title to its material (individually or in
the aggregate) Properties, free and clear of all Liens except Liens permitted by
Section 9.02.
(b) All leases and agreements necessary for the conduct of the business of
the Borrower and the Subsidiaries are valid and subsisting, in full force and
effect and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which would affect in any material respect the
conduct of the business of the Borrower and the Subsidiaries.
(c) The rights, Properties and other assets presently owned, leased or
licensed by the Borrower and the Subsidiaries including, without limitation, all
easements and rights of way, include all rights, Properties and other assets
necessary to permit the Borrower and the Subsidiaries to conduct their business
in all material respects in the same manner as its business has been conducted
prior to the Closing Date.
(d) All of the assets and Properties of the Borrower and the Subsidiaries
which are reasonably necessary for the operation of its business are in good
working condition and are maintained in accordance with prudent business
standards.
Section 7.11 NO MATERIAL MISSTATEMENTS. No written information,
statement, exhibit, certificate, document or report furnished to the
Administrative Agent and the Lenders (or any of them) by the Borrower or any
Subsidiary in connection with the negotiation of this Agreement contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statement contained therein not materially misleading in
the light of the circumstances in which made and with respect to the Borrower
and the Subsidiaries taken as a whole. There is no fact peculiar to the Borrower
or any Subsidiary which has a Material Adverse Effect or in the future is
reasonably likely to have (so far as the Borrower can now foresee) a Material
Adverse Effect and which has not been set forth in this Agreement or the other
documents, certificates and statements furnished to the Administrative Agent by
or on behalf of the Borrower or any Subsidiary prior to, or on, the Closing Date
in connection with the transactions contemplated hereby.
Section 7.12 INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Borrower nor any Subsidiary is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 7.14 SUBSIDIARIES. Except as set forth on SCHEDULE 7.14 or
as permitted pursuant to Section 9.19, the Borrower has no Subsidiaries and all
of the Subsidiaries of the Borrower are set forth on SCHEDULE 7.14.
Section 7.15 LOCATION OF BUSINESS AND OFFICES. The Borrower's
principal place of business and chief executive offices are located at the
address stated on the signature page of this Agreement. On the Closing Date the
principal place of business and chief executive office of each Subsidiary are
located at the addresses stated on SCHEDULE 7.14. Each jurisdiction in which
each Subsidiary operates, maintains assets, or otherwise is doing business is
stated on SCHEDULE 7.14.
Section 7.16 DEFAULTS. Neither the Borrower nor any Subsidiary is in
default nor has S any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a default under any material agreement or instrument to which
the Borrower or any Subsidiary is a party or by which the Borrower or any
Subsidiary is bound which default would have a Material Adverse Effect. No
Default hereunder has occurred and is continuing.
Section 7.17 ENVIRONMENTAL MATTERS. Except (i) as provided in
SCHEDULE 7.17 or (ii) as would not have a Material Adverse Effect (or with
respect to (c), (d) and (e) below, where the failure to take such actions would
not have a Material Adverse Effect):
(a) Neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court or
Governmental Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no Property of the Borrower or
any Subsidiary nor the operations currently conducted thereon or, to the best
knowledge of the Borrower, by any prior owner or operator of such Property or
operation, are in violation of or subject to any existing, pending or threatened
action, suit, investigation, inquiry or proceeding by or before any court or
Governmental Authority or to any remedial obligations under Environmental Laws;
(c) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of any
and all Property of the Borrower and each Subsidiary, including without
limitation past or present treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly obtained
or filed, and the Borrower and each Subsidiary are in compliance with the terms
and conditions of all such notices, permits, licenses and similar
authorizations;
(d) All hazardous substances, solid waste, and oil and gas exploration and
production wastes, if any, generated at any and all Property of the Borrower or
any Subsidiary have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the best knowledge of the Borrower, all such transport carriers and treatment
and disposal facilities have been and are operating in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and are not the
subject of any existing, pending or threatened action, investigation or inquiry
by any Governmental Authority in connection with any Environmental Laws;
(e) The Borrower has taken all steps reasonably necessary to determine and
has determined that no hazardous substances, solid waste, or oil and gas
exploration and production wastes, have been disposed of or otherwise released
and there has been no threatened release of any hazardous substances on or to
any Property of the Borrower or any Subsidiary except in compliance with
Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment;
(f) To the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment requirements
imposed by the OPA or scheduled as of the Closing Date to be imposed by OPA
during the term of this Agreement, and the Borrower does not have any reason to
believe that such Property, to the extent subject to OPA, will not be able to
maintain compliance with the OPA requirements during the term of this Agreement;
and
(g) Neither the Borrower nor any Subsidiary has any known contingent
liability in connection with any release or threatened release of any oil,
hazardous substance or solid waste into the environment.
Section 7.18 COMPLIANCE WITH THE LAW. Neither the Borrower nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or
failure would have (in the event such violation or failure were asserted by any
Person through appropriate action) a Material Adverse Effect.
Section 7.19 INSURANCE. The Borrower and each Subsidiary maintain
all material policies of fire, liability, workmen's compensation and other forms
of insurance necessary for the operation of its business. All such policies are
in full force and effect, all premiums with respect thereto covering all periods
up to and including the date of the closing have been paid, and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies are sufficient for compliance with all requirements of law and of
all agreements to which the Borrower or any Subsidiary is a party; are valid,
outstanding and enforceable policies; provide adequate insurance coverage in at
least such amounts and against at least such risks (but including in any event
public liability) as are usually insured against in the same general area by
companies engaged in the same or a similar business for the assets and
operations of the Borrower and each Subsidiary; will remain in full force and
effect through the term hereof; and will not in any way be affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Neither the Borrower nor any of the Subsidiaries self insure any
material risks. Neither the Borrower nor any Subsidiary has been refused any
insurance with respect to its assets or operations, nor has its coverage been
limited below usual and customary policy limits, by an insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance during the last three years.
Section 7.20 HEDGING AGREEMENTS. SCHEDULE 7.20 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net ▇▇▇▇ to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 RESTRICTION ON LIENS. Neither the Borrower nor any of
the Subsidiaries is a party to any agreement or arrangement (other than this
Agreement and the Security Instruments), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to other Persons on or in respect of their respective assets of
Properties.
Section 7.22 MATERIAL AGREEMENTS. Set forth on SCHEDULE 7.22 hereto
is a complete and correct list of all material agreements, leases, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
joint venture agreements, and other instruments in effect or to be in effect as
of the Closing Date (other than Hedging Agreements) providing for, evidencing,
securing or otherwise relating to any Debt of the Borrower or any of the
Subsidiaries, and all obligations of the Borrower or any of the Subsidiaries to
issuers of surety or appeal bonds issued for account of the Borrower or any such
Subsidiary, and such list correctly sets forth the names of the debtor or lessee
and creditor or lessor with respect to the Debt or lease obligations outstanding
or to be outstanding and the property subject to any Lien securing such Debt or
lease obligation.
Section 7.23 REGISTRATION STATEMENT. The Registration Statement
contains no material misstatement of fact or omitted to state a material fact or
any fact necessary to make the statement contained therein not materially
misleading in the light of the circumstances in which made and with respect to
the Borrower and the Founding Companies taken as a whole.
Section 7.24 YEAR 2000 COMPLIANCE. The Borrower has (i) initiated a
review and assessment of all material areas within its and each of its
Subsidiaries' business and operations that could be adversely affected by the
"Year 2000 Problem" (that is, the risk that computer applications used by the
Borrower or any of its Subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving any date after December 31, 1999),
(ii) developed a plan for addressing the Year 2000 problem on a timely basis,
and (iii) to date, has begun implementation of that plan. The Borrower
reasonably believes that all computer applications that are material to its or
any of its Subsidiaries' business and operations will on a timely basis be able
to perform properly date-sensitive functions for all dates after January 1, 2000
except to the extent that a failure to do so could not reasonably be expected to
have a Material Adverse Effect.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of all Indebtedness hereunder, all
interest thereon and all other amounts payable by the Borrower hereunder:
Section 8.01 FINANCIAL STATEMENTS. The Borrower shall deliver, or
shall cause to be delivered, to the Administrative Agent with sufficient copies
of each for the Lenders:
(a) As soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, the audited consolidated and unaudited
consolidating statements of income, stockholders' equity, changes in financial
position and cash flow of the Borrower and its Consolidated Subsidiaries for
such fiscal year, and the related consolidated and consolidating balance sheets
of the Borrower and its Consolidated Subsidiaries as at the end of such fiscal
year, and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related opinion of
independent public accountants of recognized national standing acceptable to the
Administrative Agent which opinion shall state that said financial statements
fairly present the consolidated financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in accordance
with GAAP on a Consistent Basis except for such changes in such principles with
which the independent public accountants shall have concurred and such opinion
shall not contain a "going concern" or like qualification or exception, and a
certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as specifically
stated, of any Default.
(b) As soon as available and in any event within 45 days after the end of
each of the first three fiscal quarterly periods of each fiscal year of the
Borrower, unaudited consolidated statements of income, stockholders' equity,
changes in financial position and cash flow of the Borrower and its Consolidated
Subsidiaries for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related consolidated
balance sheets as at the end of such period, and setting forth in each case in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly present the
consolidated financial condition and results of operations of the Borrower and
its Consolidated Subsidiaries in accordance with GAAP on a Consistent Basis, as
at the end of, and for, such period (subject to normal year-end audit
adjustments).
(c) Promptly after the Borrower knows that any Default or any Material
Adverse Effect has occurred, a notice of such Default or Material Adverse
Effect, describing the same in reasonable detail and the action the Borrower
proposes to take with respect thereto.
(d) Promptly upon receipt thereof, a copy of each other report (excluding
routine correspondence) submitted to the Borrower or any Subsidiary by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower and the Subsidiaries, and a copy of
any response by the Borrower or any Subsidiary of the Borrower, or the Board of
Directors of the Borrower or any Subsidiary of the Borrower, to such letter or
report.
(e) Promptly upon its becoming available, each financial statement,
report, notice or proxy statement sent by the Borrower to stockholders generally
and each regular or periodic report and any registration statement, prospectus
or written communication (other than transmittal letters) in respect thereof
filed by the Borrower with or received by the Borrower in connection therewith
from any securities exchange or the SEC or any successor agency.
(f) Promptly after the furnishing thereof, copies of any statement, report
or notice furnished to or any Person pursuant to the terms of any indenture,
loan or credit or other similar agreement, other than this Agreement and not
otherwise required to be furnished to the Lenders pursuant to any other
provision of this Section 8.01.
(g) From time to time such other information regarding the business,
affairs or financial condition of the Borrower or any Subsidiary (including,
without limitation, any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) as any Lender or the
Administrative Agent may reasonably request.
(h) The Borrower will furnish to the Administrative Agent, at the time it
furnishes each set of financial statements pursuant to paragraph (a) or (b)
above, a Compliance Certificate (i) certifying as to the matters set forth
therein and stating that no Default has occurred and is continuing (or, if any
Default has occurred and is continuing, describing the same in reasonable
detail), (ii) setting forth in reasonable detail the computations necessary to
determine whether the Borrower is in compliance with Sections 9.12, 9.13, 9.14
and 9.15 as of the end of the respective fiscal quarter or fiscal year and (iii)
setting forth in reasonable detail the computations necessary to determine the
Applicable Margin and the commitment fee.
Section 8.02 LITIGATION. The Borrower shall promptly give to the
Administrative Agent notice of all legal or arbitral proceedings, and of all
proceedings before any Governmental Authority affecting the Borrower or any
Subsidiary, except proceedings which, if adversely determined, would not have a
Material Adverse Effect. The Borrower will, and will cause each of the
Subsidiaries to, promptly notify the Administrative Agent and each of the
Lenders of any claim, judgment, Lien or other encumbrance affecting any Property
of the Borrower or any Subsidiary if the value of the claim, judgment, Lien, or
other encumbrance affecting such Property shall exceed $500,000.
Section 8.03 MAINTENANCE, ETC.
(a) The Borrower shall and shall cause each Subsidiary to: preserve and
maintain its corporate existence and all of its material rights, privileges and
franchises; keep books of record and account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and activities; comply with all Governmental Requirements if failure to comply
with such requirements will have a Material Adverse Effect; pay and discharge
all taxes, assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; upon reasonable
notice, permit representatives of the Administrative Agent
or any Lender, during normal business hours, to examine, copy and make extracts
from its books and records, to inspect its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably requested
by such Lender or the Administrative Agent (as the case may be); and keep, or
cause to be kept, insured by financially sound and reputable insurers all
Property of a character usually insured by Persons engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such Persons and carry such other
insurance as is usually carried by such Persons including, without limitation,
environmental risk insurance to the extent reasonably available.
(b) Contemporaneously with the delivery of the financial statements
required by Section 8.01(a) to be delivered for each year, the Borrower will
furnish or cause to be furnished to the Administrative Agent and the Lenders a
certificate of insurance coverage from the insurer in form and substance
satisfactory to the Administrative Agent and, if requested, will furnish the
Administrative Agent and the Lenders copies of the applicable policies.
(c) The Borrower will and will cause each Subsidiary to operate its
Properties or cause such Properties to be operated in a careful and efficient
manner in accordance with the practices of the industry and in compliance with
all applicable contracts and agreements and in compliance in all material
respects with all Governmental Requirements.
Section 8.04 ENVIRONMENTAL MATTERS.
(a) The Borrower will and will cause each Subsidiary to establish and
implement such procedures as may be reasonably necessary to continuously
determine and assure that any failure of the following does not have a Material
Adverse Effect: (i) all Property of the Borrower and the Subsidiaries and the
operations conducted thereon and other activities of the Borrower and the
Subsidiaries are in compliance with and do not violate the requirements of any
Environmental Laws, (ii) no oil, hazardous substances or solid wastes are
disposed of or otherwise released on or to any Property owned by any such party
except in compliance with Environmental Laws, (iii) no hazardous substance will
be released on or to any such Property in a quantity equal to or exceeding that
quantity which requires reporting pursuant to Section 103 of CERCLA, and (iv) no
oil, oil and gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and substantial
endangerment to public health or welfare or the environment.
(b) The Borrower will promptly notify the Administrative Agent and the
Lenders in writing of any threatened action, investigation or inquiry by any
Governmental Authority of which the Borrower has knowledge in connection with
any Environmental Laws, excluding routine testing and corrective action.
Section 8.05 FURTHER ASSURANCES. The Borrower will and will cause
each Subsidiary to cure promptly any defects in the creation and issuance of the
Notes and the execution and delivery of the Security Instruments and this
Agreement. The Borrower at its expense will and will cause each Subsidiary to
promptly execute and deliver to the Administrative Agent upon request all such
other documents, agreements and instruments to comply with or accomplish the
covenants and agreements of the Borrower or any Subsidiary, as the case may be,
in the Security Instruments and this Agreement, or to further evidence and more
fully describe the collateral intended as security for the Notes, or to correct
any omissions in the Security Instruments, or to state more fully the security
obligations set out herein or in any of the Security Instruments, or to perfect,
protect or preserve any Liens created pursuant to any of the Security
Instruments, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith.
Section 8.06 PERFORMANCE OF OBLIGATIONS. The Borrower will pay the
Notes according to the reading, tenor and effect thereof; and the Borrower will
and will cause each Subsidiary to do and perform every act and discharge all of
the obligations to be performed and discharged by them under the Security
Instruments and this Agreement, at the time or times and in the manner
specified.
Section 8.07 ERISA INFORMATION AND COMPLIANCE. The Borrower will
promptly furnish and will cause the NCE Subsidiaries and any ERISA Affiliate to
promptly furnish to the Administrative Agent with sufficient copies to the
Lenders (i) promptly after the filing thereof with the United States Secretary
of Labor, the Internal Revenue Service or the PBGC, copies of each annual and
other report with respect to each Plan that is subject to Title IV of ERISA
(other than a Multiemployer Plan) and has unfunded vested benefits as reflected
on such report or any trust created thereunder, (ii) immediately upon becoming
aware of the occurrence of any ERISA Event or of any "prohibited transaction,"
as described in section 406 of ERISA or in section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written notice
signed by a Responsible Officer specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan) but except for
failures which would not result in a Material Adverse Effect, the Borrower will,
and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full and
in a timely manner, without incurring any late payment or underpayment charge or
penalty and without giving rise to any lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.08 SUBSIDIARY SECURITY. Should the Borrower create or
acquire any Subsidiary pursuant to Section 9.19 hereof it will promptly grant to
the Administrative Agent for the benefit of the Lenders a security interest and
pledge of all the capital stock of such Subsidiary in form and substance
satisfactory to the Administrative Agent, and the Borrower will cause such
Subsidiary to enter into a guaranty of the Indebtedness and grant a security
interest in all of such Subsidiary's assets, each in form and substance
satisfactory to the Administrative Agent; provided, however, with respect to any
such Subsidiary that is not a U.S. based entity, the security interest and/or
guaranty shall be limited to the extent necessary to prevent any adverse tax
consequence resulting therefrom. The delivery of such security and guaranty
shall be accompanied by such back up corporate authority and opinions of counsel
as the Administrative Agent may reasonably request.
Section 8.09 INSPECTION. The Borrower shall and shall cause each
Subsidiary to permit the Administrative Agent and the Lenders to visit and
inspect any of their respective Properties, to examine all of such Person's
books of account records, reports, and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances, and accounts with
their respective officers, employees, and independent public accountants all at
such reasonable times and as often as may be reasonably requested, provided that
the Borrower is given at least three (3) Business Days advance notice thereof
and reasonable opportunity to be present when independent public accountants or
other third parties are contacted, and provided further that so long as no
Default or Event of Default exists, the Administrative Agent and the Lenders
shall not exercise the foregoing inspection right more often than once in any
calendar year.
Section 8.10 RELEASE OF LIENS; SEARCH CERTIFICATES. Not later than
30 days after the Closing Date, the Borrower shall deliver to the Administrative
Agent Lien search certificates for the Borrower and each of the Guarantors for
each of the jurisdictions set forth on Schedule 7.14 reflecting that the
financing statement relating to the Liens granted by the Borrower in favor of
the Administrative Agent under the Security Instruments have been properly filed
and that all other Liens (excluding Permitted Liens) against the Borrower, the
Guarantors or their Properties have been released to the satisfaction of the
Administrative Agent.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of Loans hereunder, all interest thereon
and all other amounts payable by the Borrower hereunder, without the prior
written consent of the Majority Lenders:
Section 9.01 DEBT. Neither the Borrower nor any Subsidiary will
incur, create, assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents or
any guaranty of or suretyship arrangement for the Notes or other Indebtedness
arising under the Loan Documents;
(b) Debt of the Borrower and/or the Founding Companies existing on the
Closing Date which is reflected in the Financial Statements or is disclosed in
SCHEDULE 9.01, and any renewals or extensions (but not increases) thereof;
(c) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business which,
if greater than 90 days past the invoice or billing date, are being contested in
good faith by appropriate proceedings if reserves adequate under GAAP shall have
been established therefor;
(d) Debt (i) under Capital Leases and (ii) purchase money Debt which in
each purchase money Debt case shall not exceed 100% of the lesser of the total
purchase price and the fair market value of the Property acquired as determined
at the time of acquisition, provided all Debt incurred pursuant to this clause
(d) shall not at any time exceed $3,000,000.
(e) Subordinated Debt not to exceed $125,000,000 at any one time
outstanding which matures on a date subsequent to the Revolving Credit
Termination Date.
(f) Hedging Agreements entered into by the Borrower, not for speculative
purposes, (i) to hedge the interest cost with respect to the Loans and being for
a notional amount not to exceed the outstanding balance of principal and
interest on the Notes and (ii) to hedge the cost of foreign currency exchanges.
(g) Debt as a result of Section 9.03(g).
(h) Subordinated Debt not to exceed $25,000,000 in the aggregate at any
one time outstanding and in each case which matures (i) not less than two years
from the date incurred and (ii) on or before the Revolving Credit Termination
Date.
Section 9.02 LIENS. Neither the Borrower nor any Subsidiary will
create, incur, assume or permit to exist any Lien on any of its Properties (now
owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens securing Capital Leases or purchase money debt allowed under
Section 9.01(d) but only on the Property under lease or acquired with such debt;
and
(d) Liens disclosed on SCHEDULE 9.02.
Section 9.03 INVESTMENTS, LOANS AND ADVANCES. Neither the Borrower
nor any Subsidiary will make or permit to remain outstanding any loans or
advances to or investments in any Person, except that the foregoing restriction
shall not apply to:
(a) investments, loans or advances reflected in the Financial Statements
or which are disclosed to the Lenders in SCHEDULE 9.03;
(b) accounts receivable arising in the ordinary course of business;
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof;
(d) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by Standard & Poors Corporation or ▇▇▇▇▇'▇
Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000.00 (as of the
date of such Lender's or bank or trust company's most recent financial reports)
and has a short term deposit rating of no lower than A2 or P2, as such rating is
set forth from time to time, by Standard & Poors Corporation or ▇▇▇▇▇'▇
Investors Service, Inc., respectively;
(f) deposits in money market funds investing exclusively in investments
described in Section 9.03(c), 9.03(d) or 9.03(e);
(g) investments, loans or advances made by the Borrower in or to the
Subsidiaries;
(h) other investments, loans or advances not to exceed $1,000,000 in the
aggregate at any time; and
(i) investments and/or loans for Acquisitions; provided, however,
Acquisitions involving non-equity consideration of more than $10,000,000 for any
individual Acquisition or $40,000,000 in the aggregate for all such Acquisitions
during the previous four fiscal quarters shall be made only upon the written
consent of the Majority Lenders, such consent to be in the sole and absolute
discretion of each such Lender. At least ten (10) Business Days prior to the
closing of any Acquisition requiring consent of the Majority Lenders, and on or
prior to the closing of any Acquisition not requiring such consent and for which
the non-equity consideration exceeds $5,000,000, the Borrower shall have
provided to the
Administrative Agent a completed certificate substantially in the form of
EXHIBIT F together with all required exhibits, duly certified by a Responsible
Officer, which the Administrative Agent shall forward to the Lenders for any
Acquisition requiring consent of the Lenders. Prior to the closing of any
Acquisition, the Borrower shall, upon request by the Administrative Agent, make
available to the Administrative Agent and the Lenders at the Borrower's offices
in Houston, Texas, any information regarding the Acquisition as the
Administrative Agent or any Lender may reasonably request, including without
limitation:
(a) descriptions in reasonable detail of the Property to be acquired
together with title or other pertinent information with respect to the
Property to be acquired;
(b) purchase agreements relating to the Acquisition, and all other
documents relating thereto or to the Properties to be acquired, including
without limitation, operations of the entity to be acquired, compliance
with Environmental Laws, and any available reports related thereto; and
(c) all financial statements of the entity to be acquired (such
financial statements for at least the most recent fiscal year to be
audited with respect to all target entities with an aggregate purchase
price in an amount in excess of fifteen percent (15%) of Net Worth as made
available to the Borrower, but in any event covering the then most recent
two (2) fiscal years together with current internally prepared interim
financial statements prepared by such target entity in accordance with
GAAP; and
(d) financial projections of the acquired entity, in form and
substance satisfactory to the Administrative Agent.
Section 9.04 DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. The Borrower
will not and will not permit any Subsidiary to make any Restricted Payment.
Section 9.05 SALES AND LEASEBACKS. Neither the Borrower nor any
Subsidiary will enter into any arrangement, directly or indirectly, with any
Person whereby the Borrower or any Subsidiary shall sell or transfer any of its
Property, whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property which the Borrower or any Subsidiary intends
to use for substantially the same purpose or purposes as the Property sold or
transferred.
Section 9.06 NATURE OF BUSINESS. Neither the Borrower nor any
Subsidiary will allow any material change to be made in the character of its
business.
Section 9.07 MERGERS, ETC. Neither the Borrower nor any Subsidiary
will merge into or with or consolidate with any other Person, unless the
Borrower or a Subsidiary is the surviving entity and no Default exists or will
be created thereby, or sell, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
Property or assets to any other Person.
Section 9.08 PROCEEDS OF NOTES. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.07. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulation G, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate
Section 7 of the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may hereinafter be in
effect.
Section 9.09 ERISA COMPLIANCE. Except as would not have or result in
a Material Adverse Effect, the Borrower will not at any time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage in,
any transaction in connection with which the Borrower, any Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of
Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to terminate,
any Plan in a manner, or take any other action with respect to any Plan, which
could result in any liability of the Borrower, any Subsidiary or any ERISA
Affiliate to the PBGC;
(c) Fail to make, or permit any Subsidiary or ERISA Affiliate to fail to
make, full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary
or any ERISA Affiliate is required to pay as contributions thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate to permit
to exist, any accumulated funding deficiency within the meaning of Section 302
of ERISA or section 412 of the Code, whether or not waived, with respect to any
Plan other than a Multiemployer Plan;
(e) Permit the funding status of any plan which is regulated under Title
IV of ERISA (other than a Multiemployer Plan) to be in a condition that could
reasonably be expected to result in liability of the Borrower, any Subsidiary or
any ERISA Affiliate to the PBGC.;
(f) Contribute to or assume an obligation to contribute to, or permit any
Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan if such contributions could reasonably be
expected to result in the assessment of a withdrawal liability;
(g) Engage in an acquisition transaction a result of which would be that
Borrower would be in violation of any of the covenants of Paragraphs (d), (e) or
(f) of this Section 9.09;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201
or 4204 of ERISA;
(i) Except as required by a collective bargaining agreement contribute to
or assume an obligation to contribute to, or permit any Subsidiary or ERISA
Affiliate to contribute to or assume an obligation to contribute to, any
employee welfare benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide benefits to former
employees of such entities, that may not be terminated by such entities in their
sole discretion at any time without any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, any
Subsidiary or any ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section 9.10 SALE OR DISCOUNT OF RECEIVABLES. Neither the Borrower
nor any Subsidiary will discount or sell (with or without recourse) any of its
notes receivable or accounts receivable, provided, such parties may, in good
faith, take such actions as are reasonably likely to maximize the value of
invoices more than 120 days past due and otherwise doubtful of collection,
provided, the aggregate original face amount of all receivables so discounted
and sold does not exceed $2,000,000.
Section 9.11 CAPITAL EXPENDITURES. The Borrower will not make or
permit any Subsidiary to make any Capital Expenditures, if, after giving effect
thereto, the aggregate of all such expenditures would exceed $8,000,000 during
any four consecutive quarters.
Section 9.12 NET WORTH. The Borrower will not at any time permit its
Net Worth to be less than the sum of $95,393,000 PLUS 75% of the sum of the
Borrower's after tax consolidated net income for each fiscal quarter for which
Consolidated Net Income is greater than $0 beginning with the fiscal quarter
ending September 30, 1998 PLUS 100% of the increase to Net Worth resulting from
equity offerings (including new equity issued for acquisitions) after the
Closing Date.
Section 9.13 LEVERAGE RATIO. The Borrower will not permit its ratio
of Funded Debt as of the end of any fiscal quarter to Adjusted EBITDA ("LEVERAGE
RATIO") for the four fiscal quarters ending on such date to be greater than the
ratio corresponding to the applicable period set forth below:
----------------------------------------------
PERIOD RATIO
----------------------------------------------
from the Closing Date
until, but excluding
9/30/2001 4.00 to 1.00
----------------------------------------------
on and after 9/30/2001
until, but excluding
9/30/2002 3.75 to 1.00
----------------------------------------------
on 9/30/2002 and thereafter 3.50 to 1.00
----------------------------------------------
PROVIDED, HOWEVER, upon the occurrence of an Equity Event, from and after such
Equity Event, the Borrower will not permit its ratio of Funded Debt as of the
end of any fiscal quarter to Adjusted EBITDA for the four fiscal quarters ending
on such date to be greater than the ratio corresponding to the applicable period
set forth below:
----------------------------------------------
PERIOD RATIO
----------------------------------------------
from the Closing Date
until, but excluding 9/30/01 3.00 to 1.00
----------------------------------------------
on and after 9/30/01 until,
but excluding 9/30/02 2.75 to 1.00
----------------------------------------------
on 9/30/02 and thereafter 2.50 to 1.00
----------------------------------------------
PROVIDED, HOWEVER, upon the occurrence of a Subordinated Debt Event, from and
after such Subordinated Debt Event, the Borrower will not permit its ratio of
Funded Debt as of the end of any fiscal quarter to Adjusted EBITDA for the four
fiscal quarters ending on such date to be greater than the ratio corresponding
to the applicable period set forth below:
----------------------------------------------
PERIOD RATIO
----------------------------------------------
from the Closing Date
until, but excluding 9/30/01 4.50 to 1.00
----------------------------------------------
on and after 9/30/01 until,
but excluding 9/30/02 4.25 to 1.00
----------------------------------------------
on 9/30/02 and thereafter 4.00 to 1.00
----------------------------------------------
For the purposes of Sections 9.13 and 9.14, "Adjusted EBITDA" shall mean
the EBITDA of the Borrower and the Subsidiaries calculated on a pro-forma basis
to include the EBITDA for the most recent four fiscal quarters of acquired
Persons to the extent that such EBITDA is not included in the EBITDA of the
Borrower plus certain extraordinary or non-recurring expenses as specifically
listed on SCHEDULE 9.13.
Section 9.14 SENIOR DEBT LEVERAGE RATIO. The Borrower will not
permit its ratio of Senior Debt as of the end of any fiscal quarter to Adjusted
EBITDA for the four fiscal quarters ending on such date to be greater than the
ratio corresponding to the applicable period set forth below:
----------------------------------------------
PERIOD RATIO
----------------------------------------------
from the Closing Date
until, but excluding
12/31/98 4.00 to 1.00
----------------------------------------------
on and after 12/31/98
until, but
excluding 3/31/99 3.75 to 1.00
----------------------------------------------
on and after 3/31/99 until,
but excluding 6/30/99 3.50 to 1.00
----------------------------------------------
on and after 6/30/99 until,
but excluding 12/31/99 3.25 to 1.00
----------------------------------------------
on and after 12/31/99
until, but excluding 9/30/01 3.00 to 1.00
----------------------------------------------
on and after 9/30/01 until,
but excluding 9/30/02 2.75 to 1.00
----------------------------------------------
on 9/30/02 and thereafter 2.50 to 1.00
----------------------------------------------
PROVIDED, HOWEVER, upon the occurrence of an Equity Event or a Subordinated Debt
Event, from and after such Equity Event or Subordinated Debt Event, the Borrower
will not permit its ratio of Senior Debt as of the end of any fiscal quarter to
Adjusted EBITDA for the four fiscal quarters ending on such date to be greater
than the ratio corresponding to the applicable period set forth below:
----------------------------------------------
PERIOD RATIO
----------------------------------------------
from the Closing Date
until, but excluding 9/30/01 3.00 to 1.00
----------------------------------------------
on and after 9/30/01 until,
but excluding 9/30/02 2.75 to 1.00
----------------------------------------------
on 9/30/02 and thereafter 2.50 to 1.00
----------------------------------------------
For the purposes of Sections 9.13 and 9.14, "Adjusted EBITDA" shall mean
the EBITDA of the Borrower and the Subsidiaries calculated on a pro-forma basis
to include the EBITDA for the most recent four fiscal quarters of acquired
Persons to the extent that such EBITDA is not included in the EBITDA of the
Borrower plus certain extraordinary or non-recurring expenses as specifically
listed on SCHEDULE 9.13.
Section 9.15 FIXED CHARGE COVERAGE RATIO. The Borrower will not
permit its Fixed Charge Coverage Ratio as of the end of any fiscal quarter of
the Borrower (calculated quarterly at the end of each fiscal quarter) to be less
than 2.00 to 1.00 until, but excluding, September 30, 1999, and on and after
September 30, 1999 to be less than 1.40 to 1.00. For the purposes of this
Section 9.15, "FIXED CHARGE COVERAGE RATIO" shall mean the ratio of (i) Adjusted
EBITDA minus cash taxes (excluding cash taxes paid by Alatec Products, Inc. for
tax years prior to 1997) and Capital Expenditures for the four fiscal quarters
ending on such date to (ii) cash interest payments, plus principal payments of
Debt paid (or required to be paid) for such four fiscal quarters of the Borrower
and its Consolidated Subsidiaries plus, without duplication, principal payments
of Subordinated Debt permitted under Section 9.01(h) to be made or scheduled to
be made during the immediately succeeding fiscal quarter. For the purposes of
Section 9.15 only, "Adjusted EBITDA" shall mean the EBITDA of the Borrower and
the Subsidiaries calculated on a pro-forma basis to include the EBITDA for the
most recent four fiscal quarters of the Founding Companies (and no other
acquired Persons) to the extent that such EBITDA is not included in the EBITDA
of the Borrower, plus certain extraordinary or non-recurring expenses as
specifically listed on SCHEDULE 9.13.
Section 9.16 SALE OF PROPERTIES. The Borrower will not, and will not
permit any Subsidiary to, sell, assign, convey or otherwise transfer (a
"TRANSFER") any of its Property or any interest therein, except for Properties
(i) which are obsolete or no longer useful in the Borrower's or Subsidiaries'
business, (ii) the aggregate book value of which the proposed Transfers shall
not exceed $500,000 in any consecutive 12 month period, and (iii) for which the
Borrower has given the Administrative Agent at least ten (10) Business Days
prior written notice of any proposed Transfers after which the aggregate book
value exceeds $500,000 in any consecutive 12 month period, but shall not exceed
$2,500,000 in the aggregate for any such period.
Section 9.17 ENVIRONMENTAL MATTERS. Neither the Borrower nor any
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
Section 9.18 TRANSACTIONS WITH AFFILIATES. Neither the Borrower nor
any Subsidiary will enter into any transaction, including, without limitation,
any purchase, sale, lease or exchange of Property or the rendering of any
service, with any Affiliate (except for the Borrower or any Guarantor) unless
such transactions are otherwise permitted under this Agreement, are in the
ordinary course of its business and are upon fair and reasonable terms no less
favorable to it than it would obtain in a comparable arm's length transaction
with a Person not an Affiliate, or are disclosed in the Registration Statement.
Section 9.19 SUBSIDIARIES. The Borrower shall not, and shall not
permit any Subsidiary to, create any additional Subsidiaries except as permitted
by Section 9.03. The Borrower shall not and shall not permit any Subsidiary to
sell or to issue any stock or ownership interest of a Subsidiary except to the
Borrower or any Guarantor and except in compliance with Section 9.03.
Section 9.20 NEGATIVE PLEDGE AGREEMENTS. Neither the Borrower nor
any Subsidiary will create, incur, assume or suffer to exist any contract,
agreement or understanding (other than this Agreement and the Security
Instruments) which in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property or restricts any
Subsidiary from paying dividends to the Borrower, or which requires the consent
of or notice to other Persons in connection therewith.
Section 9.21 FISCAL YEAR. The Borrower will not change its fiscal
year without consent of the Majority Lenders.
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01 EVENTS OF DEFAULT. One or more of the following events
shall constitute an "EVENT OF DEFAULT":
(a) the Borrower shall default in the payment or prepayment when due of
any principal of or interest on any Loan, or any reimbursement obligation for a
disbursement made under any Letter of Credit, or any fees or other amount
payable by it hereunder or under any Security Instrument and such default, other
than a default of a payment or prepayment of principal (which shall have no cure
period), shall continue unremedied for a period of three (3) Business Days; or
(b) the Borrower or any Subsidiary shall default in the payment when due
of any principal of or interest on any of its other Debt aggregating $500,000 or
more, or any event specified in any note, agreement, indenture or other document
evidencing or relating to any such Debt shall occur if the effect of such event
is to cause, or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Debt (or a trustee or Administrative Agent
on behalf of such holder or holders) to cause, such Debt to become due prior to
its stated maturity; or
(c) any representation, warranty or certification made or deemed made
herein or in any Security Instrument by the Borrower or any Subsidiary, or any
certificate furnished to any Lender or the Administrative Agent pursuant to the
provisions hereof or any Security Instrument, shall prove to have been false or
misleading as of the time made or furnished in any material respect; or
(d) the Borrower shall default in the performance of any of its
obligations under Article IX or any other Article of this Agreement other than
under Article VIII; or the Borrower shall default in the performance of any of
its obligations under Article VIII or any Security Instrument (other than the
payment of amounts due which shall be governed by Section 10.01(a)) and such
default shall continue unremedied for a period of thirty (30) days after the
earlier to occur of (i) notice thereof to the Borrower by the Administrative
Agent or any Lender (through the Administrative Agent), or (ii) the Borrower
otherwise becoming aware of such default; or
(e) the Borrower shall admit in writing its inability to, or be generally
unable to, pay its debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, liquidation or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of the Borrower, in any court of competent jurisdiction, seeking (i) its
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower of all or any substantial part
of its assets, or (iii) similar relief in respect of the Borrower under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 60 days; or (iv)
an order for relief against the Borrower shall be entered in an involuntary case
under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of $500,000
in the aggregate shall be rendered by a court against the Borrower or any
Subsidiary and the same shall not be discharged (or provision shall not be made
for such discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof and the Borrower or such
Subsidiary shall not, within said period of 30 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal; or
(i) the Security Instruments after delivery thereof shall for any reason,
except to the extent permitted by the terms thereof, cease to be in full force
and effect and valid, binding and enforceable in accordance with their terms, or
cease to create a valid and perfected Lien of the priority required thereby on
any of the collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or the Borrower shall so state in
writing; or
(j) any Letter of Credit becomes the subject matter of any order,
judgment, injunction or any other such determination, or if the Borrower or any
other Person shall petition or apply for or obtain any order restricting payment
by the Administrative Agent under any Letter of Credit or extending the Lenders'
liability under any Letter of Credit beyond the expiration date stated therein
or otherwise agreed to by the Administrative Agent; or
(k) a Change of Control occurs or the Borrower discontinues its usual
business; or
(l) any Guarantor takes, suffers or permits to exist any of the events or
conditions referred to in paragraphs (e), (f), (g) or (h) hereof or if any
provision of any guaranty agreement related thereto shall for any reason cease
to be valid and binding on any Guarantor or if any Guarantor shall so state in
writing; PROVIDED, HOWEVER, the foregoing shall not be considered an Event of
Default for any Guarantor with total assets of less than $1,000,000 and for
which the foregoing does not result in a Material Adverse Effect.
Section 10.02 REMEDIES.
(a) In the case of an Event of Default other than one referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the Administrative Agent,
upon request of the Majority Lenders, shall, by notice to the Borrower, cancel
the Commitments and/or declare the principal amount then outstanding of, and the
accrued interest on, the Loans and all other amounts payable by the Borrower
hereunder and under the Notes (including without limitation the payment of cash
collateral to secure the LC Exposure as provided in Section 2.09(b) hereof) to
be forthwith due and payable, whereupon such amounts shall be immediately due
and payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the Commitments shall be automatically
canceled and the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower hereunder and under
the Notes (including without limitation the payment of cash collateral to secure
the LC Exposure as provided in Section 2.09(b) hereof) shall become
automatically immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second to accrued interest on the Notes; third to fees; fourth pro rata to
principal outstanding on the Notes and other Indebtedness; fifth to serve as
cash collateral to be held by the Administrative Agent to secure the LC
Exposure; and any excess shall be paid to the Borrower or as otherwise required
by any Governmental Requirement.
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.01 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its
Administrative Agent under this Agreement and the other Loan Documents with such
powers and discretion as are specifically delegated to the Administrative Agent
by the terms of this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto. Neither the Administrative
Agent nor the Fronting Bank (which terms as used in this sentence and in Section
11.05 and the first sentence of Section 11.06 hereof shall include each of their
Affiliates and their own and their Affiliates' officers, directors, employees,
and Administrative Agents): (a) shall have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee or
fiduciary for any Lender; (b) shall be responsible to the Lenders for any
recital, statement, representation, or warranty (whether written or oral) made
in or in connection with any Loan Document or any certificate or other document
referred to or provided for in, or received by any of them under, any Loan
Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Document, or any other document
referred to or provided for therein or for any failure by the Borrower, a
Guarantor or any other Person to perform any of its obligations thereunder; (c)
shall be responsible for or have any duty to ascertain, inquire into, or verify
the performance or observance of any covenants or agreements by the Borrower, a
Guarantor or any other Person or the satisfaction of any condition or to inspect
the property (including the books and records) of the Borrower or any of its
Subsidiaries or Affiliates; (d) shall be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and (e) shall be
responsible for any action taken or omitted to be taken by it under or in
connection with any Loan Document, except for its own gross negligence or
willful misconduct. The Administrative Agent may employ Administrative Agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such Administrative Agents or attorneys-in-fact selected by it
with reasonable care.
Section 11.02 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative
Agent and the Fronting Bank shall be entitled to rely upon any certification,
notice, instrument, writing or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by either of them to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent
or the Fronting Bank. The Administrative Agent may deem and treat the payee of
any Note as the holder thereof for all purposes hereof unless and until the
Administrative Agent receives and accepts an Assignment and Acceptance executed
in accordance with Section 12.06 hereof. As to any matters not expressly
provided for by this Agreement, neither the Administrative Agent nor the
Fronting Bank shall be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Lenders, and such instructions shall be binding on all of the Lenders;
PROVIDED, HOWEVER, that neither the Administrative Agent nor the Fronting Bank
shall be required to take any action that exposes the Administrative Agent or
the Fronting Bank to personal liability or that is contrary to any Loan Document
or applicable law or unless it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking any such action.
Section 11.03 DEFAULTS. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of a Default or Event of Default
unless the Administrative Agent has received written notice from a Lender or the
Borrower specifying such Default or Event of Default and stating that such
notice is a "Notice of Default." In the event that the Administrative Agent
receives such a notice of the occurrence of a Default
or Event of Default, the Administrative Agent shall give prompt notice thereof
to the Lenders. The Administrative Agent shall (subject to Section 11.02 hereof)
take such action with respect to such Default or Event of Default as shall
reasonably be directed by the Majority Lenders, PROVIDED THAT, unless and until
the Administrative Agent shall have received such directions, the Administrative
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 in the best interest of the Lenders.
Section 11.04 RIGHTS AS A LENDERSECTION. With respect to its
Commitments and the Loans made by it and its participation in the issuance of
Letters of Credit, NationsBank (and any successor acting as Administrative
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Administrative Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Administrative Agent
in its individual capacity. NationsBank (and any successor acting as
Administrative Agent) and its Affiliates may (without having to account therefor
to any Lender) accept deposits from, lend money to, make investments in, provide
services to and generally engage in any kind of lending, trust or other business
with the Borrower (and any of its Affiliates) as if it were not acting as the
Administrative Agent, and NationsBank and its Affiliates may accept fees and
other consideration from the Borrower for services in connection with this
Agreement or otherwise without having to account for the same to the Lenders.
Section 11.05 INDEMNIFICATION. THE LENDERS AGREE TO INDEMNIFY THE
ADMINISTRATIVE AGENT AND THE FRONTING BANK RATABLY IN ACCORDANCE WITH THEIR
PERCENTAGE SHARES FOR THE INDEMNITY MATTERS AS DESCRIBED IN SECTION 12.03 TO THE
EXTENT NOT INDEMNIFIED OR REIMBURSED BY THE BORROWER UNDER SECTION 12.03, BUT
WITHOUT LIMITING THE OBLIGATIONS OF THE BORROWER UNDER SAID SECTION 12.03 AND
FOR ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND AND
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE
ADMINISTRATIVE AGENT OR THE FRONTING BANK IN ANY WAY RELATING TO OR ARISING OUT
OF: (I) ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY ACTION
TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER ANY LOAN DOCUMENT (INCLUDING
ANY OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE ADMINISTRATIVE AGENT),
PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT
THEY ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED
PARTY. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE THE
ADMINISTRATIVE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY COSTS OR
EXPENSES PAYABLE BY THE BORROWER UNDER SECTION 12.03, TO THE EXTENT THAT THE
ADMINISTRATIVE AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS AND EXPENSES BY
THE BORROWER. THE AGREEMENTS CONTAINED IN THIS SECTION SHALL SURVIVE PAYMENT IN
FULL OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT.
Section 11.06 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER
LENDERS. Each Lender acknowledges and agrees that it has, independently and
without reliance on the Administrative Agent, the Fronting Bank or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its decision to
enter into this Agreement, and that it will, independently and without reliance
upon the Administrative Agent, the Fronting Bank or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, neither the Administrative Agent nor the
Fronting Bank shall have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower (or any of its Affiliates) which
may come into the possession of the Administrative Agent, the Fronting Bank or
any of their respective Affiliates. In this regard, each Lender acknowledges
that ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. is acting in this transaction as special counsel to
the Administrative Agent only, except to the extent otherwise expressly stated
in any legal opinion or any Loan Document. Each Lender will consult with its own
legal counsel to the extent that it deems necessary in connection with the Loan
Documents and the matters contemplated therein.
Section 11.07 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. The
Administrative Agent may resign at any time by giving notice thereof to the
Lenders and the Borrower. Upon any such resignation or removal, the Majority
Lenders, with the consent of the Borrower, shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
giving of notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent which shall be a
commercial bank organized under the laws of the United States of America having
combined capital and surplus of at least $100,000,000. Upon the acceptance of
such appointment as Administrative Agent hereunder by a successor, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article XI and Section
12.03 shall continue in effect for its benefit in respect of any actions taken
or omitted to be taken by it while it was acting as the Administrative Agent.
ARTICLE XII
MISCELLANEOUS
Section 12.01 WAIVER. No failure on the part of the Administrative
Agent or any ER Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any of the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of the Loan Documents
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
Section 12.02 NOTICES. All notices and other communications provided
for herein and ES in the other Loan Documents (including, without limitation,
any modifications of, or waivers or consents under, this Agreement or the other
Loan Documents) shall be given or made by telex, telecopy, courier or U.S. Mail
or in writing and telexed, telecopied, mailed or delivered to the intended
recipient at the "Address for Notices" specified below its name on the signature
pages hereof or in the Loan Documents or, as to any party, at such other address
as shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before 1:00 p.m. local time on a Business Day (otherwise on the next
succeeding Business Day) by telex or telecopier and evidence or confirmation of
receipt is obtained, or personally delivered or, in the case of a mailed notice,
three (3) Business Days after the date deposited in the mails, postage prepaid,
in each case given or addressed as aforesaid.
Section 12.03 PAYMENT OF EXPENSES, INDEMNITIES, ETC.
(a) The Borrower agrees to pay on demand all costs and expenses of the
Administrative Agent and its Affiliates in connection with the syndication,
preparation, execution, delivery, administration, modification, and amendment of
this Agreement, the other Loan Documents, and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent (including the cost of internal
counsel) with respect thereto and with respect to advising the Administrative
Agent as to its rights and responsibilities under the Loan Documents. The
Borrower further agrees to pay on demand all costs and expenses of the
Administrative Agent and the Lenders, if any (including, without limitation,
reasonable attorneys' fees and expenses and the cost of internal counsel), in
connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Loan Documents and the other documents to be
delivered hereunder.
(b) THE BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE
AGENT AND EACH LENDER AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ADMINISTRATIVE AGENTS, AND ADVISORS (EACH, AN
"INDEMNIFIED PARTY") FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES,
LIABILITIES, COSTS, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS' FEES) THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY
INDEMNIFIED PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY
REASON OF (INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION,
LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION THEREWITH) THE
LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR
PROPOSED USE OF THE PROCEEDS OF THE LOANS (INCLUDING ANY OF THE FOREGOING
ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY), EXCEPT TO THE EXTENT SUCH
CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE IS FOUND IN A FINAL,
NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH INDEMNIFIED PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE
CASE OF AN INVESTIGATION, LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY
IN THIS SECTION 12.03 APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT
SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY THE BORROWER, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER PERSON
OR ANY INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED. TO THE MAXIMUM EXTENT ALLOWED
BY APPLICABLE LAW, THE BORROWER AGREES NOT TO ASSERT ANY CLAIM AGAINST THE
ADMINISTRATIVE AGENT, ANY LENDER, ANY OF THEIR AFFILIATES, OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, ADMINISTRATIVE AGENTS, AND
ADVISERS, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL, OR
PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO THE LOAN DOCUMENTS, ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE ACTUAL OR PROPOSED USE OF THE
PROCEEDS OF THE LOANS.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 12.03 shall survive the payment in full of the Loans and all other
amounts payable under this Agreement.
Section 12.04 AMENDMENTS, ETC. To the maximum extent allowed by
applicable law, any provision of this Agreement or any other Loan Document may
be amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Borrower and the Majority Lenders (and, if Article 11 or the
rights or duties of the Administrative Agent are affected thereby, by the
Administrative Agent); PROVIDED that no such amendment or waiver shall, unless
signed by all the Lenders, (i) increase the Commitments of the Lenders, (ii)
reduce the principal of or rate of interest on any Loan or any fees or other
amounts payable hereunder, (iii) postpone any date fixed for the payment of any
scheduled installment of principal of or interest on any Loan or any fees or
other amounts payable
hereunder or for termination of any Commitment, (iv) change the percentage of
the Commitments or of the unpaid principal amount of the Notes, or the number of
Lenders, which shall be required for the Lenders or any of them to take any
action under this Section or any other provision of this Agreement or (v)
release any Guarantor or all or substantially all of the collateral.
Section 12.05 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 12.06 ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Loans, its Notes, and its Commitments);
PROVIDED, HOWEVER, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least
equal to $5,000,000 or an integral multiple of $1,000,000 in excess
thereof;
(iii) each such assignment by a Lender shall be of a constant, and
not varying, percentage of all of its rights and obligations under this
Agreement and the Notes; and
(iv) the parties to such assignment shall execute and deliver to the
Administrative Agent for its acceptance an Assignment and Acceptance
substantially in the form of EXHIBIT E hereto, together with any Notes
subject to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the
Administrative Agent and the Borrower shall make appropriate arrangements so
that, if required, new Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the laws of the United States of America or a
state thereof, it shall deliver to the Borrower and the Administrative Agent
certification as to exemption from deduction or withholding of Taxes in
accordance with Section 4.06.
(b) The Administrative Agent shall maintain at its Principal Office a copy
of each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "REGISTER"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of
EXHIBIT E hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and its Loans); PROVIDED, HOWEVER, that (i) such
Lender=s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions contained in Article 5 and the right
of set-off contained in Section 4.05, and (iv) the Borrower shall continue to
deal solely and directly with such Lender in connection with such Lender=s
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of the Borrower relating to its Loans and
its Note and to approve any amendment, modification, or waiver of any provision
of this Agreement (other than amendments, modifications, or waivers decreasing
the amount of principal of or the rate at which interest is payable on such
Loans or Note, extending any scheduled principal payment date or date fixed for
the payment of interest on such Loans or Note, or extending its Commitments).
(e) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Loans and its
Notes to any Federal Reserve Bank as collateral security pursuant to Regulation
A and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning the Borrower or any
of the Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants),
subject, however, to the provisions of Section 12.15 hereof.
Section 12.07 INVALIDITY. In the event that any one or more of the
provisions contained in any of the Loan Documents or the Letters of Credit, the
Letter of Credit Agreements shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Notes, this Agreement or any
Security Instrument.
Section 12.08 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 REFERENCES. The words "herein," "hereof," "hereunder"
and other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
Section 12.10 SURVIVAL. The obligations of the parties under Section
4.06, Article V, and Sections 11.05 and 12.03 shall survive the repayment of the
Loans and the termination of the Commitments. To the extent that any payments on
the Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Administrative Agent's and the Lenders' Liens, security
interests, rights, powers and remedies under this Agreement and each Security
Instrument shall
continue in full force and effect. In such event, each Security Instrument shall
be automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.
Section 12.11 CAPTIONS. Captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
Section 12.12 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 12.13 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(A) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED
STATES FEDERAL LAW PERMITS ANY LENDER TO CHARGE INTEREST AT THE RATE ALLOWED BY
THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. SECTION 346.001, ET SEQ., OF
THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS
AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE
NOTES.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS
SHALL BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE BORROWER TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW,
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE
AND DOES NOT PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM OBTAINING
JURISDICTION OVER THE BORROWER IN ANY COURT OTHERWISE HAVING JURISDICTION.
(C) EACH OF THE BORROWER AND EACH LENDER HEREBY (I) IRREVOCABLY AND
UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY SECURITY
INSTRUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR ADMINISTRATIVE AGENT OF COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE SECURITY INSTRUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 12.13.
Section 12.14 INTEREST. It is the intention of the parties hereto
that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Lender under laws applicable to it (including the laws of the United States of
America and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to such Lender notwithstanding the other provisions of
this Agreement), then, in that event, notwithstanding anything to the contrary
in any of the Loan Documents or any agreement entered into in connection with or
as security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by such Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by such Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Borrower). All sums paid
or agreed to be paid to any Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to such Lender,
be amortized, prorated, allocated and spread throughout the full term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.14 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to such Lender would be less than the amount of
interest payable to such Lender computed at the Highest Lawful Rate applicable
to such Lender, then the amount of interest payable to such Lender in respect of
such subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Lender until the total amount of interest
payable to such Lender shall equal the total amount of interest which would have
been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.14. To the extent that Section 303.301
et seq. of the Texas Finance Code is relevant for the purpose of determining the
Highest Lawful Rate, such Lender elects to determine the applicable rate ceiling
under such Article by the weekly rate ceiling from time to time in effect.
Section 12.15 CONFIDENTIALITY. The Administrative Agent and each
Lender (each, a "LENDING PARTY") agrees to keep confidential any information
furnished or made available to it by the Borrower pursuant to this Agreement
that is marked confidential; PROVIDED that nothing herein shall prevent any
Lending Party from disclosing such information (a) to any other Lending Party or
any Affiliate of any Lending Party, or any officer, director, employee,
Administrative Agent, or advisor of any Lending Party or Affiliate of any
Lending Party to the extent required in connection with their work on the Loans,
(b) to any other Person if reasonably incidental to the administration of the
credit facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative agency, (e) upon
the request or demand of any regulatory agency or authority, (f) that is or
becomes available to the public or that is or becomes available to any Lending
Party other than as a result of a disclosure by any Lending Party prohibited by
this Agreement, (g) in connection with any litigation to which such Lending
Party or any of its Affiliates may be a party, (h) to the extent necessary in
connection with the exercise of any remedy
under this Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
Section 12.16 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE SECURITY
INSTRUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS
OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE SECURITY
INSTRUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE SECURITY INSTRUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT
IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE SECURITY INSTRUMENTS ON THE BASIS THAT THE PARTY HAD
NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
[SIGNATURES BEGIN ON NEXT PAGE]
The parties hereto have caused this Agreement to be duly executed as
of the day and year first above written.
BORROWER: PENTACON, INC.
By:_____________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
Address for Notices
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
LENDER AND ADMINISTRATIVE AGENT: NATIONSBANK, N.A.
By:_____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Lending Office for Base Rate Loans
and Eurodollar Loans:
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address for Notices:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
PARIBAS
By:
Name:
Title:
By:
Name:
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
Lending Office for Base Rate Loans
and Eurodollar Loans:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
ANNEX 1
LIST OF PERCENTAGE SHARES,
MAXIMUM REVOLVING CREDIT AMOUNTS
AND REVOLVER TERM LOANS
-------------------------------------------------------------------------------
PERCENTAGE MAXIMUM REVOLVING REVOLVER
NAME OF LENDER SHARE CREDIT AMOUNT TERM LOANS
-------------------------------------------------------------------------------
NationsBank, N.A. 80.000% $108,000,000.00 $32,000,000
-------------------------------------------------------------------------------
Paribas 8.5714% $11,571,428.57 $3,428,571.43
-------------------------------------------------------------------------------
Union Bank of California,
N.A. 11.4286% $15,428,571.43 $4,571,428.57
-------------------------------------------------------------------------------
TOTAL 100% $135,000,000 $40,000,000
-------------------------------------------------------------------------------
EXHIBIT A-1
FORM OF REVOLVING CREDIT NOTE
$_____________________________ ___________________, 199__
FOR VALUE RECEIVED, PENTACON, INC., a Delaware corporation (the
"BORROWER") hereby promises to pay to the order of
______________________________ (the "LENDER"), at the Principal Office of
NATIONSBANK, N.A. (the "ADMINISTRATIVE AGENT"), at
____________________________________________, the principal sum of _____________
Dollars ($____________) (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Revolving Credit Loans made by the Lender to the
Borrower under the Credit Agreement, as hereinafter defined), in lawful money of
the United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Revolving Credit Loan, at
such office, in like money and funds, for the period commencing on the date of
such Revolving Credit Loan until such Revolving Credit Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Revolving Credit Loan made by the Lender to the Borrower, and each payment
made on account of the principal thereof, shall be recorded by the Lender on its
books and, prior to any transfer of this Revolving Credit Note, may be endorsed
by the Lender on the schedules attached hereto or any continuation thereof or on
any separate record maintained by the Lender.
This Revolving Credit Note is one of the Notes referred to in the Amended
and Restated Credit Agreement dated as of September 3, 1998 among the Borrower,
the Lenders which are or become parties thereto (including the Lender) and the
Administrative Agent, and evidences Revolving Credit Loans made by the Lender
thereunder (such Amended and Restated Credit Agreement as the same may be
amended or supplemented from time to time, the "CREDIT AGREEMENT"). Capitalized
terms used in this Revolving Credit Note have the respective meanings assigned
to them in the Credit Agreement.
This Revolving Credit Note is issued pursuant to the Credit Agreement and
is entitled to the benefits provided for in the Credit Agreement and the
Security Instruments. The Credit Agreement provides for the acceleration of the
maturity of this Revolving Credit Note upon the occurrence of certain events,
for prepayments of Revolving Credit Loans upon the terms and conditions
specified therein and other provisions relevant to this Revolving Credit Note.
THIS REVOLVING CREDIT NOTE AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THIS REVOLVING CREDIT NOTE AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
PENTACON, INC.
By:
Name:
Title:
EXHIBIT A-2
FORM OF REVOLVER TERM LOAN NOTE
$_____________________________ ___________________, 199__
FOR VALUE RECEIVED, PENTACON, INC., a Delaware corporation (the
"BORROWER") hereby promises to pay to the order of
______________________________ (the "LENDER"), at the Principal Office of
NATIONSBANK, N.A. (the "ADMINISTRATIVE AGENT"), at
____________________________________________, the principal sum of _____________
Dollars ($____________) (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Revolver Term Loans made by the Lender to the
Borrower under the Credit Agreement, as hereinafter defined), in lawful money of
the United States of America and in immediately available funds, on the dates
and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Revolver Term Loan, at such
office, in like money and funds, for the period commencing on the date of such
Revolver Term Loan until such Revolver Term Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate, Interest Period and maturity of
each Revolver Term Loan made by the Lender to the Borrower, and each payment
made on account of the principal thereof, shall be recorded by the Lender on its
books and, prior to any transfer of this Revolver Term Loan Note, may be
endorsed by the Lender on the schedules attached hereto or any continuation
thereof or on any separate record maintained by the Lender.
This Revolver Term Loan Note is one of the Notes referred to in the
Amended and Restated Credit Agreement dated as of September 3, 1998 among the
Borrower, the Lenders which are or become parties thereto (including the Lender)
and the Administrative Agent, and evidences Revolver Term Loans made by the
Lender thereunder (such Amended and Restated Credit Agreement as the same may be
amended or supplemented from time to time, the "CREDIT Agreement"). Capitalized
terms used in this Revolver Term Loan Note have the respective meanings assigned
to them in the Credit Agreement.
This Revolver Term Loan Note is issued pursuant to the Credit Agreement
and is entitled to the benefits provided for in the Credit Agreement and the
Security Instruments. The Credit Agreement provides for the acceleration of the
maturity of this Revolver Term Loan Note upon the occurrence of certain events,
for prepayments of Revolver Term Loans upon the terms and conditions specified
therein and other provisions relevant to this Revolver Term Loan Note.
THIS REVOLVER TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS EMBODY THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THIS REVOLVER TERM LOAN NOTE AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
THIS REVOLVER TERM LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
PENTACON, INC.
By:
Name:
Title:
EXHIBIT A-3
FORM OF SWING LINE NOTE
$10,000,000 ___________________, 199__
FOR VALUE RECEIVED, PENTACON, INC., a Delaware corporation (the
"BORROWER") hereby promises to pay to the order of NATIONSBANK, N.A. (the "SWING
LINE LENDER"), at its Principal Office at
____________________________________________, the principal sum of TEN MILLION
DOLLARS ($10,000,000) or, if less, the outstanding principal amount advanced
under this Swing Line Note, in lawful money of the United States of America and
in immediately available funds, on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the unpaid principal
amount of each such Swing Line Loan, at such office, in like money and funds,
for the period commencing on the date of such Swing Line Loan until such Swing
Line Loan shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
The date, amount, interest rate and maturity of each Swing Line Loan made
by the Swing Line Lender to the Borrower, and each payment made on account of
the principal thereof, shall be recorded by the Swing Line Lender on its books
and, prior to any transfer of this Swing Line Note, may be endorsed by the Swing
Line Lender on the schedules attached hereto or any continuation thereof or on
any separate record maintained by the Swing Line Lender.
This Swing Line Note is one of the Notes referred to in the Amended and
Restated Credit Agreement dated as of September 3, 1998 among the Borrower, the
Lenders which are or become parties thereto (including the Swing Line Lender)
and the Administrative Agent, and evidences Swing Line Loans made by the Swing
Line Lender thereunder (such Amended and Restated Credit Agreement as the same
may be amended or supplemented from time to time, the "CREDIT AGREEMENT").
Capitalized terms used in this Swing Line Note have the respective meanings
assigned to them in the Credit Agreement.
This Swing Line Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement and the Security
Instruments. The Credit Agreement provides for the acceleration of the maturity
of this Swing Line Note upon the occurrence of certain events, for prepayments
of Swing Line Loans upon the terms and conditions specified therein and other
provisions relevant to this Swing Line Note.
THIS SWING LINE NOTE AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THIS SWING LINE NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
THIS SWING LINE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
PENTACON, INC.
By:
Name:
Title:
EXHIBIT B
FORM OF BORROWING, CONTINUATION AND CONVERSION REQUEST
_____________________, 199__
PENTACON, INC., a Delaware corporation (the "BORROWER"), pursuant to the
Amended and Restated Credit Agreement dated as of September 3, 1998 (together
with all amendments or supplements thereto, the "CREDIT AGREEMENT") among the
Borrower, NATIONSBANK, N.A., as Administrative Agent for the lenders (the
"LENDERS") which are or become parties thereto, and such Lenders, hereby makes
the requests indicated below (unless otherwise defined herein, capitalized terms
are defined in the Credit Agreement):
[ ] 1. Loans:
(a) Aggregate amount of new Loans to be $______________________;
(b) Requested funding date is _________________, 199__;
(c) $_____________________ of such borrowings are to be Eurodollar
Loans;
$_____________________ of such borrowings are to be Base Rate
Loans; and
(d) Length of Interest Period for Eurodollar Loans is:
_________________________.
[ ] 2. Eurodollar Loan Continuation for Eurodollar Loans maturing on :
(a) Aggregate amount to be continued as Eurodollar Loans is
$____________________;
(b) Aggregate amount to be converted to Base Rate Loans is
$____________________;
(c) Length of Interest Period for continued Eurodollar Loans is
______________________.
[ ] 3. Conversion of Outstanding Base Rate Loans to Eurodollar Loans:
Convert $__________________ of the outstanding Base Rate Loans to
Eurodollar Loans on ____________________ with an Interest Period of
_______________________.
[ ] 4. Conversion of outstanding Eurodollar Loans to Base Rate Loans:
Convert $__________________ of the outstanding Eurodollar Loans with
Interest Period maturing on ______________________, 199_, to Base
Rate Loans.
The undersigned certifies that he is the _____________________ of the
Borrower, and that as such he is authorized to execute this certificate on
behalf of the Borrower. The undersigned further certifies, represents and
warrants on behalf of the Borrower that the Borrower is entitled to receive the
requested borrowing, continuation or conversion under the terms and conditions
of the Credit Agreement.
PENTACON, INC.
By:_________________________________
Name:
Title:
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ________________ of
PENTACON, INC., a Delaware corporation (the "BORROWER") and that as such he is
authorized to execute this certificate on behalf of the Borrower. With reference
to the Amended and Restated Credit Agreement dated as of September 3, 1998
(together with all amendments or supplements thereto being the "AGREEMENT")
among the Borrower, NATIONSBANK, N.A., as Administrative Agent for the lenders
(the "LENDERS") and such Lenders, the undersigned represents and warrants as
follows (each capitalized term used herein having the same meaning given to it
in the Agreement unless otherwise specified):
(a) The representations and warranties of the Borrower contained in
Article VII of the Agreement and in the Security Instruments and otherwise
made in writing by or on behalf of the Borrower pursuant to the Agreement
and the Security Instruments were true and correct when made, and are
repeated at and as of the time of delivery hereof and are true and correct
at and as of the time of delivery hereof, except to the extent such
representations and warranties are expressly limited to an earlier date or
the Majority Lenders have expressly consented in writing to the contrary.
(b) The Borrower has performed and complied with all agreements and
conditions contained in the Agreement and in the Security Instruments
required to be performed or complied with by it prior to or at the time of
delivery hereof.
(c) Since September 30, 1997, no change has occurred, either in any
case or in the aggregate, in the condition, financial or otherwise, of the
Borrower or any Subsidiary which would have a Material Adverse Effect.
(d) There exists, and, after giving effect to the loan or loans with
respect to which this certificate is being delivered, will exist, no
Default under the Agreement or any event or circumstance which
constitutes, or with notice or lapse of time (or both) would constitute,
an event of default under any loan or credit agreement, indenture, deed of
trust, security agreement or other agreement or instrument evidencing or
pertaining to any Debt of the Borrower or any Subsidiary, or under any
material agreement or instrument to which the Borrower or any Subsidiary
is a party or by which the Borrower or any Subsidiary is bound.
(e) Attached hereto are the detailed computations necessary to
determine whether the Borrower is in compliance with Sections 9.11, 9.12,
9.13 and 9.14 as of the end of the [fiscal quarter][fiscal year] ending .
(f) For the period beginning on _______________ and ending on the
next Determination Date (as defined in the definition of Applicable
Margin), the Applicable Margin for Eurodollar Loans should be _____% and
for Base Rate Loans should be _____% and the commitment fee percentage
should be _____% and attached hereto are detailed computations necessary
to determine said Applicable Margin and commitment fee for such period.
(g) If any Subordinated Debt permitted by Section 9.01(h) exists,
Borrower has no reason to believe that it will be unable to make any
scheduled payment of such Subordinated Debt due within the next 90 days,
including without limitation, by reason of a Default existing under the
Credit Agreement or caused by such payment.
EXECUTED AND DELIVERED this ____ day of ______________.
PENTACON, INC.
By:
Name:
Title:
EXHIBIT D
SECURITY INSTRUMENTS
1. Security Agreement (Stock and Other Securities) executed by Borrower in
favor of the Administrative Agent
2. Financing Statement relating to Security Agreement (Stock and Other
Securities)
3. Assignment Separate from Stock Certificate for stock of Guarantors
4. Guaranty Agreements in favor of the Administrative Agent from each
Guarantor
5. Financing Statements relating to the Guaranty Agreements
6. Security Agreements (Accounts Receivable, Inventory, Equipment, General
Intangibles, and Other Property) executed by the Borrower and each
Subsidiary in favor of the Administrative Agent
7. Financing Statements relating to Security Agreements (Accounts Receivable,
Inventory, Equipment, General Intangibles, and other Property)
EXHIBIT E
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Credit Agreement dated as of
September 3, 1998 (the "CREDIT AGREEMENT") among PENTACON, INC., a Delaware
corporation (the "BORROWER"), the Lenders (as defined in the Credit Agreement)
and NATIONSBANK, N.A., as Administrative Agent for the Lenders (the
"ADMINISTRATIVE AGENT"). Terms defined in the Credit Agreement are used herein
with the same meaning.
The "Assignor" and the "Assignee" referred to on SCHEDULE 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without recourse
and without representation or warranty except as expressly set forth herein, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement and the
other Loan Documents as of the date hereof equal to the percentage interest
specified on SCHEDULE 1 of all outstanding rights and obligations under the
Credit Agreement and the other Loan Documents. After giving effect to such sale
and assignment, the Assignee's Commitment and the amount of the Loans owing to
the Assignee will be as set forth on SCHEDULE 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its obligations under the Loan
Documents or any other instrument or document furnished pursuant thereto; and
(iv) attaches the Note held by the Assignor and requests that the Administrative
Agent exchange such Note for new Notes payable to the order of the Assignee in
an amount equal to the Commitment assumed by the Assignee pursuant hereto and to
the Assignor in an amount equal to the Commitment retained by the Assignor, if
any, as specified on SCHEDULE 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 8.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to the Administrative Agent by the
terms thereof, together with such powers and discretion as are reasonably
incidental thereto; (v) agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Credit Agreement are
required to be performed by it as a Lender; and (vi) attaches any U.S. Internal
Revenue Service or other forms required under Section 4.06.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance and recording by the
Administrative Agent. The effective date for this Assignment and Acceptance (the
"EFFECTIVE DATE") shall be the date of acceptance hereof by the Administrative
Agent, unless otherwise specified on SCHEDULE 1.
5. Upon such acceptance and recording by the Administrative Agent, as of
the Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Lender thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Administrative Agent, from
and after the Effective Date, the Administrative Agent shall make all payments
under the Credit Agreement and the Notes in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of Texas.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of SCHEDULE 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused SCHEDULE 1
to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
Percentage interest assigned: ________%
Assignee's Commitment: $_______
Aggregate outstanding principal amount
of Loans assigned: $_______
Principal amount of Note payable to Assignee: $_______
Principal amount of Note payable to Assignor: $_______
Effective Date (if other than date
of acceptance by Administrative Agent): *_______, 19__
[NAME OF ASSIGNOR], as Assignor
BY:
Title:
Dated: , 199 _
[NAME OF ASSIGNEE], as Assignee
BY:
Title:
Domestic Lending Office:
Eurodollar Lending Office:
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Administrative Agent.
Accepted [and Approved] **
this ___ day of ___________, 19 _
NATIONSBANK, N.A., AS Administrative Agent
By:
Title:
[Approved this ____ day
of ____________, 19__
[NAME OF BORROWER]
By:_________________________________]**
Title:
** Required if the Assignee is an Eligible Assignee solely by reason of
clause (iii) of the definition of "Eligible Assignee".
EXHIBIT F
FORM OF ACQUISITION CERTIFICATE
The undersigned hereby certifies that he is the ________________ of
PENTACON, INC., a Delaware corporation (the "BORROWER") and that as such he is
authorized to execute this certificate on behalf of the Borrower. Reference is
made to the Amended and Restated Credit Agreement dated as of September 3, 1998,
among the Borrower, NationsBank, N.A., as Administrative Agent for the lenders
(the "LENDERS") and such Lenders (together with all amendments or supplements
thereto being the "CREDIT AGREEMENT"; each capitalized term used herein having
the same meaning given to it in the Credit Agreement unless otherwise
specified). The Borrower intends to make an Acquisition and in connection
therewith hereby certifies to the Administrative Agent and the Lenders that:
(a) EXHIBIT A attached hereto describes in reasonable detail the
Property to be acquired [and, to the extent requested by the
Administrative Agent or any Lender, delivered herewith to the
Administrative Agent is all title or other pertinent information with
respect to the Property to be acquired].
(b) Attached hereto as EXHIBIT B are [audited] financial statements
of the target entity to be acquired covering the most recent two (2)
fiscal years together with current internally prepared interim financial
statements prepared by such target entity, in each case in accordance with
GAAP. [Such financial statements for at least the most recent fiscal year
to be audited with respect to all target entities with an aggregate
purchase price in an amount in excess of fifteen percent (15%) of Net
Worth.]
(c) Attached hereto as EXHIBIT C are financial projections
of the target entity.
(d) Delivered concurrently herewith is a Compliance Certificate
(with pro-forma computations for financial covenants), taking into account
the Acquisition (including EBITDA for the target entity for the last four
fiscal quarters).
EXECUTED AND DELIVERED this ____ day of ______________.
PENTACON, INC.
By:
Name:
Title:
SCHEDULE 7.02
LIABILITIES
Normal accruals for taxes and payables.
Increases in debt incurred under NationsBank credit facility since June 30,
1998.
The Company has entered into an office lease for office space in Houston, Texas.
SCHEDULE 7.03
LITIGATION
Mr. ▇▇▇▇▇▇ ▇▇▇▇ was terminated as a salesperson for Texas International Aviation
in July 1998. He has threatened litigation against Texas International Aviation
alleging wrongful termination of his employment.
SCHEDULE 7.09
TAXES
None, except as those relating to Alatec Products Inc., as described in said
party's financial statements which have previously been provided to the
Administrative Agent.
SCHEDULE 7.10
TITLES, ETC.
None.
SCHEDULE 7.14
SUBSIDIARIES OF BORROWER AND PRINCIPAL PLACE OF BUSINESS
SUBSIDIARY AND CHIEF EXECUTIVE OFFICE OTHER JURISDICTIONS OF OPERATION
Maumee Industries, Inc. None
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Alatec Products, Inc. Florida
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Massachusetts
Minnesota
Missouri
Texas
AXS Solutions, Inc. Illinois
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Capitol Bolt & Supply, Inc. Arkansas
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Georgia
Illinois
Sales Systems, Limited South Carolina
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Pace Products, Inc. Illinois
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
D-Bolt Company, Inc. North Carolina
999-1001 ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Texas International Aviation, Inc. California
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
West Coast Aero Products Holding Corporation, Inc. None
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ASI Aerospace Group, Inc. (Sub of West Coast) California
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Aviation, Inc. (Sub of ASI) None
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE 7.17
ENVIRONMENTAL MATTERS
None.
SCHEDULE 7.20
HEDGING AGREEMENTS
None.
SCHEDULE 7.22
MATERIAL AGREEMENTS
See material agreements listed on the Company's S-1 Registration Statement and
Shelf Registration Statement. See also agreements which have subsequently been
disclosed in the Company's 8-K filings.
The Company has entered into an office space lease for office space in Houston,
Texas.
The Company is negotiating a Joint Venture Agreement with Blanc Aero to
distribute products.
Agreements related to the purchase of West Coast Aerospace Holding Corporation
and its subsidiaries.
SCHEDULE 9.01
DEBT
The Companies lease certain facilities and equipment under capital and operating
leases which are generally secured by the facility or equipment which are
leased.
AXS has liability on a Non-Compete Agreement with a former stockholder.
ASI Aerospace Group has liability on Stockholder Notes due to former
stockholders.
Pentacon has contingent liability on a Guaranty Agreement in favor of The Boeing
Company, on behalf of Texas International Aviation and Alatec.
▇▇▇▇▇ Supply has two notes payable to ▇▇▇ ▇▇▇▇▇▇ (having an outstanding
principal balance of approximately $493,000) and one note payable to ▇▇▇▇ ▇▇▇▇▇▇
(having an outstanding principal balance of approximately $277,000) which may
not be paid off as part of the West Coast Aerospace Holding acquisition. If not
paid off, the debt will be subordinate to NationsBank.
ASI Aerospace Group has seller notes payable to the sellers of ▇▇▇▇▇▇▇▇
International which will not be paid at closing (the notes have an outstanding
principal balance of approximately $500,000).
SCHEDULE 9.02
LIENS
None.
SCHEDULE 9.03
INVESTMENTS, LOANS AND ADVANCES
None.
SCHEDULE 9.13
EXTRAORDINARY OR NON-RECURRING EXPENSES
PENTACON, INC.
EBITDA ADJUSTMENTS
-------------------------------------------------------------------------------
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
9/30/97 12/31/97 3/31/98 6/30/98
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Founders
-------------------------------------------------------------------------------
Founder Deal Costs 100,000 800,000 -- --
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Non-Cash Compensation Charges 1,200,000 -- -- --
-------------------------------------------------------------------------------
Excess 401k Contribution 300,000 -- -- --
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Consulting -- 75,000 -- --
-------------------------------------------------------------------------------
Bonuses -- 100,000 -- --
-------------------------------------------------------------------------------
Miscellaneous -- 500,000 -- --
================================================================================
TOTAL FOUNDERS 1,600,000 1,475,000 -- --
================================================================================
TIA (1)
-------------------------------------------------------------------------------
Executive Salary & Bonus 72,500 72,500 72,500 72,500
-------------------------------------------------------------------------------
Other (20,000) (20,000) (20,000) (20,000)
================================================================================
TOTAL TIA 52,500 52,500 52,500 52,500
================================================================================
ASI (1)
-------------------------------------------------------------------------------
Management Fees 44,750 44,750 44,750 44,750
-------------------------------------------------------------------------------
Acquisition Bonuses 25,000 25,000 25,000 25,000
-------------------------------------------------------------------------------
Acquisition Expenses 38,000 38,000 38,000 38,000
-------------------------------------------------------------------------------
Moving Expenses 12,000 12,000 12,000 12,000
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Loss on Sale of Assets 11,750 11,750 11,750 11,750
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Consulting Agreement 12,500 12,500 12,500 12,500
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Lease Termination (30,000) (30,000) (30,000) (30,000)
================================================================================
================================================================================
TOTAL ASI 114,000 114,000 114,000 114,000
================================================================================
Summary
-------------------------------------------------------------------------------
Founders 1,600,000 1,475,000 -- --
-------------------------------------------------------------------------------
TIA 52,500 52,500 52,500 52,500
-------------------------------------------------------------------------------
ASI 114,000 114,000 114,000 114,000
================================================================================
TOTAL EBITDA ADJUSTMENTS 1,766,500 1,641,500 166,500 166,500
================================================================================