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$21,000,000 Term Loan Facility
$39,000,000 Revolving Credit Facility
CREDIT AGREEMENT
dated as of
May 15, 1997
among
KINRO, INC.
SHOALS SUPPLY, INC.
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
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CHASE SECURITIES INC.,
as Arranger
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions............................................ 1
SECTION 1.01. Defined Terms....................................... 1
SECTION 1.02. Classification of Loans and Borrowings.............. 16
SECTION 1.03. Terms Generally..................................... 16
SECTION 1.04. Accounting Terms; GAAP.............................. 17
ARTICLE II The Credits............................................ 17
SECTION 2.01. Commitments......................................... 17
SECTION 2.02. Loans and Borrowings................................ 17
SECTION 2.03. Requests for Revolving Borrowings................... 18
SECTION 2.04. Letter of Credit.................................... 18
SECTION 2.05. Funding of Borrowings............................... 22
SECTION 2.06. Interest Elections.................................. 22
SECTION 2.07. Termination and Reduction of Commitments............ 24
SECTION 2.08. Repayment of Loans; Evidence of Debt................ 24
SECTION 2.09. Prepayment of Loans; Mandatory
Reduction of Commitments............................ 25
SECTION 2.10. Fees................................................ 26
SECTION 2.11. Interest............................................ 27
SECTION 2.12. Alternate Rate of Interest.......................... 28
SECTION 2.13. Increased Costs..................................... 28
SECTION 2.14. Break Funding Payments.............................. 29
SECTION 2.15. Taxes............................................... 30
SECTION 2.16. Payments Generally; Pro Rata
Treatment; Sharing of Set-offs...................... 31
SECTION 2.17. Mitigation Obligations; Replacement of Lenders...... 32
ARTICLE III Representations and Warranties......................... 33
SECTION 3.01. Organization; Powers................................ 33
SECTION 3.02. Authorization; Enforceability....................... 33
SECTION 3.03. Governmental Approvals; No Conflicts; No Defaults... 33
SECTION 3.04. Financial Condition; No Material Adverse Change..... 34
SECTION 3.05. Properties.......................................... 34
SECTION 3.06. Litigation and Environmental Matters................ 34
SECTION 3.07. Compliance with Laws and Agreements................. 35
SECTION 3.08. Investment and Holding Company
Status; Margin Regulations.......................... 35
SECTION 3.09. Taxes............................................... 35
SECTION 3.10. ERISA............................................... 35
SECTION 3.11. Subsidiaries........................................ 36
SECTION 3.12. SEC Matters......................................... 36
SECTION 3.13. Labor Matters....................................... 36
SECTION 3.14. Solvency............................................ 36
SECTION 3.15. Security Documents.................................. 36
SECTION 3.16. Lock Boxes.......................................... 37
SECTION 3.17. Restrictive Agreements.............................. 37
SECTION 3.18. Disclosure.......................................... 37
ARTICLE IV Conditions............................................. 38
SECTION 4.01. Effective Date...................................... 38
SECTION 4.02. Each Credit Event................................... 42
ARTICLE V Affirmative Covenant................................... 42
SECTION 5.01. Financial Statements and Other Information.......... 42
SECTION 5.02. Notices of Certain Events........................... 44
SECTION 5.03. Existence; Conduct of Business...................... 44
SECTION 5.04. Payment of Obligations.............................. 44
SECTION 5.05. Maintenance of Properties; Insurance................ 45
SECTION 5.06. Books and Records; Inspection
Rights; Lock Boxes.................................. 45
SECTION 5.07. Compliance with Laws................................ 45
SECTION 5.08. Use of Proceeds and Letter of Credit................ 46
SECTION 5.09. Additional Guarantors............................... 46
SECTION 5.10. Further Assurances.................................. 47
ARTICLE VI Negative Covenants..................................... 48
SECTION 6.01. Indebtedness........................................ 48
SECTION 6.02. Liens............................................... 48
SECTION 6.03. Certain Changes; Prohibited Transactions............ 49
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions......................... 50
SECTION 6.05. Hedging Agreements.................................. 51
SECTION 6.06. Restricted Payments................................. 51
SECTION 6.07. Certain Financial Covenants......................... 51
SECTION 6.08. Transactions with Affiliates........................ 53
SECTION 6.09. Restrictive Agreements.............................. 53
SECTION 6.10. Amendment of Certain Documents...................... 53
SECTION 6.11. Location of Collateral.............................. 54
ARTICLE VII Events of Default...................................... 53
ARTICLE VIII The Agents............................................. 56
ARTICLE IX Miscellaneous.......................................... 58
SECTION 9.01. Notices............................................. 58
SECTION 9.02. Waivers; Amendments................................. 58
SECTION 9.03. Expenses; Indemnity; Damage Waiver.................. 59
SECTION 9.04. Successors and Assigns.............................. 61
SECTION 9.05. Survival............................................ 63
SECTION 9.06. Counterparts; Integration; Effectiveness............ 63
SECTION 9.07. Severability........................................ 64
SECTION 9.08. Right of Setoff..................................... 64
SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT
TO SERVICE OF PROCESS............................... 64
SECTION 9.10. WAIVER OF JURY TRIAL................................ 65
SECTION 9.11. Headings............................................ 65
SECTION 9.12. Confidentiality..................................... 65
SECTION 9.13. Interest Rate Limitation............................ 66
ARTICLE X Two Borrowers.......................................... 66
EXHIBIT A -- Form Of Assignment And Acceptance
EXHIBIT B -- Opinion Of Counsel For The Borrowers
EXHIBIT 2.04 -- Letter of Credit Extension Request
EXHIBIT 4.01-1 -- Subsidiary Guarantee
EXHIBIT 4.01-2 -- Company Guaranty
EXHIBIT 4.01-3 -- Subordination Agreement
EXHIBIT 4.01-4 -- Security Agreement
EXHIBIT 4.01-5 -- Pledge Agreement
EXHIBIT 4.01-5a -- Lockbox Security Agreement
EXHIBIT 4.01-6 -- Supplemental Security Agreement
EXHIBIT 4.01-7 -- Revolving Credit Note
EXHIBIT 4.01-8 -- Term Note
SCHEDULE 1.01-1 -- Applicable Rate Margins
SCHEDULE 1.01-2 -- Subsidiary Guarantors
SCHEDULE 2.01 -- Commitments
SCHEDULE 2.08 -- Term Loan Facility Repayment Schedule
SCHEDULE 3.04 -- Undisclosed Liabilities
SCHEDULE 3.06 -- Litigation and Related Matters
SCHEDULE 3.10 -- Investments, Joint Ventures, Partnerships
SCHEDULE 3.11A -- Subsidiaries of the Company
SCHEDULE 3.11B -- Subsidiaries of the Company (excluding Inactive Subsidiaries)
SCHEDULE 3.17 -- Certain Restrictions and Conditions
SCHEDULE 6.01 -- Indebtedness
SCHEDULE 6.02 -- Liens
SCHEDULE 6.04 -- Loans and Investments
CREDIT AGREEMENT dated as of May 15, 1997, among KINRO, INC., an Ohio
corporation, SHOALS SUPPLY, INC., a Delaware corporation, the LENDERS
party hereto, and THE CHASE MANHATTAN BANK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its
capacity as administrative agent for the Lenders hereunder (and, where
applicable, under the Guarantee Agreements and the Subordination Agreement).
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitments. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate Margin" means, for any day, with respect to any
Loan, the General Margin or Special Margin as specified in Schedule 1.01-1
hereto, as applicable in accordance with Schedule 1.01-1.
"Approved Subordinated Debt" means Indebtedness subordinated to the
Obligations of the Borrowers under this Agreement and the other Loan Documents
on terms approved in writing by the Administrative Agent and the Required
Lenders.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD
Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" means each of Kinro, Inc., an Ohio corporation, and
Shoals Supply, Inc., a Delaware corporation.
"Borrowing" means a group of Loans of the same Type, made, converted
or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect.
"Borrowing Request" means a request by a Borrower for a Revolving
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" means, for any period, the sum of all amounts
that would, in accordance with GAAP, be included as additions to property, plant
and equipment and other capital expenditures on a consolidated statement of cash
flows for the Company and its consolidated Subsidiaries during such period
(including the amount of assets leased under any Capital Lease Obligation).
"Capital Lease Obligations" of any Person means the obligations of
such Person to
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pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof) other than
the Rose Group, of shares representing more than 25% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the
Company; (b) occupation of a majority of the seats (other than vacant seats) on
the board of directors of the Company by Persons who were neither (i) nominated
by the board of directors of the Company nor (ii) appointed by directors so
nominated; (c) the acquisition of direct or indirect Control of the Company by
any Person or group other than the Rose Group; or (d) the ownership by any
Person other than the Company of any capital stock of a Borrower, or the
ownership by any Person other than a Borrower, or the Subsidiary of the Borrower
that is the owner thereof as of the Effective Date (or such later date on which
the Guarantor becomes a Guarantor hereunder), of any capital stock or other
equity interest in any Guarantor.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.13(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.
"Character", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans or Term Loans.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means any property or rights in which, pursuant to the
Security Documents, there has been granted (or purported to have been granted)
to the Collateral Agent, or the Special Collateral Agent, for the ratable
benefit of the Lenders, a security interest.
"Collateral Agent" means the Chase Manhattan Bank as Collateral
Agent under the Security Agreement and the Pledge Agreement.
"Commitment" means, with respect to each Lender, such Lender's Term
Loan Facility Commitment and such Lender's Revolving Credit Commitment, as such
commitments may be (a) reduced from time to time pursuant to Section 2.07 and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial amounts of each Lender's
Commitments are set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Commitments, as applicable.
The initial aggregate amount of the Lenders' Revolving Credit Commitments is
$39,000,000 (which amount shall include the undrawn amount of the Letter of
Credit) and the initial aggregate amount of the Lenders' Term Loan Facility
Commitments is $21,000,000.
"Company" means Drew Industries Incorporated, a Delaware
corporation.
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"Company Guarantee" has the meaning given to such term in Section
4.01(a).
"Consolidated Current Assets" means, at the date of determination,
all assets of the Company and its consolidated Subsidiaries that would, in
accordance with GAAP, be classified on a consolidated balance sheet of the
Company and its consolidated Subsidiaries as current assets.
"Consolidated Current Liabilities" means, at the date of
determination, all liabilities of the Company and its consolidated Subsidiaries
that would, in accordance with GAAP, be classified on a consolidated balance
sheet of the Company and its consolidated Subsidiaries as current liabilities.
"Consolidated Debt Service Coverage Ratio" means, with respect to
the Company and its Subsidiaries (a) as at the end of any of the first three
fiscal quarters of a fiscal year, the ratio of (i) the sum of Consolidated Net
Income plus depreciation, depletion and amortization of properties (including
intangible properties) of the Company and its Subsidiaries plus Consolidated
Interest Expense for the four most recent consecutive fiscal quarters to (ii)
the sum of Consolidated Interest Expense for the four most recent consecutive
fiscal quarters plus the current portion of Consolidated Funded Indebtedness as
of the end of such fiscal quarter; and (b) as at the end of the last fiscal
quarter of a fiscal year, the ratio of (i) the sum of Consolidated Net Income
plus depreciation, depletion and amortization of properties (including
intangible properties) of the Company and its Subsidiaries, plus Consolidated
Interest Expense, reduced by the amount of Capital Expenditures of the Company
and its Subsidiaries other than such Capital Expenditures funded by borrowings
(other than the Loans), (all for the four most recent consecutive fiscal
quarters) to (ii) the sum of Consolidated Interest Expense for the four most
recent consecutive fiscal quarters plus the current portion of Consolidated
Funded Indebtedness as of the end of such fiscal quarter.
"Consolidated Funded Indebtedness" means, as of the date of
determination, all Indebtedness of the Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP, that
by its terms matures more than one year after the date of calculation, and any
such Indebtedness maturing within one year from such date that is renewable or
extendable at the option of the obligor to a date more than one year from such
date.
"Consolidated Interest Expense" means, for any period the amount of
interest expense, both expensed and capitalized, of the Company and its
consolidated Subsidiaries, for such period on the aggregate principal amount of
their Indebtedness, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, net income of the
Company and its consolidated Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Worth" means, as of the date of determination, all
items which in conformity with GAAP would be included under shareholders' equity
on a consolidated balance sheet of the Company and its consolidated Subsidiaries
at such date.
"Consolidated Tangible Net Worth" means, as of the date of
determination, Consolidated Net Worth after deducting therefrom (a) goodwill,
including any amounts (however designated on the balance sheet) representing the
cost of acquisitions of its Subsidiaries in excess of underlying tangible
assets, (b) patents, trademarks, copyrights and other intangible assets, (c)
leasehold improvements not recoverable at the expiration of a lease, and (d)
deferred charges (including, but not limited to, unamortized debt discount and
expense, organization expenses and
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experimental and development expenses, but excluding prepaid expenses and
deferred taxes).
"Consolidated Total Liabilities" means, as of the date of
determination, all liabilities of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in conformity with GAAP, including
Consolidated Current Liabilities and Consolidated Funded Indebtedness.
"Consolidated Working Capital" means, as of the date of
determination, Consolidated Current Assets at such date minus Consolidated
Current Liabilities at such date.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Credit Party" means each Borrower, each Guarantor, and each Person
who is required to become a party to the Subordination Agreement pursuant to
Section 5.09.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Credit Party or any
Subsidiary thereof directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with any Credit Party, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of
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ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Credit Party or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of any
Plan; (e) the receipt by any Credit Party or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence
by any Credit Party or any of its ERISA Affiliates of any liability with respect
to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or
(g) the receipt by any Credit Party or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from any Credit Party or any ERISA Affiliate
of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning given to such term in Article
VII.
"Excluded Taxes" means, with respect to the Administrative Agent,
any Lender, the Issuing Bank or any other recipient of any payment to be made by
or on account of any obligation of a Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which a Borrower is located and (c) in the case of
a Foreign Lender (other than an assignee pursuant to a request by the Borrowers
under Section 2.17(b)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.15(e), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from a Borrower with respect to such withholding tax pursuant to Section
2.15(a).
"Existing Credit Agreement" means the Amended and Restated Credit
Agreement dated as of September 30, 1996 to which the Credit Parties and The
Chase Manhattan Bank are parties.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.
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"Foreign Lender" means any Lender that is organized under the laws
of a jurisdiction other than that in which the Borrowers are located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guarantor" means each of (i) the Company, (ii) each Person listed
on Schedule 1.01-2 hereto, and (iii) each Person who is required to become a
Guarantor pursuant to Section 5.09.
"Guarantee Agreement" has the meaning given to such term in Section
4.01(a).
"Interest Rate Protection Merchant" shall mean a Lender which
provides Hedging Agreements to the Borrowers or either of them for interest rate
protection.
"Interest Rate Hedging Exposure Amount" means the Hedging Exposure
Amount attributable to Interest Rate Hedging Agreements.
"Interest Rate Hedging Agreement" shall mean a Hedging Agreement
between a Borrower and an Interest Rate Protection Merchant which provides for
interest rate protection. Interest Rate Hedging Agreements shall not be required
hereunder to have participation by more than one Lender.
"Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
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"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Hedging Exposure Amount" means the maximum aggregate amount (giving
effect to any netting agreements) that the Borrowers or either of them would be
required to pay at any time if all of its or their Hedging Agreements were
terminated at such time.
"Inactive Subsidiary" means, with respect to any Person, a
Subsidiary of such Person (i) that conducts no business activities on the
Effective Date hereof nor on any date thereafter, (ii) the assets of which
Subsidiary have a fair market value less than the smaller of (x) $50,000 or (y)
one-half of one percent (.5%) of the consolidated assets of such Person and its
Subsidiaries; and (iii) the total liabilities of which are less than $25,000;
provided that if the assets of all such Subsidiaries that meet the conditions of
clauses (i), (ii) and (iii) (each, a "Specified Subsidiary"), in the aggregate,
exceed either of the thresholds of clause (ii), then there shall be excluded
from the term "Inactive Subsidiary" the Specified Subsidiary having the greatest
assets, and, if necessary, the Specified Subsidiary having the next greatest
assets, and so on, until the assets of the remaining Specified Subsidiaries, in
the aggregate, no longer exceed either of such thresholds of clause (ii) (such
remaining Specified Subsidiaries constituting the Inactive Subsidiaries);
provided further, that no Credit Party shall be an Inactive Subsidiary.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by a Borrower to convert
or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after
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the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three,
six, or twelve months (if such twelve month period is available to all Lenders)
thereafter, as the Borrower thereof may elect, provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period and (iii) no Interest Period may
be selected for any Eurodollar Term Borrowing that would end later than a Term
Loan Repayment Date occurring on or after the first day of such Interest Period
if, after giving effect to such selection, the aggregate outstanding amount of
(x) the Eurodollar Term Borrowings with Interest Periods ending on or prior to
such Term Loan Repayment Date and (y) the ABR Term Borrowings would not be at
least equal to the principal amount of Term Borrowings to be paid on such Term
Loan Repayment Date. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and, thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as
the issuer of the Letter of Credit.
"LC Disbursement" means a payment made by the Issuing Bank pursuant
to the Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the undrawn amount
of the Letter of Credit at such time plus (b) the aggregate amount of all LC
Disbursements that have not yet been reimbursed at such time. The LC Exposure of
any Lender at any time shall be its Applicable Percentage of the total LC
Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"Letter of Credit" means letter of credit J-256227 issued by The
Chase Manhattan Bank for the benefit of ▇▇▇▇▇ ▇▇▇▇ Rubber USA Inc. for the
account of Shoals Supply, Inc., and any renewal, extension, amendment, or
modification thereof.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the
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Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" means this Agreement, any promissory notes
delivered pursuant hereto, the Security Documents, the Guarantee Agreements, the
Subordination Agreement, and any applications heretofore or hereafter made in
respect of the Letter of Credit, and any instruments or agreements executed and
delivered pursuant to any of the foregoing, in each case as supplemented,
amended or modified from time to time, and any document, instrument, or
agreement supplementing, amending, or modifying, or waiving any provision of,
any of the foregoing.
"Loans" means the loans made by the Lenders pursuant to this
Agreement.
"Lockbox Security Agreement" has the meaning given to such term in
Section 4.01(a).
"Mandatory Lenders" means, at any time, Lenders having Total
Exposures and unused Commitments representing more than 75% of the sum of the
Total Exposures and unused Commitments at such time.
"Material Adverse Effect" means, in respect of any Person, a
material adverse effect on (a) the business, assets, operations, prospects or
condition, financial or otherwise, of such Person, (b) the ability of such
Person to perform any of its obligations under this Agreement or any other Loan
Document to which it is a party or (c) the rights of or benefits available to
the Lenders in respect of such Person under this Agreement or any other Loan
Document.
"Material Indebtedness" means, in respect of any Person,
Indebtedness (other than the Loans), or obligations in respect of one or more
Hedging Agreements, of any one or more of such Person and its Subsidiaries in an
aggregate principal amount exceeding $500,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of any Person
or any Subsidiary in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such
Person would be required to pay if such Hedging Agreement were terminated at
such time.
"Maturity Date" means the date that is the fifth anniversary of the
Effective Date.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Obligations" means, without duplication, all obligations defined as
"Obligations" in the Security Agreement, the Supplemental Security Agreement, or
the Pledge Agreement.
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"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"Perfection Certificates" means the Perfection Certificates
delivered pursuant to each of the Security Agreement and the Supplemental
Security Agreement, prepared by the Borrowers.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business; and
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of any Credit Party or any Subsidiary thereof;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness or any Lien on any Collateral.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic office of any
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commercial bank organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided profits of
not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not
more than 30 days for securities described in clause (a) above and entered into
with a financial institution satisfying the criteria described in clause (c)
above; and
(e) shares of any money market mutual fund registered under the
Investment Company Act of 1940 having assets in excess of $1,000,000,000 and in
respect of which a Lender or an Affiliate of a Lender acts as investment
advisor.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which any Credit
Party or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement" has the meaning given to such term in Section
4.01(a).
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"▇▇▇▇▇ Acquisition" means the acquisition by Shoals Supply, Inc. of
the business and assets of ▇▇▇▇▇ Tire & Axle, an Indiana corporation.
"▇▇▇▇▇ Warrant" means the warrant to be issued by the Company in
connection with the ▇▇▇▇▇ Acquisition covering 40,000 shares of the common stock
of the Company and providing for a cash payment by the Company to the warrant
holder in the event of a decline in the stock of the Company below the issue
price of the warrant.
"Register" has the meaning given to such term in Section 9.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Total
Exposures and unused Commitments representing more than 66-2/3% of the sum of
the Total Exposures and unused Commitments at such time.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of a Credit Party or any Subsidiary thereof, any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
a Credit Party or any option, warrant or other right to acquire any such shares
of capital stock of a Credit Party, or any
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payment of principal, interest, or any other amount in respect of or for the
purchase of any Indebtedness of any Credit Party that is subordinated to any
obligations arising under the Loan Documents (including Approved Subordinated
Debt). Such term shall not (i) include management fees paid in cash to the
Company by its Subsidiaries; or (ii) aggregate cash payments by the Company
under the ▇▇▇▇▇ Warrant to the holder thereof not in excess of $300,000.
"Revolving Credit Commitment" means, with respect to each Lender,
the commitment of each Lender to make Revolving Loans hereunder as set forth in
Section 2.01, and to acquire participations in the Letter of Credit as set forth
in Section 2.04 as the same may be (a) reduced from time to time pursuant to
Section 2.07 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans and its LC Exposure at such time.
"Revolving Credit Note" has the meaning given to such term in
Section 4.01(d).
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Rose Group" means ▇▇▇▇▇▇ ▇. ▇▇▇▇, III together with the Persons
listed on Schedule 1.01-A hereto.
"S&P" means Standard & Poor's.
"Secured Parties" means the Lenders, the Administrative Agent, the
Collateral Agent, the Special Collateral Agent, the Issuing Bank and any
Interest Rate Protection
Merchant.
"Security Agreement" has the meaning given to such term in Section
4.01(a).
"Security Documents" means each of the agreements, instruments, and
documents referred to in the last two sentences of Section 4.01(a) and any
instruments or agreements executed and delivered pursuant to any of the
foregoing, in each case as supplemented, amended or modified from time to time,
and any document, instrument or agreement supplementing, amending or modifying,
or waiving any provision of, any of the foregoing.
"Shoals Supply, Inc." means Shoals Supply, Inc., a Delaware
corporation.
"Special Collateral Agent" means Texas Commerce Bank National
Association, as Special Collateral Agent under the Supplemental Security
Agreement.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
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exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"Stock Repurchase" has the meaning given to such term in Section
4.01(h).
"Subordination Agreement" has the meaning given to such term in
Section 4.01(a).
"Subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held, or (b) that is, as of such date,
otherwise Controlled by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.
"Subsidiary Guarantee" has the meaning given to such term in Section
4.01(a).
"Supplemental Security Agreement" has the meaning given to such term
in Section 4.01(a).
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loan" means each of the term loans made by the Lenders to the
Borrowers constituting the Term Loan Facility.
"Term Loan Exposure" means, with respect to any Lender at any time,
the outstanding principal amount of such Lender's Term Loans at such time.
"Term Loan Facility" means the term loan facility available on the
Effective Date and constituted by the Term Loans.
"Term Loan Facility Commitment" means, with respect to each Lender,
the commitment of each Lender to make Term Loans hereunder as set forth in
Section 2.01 (subject to Section 2.07).
"Term Loan Repayment Amount" has the meaning given to such term in
Section 2.08(a).
"Term Loan Repayment Date" has the meaning given to such term in
Section 2.08(a).
"Term Note" has the meaning given to such term in Section 4.01(d).
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information
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telephone line of the Federal Reserve Bank of New York (which rate will, under
the current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day) or, if such rate is not so
reported on such day or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00 a.m., New
York City time, on such day (or, if such day is not a Business Day, on the next
preceding Business Day) by the Administrative Agent from three negotiable
certificate of deposit dealers of recognized standing selected by it.
"Total Exposure" means, with respect to any Lender at any time, the
sum of such Lenders Revolving Credit Exposure at such time and Term Loan
Exposure at such time.
"Transactions" means the execution, delivery and performance by each
Credit Party of this Agreement and each other Loan Document to which such Credit
Party is a party, the creation of the security interests contemplated by the
Security Documents, the borrowing of Loans (in the case of the Borrowers), the
Stock Repurchase (in the case of the Company), the use of the proceeds of Loans
and the other transactions contemplated by the Loan Documents.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate, or the
Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Character (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Character and
Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified
and referred to by Character (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided
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herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrowers notify the Administrative Agent that the Borrowers request an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrowers that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set forth
herein, (a) each Lender agrees to make Revolving Loans to either Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in such Lender's Revolving Credit Exposure exceeding such
Lender's Revolving Credit Commitment and (b) each Lender agrees to make Term
Loans to either Borrower on the Effective Date in an amount equal to the amount
of such Lender's Term Loan Facility Commitment. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrowers may borrow,
prepay and reborrow Revolving Loans. Amounts paid or prepaid in respect of Term
Loans may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.12, (i) each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower thereof may
request in accordance herewith. Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrowers to repay such Loan in accordance with the
terms of this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $1,000,000. At the time that
each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $50,000 and not less than $100,000; provided that an
ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Credit Commitments or that is
required to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.04(e). Borrowings of more than one Type and Character may be
outstanding at the same time; provided that there shall not at any time be more
than a total of eight (8) Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, no
Borrower shall be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
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SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Borrower thereof shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing, or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, on the date of the proposed Borrowing; provided that
any such notice of an ABR Revolving Borrowing to finance the reimbursement of an
LC Disbursement as contemplated by Section 2.04(e) may be given not later than
10:00 a.m., New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower thereunder. Each such telephonic and written Borrowing Request
shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements
of Section 2.05.
If no election as to the Type of Revolving Borrowing is specified, then the
requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period
is specified with respect to any requested Eurodollar Revolving Borrowing, then
the Borrower thereof shall be deemed to have selected an Interest Period of one
month's duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made as
part of the requested Borrowing.
SECTION 2.04. Letter of Credit. (a) General. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrower to, or entered into by the Borrower with, the Issuing
Bank relating to the Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Amendment, Renewal, Extension. Whenever Shoals Supply, Inc.
desires the Issuing Bank to amend the Letter of Credit, Shoals Supply, Inc.
shall give the Issuing Bank (at least five Business Days in advance of the
requested date of amendment) a signed, written request identifying the Letter of
Credit, specifying the requested amendment and providing such other information
as may be necessary to prepare such amendment. Each such request and amendment
shall be in form and substance satisfactory to the Issuing Bank in its sole
discretion. Each such amendment shall require the written consent of all the
Lenders in their sole discretion; provided, however, that at the written request
of Shoals Supply, Inc. in the form of Exhibit 2.04
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hereto accompanied by the certificate of the chief financial officer of the
Company in the form therein prescribed, received by the Issuing Bank not more
than 60 nor less than 30 days before the then stated expiration date of the
Letter of Credit, the Issuing Bank shall issue an amendment to extend the then
stated expiration date of the Letter of Credit to a date not later than the
earlier of (i) one year from such then stated expiration date or (ii) thirty
(30) days before the Maturity Date; provided further, however, that the Issuing
Bank shall not issue such amendment if the Issuing Bank shall have received
notice that any of the conditions to a Borrowing (other than a request under
Section 2.03) are not then satisfied. The Issuing Bank shall furnish to Shoals
Supply, Inc. and the Administrative Agent a copy of each amendment to the Letter
of Credit promptly following the issuance thereof.
(c) Participations. Without any further action on the part of the
Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and
each Lender hereby acquires from the Issuing Bank, a participation in the Letter
of Credit equal to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
such Lender's Applicable Percentage of each LC Disbursement made by the Issuing
Bank and not reimbursed by the Borrowers on the date due as provided in
paragraph (d) of this Section, or of any reimbursement payment required to be
refunded to a Borrower for any reason. Each Lender acknowledges and agrees that
its obligation to acquire participations pursuant to this paragraph in respect
of the Letter of Credit is absolute and unconditional and shall not be affected
by any circumstance whatsoever, including any amendment, renewal or extension
(if permitted hereunder) of the Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
(d) Reimbursement. If the Issuing Bank shall make any LC
Disbursement in respect of the Letter of Credit, the Borrowers shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, New York City time, on the date
that such LC Disbursement is made, if the Borrowers shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time, on such date,
or, if such notice has not been received by the Borrowers prior to such time on
such date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Borrowers receive such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrowers receive such
notice, if such notice is not received prior to such time on the day of receipt;
provided that, if such LC Disbursement is not less than $100,000, the Borrowers
may, subject to the conditions to borrowing set forth herein, request in
accordance with Section 2.03 that such payment be financed with an ABR Revolving
Borrowing in an equivalent amount and, to the extent so financed, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting ABR Revolving Borrowing. If the Borrowers fail to make such payment
when due, the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the payment then due from the Borrowers in respect thereof and
such Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrowers, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders),
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrowers pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that
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Lenders have made payments pursuant to this paragraph to reimburse the Issuing
Bank, then to such Lenders and the Issuing Bank as their interests may appear.
Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing
Bank for any LC Disbursement (other than the funding of ABR Revolving Loans as
contemplated above) shall not constitute a Loan and shall not relieve the
Borrowers of their obligation to reimburse such LC Disbursement.
(e) Obligations Absolute. The obligation of the Borrowers to
reimburse LC Disbursements as provided in paragraph (d) of this Section is the
joint and several obligation of each Borrower, shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of the Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under the Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect, (iii) payment by the Issuing Bank under the Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit, or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, either Borrower's obligations hereunder.
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of
their Related Parties, shall have any liability or responsibility by reason of
or in connection with the issuance or transfer of the Letter of Credit or any
payment or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to the Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Borrowers to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by each Borrower to the extent permitted by applicable law) suffered by
the Borrowers that are caused by the Issuing Bank's failure to exercise care
when determining whether drafts and other documents presented under the Letter
of Credit comply with the terms thereof. The parties hereto expressly agree
that, in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of the Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
(f) Disbursement Procedures. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under the Letter of Credit. The Issuing Bank shall promptly
notify the Administrative Agent and the Borrowers by telephone (confirmed by
telecopy) of such demand for payment and whether the Issuing Bank has made or
will make an LC Disbursement thereunder; provided that any failure to give or
delay in giving such notice shall not relieve the Borrowers of their obligation
to reimburse the Issuing Bank and the Lenders with respect to any such LC
Disbursement.
(g) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from
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and including the date such LC Disbursement is made to but excluding the date
that the Borrowers reimburse such LC Disbursement, at the rate per annum then
applicable to ABR Revolving Loans; provided that, if the Borrowers fail to
reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.11(e) shall apply. Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to paragraph (d)
of this Section to reimburse the Issuing Bank shall be for the account of such
Lender to the extent of such payment.
(h) Cash Collateralization. If any Event of Default shall occur and
be continuing, on the Business Day that the Borrowers receive notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposures representing greater than
66-2/3% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrowers shall deposit in an account with the
Collateral Agent, in the name of the Collateral Agent and for the benefit of the
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default described in clause (h) or (i) of
Article VII. Such deposit shall be held by the Collateral Agent as collateral
for the payment and performance of the Obligations. The Collateral Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Collateral Agent and at the Borrowers' risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrowers for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 66-2/3% of the total LC Exposure), be applied to
satisfy other Obligations. If the Borrowers are required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to either
Borrower within three Business Days after all Events of Default have been cured
or waived.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower thereof by promptly crediting the amounts so received, in like
funds, to an account of the Borrower thereof maintained with the Administrative
Agent in New York City and designated by such Borrower in the applicable
Borrowing Request; provided that ABR Revolving Loans made to finance the
reimbursement of an LC Disbursement as provided in Section 2.04(e) shall be
remitted by the Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from
a Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower
thereof a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the Borrowers (jointly and
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severally) and the applicable Lender (severally) agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower thereof to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrowers, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Borrowing initially shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower thereof may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower thereof may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.
(b) To make an election pursuant to this Section, the appropriate
Borrower shall notify the Administrative Agent of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if such
Borrower were requesting a Revolving Borrowing of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request in a form approved by the Administrative Agent and signed by
the appropriate Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower thereof shall be deemed to
have selected an Interest Period of one month's duration.
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(d) Any portion of a Term Borrowing maturing or required to be
repaid in less than one month may not be converted into or continued as a
Eurodollar Term Borrowing. Any portion of a Eurodollar Term Borrowing that
cannot be converted into or continued as a Eurodollar Term Borrowing by reason
of the preceding sentence shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Term Borrowing.
(e) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(f) If the Borrower thereof fails to deliver a timely Interest
Election Request in accordance herewith with respect to a Eurodollar Borrowing
prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing, then,
(i) no outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a) The Term Loan
Facility Commitments shall automatically terminate at 5:00 p.m. New York City
time, on the Effective Date. Unless previously terminated, the Revolving Credit
Commitments shall terminate on the Maturity Date.
(b) The Borrowers may at any time terminate, or from time to time
reduce, the Revolving Credit Commitments; provided that (i) each reduction of
the Revolving Credit Commitments shall be in an amount that is an integral
multiple of $100,000 and not less than $100,000 and (ii) the Borrowers shall not
terminate or reduce the Revolving Credit Commitments if, after giving effect to
any concurrent prepayment of the Revolving Loans in accordance with Section
2.09, the sum of the Revolving Credit Exposures would exceed the total Revolving
Credit Commitments.
(c) The Borrowers shall notify the Administrative Agent of any
election to terminate or reduce the Revolving Credit Commitments under paragraph
(b) of this Section at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrowers pursuant to this Section shall be irrevocable. Any termination or
reduction of the Revolving Credit Commitments shall be permanent. Each reduction
of the Revolving Credit Commitments shall be made ratably among the Lenders in
accordance with their respective Revolving Credit Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrowers
hereby, jointly and severally, unconditionally promise to pay (i) to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Loan and (to the extent not previously paid) each Term
Loan, together with any accrued but unpaid interest thereon, on the Maturity
Date, and (ii) to the Administrative Agent for the account of each Lender an
aggregate principal amount of the Term Loans (subject to adjustment pursuant to
Section 2.09) on the dates (each, a "Term Loan Repayment Date"), and in the
respective amounts (such amount, as adjusted pursuant to Section 2.09(b), the
"Term Loan Repayment Amount"), set forth in Schedule 2.08
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hereto; such promise of each Borrower to repay each Loan shall apply
unconditionally to each Loan irrespective of which Borrower was the Borrower of
such Loan.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrowers to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Character and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrowers to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein absent manifest error;
provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the (joint and
several) obligation of the Borrowers to repay the Loans in accordance with the
terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrowers shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Prepayment of Loans; Mandatory Reduction of Commitments. (a)
The Borrowers shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part, without premium or penalty, subject, however,
to prior notice in accordance with paragraph (b) of this Section and subject to
the other applicable terms and provisions hereof, including, without limitation,
Section 2.14. The Borrowers shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any such prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the Borrower of such Borrowing, the prepayment date, whether the
prepayment relates to a Borrowing of Revolving Loans or Term Loans, and the
respective principal amounts of each such Borrowing (or portion thereof) to be
prepaid. Optional prepayments of Term Loans shall be applied to remaining
installments of principal thereof in the inverse order of maturity. Promptly
following receipt of any such notice relating to a Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each such
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing, shall be applied first to ABR Loans outstanding of the
Character to be prepaid, and then to outstanding Eurodollar Loans of that
Character, subject to Section 2.14. Prepayments shall be accompanied by accrued
interest to
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the extent required by Section 2.11.
(b) In the event that and on each occasion that Indebtedness
described in Section 6.01(e) is incurred, the Borrowers shall, substantially
simultaneously with (and in any event not later than the Business Day next
following) the incurrence of such Indebtedness, apply an amount (the "Net
Proceeds Amount") equal to the amount of such Indebtedness (but only to the
extent such Indebtedness represents a refinancing of fixed assets) less
reasonable and customary fees, expenses, and other costs paid by the Credit
Parties in connection therewith, to prepayment of the Loans and reduction of the
Commitments as hereinafter provided. Such prepayment shall be applied (i) first,
against the outstanding principal balance of the Term Loans (in the inverse
order of the maturity thereof), and (ii) second, to the prepayment of Revolving
Credit Loans, the amount of any such prepayment of Revolving Credit Loans
constituting a permanent reduction of the Revolving Credit Commitments in such
aggregate amount. To the extent that the Net Proceeds Amount exceeds the sum of
the amounts included in the preceding clauses (i) and (ii), the Revolving Credit
Commitments shall be permanently reduced by the amount of such excess. The
Borrowers shall deliver to the Administrative Agent, at the time of each
prepayment or reduction required under this Section 2.09(b), a certificate
signed by the Chief Financial Officer of the Company setting forth in reasonable
detail the calculation of the amount of such prepayment or reduction. All
prepayments of Borrowings under this Section 2.09(b) shall be subject to Section
2.14, but shall otherwise be without premium or penalty. All prepayments of
Borrowings under this Section 2.09(b) shall be accompanied by accrued interest
on the principal amount being prepaid to but excluding the date of payment.
(c) Amounts to be applied pursuant to Section 2.09(b) to the
prepayment of Term Loans and Revolving Credit Loans shall be applied first to
reduce outstanding ABR Loans of the Character to be prepaid. Any amounts
remaining after each such application and required to be applied to prepayment
pursuant to Section 2.09(b) shall, at the option of the Borrower, be applied to
prepay Eurodollar Loans of such Character, immediately and/or shall be deposited
in the Prepayment Account (as defined below). The Administrative Agent shall
apply any cash deposited in the Prepayment Account to prepay Eurodollar Loans on
the last day of their respective Interest Periods (or, at the direction of the
Borrowers, on any earlier date) until all outstanding Eurodollar Loans to be
prepaid have been prepaid or until all the allocable cash on deposit with
respect to such Loans has been exhausted. For purposes of this Agreement,
"Prepayment Account" shall mean an account established by the Borrowers with the
Administrative Agent and over which the Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal for
application in accordance with this Section 2.09(c). The Administrative Agent
will, at the request of the Borrowers, invest amounts on deposit in the
Prepayment Account in Permitted Investments maturing prior to the last day of
the applicable Interest Periods of the Eurodollar Loans to be prepaid, as the
case may be; provided, however, that (i) the Administrative Agent shall not be
required to make any investment that, in its sole judgment, would require or
cause the Administrative Agent to be in, or would result in any, violation of
any law, statute, rule or regulation and (ii) the Administrative Agent shall
have no obligation to invest amounts on deposit in the Prepayment Account if a
Default of Event of Default shall have occurred and be continuing. The Borrowers
shall, jointly and severally, indemnify the Administrative Agent for any losses
relating to the investments so that the amount available to prepay Eurodollar
Loans on the last day of the applicable Interest Periods is not less than the
amount that would have been available had no investments been made pursuant
thereto. Other than any interest earned on such investments, the Prepayment
Account shall not bear interest. Interest or profits, if any, on such
investments shall be deposited in the Prepayment Account and reinvested as
specified above. If the maturity of the Loans has been accelerated pursuant to
Article VII, the Administrative Agent may, in its sole discretion, apply all
amounts on deposit in the Prepayment Account to satisfy any of the
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Obligations. Each Borrower hereby grants to the Administrative Agent, for its
benefit and the benefit of the Issuing Bank and the Lenders, to secure the
Obligations, a security interest in the Prepayment Account. Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the Borrowing.
SECTION 2.10. Fees. (a) The Borrowers agree, jointly and severally, to pay
to the Administrative Agent for the account of each Lender a commitment fee,
which shall accrue at the rate of 3/8 of 1% per annum on the daily unused amount
of the Revolving Credit Commitment of such Lender during the period from and
including the Effective Date to but excluding the date on which such Revolving
Credit Commitment terminates. Accrued commitment fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the date on which the Revolving Credit Commitments terminate, commencing on
the first such date to occur after the date hereof. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
(b) The Borrowers agree, jointly and severally, to pay (i) to the
Administrative Agent for the account of each Lender a participation fee with
respect to its participations in the Letter of Credit, which shall accrue at a
rate of 3/4 of 1% per annum on the average daily amount of such Lender's LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lender's Revolving Credit
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank the Issuing Bank's standard fees with
respect to the amendment, renewal or extension of the Letter of Credit or
processing of drawings thereunder. Participation fees accrued through and
including the last day of March, June, September and December of each year shall
be payable on the third Business Day following such last day, commencing on the
first such date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Revolving Credit Commitments terminate
and any such fees accruing after the date on which the Revolving Credit
Commitments terminate shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All participation fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders. Fees paid shall not be
refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Rate Margin.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate Margin.
(c) Notwithstanding the foregoing, if any principal of or interest
on any Loan or any fee or other amount payable by the Borrowers hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding
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paragraphs of this Section or (ii) in the case of any other amount, 2% plus the
rate applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Revolving Credit Commitments; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate, or
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
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and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any Eurodollar Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost
to such Lender or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum
received or receivable by such Lender or the Issuing Bank hereunder
(whether of principal, interest or otherwise), then the Borrowers will pay
to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as
the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or the Issuing Bank's capital
or on the capital of such Lender's or the Issuing Bank's holding company,
if any, as a consequence of this Agreement or the Loans made by, or
participations in the Letter of Credit held by, such Lender, or the Letter
of Credit issued by the Issuing Bank, to a level below that which such
Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding
company could have achieved but for such Change in Law (taking into
consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with
respect to capital adequacy), then from time to time the Borrowers will
pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Bank or such Lender's or the Issuing Bank's holding company for any such
reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank
or its holding company, as the case may be, as specified in paragraph (a)
or (b) of this Section shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender or
the Issuing Bank, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such
compensation; provided that the Borrowers shall not be required to
compensate a Lender or the Issuing Bank pursuant to this Section for any
increased costs or reductions incurred more than 180 days prior to the
date that such Lender or the Issuing Bank, as the case may be, notifies
the Borrowers of the Change in Law giving rise to such increased costs or
reductions and of such Lender's or the Issuing Bank's intention to claim
compensation therefor; provided further that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period
of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment of
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Loan on the date specified in any notice delivered pursuant hereto,
or (d) the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Borrowers
pursuant to Section 2.17, then, in any such event, the Borrowers shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount determined by such Lender to be the
excess, if any, of (i) the amount of interest which would have
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accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrowers hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if
either Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (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) the Administrative Agent, Lender or
Issuing Bank (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent, each
Lender and the Issuing Bank, within 10 days after written demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrowers
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrowers by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by a Borrower to a Governmental Authority, the Borrowers shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, and a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrowers are located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrowers (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrowers as will permit such payments to be
made without withholding or at a reduced rate.
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SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
(a) Each Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.13, 2.14, or 2.15, or otherwise) and under
any other Loan Document prior to 1:00 p.m., New York City time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.13,
2.14, or 2.15, and 9.03 shall be made directly to the Persons entitled thereto.
The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second, towards payment of
principal and unreimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
unreimbursed LC Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise (including by virtue of any security), obtain payment
in respect of any principal of or interest on any of its Loans or participations
in LC Disbursements resulting in such Lender's receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC
Disbursements and accrued interest thereon than the proportion received by any
other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of
all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Loans
and participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by a Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to a Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrowers prior to the date on which any payment is due to the
Administrative Agent for the
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account of the Lenders or the Issuing Bank hereunder that the Borrowers will not
make such payment, the Administrative Agent may assume that the Borrowers have
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Bank, as the case may
be, the amount due. In such event, if the Borrowers have not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or Issuing Bank with interest thereon, for
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.04(d) or (e), 2.05(b) or paragraph (d) of this
Section, then the Administrative Agent may, in its discretion (notwithstanding
any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.13, or if the Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrowers
hereby agree, jointly and severally, to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if
the Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrowers may, at their sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrowers
shall have received the prior written consent of the Administrative Agent (and,
if a Commitment is being assigned, the Issuing Bank), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrowers (in the case of all
other amounts) and (iii) in the case of any such assignment resulting from a
claim for compensation under Section 2.13 or payments required to be made
pursuant to Section 2.15, such assignment will result in a reduction in such
compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.
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ARTICLE III
Representations and Warranties
The Borrowers jointly and severally represent and warrant to the Lenders
that:
SECTION 3.01. Organization; Powers. Each Credit Party and its Subsidiaries
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted (other than Kinro Manufacturing, Inc., the
qualification of which in Idaho is pending) and, except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect in respect of such Credit Party, is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions are within
the corporate or partnership (as applicable) powers of the Credit Parties and
have been duly authorized by all necessary corporate, partnership (if
applicable), and, if required, stockholder or partner action. This Agreement and
each other Loan Document has been duly executed and delivered by each Credit
Party that is a party thereto and constitutes a legal, valid and binding
obligation of such Credit Party, enforceable in accordance with its respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts; No Defaults. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws, certificate of
limited partnership, agreement of limited partnership, or other organizational
documents of any Credit Party or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Credit Party or any of
its Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by any Credit Party or any of its Subsidiaries, and (d)
will not result in the creation or imposition of any Lien (except in favor of
the Collateral Agent or the Special Collateral Agent) on any asset now owned or
hereafter acquired of any Credit Party or any of its Subsidiaries. No Credit
Party is in default in any manner under any provision of any indenture or other
agreement or instrument evidencing Indebtedness, or any other material agreement
or instrument to which it is a party or by which it or any of its properties or
assets are or may be bound.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Company has heretofore furnished to the Lenders (i) its consolidated balance
sheet and statements of income, stockholders equity and cash flows as of and for
the fiscal year ended December 31, 1996, reported on by KPMG Peat Marwick LLP,
independent public accountants, and (ii) consolidating balance sheets of the
Company and its Subsidiaries setting forth such information separately for the
Company and each Subsidiary thereof and related consolidating statements of
operations for the Company and its Subsidiaries setting forth such information
separately for the Company and each Subsidiary thereof as of and for the fiscal
year ending December 31, 1996, and including in comparative form the figures for
the preceding fiscal year, certified by its chief financial officer. Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Company and of its
Subsidiaries as of such dates and for such periods in accordance with GAAP.
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(b) Since December 31, 1996, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of any Credit Party. Except as disclosed on Schedule 3.04 annexed
hereto, the Credit Parties have no liabilities, contingent or otherwise, not
disclosed on the financial statements referred to in Section 3.04, other than in
respect of goods and services arising in the ordinary course of business.
SECTION 3.05. Properties. (a) Each Credit Party and its Subsidiaries has
good title (free of Liens except such as are permitted under Section 6.02) to,
or valid leasehold interests in, all its real and personal property material to
its business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes. No Credit Party is a party to any
contract, agreement, lease or instrument (other than the Loan Documents) the
performance of which, either unconditionally or upon the happening of any event,
will result in or require the creation of a Lien (except in favor of the
Collateral Agent or the Special Collateral Agent) on any of its property or
assets (now owned or hereafter acquired) or otherwise result in a violation of
any Loan Documents.
(b) Each Credit Party owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by such Credit Party and its Subsidiaries does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect in respect of such Credit Party.
SECTION 3.06. Litigation and Environmental Matters. (a) Except as
disclosed on Schedule 3.06 annexed hereto, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of any Borrower, threatened against or affecting
any Credit Party or any of its Subsidiaries (i) which, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect in respect of any Credit Party or (ii) that involve this
Agreement or the Transactions.
(b) Except as set forth in Schedule 3.06, and except with respect to
any other matters that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect in respect of any Credit
Party, neither any Credit Party nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
(c) Since the date of this Agreement, there has been no change in
the status of the matters disclosed on Schedule 3.06 that, individually or in
the aggregate, has resulted in, or materially increased the likelihood of, a
Material Adverse Effect in respect of any Credit Party.
SECTION 3.07. Compliance with Laws and Agreements. Each Credit Party and
its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status; Margin Regulations.
No Credit Party nor any of its Subsidiaries is (a) an "investment company" as
defined in, or subject to
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regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935. No Credit Party is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation U of
the Board). No part of the proceeds of any Loan or of the Letter of Credit will
be used, directly or indirectly and whether immediately, incidentally or
ultimately, for any purpose which entails a violation of or which is
inconsistent with, the provisions of the regulations of the Board, including,
without limitation, Regulation G, T, U or X thereof.
SECTION 3.09. Taxes. Each Credit Party and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except Taxes that are being contested in good faith by appropriate
proceedings and for which such Credit Party or such Subsidiary, as applicable,
has set aside on its books adequate reserves.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect in respect of any Credit Party. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed by more than $50,000 the fair market value of the assets of
such Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$150,000 the fair market value of the assets of all such underfunded Plans.
SECTION 3.11. Subsidiaries. The direct and indirect Subsidiaries of the
Company, including, without limitation, all Subsidiaries of each Borrower, and
their respective business forms, jurisdictions of organization, addresses, and
respective equity owners, are set forth on Schedule 3.11A. Except as so
disclosed on Schedule 3.11A, no Credit Party has any direct or indirect
Subsidiaries or investments in, or joint ventures or partnerships with, any
Person as of the Effective Date. As of the Effective Date, the Persons listed on
Schedule 3.11B hereto are the only Subsidiaries of the Company other than the
Borrowers and Inactive Subsidiaries.
SECTION 3.12. SEC Matters. The Company is current in all required
disclosure and otherwise in compliance in all respects with applicable federal
and state securities laws and/or rules and regulations of the Securities and
Exchange Commission, and with applicable state securities laws and/or rules and
regulations of state securities authorities and of any stock exchanges or other
self regulatory organizations having jurisdiction of the Company and/or its
securities.
SECTION 3.13. Labor Matters. Except as set forth on Schedule 3.13, there
are no strikes or other material labor disputes or grievances pending or, to the
knowledge of either Borrower, threatened, against any Credit Party. Except as
set forth on Schedule 3.13 hereto, no Credit Party is a party to any collective
bargaining agreement.
SECTION 3.14. Solvency. After giving effect to the Transactions to occur
on the Effective Date, (i) the fair saleable value of the assets of the Credit
Parties and their Subsidiaries, in the aggregate, will exceed the amount that
will be required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of the Credit Parties and their
Subsidiaries as they mature, (ii) the assets of each Credit Party and its
Subsidiaries will not constitute
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unreasonably small capital to carry out their businesses as conducted or as
proposed to be conducted, including the capital needs of such Credit Party and
its Subsidiaries (taking into account the particular capital requirements of the
businesses conducted by such entities and the projected capital requirements and
capital availability of such businesses) and (iii) the Credit Parties do not
intend to, or intend to permit any of their Subsidiaries to, and do not believe
that they or any of their Subsidiaries will, incur debts beyond their ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be received by them and the amounts to be payable on or in respect of
their obligations).
SECTION 3.15. Security Documents. (a) The Pledge Agreement, upon execution
and delivery by the parties thereto, will create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties (as such term is defined
in the Pledge Agreement), a legal, valid and enforceable security interest in
the Collateral (as such term is defined in the Pledge Agreement) and, when (i)
such Collateral consisting of corporate stock is delivered to the Collateral
Agent together with duly executed, undated instruments of transfer, and (ii)
financing statements in appropriate form in respect of limited partnership
interests constituting Collateral thereunder are filed in the offices specified
therein, the Pledge Agreement and the Lien created thereunder will constitute a
fully perfected first priority Lien on, and security interest in such
Collateral, in each case prior and superior in right to any other Person.
(b) The Security Agreement, upon execution and delivery by the
parties thereto, will create in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties (as such term is defined in the Security
Agreement), a legal, valid and enforceable security interest in the Collateral
(as such term is defined in the Security Agreement), and when financing
statements in appropriate form are filed in the offices specified therein, the
Lien created under the Security Agreement will constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the Borrower and
the Guarantors, as applicable, in such Collateral in each case prior and
superior in right to any other Person.
(c) The Supplemental Security Agreement, upon execution and delivery
by the parties thereto, will create in favor of the Special Collateral Agent,
for the ratable benefit of the Secured Parties (as such term is defined in the
Supplemental Security Agreement), a legal, valid and enforceable security
interest in the Collateral (as such term is defined in the Supplemental Security
Agreement), and when financing statements in appropriate form are filed in the
offices specified therein, the Lien created under the Supplemental Security
Agreement will constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Borrower and the Guarantors, as applicable,
in such Collateral in each case prior and superior in right to any other Person.
SECTION 3.16. Lock Boxes. The Credit Parties have furnished to the
Administrative Agent true and correct copies of all agreements and other
documents to which any Credit Party is a party or by which any Credit Party is
bound or affected, establishing or pertaining to lock boxes or similar
arrangements involving the collection or processing of Accounts Receivable or
otherwise dealing with the proceeds of the sale of Inventory of any Credit
Party.
SECTION 3.17. Restrictive Agreements. No Credit Party nor any Subsidiary
thereof is a party to any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of such Credit Party or
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Credit Party or Subsidiary to pay dividends
or other distributions with respect to any shares of its capital stock or other
equity interests; other than (i) restrictions and conditions imposed by law or
by this Agreement and (ii) restrictions and
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conditions existing on the date hereof identified on Schedule 3.17.
SECTION 3.18. Disclosure. The Borrowers have disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which each Credit
Party or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect in respect of any Credit Party. None of the
reports, financial statements, certificates or other information furnished by or
on behalf of the Borrowers or any other Credit Party to the Administrative Agent
or any Lender in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or supplemented
by other information so furnished) contains any material misstatement of fact or
omits to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed on
behalf of such party or (ii) written evidence satisfactory to the Administrative
Agent (which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement. The
Administrative Agent shall have received (i) from each person listed on Schedule
1.01-2 hereto, a duly executed counterpart of the Guarantee Agreement in the
form of Exhibit 4.01-1 hereto (as it may be supplemented, amended or modified
from time to time, a "Subsidiary Guarantee"); (ii) from the Company, a duly
executed Guarantee Agreement in the form of Exhibit 4.01-2 hereto (as it may be
supplemented, amended, or modified from time to time, the "Company Guarantee";
together with each Subsidiary Guarantee, a "Guarantee Agreement"); and (iii)
from each Credit Party, a duly executed counterpart of the Subordination
Agreement in the form of Exhibit 4.01-3 hereto (as it may be supplemented,
amended or modified from time to time, the "Subordination Agreement"). The
Collateral Agent shall have received (i) from each Credit Party other than the
Company, a duly executed counterpart of the Security Agreement in the form of
Exhibit 4.01-4 hereto (as it may be supplemented, amended, or modified from time
to time, the "Security Agreement") together with Form UCC-1 financing statements
in connection therewith in proper form for filing in the offices therein
specified, (ii) from each Credit Party other than those that are limited
partnerships, the duly executed Pledge and Security Agreement in the form of
Exhibit 4.01-5 hereto (as it may be supplemented, amended, or modified from time
to time, the "Pledge Agreement") together with (x) certificates representing the
corporate securities pledged thereunder together with related undated stock
powers endorsed in blank, (y) Form UCC-1 financing statements in respect of all
partnership interests in which a security interest is granted thereunder, and
(z) instruments of consent, waiver, and recognition in the form of Exhibit 2.01
to the Pledge Agreement duly executed by each Credit Party that is a partnership
and by each partner therein, and (iii) from the Borrowers (and Texas Commerce
Bank National Association) a duly executed counterpart of the Lockbox Security
Agreement in the form of Exhibit 4.01-5(a) hereto (as it may be supplemented,
amended or modified from time to time, the "Lockbox Security Agreement"). The
Special Collateral Agent shall have received from each Credit Party other than
the Company, a duly executed counterpart of the Supplemental Security Agreement
in the form of
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Exhibit 4.01-6 hereto (as it may be supplemented, amended, or modified from time
to time, the "Supplemental Security Agreement") together with Form UCC-1
financing statements in connection therewith in proper form for filing in the
offices therein specified.
(b) The Administrative Agent shall have received a favorable written
opinion (i) (addressed to the Administrative Agent, the Collateral Agent, the
Special Collateral Agent, and the Lenders and dated the Effective Date) of
Berlack, Israels & ▇▇▇▇▇▇▇▇ LLP, counsel for the Credit Parties, substantially
in the form of Exhibit B, and (ii) (addressed to the Administrative Agent, the
Collateral Agent, and the Lenders and dated the Effective Date) of each local
counsel listed on Schedule 4.01-7 hereto substantially in the form of Exhibit
4.01-8 hereto, and in each case covering such other matters relating to the
Credit Parties, this Agreement, the other Loan Documents or the Transactions as
the Required Lenders shall reasonably request. The Borrowers hereby request such
counsel to deliver such opinion. The Secured Parties shall also have received
(i) a favorable opinion of Alabama counsel selected by them relating to the
Liens in the Collateral and the enforcement thereof in the State of Alabama and
in each other state or other jurisdiction in which the Credit Parties maintain
on the Effective Date Collateral having a book value in the aggregate of at
least $3,000,000 (such other jurisdictions being the states of Indiana,
Tennessee and Texas) and (ii) opinions satisfactory to the Lenders from counsel
in jurisdictions in which the Credit Parties are organized.
(c) The Administrative Agent shall have received (i) a copy of the
certificate of incorporation, including all amendments thereto, of each Credit
Party that is a corporation, and a copy of the certificate of limited
partnership of each Credit Party that is a limited partnership, in each case
certified as of a recent date by the Secretary of State of the state of its
organization, (ii) a certificate as to the good standing of each Credit Party as
of a recent date, from the Secretary of State of the state of its organization;
(iii) a certificate of the Secretary or Assistant Secretary of each Borrower and
each Guarantor, or of the managing general partner of each Guarantor that is a
limited partnership, dated the Effective Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of such Borrower or such
Guarantor or, in the case of a Guarantor that is a limited partnership, its
agreement of limited partnership, as in effect on the Effective Date and at all
times since a date prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Borrower or such Guarantor (or, in the
case of a Guarantor that is a limited partnership, by the Board of Directors of
its managing general partner), authorizing the execution, delivery and
performance of the Loan Documents and (in the case of each Borrower) the
borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect as of the Effective Date,
(C) that the certificate of incorporation of the Borrower or such Guarantor, or,
in the case of a Guarantor that is a limited partnership, its certificate of
limited partnership, has not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to clause
(ii) above and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in connection
herewith on behalf of such Borrower or such Guarantor (or the managing general
partner of such Guarantor that is a limited partnership); (iii) a certificate of
another officer as to the incumbency and specimen signature of the Secretary or
Assistant Secretary executing the certificate pursuant to (ii) above; and (iv)
such other documents as the Lenders or their counsel or counsel for the
Administrative Agent, the Collateral Agent or the Special Collateral Agent, or
the counsel referred to in the last sentence of Section 4.01(b), may reasonably
request.
(d) Each Lender requesting the same shall have received a duly
executed Revolving Credit Note (each, a "Revolving Credit Note"), and a duly
executed Term Note (each, a "Term Note"), in the forms of Exhibit 4.01-8 hereto
and Exhibit 4.01-9 hereto,
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respectively.
(e) The Collateral Agent and the Special Collateral Agent shall have
received the results of a search of the Uniform Commercial Code (or equivalent
filings) filings made with respect to each Borrower and each Guarantor in the
states (or other jurisdictions) in which the chief executive offices of such
Persons are located, or in which any offices of such Persons in which records
have been kept relating to Accounts are located and in the other jurisdictions
in which Uniform Commercial Code filings (or equivalent filings) are to be made
pursuant to the Security Documents, together with copies of the financing
statements (or similar documents) disclosed by such search, and accompanied by
evidence satisfactory to the Collateral Agent and the Special Collateral Agent
that the Liens indicated in any such financing statement have been released.
(f) The Collateral Agent and the Special Collateral Agent shall have
received Perfection Certificates with respect to each of the Borrowers and the
Guarantors dated the Effective Date and duly executed by the Chief Financial
Officer of the Company.
(g) The Administrative Agent shall have received a copy of the
insurance policies satisfying the requirements of Section 5.05, each of which
shall be endorsed or otherwise amended to include a lender's loss payable
endorsement (except in the case of liability policies) and to name the
Collateral Agent or the Special Collateral Agent (as specified by the
Administrative Agent), as a loss payee as its interest may appear and shall
provide for at least thirty (30) days' prior written notice from such insurance
company to the Collateral Agent or the Special Collateral Agent (as the case may
be) of any change, termination or cancellation thereof, in form and substance
reasonably satisfactory to the Collateral Agent and the Special Collateral
Agent.
(h) Concurrently with the consummation of the transactions
contemplated hereby on the Effective Date:
(i) the Company shall have paid its obligations evidenced by
its promissory note dated March 7, 1997 payable to the order of ▇▇▇▇▇▇ ▇.
▇▇▇▇, III, which promissory note was issued by the Company to ▇▇▇▇▇▇ ▇.
▇▇▇▇, III to effect the repurchase from ▇▇▇▇▇▇ ▇. ▇▇▇▇, III of 1,600,000
issued and outstanding shares of common stock of the Company (the "Stock
Repurchase"), and the Lenders shall be satisfied that (x) the price per
share paid in the Stock Repurchase did not exceed the public trading price
at the time of such purchase and (y) that the Stock Repurchase was
consummated in compliance with all applicable securities laws and
corporate laws.
(ii) the Borrowers shall have repaid in full the principal of
all loans outstanding, and other amounts due under, the Existing Credit
Agreement and under each agreement related thereto, and the Administrative
Agent shall have received duly executed documentation either evidencing or
necessary for (A) the termination of the Existing Credit Agreement and
each other agreement related thereto, (B) the cancellation of all
commitments thereunder, and (D) the termination, or assignment to the
Collateral Agent or the Special Collateral Agent for the ratable benefit
of the Secured Parties, of all security interests granted by the Borrowers
or any other Person in connection therewith.
(i) After giving effect to the Transactions, on the Effective Date,
the Credit Parties shall have no Indebtedness other than (i) Indebtedness under
the Loan Documents and (ii) Indebtedness permitted under Section 6.01.
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(j) The Administrative Agent shall have received copies certified by
the chief financial officer of each Credit Party of all lock box or similar
arrangements involving the collection or processing of accounts receivable or
otherwise dealing with the proceeds of the sale of inventory in effect as to
such Credit Party, and shall (i) be satisfied, in its sole discretion, with the
agreements and documents pertaining thereto, and (ii) the Collateral Agent or
the Special Collateral Agent (as designated by the Administrative Agent) shall
have received waivers of rights of set off, and such other agreements as it
shall deem satisfactory, in its sole discretion, from parties to such
arrangements.
(k) On the Effective Date, the Administrative Agent shall have
received a certificate of the chief executive officer of the Company containing
a description, satisfactory to the Administrative Agent in its discretion, of
the structure of ownership and voting relationships among the Company, the
Borrowers, and each other Credit Party.
(l) On the Effective Date, immediately prior to the effectiveness
hereof, there shall be no Default or Event of Default (as such terms are used in
the Existing Credit Agreement) under the Existing Credit Agreement, and the
respective chief executive officers of the Company and of each Borrower shall
have delivered to the Bank certificates to such effect.
(m) All legal matters incident to this Agreement and the Borrowing
hereunder shall be satisfactory to the Lenders and their counsel and to counsel
for the Administrative Agent, the Collateral Agent and the Special Collateral
Agent.
(n) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President or a
Financial Officer of each Borrower, confirming compliance with the conditions
set forth in paragraphs (a) and (b) of Section 4.02.
(o) The Lenders shall be satisfied that the consummation of the
Transactions will not (i) violate any applicable law, statute, rule or
regulation or (ii) conflict with, or result in a default or event of default
under any material agreement of any Credit Party or Subsidiary thereof.
(p) The Lenders shall have received evidence satisfactory to them
that there has been no material adverse change in the business, assets,
operations, prospects or conditions, financial or otherwise, of any Credit Party
since December 31, 1996.
(q) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all expenses required to be
reimbursed or paid by the Borrowers hereunder.
The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on May
15, 1997 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, or to continue or convert any Loan, is
subject to the satisfaction of the
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following conditions:
(a) The representations and warranties of the Borrowers set forth in
this Agreement shall be true and correct on and as of the date of such Borrowing
or the date of such continuation or conversion, as applicable.
(b) At the time of and immediately after giving effect to such
Borrowing or such continuation or conversion, as applicable, no Default shall
have occurred and be continuing.
Each Borrowing and each continuation or conversion of any Loan shall be deemed
to constitute a representation and warranty by the Borrowers on the date thereof
as to the matters specified in paragraphs (a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full and the Letter of Credit shall have expired or terminated and
all LC Disbursements shall have been reimbursed, the Borrowers covenant and
agree, jointly and severally, with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The Borrowers
will furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year of the Company,
(i) its audited consolidated balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by KPMG Peat Marwick LLP or other independent public accountants
of recognized national standing (without a "going concern" or like qualification
or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly
in all material respects the financial condition and results of operations of
the Company and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, and (ii) consolidating balance sheets
setting forth such information separately for the Company and for each Borrower
as of the end of such fiscal year and consolidating statements of operations
setting forth such information separately for the Company and for each Borrower
for such fiscal year, such consolidating balance sheet and consolidating
statements of operations to be certified by the chief financial officer of the
Company as fairly presenting the financial condition and results of operations
of the Company and each Borrower as of the end of, and for, such fiscal period
in accordance with GAAP;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Company, (i) its consolidated balance sheet
and related statements of operations, stockholders' equity and cash flows as of
the end of and for such fiscal quarter (except in the case of the statements of
cash flows) and the then elapsed portion of the fiscal year, setting forth in
each case (except in the case of stockholders' equity) in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by one
of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Company and its
consolidated
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Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes, and (ii) consolidating balance sheets of the Company and of each
Borrower setting forth such information separately for the Company and for each
Borrower and related consolidating statements of operations of the Company and
of each Borrower setting forth such information separately for the Company and
each Borrower as of the end of and for such quarter and the then elapsed portion
of the fiscal year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or in the case of the balance
sheets, as of the end of) the previous fiscal year, all of which shall be
certified by the chief financial officer of the Company as fairly presenting the
financial condition and results of operations therein shown in accordance with
GAAP consistently applied subject to normal year-end adjustments and the absence
of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Company (i)
certifying as to whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken with
respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.07 and 6.11 and (iii) stating whether
any change in the application of GAAP in respect of the audited financial
statements referred to in Section 3.04 has occurred and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines), and promptly after receipt by the Company, a copy of each
management letter (if prepared) of such accounting firm (together with any
response thereto prepared by the Company);
(e) promptly (i) after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed by
the Company or any Subsidiary thereof with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by the Company to its shareholders generally, as the case may be;
and (ii) copies of any documents and information furnished to any other
government agency (except if in the ordinary course of business), including the
Internal Revenue Service;
(f) within forty (40) days after the end of each calendar month, (i)
accounts receivables aging schedules of the Borrower, the Company and each
Subsidiary thereof, and (ii) consolidated financial statements of the Company
and its Subsidiaries including a reasonably detailed management report in
respect thereof, certified to be true, complete and correct in all material
respects by the president, treasurer or chief financial officer of the Company,
such schedules, statements, and report to be in form and substance satisfactory
to the Administrative Agent;
(g) within five (5) days after the occurrence of any transaction of
the type referred to in Section 6.01(c), notice thereof describing the same in
reasonable detail;
(h) promptly, a copy of any amendment or waiver of any provision of
any agreement or instrument referred to in Section 6.10; and
(i) promptly following any request therefor, such other information
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regarding the operations, business affairs and financial condition of each
Credit Party or any Subsidiary thereof, or compliance with the terms of this
Agreement or the other Loan Documents, as the Administrative Agent, the
Collateral Agent, the Special Collateral Agent, or any Lender may reasonably
request.
SECTION 5.02. Notices of Certain Events. The Borrowers will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting any
Credit Party or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect in respect of such
Credit Party;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of any Credit Party and its Subsidiaries in an aggregate
amount exceeding $125,000; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect in respect of any Credit Party.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of a Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. Each Credit Party will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section
6.03.
SECTION 5.04. Payment of Obligations. Each Credit Party will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect in
respect of such Credit Party before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Credit Party or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect in respect of such
Credit Party, and (d) the same shall be paid or discharged or fully and
adequately bonded before it might become a Lien upon any property or asset of
such Credit Party or Subsidiary.
SECTION 5.05. Maintenance of Properties; Insurance. Each Credit Party
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations, including,
without limitation, insurance against fire, and public liability insurance
against such risks and in such amounts, and having such deductible amounts as
are customary, with companies in the same or similar businesses and which is no
less
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than may be required by law, which insurance policies shall name the Collateral
Agent or the Special Collateral Agent (as the Administrative Agent shall
designate) as loss payee as its interest may appear and shall provide for at
least thirty (30) days' prior written notice from such insurance company to the
Collateral Agent or the Special Collateral Agent (as the case may be) of any
change, termination or cancellation thereof.
SECTION 5.06. Books and Records; Inspection Rights; Lock Boxes. (a) Each
Credit Party will, and will cause each of its Subsidiaries to, keep proper books
of record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities. Each
Credit Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent, the Collateral Agent, or
the Special Collateral Agent, or any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, and to verify the status of any
Collateral, all at such reasonable times and as often as reasonably requested.
(b) Prior to the amendment of modification of any arrangement
referred to in Section 3.16, or the establishment after the Effective Date of
any such arrangement, the Administrative Agent shall have been furnished with
copies of such proposed amendment or modification, or agreements establishing
such arrangement and shall, in its sole discretion, have consented thereto. In
connection with the foregoing, the Credit Parties shall cause the receipt by the
Collateral Agent or the Special Collateral Agent (as determined by the
Administrative Agent) of waivers of rights of set off and other documentation
satisfactory to the Collateral Agent or the Special Collateral Agent, as the
case may be, in its sole discretion, from the parties to such arrangements as
amended, modified, or established.
SECTION 5.07. Compliance with Laws; Environmental Laws. (a) Each Credit
Party will, and will cause each of its Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect in respect of such Credit Party.
(b) Without limiting the preceding paragraph, each Credit Party
will, and will cause each of its Subsidiaries to (i) comply in all material
respects with, and use reasonable best efforts to ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws; and (ii) conduct and complete (or cause to be conducted and
completed) all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and in a timely
fashion comply in all material respects with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably expected to have a
Material Adverse Effect in respect of any Credit Party;
SECTION 5.08. Use of Proceeds and Letter of Credit. The proceeds of the
Term Loans will be used only to discharge the indebtedness of the Company
referred to in clause (i) of Section 4.01(h). The proceeds of the Revolving
Loans will be used to repay the indebtedness of the Borrowers under the Existing
Credit Agreement, for permitted Capital Expenditures, for permitted
acquisitions, and for working capital purposes. No part of the proceeds of any
Loan will be used, whether directly or indirectly, for any purpose that entails
a violation of any of the Regulations of the Board, including Regulations G, U
and X. The Letter of Credit will be used only to support payment obligations to
the beneficiary thereof.
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SECTION 5.09. Additional Guarantors; Additional Collateral; Additional
Parties to Subordination Agreement. If any Person (a) after the date hereof
becomes (whether upon its formation, by acquisition of stock or other interests
therein, or otherwise) a Subsidiary of any Credit Party (a "New Subsidiary"), or
(b) that was an Inactive Subsidiary of a Credit Party ceases to be an Inactive
Subsidiary of a Credit Party but continues to be a Subsidiary thereof, the
Borrowers shall promptly furnish notice in writing of such facts to the
Administrative Agent and, if the Administrative Agent and the Required Lenders,
shall so elect, (i) cause such New Subsidiary or formerly Inactive Subsidiary to
become a Guarantor pursuant to an instrument in form, scope, and substance
satisfactory to the Administrative Agent, (ii) deliver or cause to be delivered,
or assign, to the Collateral Agent (x) subject to the Lien in favor of the
Collateral Agent under the Pledge Agreement, the certificates representing
shares of stock or other interests of the New Subsidiary or formerly Inactive
Subsidiary owned by a Credit Party (or Subsidiary thereof), together with
appropriate instruments of transfer required under the Pledge Agreement, and (y)
an amendment to the Pledge Agreement, reflecting the foregoing in the form
thereof prescribed under the Pledge Agreement; and (iii) cause such New
Subsidiary or formerly Inactive Subsidiary to become a party to the Security
Documents pursuant to one or more instruments or agreements satisfactory in form
and substance to the Collateral Agent and the Special Collateral Agent, the
effect of which shall be to secure the Obligations by a first priority Lien on
and security interest in the personal property of such New Subsidiary or
formerly Inactive Subsidiary, provided, however, that in any event, prior to the
time that any New Subsidiary or formerly Inactive Subsidiary receives the
proceeds of, or makes, any loan or advance or other extension of credit, from or
to, or otherwise becomes the obligor or obligee in respect of any Indebtedness
of, any Credit Party or Subsidiary thereof, the Borrowers shall (A) cause to be
taken, in respect of any such obligor, the action referred to in the preceding
clauses (i), (ii), and (iii), and (B) in the case of any such obligee, cause
such obligee to become a party to the Subordination Agreement pursuant to one or
more instruments or agreements satisfactory in form and substance to the
Administrative Agent.
SECTION 5.10. Further Assurances. (a) Each Credit Party will, and will
cause its Subsidiaries to, execute any and all further documents, financing
statements, agreements and instruments, and take all further action (including,
without limitation, filing Uniform Commercial Code and other financing
statements and the establishment of and deposit of Collateral into custody
accounts) that may be required under applicable law, or that the Required
Lenders, the Administrative Agent, the Collateral Agent, or the Special
Collateral Agent may request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents, it being understood that it is
the intent of the parties that the Obligations shall be secured by, among other
things, all the personal property of each Borrower and each Guarantor (other
than the Company), including any such personal property acquired subsequent to
the Effective Date. Such security interests and Liens will be created under the
Security Documents and other security agreements, and other instruments and
documents in form and substance satisfactory to the Required Lenders, and the
Borrowers shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, and lien searches) as the
Required Lenders shall reasonably request to evidence compliance with this
Section 5.10. The Borrowers agree to provide such evidence as the Required
Lenders shall reasonably request as to the perfection and priority status of
each such security interest and Lien.
ARTICLE VI
Negative Covenants
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Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full and the Letter of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrowers covenant and agree,
jointly and severally, with the Lenders that:
SECTION 6.01. Indebtedness. No Credit Party will, nor will it permit any
of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created hereunder or under the other Loan
Documents;
(b) Indebtedness existing on the date hereof and set forth in
Schedule 6.01, but not any extensions, increases, renewals, refinancing, or
replacements of any such Indebtedness;
(c) Indebtedness of the Borrower or any Subsidiary thereof incurred
to finance the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof; provided that (i) such Indebtedness is incurred prior
to or within 90 days after such acquisition or the completion of such
construction or improvement and (ii) the aggregate principal amount of
Indebtedness incurred as permitted by this clause (c) shall not exceed $250,000
in the aggregate for any fiscal year of the Company;
(d) liabilities under operating leases of equipment not in excess of
$1,000,000 in the aggregate for the Company and its Subsidiaries in any fiscal
year;
(e) Indebtedness of a Credit Party as a borrower, as a lessee, as an
account party in respect of letters of credit, or otherwise, incurred in
connection with Industrial Revenue Bond financing or similar financing involving
Governmental Authorities ("Tax Assisted Financing") for the acquisition,
construction, or improvement of fixed assets or the refinancing thereof;
provided that the property financed by such Tax Assisted Financing shall be
owned or leased by a Credit Party and used by a Credit Party in the ordinary
course of its business; and provided further that such Indebtedness permitted
under this paragraph shall not exceed, in the aggregate, $8,000,000;
(f) Indebtedness of one Credit Party to another Credit Party;
provided that (i) all of the outstanding capital stock or other equity interests
of each such Credit Party shall be owned 100% directly or indirectly by the
Company; (ii) each of such Credit Parties to or by whom such Indebtedness is
owed, or who owns (directly or indirectly) any stock referred to in the
preceding clause (i), shall have become a party to the Subsidiary Guarantee
Agreement or to the Subordination Agreement (or to both) as required by Section
5.09 hereof, (iii) such Indebtedness shall at all times be subject to the
provisions of the Subordination Agreement as Subordinated Debt as defined in the
Subordination Agreement; and (iv) such indebtedness shall not be assigned or
transferred by the obligee thereof to any Person other than another Credit Party
such that after giving effect to such assignment or transfer all the conditions
of this proviso are met;
(g) Approved Subordinated Debt;
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(h) liabilities assumed in an aggregate amount not exceeding
$2,000,000 to certain employees of Shoals, as more particularly described in
Schedule 6.01; and
(i) Interest Rate Hedging Exposure Amount to Interest Rate
Protection Merchants not exceeding $1,000,000 in the aggregate.
SECTION 6.02. Liens. No Credit Party will, nor will it permit any
Subsidiary thereof to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(a) Liens arising under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of any Credit Party or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02; provided
that (i) such Lien shall not apply to any other property or asset of any Credit
Party or any such Subsidiary thereof and (ii) such Lien shall secure only those
obligations which it secures on the date hereof, and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof; and
(d) Liens on fixed or capital assets acquired, constructed or
improved; provided that (i) such security interests secure Indebtedness
permitted by clause (c) of Section 6.01, (ii) such security interests and the
Indebtedness secured thereby are incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 85% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iv) such security
interests shall not apply to any other property or assets of any Credit Party or
any Subsidiary thereof; and
(e) Liens securing Indebtedness described in Section 6.01(e), which
Liens shall not apply to any other property or assets of any Credit Party or any
subsidiary thereof; provided that the Lenders hereby agree to direct the
Collateral Agent and the Special Collateral Agent, if there is no Default or
Event of Default, to subordinate the security interest of the Collateral Agent
or the Special Collateral Agent (as the case may be) for the ratable benefit of
the Lender under the Security Documents to such Liens permitted under this
Section 6.02(e), in respect of machinery, equipment and fixed assets included in
the Collateral and subject to the Liens permitted under this Section 6.02(e);
provided, further, however, that such subordination shall become void ab initio
and of no force and effect in the event that the Borrowers have not timely made
the prepayments (and reduction of the Commitments) required under Section
2.09(b).
SECTION 6.03. Certain Changes; Prohibited Transactions. (a) No Credit
Party will, nor will it permit any Subsidiary thereof to (i) liquidate or
dissolve, or merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or (ii) sell, transfer, lease
or otherwise dispose of (in one transaction or in a series of transactions) (x)
assets in an amount such that after giving effect thereto the aggregate of all
such sales, transfers, leases, or other dispositions by all Credit Parties shall
have exceeded the sum of (A) $1,000,000 and (B) the amount, if any, by which 10%
of Consolidated Tangible Net Worth (as of the most recent quarterly financial
statements furnished hereunder exceeds $1,000,000, or (y) any stock of any of
its Subsidiaries (in each case, as to all such assets, including stock, whether
now owned or hereafter acquired).
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(b) No Credit Party will, nor will it permit any of its Subsidiaries
to (i) change its accounting policies in any way that could have a material
effect on the presentation of financial reports, (ii) alter in any material
respect the nature of the business of such Credit Party or Subsidiary thereof
from that conducted on the Effective Date (or, if subsequent thereto, the date
such Person became a Credit Party or Subsidiary thereof), or (iii) change the
fiscal year of any Credit Party or any Subsidiary thereof from the fiscal year
in effect on the Effective Date (or such later date on which such Person became
a Credit Party or Subsidiary thereof); provided that such accounting policies
may change to accord with a change in GAAP; provided further that in the event
of any such change, all financial reports required hereunder that are thereby
affected relating to the fiscal quarter (including, if such fiscal quarter is
the fourth quarter, the fiscal year end), immediately following such change,
shall be presented in two formats, one of which shall reflect such change and
the other of which shall reflect the original accounting policy.
(c) No Credit Party or Subsidiary thereof will sell, assign,
discount or otherwise dispose of notes, accounts receivable or other rights to
receive payment, with or without recourse, except for collections and credits
(to the extent permitted under the Security Documents) in the ordinary course of
business.
(d) No Credit Party or any Subsidiary thereof will enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal, and used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property that it intends to use for substantially the same
purpose or purposes as the property being sold or transferred.
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
No Credit Party will, nor will it permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, Guarantee (except pursuant to the Guarantee Agreements) any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
(a) Permitted Investments;
(b) investments existing on the date hereof in the capital stock or
partnership interests, as the case may be, of its Subsidiaries;
(c) acquisitions of stock (or other equity interests), of other
Persons who become Subsidiaries of a Credit Party, and acquisitions of assets or
business of any other Person, provided that the chief financial officer of the
Company certifies to the Administrative Agent on behalf of the Lenders that the
fair market value of the acquired stock, assets, or business is equal to or
greater than the investment therein, and provided further that the aggregate of
all such investments (in each case including any Indebtedness of any Person that
is or that thereby becomes a Credit Party) does not, (i) without the consent of
the Administrative Agent and the Required Lenders, exceed $2,000,000, or (ii)
without the consent of the Administrative Agent and the Mandatory Lenders,
exceed $10,000,000;
(d) aluminum futures contracts entered into in the ordinary course
of
-46-
business for the purpose of hedging against the price of aluminum, provided that
the aggregate amount of obligations thereunder shall not exceed $5,000,000 for
the Company and its Subsidiaries in the aggregate at any one time;
(e) loans to employees not to exceed $500,000 outstanding for the
Company and its Subsidiaries in the aggregate at any one time;
(f) loans and advances from one Credit Party to another Credit
Party; provided that the recipient thereof shall have become a party to the
Subsidiary Guarantee Agreement and the Security Documents, and the Credit Party
making such loan or advance shall have become a party to the Subordination
Agreement, and all other conditions of Section 5.04 and 6.01(f) shall have been
met in respect thereof;
(g) purchases by Kinro Texas Limited Partnership, a Texas limited
partnership, Kinro Tennessee Limited Partnership, a Tennessee limited
partnership, Shoals Supply Texas Limited Partnership, a Texas limited
partnership, and Shoals Supply Tennessee Limited Partnership, a Tennessee
limited partnership, from the Company of common stock of the Company, which
stock will be transferred to employees of such limited partnerships as part of
the compensation of such employees in accordance with the Drew Industries
Incorporated Stock Option Plan as amended from time to time; and
(h) the loans and investments listed on Schedule 6.04, provided that
the same shall not be increased or the repayment or return thereof deferred.
SECTION 6.05. Hedging Agreements. No Credit Party will, nor will it permit
any of its Subsidiaries to, enter into any Hedging Agreement for purposes of
speculation or investment, or otherwise outside of the ordinary course of the
business of such Credit Party.
SECTION 6.06. Restricted Payments. No Credit Party will, nor will it
permit any of its Subsidiaries to, pay, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, other than (i) cash
dividends (or distributions, in the case of limited partnerships), from an
indirect Subsidiary of the Company to a Subsidiary of the Company or from a
Subsidiary of the Company to the Company, and (ii) payments in respect of
Indebtedness of one Credit Party to another Credit Party to the extent such
Indebtedness is permitted hereunder and such payment is permitted under the
Subordination Agreement.
SECTION 6.07. Certain Financial Covenants.
(a) The Company and its Subsidiaries shall not make or permit to be
made Capital Expenditures exceeding, in the aggregate, during the fiscal year
ending (i) December 31, 1997, $8,000,000; (ii) December 31, 1998, $3,500,000;
(iii) December 31, 1998, $3,500,000; or (iv) thereafter, $2,500,000.
(b) Permit the excess of Consolidated Current Assets over
Consolidated Current Liabilities (such excess, the "DCWC") to be less than the
amounts set forth for the respective periods set forth below:
Period Amount
------ ------
Effective Date through March 30, 1998 $2,000,000
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March 31, 1998 through June 29, 1998 $3,000,000
June 30, 1998 through September 29, 1998 $4,000,000
September 30, 1998 through December 30, 1998 $5,000,000
December 31, 1998 through December 30, 1999 $7,500,000
December 31, 1999 through December 30, 2000 The greater of (x)
$15,000,000, or (y)
$5,000,000 plus the
DCWC as of December
31, 1998
Each subsequent period December 31 through $5,000,000 plus
December 30 of the following year (commencing the DCWC as of
with the period from December 31, 2000 through December 31 of the
December 30, 2001) (each, a "Test Period") preceding Test
Period (or, in the
case of the Test
Period from
December 31, 2000
through December
31, 2001, the DCWC
for the period
from December 31,
1999 through
December 30, 2000).
provided, however, that for purposes of this paragraph (b) all Revolving Loans
shall be treated as current liabilities except for $4,000,000 of Revolving Loans
during the period from the Effective Date through December 30, 1997
(c) Permit the sum of Consolidated Tangible Net Worth and
Approved Subordinated Debt of the Company and its Subsidiaries to be less than
the amount set forth below at any time during the respective period set forth
below:
Period Amount
------ ------
Effective Date through December 30, 1997 $0
December 31, 1997 through December 30, 1998 $10,000,000
December 31, 1998 through December 30, 1999 $22,000,000
December 31, 1999 and thereafter $34,000,000
(d) Permit the ratio of Consolidated Funded Indebtedness to the sum
of (i) Consolidated Funded Indebtedness plus (ii) Consolidated Tangible Net
Worth to be greater than the ratio set forth below at any time during the
respective periods set forth below:
Period Ratio
------ -----
Effective Date through December 30, 1997 1.0 to 1.0
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December 31, 1997 through December 30, 1998 0.8 to 1.0
December 31, 1998 through December 30, 1999 0.6 to 1.0
December 31, 1999 and thereafter 0.4 to 1.0
(e) Permit the Consolidated Debt Service Coverage Ratio to be less
than (i) 1.75 to 1.00 at the end of any of the first three fiscal quarters of
any fiscal year of the Company, (ii) 1.10 to 1.00 at December 31, 1997, or (iii)
1.25 to 1.00 at the end of any subsequent fiscal year of the Company.
(f) Permit Consolidated Net Income to be less than zero for any
fiscal year of the Company or for any two consecutive fiscal quarters of the
Company.
SECTION 6.08. Transactions with Affiliates. No Credit Party will, nor will
it permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except in the ordinary course of business at prices and on terms and
conditions not less favorable to such Credit Party or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties.
SECTION 6.09. Restrictive Agreements. No Credit Party will, nor will it
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of such Credit Party or Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Credit Party or Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or other equity
interests; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 3.17 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition),
(iii) clause (a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Indebtedness and (iv) clause (a) of the foregoing shall not
apply to customary provisions in leases restricting the assignment thereof.
SECTION 6.10. Amendment of Certain Documents. Permit the termination of,
or any amendment, waiver or modification to, the Certificate of Incorporation or
By-Laws, or Certificate of Limited Partnership or Agreement of Limited
Partnership, as the case may be, of any Credit Party or Subsidiary thereof
except for amendments, modifications or waivers that are not adverse in any
respect to the Lenders, the Administrative Agent, the Collateral Agent, the
Special Collateral Agent, or the Issuing Bank.
SECTION 6.11. Location of Collateral. The Credit Parties will not
permit the value of Collateral (determined on a book basis) located in any
single state or foreign jurisdiction to exceed $3,000,000 in the aggregate
(any such excess, a "Collateral Overage") in any two consecutive fiscal
quarters (as determined by taking the aggregate value of the Collateral in
each such jurisdiction as of the last day of the quarter) unless there
shall have been delivered to the Collateral Agent within 45 days after the
close of two consecutive fiscal quarters in which a Collateral Overage
exists a favorable opinion of local counsel in such jurisdiction
satisfactory to the Collateral Agent regarding the Lien of the Collateral
Agent in respect of such Collateral.
ARTICLE VII
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Events of Default
If any of the following events ("Events of Default") shall occur:
(a) the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrowers shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable;
(c) any representation or warranty made or deemed made by or on
behalf of any Credit Party or any Subsidiary thereof in or in connection with
this Agreement or any other Loan Document, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with this Agreement or any other Loan Document, shall prove to have been
incorrect in any material respect when made or deemed made;
(d) the Credit Parties shall fail to observe or perform in any
material respect any covenant, condition or agreement contained in Article V or
in Article VI hereof, or in any Guarantee Agreement, the Subordination Agreement
or in any Security Document;
(e) the Credit Parties shall fail to observe or perform any other
covenant, condition or agreement contained in this Agreement (other than those
specified in clause (a), (b) or (d) of this Article), and such failure shall
continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) any Credit Party or any Subsidiary thereof shall fail to make
any payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to permitted secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of any Credit Party or any Subsidiary thereof or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Credit Party or for any Subsidiary thereof or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
-50-
(i) any Credit Party or any Subsidiary thereof shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for such Credit Party or any Subsidiary thereof
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;
(j) any Credit Party or any Subsidiary thereof shall become unable,
admit in writing or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $100,000 shall be rendered against any Credit Party and/or
any Subsidiary thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of any Credit Party or any Subsidiary thereof to enforce any such
judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of any Credit
Party in an aggregate amount exceeding (i) $50,000 in any year or (ii) $150,000
for all periods; or
(m) a Change in Control shall occur; or
(n) either of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
shall cease to be actively involved in the management of the Company's
operations on a full time day to day basis and the individual or individuals
succeeding to their functions shall not be appointed in a timely manner or shall
not have appropriate experience and qualifications therefor; or
(o) (i) any security interest in favor of the Collateral Agent or
the Special Collateral Agent created or purported to be created under the
Security Agreement, or the Supplemental Security Agreement, or under the Pledge
Agreement, or under any other Security Document, shall, in any such case, no
longer provide the lien or priority contemplated by such Security Document or
any party having granted any such security interests (or any successor thereto
or representative thereof) shall make any claim or assertion to such effect, or
(ii) any Credit Party (or any successor thereto or representative thereof) shall
claim or assert that this Agreement or any Guarantee Agreement or any right or
remedy of the Administrative Agent, the Collateral Agent, the Special Collateral
Agent, the Issuing Bank or any Lender hereunder shall not be enforceable in
accordance with its terms, or any Person (other than the Administrative Agent,
the Collateral Agent, the Special Collateral Agent, the Issuing Bank or any
Lender) shall claim or assert that any other Loan Document or any right or
remedy of the Administrative Agent, the Collateral Agent, the Special Collateral
Agent, the Issuing Bank or any Lender thereunder shall not be enforceable in
accordance with its terms;
then, and in every such event (other than an event described in clause (h) or
(i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at
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the request of the Required Lenders shall, by notice to the Borrowers, take any
of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrowers, (iii) require cash
collateral as contemplated by Section 2.04(h), and (iv) enforce rights or cause
the enforcement of rights or exercise or cause the exercise of any remedies
available under any Loan Document or otherwise; and in case of any event
described in clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrowers accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers.
ARTICLE VIII
The Agents
Each of the Lenders and the Issuing Bank hereby irrevocably appoints (i)
The Chase Manhattan Bank as Administrative Agent, (ii) The Chase Manhattan Bank
as Collateral Agent, and (iii) Texas Commerce Bank National Association as
Special Collateral Agent (the Administrative Agent, the Collateral Agent, and
the Special Collateral Agent for purposes of this Article being referred to
individually as an "Agent" and collectively as the "Agents"), and authorizes the
Agents to take such actions on its behalf and to exercise such powers as are
delegated to such Agent by the terms of this Agreement or by the terms of any
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
Each bank serving as an Agent shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not an Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with any Credit Party
or any Subsidiary or other Affiliate thereof as if it were not an Agent.
None of the Agents shall have any duties or obligations except those
expressly set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, (a) the Agents shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) no Agent shall have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby or by the other Loan Documents that such
Agent is required to exercise in writing by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, no Agent shall have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to any Credit Party or any
of its Subsidiaries that is communicated to or obtained by such Agent or any of
its Affiliates in any capacity. No Agent shall be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or wilful misconduct. No Agent shall be deemed to have knowledge of
any Default unless and until written notice thereof is
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given to such Agent by the Borrowers or a Lender, and no Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document. The
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for any
Credit Party), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.
Each Agent may perform any and all of its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by it including,
without limitation, its duties, rights and powers under any Loan Documents in
respect of the Collateral or any portion thereof. Each Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of each Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as an Agent.
Subject to the foregoing, each Agent (including but not limited to the
Administrative Agent) acting under or in respect of the Collateral, shall act
for the ratable benefit of the Lenders and the Issuing Bank as appropriate
hereunder (unless otherwise provided herein or in any other Loan Documents) and
shall be entitled to the exculpations, privileges, indemnities and other
protections provided for the benefit of the Agent herein or therein.
Subject to the appointment and acceptance of a successor Agent as provided
in this paragraph, any Agent may resign at any time by notifying the Lenders,
the Issuing Bank and the Borrowers. Upon any such resignation, the Required
Lenders shall have the right, in consultation with the Borrowers, to appoint a
successor. If no successor shall have been so appointed by the Required Lenders
and shall have accepted such appointment within 30 days after the retiring Agent
gives notice of its resignation, then the retiring Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Agent which shall be a bank
with an office in New York, New York, or an Affiliate of any such bank (except
that the Lenders and the Issuing Bank shall receive a favorable opinion of
Alabama counsel selected by the Secured Parties as to the Lien of the
Supplemental Security Agreement in respect of any successor to the Special
Collateral Agent unless all the Lenders and the Issuing Bank otherwise agree).
Upon the acceptance of its appointment as an Agent by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations as such. The fees payable by the
Borrowers to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrowers and such successor.
After any Agent's resignation, the provisions of this Article and Section 9.03
shall
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continue in effect for the benefit of such retiring Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agents or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrowers or to either Borrower, to the Borrowers c/o
the Company at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (Telecopy No. 914-428-4581);
(b) if to the Administrative Agent, to The Chase Manhattan Bank,
Loan and Agency Bank Services Group, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ ▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with copies
to The Chase Manhattan Bank, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention of ▇▇▇ ▇▇▇▇▇▇▇▇ (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to the Issuing Bank, to The Chase Manhattan Bank, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇ Apollo
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Collateral Agent, the Special Collateral Agent, the
Issuing Bank or any Lender in exercising any right or power hereunder or under
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative
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Agent, the Collateral Agent, the Special Collateral Agent, the Issuing Bank and
the Lenders hereunder or under any other Loan Document are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrowers or any other Credit Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, the
Collateral Agent, the Special Collateral Agent, any Lender or the Issuing Bank
may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement or any of the other Loan Documents nor
any provision hereof or thereof may be waived, amended or modified except (a) in
the case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders or by the Borrowers and
the Administrative Agent with the consent of the Required Lenders, and (b) in
the case of any Security Document, pursuant to an agreement entered into by the
parties thereto and consented to by the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written
consent of such Lender, (ii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or LC
Disbursement, or any interest thereon, or any fees payable hereunder, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment, without the written consent of each Lender
affected thereby, (iv) change Section 2.16(b) or (c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written
consent of each Lender, (v) release any material Collateral under any Security
Document or release any guarantor under any Guarantee Agreement except as
expressly permitted thereby or hereby, without the prior consent of each Lender,
(vi) waive, amend, or modify any provision of Section 6.04(c) or Section 6.07(f)
without the prior written consent of the Mandatory Lenders; or (vii) change any
of the provisions of this Section or the definition of "Required Lenders" or
"Mandatory Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
under any other Loan Document or make any determination or grant any consent
hereunder or thereunder, without the written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Collateral Agent, the Special
Collateral Agent, or the Issuing Bank hereunder or thereunder without the prior
written consent of the Administrative Agent, the Collateral Agent, the Special
Collateral Agent, or the Issuing Bank, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers shall
pay (i) all reasonable out-of-pocket expenses incurred by each of the
Administrative Agent, the Collateral Agent, the Special Collateral Agent, and
the Issuing Bank, and its respective Affiliates, including the reasonable fees,
charges and disbursements of counsel for such Persons, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement and the other Loan Documents, or any
amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the amendment, renewal or extension of the Letter of
Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses
incurred by the Administrative Agent, the Collateral Agent, the Special
Collateral Agent, the Issuing Bank or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent, the Collateral
Agent, the
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Special Collateral Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights against any Credit Party in connection
with this Agreement or the other Loan Documents, including its rights against
any Credit Party under this Section, or against any Credit Party in connection
with the Loans made hereunder or the Letter of Credit, or any Collateral,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letter of Credit, or
Collateral.
(b) The Borrowers shall indemnify the Administrative Agent, the
Collateral Agent, the Special Collateral Agent, the Issuing Bank and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement, any other Loan
Document, or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto or thereto of their respective obligations
hereunder or thereunder or the consummation of the Transactions or any other
transactions contemplated hereby or thereby (other than in connection with
disputes between parties hereto other than Credit Parties regarding obligations
of such other parties), (ii) any Loan or the Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under the Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by and Credit Party or any of its
Subsidiaries, or any Environmental Liability related in any way to any Credit
Party or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrowers fail to pay any amount required
to be paid to the Administrative Agent, the Collateral Agent, the Special
Collateral Agent, or the Issuing Bank under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the
Collateral Agent, the Special Collateral Agent, or the Issuing Bank, as the case
may be, such Lender's Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent, the Collateral Agent, the Special
Collateral Agent, or the Issuing Bank in its capacity as such; and provided
further that the action of the Collateral Agent, the Special Collateral Agent or
the Issuing Bank giving rise to the same did not constitute gross negligence or
willful misconduct by such Person.
(d) To the extent permitted by applicable law, the Borrowers shall
not assert, and each Borrower hereby waives, any claim against any Indemnitee,
on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any other Loan Document, or any
agreement or instrument contemplated hereby or thereby, the Transactions, any
Loan or the Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after
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written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
and the other Loan Documents shall be binding upon and inure to the benefit of
the parties hereto and thereto and their respective successors and assigns
permitted hereby and thereby, except that the Borrowers may not assign or
otherwise transfer any of their rights or obligations hereunder or thereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by a Borrower without such consent shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, the Collateral Agent, the Special
Collateral Agent, their respective successors and assigns permitted hereby and,
to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Collateral Agent, the Special Collateral Agent, the
Issuing Bank and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement and the other Loan Documents
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided that (i) except in the case of an assignment to a Lender or an
Affiliate of a Lender, the Borrowers and the Administrative Agent (and, in the
case of an assignment of all or a portion of a Commitment or any Lender's
obligations in respect of its LC Exposure and the Issuing Bank) must give their
prior written consent to such assignment (which consent shall not be
unreasonably withheld), (ii) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment, the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 unless the Borrowers and
the Administrative Agent otherwise consent, (iii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement and the other Loan Documents, (iv)
the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Acceptance, together with a processing and recordation
fee of $3,500 (provided, however, that such fee shall not be charged for an
assignment to an Affiliate of a Lender), and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; and provided further that any consent of the Borrowers otherwise
required under this paragraph shall not be required if an Event of Default has
occurred and is continuing. Subject to acceptance and recording thereof pursuant
to paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement and the other
Loan Documents, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the
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"Register"). The entries in the Register shall be conclusive, and the Borrowers,
the Administrative Agent, the Collateral Agent, the Special Collateral Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers, the Collateral Agent, the Special
Collateral Agent, the Issuing Bank and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrowers, the
Administrative Agent, or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided 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 and (iii) the Borrowers, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to
Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrowers agree that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were a
Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrowers' prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15 unless
the Borrowers are notified of the participation sold to such Participant and
such Participant agrees, for the benefit of the Borrowers, to comply with
Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement and the Revolving
Credit Note and the Term Note issued to it to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or assignment of a
security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or
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assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrowers herein and by the Borrowers and the other
Credit Parties in the other Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Documents shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of this Agreement
and the making of any Loans, regardless of any investigation made by any such
other party or on its behalf and notwithstanding that the Administrative Agent,
the Collateral Agent, the Special Collateral Agent, the Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or the Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The provisions of
Sections 2.13, 2.14, 2.15 and 9.03 and Article VIII shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letter of Credit and the Commitments or the termination of this Agreement
or any provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents, and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
thereto relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and
enforceability of the remaining provisions hereof; and the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, 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 obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of a Borrower
against any of and all the obligations of the Borrowers now or hereafter
existing under this Agreement or any other Loan Document held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or such other Loan Document and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have.
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SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.
(b) Each Borrower hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Collateral Agent, the Special Collateral Agent, the Issuing Bank or any
Lender may otherwise have to bring any action or proceeding relating to this
Agreement against either Borrower or its properties in the courts of any
jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any court referred to in paragraph (b) of this Section. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and
-61-
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or any
other Loan Document, (g) with the consent of the Borrowers or (h) to the extent
such Information (x) becomes publicly available other than as a result of a
breach of this Section or (y) becomes available to the Administrative Agent, the
Collateral Agent, the Special Collateral Agent, the Issuing Bank or any Lender
on a nonconfidential basis from a source other than the Borrowers. For the
purposes of this Section, "Information" means all information received from the
Borrowers relating to the Borrowers or their businesses, other than any such
information that is available to the Administrative Agent, the Collateral Agent,
the Special Collateral Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by the Borrowers; provided that, in
the case of information received from the Borrowers after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "Charges"), shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
ARTICLE X
Two Borrowers
Each Borrower agrees that the representations and warranties made by, and
the liabilities, obligations, and covenants of and applicable to either or both
of the Borrowers under this Agreement, shall in every case (whether or not
specifically so stated in each such case herein) be joint and several. Every
notice by or to either Borrower shall be deemed also to constitute notice by and
to the other Borrower, every act or omission by either Borrower also shall be
binding upon the other Borrower, and the Administrative Agent, the Collateral
Agent, the Special Collateral Agent, the Issuing Bank, and the Lenders are fully
authorized by each Borrower to act and rely also upon the representations and
warranties, covenants, notices, acts, and omissions of the other Borrower.
[Balance of Page Intentionally Left Blank]
-62-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
KINRO, INC.
By
Name:
Title:
SHOALS SUPPLY, INC.
By
Name:
Title:
THE CHASE MANHATTAN BANK,
individually and as Administrative Agent,
By
Name:
Title:
KEYBANK, NATIONAL ASSOCIATION
By
Name:
Title:
THE SUMITOMO BANK, LIMITED
By
Name:
Title:
EUROPEAN AMERICAN BANK
By
Name:
Title:
-63-
EXHIBIT A
Form Of
Assignment And Acceptance
Reference is made to the Credit Agreement dated as of May 15, 1997
(as amended and in effect on the date hereof, the "Credit Agreement"), among
Kinro, Inc., an Ohio corporation, Shoals Supply, Inc., a Delaware corporation,
the Lenders named therein and The Chase Manhattan Bank, as Administrative Agent
for the Lenders. Terms defined in the Credit Agreement are used herein with the
same meanings.
The Assignor named on the reverse hereof hereby sells and assigns,
without recourse, to the Assignee named on the reverse hereof, and the Assignee
hereby purchases and assumes, without recourse, from the Assignor, effective as
of the Assignment Date set forth on the reverse hereof, the interests set forth
on the reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement and the other Loan Documents, including,
without limitation, the interests set forth on the reverse hereof in the
Commitment of the Assignor on the Assignment Date and Term Loans and Revolving
Loans owing to the Assignor which are outstanding on the Assignment Date,
together with the participations in the Letter of Credit and LC Disbursements
held by the Assignor on the Assignment Date, but excluding accrued interest and
fees to and excluding the Assignment Date. The Assignee hereby acknowledges
receipt of a copy of the Credit Agreement. From and after the Assignment Date
(i) the Assignee shall be a party to and be bound by the provisions of the
Credit Agreement and, to the extent of the Assigned Interest, have the rights
and obligations of a Lender thereunder and (ii) the Assignor shall, to the
extent of the Assigned Interest, relinquish its rights and be released from its
obligations under the Credit Agreement and the other Loan Documents.
This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is a Foreign Lender, any
documentation required to be delivered by the Assignee pursuant to Section
2.15(e) of the Credit Agreement, duly completed and executed by the Assignee,
and (ii) if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire in the form supplied by the Administrative Agent,
duly completed by the Assignee. The [Assignee/Assignor] shall pay the fee
payable to the Administrative Agent pursuant to Section 9.04(b) of the Credit
Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
-1-
Effective Date of Assignment
("Assignment Date"):
================================================================================
Facility Principal Amount Assigned Percentage Assigned of
-------- Facility/Commitment (set
forth, to at least 8
decimals, as a percentage
of the Facility and the
aggregate Commitments of
all Lenders thereunder)
--------------------------------------------------------------------------------
Commitment Assigned: $ %
--------------------------------------------------------------------------------
Term Loans:
--------------------------------------------------------------------------------
Revolving Loans:
================================================================================
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By:
Name:
Title:
[Name of Assignee] , as Assignee
By:
Name:
Title:
-2-
The undersigned hereby consent to the within assignment:*/
Kinro, Inc. The Chase Manhattan Bank,
as Administrative Agent,
By: By:
Name: Name:
Title: Title:
Shoals Supply, Inc. The Chase Manhattan Bank,
as Issuing Bank
By: By:
Name: Name:
Title: Title:
-3-
EXHIBIT B
Opinion Of Counsel For The Credit Parties
[TO BE SUPPLIED]
-1-
SCHEDULE 1.01-1
================================================================================
Alternate Base Eurodollar
Rate Loans Loans
-------------- ----------
--------------------------------------------------------------------------------
General Margins (through 0.25% 1.50%
December 30, 1999)
--------------------------------------------------------------------------------
Special Margins (and 0 1.00%
General Margins after
December 30, 1999)
================================================================================
Special Margins are available only at such times during which (i)
the Borrowers are in compliance with all terms and conditions of this Agreement,
there being no Default or Event of Default hereunder and (ii) the ratio referred
to in Section 6.07(d) is less than 0.50 to 1.00. If such conditions are met, the
Borrowers may request in a notice in writing to the Administrative Agent that
Special Margins apply, which request shall (i) contain a detailed calculation
demonstrating compliance with all financial covenants and ratios under this
Agreement, and (ii) contain the certification by the chief financial officer of
the Company to the effect that the conditions required by the preceding sentence
are satisfied. Upon compliance with the foregoing, the interest rates on the
Loans will be adjusted to reflect the application of the Special Margins five
(5) Business Days after receipt of such notice. Compliance with the conditions
of the first sentence of this paragraph shall be tested at the end of each month
while the Special Margins are in effect. In the event that the foregoing
conditions permitting the applicability of Special Margins are no longer fully
satisfied at any time, the Special Margins shall automatically increase to the
General Margins (or such other rate as may be provided in the Credit Agreement).
The availability of Special Margins after reversion to General Margins shall be
effective only upon compliance with all conditions to the initial applicability
of Special Margins.
-2-
SCHEDULE 1.01-1A
----------------
Additional Members of the Rose Group:
================================================================================
Name:
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ & ▇▇▇▇▇▇
--------------------------------------------------------------------------------
Cardinal Investment Company, Inc. Pension Plan
--------------------------------------------------------------------------------
Cardinal Investment Company, Inc. Profit Sharing Plan
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------------------------------------------------------
Scout Ventures
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇ Dunk
--------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ Investment Corporation
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ as Trustee of the ▇▇▇▇▇▇ ▇▇▇▇▇▇ Rose 1990 Irrevocable Trust
--------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------------------
Metrocenter Properties, Inc.
--------------------------------------------------------------------------------
Atlas Capital LP
--------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
================================================================================
-3-
SCHEDULE 1.01-2
---------------
================================================================================
Name of Guarantor State of Organization
----------------- ---------------------
--------------------------------------------------------------------------------
1. Kinro Holding, Inc. New York
--------------------------------------------------------------------------------
2. Kinro Manufacturing, Inc. Delaware
--------------------------------------------------------------------------------
3. Shoals Holding, Inc. New York
--------------------------------------------------------------------------------
4. Kinro Texas Limited Partnership Texas
--------------------------------------------------------------------------------
5. Shoals Supply Texas Limited Partnership Texas
--------------------------------------------------------------------------------
6. Kinro Tennessee Limited Partnership Tennessee
--------------------------------------------------------------------------------
7. Shoals Supply Tennessee Limited Partnership Tennessee
================================================================================
-4-
SCHEDULE 2.01
-------------
================================================================================
Term Loan Revolving
Lender Facility Commitment Credit Commitment
------ ------------------- -----------------
--------------------------------------------------------------------------------
The Chase Manhattan Bank $10,500,000 $19,500,000
--------------------------------------------------------------------------------
KeyBank, National Association 3,500,000 6,500,000
--------------------------------------------------------------------------------
The Sumitomo Bank, Limited 3,500,000 6,500,000
--------------------------------------------------------------------------------
European American Bank 3,500,000 6,500,000
--------- ---------
--------------------------------------------------------------------------------
TOTAL $21,000,000 $39,000,000
================================================================================
-5-
SCHEDULE 2.08
-------------
==============================================================================================
Portion Due Portion Due
Term Loan Total Portion Due The KeyBank, The Sumitomo Portion Due
Principal Principal Chase Manhattan National Bank, European
Payment Dates Payment Bank Association Limited American Bank
------------- ------- ---- ----------- ------- -------------
----------------------------------------------------------------------------------------------
July 31, 1997 $2,500,000 $1,250,000 $416,666.67 $416,666.67 $416,666.67
----------------------------------------------------------------------------------------------
October 31, 1997 2,500,000 1,250,000 416,666.67 416,666.67 416,666.67
----------------------------------------------------------------------------------------------
January 31, 1998 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
April 30, 1998 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
July 31, 1998 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
October 31, 1998 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
January 31, 1999 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
April 30, 1999 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
July 31, 1999 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
October 31, 1999 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
January 31, 2000 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
April 30, 2000 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
July 31, 2000 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
October 31, 2000 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
January 31, 2001 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
April 30, 2001 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
July 31, 2001 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
October 31, 2001 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
January 31, 2002 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
April 30, 2002 842,106 421,053 140,351.00 140,351.00 140,351.00
----------------------------------------------------------------------------------------------
Fifth Anniversary 842,092 421,046 140,348.66 140,348.66 140,348.66
of the Effective ------- ------- ---------- ---------- ----------
Date
TOTAL $21,000,000 $10,500,000 $3,500,000.00 $3,500,000.00 $3,500,000.00
==============================================================================================