FIRST AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 27, 2000
AMONG
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
AND
BANK OF AMERICA, N.A.
(FORMERLY KNOWN AS BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, SUCCESSOR-IN-INTEREST TO
BANKAMERICA BUSINESS CREDIT, INC.)
AS THE AGENT
AND
INDUSTRIAL SYSTEMS ASSOCIATES, INC.
AS THE BORROWER
TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT.......................................................2
1.1. Definitions.....................................................................2
1.2. Accounting Terms...............................................................29
1.3. Interpretive Provisions........................................................29
ARTICLE 2 LOANS AND LETTERS OF CREDIT...........................................................30
2.1. Total Facility.................................................................30
2.2. Revolving Loans................................................................30
2.3. Intentionally Omitted..........................................................38
2.4. Letters of Credit..............................................................39
ARTICLE 3 INTEREST AND FEES.....................................................................45
3.1. Interest.......................................................................45
3.2. Conversion and Continuation Elections..........................................46
3.3. Maximum Interest Rate..........................................................47
3.4. Certain Fees...................................................................48
3.5. Unused Line Fee................................................................48
3.6. Letter of Credit Fee...........................................................48
ARTICLE 4 PAYMENTS AND PREPAYMENTS..............................................................49
4.1. Revolving Loans................................................................49
4.2. Termination of Facility........................................................49
4.3. Reduction of Commitments.......................................................49
4.4. Intentionally Omitted..........................................................50
4.5. Intentionally Omitted..........................................................50
4.6. Payments by the Borrower.......................................................50
4.7. Payments as Revolving Loans....................................................50
4.8. Apportionment, Application and Reversal of Payments............................51
4.9. Indemnity for Returned Payments................................................51
4.10. Agent's and Lenders' Books and Records; Monthly Statements.....................52
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY................................................52
5.1. Taxes..........................................................................52
5.2. Illegality.....................................................................54
5.3. Increased Costs and Reduction of Return........................................54
5.4. Funding Losses.................................................................55
5.5. Inability to Determine Rates...................................................55
5.6. Certificates of Lenders........................................................55
5.7. Survival.......................................................................56
5.8. Replacement Lenders............................................................56
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ARTICLE 6 COLLATERAL............................................................................56
6.1. Grant of Security Interest.....................................................56
6.2. Perfection and Protection of Security Interest.................................58
6.3. Location of Collateral.........................................................59
6.4. Title to, Liens on, and Sale and Use of Collateral.............................59
6.5. Intentionally Omitted..........................................................59
6.6. Access and Examination; Confidentiality........................................60
6.7. Collateral Reporting...........................................................61
6.8. Accounts.......................................................................62
6.9. Collection of Accounts; Payments...............................................63
6.10. Inventory; Perpetual Inventory.................................................65
6.11. Equipment......................................................................65
6.12. Customer Contracts.............................................................66
6.13. Documents, Instruments, and Chattel Paper......................................67
6.14. Right to Cure..................................................................67
6.15. Power of Attorney..............................................................67
6.16. The Agent's and Lenders' Rights, Duties and Liabilities........................68
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.....................................68
7.1. Books and Records..............................................................68
7.2. Financial Information..........................................................69
7.3. Notices to the Lenders.........................................................71
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS................................................72
8.1. Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents.................................................................72
8.2. Validity and Priority of Security Interest.....................................73
8.3. Organization and Qualification.................................................73
8.4. Corporate Name; Prior Transactions.............................................73
8.5. Subsidiaries and Affiliates....................................................74
8.6. Financial Statements and Projections...........................................74
8.7. Capitalization.................................................................74
8.8. Solvency.......................................................................74
8.9. Debt...........................................................................75
8.10. Distributions..................................................................75
8.11. Title to Property..............................................................75
8.12. Real Estate; Leases............................................................75
8.13. Proprietary Rights.............................................................75
8.14. Trade Names and Terms of Sale..................................................76
8.15. Litigation.....................................................................76
8.16. Restrictive Agreements.........................................................76
8.17. Labor Disputes.................................................................76
8.18. Environmental Laws.............................................................77
8.19. No Violation of Law............................................................78
8.20. No Default.....................................................................78
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8.21. ERISA Compliance...............................................................78
8.22. Taxes..........................................................................79
8.23. Regulated Entities.............................................................79
8.24. Use of Proceeds; Margin Regulations............................................79
8.25. Copyrights, Patents, Trademarks and Licenses, etc..............................80
8.26. No Material Adverse Change.....................................................80
8.27. Full Disclosure................................................................80
8.28. Material Agreements............................................................80
8.29. Bank Accounts..................................................................81
8.30. Governmental Authorization.....................................................81
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS....................................................81
9.1. Taxes and Other Obligations....................................................81
9.2. Corporate Existence and Good Standing..........................................81
9.3. Compliance with Law and Agreements; Maintenance of Licenses....................82
9.4. Maintenance of Property........................................................82
9.5. Insurance......................................................................82
9.6. Condemnation...................................................................84
9.7. Environmental Laws.............................................................85
9.8. Compliance with ERISA..........................................................86
9.9. Mergers, Consolidations or Sales...............................................86
9.10. Distributions; Capital Change; Restricted Investments..........................86
9.11. Intentionally Omitted..........................................................87
9.12. Guaranties.....................................................................87
9.13. Debt...........................................................................87
9.14. Intentionally Omitted..........................................................87
9.15. Transactions with Affiliates...................................................87
9.16. Investment Banking and Finder's Fees...........................................88
9.17. Intentionally Omitted..........................................................88
9.18. Business Conducted.............................................................88
9.19. Liens..........................................................................88
9.20. Intentionally Omitted..........................................................88
9.21. New Subsidiaries...............................................................88
9.22. Fiscal Year....................................................................89
9.23. Capital Expenditures...........................................................89
9.24. Fixed Charge Coverage Ratio....................................................89
9.25. Availability; Fixed Charge Coverage............................................89
9.26. Use of Proceeds................................................................89
9.27. Further Assurances.............................................................89
9.28. Canadian Tax Matters...........................................................90
9.29. Payment of Subordinated Debt...................................................90
9.30. Quebec Locations...............................................................90
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ARTICLE 10 CONDITIONS TO AMENDMENT AND RESTATEMENT AND LENDING..................................90
10.1. Conditions Precedent to Amendment and Restatement..............................90
10.2. Conditions Precedent to Each Loan..............................................91
ARTICLE 11 DEFAULT; REMEDIES....................................................................92
11.1. Events of Default..............................................................92
11.2. Remedies.......................................................................94
ARTICLE 12 TERM AND TERMINATION.................................................................96
12.1. Term and Termination...........................................................96
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..........................97
13.1. No Waivers; Cumulative Remedies................................................97
13.2. Amendments and Waivers.........................................................97
13.3. Assignments; Participations....................................................98
ARTICLE 14 THE AGENT...........................................................................100
14.1. Appointment and Authorization.................................................100
14.2. Delegation of Duties..........................................................100
14.3. Liability of Agent............................................................101
14.4. Reliance by Agent.............................................................101
14.5. Notice of Default.............................................................102
14.6. Credit Decision...............................................................102
14.7. Indemnification...............................................................102
14.8. Agent in Individual Capacity..................................................103
14.9. Successor Agent...............................................................103
14.10. Withholding Tax...............................................................104
14.11. Intentionally Omitted.........................................................106
14.12. Collateral Matters............................................................106
14.13. Restrictions on Actions by Lenders; Sharing of Payments.......................107
14.14. Agency for Perfection.........................................................107
14.15. Payments by Agent to Lenders..................................................108
14.16. Concerning the Collateral and the Related Loan Documents......................108
14.17. Field Audit and Examination Reports; Disclaimer by Lenders....................108
14.18. Relation Among Lenders........................................................109
ARTICLE 15 MISCELLANEOUS.......................................................................109
15.1. Cumulative Remedies; No Prior Recourse to Collateral..........................109
15.2. Severability..................................................................109
15.3. Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.........110
15.4. WAIVER OF JURY TRIAL..........................................................111
15.5. Survival of Representations and Warranties....................................111
15.6. Other Security and Guaranties.................................................111
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15.7. Fees and Expenses.............................................................111
15.8. Notices.......................................................................112
15.9. Waiver of Notices.............................................................113
15.10. Binding Effect................................................................113
15.11. Indemnity of the Agent and the Lenders by the Borrower........................114
15.12. Limitation of Liability.......................................................114
15.13. Final Agreement; References...................................................115
15.14. Counterparts..................................................................115
15.15. Captions......................................................................115
15.16. Right of Setoff...............................................................115
15.17. Amendment and Restatement.....................................................116
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EXHIBITS AND SCHEDULES
EXHIBIT A - INTENTIONALLY OMITTED
EXHIBIT B - BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - INTENTIONALLY OMITTED
EXHIBIT E - NOTICE OF BORROWING
EXHIBIT F - NOTICE OF CONVERSION/CONTINUATION
EXHIBIT G - ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1 TO
ASSIGNMENT AND
ACCEPTANCE AGREEMENT - NOTICE OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT H - FORM OF ACCOUNTS PAYABLE REPORT
SCHEDULE 1.1A ASSIGNED CONTRACTS
SCHEDULE 6.3 LOCATIONS
SCHEDULE 8.3 JURISDICTIONS OF QUALIFICATION
SCHEDULE 8.4 CORPORATE NAMES; PRIOR TRANSACTIONS
SCHEDULE 8.5 SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.7 CAPITALIZATION
SCHEDULE 8.9 DEBT
SCHEDULE 8.12 REAL PROPERTY
SCHEDULE 8.13 PROPRIETARY RIGHTS
SCHEDULE 8.14 TRADE NAMES
SCHEDULE 8.15 LITIGATION
SCHEDULE 8.17 LABOR DISPUTES
SCHEDULE 8.18 ENVIRONMENTAL MATTERS
SCHEDULE 8.21 ERISA MATTERS
SCHEDULE 8.28 MATERIAL AGREEMENTS
SCHEDULE 8.29 BANK ACCOUNTS
SCHEDULE 9.15 AFFILIATE TRANSACTIONS
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FIRST AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
First Amended and Restated Loan and Security Agreement, dated
as of April 27, 2000, among the financial institutions listed on the signature
pages hereof (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), Bank of America, N.A. (formerly
known as Bank of America National Trust and Savings Association,
successor-in-interest to BankAmerica Business Credit, Inc.) (the "Bank") with an
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as
agent for the Lenders (in its capacity as agent, the "Agent"), and Industrial
Systems Associates, Inc., a Pennsylvania corporation, with an office at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower").
W I T N E S S E T H :
WHEREAS, the Borrower, INTERMAT, Inc., a Delaware corporation
("INTERMAT"), the Agent and the Lenders are party to that certain Loan and
Security Agreement dated as of May 8, 1998 (as previously amended by the Waiver
and Amendment No. 1 to Loan and Security Agreement, dated March 2, 2000 among
Lenders, Agent, Borrower and INTERMAT, the "Original Loan Agreement");
WHEREAS, pursuant to a Consent and Release dated February 29,
2000 by the Agent and the Lenders and accepted and agreed to by the Borrower and
INTERMAT (the "Release"), and in connection with the sale of its stock, INTERMAT
will no longer be a borrower under the Original Loan Agreement;
WHEREAS, as a result of the termination of INTERMAT as a
borrower under the Original Loan Agreement, the parties hereto desire to amend
and restate the Original Loan Agreement; and
WHEREAS, it is the intent of the parties hereto that this
Agreement (i) shall re-evidence the Borrower's indebtedness to the Lenders and
the Agent under the Original Loan Agreement, (ii) is entered into in
substitution for, and not in payment of, the obligations of the Borrower under
the Original Loan Agreement, and (iii) is in no way intended to constitute a
novation of the Borrower's indebtedness which was evidenced by the Original Loan
Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrower hereby agree that the Original Loan Agreement is amended and restated
to read in its entirety as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1. DEFINITIONS.
As used herein:
"ACCOUNTS" means, with respect to the Borrower or SDI Canada,
all of such Person's now owned or hereafter acquired or arising accounts, and
any other rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.
"ACCOUNT DEBTOR" means each Person obligated in any way on or
in connection with an Account.
"ADJUSTED NET EARNINGS FROM OPERATIONS" means, with respect to
any fiscal period of SDI, SDI's consolidated net income after provision for
income taxes for such fiscal period, as determined in accordance with GAAP and
reported on the Financial Statements for such period, excluding any and all of
the following included in such net income: (a) gain or loss arising from the
sale of any capital assets; (b) gain arising from any write-up in the book value
of any asset; (c) earnings or loss of any corporation, substantially all the
assets of which have been acquired by SDI or any of its Subsidiaries in any
manner, to the extent realized by such other corporation prior to the date of
acquisition; (d) earnings of any business entity (other than a consolidated
Subsidiary) in which SDI or any of its Subsidiaries has an ownership interest
unless (and only to the extent) such earnings shall actually have been received
by SDI or any of its Subsidiaries in the form of cash distributions; (e)
earnings of any Person to which assets of SDI or any of its Subsidiaries shall
have been sold, transferred or disposed of, or into which SDI or any of its
Subsidiaries shall have been merged, or which has been a party with SDI or any
of its Subsidiaries to any consolidation or other form of reorganization, prior
to the date of such transaction; (f) gain arising from the acquisition of debt
or equity securities of SDI or any of its Subsidiaries or from cancellation or
forgiveness of Debt; and (g) gain arising from extraordinary items, as
determined in accordance with GAAP, or from any other non-recurring transaction.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person or which owns, directly or indirectly, five percent
(5%) or more of the outstanding equity interest of such Person. A Person shall
be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.
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"AGENT" means Bank of America, N.A., formerly known as Bank of
America National Trust and Savings Association, successor-in-interest to
BankAmerica Business Credit, Inc., solely in its capacity as agent for the
Lenders, and any successor agent.
"AGENT ADVANCES" has the meaning specified in SECTION 2.2(i).
"AGENT'S LIENS" means the Liens in the Collateral granted to
the Agent, for the ratable benefit of the Lenders, the Bank, and the Agent
pursuant to this Agreement and the other Loan Documents.
"AGENT-RELATED PERSONS" means the Agent and any successor
agent, together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"AGGREGATE REVOLVER OUTSTANDINGS" means, with respect to the
Borrower, at any time: the sum of (a) the unpaid balance of Revolving Loans for
the account of the Borrower, (b) the aggregate amount of Pending Revolving Loans
for the account of the Borrower, (c) one hundred percent (100%) of the aggregate
undrawn face amount of all outstanding Letters of Credit for the account of the
Borrower, and (d) the aggregate amount of any unpaid reimbursement obligations
in respect of Letters of Credit for the account of the Borrower.
"AGREEMENT" means this Loan and Security Agreement.
"ANNIVERSARY DATE" means each anniversary of the Closing Date.
"APPLICABLE MARGIN" means:
(a) with respect to Base Rate Revolving Loans, the per annum
percentage set forth below in Chart I in the column entitled "Applicable Margin
for Base Rate Revolving Loans" opposite the Senior Funded Debt to EBITDA Ratio
for the most recently ended Fiscal Quarter for which the Agent has received the
certificate required under SECTION 7.2(e) (such that adjustments to such per
annum percentage occur on the first day of the calendar month after the date the
Agent receives the certificate required under SECTION 7.2(e) for a Fiscal
Quarter), and
(b) with respect to LIBOR Revolving Loans, the per annum
percentage set forth below in Chart I in the column entitled "Applicable Margin
for LIBOR Revolving Loans" opposite the Senior Funded Debt to EBITDA Ratio for
the most recently ended Fiscal Quarter for which the Agent has received the
certificate required under SECTION 7.2(e) (such that adjustments to such per
annum percentage occur on the first day of the calendar month after the date the
Agent receives the certificate required under SECTION 7.2(e) for a Fiscal
Quarter).
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CHART I
APPLICABLE MARGIN FOR BASE APPLICABLE MARGIN FOR
SENIOR FUNDED DEBT TO EBITDA RATE REVOLVING LOANS LIBOR REVOLVING LOANS
------------------------------------ -------------------------- ----------------------
less than 0 0 1.50%
---------------------------------------------------------------------------------------------------------
greater than 3.0:1.0, but less than 3.75:1.0 0 1.75%
---------------------------------------------------------------------------------------------------------
greater than 3.75:1.0, but less than 4.5:1.0 0.25% 2.00%
---------------------------------------------------------------------------------------------------------
greater than 4.5:1.0, but less than 5.25:1.0 0.50% 2.25%
---------------------------------------------------------------------------------------------------------
greater than 5.25:1.0, but less than 6.0:1.0 0.75% 2.50%
---------------------------------------------------------------------------------------------------------
greater than 6.0:1.0 1.00% 3.00%
---------------------------------------------------------------------------------------------------------
Failure to timely deliver financial statements for the last month of a Fiscal
Quarter shall, in addition to any other remedy provided for in this Agreement,
result in an increase in the Applicable Margins to the highest level set forth
in Chart I, until the day of receipt by the Agent of those financial statements
demonstrating that such an increase is not required. If the audited Financial
Statements received by the Agent under SECTION 7.2(a) indicate that the Senior
Funded Debt to EBITDA Ratio set forth in the certificate delivered to the Agent
under SECTION 7.2(e) for the last Fiscal Quarter of a Fiscal Year is inaccurate,
the Applicable Margin shall be retroactively adjusted to the Applicable Margin
that should have been in effect for such relevant period based on such audited
Financial Statements. For purposes of Chart I, EBITDA as used in determining
Senior Funded Debt shall be determined for the twelve (12) month period ending
on the last day of the applicable Fiscal Quarter.
"ASSIGNED CONTRACTS" means, collectively, with respect to the
Borrower or SDI Canada, all of such Person's rights and remedies under, and all
moneys and claims for money due or to become due to such Person under those
contracts set forth on SCHEDULE 1.1a, and any other material contracts, and any
and all amendments, supplements, extensions, and renewals thereof including,
without limitation, all rights and claims of such Person now or hereafter
existing: (i) under any insurance, indemnities, warranties, and guarantees
provided for or arising out of or in connection with any of the foregoing
agreements; (ii) for any damages arising out of or for breach or default under
or in connection with any of the foregoing contracts; (iii) to all other amounts
from time to time paid or payable under or in connection with any of the
foregoing agreements; or (iv) to exercise or enforce any and all covenants,
remedies, powers and privileges thereunder. The Assigned Contracts shall include
the Customer Contracts, but shall exclude rights under real estate leases in
which any of the Credit Parties are the lessee.
"ASSIGNEE" has the meaning specified in SECTION 13.3(a).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in
SECTION 13.3(a).
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"ATTORNEY COSTS" means and includes all fees, expenses and
disbursements of any law firm or other external counsel engaged by the Agent,
the allocated cost of internal legal services of the Agent and all expenses and
disbursements of internal counsel of the Agent.
"AVAILABILITY" means with respect to the Borrower, at any
time, (a) the lesser of (i) the Maximum Revolver Amount or (ii) the result of
the following calculation: (A) eighty-five percent (85%) of the Net Amount of
Eligible Accounts of the Borrower and SDI Canada; PLUS (B) fifty-five percent
(55%) of the value of Eligible Inventory of the Borrower and SDI Canada;
PROVIDED, that at no time shall the sum of outstanding Revolving Loans based
upon the value of Eligible Inventory of the Borrower and SDI Canada exceed
$30,000,000 ("Maximum Inventory Loan"); MINUS (C) a reserve in the amount of
$5,000,000 pertaining to the loans made by the Borrower to the Mexican
Subsidiaries; MINUS (b) the sum of (i) the Aggregate Revolver Outstandings, (ii)
reserves for accrued interest on the Obligations of the Borrower, (iii) the
Environmental Compliance Reserve, and (iv) all other reserves which the Agent
deems necessary in the exercise of its reasonable credit judgment exercised in
good faith to maintain with respect to the Borrower's account, including,
without limitation, reserves for any amounts which the Agent or any Lender may
be obligated to pay in the future for the account of the Borrower or SDI Canada.
The Availability attributable to SDI Canada shall not be more than $5,000,000
and shall be based on the Dollar Equivalent of its Accounts and Inventory.
"AVERAGE REVOLVER DEBT" means, for any calendar month, the
average daily outstanding principal balance of the Revolving Loans for the
account of the Borrower for such calendar month.
"BANK" has the meaning specified in the preamble to this
Agreement.
"BANKRUPTCY CODE" means Title 11 of the United States Code
(11 U.S.C. Section 101 ET seq.).
"BANKRUPTCY AND INSOLVENCY ACT" means R.S.C. 1985, Chap. B-3.
"BASE RATE" means, for any day, the rate of interest in
effect for such day as publicly announced from time to time by the Bank in
Charlotte, North Carolina, as its "prime rate" (the "prime rate" being a rate
set by the Bank based upon various factors including the Bank's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate). Any change in the prime rate announced by the Bank shall
take effect at the opening of business on the day specified in the public
announcement of such change. Each Interest Rate based upon the Base Rate shall
be adjusted simultaneously with any change in the Base Rate.
"BASE RATE REVOLVING LOAN" means a Revolving Loan during any
period in which it bears interest based on the Base Rate.
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"BORROWER'S ADJUSTED NET EARNINGS FROM OPERATIONS" means, with
respect to any fiscal period of the Borrower, consolidated net income of the
Borrower and its Subsidiaries after provision for income taxes for such fiscal
period, as determined in accordance with GAAP and reported on the Financial
Statements for such period, excluding any and all of the following included in
such net income: (a) gain or loss arising from the sale of any capital assets;
(b) gain arising from any write-up in the book value of any asset; (c) earnings
or loss of any corporation, substantially all the assets of which have been
acquired by the Borrower or any of its Subsidiaries in any manner, to the extent
realized by such other corporation prior to the date of acquisition; (d)
earnings of any business entity (other than a consolidated Subsidiary of the
Borrower) in which the Borrower or any of its Subsidiaries has an ownership
interest unless (and only to the extent) such earnings shall actually have been
received by the Borrower or any of its Subsidiaries in the form of cash
distributions; (e) earnings of any Person to which assets of the Borrower or any
of its Subsidiaries shall have been sold, transferred or disposed of, or into
which the Borrower or any of its Subsidiaries shall have been merged, or which
has been a party with the Borrower or any of its Subsidiaries to any
consolidation or other form of reorganization, prior to the date of such
transaction; (f) gain arising from the acquisition of debt or equity securities
of the Borrower or any of its Subsidiaries or from cancellation or forgiveness
of Debt; and (g) gain arising from extraordinary items, as determined in
accordance with GAAP, or from any other non-recurring transaction.
"BORROWING" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to the Borrower (or by the
Bank in the case of a Borrowing funded by Non-Ratable Loans) or by the Agent in
the case of a Borrowing consisting of an Agent Advance or an Over Advance.
"BORROWING BASE CERTIFICATE" means, with respect to the
Borrower, a certificate by a Responsible Officer of the Borrower, substantially
in the form of EXHIBIT B (or another form acceptable to the Agent) setting forth
the calculation of the Availability of the Borrower, including a calculation of
each component thereof, as of the close of business no more than five (5)
Business Days prior to the date of such certificate, all in such detail as shall
be satisfactory to the Agent. All calculations of Availability of the Borrower
in connection with the preparation of any Borrowing Base Certificate shall
originally be made by the Borrower and certified to the Agent; PROVIDED, that
the Agent shall have the right to review and adjust any such calculation to the
extent that such calculation is not in accordance with this Agreement.
"BUSINESS DAY" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Chicago, Illinois, are required or permitted
to be closed, and (b) with respect to all notices, determinations, fundings and
payments in connection with the LIBOR Rate or LIBOR Revolving Loans, any day
that is a Business Day pursuant to CLAUSE (a) above and that is also a day on
which trading in Dollars is carried on by and between banks in the London
interbank market.
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"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"CAPITAL EXPENDITURES" means all payments due (whether or not
paid) in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, or in connection with a Capital Lease, less the Net Proceeds from a sale
or sale-leaseback of Fixed Assets.
"CAPITAL LEASE" means any lease of property by a Person
which, in accordance with GAAP, is or should be reflected as a capital lease on
the balance sheet of such Person.
"CHANGE OF CONTROL" means any event, transaction or
occurrence as a result of which (a) SDI shall cease to own and control all of
the economic and voting rights associated with ownership of one hundred percent
(100%) of the issued and outstanding capital stock of the Borrower on a fully
diluted basis, (b) the Borrower shall cease to own and control all of the
economic and voting rights associated with ownership of one hundred percent
(100%) of the issued and outstanding capital stock of SDI Canada Holdings, (c)
SDI Canada Holdings shall cease to own and control all of the economic and
voting rights associated with ownership of one hundred percent (100%) of the
issued and outstanding capital stock of SDI Canada, and (d) SDI shall cease to
own directly or indirectly one hundred percent (100%) of the issued and
outstanding capital stock of Strategic Distribution Services de Mexico, S.A. and
Strategic Distribution Marketing de Mexico, S.A. de C.V.
"CLOSING DATE" means May 8, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and regulations promulgated
thereunder.
"COLLATERAL" has the meaning specified in SECTION 6.1.
"COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"COMMITMENT" on the signature pages of this Agreement or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 13.3, as such Commitment
may be adjusted from time to time in accordance with the provisions of SECTION
13.3 and SECTION 4.3, and "Commitments" means, collectively, the aggregate
amount of the commitments of all of the Lenders.
"COMPANIES' CREDITORS ARRANGEMENT ACT" means R.S.C. 1985,
Chap. C-36.
"CONTAMINANT" means any pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste,
-7-
asbestos in any form or condition, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste.
"CREDIT PARTIES" means SDI, the Borrower, SDI Canada Holdings
and SDI Canada.
"CREDIT SUPPORT" has the meaning specified in SECTION 2.4(a).
"CUSTOMER CONTRACT" means a written agreement between the
Borrower or SDI Canada and an Account Debtor of the Borrower or SDI Canada
providing for the establishment of an "in-plant store program" by the Borrower
or SDI Canada for such Account Debtor on terms and conditions consistent with
the Borrower's current practices, which terms shall include a requirement that
(i) such Account Debtor shall purchase all Inventory of the Borrower or SDI
Canada, as applicable, (at a purchase price greater than or equal to the cost
thereof) on such Account Debtor's premises upon termination of such Customer
Contract, (ii) such Account Debtor shall purchase all ▇▇▇▇-and-hold Inventory
(at a purchase price equal to the amount invoiced to such Account Debtor), and
(iii) such Account Debtor shall purchase all Slow Moving Inventory of the
Borrower or SDI Canada, as applicable (at a purchase price greater than or equal
to the cost thereof) on such Account Debtor's premises.
"DEBT" means, with respect to a Person, all liabilities,
obligations and indebtedness of such Person to any other Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, and including, without in any way limiting the
generality of the foregoing: (i) such Person's liabilities and obligations to
trade creditors; (ii) all Obligations; (iii) all obligations and liabilities of
any other Person secured by any Lien on such Person's property, even though such
Person shall not have assumed or become liable for the payment thereof;
PROVIDED, HOWEVER, that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such Person
prepared in accordance with GAAP; (iv) all obligations or liabilities created or
arising under any Capital Lease of such Person or conditional sale or other
title retention agreement with respect to property used or acquired by such
Person, even if the rights and remedies of the lessor, seller or lender
thereunder are limited to repossession of such property; PROVIDED, HOWEVER, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of such Person prepared in
accordance with GAAP; (v) all accrued pension fund and other employee benefit
plan obligations and liabilities; (vi) all obligations and liabilities under
Guaranties; and (vii) deferred taxes.
"DEBT FOR BORROWED MONEY" means Debt for borrowed money or as
evidenced by notes, bonds, debentures, loan agreements, or similar evidences of
any such Debt of such Person, the deferred and unpaid purchase price of any
property or business
-8-
(other than trade accounts payable incurred in the ordinary course of business
and constituting current liabilities) and all obligations under Capital Leases.
"DEFAULT" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"DEFAULTING LENDER" has the meaning specified in SECTION
2.2(g)(ii).
"DEFAULT RATE" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate PLUS
(b) two percent (2%). Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate. In addition, with respect to Letters
of Credit, the Default Rate shall mean an increase in the Letter of Credit Fee
by two (2) percentage points.
"DISTRIBUTION" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for such stock) of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) that does not contain any redemption or put provisions
that are either mandatory or that may be exercised at the option of the holder
of such stock, options or warrants; or (b) the redemption or other acquisition
of any capital stock (or any options or warrants for such stock) of such
corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"DOLLAR" and "$" means dollars in the lawful currency of the
United States.
"DOLLAR EQUIVALENT" means, at any time, (a) as to any amount
denominated in Dollars, the amount thereof at such time, and (b) as to any
amount denominated in a currency other than Dollars, the equivalent amount in
Dollars as determined by the Agent at such time on the basis of the Spot Rate
for the purchase of Dollars with such currency.
"EBITDA" means, with respect to any fiscal period of SDI,
Adjusted Net Earnings from Operations for such period; PLUS the sum of the
following to the extent deducted in computing such Adjusted Net Earnings from
Operations: (i) income tax expense, (ii) interest expense (whether paid or
accrued), and (iii) amortization, depreciation and other non-cash charges
(including, without limitation, amortization of goodwill, deferred financing
fees and other intangibles); and MINUS non-cash credits to the extent included
in computing such Adjusted Net Earnings from Operations.
"ELIGIBLE ACCOUNTS" means, with respect to the Borrower or
SDI Canada, all Accounts of such Person which the Agent in the exercise of its
reasonable discretion determines to be Eligible Accounts of such Person. Without
limiting such discretion of the Agent, Eligible Accounts of the Borrower and SDI
Canada shall not, unless the Agent in its sole discretion elects, include any
Account of such Person:
-9-
(a) with respect to which more than ninety (90) days have
elapsed since the date of the original invoice therefor or it is more than sixty
(60) days past due with payment terms normal for the industry;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in SECTION 6.8 are not or have
ceased to be complete and correct or have been breached;
(c) with respect to which, in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been received, presented for payment and returned uncollected for any
reason;
(d) which represents a progress billing (as hereinafter
defined) or as to which such Person has extended the time for payment without
the consent of the Agent; for the purposes hereof, "progress billing" means any
invoice for goods sold or leased or services rendered under a contract or
agreement pursuant to which the Account Debtor's obligation to pay such invoice
is conditioned upon such Person's completion of any further performance under
the contract or agreement;
(e) as to which any one or more of the following events has
occurred with respect to the Account Debtor on such Account: death or judicial
declaration of incompetency of an Account Debtor who is an individual; the
filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or any proposal or other relief under the bankruptcy,
insolvency, or similar laws of the United States, Canada, any state, province or
territory thereof, or any foreign jurisdiction, now or hereafter in effect; the
making of any general assignment by the Account Debtor for the benefit of
creditors; the filing by the Account Debtor of a proposal or notice of intent to
file a proposal by the Account Debtor; the appointment of a receiver, or trustee
or monitor (in any case whether interim or final) for the Account Debtor or for
any of the assets of the Account Debtor, including, without limitation, the
appointment of or taking possession by a "custodian," as defined in the Federal
Bankruptcy Code; the institution by or against the Account Debtor of any other
type of insolvency proceeding (under the bankruptcy laws of the United States or
otherwise) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of, the
Account Debtor; the sale, assignment, or transfer of all or any material part of
the assets of the Account Debtor; the nonpayment generally by the Account Debtor
of its debts as they become due; or the cessation of the business of the Account
Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor thereon
is classified as ineligible under CLAUSE (a) above;
(g) owed by an Account Debtor which: (i) does not maintain
its chief executive office in the United States or Canada; or (ii) is not
organized under the laws of
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the United States or any state thereof or Canada or any province thereof; or
(iii) is the government of any foreign country or sovereign state, or of any
state, province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof; except
to the extent that such Account is secured or payable by a letter of credit
issued by a Person and having terms reasonably satisfactory to the Agent;
(h) owed by an Account Debtor which is an Affiliate or
employee of a Credit Party;
(i) except as provided in CLAUSE (k) below, as to which
either the perfection, enforceability, or validity of the Agent's Lien in such
Account, or the Agent's right or ability to obtain direct payment to the Agent
of the proceeds of such Account, is governed by any federal, state, or local
statutory requirements other than those of the UCC or as to SDI Canada, the
PPSA;
(j) which is owed by an Account Debtor to which such Person
is indebted in any way, or which is subject to any right of setoff or recoupment
by the Account Debtor, unless the Account Debtor has entered into an agreement
acceptable to the Agent to waive setoff rights; or if the Account Debtor thereon
has disputed liability or made any claim with respect to any other Account due
from such Account Debtor; but in each such case only to the extent of such
indebtedness, setoff, recoupment, dispute, or claim;
(k) which is owed by the government of the United States of
America or Canada, or any department, agency, public corporation, or other
instrumentality or either thereof, unless any steps necessary to perfect the
Agent's Lien therein, have been complied with to the Agent's satisfaction with
respect to such Account, including in the case of an Account owing by the United
States of America, the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. SECTION 3727 ET seq.);
(l) which is owed by any state, municipality, or other
political subdivision of the United States of America or Canada, or any
department, agency, public corporation, or other instrumentality of either
thereof and as to which the Agent determines that its Lien therein is not or
cannot be perfected;
(m) which represents a sale on a ▇▇▇▇-and-hold (unless the
Customer Contract applicable thereto requires the Account Debtor thereof to
purchase the Inventory subject to such ▇▇▇▇-and-hold), guaranteed sale, sale and
return, sale on approval, consignment, or other repurchase or return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
-11-
(o) if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is impaired or that
the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in
any state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit such Person to seek judicial enforcement in
such State of payment of such Account, unless such Person has qualified to do
business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year;
(q) which arises out of a sale not made in the ordinary
course of such Person's business;
(r) as to which the goods giving rise to such Account have
not been shipped and delivered to and accepted by the Account Debtor or the
services giving rise to such Account have not been performed by such Person,
and, if applicable, accepted by the Account Debtor, or the Account Debtor
revokes its acceptance of such goods or services;
(s) which is a C.O.D. Account;
(t) which arises out of an enforceable contract or order
which, by its terms, forbids, restricts or makes void or unenforceable the
granting of a Lien by the Borrower to the Agent with respect to such Account; or
(u) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
If any Account at any time ceases to be an Eligible Account,
then such Account shall promptly be excluded from the calculation of Eligible
Accounts. The Agent shall promptly notify the Borrower of the exclusion of any
Account from Eligible Accounts for any reason other than the application of the
criteria listed above.
"ELIGIBLE INVENTORY" means, with respect to the Borrower or
SDI Canada, Inventory of such Person, valued at the lower of cost (on a
first-in, first-out basis) or market, that constitutes finished goods that is
subject to a Customer Contract and that, unless the Agent in its reasonable
discretion elects: (a) is not, in the Agent's reasonable opinion, obsolete, Slow
Moving, or unmerchantable (unless such Inventory is required to be purchased at
a purchase price greater than or equal to the cost thereof pursuant to a
Customer Contract); (b) is located on premises of an Account Debtor that has
executed a Customer Contract requiring such Account Debtor to purchase all of
the Inventory on such Account Debtor's premises upon the termination of such
Customer Contract (provided that up to $100,000 of Inventory located at the
Borrower's warehouse facility in Greenville, North Carolina shall not be
ineligible because of this clause (b)); (c) upon which the Agent for the benefit
of the Lenders has a first priority perfected security interest; (d) is not
work-in-process, spare parts, packaging and shipping materials, supplies to be
consumed in such Person's business (as opposed to supplies to be sold by such
Person in the ordinary course
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of its business), ▇▇▇▇-and-hold Inventory, returned, damaged or defective
Inventory, or Inventory delivered to such Person on consignment or approval; (e)
is not Inventory of a customer of such Person; (f) is not Inventory in-transit;
(g) does not constitute capitalized overhead; and (h) the Agent, in the exercise
of its reasonable discretion, deems eligible as the basis for Revolving Loans
based on such collateral and credit criteria as the Agent may from time to time
establish. If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory.
The Agent shall promptly notify the Borrower of the exclusion of any Inventory
from Eligible Inventory for any reason other than the criteria listed above.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"ENVIRONMENTAL COMPLIANCE RESERVE" means, with respect to the
Borrower or SDI Canada, any reserves which the Agent, after the Closing Date,
establishes from time to time for amounts that are reasonably likely to be
expended by such Person in order for such Person and its operations and property
(a) to comply with any notice from a Governmental Authority asserting material
non-compliance with Environmental Laws, or (b) to correct any such material
non-compliance identified in a report delivered to the Agent and the Lenders
pursuant to SECTION 9.7.
"ENVIRONMENTAL LAWS" means all federal, state, provincial or
local laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental matters or treatment, storage, disposal,
handling or exposure to any Contaminant.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority or any other Person for (1) any liability under any Environmental
Laws, or (2) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant into
the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable
requirement of law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any property or the
transfer, sale or lease of any property or deed or title for any property for
environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Property Transfer
Acts."
"EQUIPMENT" means, with respect to the Borrower or its
Subsidiaries, all of such Person's now owned and hereafter acquired machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal
property (except Inventory), including motor vehicles with respect to which a
certificate of title has been issued, aircraft, dies, tools, jigs, and office
equipment, as well as all of such types of property leased by such Person and
all of such Person's rights and interests with respect thereto under such leases
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(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA AFFILIATE" means any Credit Party and any trade or
business (whether or not incorporated) under common control with a Credit Party
within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event or Termination
Event with respect to a Pension Plan; (b) a withdrawal by a Credit Party or any
ERISA Affiliate from a Pension Plan during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or employer
under the PBA or a cessation of operations which is treated as such a
withdrawal; (c) a complete or partial withdrawal by a Credit Party or any ERISA
Affiliate from a Multi-employer Plan or Plan regulated or governed by the PBA or
notification that a Multi-employer Plan or Plan regulated or governed by the PBA
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination, or the commencement of
proceedings by the PBGC or other applicable Governmental Authority to terminate
a Pension Plan or Multi-employer Plan; (e) an event or condition which might
reasonably be expected to constitute grounds for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multi-employer Plan;
(f) the imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, or the PBA or
another applicable law of any jurisdiction, upon a Credit Party or any ERISA
Affiliate; or (g) any failure to make or remit any contribution when due in
respect of any Plan.
"EVENT OF DEFAULT" has the meaning specified in SECTION 11.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the last
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transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"FEE LETTER" means that certain Fee Letter dated May 9, 1998
among the Borrower, INTERMAT, the Agent and the Bank.
"FINANCIAL STATEMENTS" means, according to the context in
which it is used, the financial statements referred to in SECTION 8.6 or any
other financial statements required to be given to the Lenders pursuant to this
Agreement.
"FISCAL QUARTER" means the quarterly periods ending on March
31, June 30, September 30 and December 31 of each year.
"FISCAL YEAR" means SDI's fiscal year for financial accounting
purposes. The current Fiscal Year of SDI will end on December 31, 2000.
"FIXED ASSETS" means, with respect to the Borrower or its
Subsidiaries, Equipment and Real Estate of the Borrower or its Subsidiaries, as
the case may be.
"FIXED CHARGE COVERAGE RATIO" means, for any fiscal period,
the ratio of (a) EBITDA for such period OVER (b) Fixed Charges of SDI for such
period.
"FIXED CHARGES" means, for any fiscal period, on a
consolidated basis, the sum of (i) interest expense (whether paid or accrued)
deducted in determining Adjusted Net Earnings from Operations for such period,
(ii) cash taxes for such period, (iii) cash dividend payments by SDI during such
period, (iv) principal payments on Debt for Borrowed Money (excluding payments
of the Revolving Loans) during such period, and (v) Capital Expenditures (if
positive) during such period to the extent not financed by Debt for Borrowed
Money (provided, that for purposes of this CLAUSE (v), Revolving Loans shall not
be Debt for Borrowed Money).
"FUNDING DATE" means the date on which a Borrowing occurs.
"FX TRADING OFFICE" means the Foreign Exchange Trading
Center, Chicago, Illinois, of the Bank, or such other of the Bank's offices as
the Agent may designate from time to time.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of
-15-
comparable stature and authority within the U.S. accounting profession), which
are applicable to the circumstances as of the Closing Date.
"GENERAL INTANGIBLES" means, with respect to the Borrower or
SDI Canada, all of such Person's now owned or hereafter acquired general
intangibles, choses in action and causes of action and all other intangible
personal property of such Person of every kind and nature (other than Accounts),
including, without limitation, all contract rights, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Person in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to such Person from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which such Person is beneficiary, and any letter of credit,
guarantee, claim, security interest or other security held by or granted to such
Person.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state, province, municipality, region or other political subdivision thereof,
any central bank (or similar monetary or regulatory authority) thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of the
foregoing, and any department, agency, board, commission, tribunal, committee or
instrumentality of any of the foregoing.
"GUARANTY" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity securities
or other property or services.
"INTERCOMPANY ACCOUNTS" means all assets and liabilities,
however arising, which are due to the Borrower from, which are due from the
Borrower to, or which otherwise arise from any transaction by the Borrower with,
any Affiliate.
"INTEREST PERIOD" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the
-16-
date one (1), two (2), three (3) or six (6) months thereafter as selected by the
Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
PROVIDED, that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of the calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
"INTEREST RATE" means each or any of the interest rates,
including the Default Rate, set forth in SECTION 3.1.
"INVENTORY" means, with respect to the Borrower or SDI Canada,
all of such Person's now owned and hereafter acquired inventory, goods and
merchandise, wherever located, to be furnished under any contract of service or
held for sale or lease, all returned goods, raw materials, other materials and
supplies of any kind, nature or description which are or might be consumed in
such Person's business or used in connection with the packing, shipping,
advertising, selling or finishing of such goods, merchandise and such other
personal property, and all documents of title or other documents representing
them.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LATEST PROJECTIONS" means: (a) on the Closing Date and
thereafter until the Agent receives new projections pursuant to SECTION 7.2(e),
the projections of SDI's consolidated and consolidating financial condition,
results of operations, and cash flow, for the period commencing on January 1,
1998 and ending on December 31, 1998 and delivered to the Agent prior to the
Closing Date; and (b) thereafter, the projections most recently received by the
Agent pursuant to SECTION 7.2(e).
"LENDER" and "LENDERS" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of any
Agent Advance and Over Advance outstanding and the Bank to the extent of any
Non-Ratable Loan outstanding; PROVIDED, that no such Agent Advance, Over Advance
or Non-Ratable Loan shall be taken into account in determining any Lender's Pro
Rata Share.
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"LETTER OF CREDIT" means a letter of credit issued or caused
to be issued for the account of the Borrower pursuant to SECTION 2.4.
"LETTER OF CREDIT FEE" has the meaning specified in SECTION
3.6.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR
Rate Loan, the last day of each Interest Period applicable to such Loan (or if
such Interest Period exceeds three (3) months, ninety (90) days after the
beginning of such Interest Period and on the last day of such Interest Period).
"LIBOR RATE" means, for any Interest Period, with respect to
LIBOR Revolving Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/1000th of 1.0%) determined by
the Agent as follows:
LIBOR Rate = LIBOR
---------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for
any Interest Period the maximum reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%) in
effect on such day (whether or not applicable to any Lender)
under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum (rounded
upward to the next 1/100th of 1%) notified to the Agent by the
Bank as the rate of interest at which Dollar deposits in the
approximate amount of the Loan to be made or continued as, or
converted into, a LIBOR Rate Loan and having a maturity
comparable to such Interest Period would be offered by the
Bank's applicable lending office to major banks in the London
eurodollar market at approximately 11:00 a.m. (London time)
two (2) Business Days prior to the commencement of such
Interest Period.
"LIBOR REVOLVING LOAN" means a Revolving Loan during any
period in which it bears interest based on the LIBOR Rate.
"LIEN" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including without limitation, a security interest,
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hypothec, charge, claim, or lien arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes; and (b) to the extent not
included under CLAUSE (a), (i) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other
title exception or encumbrance affecting property, and (ii) any other lien,
charge, privilege, secured claim, title retention, garnishment right, deemed
trust, encumbrance or other right affecting property, ▇▇▇▇▇▇ or inchoate,
whether or not crystallized or fixed, whether or not for amounts due or
accruing due, arising by any statute, act or law of any jurisdiction, at
common law, in equity or by any agreement.
"LOAN ACCOUNT" means, with respect to the Borrower, the loan
account of the Borrower, which account shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Trademark and
Copyright Agreements, the SDI Guaranty, the SDI Trademark Agreements, the SDI
Canada Guaranty, the SDI Canada Holdings Guaranty, the SDI Security Agreement,
the SDI Canada Security Agreement, the SDI Canada Holding Security Agreement,
the SDI Pledge Agreement, the SDI Canada Holdings Pledge Agreement and any other
agreements, instruments, and documents heretofore, now or hereafter evidencing,
securing, guaranteeing or otherwise relating to the Obligations, the Collateral,
or any other aspect of the transactions contemplated by this Agreement.
"LOANS" means, collectively, all loans and advances provided
for in ARTICLE 2.
"MAJORITY LENDERS" means at any time Lenders whose Pro Rata
Shares aggregate more than sixty-six and two-thirds percent (66 2/3%) of the
Commitments or, if no Commitments shall then be in effect, Lenders who hold more
than sixty-six and two-thirds percent (66 2/3%) of the aggregate principal
amount of the Loans then outstanding.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties or
condition (financial or otherwise) of the Borrower or the Collateral of the
Borrower taken as a whole; (b) a material impairment of the ability of a Credit
Party to perform under any Loan Document and to avoid any Event of Default; or
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against a Credit Party of any Loan Document.
"MAXIMUM REVOLVER AMOUNT" means $50,000,000.
"MEXICAN SUBSIDIARIES" means, collectively, Strategic
Distribution Services de Mexico, S.A. de C.V. and Strategic Distribution
Marketing de Mexico, S.A. de C.V.
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"MULTI-EMPLOYER PLAN" means a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by the
Borrower or any ERISA Affiliate.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" means, with respect to the
Borrower or SDI Canada, at any time, the gross amount of Eligible Accounts of
such Person less sales, excise or similar taxes, and less returns, discounts,
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed.
"NET PROCEEDS" means the gross proceeds from a sale or
sale-leaseback of Fixed Assets, less applicable expenses, taxes and Debt
repayments made which are associated with such sale or sale-leaseback.
"NON-RATABLE LOAN" and "NON-RATABLE LOANS" have the meanings
specified in SECTION 2.2(h).
"NOTICE OF BORROWING" has the meaning specified in SECTION
2.2(b).
"NOTICE OF CONVERSION/CONTINUATION" has the meaning specified
in SECTION 3.2(b).
"OBLIGATIONS" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower to
the Agent and/or any Lender, arising under or pursuant to this Agreement or any
of the other Loan Documents, whether or not evidenced by any note, or other
instrument or document, whether arising from an extension of credit, opening of
a letter of credit, acceptance, loan, guaranty, indemnification or otherwise,
whether direct or indirect (including, without limitation, those acquired by
assignment from others), absolute or contingent, due or to become due, primary
or secondary, as principal or guarantor, and including, without limitation, all
principal, interest, charges, expenses, fees, attorneys' fees, filing fees and
any other sums chargeable to the Borrower hereunder or under any of the other
Loan Documents. "Obligations" includes, without limitation, all debts,
liabilities, and obligations now or hereafter owing from the Borrower to the
Agent and/or any Lender under or in connection with the Letters of Credit.
"OTHER TAXES" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"OVER ADVANCE" has the meaning specified in SECTION 2.2(j).
"PARTICIPANT LENDER" means any Person who shall have been
granted the right by any Lender to participate in the financing provided by such
Lender under this
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Agreement, and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender.
"PAYMENT ACCOUNT" means, with respect to the Borrower, each
blocked bank account established pursuant to SECTION 6.9, to which the funds of
the Borrower (including, without limitation, proceeds of Accounts of the
Borrower and other Collateral of the Borrower) are deposited or credited, and
which is maintained in the name of the Agent or the Borrower, as the Agent may
determine, on terms acceptable to the Agent.
"PAYMENT DIRECTION NOTICE" means a written notice by the Agent
to the bank at which a Payment Account is maintained instructing such bank to
wire transfer all funds deposited in such Payment Account to an account
designated by the Agent in such notice.
"PBA" means the Pension Benefits Act of Ontario and all
regulations thereunder as amended from time to time, and any successor
legislation.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PENDING REVOLVING LOANS" means, with respect to the Borrower,
at any time, the aggregate principal amount of all Revolving Loans requested in
any Notice(s) of Borrowing by the Borrower received by the Agent which have not
yet been advanced.
"PENSION PLAN" means a pension plan (as defined in Section
3(2) of ERISA or the applicable laws of any jurisdiction including the PBA)
subject to Title IV of ERISA or the applicable laws of any jurisdiction
including the PBA which the Borrower or any ERISA Affiliate sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or in
the case of a Multiple-employer Plan has made contributions at any time during
the immediately preceding five (5) plan years.
"PERMITTED ACQUISITION" means any acquisition of all or
substantially all of the assets of or equity interests in any Person (an
"Acquisition") that meets the following conditions:
(a) no Default or Event of Default has occurred and is
continuing at the time of, or would result from, such Acquisition;
(b) the Borrower gives the Agent at least ten (10) Business
Days prior written notice of such Acquisition, together with copies of the legal
documents relating to such Acquisition and a certificate demonstrating in
reasonable detail that such Acquisition is a Permitted Acquisition (as defined
herein);
(c) the Person whose assets or equity interests are being
acquired is engaged in a line or lines of business in which the Borrower and its
Subsidiaries are permitted to be engaged pursuant to SECTION 9.18;
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(d) such Acquisition, together with all other Acquisitions
since the Closing Date, do not involve the payment of cash consideration in
excess of $10,000,000 in the aggregate for all such Acquisitions;
(e) if such Acquisition is an acquisition of assets, such
assets are directly acquired by the Borrower;
(f) if such Acquisition is an acquisition of equity
interests, the acquired Person is merged into the Borrower on the day of the
Acquisition and the Borrower is the sole surviving Person after giving effect to
such merger;
(g) Availability, after giving effect to the payment of the
cash portion of the purchase price of, and all closing fees, costs and expenses
related to, such Acquisition but without including in the calculation of
Availability any assets acquired in such Acquisition, exceeds $15,000,000;
(h) any Inventory and Accounts acquired in such Acquisition
are not included in determining Availability until the Agent shall have
completed a satisfactory review of such Accounts and Inventory;
(i) goodwill acquired in such Acquisition shall not exceed
thirty percent (30%) of the total purchase price;
(j) the board of directors of the Person whose assets or
equity interests are being acquired has approved such Acquisition; and
(k) any Debt incurred or assumed in connection with such
transaction is permitted by SECTION 9.13.
"PERMITTED LIENS" means:
(a) Liens for taxes not delinquent or statutory Liens for
taxes in an amount not to exceed $250,000 in the aggregate, PROVIDED, that the
payment of such taxes which are due and payable is being contested in good faith
and by appropriate proceedings diligently pursued and as to which adequate
financial reserves have been established on the Borrower's books and records and
a stay of enforcement of any such Lien is in effect.
(b) the Agent's Liens;
(c) deposits under worker's compensation, unemployment
insurance, social security and other similar laws, or to secure the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure indemnity, performance or other similar bonds for the performance
of bids, tenders or contracts (other than for the repayment of borrowed money)
or to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
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(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons, PROVIDED,
that if any such Lien arises from the nonpayment of such claims or demand when
due, such claims or demands do not exceed $250,000 in the aggregate for the
Borrower;
(e) reservations, exceptions, encroachments, easements,
rights of way, covenants running with the land, and other similar title
exceptions or encumbrances affecting any Real Estate; PROVIDED, that they do not
in the aggregate materially detract from the value of the Real Estate or
materially interfere with its use in the ordinary conduct of the Borrower's
business;
(f) judgment and other similar Liens arising in connection
with court proceedings to the extent the attachment or enforcement of such Liens
would not result in an Event of Default hereunder; and
(g) purchase money liens on Fixed Assets purchased by the
Borrower and securing Debt not in excess of $1,000,000 in the aggregate for the
Borrower at any time outstanding, so long as the Lien only secures the purchase
price thereof.
"PERMITTED MEXICAN LOAN AMOUNT" means $11,457,000.
"PERMITTED RENTALS" has the meaning specified in SECTION 9.24.
"PERSON" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, Governmental Authority, or any other entity.
"PLAN" means an employee benefit plan (as defined in Section
3(3) of ERISA or the applicable laws of any jurisdiction) which the Borrower or
an ERISA Affiliate sponsors or maintains or to which the Borrower makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"PPSA" means the Personal Property Security Act of Ontario or
any other applicable jurisdiction, and all regulations thereunder, as amended
from time to time, and any successor legislation.
"PREMISES" means the land identified by addresses on SCHEDULE
8.12, together with all buildings, improvements, and fixtures thereon and all
tenements, hereditaments, and appurtenances belonging or in any way appertaining
thereto, and which constitutes all of the real property in which the Borrower or
SDI Canada has any interests on the Restatement Date.
"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of
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which is the amount of Obligations owed to such Lender and the denominator of
which is the aggregate amount of the Obligations owed to the Lenders.
"PROPRIETARY RIGHTS" means, with respect to the Borrower or
its Subsidiaries, all of such Person's now owned and hereafter arising or
acquired: licenses, franchises, permits, patents, patent rights, copyrights,
works which are the subject matter of copyrights, trademarks, service marks,
trade names, trade styles, patent, trademark and service ▇▇▇▇ applications, and
all licenses and rights related to any of the foregoing, including, without
limitation, those patents, trademarks, service marks, trade names and copyrights
set forth on SCHEDULE 8.13 hereto, and all other rights under any of the
foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to ▇▇▇ for past,
present and future infringement of any of the foregoing.
"REAL ESTATE" means, with respect to the Borrower or its
Subsidiaries, all of the present and future interests of such Person, as owner,
lessee, or otherwise, in the Premises, including, without limitation, any
interest arising from an option to purchase or lease the Premises or any portion
thereof.
"RELEASE" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Real Estate or other property.
"RENTALS" has the meaning specified in SECTION 9.24.
"REPORTABLE EVENT" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"REQUIRED LENDERS" means at any time Lenders whose Pro Rata
Shares aggregate more than forty percent (40%) of the Commitments or, if no
Commitments shall then be in effect, Lenders who hold more than forty percent
(40%) of the aggregate principal amount of the Loans then outstanding.
"REQUIREMENT OF LAW" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"RESPONSIBLE OFFICER" means, with respect to the Borrower, the
chief executive officer or the president of the Borrower, or any other officer
having substantially the same authority and responsibility; or, with respect to
compliance with financial covenants and the preparation of the Borrowing Base
Certificate of the Borrower, the chief
-24-
financial officer or the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"RESTATEMENT DATE" means the date on which the amendment and
restatement of the Original Loan Agreement becomes effective pursuant to SECTION
10.1.
"RESTRICTED INVESTMENT" means any acquisition of property by
the Borrower, SDI Canada Holdings or SDI Canada in exchange for cash or other
property, whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any other
property, or a loan, advance, capital contribution, or subscription, except
acquisitions of the following: (a) Equipment to be used in the business of the
Borrower, SDI Canada Holdings or SDI Canada, as the case may be, so long as the
acquisition costs thereof constitute Capital Expenditures permitted hereunder;
(b) Inventory in the ordinary course of business; (c) current assets (including
Accounts) arising from the sale or lease of goods or the rendition of services
in the ordinary course of business of the Borrower, SDI Canada Holdings or SDI
Canada, as the case may be; (d) direct obligations of the United States of
America, or any agency thereof, or obligations guaranteed by the United States
of America, PROVIDED, that such obligations mature within one year from the date
of acquisition thereof; (e) certificates of deposit maturing within one year
from the date of acquisition, bankers' acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with a bank or
trust company organized under the laws of the United States or any state thereof
having capital and surplus aggregating at least $100,000,000; (f) commercial
paper given a rating of "A2" or better by Standard & Poor's Corporation or "P2"
or better by ▇▇▇▇▇'▇ Investors Service, Inc. and maturing not more than ninety
(90) days from the date of creation thereof; and (g) mutual funds investing
primarily in the types of investments set forth in clauses (d), (e) or (f)
above.
"REVOLVING LOANS" has the meaning specified in SECTION 2.2 and
includes each Agent Advance, Over Advance and Non-Ratable Loan.
"SDI" means Strategic Distribution, Inc., a Delaware
corporation.
"SDI CANADA" means Strategic Distribution (Canada) Company, a
Nova Scotia unlimited liability company, and which is also know by the French
name of Strategic (Canada) Compagnie De Distribution.
"SDI CANADA GUARANTY" means the Guaranty dated the Closing
Date executed by SDI Canada with respect to the Obligations.
"SDI CANADA SECURITY AGREEMENT" means the General Security
Agreement dated the Closing Date executed by SDI Canada in favor of the Agent
for the benefit of itself and the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
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"SDI CANADA HOLDINGS" means Strategic Distribution (Canada)
Holdings, Inc., a Delaware corporation.
"SDI CANADA HOLDINGS GUARANTY" means the Guaranty dated the
Closing Date executed by SDI Canada Holdings with respect to the Obligations.
"SDI CANADA HOLDINGS PLEDGE AGREEMENT" means the Pledge
Agreement dated the Closing Date executed by SDI Canada Holdings in favor of the
Agent for the benefit of itself and the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"SDI CANADA HOLDINGS SECURITY AGREEMENT" means the Security
Agreement dated the Closing Date executed by SDI Canada Holdings in favor of the
Agent for the benefit of itself and the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"SDI GUARANTY" means the Guaranty dated the Closing Date
executed by SDI with respect to the Obligations.
"SDI PLEDGE AGREEMENT" means the Pledge Agreement dated the
Closing Date executed by SDI in favor of the Agent for the benefit of itself and
the Lenders, as the same may be amended, supplemented or otherwise modified from
time to time.
"SDI SECURITY AGREEMENT" means the Security Agreement dated
the Closing Date executed by SDI in favor of the Agent for the benefit of itself
and the Lenders, as the same may be amended, supplemented or otherwise modified
from time to time.
"SDI TRADEMARK AGREEMENT" means the Trademark Security
Agreement, dated as of the Closing Date, executed and delivered by SDI to the
Agent to evidence and perfect the Agent's security interest in SDI's present and
future trademarks, and related licenses and rights, for the benefit of the Agent
and the Lenders.
"SENIOR FUNDED DEBT" means, as of the last day of any Fiscal
Quarter, the sum of (i) Debt for Borrowed Money as of such date (provided, that
for purposes of this CLAUSE (i), Revolving Loans shall not be Debt for Borrowed
Money), and (ii) the average daily principal amount of the Revolving Loans
outstanding during the thirty (30) day period ending on such date.
"SENIOR FUNDED DEBT TO EBITDA RATIO" means, for any fiscal
period, the ratio of (a) Senior Funded Debt of SDI on a consolidated basis as of
the last day of such period OVER (b) EBITDA for such period.
"SETTLEMENT" AND "SETTLEMENT DATE" have the meanings
specified in SECTION 2.2(k)(l).
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"SLOW MOVING" means, with respect to Inventory, Inventory that
has been owned by the Borrower or SDI Canada for the length of time after which
such Inventory is required to be purchased by the customer under the Customer
Contract relating to such Inventory.
"SOLVENT" means when used with respect to any Person that at
the time of determination:
(i) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including, without limitation,
contingent liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(iv) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"SPECIFIED EVENT OF DEFAULT" means (i) an Event of Default
arising under SECTION 11.1(a), (ii) an Event of Default arising under SECTION
11.1(c) as a result of a breach by the Borrower of SECTION 6.7 or SECTION 7.2,
and (iii) any other Event of Default arising for any reason to the extent
Availability is less than $5,000,000 at such time as such other Event of Default
exists.
"SPOT RATE" for a currency means the rate quoted by the Bank
as the spot rate for the purchase by the Bank of such currency with another
currency through its FX Trading Office at approximately 10:30 a.m. (Chicago
time) on the date two (2) Banking Days prior to the date as of which the foreign
exchange computation is made.
"STATED TERMINATION DATE" means May 8, 2001.
"SUBORDINATED DEBT" means any Debt of the Borrower or a
Subsidiary of the Borrower that is subordinated to the Obligations or other debt
in a manner satisfactory to the Agent in its discretion.
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"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of SDI.
"TAXES" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, excluding, in the case of each
Lender and the Agent, such taxes as are imposed on or measured by each Lender's
net income, capital, profits and gains and franchise taxes imposed on it other
than withholding taxes by the (i) United States, or (ii) Governmental Authority
of the jurisdiction in which such Lender's lending office (or administrative
office) is located or any political subdivision thereof and (iii) Governmental
Authority of the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Agent, as the case may be, is organized,
managed or controlled.
"TERMINATION DATE" means the earliest to occur of (i) the
Stated Termination Date, (ii) the date the Total Facility is terminated either
by the Borrower pursuant to SECTION 4.2 or by the Majority Lenders pursuant to
SECTION 11.2, and (iii) the date this Agreement is otherwise terminated for any
reason whatsoever.
"TERMINATION EVENT" means (a) the whole or partial withdrawal
of the Borrower or any Subsidiary from a Plan during a plan year; or (b) the
filing of a notice of intent to terminate in whole or in part a Plan or the
treatment of a Plan amendment as a termination or partial termination; or (c)
the institution of proceedings by any Governmental Authority to terminate in
whole or in part or have a trustee appointed to administer a Plan; or (d) any
other event or condition which might constitute grounds for the termination of,
winding up or partial termination of winding up or appointment of a trustee to
administer, any Plan.
"TOTAL FACILITY" has the meaning specified in SECTION 2.1.
"TRADEMARK AND COPYRIGHT AGREEMENTS" means the Trademark
Security Agreement and the Copyright Security Agreement, each dated as of the
Closing Date, executed and delivered by the Borrower to the Agent to evidence
and perfect the Agent's security interest in the Borrower's present and future
trademarks, and related licenses and rights, for the benefit of the Agent and
the Lenders.
"UCC" means the Uniform Commercial Code (or any successor
statute) of the State of Illinois or of any other state the laws of which are
required by Section 9-103 thereof to be applied in connection with the issue of
perfection of security interests.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's
benefit liabilities over the current value of that Plan's assets, determined in
accordance with the assumptions
-28-
used for funding the Pension Plan pursuant to Section 412 of the Code or the PBA
or other applicable laws of any jurisdiction for the applicable plan year and
includes in the case of any Plan regulated or governed by the PBA or applicable
laws of any jurisdiction, any unfunded liability or solvency deficiency as
determined under the PBA or other applicable laws.
"UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to
$20,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus (b) the aggregate unpaid reimbursement obligations with
respect to all Letters of Credit.
"UNUSED LINE FEE" has the meaning specified in SECTION 3.5.
1.2. ACCOUNTING TERMS.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.
1.3. INTERPRETIVE PROVISIONS
(a) The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "including" is not limiting and means
"including without limitation"; and (ii) in the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(e) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent, the
Borrower, SDI Canada and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent's or Lenders' involvement in their preparation.
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ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1. TOTAL FACILITY.
Subject to all of the terms and conditions of this Agreement,
the Lenders severally agree to make available a total credit facility of up to
$50,000,000 (the "Total Facility") for the Borrower's use from time to time
during the term of this Agreement. The Total Facility shall be comprised of a
revolving line of credit consisting of revolving loans and letters of credit up
to the Maximum Revolver Amount, as described in SECTIONS 2.2 and 2.4.
2.2. REVOLVING LOANS.
(a) AMOUNTS. Subject to the satisfaction of the conditions
precedent set forth in ARTICLE 10, each Lender severally agrees, upon the
Borrower's request from time to time on any Business Day during the period from
the Closing Date to the Termination Date, to make revolving loans (the
"Revolving Loans") to the Borrower, in amounts not to exceed (except for the
Bank with respect to Non-Ratable Loans, Agent Advances or Over Advances) such
Lender's Pro Rata Share of the Borrower's Availability. The Lenders, however, in
their discretion, may elect to make Revolving Loans or participate (as provided
for in SECTION 2.4(f)) in the credit support or enhancement provided through the
Agent to the issuers of Letters of Credit for the account of the Borrower in
excess of the Borrower's Availability on one or more occasions, but if they do
so, neither the Agent nor the Lenders shall be deemed thereby to have changed
the limits of the Maximum Revolver Amount or the Availability of the Borrower or
to be obligated to exceed such limits on any other occasion. If the Aggregate
Revolver Outstandings for the account of the Borrower exceeds the Availability
of the Borrower (with such Availability for this purpose calculated as if the
Aggregate Revolver Outstandings for the account of the Borrower were zero), the
Lenders may refuse to make or otherwise restrict the making of Revolving Loans
for the account of the Borrower as the Lenders determine until such excess has
been eliminated, subject to the Agent's authority, in its sole discretion, to
make Agent Advances pursuant to the terms of SECTION 2.2(i), and subject to the
Agent's authority, in its sole discretion, to make Over Advances pursuant to the
terms of SECTION 2.2(j).
(b) PROCEDURE FOR BORROWING. (1) Each Borrowing for the
account of the Borrower shall be made upon the Borrower's irrevocable written
notice delivered to the Agent in the form of a notice of borrowing in the form
attached hereto as EXHIBIT E ("Notice of Borrowing") together with a Borrowing
Base Certificate for the Borrower reflecting sufficient Availability for the
Borrower, (which must be received by the Agent prior to 10:00 a.m. (Chicago
time) (i) three (3) Business Days prior to the requested Funding Date, in the
case of LIBOR Revolving Loans and (ii) no later than 10:00 a.m. on the requested
Funding Date, in the case of Base Rate Revolving Loans, specifying:
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(A) the amount of the Borrowing (which in the case of
LIBOR Loans shall be in the minimum amount of $500,000 and in
integral multiples of $500,000 in excess thereof);
(B) the requested Funding Date, which shall be a
Business Day;
(C) whether the Revolving Loans requested are to be
Base Rate Revolving Loans or LIBOR Revolving Loans; and
(D) the duration of the Interest Period if the
requested Revolving Loans are to be LIBOR Revolving Loans. If
the Notice of Borrowing fails to specify the duration of the
Interest Period for any Borrowing comprised of LIBOR Revolving
Loans, such Interest Period shall be one month;
PROVIDED, HOWEVER, that with respect to the Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Revolving Loans only.
(2) With respect to any request for Base Rate Revolving Loans,
in lieu of delivering the above-described Notice of Borrowing, the
Borrower may give the Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing
within 24 hours of the giving of such notice but the Agent shall be
entitled to rely on the telephonic notice in making such Revolving
Loans.
(c) RELIANCE UPON AUTHORITY. On or prior to the Closing Date
and thereafter prior to any change with respect to any of the information
contained in the following CLAUSES (i) and (ii), the Borrower shall deliver to
the Agent a writing setting forth (i) the account of the Borrower to which the
Agent is authorized to transfer the proceeds of the Revolving Loans requested by
the Borrower pursuant to this SECTION 2.2, and (ii) the names of the persons
authorized to request Revolving Loans on behalf of the Borrower, and shall
provide the Agent with a specimen signature of each such person. The Agent shall
be entitled to rely conclusively on such person's authority to request Revolving
Loans on behalf of the Borrower, the proceeds of which are to be transferred to
any of the accounts specified by the Borrower pursuant to the immediately
preceding sentence, until the Agent receives written notice to the contrary. The
Agent shall have no duty to verify the identity of any individual representing
him or herself as one of the officers authorized by the Borrower to make such
requests on its behalf.
(d) NO LIABILITY. The Agent shall not incur any liability to
the Borrower as a result of acting upon any notice referred to in SECTIONS
2.2(b) and (c), which notice the Agent believes in good faith to have been given
by an officer duly authorized by the Borrower to request Revolving Loans on its
behalf or for otherwise acting in good faith under this SECTION 2.2, and the
crediting of Revolving Loans to the Borrower's deposit account, or transmittal
to
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such Person as the Borrower shall direct, shall conclusively establish the
obligation of the Borrower to repay such Revolving Loans as provided herein.
(e) NOTICE IRREVOCABLE. Any Notice of Borrowing of the
Borrower (or telephonic notice in lieu thereof) made pursuant to SECTION 2.2(b)
shall be irrevocable and the Borrower shall be bound to borrow the funds
requested therein in accordance therewith.
(f) AGENT'S ELECTION. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to SECTION 2.2(b), the
Agent shall elect, in its discretion, (i) to have the terms of SECTION 2.2(g)
apply to such requested Borrowing, or (ii) to request the Bank to make a
Non-Ratable Loan pursuant to the terms of SECTION 2.2(h) in the amount of the
requested Borrowing; PROVIDED, HOWEVER, that if the Bank declines in its sole
discretion to make a Non-Ratable Loan pursuant to SECTION 2.2(h), the Agent
shall elect to have the terms of SECTION 2.2(g) apply to such requested
Borrowing.
(g) MAKING OF REVOLVING LOANS.
(i) In the event that the Agent shall elect or be
deemed to have elected to have the terms of this SECTION
2.2(g) apply to a requested Borrowing as described in SECTION
2.2(f), then promptly after receipt of a Notice of Borrowing
or telephonic notice pursuant to SECTION 2.2(b), the Agent
shall notify the Lenders by telecopy, telephone or other
similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share
of the requested Borrowing available to the Agent in same day
funds, to such account of the Agent as the Agent may
designate, not later than 1:00 p.m. (Chicago time) on the
Funding Date applicable thereto. After the Agent's receipt of
the proceeds of such Revolving Loans, upon satisfaction of the
applicable conditions precedent set forth in ARTICLE 10, the
Agent shall make the proceeds of such Revolving Loans
available (not later than 2:00 p.m. Chicago time) to the
Borrower on the applicable Funding Date by transferring same
day funds equal to the proceeds of such Revolving Loans
received by the Agent to the account of the Borrower,
designated in writing by the Borrower and acceptable to the
Agent; PROVIDED, HOWEVER, that the amount of Revolving Loans
so made on any date shall in no event exceed the Availability
of the Borrower on such date.
(ii) Unless the Agent receives notice from a Lender
with respect to any Borrowing after the Closing Date at least
one Business Day prior to the date of such Borrowing that such
Lender will not make available as and when required hereunder
to the Agent for the account of the Borrower the amount of
that Lender's Pro Rata Share of the Borrowing requested by the
Borrower, the Agent may assume that each Lender has made such
amount available to the Agent in immediately available funds
on the Funding Date and the Agent may (but shall not be
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so required), in reliance upon such assumption, make available
to the Borrower on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount
available to the Agent in immediately available funds and the
Agent in such circumstances has made available to the Borrower
such amount, that Lender shall on the Business Day following
such Funding Date make such amount available to the Agent,
together with interest at the Federal Funds Rate for each day
during such period. A notice of the Agent submitted to any
Lender with respect to amounts owing under this subsection
shall be conclusive, absent manifest error. If such amount is
so made available, such payment to the Agent shall constitute
such Lender's Loan on the date of Borrowing for all purposes
of this Agreement. If such amount is not made available to the
Agent on the Business Day following the Funding Date, the
Agent will notify the Borrower of such failure to fund and,
upon demand by the Agent, the Borrower shall pay such amount
to the Agent for the Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing,
at a rate per annum equal to the Interest Rate applicable at
the time to the Loans comprising such Borrowing. The failure
of any Lender to make any Loan on any Funding Date (any such
Lender, prior to the cure of such failure, being hereinafter
referred to as a "Defaulting Lender") shall not relieve any
other Lender of any obligation hereunder to make a Loan on
such Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Loan to be made by
such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to
a Defaulting Lender any payments made by the Borrower to the
Agent for the Defaulting Lender's benefit; nor shall a
Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall
instead be paid to or retained by the Agent. The Agent may
hold and, in its discretion, re-lend to the Borrower the
amount of all such payments received or retained by it for the
account of such Defaulting Lender. Any amounts so re-lent to
the Borrower shall bear interest at the rate applicable to
Base Rate Revolving Loans and for all other purposes of this
Agreement shall be treated as if they were Revolving Loans,
PROVIDED, HOWEVER, that for purposes of voting or consenting
to matters with respect to the Loan Documents and determining
Pro Rata Shares in connection with such voting and consenting,
such Defaulting Lender shall be deemed not to be a "Lender"
and such Lender's Commitment shall be deemed to be zero (-0-).
Until a Defaulting Lender cures its failure to fund its Pro
Rata Share of any Borrowing (1) such Defaulting Lender shall
not be entitled to any portion of the Unused Line Fee and (2)
the Unused Line Fee shall accrue in favor of the Lenders which
have funded their respective Pro Rata Shares of such requested
Borrowing,
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shall be allocated among such performing Lenders ratably based
upon their relative Commitments, and shall be calculated based
upon the average amount by which the aggregate Commitments of
such performing Lenders exceeds the sum of outstanding
Revolving Loans and the undrawn face amount of all outstanding
Letters of Credit. This SECTION 2.2(g) shall remain effective
with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations
under this Agreement. The terms of this SECTION 2.2(g) shall
not be construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the performance
by the Borrower of its duties and obligations hereunder.
(h) MAKING OF NON-RATABLE LOANS.
(i) In the event the Agent shall elect, with the
consent of the Bank, to have the terms of this SECTION 2.2(h)
apply to a requested Borrowing by the Borrower as described in
SECTION 2.2(f), the Bank shall make a Revolving Loan in the
amount of such Borrowing (any such Revolving Loan made solely
by the Bank pursuant to this SECTION 2.2(h) being referred to
as a "Non-Ratable Loan" and such Revolving Loans being
referred to collectively as "Non-Ratable Loans") available to
the Borrower on the Funding Date applicable thereto by
transferring same day funds to an account of the Borrower,
designated in writing by the Borrower and acceptable to the
Agent; PROVIDED, that the aggregate amount of Non-Ratable
Loans outstanding at any time shall not exceed $10,000,000.
Each Non-Ratable Loan is a Revolving Loan hereunder and shall
be subject to all the terms and conditions applicable to other
Revolving Loans except that all payments thereon shall be
payable to the Bank solely for its own account (and for the
account of the holder of any participation interest with
respect to such Revolving Loan). The Agent shall not request
the Bank to make any Non-Ratable Loan if (i) the Agent shall
have received written notice from any Lender, or otherwise has
actual knowledge, that one or more of the applicable
conditions precedent set forth in ARTICLE 10 will not be
satisfied on the requested Funding Date for the applicable
Borrowing, or (ii) the requested Borrowing by the Borrower
would exceed the Availability of the Borrower on such Funding
Date. The Bank shall not otherwise be required to determine
whether the applicable conditions precedent set forth in
ARTICLE 10 have been satisfied or the requested Borrowing by
the Borrower would exceed the Availability of the Borrower on
the Funding Date applicable thereto prior to making, in its
sole discretion, any Non-Ratable Loan.
(ii) The Non-Ratable Loans for the account of the
Borrower shall be repayable on demand and secured by the
Collateral of the Borrower, shall constitute Revolving Loans
for the account of the
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Borrower and Obligations hereunder, and shall bear interest at
the rate applicable to the Revolving Loans from time to time.
(i) AGENT ADVANCES.
(i) Subject to the limitations set forth in the
provisos contained in this SECTION 2.2(i), the Agent is hereby
authorized by the Borrower and the Lenders, from time to time
in the Agent's sole discretion, (1) after the occurrence of a
Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in ARTICLE
10 have not been satisfied, to make Revolving Loans to the
Borrower on behalf of the Lenders which the Agent, in its
reasonable business judgment, deems necessary or desirable (A)
to preserve or protect the Collateral of the Borrower, or any
portion thereof, (B) to enhance the likelihood of, or maximize
the amount of, repayment of the Loans and other Obligations,
or (C) to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including, without
limitation, costs, fees and expenses as described in SECTION
15.7 (any of the advances described in this SECTION 2.2(i)
being herein referred to as "Agent Advances"); PROVIDED, that
the Required Lenders may at any time revoke the Agent's
authorization contained in this SECTION 2.2(i) to make Agent
Advances, any such revocation to be in writing and to become
effective prospectively upon the Agent's receipt thereof.
(ii) The Agent Advances for the account of the
Borrower shall be repayable on demand and secured by the
Collateral of the Borrower, shall constitute Revolving Loans
for the account of the Borrower and Obligations hereunder, and
shall bear interest at the rate applicable to the Revolving
Loans from time to time. The Agent shall notify each Lender in
writing of each such Agent Advance.
(j) OVER ADVANCES.
(i) Subject to the limitations set forth in the
provisions contained in this SECTION 2.2(j), the Agent is
hereby authorized by the Lenders in the Agent's sole
discretion upon the request of the Borrower to make Loans to
the Borrower (not exceeding $2,000,000 in the aggregate at any
one time outstanding) that cause the Aggregate Revolver
Outstandings to exceed the Borrower's Availability (but not
the Maximum Revolver Amount) (any of the advances described in
this SECTION 2.2(j) being herein referred to as "Over
Advances").
(ii) The Over Advances for the account of the
Borrower shall be repayable on demand and secured by the
Collateral of the Borrower, shall constitute Revolving Loans
for the account of the Borrower and
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Obligations hereunder, and shall bear interest at the rate
applicable to the Revolving Loans from time to time. The Agent
shall notify each Lender in writing of each Over Advance.
(k) SETTLEMENT. It is agreed that each Lender's funded portion
of the Revolving Loan is intended by the Lenders to be equal at all times to
such Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, the Bank, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Borrower) that
in order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Revolving Loans, the Non-Ratable
Loans, the Agent Advances and the Over Advances shall take place on a periodic
basis in accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement")
with the Lenders on a bi-weekly basis, or on a more frequent
basis if so determined by the Agent, (1) on behalf of the
Bank, with respect to each outstanding Non-Ratable Loan, (2)
for itself, with respect to each Agent Advance and Over
Advance, and (3) with respect to collections received, in each
case, by notifying the Lenders of such requested Settlement by
telecopy, telephone or other similar form of transmission, of
such requested Settlement, no later than 10:00 a.m. (Chicago
time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than the Bank, in the
case of Non-Ratable Loans) shall make the amount of such
Lender's Pro Rata Share of the outstanding principal amount of
the Non-Ratable Loans, Agent Advances and Over Advances with
respect to which Settlement is requested available to the
Agent, for itself or for the account of the Bank, in same day
funds, to such account of the Agent as the Agent may
designate, not later than 1:00 p.m. (Chicago time), on the
Settlement Date applicable thereto, regardless of whether the
applicable conditions precedent set forth in ARTICLE 10 have
then been satisfied. Such amounts made available to the Agent
shall be applied against the amounts of the applicable
Non-Ratable Loan, Agent Advance or Over Advance and, together
with the portion of such Non-Ratable Loan, Agent Advance or
Over Advance representing the Bank's Pro Rata Share thereof,
shall constitute Revolving Loans of such Lenders. If any such
amount is not made available to the Agent by any Lender on the
Settlement Date applicable thereto, the Agent shall be
entitled to recover such amount on demand from such Lender
together with interest thereon at the Federal Funds Rate for
the first three (3) days from and after the Settlement Date
and thereafter at the Interest Rate then applicable to the
Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one
(1) Business Day after demand is made by the Agent (whether
before or after the occurrence of a Default or an Event of
Default and regardless of
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whether the Agent has requested a Settlement with respect to a
Non-Ratable Loan, Agent Advance or Over Advance), each other
Lender shall irrevocably and unconditionally purchase and
receive from the Bank or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation
in such Non-Ratable Loan, Agent Advance or Over Advance to the
extent of such Lender's Pro Rata Share thereof by paying to
the Agent, in same day funds, an amount equal to such Lender's
Pro Rata Share of such Non-Ratable Loan, Agent Advance or Over
Advance. If such amount is not in fact made available to the
Agent by any Lender, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest
thereon at the Federal Funds Rate for the first three (3) days
from and after such demand and thereafter at the Interest Rate
then applicable to the Revolving Loans.
(iii) From and after the date, if any, on which any
Lender purchases an undivided interest and participation in
any Non-Ratable Loan, Agent Advance or Over Advance pursuant
to subsection (ii) above, the Agent shall promptly distribute
to such Lender at such address as such Lender may request in
writing, such Lender's Pro Rata Share of all payments of
principal and interest and all proceeds of Collateral received
by the Agent in respect of such Non-Ratable Loan, Agent
Advance or Over Advance.
(iv) Between Settlement Dates, the Agent, to the
extent no Agent Advances, Non-Ratable Loans or Over Advances
are outstanding, may pay over to the Bank any payments
received by the Agent, which in accordance with the terms of
this Agreement would be applied to the reduction of the
Revolving Loans, for application to the Bank's other
outstanding Revolving Loans. If, as of any Settlement Date,
collections received since the then immediately preceding
Settlement Date have been applied to the Bank's other
outstanding Revolving Loans other than to Non-Ratable Loans,
Agent Advances or Over Advances, as provided for in the
previous sentence, the Bank shall pay to the Agent for the
accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each
Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Revolving Loans and
the Bank's other Revolving Loans shall be deemed to be
reinstated in the amount so paid to the Agent for the account
of the other Lenders. During the period between Settlement
Dates, the Bank with respect to Non-Ratable Loans, the Agent
with respect to the Agent Advances and Over Advances, and each
Lender with respect to the Revolving Loans other than
Non-Ratable Loans, Agent Advances and Over Advances, shall be
entitled to interest at the applicable rate or rates payable
under this Agreement on the actual average daily amount of
funds employed by the Bank, the Agent and the other Lenders.
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(l) NOTATION. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender, including the
Non-Ratable Loans owing to the Bank, and the Agent Advances and Over Advances
owing to the Agent, from time to time. In addition, each Lender is authorized,
at such Lender's option, to note the date and amount of each payment or
prepayment of principal of such Lender's Revolving Loans in its books and
records, including computer records, such books and records constituting
rebuttably presumptive evidence, absent manifest error, of the accuracy of the
information contained therein.
(m) LENDERS' FAILURE TO PERFORM. All Loans (other than
Non-Ratable Loans, Agent Advances and Over Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata Shares. It is
understood that (a) no Lender shall be responsible for any failure by any other
Lender to perform its obligation to make any Loans hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligation to make any Loans hereunder, (b) no
failure by any Lender to perform its obligation to make any Loans hereunder
shall excuse any other Lender from its obligation to make any Loans hereunder,
and (c) the obligations of each Lender hereunder shall be several, not joint and
several.
2.3. INTENTIONALLY OMITTED.
2.4. LETTERS OF CREDIT.
(a) AGREEMENT TO CAUSE ISSUANCE. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrower herein set forth, the Agent agrees to take reasonable
steps to cause to be issued for the account of the Borrower and to provide
credit support or other enhancement to banks acceptable to the Agent, which
issue Letters of Credit for the account of the Borrower (any such credit support
or enhancement being herein referred to a "Credit Support") in accordance with
this SECTION 2.4 from time to time during the term of this Agreement.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have
any obligation to take steps to cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (1) the maximum
undrawn amount of the requested Letter of Credit is greater than the Unused
Letter of Credit Subfacility at such time; (2) the maximum undrawn amount of the
requested Letter of Credit for the account of the Borrower and all commissions,
fees, and charges due from the Borrower in connection with the opening thereof
exceed the Availability of the Borrower at such time; or (3) such Letter of
Credit has an expiration date later than the Stated Termination Date or more
than (i) one hundred eighty (180) days from the date of issuance in the case of
documentary Letters of Credit or (ii) three hundred sixty-five (365) days from
the date of issuance in the case of any other Letters of Credit.
(c) OTHER CONDITIONS. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in ARTICLE 10, the
obligation of the Agent to take
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reasonable steps to cause to be issued any Letter of Credit or to provide Credit
Support for any Letter of Credit is subject to the following conditions
precedent having been satisfied in a manner satisfactory to the Agent:
(1) The Borrower shall have delivered to the proposed
issuer of such Letter of Credit, at such times and in such manner as
such proposed issuer may prescribe, an application in form and
substance satisfactory to such proposed issuer and the Agent for the
issuance of the Letter of Credit and such other documents as may be
required pursuant to the terms thereof, and the form and terms of
the proposed Letter of Credit shall be satisfactory to the Agent and
such proposed issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to
enjoin or restrain money center banks generally from issuing letters
of credit of the type and in the amount of the proposed Letter of
Credit, and no law, rule or regulation applicable to money center
banks generally and no request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction
over money center banks generally shall prohibit, or request that
the proposed issuer of such Letter of Credit refrain from, the
issuance of letters of credit generally or the issuance of such
Letters of Credit.
(d) ISSUANCE OF LETTERS OF CREDIT.
(1) REQUEST FOR ISSUANCE. The Agent shall have received
three (3) Business Days' prior written notice from the Borrower of
the Borrower's request for the issuance of a Letter of Credit. Such
notice shall be irrevocable and shall specify the original face
amount of the Letter of Credit requested, the effective date (which
date shall be a Business Day) of issuance of such requested Letter
of Credit, whether such Letter of Credit may be drawn in a single or
in partial draws, the date on which such requested Letter of Credit
is to expire (which date shall be a Business Day), the purpose for
which such Letter of Credit is to be issued, and the beneficiary of
the requested Letter of Credit. The Borrower shall attach to such
notice the proposed form of the Letter of Credit.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE. The Agent
shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set
forth in the notice from the Borrower pursuant to SECTION 2.4(d)(1),
(i) the amount of the applicable Unused Letter of Credit Subfacility
and (ii) the Availability of the Borrower as of such date. If (i)
the undrawn amount of the requested Letter of Credit is not greater
than the applicable Unused Letter of Credit Subfacility and (ii) the
issuance of such requested Letter of Credit and all commissions,
fees, and charges due from the Borrower in connection with the
opening thereof would
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not exceed the Availability of the Borrower, the Agent shall take
reasonable steps to cause such issuer to issue the requested Letter
of Credit on such requested effective date of issuance.
(3) NOTICE OF ISSUANCE. On each Settlement Date the Agent
shall give notice to each Lender of the issuance of all Letters of
Credit issued since the last Settlement Date.
(4) NO EXTENSIONS OR AMENDMENT. The Agent shall not be
obligated to cause any Letter of Credit to be extended or amended
unless the requirements of this SECTION 2.4(d) are met as though a
new Letter of Credit were being requested and issued. With respect
to any Letter of Credit which contains any "evergreen" or automatic
renewal provision, each Lender shall be deemed to have consented to
any such extension or renewal unless any such Lender shall have
provided to the Agent, not less than thirty (30) days prior to the
last date on which the applicable issuer can in accordance with the
terms of the applicable Letter of Credit decline to extend or renew
such Letter of Credit, written notice that it declines to consent to
any such extension or renewal, PROVIDED, that if all of the
requirements of this SECTION 2.4 are met and no Default or Event of
Default exists, no Lender shall decline to consent to any such
extension or renewal.
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT.
(1) PAYMENT OF LETTER OF CREDIT OBLIGATIONS. The Borrower
agrees to reimburse the issuer for any draw under any Letter of
Credit issued for the account of the Borrower and the Agent for the
account of the Lenders upon any payment pursuant to any Credit
Support issued for the account of the Borrower immediately upon
demand, and to pay the issuer of such Letter of Credit the amount of
all other obligations and other amounts payable to such issuer under
or in connection with such Letter of Credit immediately when due,
irrespective of any claim, setoff, defense or other right which the
Borrower may have at any time against such issuer or any other
Person.
(2) REVOLVING LOANS TO SATISFY REIMBURSEMENT OBLIGATIONS.
In the event that the issuer of any Letter of Credit for the account
of the Borrower honors a draw under such Letter of Credit or the
Agent shall have made any payment pursuant to any Credit Support for
the account of the Borrower and the Borrower shall not have repaid
such amount to the issuer of such Letter of Credit or the Agent, as
applicable, pursuant to SECTION 2.4(e)(1), the Agent shall, upon
receiving notice of such failure, notify each Lender of such
failure, and each Lender shall unconditionally pay to the Agent, for
the account of such issuer or the Agent, as applicable, as and when
provided hereinbelow, an amount equal to such Lender's Pro Rata
Share of the amount of such payment in Dollars and in same day
funds. If the Agent so notifies the
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Lenders prior to 11:00 a.m. (Chicago time) on any Business Day, each
Lender shall make available to the Agent the amount of such payment,
as provided in the immediately preceding sentence, on such Business
Day. Such amounts paid by the Lenders to the Agent shall constitute
Revolving Loans for the account of the Borrower which shall be
deemed to have been requested by the Borrower pursuant to SECTION
2.2 as set forth in SECTION 4.7.
(f) PARTICIPATIONS.
(1) PURCHASE OF PARTICIPATIONS. Immediately upon issuance
of any Letter of Credit for the account of the Borrower in
accordance with SECTION 2.4(d), each Lender shall be deemed to have
irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation in the
Letter of Credit or the Credit Support provided through the Agent to
such issuer in connection with the issuance of such Letter of
Credit, equal to such Lender's Pro Rata Share of the face amount of
such Letter of Credit or the amount of such Credit Support
(including, without limitation, all obligations of the Borrower with
respect thereto, and any security therefor or guaranty pertaining
thereto).
(2) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS. Whenever
the Agent receives a payment from the Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit
Support for the account of the Borrower as to which the Agent has
previously received for the account of the issuer thereof payment
from a Lender pursuant to SECTION 2.4(e)(2), the Agent shall
promptly pay to such Lender such Lender's Pro Rata Share of such
payment from the Borrower in Dollars. Each such payment shall be
made by the Agent on the Business Day on which the Agent receives
immediately available funds paid to such Person pursuant to the
immediately preceding sentence, if received prior to 1:00 p.m.
(Chicago time) on such Business Day and otherwise on the next
succeeding Business Day.
(3) DOCUMENTATION. Upon the request of any Lender, the
Agent shall furnish to such Lender copies of any Letter of Credit,
reimbursement agreements executed in connection therewith,
application for any Letter of Credit and credit support or
enhancement provided through the Agent in connection with the
issuance of any Letter of Credit, and such other documentation as
may reasonably be requested by such Lender.
(4) OBLIGATIONS IRREVOCABLE. The obligations of each Lender
to make payments to the Agent with respect to any Letter of Credit
or with respect to any Credit Support provided through the Agent
with respect to a Letter of Credit, and the obligations of the
Borrower to make payments to the Agent, for the account of the
Lenders, shall be irrevocable, not subject to any
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qualification or exception whatsoever, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of
any Letter of Credit (or any Person for whom any such
transferee may be acting), any Lender, the Agent, the issuer
of such Letter of Credit, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the Borrower or
any other Person and the beneficiary named in any Letter of
Credit);
(iii) any draft, certificate or any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents; or
(v) the occurrence of any Default or Event of
Default.
(g) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any
payment by or on behalf of the Borrower received by the Agent with respect to
any Letter of Credit or Credit Support provided for any Letter of Credit (or any
guaranty by the Borrower or reimbursement obligation of the Borrower relating
thereto) and distributed by the Agent to the Lenders on account of their
respective participations therein is thereafter set aside, avoided or recovered
from the Agent in connection with any receivership, liquidation or bankruptcy
proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their
respective Pro Rata Shares of such amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the Agent upon the
amount required to be repaid by it.
(h) COMPENSATION FOR LETTERS OF CREDIT.
(1) LETTER OF CREDIT FEE. The Borrower agrees to pay to
the Agent with respect to each Letter of Credit issued for the
account of Borrower, for the account of the Lenders, the Letter of
Credit Fee specified in, and in accordance with the terms of,
SECTION 3.6.
(2) ISSUER FEES AND CHARGES. The Borrower shall pay to
the issuer of any Letter of Credit issued for the account of the
Borrower, or to the
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Agent, for the account of the issuer of any such Letter of Credit,
solely for such issuer's account, such fees and other charges as are
charged by such issuer for letters of credit issued by it,
including, without limitation, its standard fees for issuing,
administering, amending, renewing, paying and canceling letters of
credit and all other fees associated with issuing or servicing
letters of credit, as and when assessed.
(i) INDEMNIFICATION; EXONERATION; POWER OF ATTORNEY
(1) INDEMNIFICATION. In addition to amounts payable as
elsewhere provided in this SECTION 2.4, the Borrower hereby agrees
to protect, indemnify, pay and save the Lenders and the Agent
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which any Lender or the Agent may incur or be
subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit for the account of the Borrower or the
provision of any credit support or enhancement in connection
therewith. The agreement in this SECTION 2.4(i)(1) shall survive
payments of all Obligations.
(2) ASSUMPTION OF RISK BY THE BORROWER. As among the
Borrower, the Lenders, and the Agent, the Borrower assumes all risks
of the acts and omissions of, or misuse of any of the Letters of
Credit by, the respective beneficiaries of such Letters of Credit
issued for the account of the Borrower. In furtherance and not in
limitation of the foregoing, the Lenders and the Agent shall not be
responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any Person
in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit,
even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason; (C) the
failure of the beneficiary of any Letter of Credit to comply duly
with conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order make a
drawing under any Letter of Credit or of the proceeds thereof; (G)
the misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (H) any
consequences arising from causes beyond the control of the Lenders
or the Agent, including, without limitation, any act or omission,
whether rightful or wrongful, of any present or future DE JURE or DE
FACTO Governmental Authority.
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None of the foregoing shall affect, impair or prevent the vesting of
any rights or powers of the Agent or any Lender under this SECTION
2.4(i).
(3) EXONERATION. Any action taken or omitted by the Agent
or any Lender under or in connection with any of the Letters of
Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not put the
Agent or any Lender under any resulting liability to the Borrower or
relieve the Borrower of any of its obligations hereunder to any such
Person.
(4) POWER OF ATTORNEY. In connection with all Inventory
financed by Letters of Credit issued for the account of the
Borrower, the Borrower hereby appoints the Agent, or the Agent's
designee, as its attorney, with full power and authority: (a) to
sign and/or endorse the Borrower's name upon any warehouse or other
receipts; (b) to sign the Borrower's name on bills of lading and
other negotiable and non-negotiable documents; (c) to clear
Inventory through customs in the Agent's or the Borrower's name, and
to sign and deliver to customs officials powers of attorney in the
Borrower's name for such purpose; (d) to complete in the Borrower's
or the Agent's name, any order, sale, or transaction, obtain the
necessary documents in connection therewith, and collect the
proceeds thereof; and (e) to do such other acts and things as are
necessary in order to enable the Agent to obtain possession of the
Inventory and to obtain payment of the Obligations. Neither the
Agent nor its designee, as the Borrower's attorney, will be liable
for any acts or omissions, nor for any error of judgment or mistakes
of fact or law. This power, being coupled with an interest, is
irrevocable until all Obligations have been paid and satisfied.
(5) ACCOUNT PARTY. The Borrower hereby authorizes and
directs any issuer of a Letter of Credit for the account of the
Borrower to name the Borrower as the "Account Party" therein and to
deliver to the Agent all instruments, documents and other writings
and property received by the issuer pursuant to the Letter of
Credit, and to accept and rely upon the Agent's instructions and
agreements with respect to all matters arising in connection with
the Letter of Credit or the application therefor.
(6) CONTROL OF INVENTORY. In connection with all Inventory
financed by Letters of Credit issued for the account of the
Borrower, the Borrower will, at the Agent's request, instruct all
suppliers, carriers, forwarders, warehouses or others receiving or
holding cash, checks, Inventory, documents or instruments in which
the Agent holds a security interest to deliver them to the Agent
and/or subject to the Agent's order, and if they shall come into the
Borrower's possession, to deliver them, upon request, to the Agent
in their original form. The Borrower shall also, at the Agent's
request,
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designate the Agent as the consignee on all bills of lading and
other negotiable and non-negotiable documents.
(j) SUPPORTING LETTER OF CREDIT; CASH COLLATERAL. If,
notwithstanding the provisions of SECTION 2.4(b) and SECTION 12.1, any Letter of
Credit issued for the account of the Borrower is outstanding upon the
termination of this Agreement, then upon such termination the Borrower shall
deposit with the Agent, for the ratable benefit of the Agent and the Lenders,
with respect to each Letter of Credit then outstanding, as the Majority Lenders,
in their discretion shall specify, either (A) a standby letter of credit (a
"Supporting Letter of Credit") in form and substance satisfactory to the Agent,
issued by an issuer satisfactory to the Agent in an amount equal to the greatest
amount for which such Letter of Credit may be drawn plus any fees and expenses
associated with such Letter of Credit, under which Supporting Letter of Credit
the Agent is entitled to draw amounts necessary to reimburse the Agent and the
Lenders for payments made by the Agent and the Lenders under such Letter of
Credit or under any credit support or enhancement provided through the Agent
with respect thereto and any fees and expenses associated with such Letter of
Credit, or (B) cash in amounts necessary to reimburse the Agent and the Lenders
for payments made by the Agent or the Lenders under such Letter of Credit or
under any credit support or enhancement provided through the Agent with respect
thereto and any fees and expenses associated with such Letter of Credit. Such
Supporting Letter of Credit or deposit of cash shall be held by the Agent, for
the ratable benefit of the Agent and the Lenders, as security for, and to
provide for the payment of, the aggregate undrawn amount of such Letters of
Credit remaining outstanding.
ARTICLE 3
INTEREST AND FEES
3.1. INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate or
the LIBOR Rate and SECTIONS 3.1(a)(i) or (ii), as applicable, but not to exceed
the Maximum Rate described in SECTION 3.3. Subject to the provisions of SECTION
3.2, any of the Loans may be converted into, or continued as, Base Rate
Revolving Loans or LIBOR Revolving Loans in the manner provided in SECTION 3.2.
If at any time Loans are outstanding with respect to which notice has not been
delivered to the Agent in accordance with the terms of this Agreement specifying
the basis for determining the interest rate applicable thereto, then those Loans
shall be Base Rate Revolving Loans until notice to the contrary has been given
to the Agent in accordance with this Agreement and such notice has become
effective. Except as otherwise provided herein, the outstanding Obligations
shall bear interest as follows:
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(i) For all Base Rate Revolving Loans and other
Obligations (other than LIBOR Revolving Loans) at a
fluctuating per annum rate equal to the Base Rate plus the
Applicable Margin;
(ii) For all LIBOR Revolving Loans at a per annum
rate equal to the LIBOR Rate PLUS the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in CLAUSE (i) above as of the effective date of such change. All interest
charges shall be computed on the basis of a year of three hundred sixty (360)
days and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest accrued on all Loans for the
account of the Borrower will be payable by the Borrower in arrears on the first
day of each month hereafter, and in the case of LIBOR Revolving Loans, on each
LIBOR Interest Payment Date.
(b) DEFAULT RATE. If a Specified Event of Default occurs and
is continuing and the Majority Lenders in their discretion so elect, then, while
any such Specified Event of Default is outstanding, all of the Obligations shall
bear interest at the Default Rate applicable thereto.
3.2. CONVERSION AND CONTINUATION ELECTIONS.
(a) The Borrower may, upon irrevocable written notice to the
Agent in accordance with SECTION 3.2(b):
(i) elect, as of any Business Day, in the case of
Base Rate Revolving Loans for the account of the Borrower to
convert any such Loans (or any part thereof in an amount not
less than $500,000, or that is in an integral multiple of
$500,000 in excess thereof) into LIBOR Revolving Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Revolving Loans for the
account of the Borrower having Interest Periods expiring on
such day (or any part thereof in an amount not less than
$500,000, or that is in an integral multiple of $500,000 in
excess thereof);
PROVIDED, that if at any time the aggregate amount of LIBOR Revolving Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such LIBOR Revolving Loans shall
automatically convert into Base Rate Revolving Loans, and on and after such date
the right of the Borrower to continue such Loans as, and convert such Loans
into, LIBOR Revolving Loans, as the case may be, shall terminate.
(b) The Borrower shall deliver a notice of
conversion/continuation in the form attached hereto as EXHIBIT F ("Notice of
Conversion/Continuation") to be received by the
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Agent not later than 10:00 a.m. (Chicago time) at least three (3) Business Days
in advance of the Conversion/Continuation Date, if the Loans for the account of
the Borrower are to be converted into or continued as LIBOR Revolving Loans and
specifying:
(i) the proposed Conversion/Continuation Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Revolving Loans for the account of the Borrower, the Borrower has
failed to select timely a new Interest Period to be applicable to LIBOR
Revolving Loans or if any Default or Event of Default then exists, the Borrower
shall be deemed to have elected to convert such LIBOR Revolving Loans into Base
Rate Revolving Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
(e) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as a LIBOR
Rate Loan with an Interest Period of longer than thirty (30) days.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than ten (10) different Interest Periods in effect.
3.3. MAXIMUM INTEREST RATE.
In no event shall any interest rate provided for hereunder
exceed the maximum rate legally chargeable by any Lender under applicable law
for loans of the type provided for hereunder (the "Maximum Rate"). If, in any
month, any interest rate, absent such limitation, would have exceeded the
Maximum Rate, then the interest rate for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate shall remain at the Maximum Rate until
such time as the amount of interest paid hereunder equals the amount of interest
which would have been paid if the same had not been limited by the Maximum Rate.
In the event that, upon payment in full of the Obligations, the total amount of
interest paid or accrued by
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the Borrower under the terms of this Agreement is less than the total amount of
interest which would, but for this SECTION 3.3, have been paid or accrued by the
Borrower if the interest rates otherwise set forth in this Agreement had at all
times been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Agent, for the account of the Lenders, an amount equal
to the excess of (a) the lesser of (i) the amount of interest which would have
been charged if the Maximum Rate had, at all times, been in effect over (ii) the
amount of interest which would have accrued had the interest rates otherwise set
forth in this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement. In the event that a
court determines that the Agent and/or any Lender has received interest and
other charges hereunder from the Borrower in excess of the Maximum Rate, such
excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations of the Borrower other than interest, in the
inverse order of maturity, and if there are no Obligations of the Borrower
outstanding, the Agent and/or such Lender shall refund to the Borrower such
excess.
3.4. CERTAIN FEES.
The Borrower agrees to pay the fees to the Bank and the Agent
set forth in the Fee Letter.
3.5. UNUSED LINE FEE.
Until the Obligations have been paid in full and the Agreement
terminated, the Borrower agrees to pay, on the first day of each month and on
the Termination Date, to the Agent, for the ratable account of the Lenders, an
unused line fee equal to one-quarter of one percent (0.25%) per annum on the
average daily amount by which the Maximum Revolver Amount exceeded the sum of
the average daily outstanding amount of Revolving Loans and the undrawn face
amount of all outstanding Letters of Credit, during the immediately preceding
month or shorter period if calculated on the Termination Date. The unused line
fee shall be computed on the basis of a 360-day year for the actual number of
days elapsed.
3.6. LETTER OF CREDIT FEE.
The Borrower agrees to pay to the Agent, for the ratable
account of the Lenders, for each Letter of Credit, a fee (the "Letter of Credit
Fee") equal to one and one-half percent (1.5%) per annum of the undrawn face
amount of each documentary Letter of Credit issued for the Borrower's account at
the Borrower's request and two percent (2%) per annum of the undrawn face amount
of each other Letter of Credit issued for the Borrower's account at the
Borrower's request, in each case, PLUS all out-of-pocket costs, fees and
expenses incurred by the Agent in connection with the application for, issuance
of, or amendment to any Letter of Credit, which costs, fees and expenses could
include a "fronting fee" required to be paid by the Agent to such issuer for the
assumption of the settlement risk in connection with the issuance of such Letter
of Credit. The Letter of Credit Fee shall be payable monthly in arrears on the
first day of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remains
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outstanding. The Letter of Credit Fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1. REVOLVING LOANS.
The Borrower shall repay the outstanding principal balance of
the Revolving Loans for the Borrower's account, plus all accrued but unpaid
interest thereon, on the Termination Date. The Borrower may prepay Revolving
Loans at any time, and reborrow subject to the terms of this Agreement;
PROVIDED, HOWEVER, that with respect to any LIBOR Revolving Loans prepaid by the
Borrower prior to the expiration date of the Interest Period applicable thereto,
the Borrower promises to pay to the Agent for account of the Lenders the amounts
described in SECTION 5.4. In addition, and without limiting the generality of
the foregoing, upon demand the Borrower promises to pay to the Agent, for
account of the Lenders, the amount, without duplication, by which the Aggregate
Revolver Outstanding of the Borrower exceeds the Availability of the Borrower
(with Availability for this purpose calculated as if the Aggregate Revolver
Outstandings of the Borrower were zero).
4.2. TERMINATION OF FACILITY.
The Borrower may terminate this Agreement upon at least thirty
(30) Business Days' notice to the Agent and the Lenders, upon (a) the payment in
full of all outstanding Revolving Loans, together with accrued interest thereon,
and the cancellation of all outstanding Letters of Credit (b) the payment in
full in cash of all other Obligations together with accrued interest thereon,
and (c) with respect to any LIBOR Revolving Loans prepaid in connection with
such termination prior to the expiration date of the Interest Period applicable
thereto, the payment of the amounts described in SECTION 5.4.
4.3. REDUCTION OF COMMITMENTS.
The Borrower may, effective on a date specified at least ten
(10) Business Days after the delivery of a notice of the same, permanently
reduce the Maximum Revolver Amount by a minimum amount of $1,000,000 or any
multiple of $1,000,000 in excess thereof; UNLESS (i) after giving effect thereto
Maximum Revolver Amount is less than $20,000,000 or (ii) after giving effect
thereto and to any prepayment of the Loans made on the effective date of such
reduction, the Aggregate Revolver Outstandings of the Borrower exceeds the
amount of the Maximum Revolver Amount then in effect. Any reduction of the
Maximum Revolver Amount shall be applied to the Commitments of each Lender
according to its Pro Rata Share. Any notice from the Borrower to reduce the
Maximum Revolver Amount will be irrevocable. Notwithstanding the foregoing, no
reduction in the Maximum Revolver Amount shall be effective until any repayment
of Loans necessary to cause the Aggregate Revolver Outstandings of the Borrower
not to exceed the Maximum
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Revolver Amount that would be in effect after such reduction and any amounts
that are payable under SECTION 5.4 in connection with any such repayment. For
purposes of determining the fee that is due under SECTION 3.5, the Maximum
Revolver Amount for any day shall be the Maximum Revolver Amount that was in
effect on such day.
4.4. INTENTIONALLY OMITTED.
4.5. INTENTIONALLY OMITTED.
4.6. PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrower shall be made to the Agent for the
account of the Lenders at the Agent's address set forth in SECTION 15.8, and
shall be made in Dollars and in immediately available funds, no later than 1:00
p.m. (Chicago time) on the date specified herein. Any payment received by the
Agent later than 1:00 p.m. (Chicago time) shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall continue
to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior
to the date on which any payment is due to the Lenders that the Borrower will
not make such payment in full as and when required, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
4.7. PAYMENTS AS REVOLVING LOANS.
All payments of principal, interest, reimbursement obligations
in connection with Letters of Credit, fees, premiums and other sums payable
hereunder by the Borrower, including all reimbursement for expenses pursuant to
SECTION 15.7, may, at the option of the Agent, in its sole discretion, subject
only to the terms of this SECTION 4.7, be paid from the proceeds of Revolving
Loans made hereunder for the account of the Borrower, whether made following a
request by the Borrower pursuant to SECTION 2.2 or a deemed request as provided
in this SECTION 4.7. The Borrower hereby irrevocably authorizes the Agent to
charge the Loan Account of the Borrower for the purpose of paying principal,
interest, reimbursement obligations in connection with Letters of Credit, fees,
premiums and other sums payable hereunder by the Borrower, including reimbursing
expenses pursuant to
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SECTION 15.7, and agrees that all such amounts charged shall constitute
Revolving Loans (including Non-Ratable Loans, Agent Advances and Over Advances)
for the account of the Borrower and that all such Revolving Loans for the
account of the Borrower so made shall be deemed to have been requested by the
Borrower pursuant to SECTION 2.2.
4.8. APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS.
Aggregate principal and interest payments by the Borrower
shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Loans to which such payments relate held by each
Lender) and payments of the fees by the Borrower shall, as applicable, be
apportioned ratably among the Lenders. All payments by the Borrower shall be
remitted to the Agent and all such payments not relating to principal or
interest of specific Loans, or not constituting payment of specific fees, and
all proceeds of Accounts or other Collateral of the Borrower received by the
Agent, shall be applied, ratably, subject to the provisions of this Agreement,
FIRST, to pay any fees, indemnities or expense reimbursements then due to the
Agent from the Borrower; SECOND, to pay any fees or expense reimbursements then
due to the Lenders from the Borrower; THIRD, to pay interest due in respect of
all Revolving Loans for the account of the Borrower, including Non-Ratable
Loans, Agent Advances and Over Advances; FOURTH, to pay or prepay principal of
the Non-Ratable Loans for the account of the Borrower, Agent Advances and Over
Advances for the account of the Borrower; FIFTH, to pay or prepay principal of
the Revolving Loans (other than Non-Ratable Loans, Agent Advances and Over
Advances) for the account of the Borrower and unpaid reimbursement obligations
in respect of Letters of Credit for the account of the Borrower; and SIXTH, to
the payment of any other Obligation due to the Agent or any Lender by the
Borrower. Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the Borrower, or unless an Event of Default is
outstanding, neither the Agent nor any Lender shall apply any payments which it
receives to any LIBOR Revolving Loan for the account of the Borrower, except (a)
on the expiration date of the Interest Period applicable to any such LIBOR Rate
Loan, or (b) in the event, and only to the extent, that there are no outstanding
Base Rate Revolving Loans. The Agent shall promptly distribute to each Lender,
pursuant to the applicable wire transfer instructions received from each Lender
in writing, such funds as it may be entitled to receive, subject to a Settlement
delay as provided for in SECTION 2.2(k). The Agent and the Lenders shall have
the continuing and exclusive right to apply and reverse and reapply any and all
such proceeds and payments to any portion of the Obligations.
4.9. INDEMNITY FOR RETURNED PAYMENTS.
If, after receipt of any payment of, or proceeds applied to
the payment of, all or any part of the Obligations of the Borrower, the Agent or
any Lender is for any reason arising out of or relating to the Loans, the Loan
Documents or the relationships of the Agent or any Lender with any Credit Party
compelled to surrender such payment or proceeds to any Person because such
payment or application of proceeds is invalidated, declared fraudulent, set
aside, determined to be void or voidable as a preference, impermissible setoff,
or a diversion of trust funds or for any other reason, then the
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Obligations of the Borrower or part thereof intended to be satisfied shall be
revived and continue and this Agreement shall continue in full force as if such
payment or proceeds had not been received by the Agent or such Lender, and the
Borrower shall be liable to pay to the Agent, and hereby does indemnify the
Agent and the Lenders and hold the Agent and the Lenders harmless for, the
amount of such payment or proceeds surrendered. The provisions of this SECTION
4.9 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without
prejudice to the Agent's and the Lenders' rights under this Agreement and shall
be deemed to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this SECTION 4.9 shall
survive the termination of this Agreement.
4.10. AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY
STATEMENTS.
The Borrower agrees that the Agent's and each Lender's books
and records showing the Obligations and the transactions pursuant to this
Agreement and the other Loan Documents shall be admissible in any action or
proceeding arising therefrom, and shall constitute rebuttably presumptive proof
thereof, irrespective of whether any Obligation is also evidenced by a
promissory note or other instrument. The Agent will provide to the Borrower a
monthly statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on the
Borrower and an account stated (except for reversals and reapplications of
payments made as provided in SECTION 4.8 and corrections of errors discovered by
the Agent), unless the Borrower notifies the Agent in writing to the contrary
within sixty (60) days after such statement is rendered. In the event a timely
written notice of objections is given by the Borrower, only the items to which
exception is expressly made will be considered to be disputed by the Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1. TAXES.
(a) Any and all payments by the Borrower to each Lender or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
SECTION 5.1) paid by the Lender or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within thirty
(30) days after
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the date the Lender or the Agent makes written demand therefor. Each Lender
agrees, within a reasonable time after receiving a written request from the
Borrower, to provide the Borrower and the Agent with such certificates as are
reasonably required, and take such other actions as are reasonably necessary (so
long as such actions do not have a negative effect on such Lender), to claim
such exemptions as such Lender or the Agent may be entitled to claim in respect
of all or a portion of any Taxes which are otherwise required to be paid or
deducted or withheld pursuant to this SECTION 5.1 in respect of any payments
under this Agreement.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings
(including deductions and withholdings applicable to
additional sums payable under this SECTION 5.1) such Lender or
the Agent, as the case may be, receives an amount equal to the
sum it would have received had no such deductions or
withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount deducted
or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or
the Agent for the account of such Lender, at the time interest
is paid, all additional amounts which the respective Lender
specifies as necessary to preserve the after-tax yield the
Lender would have received if such Taxes or Other Taxes had
not been imposed.
(d) Within thirty (30) days after the date of any payment by
the Borrower of Taxes or Other Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to
any Lender or the Agent pursuant to subsection (c) of this SECTION 5.1, then
such Lender shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its lending office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
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5.2. ILLEGALITY.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Lender or its applicable lending office to make
LIBOR Revolving Loans, then, on notice thereof by such Lender to the Borrower
through the Agent, any obligation of such Lender to make LIBOR Revolving Loans
shall be suspended until such Lender notifies the Agent and the Borrower that
the circumstances giving rise to such determination no longer exist which notice
shall be given promptly by such Lender.
(b) If a Lender determines that it is unlawful to maintain any
LIBOR Rate Loan, the Borrower shall, upon its receipt of notice of such fact and
demand from such Lender (with a copy to the Agent), prepay in full such LIBOR
Revolving Loans for the account of the Borrower of that Lender then outstanding,
together with interest accrued thereon and amounts required under SECTION 5.4,
either on the last day of the Interest Period thereof, if the Lender may
lawfully continue to maintain such LIBOR Revolving Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBOR Rate
Loan. If the Borrower is required to so prepay any LIBOR Rate Loan, then
concurrently with such prepayment, the Borrower shall borrow from the affected
Lender, in the amount of such repayment, a Base Rate Loan.
5.3. INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender determines that, due to either (i) the
introduction of or any change in the interpretation of any law or regulation or
(ii) the compliance by that Lender with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender of agreeing to make
or making, funding or maintaining any LIBOR Revolving Loans for the account of
the Borrower, then the Borrower shall be liable for, and shall from time to
time, upon demand (with a copy of such demand to be sent to the Agent), pay to
the Agent for the account of such Lender, additional amounts as are sufficient
to compensate such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender or any corporation or other entity controlling the
Lender with any Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by the Lender or any
corporation or other entity controlling the Lender and (taking into
consideration such Lender's or such corporation's or other entity's policies
with respect to capital adequacy and such Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitment, loans, credits or obligations under this Agreement for the account
of the
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Borrower, then, upon demand of such Lender to the Borrower through the Agent,
the Borrower shall pay to the Lender, from time to time as specified by the
Lender, additional amounts sufficient to compensate the Lender for such
increase.
5.4. FUNDING LOSSES.
The Borrower shall reimburse each Lender and hold each Lender
harmless from any loss or expense which the Lender may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or convert
a Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/ Continuation; or
(c) the prepayment or other payment (including after
acceleration thereof) of an LIBOR Rate Loan on a day that is not the last day of
the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Revolving Loans or from fees
payable to terminate the deposits from which such funds were obtained (but such
loss shall not include lost profits (e.g. loss of the economic benefit of the
Applicable Margin)).
5.5. INABILITY TO DETERMINE RATES.
If the Agent determines that for any reason adequate and
reasonable means do not exist for determining the LIBOR Rate for any requested
Interest Period with respect to a proposed LIBOR Rate Loan, or that the LIBOR
Rate for any requested Interest Period with respect to a proposed LIBOR Rate
Loan does not adequately and fairly reflect the cost to the Lenders of funding
such Loan, the Agent will promptly so notify the Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain LIBOR Revolving
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, the Borrower may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Borrower does not revoke such Notice, the Lenders shall make, convert or
continue the Loans, as proposed by the Borrower, in the amount specified in the
applicable notice submitted by the Borrower, but such Loans shall be made,
converted or continued as Base Rate Revolving Loans instead of LIBOR Revolving
Loans.
5.6. CERTIFICATES OF LENDERS.
Any Lender claiming reimbursement or compensation from the
Borrower under this ARTICLE 5 shall deliver to the Borrower (with a copy to the
Agent) a certificate setting forth in reasonable detail the amount payable to
the Lender hereunder and such certificate shall be conclusive and binding on the
Borrower in the absence of manifest
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error; PROVIDED, that the Borrower shall not be liable for any cost for which
such a certificate has not been delivered to the Borrower within one hundred
eighty (180) days of such Lender becoming aware of such cost.
5.7. SURVIVAL.
The agreements and obligations of the Borrower in this ARTICLE
5 shall survive the payment of all other Obligations.
5.8. REPLACEMENT LENDERS.
If (a) the Borrower becomes obligated to pay additional
amounts to any Lender pursuant to SECTION 5.1 or 5.3 as a result of any
condition described in such Sections which is not generally applicable to all
Lenders, then, unless such Lender has theretofore taken steps to remove or cure,
and has removed or cured, the conditions creating the cause for such obligation
to pay such additional amounts, within sixty (60) days of being on notification
of such condition, or (b) a Lender invokes the provisions of SECTION 5.2, in
each case the Borrower may designate another bank which is reasonably acceptable
to the Agent (such bank being herein called a "Replacement Lender") to purchase
for cash all of the Loans of such Lender and all of such Lender's rights
hereunder, without recourse to or warranty (other than title) by, or expense to,
such Lender for a purchase price equal to the outstanding principal amount of
the Loans payable to such Lender plus any accrued but unpaid interest on such
Loans and accrued but unpaid commitment and other fees, expense reimbursements
and indemnities in respect of that Lender's Commitments. If the Replacement
Lender is prepared to so purchase, such Lender shall consummate such sale in
accordance with such terms (and, if such Lender is an issuer of Letters of
Credit, such other terms as may be necessary to compensate fully such Lender)
within a reasonable time not exceeding sixty (60) days from the date the
Borrower designates a Replacement Lender, and thereupon such Lender shall not
longer be a party hereto or have any obligations or rights hereunder (except
rights which, pursuant to the provisions of this Agreement, survive the
termination of this Agreement and the repayment of the Loans), and the
Replacement Lender shall succeed to such obligations or rights.
ARTICLE 6
COLLATERAL
6.1. GRANT OF SECURITY INTEREST.
(a) As security for all its present and future Obligations,
the Borrower hereby grants to the Agent, for the ratable benefit of the Agent
and the Lenders, a continuing security interest in, lien on, assignment of, and
right of set-off against, all of the following property of the Borrower, whether
now owned or existing or hereafter acquired or arising, regardless of where
located:
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(i) all Accounts of the Borrower;
(ii) all Inventory of the Borrower;
(iii) all contract rights, letters of credit,
contracts (including Assigned Contracts), chattel paper,
instruments, notes, documents, and documents of title of the
Borrower;
(iv) all General Intangibles of the Borrower;
(v) all Equipment of the Borrower;
(vi) all money, investment property and securities;
(vii) other property of any kind of the Borrower in
the possession or under the control of the Agent or any
Lender, any assignee of or participant in the Obligations, or
a bailee of any such party or such party's affiliates;
(viii) all of the Borrower's deposit accounts,
credits and balances with and other claims against the Agent
or any Lender or any of its affiliates or any other financial
institution with which the Borrower maintains deposits;
(ix) all of the Borrower's other real and personal
property;
(x) all books, records and other property related to
or referring to any of the foregoing, including, without
limitation, books, records, account ledgers, data processing
records, computer software and other property and General
Intangibles at any time evidencing or relating to any of the
foregoing; and
(xi) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing,
including, but not limited to, proceeds of any insurance
policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with all other property of the Borrower, SDI
Canada or any other Credit Party in which the Agent or any Lender may at any
time be granted a Lien, is herein collectively referred to as the "Collateral."
The Collateral does not include any leasehold interests in real estate of any
Credit Party under leases where the Credit Party is the lessee.
(b) All of the Obligations shall be secured by all of the
Collateral.
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6.2. PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) The Borrower shall, and shall cause SDI Canada to, at its
expense, perform all steps requested by the Agent at any time to perfect,
maintain, protect, and enforce the Agent's Liens, including, without limitation:
(i) executing, delivering and/or filing and recording of the Trademark and
Copyright Agreements and executing and filing financing or continuation
statements, and amendments thereof, in form and substance satisfactory to the
Agent; (ii) delivering to the Agent the originals of all instruments, documents,
and chattel paper, and all other Collateral of which the Agent determines it
should have physical possession in order to perfect and protect the Agent's
security interest therein, duly pledged, endorsed or assigned to the Agent
without restriction; (iii) delivering to the Agent warehouse receipts covering
any portion of the Collateral located in warehouses (but not including any
in-plant store locations) and for which warehouse receipts are issued and
certificate of titles covering any portion of the Collateral for which
certificates of title have been issued; (iv) when an Event of Default exists,
transferring Inventory to warehouses designated by the Agent; (v) placing
notations on the Borrower's or SDI Canada's books of account to disclose the
Agent's security interest; (vi) delivering to the Agent all letters of credit on
which the Borrower or SDI Canada is named beneficiary; and (vii) taking such
other steps as are deemed necessary or desirable by the Agent to maintain and
protect the Agent's Liens. To the extent permitted by applicable law, the Agent
may file, without the Borrower's signature, one or more financing statements
disclosing the Agent's Liens. The Borrower agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Borrower's or SDI Canada's
agents or processors, then the Borrower shall notify the Agent thereof and shall
notify such Person of the Agent's security interest in such Collateral and, upon
the Agent's request, instruct such Person to hold all such Collateral for the
Agent's account subject to the Agent's instructions. If at any time any
Collateral is located on any operating facility of the Borrower or SDI Canada
which is not owned by the Borrower or SDI Canada (other than an in-plant store
location), then the Borrower shall, or shall cause SDI Canada to, at the request
of the Agent, obtain written waivers, in form and substance satisfactory to the
Agent, of all present and future Liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral.
(c) From time to time, the Borrower shall, and shall cause SDI
Canada to, upon the Agent's request, execute and deliver confirmatory written
instruments pledging to the Agent, for the ratable benefit of the Agent and the
Lenders, the Collateral with respect to the Borrower or SDI Canada, but the
Borrower's failure to do so shall not affect or limit any security interest or
any other rights of the Agent or any Lender in and to the Collateral with
respect to the Borrower or SDI Canada. So long as this Agreement is in effect
and until all Obligations have been fully satisfied, the Agent's Liens shall
continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability of the Borrower or as
the basis for any advance, loan, extension of credit, or other financial
accommodation).
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6.3. LOCATION OF COLLATERAL.
The Borrower represents and warrants to the Agent and the
Lenders that as of the Restatement Date: (a) SCHEDULE 6.3 is a correct and
complete list of the Borrower's and SDI Canada's chief executive office, the
location of its and SDI Canada's books and records, the locations of the
Collateral, and the locations of all of its and SDI Canada's other places of
business; and (b) except for the locations under the heading "Account Debtor
Premises," SCHEDULE 6.3 correctly identifies any of such facilities and
locations that are not owned by the Borrower or SDI Canada and sets forth the
names of the owners and lessors or sublessors of and, to the best of the
Borrower's knowledge, the holders of any mortgages on, such facilities and
locations. The Borrower covenants and agrees that it will not, and that it will
cause SDI Canada to not, (i) maintain any Collateral at any location other than
those locations listed for such Person on SCHEDULE 6.3, (ii) otherwise change or
add to any of such locations, or (iii) change the location of its chief
executive office from the location identified in SCHEDULE 6.3, unless it gives
the Agent at least thirty (30) days' prior written notice thereof and executes
any and all financing statements and other documents that the Agent requests in
connection therewith; PROVIDED, that notwithstanding the foregoing, the Borrower
or SDI Canada may maintain Inventory with an Account Debtor at a location not
listed on SCHEDULE 6.3 so long as (a) such new location is identified in the
Inventory report required to be delivered with respect to such Person to the
Agent pursuant to SECTION 6.7(d) immediately following the date such new
location is established and (b) the Borrower or SDI Canada, as applicable, and
Account Debtor execute a Customer Contract.
6.4. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL.
The Borrower represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that: (a) all of the
Collateral of the Borrower and SDI Canada is and will continue to be owned by
the Borrower or SDI Canada, as applicable, free and clear of all Liens
whatsoever, except for Permitted Liens; (b) the Agent's Liens in the Collateral
will not be subject to any prior Lien, except for Permitted Liens; (c) the
Borrower and SDI Canada will use, store, and maintain the Collateral with all
reasonable care and will use such Collateral for lawful purposes only; and (d)
neither of the Borrower nor SDI Canada will, without the Agent's prior written
approval, sell, or dispose of or permit the sale or disposition of any of the
Collateral except for sales of Inventory in the ordinary course of business and
sales of Equipment as permitted by SECTION 6.11. The inclusion of proceeds in
the Collateral shall not be deemed to constitute the Agent's or any Lender's
consent to any sale or other disposition of the Collateral except as expressly
permitted herein.
6.5. INTENTIONALLY OMITTED.
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6.6. ACCESS AND EXAMINATION; CONFIDENTIALITY.
(a) The Agent, accompanied by any Lender which so elects, may
at all reasonable times during regular business hours (and at any time when a
Default or Event of Default exists) have access to, examine, audit, make
extracts from or copies of and inspect any or all of the Borrower's and SDI
Canada's records, files, and books of account and the Collateral (including
those records, files and books of account and Collateral located on an Account
Debtor's premises), and discuss the Borrower's and SDI Canada's affairs with the
Borrower's or SDI Canada's officers and management; PROVIDED, that if no Default
or Event of Default exists, the Agent and the Lenders shall not conduct more
than four (4) audits in any Fiscal Year; PROVIDED, FURTHER, that if (i) no
Default or Event of Default exists, (ii) the Borrower's Availability equals or
exceeds $20,000,000 at all times, and (iii) the aggregate unpaid Obligations
have not exceeded $15,000,000 at any time, the Agent and the Lenders shall not
conduct more than two (2) audits in any Fiscal Year. The Borrower will, and will
cause SDI Canada to, deliver to the Agent any instrument necessary for the Agent
to obtain records from any service bureau maintaining records for the Borrower
or SDI Canada. The Agent may, and at the direction of the Majority Lenders
shall, at any time when a Default or Event of Default exists, and at the
Borrower's expense, make copies of all of the Borrower's and SDI Canada's books
and records, or require the Borrower and SDI Canada to deliver such copies to
the Agent. The Agent may, without expense to the Agent, use such of the
Borrower's and SDI Canada's respective personnel, supplies, and premises as may
be reasonably necessary for maintaining or enforcing the Agent's Liens. The
Agent shall have the right, at any time, in the Agent's name or in the name of a
nominee of the Agent, to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or
otherwise.
(b) The Borrower agrees that, subject to the Borrower's prior
consent for uses other than in a traditional tombstone, which consent shall not
be unreasonably withheld or delayed, the Agent and each Lender may use the
Borrower's name in advertising and promotional material and in conjunction
therewith disclose the general terms of this Agreement. The Agent and each
Lender agree to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all financial and pricing information (whether
or not labeled "secret" or "confidential") and all other information identified
as "confidential" or "secret" by the Borrower and provided to the Agent or such
Lender by or on behalf of the Borrower or SDI Canada, under this Agreement or
any other Loan Document, and neither the Agent, nor such Lender nor any of their
respective Affiliates shall use any such information other than in connection
with or in enforcement of this Agreement and the other Loan Documents, except to
the extent that such information (i) was or becomes generally available to the
public other than as a result of disclosure by the Agent or such Lender, or (ii)
was or becomes available on a nonconfidential basis from a source other than the
Borrower or SDI Canada, PROVIDED, that such source is not bound by a
confidentiality agreement with the Borrower known to the Agent or such Lender;
PROVIDED, HOWEVER, that the Agent and any Lender may disclose such information
(1) at the request or pursuant to any requirement of any Governmental Authority
to which the Agent or such Lender is subject or in connection with an
examination of the Agent or such Lender by any such Governmental Authority; (2)
pursuant to
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subpoena or other court process; (3) when required to do so in accordance with
the provisions of any applicable requirement of law; (4) to the extent
reasonably required in connection with any litigation or proceeding (including,
but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or
their respective Affiliates may be party; (5) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Agent's or such Lender's independent auditors, accountants,
attorneys and other professional advisors; (7) to any prospective Participant or
assignee under any Assignment and Acceptance, actual or potential, PROVIDED,
that such prospective Participant or assignee agrees in writing for the benefit
of the Borrower to keep such information confidential to the same extent
required of the Agent and the Lenders hereunder; (8) as expressly permitted
under the terms of any other document or agreement regarding confidentiality to
which the Borrower or SDI Canada is party or is deemed party with the Agent or
such Lender, and (9) to its Affiliates. Without limiting the foregoing, the
Agent and the Lenders shall not disclose such information to any of the
Borrower's competitors or any Person in the same or similar lines of business as
the Borrower.
6.7. COLLATERAL REPORTING.
The Borrower shall provide the Agent with the following
documents at the following times in form satisfactory to the Agent: (a) on a
monthly basis by the twentieth (20th) day following the end of each month (or
more frequently if requested by the Agent), a schedule of the Borrower's and SDI
Canada's Accounts created since the last such schedule and a Borrowing Base
Certificate; (b) on a monthly basis by the twentieth (20th) day following the
end of each month (or more frequently if requested by the Agent), an aging of
the Borrower's and SDI Canada's Accounts, together with a reconciliation to the
previous month's aging of the Borrower's and SDI Canada's Accounts and to the
Borrower's and SDI Canada's general ledger; (c) on a monthly basis by the
thirtieth (30th) day following the end of each month (or more frequently if
requested by the Agent), a report in the form attached hereto as EXHIBIT H of
the Borrower's and SDI Canada's accounts payable; (d) on a monthly basis by the
thirtieth (30th) day following the end of each month (or more frequently if
requested by the Agent), Inventory reports by location, which designate new
locations and discontinued locations of the Borrower and SDI Canada; (e) upon
request, copies of invoices in connection with the Borrower's and SDI Canada's
Accounts, customer statements, credit memos, remittance advices and reports,
deposit slips, shipping and delivery documents in connection with the Borrower's
and SDI Canada's Accounts and for Inventory and Equipment acquired by the
Borrower and SDI Canada, purchase orders and invoices; (f) upon request, a
statement of the balance of each of the Intercompany Accounts; (g) such other
reports as to the Collateral of the Borrower and SDI Canada as the Agent shall
reasonably request from time to time; and (h) with the delivery of each of the
foregoing, a certificate of the Borrower executed by an officer thereof
certifying as to the accuracy and completeness of the foregoing. If any of the
Borrower's or SDI Canada's records or reports of the Collateral are prepared by
an accounting service or other agent, the Borrower hereby authorizes such
service or agent to deliver such records, reports, and related documents to the
Agent, for distribution to the Lenders. The Lenders agree that all certificates
delivered by officers of any Credit Party
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pursuant to this Agreement or any other Loan Document are delivered in such
person's corporate, not individual, capacity
6.8. ACCOUNTS.
(a) The Borrower hereby represents and warrants to the Agent
and the Lenders, with respect to the Borrower's Accounts and SDI Canada's
Accounts, that: (i) each existing Account represents, and each future Account
will represent, a BONA FIDE sale or lease and delivery of goods by the Borrower
or SDI Canada, or rendition of services by the Borrower or SDI Canada, in the
ordinary course of the Borrower's or SDI Canada's business; (ii) each existing
Account is, and each future Account will be, for a liquidated amount payable by
the Account Debtor thereon on the terms set forth in the invoice therefor or in
the schedule thereof delivered to the Agent, without any offset, deduction,
defense, or counterclaim except those known to the Borrower or SDI Canada and
disclosed to the Agent and the Lenders pursuant to this Agreement; (iii) no
payment will be received with respect to any Account, and no credit, discount,
or extension, or agreement therefor will be granted on any Account, except as
reported to the Agent and the Lenders in accordance with this Agreement; (iv)
each copy of an invoice delivered to the Agent by the Borrower or SDI Canada
will be a genuine copy of the original invoice sent to the Account Debtor named
therein; and (v) all goods described in any invoice representing a sale of goods
will have been delivered to the Account Debtor (other than ▇▇▇▇-and-hold
Inventory subject to a Customer Contract) and all services of the Borrower and
SDI Canada described in each invoice will have been performed.
(b) The Borrower shall not, nor shall the Borrower permit or
cause SDI Canada to, re-date any invoice or sale or make sales on extended
dating beyond that customary in such Person's business or extend or modify any
Account. If the Borrower becomes aware of any matter adversely affecting the
collectibility of any Account or Account Debtor involving an amount greater than
$250,000, including information regarding the Account Debtor's creditworthiness,
the Borrower will promptly so advise the Agent.
(c) The Borrower shall not, nor shall the Borrower permit SDI
Canada to, accept any note or other instrument (except a check or other
instrument for the immediate payment of money) with respect to any Account
without providing the Agent notice thereof. Such instrument shall be considered
as evidence of the Account and not payment thereof and the Borrower will, or
will cause SDI Canada to, promptly deliver such instrument to the Agent,
endorsed by the Borrower or SDI Canada, as applicable, to the Agent in a manner
satisfactory in form and substance to the Agent. Regardless of the form of
presentment, demand, notice of protest with respect thereto, the Borrower or SDI
Canada, as the case may be, shall remain liable thereon until such instrument is
paid in full.
(d) The Borrower shall notify the Agent promptly of all
disputes and claims in excess of $250,000 with any Account Debtor of the
Borrower or SDI Canada, and agrees to settle, contest, or adjust such dispute or
claim at no expense to the Agent or any Lender. No discount, credit or allowance
shall be granted to any such Account Debtor without the Agent's prior written
consent, except for discounts, credits and allowances made or given in the
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ordinary course of the Borrower's or SDI Canada's business when no Event of
Default exists hereunder. The Borrower shall, upon the Agent's request, send the
Agent a copy of each credit memorandum in excess of $250,000 as soon as issued
by it or SDI Canada. The Agent may, and at the direction of the Majority Lenders
shall, at all times when an Event of Default of the type described in SECTIONS
11.1(a), (f), (g), (h), or (i)(x) exists hereunder or after acceleration of the
maturity of the Obligations, settle or adjust disputes and claims directly with
Account Debtors of the Borrower or SDI Canada for amounts and upon terms which
the Agent or the Majority Lenders, as applicable, shall consider advisable and,
in all cases, the Agent will credit the Borrower's Loan Account with only the
net amounts received by the Agent in payment of any Accounts.
(e) Notwithstanding anything to the contrary herein and in
particular SECTION 4.8, all proceeds and collections of SDI Canada's Accounts
and other Collateral and payments received by the Agent and/or the Lenders from
SDI Canada shall be applied to fees and expense reimbursements not in the nature
of interest for the purposes of the INCOME TAX ACT OF CANADA and to principal
before being applied to interest due or fees and expense reimbursements which
are or may be in the nature of interest payments for the purposes of the INCOME
TAX ACT OF CANADA.
(f) If an Account Debtor returns any Inventory to the Borrower
or SDI Canada when no Event of Default exists, then the Borrower shall, or shall
cause SDI Canada to, promptly determine the reason for such return and shall
issue a credit memorandum to the Account Debtor in the appropriate amount. Upon
the Agent's request, the Borrower shall, and shall cause SDI Canada to, report
to the Agent any return involving an amount in excess of $250,000. Each such
report shall indicate the reasons for the returns and the locations and
condition of the returned Inventory. In the event any Account Debtor returns
Inventory to the Borrower or SDI Canada when an Event of Default exists, the
Borrower, upon request of the Agent, shall or shall cause SDI Canada to: (i)
hold the returned Inventory in trust for the Agent; (ii) segregate all returned
Inventory from all of its other property; (iii) dispose of the returned
Inventory solely according to the Agent's written instructions; and (iv) not
issue any credits or allowances with respect thereto without the Agent's prior
written consent. All returned Inventory shall be subject to the Agent's Liens
thereon. Whenever any Inventory is returned, the related Account shall be deemed
ineligible to the extent of the amount owing by the Account Debtor with respect
to such returned Inventory.
6.9. COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Until the Agent notifies the Borrower to the contrary, the
Borrower shall, and shall cause SDI Canada to, (i) make collection of all
Accounts and other Collateral of the Borrower and SDI Canada for the Agent, (ii)
receive all payments (but only following notice from the Agent in the case of
SDI Canada) as the Agent's trustee, and (iii) immediately (and following notice
from the Agent in the case of SDI Canada) deliver all payments in their original
form duly endorsed in blank into a Payment Account established for the account
of the Borrower or SDI Canada, as the case may be, at a bank acceptable to Agent
and subject to documentation acceptable to Agent. If the Agent requests, the
Borrower shall, and shall cause
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SDI Canada to, establish a lock-box service for collections of Accounts of the
Borrower or SDI Canada, as the case may be, at a bank acceptable to the Agent
and pursuant to documentation satisfactory to the Agent. If such lock-box
service is established, the Borrower shall, and shall cause SDI Canada to,
instruct all Account Debtors to make all payments directly to the address
established for such service. If, notwithstanding such instructions, the
Borrower or SDI Canada receives any proceeds of Accounts, it shall receive such
payments as the Agent's trustee, and shall immediately deliver such payments to
the Agent in their original form duly endorsed in blank or deposit them into a
Payment Account of the Borrower or SDI Canada, as the case may be, as the Agent
may direct. All collections received in any such lock-box or Payment Account or
directly by the Borrower, SDI Canada or the Agent, and all funds in any Payment
Account or other account to which such collections are deposited shall be
subject to the Agent's sole control; PROVIDED, that so long as the Agent has not
provided a Payment Direction Notice to the bank at which such Payment Account is
maintained, all collections received in such Payment Account shall be
transferred to a disbursement account designated by the Borrower or SDI Canada,
as the case may be. The Agent may, and at the direction of the Majority Lenders
will, provide a Payment Direction Notice at any time that an Event of Default
exists or the Borrower's Availability is less than $20,000,000. The Agent or the
Agent's designee may, at any time after the occurrence of an Event of Default,
notify Account Debtors that the Accounts of the Borrower and SDI Canada have
been assigned to the Agent and of the Agent's security interest therein, and may
collect them directly and charge the collection costs and expenses to the
Borrower's Loan Account as a Revolving Loan. So long as an Event of Default has
occurred and is continuing, the Borrower, at the Agent's request, shall, and
shall cause SDI Canada to, execute and deliver to the Agent such documents as
the Agent shall require to grant the Agent access to any post office box in
which collections of Accounts of the Borrower or SDI Canada are received.
(b) If sales of Inventory are made or services are rendered
for cash, the Borrower shall, and shall cause SDI Canada to, immediately deliver
to the Agent or deposit into a Payment Account the cash which the Borrower or
SDI Canada, as the case may be, receives.
(c) All payments received by the Agent on account of Accounts
of the Borrower or SDI Canada or as proceeds of other Collateral of the Borrower
or SDI Canada will be the Agent's sole property for its benefit and the benefit
of the Lenders and will be credited to the Borrower's Loan Account (conditional
upon final collection) upon receipt of immediately available funds.
(d) In the event the Borrower repays all of the Obligations
upon the termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Borrower's Loan Account after the Agent's receipt
of immediately available funds.
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6.10. INVENTORY; PERPETUAL INVENTORY.
The Borrower represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the Inventory
owned by the Borrower or SDI Canada is and will be held for sale or lease, or to
be furnished in connection with the rendition of services, or to be consumed in
the business of the Borrower or SDI Canada or to be used in connection with the
packing, shipping, advertising, selling or finishing of other Inventory, all in
the ordinary course of the Borrower's or SDI Canada's business, and is and will
be fit for such purposes. The Borrower will keep, and will cause SDI Canada to
keep, its Inventory in good and marketable condition, at its own expense. The
Borrower agrees that all Inventory produced in the United States will be
produced in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations, and orders thereunder. The Borrower will,
and will cause SDI Canada to, conduct a physical count of the Inventory at least
once per Fiscal Year, and after and during the continuation of an Event of
Default, at such other times as the Agent requests. The Borrower will, and will
cause SDI Canada to, maintain a perpetual inventory reporting system at all
times. The Borrower will not, and the Borrower will not permit SDI Canada to,
without the Agent's written consent, sell any Inventory on a guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis; PROVIDED, that the Borrower may agree, consistent with past practices, to
repurchase non-consumable spare parts for the purpose of repairing such spare
parts and re-selling them to the customer.
6.11. EQUIPMENT.
(a) The Borrower represents and warrants to the Agent and the
Lenders and agrees with the Agent and the Lenders that all of the Equipment
owned by the Borrower and SDI Canada is and will be used or held for use in the
Borrower's or SDI Canada's business, as the case may be, and is and will be fit
for such purposes. The Borrower shall, and shall cause SDI Canada to, keep and
maintain its Equipment in good operating condition and repair (ordinary wear and
tear excepted) and shall make all necessary replacements thereof.
(b) Upon the Agent's request, the Borrower shall inform the
Agent of any material additions to or deletions from the Equipment. The Borrower
shall not permit, and shall not allow SDI Canada to permit, any Equipment to
become a fixture with respect to real property or to become an accession with
respect to other personal property with respect to which real or personal
property the Agent does not have a Lien. The Borrower will not, and will not
allow SDI Canada to, without the Agent's prior written consent, alter or remove
any identifying symbol or number on any of its Equipment consisting of
Collateral.
(c) The Borrower shall not, and the Borrower shall not allow
SDI Canada to, without the Agent's prior written consent, sell, lease as a
lessor, or otherwise dispose of any of its Equipment, except in the ordinary
course of its business and except for equipment that is surplus, obsolete or no
longer necessary to the conduct of the business of the Credit Parties.
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6.12. CUSTOMER CONTRACTS.
The Borrower shall, and shall cause SDI Canada to, fully
perform all of its obligations under each of the Customer Contracts, and shall
enforce all of its rights and remedies thereunder, in each case, as it deems
appropriate in its business judgment; PROVIDED, HOWEVER, that the Borrower shall
not, and shall not permit SDI Canada to, take any action or fail to take any
action with respect to its Customer Contracts which would cause the termination
of such Customer Contract without providing prompt written notice thereof to the
Agent. The Borrower shall not, and shall not permit SDI Canada to, without the
Agent's and the Majority Lenders' prior written consent, modify, amend,
supplement, compromise, satisfy, release, or discharge any provisions in a
Customer Contract (i) requiring the Account Debtor thereof to purchase the
Inventory (at a purchase price greater than or equal to the cost thereof) on
such Account Debtor's premises upon termination of such Customer Contract, or
(ii) requiring the Account Debtor thereof to purchase all Slow Moving Inventory
(at a purchase price greater than or equal to the cost thereof) on such Account
Debtor's premises. If an Event of Default of the type described in SECTIONS
11.1(a), (f), (g), (h), or (i)(x) has occurred, the maturity of the Loans has
been accelerated pursuant to SECTION 11.2 or if the Termination Date has
otherwise occurred and the Borrower or SDI Canada, as the case may be, shall
fail to pursue diligently any right under its Customer Contracts, the Agent may,
and at the direction of the Majority Lenders shall, directly enforce such right
in its own or the Borrower's or SDI Canada's name and may enter into such
settlements or other agreements with respect thereto as the Agent or the
Majority Lenders, as applicable, shall determine. In any suit, proceeding or
action brought by the Agent for the benefit of the Lenders under any Customer
Contract for any sum owing thereunder or to enforce any provision thereof, the
Borrower shall, and shall cause SDI Canada to, indemnify and hold the Agent and
Lenders harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaims, recoupment, or reduction of liability
whatsoever of the obligor thereunder arising out of a breach by the Borrower or
SDI Canada of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing from the Borrower or SDI Canada to
or in favor of such obligor or its successors. All such obligations of the
Borrower and SDI Canada shall be and remain enforceable only against the
Borrower and SDI Canada and shall not be enforceable against the Agent.
Notwithstanding any provision hereof to the contrary, the Borrower and SDI
Canada shall at all times remain liable to observe and perform all of its duties
and obligations under its Customer Contracts, and the Agent's or any Lender's
exercise of any of their respective rights with respect to the Collateral shall
not release the Borrower and SDI Canada from any of such duties and obligations.
Neither the Agent nor any Lender shall be obligated to perform or fulfill any of
the Borrower's or SDI Canada's duties or obligations under its Customer
Contracts or to make any payment thereunder, or to make any inquiry as to the
nature or sufficiency of any payment or property received by it thereunder or
the sufficiency of performance by any party thereunder, or to present or file
any claim, or to take any action to collect or enforce any performance, any
payment of any amounts, or any delivery of any property.
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6.13. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER.
The Borrower represents and warrants to the Agent and the
Lenders that (a) all documents, instruments, and chattel paper describing,
evidencing, or constituting Collateral, and all signatures and endorsements
thereon, are and will be complete, valid, and genuine, and (b) all goods
evidenced by such documents, instruments, and chattel paper are and will be
owned by the Borrower or SDI Canada, free and clear of all Liens other than
Permitted Liens.
6.14. RIGHT TO CURE.
The Agent may, in its discretion, and shall, at the direction
of the Majority Lenders, pay any amount or do any act required of the Borrower
or SDI Canada hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Obligations, the Collateral or the Agent's
Liens therein, and which the Borrower or SDI Canada fails to pay or do,
including, without limitation, payment of any judgment against the Borrower or
SDI Canada, any insurance premium, any warehouse charge, any finishing or
processing charge, any landlord's claim, and any other Lien upon or with respect
to the Collateral. All payments that the Agent makes under this SECTION 6.14 and
all out-of-pocket costs and expenses that the Agent pays or incurs in connection
with any action taken by it hereunder shall be charged to the Borrower's Loan
Account as a Revolving Loan. Any payment made or other action taken by the Agent
under this SECTION 6.14 shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed thereafter as herein provided.
6.15. POWER OF ATTORNEY.
The Borrower hereby appoints the Agent and the Agent's
designee as the Borrower's attorney, with power: (a) to endorse the Borrower's
name on any checks, notes, acceptances, money orders, or other forms of payment
or security that come into the Agent's or any Lender's possession; (b) to sign
the Borrower's name on any invoice, ▇▇▇▇ of lading, warehouse receipt or other
document of title relating to any Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and
other public records and to file any such financing statements by electronic
means with or without a signature as authorized or required by applicable law or
filing procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for
delivery of the Borrower's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to the Borrower; (d) to send
requests for verification of Accounts to customers or Account Debtors; (e) to
clear Inventory, the purchase of which was financed with Letters of Credit,
through customs in the Borrower's name, the Agent's name or the name of the
Agent's designee, and to sign and deliver to customs officials powers of
attorney in the Borrower's name for such purpose; and (f) to do all things
necessary to carry out this Agreement. The Borrower ratifies and approves all
acts of such attorney. None of the Lenders or the Agent nor their attorneys will
be liable for any acts or omissions or for any error of judgment or
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mistake of fact or law that are not a result of such Person's gross negligence
or willful misconduct. This power, being coupled with an interest, is
irrevocable until this Agreement has been terminated and the Obligations have
been fully satisfied.
6.16. THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES.
The Borrower assumes all responsibility and liability arising
from or relating to the use, sale or other disposition of the Collateral. The
Obligations shall not be affected by any failure of the Agent or any Lender to
take any steps to perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release the Borrower
from any of the Obligations. Following the occurrence and continuation of an
Event of Default, the Agent may (but shall not be required to), and at the
direction of the Majority Lenders shall, without notice to or consent from the
Borrower, ▇▇▇ upon or otherwise collect, extend the time for payment of, modify
or amend the terms of, compromise or settle for cash, credit, or otherwise upon
any terms, grant other indulgences, extensions, renewals, compositions, or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in connection
with any of the foregoing, without discharging or otherwise affecting the
liability of the Borrower for the Obligations or under this Agreement or any
other agreement now or hereafter existing between the Agent and/or any Lender
and the Borrower.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1. BOOKS AND RECORDS.
The Borrower shall, and shall cause each of its Subsidiaries
to, maintain, at all times, correct and complete books, records and accounts in
which complete, correct and timely entries are made of its transactions in
accordance with GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to SECTION 7.2(a). The Borrower shall, and
shall cause each of its Subsidiaries to, by means of appropriate entries,
reflect in such accounts and in all Financial Statements proper liabilities and
reserves for all taxes and proper provision for depreciation and amortization of
property and bad debts, all in accordance with GAAP. The Borrower shall, and
shall cause each of its Subsidiaries to, maintain at all times books and records
pertaining to the Collateral in such detail, form and scope as the Agent or any
Lender shall reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejections, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory; and (c) all other dealings affecting
the Collateral.
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7.2. FINANCIAL INFORMATION.
The Borrower shall promptly furnish to the Agent, all such
financial information as the Agent shall reasonably request, and notify its
auditors and accountants that the Agent, on behalf of the Lenders, is authorized
to obtain such information directly from them. Without limiting the foregoing,
the Borrower will furnish to the Agent, in such detail as the Agent shall
reasonably request, the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated audited
balance sheets, and statements of income and expense, cash flow and of
stockholders' equity for SDI and its Subsidiaries for such Fiscal Year with
attached unaudited consolidating balance sheets, and statements of income and
expense, cash flow and stockholders' equity for such Fiscal Year, and the
accompanying notes thereto, setting forth in each case in comparative form
figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of SDI and its
consolidated Subsidiaries as at the date thereof and for the Fiscal Year then
ended, and prepared in accordance with GAAP. Such statements shall be examined
in accordance with generally accepted auditing standards by and, in the case of
such statements performed on a consolidated basis, accompanied by a report
thereon unqualified as to scope of independent certified public accountants
selected by the Borrower and reasonably satisfactory to the Agent. The Borrower,
simultaneously with retaining such independent public accountants to conduct
such annual audit, shall send a letter to such accountants, with a copy to the
Agent and the Lenders, notifying such accountants that one of the primary
purposes for retaining such accountants' services and having audited financial
statements prepared by them is for use by the Agent and the Lenders. The
Borrower hereby authorizes the Agent to communicate directly with its certified
public accountants and, by this provision, authorizes those accountants to
disclose to the Agent any and all financial statements and other supporting
financial documents and schedules relating to the Borrower and to discuss
directly with the Agent the finances and affairs of the Borrower. The Borrower
shall have a right to have a representative of the Borrower present at any
meeting with the Borrower's accountants.
(b) As soon as available, but in any event not later than
thirty (30) days after the end of each month (but, in the case of a month that
is the last month of a calendar quarter, forty-five days after the end of such
calendar quarter), consolidated and consolidating unaudited balance sheets of
SDI and its consolidated Subsidiaries as at the end of such month, and
consolidated and consolidating unaudited statements of income and expense and
cash flow for SDI and its consolidated Subsidiaries for such month and for the
period from the beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and results of
operations of SDI and its consolidated Subsidiaries as at the date thereof and
for such periods, and prepared in accordance with GAAP applied consistently with
the audited Financial Statements required to be delivered pursuant to SECTION
7.2(a). The Borrower shall cause SDI to certify by a certificate signed by its
chief financial officer or chief accounting officer that all such statements
have been prepared in accordance with GAAP and present fairly, subject to normal
year-end adjustments, the Borrower's financial position as at the dates thereof
and its results of operations for the periods then ended.
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(c) Intentionally Omitted.
(d) With each of the audited Financial Statements delivered
pursuant to SECTION 7.2(a), a certificate of the independent certified public
accountants that examined such statement to the effect that they have reviewed
and are familiar with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default, except for those, if any, described
in reasonable detail in such certificate; PROVIDED, that the Borrower need not
cause such certificate to be delivered if such certificates are not being
provided generally by reputable accounting firms.
(e) With each of the annual audited Financial Statements
delivered pursuant to SECTION 7.2(a), and within thirty (30) days after the end
of each month (but, in the case of a month that is the last month of a calendar
quarter, forty-five (45) days after the end of such calendar quarter), a
certificate of the chief financial officer or chief accounting officer of SDI
(i) setting forth in reasonable detail the calculations required to establish
that the Borrower was in compliance with the covenants set forth in SECTION 9.25
during the period covered in such Financial Statements and as at the end
thereof, and (ii) stating that, except as explained in reasonable detail in such
certificate, (A) all of the representations and warranties of the Borrower
contained in this Agreement and the other Loan Documents are correct and
complete in all material respects as at the date of such certificate as if made
at such time, except to the extent that such representations and warranties
expressly relate to an earlier date or except as set forth in such certificate,
(B) the Borrower is, at the date of such certificate, in compliance in all
material respects with all of its respective covenants and agreements in this
Agreement and the other Loan Documents, and (C) no Default or Event of Default
then exists or existed during the period covered by such Financial Statements,
together with a copy of SDI's chief executive officer's monthly update letter to
the board of directors for such month in at least as much detail as the copies
of such report provided to the Agent prior to the Closing Date. If such
certificate discloses that a representation or warranty is not correct or
complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
the Borrower has taken or proposes to take with respect thereto.
(f) Within thirty (30) days after the beginning of each Fiscal
Year, annual forecasts (to include forecasted consolidated and consolidating
balance sheets, statements of income and expenses and statements of cash flow)
for SDI and its Subsidiaries as at the end of and for each month of such Fiscal
Year.
(g) Promptly upon the filing thereof, copies of all reports to
or other documents filed by SDI or any of its Subsidiaries with the Securities
and Exchange Commission under the Exchange Act, and all reports, notices, or
statements sent or received by SDI or any of its Subsidiaries to or from the
holders of any equity interests of SDI (other than routine non-material
correspondence sent by shareholders of SDI to SDI or correspondence relating to
stock option plans) or any such Subsidiary or of any Debt for Borrowed Money of
SDI or any of its Subsidiaries registered under the Securities Act of 1933 or to
or from the trustee under any indenture under which the same is issued.
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(h) As soon as available, but in any event not later than
fifteen (15) days after SDI's or any of its Subsidiaries' receipt thereof, a
copy of all management reports and management letters prepared for SDI or any of
its Subsidiaries by KPMG Peat Marwick LLP or any other independent certified
public accountants of the Borrower.
(i) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which SDI or any of its
Subsidiaries makes available to its shareholders.
7.3. NOTICES TO THE LENDERS.
The Borrower shall notify the Agent, in writing of the
following matters at the following times:
(a) Immediately after becoming aware of any Default or Event
of Default.
(b) Promptly after becoming aware of the assertion by the
holder of any capital stock of any Credit Party or Subsidiary thereof or of any
Debt that a default exists with respect thereto or that a Credit Party is not in
compliance with the terms thereof, or the threat or commencement by such holder
of any enforcement action because of such asserted default or non-compliance.
(c) Promptly after becoming aware of any material adverse
change in any Credit Party's or any Credit Party's Subsidiary's property,
business, operations, or condition (financial or otherwise).
(d) Promptly after becoming aware of any pending or threatened
action, suit, proceeding, or counterclaim by any Person, or any pending or
threatened investigation by a Governmental Authority, and which may materially
and adversely affect the Collateral, the repayment of the Obligations, the
Agent's or any Lender's rights under the Loan Documents, or any Credit Party's
or any Credit Party's Subsidiary's property, business, operations, or condition
(financial or otherwise).
(e) Promptly after becoming aware of any pending or threatened
strike, work stoppage, unfair labor practice claim, or other labor dispute
affecting a Credit Party or any of its Subsidiaries in a manner which could
reasonably be expected to have a Material Adverse Effect.
(f) Promptly after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Governmental Authority affecting a Credit
Party which could reasonably be expected to have a Material Adverse Effect.
(g) Promptly after receipt of any notice of any violation by a
Credit Party or any of its Subsidiaries of any Environmental Law which could
reasonably be expected to have a Material Adverse Affect or that any
Governmental Authority has asserted that a Credit Party or
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any Subsidiary thereof is not in compliance with any Environmental Law or is
investigating such Credit Party's or such Subsidiary's compliance therewith.
(h) Promptly after receipt of any written notice that a Credit
Party or any of its Subsidiaries is or may be liable to any Person as a result
of the Release or threatened Release of any Contaminant or that a Credit Party
or any Subsidiary is subject to investigation by any Governmental Authority
evaluating whether any remedial action is needed to respond to the Release or
threatened Release of any Contaminant which, in either case, is reasonably
likely to give rise to liability in excess of $100,000.
(i) Promptly after receipt of any written notice of the
imposition of any Environmental Lien against any property of a Credit Party or
any of its Subsidiaries.
(j) Any change in a Credit Party's name, jurisdiction of
incorporation, or form of organization, trade names under which a Credit Party
will sell Inventory or create Accounts, or to which instruments in payment of
Accounts may be made payable, in each case at least thirty (30) days prior
thereto.
(k) Promptly (and in any event within five (5) Business Days)
after becoming aware of any event involving noncompliance by the Borrower or any
ERISA Affiliate with ERISA or the PBA which noncompliance is reasonably likely
to have a Material Adverse Effect, notice of such noncompliance.
Each notice given under this SECTION 7.3 shall describe the
subject matter thereof in reasonable detail, and shall set forth the action that
a Credit Party, its Subsidiary, or any ERISA Affiliate, as applicable, has taken
or proposes to take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower warrants and represents to the Agent and the
Lenders that except as hereafter disclosed to and accepted by the Agent and the
Majority Lenders in writing:
8.1. AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS
AGREEMENT AND THE LOAN DOCUMENTS.
Each of Borrower and each of its Subsidiaries has the
corporate power and authority to execute, deliver and perform this Agreement and
the other Loan Documents to which it is a party, as applicable. The Borrower has
the corporate power and authority to incur the Obligations and each of the
Borrower and each of its Subsidiaries has the corporate power and authority to
grant to the Agent Liens upon and security interests in the Collateral. Each of
Borrower and each of its Subsidiaries has taken all necessary corporate action
(including without limitation, obtaining approval of its stockholders if
necessary) to
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authorize its execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is party, as applicable. This Agreement and the
other Loan Documents have been duly executed and delivered by the Borrower and
each of its Subsidiaries, as applicable, and constitute the legal, valid and
binding obligations of the Borrower and such Subsidiaries, enforceable against
them in accordance with their respective terms without defense, setoff or
counterclaim. The Borrower's and such Subsidiaries' execution, delivery, and
performance of this Agreement and the other Loan Documents do not and will not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien upon the property of
the Borrower or any such Subsidiary by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture, or instrument to which the Borrower
or any such Subsidiary is a party or which is binding upon it or any such
Subsidiary if the same is reasonably be expected to have a Material Adverse
Effect, (b) any Requirement of Law applicable to the Borrower or any such
Subsidiary, or (c) the certificate or articles of incorporation or by-laws of
the Borrower or any such Subsidiary.
8.2. VALIDITY AND PRIORITY OF SECURITY INTEREST.
The provisions of this Agreement and the other Loan Documents
create legal and valid Liens on all the Collateral in favor of the Agent, for
the ratable benefit of the Agent and the Lenders, and such Liens constitute
perfected and continuing Liens on all the Collateral, having priority over all
other Liens on the Collateral other than Permitted Liens, securing all the
Obligations, and enforceable against the Borrower and each of its Subsidiaries
and all third parties.
8.3. ORGANIZATION AND QUALIFICATION.
The Borrower (a) is duly incorporated and organized and
validly existing in good standing under the laws of the jurisdiction of its
incorporation, (b) is, as of the Restatement Date, qualified to do business as a
foreign corporation and is in good standing in the jurisdictions set forth on
SCHEDULE 8.3 which are the only jurisdictions in which qualification is
necessary in order for it to own or lease its property and conduct its business,
except for such jurisdictions where the failure to do so qualify is not
reasonably expected to have a Material Adverse Effect, and (c) has all requisite
power and authority to conduct its business and to own its property.
8.4. CORPORATE NAME; PRIOR TRANSACTIONS.
The Borrower has not, and none of the Borrower's Subsidiaries
has, during the past five (5) years, been known by or used any other corporate
or fictitious name, or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property outside of the ordinary course of business, except as set forth on
SCHEDULE 8.4 or as may be disclosed to the Agent from time to time.
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8.5. SUBSIDIARIES AND AFFILIATES.
SCHEDULE 8.5 is as of the Restatement Date a correct and
complete list of the name and relationship to the Borrower of each and all of
the Borrower's Subsidiaries and other Affiliates. Each Subsidiary is (a) duly
incorporated and organized and validly existing in good standing under the laws
of its jurisdiction of incorporation set forth on SCHEDULE 8.5, and (b)
qualified to do business as a foreign corporation and in good standing in each
jurisdiction in which the failure to so qualify or be in good standing could
reasonably be expected to have a Material Adverse Effect on any such
Subsidiary's business, operations, prospects, property, or condition (financial
or otherwise) and (c) has all requisite power and authority to conduct its
business and own its property.
8.6. FINANCIAL STATEMENTS AND PROJECTIONS.
(a) The Borrower has delivered to the Agent and the Lenders
the audited balance sheet and related statements of income, retained earnings,
cash flows, and changes in stockholders equity for SDI and its consolidated
Subsidiaries as of December 31, 1997, and for the Fiscal Year then ended,
accompanied by the report thereon of SDI's independent certified public
accountants, KPMG Peat Marwick LLP. The Borrower has also delivered to the Agent
and the Lenders the unaudited balance sheet and related statements of income and
cash flows for SDI and its consolidated Subsidiaries as of February 28, 1998.
Such financial statements are attached hereto as EXHIBIT C. All such financial
statements have been prepared in accordance with GAAP and present accurately and
fairly the financial position of SDI and its consolidated Subsidiaries as at the
dates thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein represent the Borrower's reasonable estimate of the future
financial performance of the Borrower and its consolidated Subsidiaries for the
periods set forth therein. The Latest Projections have been prepared on the
basis of the assumptions set forth therein, which the Borrower believes are fair
and reasonable in light of current and reasonably foreseeable business
conditions at the time submitted to the Agent.
8.7. CAPITALIZATION.
SCHEDULE 8.7 sets forth as of the Restatement Date the
Borrower's and its Subsidiaries' authorized capital stock, the number of shares
that are validly issued and outstanding, and the beneficial owner thereof. All
outstanding shares of the Borrower and its Subsidiaries have been validly issued
and are fully paid and non-assessable.
8.8. SOLVENCY.
The Borrower, SDI Canada Holdings and SDI Canada is (after
taking into account contribution rights against the other Credit Parties)
Solvent prior to and after giving effect to the making of the Revolving Loans to
be made on the Closing Date and the issuance of the Letters of Credit to be
issued on the Closing Date, and shall (after taking
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into account contribution rights against the other Credit Parties) remain
Solvent during the term of this Agreement. No portion of the Loans is being or
will be utilized to purchase any shares in the capital of SDI Canada.
8.9. DEBT.
After giving effect to the making of the Revolving Loans to be
made on the Restatement Date, the Borrower and its Subsidiaries have no Debt,
except (a) the Obligations, (b) Debt described on SCHEDULE 8.9 or other Debt
reflected on the Financial Statements, and (c) trade payables and other Debt
arising in the ordinary course of business.
8.10. DISTRIBUTIONS.
Since December 31, 1997, no Distribution has been declared,
paid, or made upon or in respect of any capital stock or other securities of the
Borrower or any of its Subsidiaries.
8.11. TITLE TO PROPERTY.
The Borrower has, and each of its Subsidiaries has, good and
marketable title in fee simple to its real property listed in SCHEDULE 8.12
hereto, and the Borrower has, and each of its Subsidiaries has, good,
indefeasible, and merchantable title to all of its other property (including,
without limitation, the assets reflected on the December 31, 1997 Financial
Statements delivered to the Agent and the Lenders, except as disposed of in the
ordinary course of business since the date thereof), free of all Liens except
Permitted Liens.
8.12. REAL ESTATE; LEASES.
SCHEDULE 8.12 as updated from time to time sets forth a
correct and complete list as of the date thereof of all Real Estate owned by the
Borrower or any of its Subsidiaries, all leases and subleases of real or
personal property by the Borrower or its Subsidiaries as lessee or sublessee
(other than leases of personal property as to which the Borrower is lessee or
sublessee for which the value of such personal property is less than $50,000
individually or $150,000 in the aggregate), and all leases and subleases of real
or personal property by the Borrower or its Subsidiaries as lessor, lessee,
sublessor or sublessee. Each of such leases and subleases is valid and
enforceable in accordance with its terms and is in full force and effect, and no
default by any party to any such lease or sublease exists, except where such
failure to be valid and enforceable or such default, as applicable, is not
reasonably likely to have a Material Adverse Effect.
8.13. PROPRIETARY RIGHTS.
SCHEDULE 8.13 as updated from time to time sets forth a
correct and complete list as of the date thereof of all of the Borrower's and
its Subsidiaries' Proprietary Rights. None of the Proprietary Rights is subject
to any licensing agreement or similar arrangement
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except as set forth on SCHEDULE 8.13. To the best of the Borrower's knowledge,
none of the Proprietary Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or conflicts with the
Proprietary Rights. The Proprietary Rights described on SCHEDULE 8.13 constitute
all of the property of such type necessary to the current and anticipated future
conduct of the Borrower's business, except where the failure to own such
property is not reasonably likely to have a Material Adverse Effect.
8.14. TRADE NAMES AND TERMS OF SALE.
SCHEDULE 8.14 as updated from time to time sets forth a
correct and complete list as of the date thereof of all trade names or styles
under which the Borrower or any of its Subsidiaries will sell Inventory or
create Accounts, or to which instruments in payment of Accounts may be made
payable.
8.15. LITIGATION.
Except as set forth on SCHEDULE 8.15, there is no pending or
(to the best of the Borrower's knowledge) threatened, action, suit, proceeding,
or counterclaim by any Person, or investigation by any Governmental Authority of
the Borrower or any other Credit Party, or any basis for any of the foregoing,
which could reasonably be expected to cause a Material Adverse Effect.
8.16. RESTRICTIVE AGREEMENTS.
Neither the Borrower nor any of its Subsidiaries is a party to
any contract or agreement, or subject to any charter or other corporate
restriction, which affects its ability to execute, deliver, and perform the Loan
Documents and repay the Obligations or which materially and adversely affects
or, insofar as the Borrower can reasonably foresee, could reasonably be expected
to materially and adversely affect, the property, business, operations, or
condition (financial or otherwise) of the Borrower and such Subsidiaries taken
as a whole, or would in any respect cause a Material Adverse Effect.
8.17. LABOR DISPUTES.
Except as set forth on SCHEDULE 8.17, as updated from time to
time (with respect to CLAUSES (a), (b) and (c) below), (a) there is no
collective bargaining agreement or other labor contract covering employees of
the Borrower or any of its Subsidiaries, (b) no such collective bargaining
agreement or other labor contract is scheduled to expire during the term of this
Agreement, (c) no union or other labor organization is seeking to organize, or
to be recognized as, a collective bargaining unit of employees of the Borrower
or any of its Subsidiaries or for any similar purpose, and (d) there is no
pending or (to the best of the Borrower's knowledge) threatened, strike, work
stoppage, unfair labor practice claim, or other labor dispute against or
affecting the Borrower or its Subsidiaries or their employees, in any case which
is reasonably likely to have a Material Adverse Effect.
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8.18. ENVIRONMENTAL LAWS.
Except as otherwise disclosed on SCHEDULE 8.18 and except
where the inaccuracy of any of the following is not reasonably likely to have a
Material Adverse Effect:
(a) The Borrower and its Subsidiaries have complied in all
material respects with all Environmental Laws applicable to any Premises and
business, and neither the Borrower nor any Subsidiary nor any of its present
Premises or operations, nor its past property or operations nor any property now
or previously in its charge, management or control, is subject to any
enforcement order from or liability agreement with any Governmental Authority or
private Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant.
(b) The Borrower and its Subsidiaries have obtained all
permits necessary for their current operations under Environmental Laws, and all
such permits are in good standing and the Borrower and its Subsidiaries are in
compliance with all terms and conditions of such permits.
(c) Neither the Borrower nor any of its Subsidiaries, nor, to
the best of the Borrower's knowledge, any of its predecessors in interest, has,
in violation of applicable law, stored, treated or disposed of any hazardous
waste on any Premises, as defined pursuant to 40 CFR Part 261 or any equivalent
Environmental Law or any property now or previously in its charge, management or
control.
(d) Neither the Borrower nor any of its Subsidiaries has
received any summons, complaint, order or similar written notice that it is not
currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant.
(e) None of the present or past operations of the Borrower and
its Subsidiaries is the subject of any investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to a
Release or threatened Release of a Contaminant.
(f) There is not now, nor to the best of the Borrower's
knowledge has there ever been on or in any Premises:
(1) any underground storage tanks or surface
impoundments,
(2) any asbestos-containing material, or
(3) any polychlorinated biphenyls (PCB's) used in
hydraulic oils, electrical transformers or other equipment.
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(g) Neither the Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted release or discharge of a Contaminant into the
environment.
(h) Neither the Borrower nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including, without limitation, the prior owner of its property) imposing
material obligations or liabilities on the Borrower or any of its Subsidiaries
with respect to any remedial action in response to the Release of a Contaminant
or environmentally related claim.
(i) None of the products distributed or sold by the Borrower
or any of its Subsidiaries contain asbestos containing material.
(j) No Environmental Lien has attached to any Premises or
property of the Borrower or any of its Subsidiaries.
As used in this SECTION 8.18, representations as to "Premises" shall be
restricted to those portions of any Premises actually owned, operated or
occupied by the Borrower or any of its Subsidiaries, and shall not extend to any
operations conducted on the Premises by any other Person.
8.19. NO VIOLATION OF LAW.
Neither the Borrower nor any of its Subsidiaries is in
violation of any law, statute, regulation, ordinance, judgment, order, or decree
applicable to it which violation could reasonably be expected to have a Material
Adverse Effect.
8.20. NO DEFAULT.
Neither the Borrower nor any of its Subsidiaries is in default
with respect to any note, indenture, loan agreement, mortgage, lease, deed, or
other agreement to which the Borrower or such Subsidiary is a party or by which
it is bound, which default could reasonably be expected to have a Material
Adverse Effect.
8.21. ERISA COMPLIANCE.
Except as specifically disclosed in SCHEDULE 8.21 and except
where the inaccuracy of any of the following is not reasonably likely to have a
Material Adverse Effect:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code, the PBA and other federal,
provincial or state law. Each Plan which is intended to qualify under Section
401(a) of the Code has received a favorable determination letter from the IRS
and to the best knowledge of the Borrower, nothing has occurred which would
cause the loss of such qualification. The Borrower, SDI Canada and each ERISA
Affiliate has made all required contributions to any Plan when due, and no
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application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of the
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; (v) neither
the Borrower nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA; and (vi) no Lien has arisen, ▇▇▇▇▇▇
or inchoate, in respect of the Borrower or its Subsidiaries or its or their
property in connection with any Plan (save for contribution amounts not yet
due).
8.22. TAXES.
The Borrower and its Subsidiaries have filed all Federal,
provincial, state and other tax returns and reports required to be filed, and
have paid all Federal, provincial, state and other taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except where the Borrower has
notified the Agent in writing that the Borrower or a Subsidiary is contesting
such taxes, assessments, fees and changes in good faith by appropriate
proceedings diligently pursued and has established proper reserves therefor as
provided by GAAP and no Lien (other than a Permitted Lien) has resulted from
such nonpayment.
8.23. REGULATED ENTITIES.
None of Borrower, any Person controlling the Borrower, or any
Subsidiary of the Borrower, is an "Investment Company" within the meaning of the
Investment Company Act of 1940. The Borrower is not subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur indebtedness.
8.24. USE OF PROCEEDS; MARGIN REGULATIONS.
The proceeds of the Loans are to be used solely for general
corporate purposes that are not otherwise prohibited by the terms of this
Agreement. Neither the
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Borrower nor any Subsidiary is engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.
8.25. COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.
Each of Borrower and its Subsidiaries owns or is licensed or
otherwise has the right to use all of the patents, trademarks, service marks,
trade names, copyrights, contractual franchises, authorizations and other rights
that are reasonably necessary for the operation of its businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower or any Subsidiary infringes upon any rights held by
any other Person which is reasonably likely to have a Material Adverse Effect.
No claim or litigation regarding any of the foregoing is pending or threatened,
and no patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or, to the knowledge of the
Borrower, proposed, which, in either case, could reasonably be expected to have
a Material Adverse Effect.
8.26. NO MATERIAL ADVERSE CHANGE.
No Material Adverse Effect has occurred since the date of the
Financial Statements referred to in SECTION 8.6. On the basis of a comprehensive
review and assessment undertaken by the Borrower of the Borrower's and its
Subsidiaries' computer applications, the Borrower reasonably believes that the
"Year 2000 problem" (that is, the risk that computer applications used by such
Persons may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999) will not
result in a Material Adverse Effect.
8.27. FULL DISCLOSURE.
None of the representations or warranties made by the Borrower
or any Subsidiary in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Borrower or any Subsidiary in connection with the Loan Documents (including the
offering and disclosure materials delivered by or on behalf of the Borrower or
any Subsidiary to the Lenders prior to the Closing Date), contains any untrue
statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
8.28. MATERIAL AGREEMENTS.
SCHEDULE 8.28 hereto sets forth all material agreements and
contracts to which the Borrower or any of its Subsidiaries is a party or is
bound as of the Restatement Date.
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8.29. BANK ACCOUNTS.
SCHEDULE 8.29 as updated from time to time contains a complete
and accurate list as of the date thereof of all bank accounts maintained by the
Borrower or any of its Subsidiaries with any bank or other financial
institution.
8.30. GOVERNMENTAL AUTHORIZATION.
No approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or other
person is necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Borrower or any of its Subsidiaries
of the Agreement or any other Loan Document.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Agent and each Lender that, from
and after the Restatement Date, so long as any of the Obligations remain
outstanding or this Agreement is in effect:
9.1. TAXES AND OTHER OBLIGATIONS.
The Borrower shall, and shall cause each of its Subsidiaries
to, (a) file when due all tax returns and other reports which it is required to
file; and (b) pay, or provide for the payment, when due, of all taxes, fees,
assessments and other governmental charges against it or upon its property,
income and franchises, make all required withholding and other tax deposits, and
establish adequate reserves for the payment of all such items, and provide to
the Agent and the Lenders, upon request, satisfactory evidence of its timely
compliance with the foregoing; PROVIDED, HOWEVER, so long as the Borrower has
notified the Agent in writing, neither the Borrower nor any of its Subsidiaries
need pay any tax, fee, assessment, or governmental charge, that (i) it is
contesting in good faith by appropriate proceedings diligently pursued, (ii) the
Borrower or its Subsidiary, as the case may be, has established proper reserves
for as provided in GAAP, and (iii) no Lien (other than a Permitted Lien) results
from such non-payment.
9.2. CORPORATE EXISTENCE AND GOOD STANDING.
The Borrower shall, and shall cause each of its Subsidiaries
to, maintain its corporate existence and its qualification and good standing in
all jurisdictions in which the failure to maintain such existence and
qualification or good standing could reasonably be expected to have a material
adverse effect on the Borrower's or such Subsidiary's property, business,
operations, prospects, or condition (financial or otherwise).
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9.3. COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF
LICENSES.
The Borrower shall comply, and shall cause each Subsidiary to
comply, in all respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act), except where the failure to do so is not reasonably
likely to result in a material adverse effect on the Borrower's or such
Subsidiary's property, business, operations or condition (financial or
otherwise). The Borrower shall, and shall cause each of its Subsidiaries to,
obtain and maintain all licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its business as
conducted on the Closing Date. The Borrower shall not, and shall not permit any
Subsidiary to, modify, amend or alter its certificate or article of
incorporation other than in a manner which does not adversely affect the rights
of the Lenders or the Agent.
9.4. MAINTENANCE OF PROPERTY.
The Borrower shall, and shall cause each of its Subsidiaries
to, maintain all of its property necessary and useful in the conduct of its
business, in good operating condition and repair, ordinary wear and tear
excepted.
9.5. INSURANCE.
(a) The Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A-VII or better by Best Rating Guide, insurance against loss
or damage by fire with extended coverage; theft, burglary, employee dishonesty
and loss in transit; public liability and third party property damage; larceny,
embezzlement or other criminal liability; business interruption; public
liability and third party property damage; and such other hazards or of such
other types as is customary for Persons engaged in the same or similar business,
as the Agent, in its discretion, or acting at the direction of the Majority
Lenders, shall specify, in amounts, and under policies acceptable to the Agent
and the Majority Lenders. Without limiting the foregoing, upon Majority Lenders'
request, the Borrower shall also maintain, and shall cause each of its
Subsidiaries to maintain, flood insurance, in the event any of the Equipment and
Inventory is located on Real Estate designated as "flood prone" or a "flood risk
area," (hereinafter "SFHA") as defined by the Flood Disaster Protection Act of
1973, in an amount to be reasonably determined by the Agent, and shall comply
with the additional requirements of the National Flood Insurance Program as set
forth in said Act.
(b) The Borrower shall cause the Agent, for the ratable
benefit of the Agent and the Lenders, to be named in each such policy as secured
party or mortgagee and sole loss payee or additional insured, in a manner
acceptable to the Agent. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than thirty (30) days' prior
written notice to the Agent in the event of cancellation of the policy for any
reason whatsoever and a clause or endorsement stating that the interest of the
Agent shall not be impaired or invalidated by any act or neglect of the Borrower
or any of its Subsidiaries or the
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owner of any premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by the Borrower when due,
and certificates of insurance and, if requested by the Agent or any Lender,
photocopies of the policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the Lenders. If the
Borrower fails to procure such insurance or to pay the premiums therefor when
due, the Agent may, and at the direction of the Majority Lenders shall, do so
from the proceeds of Revolving Loans.
(c) The Borrower shall promptly notify the Agent and the
Lenders of any loss, damage, or destruction to the Collateral arising from its
use, whether or not covered by insurance. The Agent is hereby authorized to
collect all insurance proceeds directly, and to apply or remit them as follows:
(i) With respect to insurance proceeds relating to
property other than Collateral, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
promptly remit to the Borrower (for itself or its
Subsidiaries, as the same may be) such proceeds.
(ii) With respect to insurance proceeds relating to
Collateral other than Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 4.8 and, in
the case of SDI Canada, SECTION 6.8(e).
(iii) With respect to insurance proceeds relating to
Collateral consisting of Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 4.8 and, in
the case of SDI Canada, SECTION 6.8(e), or at the option of
the Majority Lenders, may permit or require the Borrower or
its Subsidiary to use such money, or any part thereof, to
replace, repair, restore, rebuild or acquire Fixed Assets;
PROVIDED, HOWEVER, that so long as there does not then exist
any Default or Event of Default, the Borrower or its
Subsidiary shall be permitted to use insurance proceeds
relating to its Collateral consisting of Fixed Assets in an
aggregate amount not to exceed $750,000 with respect to any
occurrence, to replace, repair, restore, rebuild or acquire
the relevant Fixed Assets, in the manner set forth in this
sentence; and PROVIDED, FURTHER, that the Borrower, upon the
request of the Agent provides the Agent with plans and
specifications for any such repair or restoration that
demonstrates to the reasonable satisfaction of the Agent that
the funds available to it will be sufficient to complete such
project in the manner provided therein.
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(d) Unless the Borrower provides the Agent with evidence of
the insurance coverage required by this SECTION 9.5, the Agent may purchase
insurance at the Borrower's expense to protect Agent's interests in the
Collateral. This insurance may, but need not, protect the Borrower's or its
Subsidiaries' interests. The coverage that the Agent purchases may not pay any
claim that the Borrower or its Subsidiaries may make or any claim that is made
against the Borrower in connection with the Collateral. The Borrower may later
cancel any insurance purchased by the Agent, but only after providing the Agent
with evidence that the Borrower has obtained insurance as required by this
Agreement. If the Agent purchases insurance for the Collateral, the Borrower
will be responsible for the costs of that insurance, including interest and any
other charges that may be imposed in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Loans. The costs of
the insurance may be more than the costs of insurance the Borrower may be able
to obtain on its own.
9.6. CONDEMNATION.
(a) The Borrower shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of its
or its Subsidiaries' property, notify the Agent of the pendency of such
proceeding, and agrees that the Agent may participate in any such proceeding,
and the Borrower from time to time will deliver to the Agent all instruments
reasonably requested by the Agent to permit such participation.
(b) The Agent is hereby authorized to collect the proceeds of
any condemnation claim or award directly, and to apply or remit them as follows:
(i) With respect to condemnation proceeds relating to
property other than Collateral, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
remit to the Borrower or its Subsidiary such proceeds.
(ii) With respect to condemnation proceeds relating
to Collateral other than Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 4.8 and, in
the case of SDI Canada, SECTION 6.8(e).
(iii) With respect to condemnation proceeds relating
to Collateral consisting of Fixed Assets, after deducting from
such proceeds the reasonable expenses, if any, incurred by the
Agent in the collection or handling thereof, the Agent shall
apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 4.8 and, in
the case of SDI Canada, SECTION 6.8(e), or at the option of
the Majority Lenders, may permit or require the Borrower or
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its Subsidiary to use such money, or any part thereof, to
replace, repair, restore, rebuild or acquire Fixed Assets;
PROVIDED, HOWEVER, that so long as there does not then exist
any Default or Event of Default, the Borrower shall be
permitted to use proceeds relating to Collateral consisting of
Fixed Assets in an aggregate amount not to exceed $750,000
with respect to any occurrence, to replace, repair, restore,
rebuild or acquire Fixed Assets, in the manner set forth in
this sentence; and PROVIDED, FURTHER, that the Borrower, upon
the request of the Agent provides the Agent with the plans and
specifications for any such repair or restoration that
demonstrates to the reasonable satisfaction of the Agent that
the funds available to it will be sufficient to compute such
project in the manner provided therein.
9.7. ENVIRONMENTAL LAWS.
(a) The Borrower shall, and shall cause each of its
Subsidiaries to, conduct its business in compliance with all Environmental Laws
applicable to it, including, without limitation, those relating to the
generation, handling, use, storage, and disposal of any Contaminant, except
where failure to do so is not reasonably likely to result in a material adverse
effect on the Borrower's or such Subsidiary's property, business, operations or
condition (financial or otherwise). The Borrower shall, and shall cause each of
its Subsidiaries to, take prompt and appropriate action to respond to any
non-compliance with Environmental Laws, except where failure to do so is not
reasonably likely to result in a material adverse effect on the Borrower's or
such Subsidiary's property, business, operations or condition (financial or
otherwise) and shall regularly report to the Agent on such response.
(b) Without limiting the generality of the foregoing, the
Borrower shall submit to the Agent and the Lenders upon the Agent's request,
commencing on the first Anniversary Date, and on each Anniversary Date
thereafter, an update of the status of each environmental compliance or
liability issue. The Agent or any Lender may request copies of technical reports
prepared by the Borrower or its Subsidiaries and its communications with any
Governmental Authority to determine whether the Borrower or any of its
Subsidiaries is proceeding reasonably to correct, cure or contest in good faith
any alleged non-compliance or environmental liability. The Borrower shall, at
the Agent's or the Majority Lenders' request (provided that no such request may
be made unless the Agent shall have reasonable grounds to believe that the
Borrower or any of its Subsidiaries are not in compliance in all material
respects with Environmental Laws and such noncompliance is likely to result in a
liability in excess of $1,000,000) and at the Borrower's expense, (a) retain an
independent environmental engineer acceptable to the Agent to evaluate the site,
including tests if appropriate, where the non-compliance or alleged
non-compliance with Environmental Laws has occurred and prepare and deliver to
the Agent, in sufficient quantity for distribution by the Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (b) provide to the Agent and the Lenders a supplemental
report of such engineer whenever the scope of the
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environmental problems, or the response thereto or the estimated costs thereof,
shall change in any material respect.
9.8. COMPLIANCE WITH ERISA.
The Borrower shall, and shall cause each of its Subsidiaries
and ERISA Affiliates to, unless the failure to do so is not reasonably likely to
have a Material Adverse Effect: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code, the PBA and
other federal, provincial or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; (c) make all
required contributions to any Plan subject to Section 412 of the Code; (d) not
engage in a prohibited transaction or violation of the fiduciary responsibility
rules with respect to any Plan; (e) not engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA; and (f) not permit any Lien, ▇▇▇▇▇▇
or inchoate, to arise or exist in connection with any Plan (save for
contribution amounts not yet due).
9.9. MERGERS, CONSOLIDATIONS OR SALES.
Neither the Borrower nor any of its Subsidiaries shall enter
into any transaction of merger, amalgamation, reorganization, or consolidation,
or transfer, sell, assign, lease, or otherwise dispose of all or any part of its
property, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except (i) for sales of Inventory in the ordinary course of its
business, (ii) for sales or other dispositions of Equipment in the ordinary
course of business that are obsolete or no longer useable by the Borrower or
such Subsidiary in its business as permitted by SECTION 6.11, and (iii) mergers
of Persons acquired in Permitted Acquisitions with and into the Borrower so long
as the Borrower is the sole surviving Person.
9.10. DISTRIBUTIONS; CAPITAL CHANGE; RESTRICTED INVESTMENTS.
Neither the Borrower nor any of its Subsidiaries shall (i)
directly or indirectly declare or make, or incur any liability to make, any
Distribution, (ii) make any change in its capital structure which could have a
Material Adverse Effect, or (iii) make any Restricted Investment, except (A)
Distributions to the Borrower by its Subsidiaries, (B) Distributions by the
Borrower to SDI to reimburse SDI for out-of-pocket expenses incurred by SDI in
the ordinary course of its business on an arm's length basis for the benefit of
the Borrower that are expenses that ordinarily would have been paid by the
Borrower if SDI had not paid such expenses, (C) loans by the Borrower to SDI
Canada in an aggregate amount outstanding not to exceed $5,000,000 (less the
amount of Restricted Investments by SDI under SECTION 5.6(ii)(b) of the SDI
Security Agreement), so long as the Borrower's Availability after giving effect
to such loan exceeds ten percent (10%) of the Borrower's Availability (assuming
Aggregate Revolver Outstandings of the Borrower are zero), (D) loans by the
Borrower to the Mexican Subsidiaries in an aggregate amount outstanding not to
exceed the Permitted Mexican Loan Amount (less the amount of Restricted
Investments by SDI under SECTION 5.6(ii)(a) of the SDI Security Agreement), so
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long as the Borrower's Availability after giving effect to each such loan
exceeds ten percent (10%) of the Borrower's Availability (assuming Aggregate
Revolver Outstandings of the Borrower are zero), (E) Permitted Acquisitions by
the Borrower, (F) advances to employees of Credit Parties for travel, relocation
or other ordinary business expenses provided that the aggregate amount
outstanding at any one time shall not exceed $20,000 per single employee and
$250,000 in the aggregate for all employees, (G) advances to subcontractors and
suppliers in the ordinary course of business not exceeding an aggregate
outstanding amount of $500,000, (H) extensions of credit in the nature of
receivables or notes arising from the sale of goods and services in the ordinary
course of business, and (I) nonrecourse loans to holders of stock options of
SDI, which loans were made solely for the purpose of enabling such holders to
purchase shares of the common stock of SDI upon the exercise of such options and
which loans are secured by some or all of such purchased shares, provided that
the aggregate outstanding amount of all such loans does not at any time exceed
$1,500,000.
9.11. INTENTIONALLY OMITTED.
9.12. GUARANTIES.
Neither the Borrower nor any of its Subsidiaries shall make,
issue, or become liable on any Guaranty, except in respect of Debt for Borrowed
Money permitted under SECTION 9.13 and except Guaranties of the Obligations in
favor of the Agent.
9.13. DEBT.
Neither the Borrower nor any of its Subsidiaries shall incur
or maintain any Debt, other than: (a) the Obligations, (b) Debt for Borrowed
Money outstanding on the Closing Date and any refinancing thereof (provided that
any such refinancing is in a principal amount not in excess of the principal
amount of the Debt being refinanced, is at a market interest rate and is on
terms no more restrictive upon the Borrower and its Subsidiaries than the Debt
being refinanced), (c) purchase money Debt for Borrowed Money not in excess of
$1,000,000 at any time outstanding, (d) Capitalized Lease obligations not in
excess of $1,000,000 at any time outstanding, (e) unsecured Debt for Borrowed
Money not in excess of $1,000,000 at any time outstanding, which is subordinated
to the Obligations on terms acceptable to the Agent, (f) Debt for Borrowed Money
owing to the Borrower permitted under SECTION 9.10, (g) unsecured Debt that is
incurred in connection with Permitted Acquisitions that is subordinated on terms
and conditions acceptable to the Agent in its discretion, and (h) other
unsecured Debt for Borrowed Money not in excess of $1,000,000 at any time
outstanding.
9.14. INTENTIONALLY OMITTED.
9.15. TRANSACTIONS WITH AFFILIATES.
Except as set forth in SECTION 9.10, neither the Borrower nor
any of its Subsidiaries shall sell, transfer, distribute, or pay any money or
property, including, but not
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limited to, any fees or expenses of any nature (including, but not limited to,
any fees or expenses for management services), to any Affiliate, or lend or
advance money or property to any Affiliate, or invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any property, of any Affiliate, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate. Notwithstanding
the foregoing, (i) the Borrower and its Subsidiaries may engage in transactions
not otherwise prohibited hereunder with Affiliates in the ordinary course of
business, in amounts and upon terms fully disclosed to the Agent and the
Lenders, and no less favorable to the Borrower and its Subsidiaries than would
be obtained in a comparable arm's-length transaction with a third party who is
not an Affiliate and (ii) the Borrower may engage in the transaction described
on SCHEDULE 9.15.
9.16. INVESTMENT BANKING AND FINDER'S FEES.
Neither the Borrower nor any of its Subsidiaries shall pay or
agree to pay, or reimburse any other party with respect to, any investment
banking or similar or related fee, underwriter's fee, finder's fee, or broker's
fee to any Person in connection with this Agreement. The Borrower shall defend
and indemnify the Agent and the Lenders against and hold them harmless from all
claims of any Person that the Borrower or any of its Subsidiaries is obligated
to pay for any such fees, and all costs and expenses (including without
limitation, attorneys' fees) incurred by the Agent and/or any Lender in
connection therewith.
9.17. INTENTIONALLY OMITTED.
9.18. BUSINESS CONDUCTED.
The Borrower shall not and shall not permit any of its
Subsidiaries to, engage directly or indirectly, in any line of business other
than the businesses in which the Borrower is engaged on the Closing Date or any
business reasonably related, ancillary or incidental to such business.
9.19. LIENS.
Neither the Borrower nor any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except Permitted Liens.
9.20. INTENTIONALLY OMITTED.
9.21. NEW SUBSIDIARIES.
The Borrower shall not, directly or indirectly, organize,
create, acquire or permit to exist any Subsidiary other than those listed on
SCHEDULE 8.5.
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9.22. FISCAL YEAR.
The Borrower shall not change and shall not permit its
Subsidiaries to change its Fiscal Year.
9.23. CAPITAL EXPENDITURES.
Neither the Borrower nor any of its Subsidiaries shall make or
incur any Capital Expenditure if, after giving effect thereto, the aggregate
amount of all Capital Expenditures by the Borrower and its Subsidiaries on a
consolidated basis would exceed $6,000,000 in any Fiscal Year. Any amount of
such limitation up to $2,000,000 not spent in Fiscal Year 1999 may be spent in
Fiscal Year 2000.
9.24. FIXED CHARGE COVERAGE RATIO.
The Borrower will maintain a Fixed Charge Coverage Ratio,
calculated as of the last day of each of the Borrower's Fiscal Quarters, of not
less than (i) as of March 31, 2000, on a trailing three months' basis, 0.10 to
1.0, (ii) as of June 30, 2000, on a trailing six months' basis, 0.33 to 1.0,
(iii) as of September 30, 2000, on a trailing nine months' basis, 0.71 to 1.0,
and (iv) as of the last day of each Fiscal Quarter thereafter, on a trailing
twelve months' basis, 1.10 to 1.0.
9.25. AVAILABILITY; FIXED CHARGE COVERAGE.
The Borrower will not permit Availability to be less than
$5,000,000 at any time; PROVIDED, that Availability may be less than $5,000,000
at any time (the first such time, the "Initial Trigger Date") so long as the
Fixed Charge Coverage Ratio is at least 1.1:1.0 for the twelve (12) month period
ending (a) on the last day of the month preceding the Initial Trigger Date, and
(b) on the last day of each month thereafter (regardless of whether Availability
exceeds $5,000,000 after the Initial Trigger Date).
9.26. USE OF PROCEEDS.
The Borrower shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (i)
to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Borrower or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
9.27. FURTHER ASSURANCES.
The Borrower shall, and shall cause each of its Subsidiaries
to, execute and deliver, or cause to be executed and delivered, to the Agent
and/or the Lenders such documents and agreements, and shall take or cause to be
taken such actions, as the Agent
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or any Lender may, from time to time, request to carry out the terms and
conditions of this Agreement and the other Loan Documents.
9.28. CANADIAN TAX MATTERS.
The Borrower shall quarterly and more frequently when
requested by the Agent, provide to the Agent, or cause SDI Canada to provide to
the Agent, (i) a detailed accounting of all amounts paid (upon collection of SDI
Canada's accounts or otherwise) by SDI Canada to the Borrower, whether or not
applied to the Obligations outstanding and whether by way of loans, loan
repayments, dividends or otherwise, together with a calculation of all
withholding and other taxes payable in respect thereof and (ii) evidence
satisfactory to the Agent of the remittance when due to the applicable
Governmental Authorities of all withholding and other taxes payable in respect
thereof.
9.29. PAYMENT OF SUBORDINATED DEBT.
The Borrower shall not, and Borrower shall not permit any of
its Subsidiaries, to pay, purchase or redeem any Subordinated Debt, except as
permitted by the applicable subordination agreement.
9.30. QUEBEC LOCATIONS.
The Borrower shall not (i) establish or open any business
locations or operations, or locate any assets or permit any of its assets to be
located, in the Province of Quebec, Canada or (ii) enter into a Customer
Contract with a Person located in the Province of Quebec, Canada, unless prior
to doing so, the Borrower has entered into an amendment to this Agreement with
the Agent and the Majority Lenders that addresses, to the reasonable
satisfaction of the Agent and the Majority Lenders, issues arising under Quebec
law with respect to the ability of the Agent to act as an agent under this
Agreement for the benefit of the Lenders, and such other agreements, instruments
and documents as the Agent shall reasonably request in good faith in connection
therewith.
ARTICLE 10
CONDITIONS TO AMENDMENT AND RESTATEMENT AND LENDING
10.1. CONDITIONS PRECEDENT TO AMENDMENT AND RESTATEMENT.
The amendment and restatement of the Original Loan Agreement
in the form of this Agreement shall be effective upon the satisfaction of the
following conditions precedent in a manner satisfactory to Agent:
(a) The Borrower and each Lender shall have executed and
delivered a counterpart of this Agreement to the Agent, and SDI, SDI Canada
Holdings and SDI Canada shall have executed and delivered the acknowledgment in
the form attached to this Agreement.
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(b) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as of the Restatement Date as
if made on such date.
(c) No Default or Event of Default shall exist on the
Restatement Date.
(d) The Agent shall have received a certificate executed by
the Secretary or Assistant Secretary or the Borrower certifying that the
Borrower's Board of Directors has adopted resolutions authorizing the execution,
delivery and performance of this Agreement.
(e) INTERMAT shall have been terminated as a Borrower under
the Consent and Release referred to in the second recital of this Agreement.
10.2. CONDITIONS PRECEDENT TO EACH LOAN.
The obligation of the Lenders to make each Loan, including the
initial Revolving Loans and the obligation of the Agent to take reasonable steps
to cause to be issued or to provide Credit Support for any Letter of Credit and
the obligation of the Lenders to participate in Letters of Credit or Credit
Support for Letters of Credit, shall be subject to the further conditions
precedent that on and as of the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance
by the Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in CLAUSES (i) and (ii), with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer of the Borrower, dated the date of such extension of credit, stating
that:
(i) The representations and warranties contained in
this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of
credit as though made on and as of such date, other than any
such representation or warranty which relates to a specified
prior date and except to the extent the Agent and the Lenders
have been notified by the Borrower that any representation or
warranty is not correct and the Majority Lenders have
explicitly waived in writing compliance with such
representation or warranty; and
(ii) No event has occurred and is continuing, or
would result from such extension of credit, which constitutes
a Default or an Event of Default; and
(b) without limiting SECTION 10.1(b), the amount of the
Availability of the Borrower shall be sufficient to make such Revolving Loan for
the account of the Borrower without exceeding its Availability, PROVIDED,
HOWEVER, that the foregoing conditions precedent are not conditions to each
Lender participating in or reimbursing the Bank or the Agent for such
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Lenders' Pro Rata Share of any Non-Ratable Loan, Agent Advance or Over Advance
as provided in SECTIONS 2.2(h), (i), (j) and (k).
ARTICLE 11
DEFAULT; REMEDIES
11.1. EVENTS OF DEFAULT.
It shall constitute an event of default ("Event of Default")
if any one or more of the following shall occur for any reason:
(a) any failure to pay the principal of or interest or premium
on any of the Obligations when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the
Borrower in this Agreement or by a Credit Party or any of its Subsidiaries in
any of the other Loan Documents, any Financial Statement, or any certificate
furnished by a Credit Party or any of its Subsidiaries at any time to the Agent
or any Lender shall prove to be untrue in any material respect as of the date on
which made, deemed made, or furnished;
(c) any default shall occur in the observance or performance
of any of the covenants and agreements contained in this Agreement, except for
those specified in clause (d) of this SECTION 11.1, and such default shall
continue for a period of twenty (20) days after the Borrower is aware of such
default;
(d) any default shall occur in the observance or performance
of any of the covenants and agreements contained in ARTICLE 6, SECTIONS 7.2, 7.3
or 9.5 or SECTIONS 9.9 through 9.30, any other Loan Documents, or any other
agreement entered into at any time to which a Credit Party or any Subsidiary and
the Agent or any Lender are party, or if any such agreement or document shall
terminate (other than in accordance with its terms or the terms hereof or with
the written consent of the Agent and the Majority Lenders) or become void or
unenforceable, without the written consent of the Agent and the Majority
Lenders;
(e) default shall occur with respect to any Debt For Borrowed
Money (other than the Obligations) in an outstanding principal amount which
exceeds $500,000, or under any agreement or instrument under or pursuant to
which any such Debt For Borrowed Money may have been issued, created, assumed,
or guaranteed by a Credit Party or any of its Subsidiaries, and such default
shall continue for more than the period of grace, if any, therein specified, if
the effect thereof (with or without the giving of notice or further lapse of
time or both) is to accelerate, or to permit the holders of any such Debt For
Borrowed Money to accelerate, the maturity of any such Debt For Borrowed Money;
or any such Debt For Borrowed Money shall be declared due and payable or be
required to be prepaid (other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof;
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(f) a Credit Party or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
file any proposal or notice of intent to file a proposal or otherwise commence
any action or proceeding seeking reorganization, arrangement, consolidation or
readjustment of its debts or which seeks to stay or has the effect of staying
any creditor or for any other relief under the federal Bankruptcy Code, the
Bankruptcy and Insolvency Act or the Companies' Creditors Arrangement Act, each
as amended, or under any other bankruptcy, insolvency, liquidation, winding-up,
corporate or similar act or law, state, provincial or federal, now or hereafter
existing, or consent to, approve of, or acquiesce in, any such petition,
proposal, action or proceeding; (ii) apply for or acquiesce in the appointment
of a receiver, assignee, liquidator, sequestrator, custodian, monitor,
administrator, trustee or similar officer for it or for all or any part of its
property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(g) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of a Credit Party or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, the
Bankruptcy and Insolvency Act or the Companies' Creditors Arrangement Act, as
amended, or under any other bankruptcy, insolvency, liquidation, winding-up,
corporate or similar act or law, state, provincial or federal, now or hereafter
existing and either (i) such petition, proposal, action or proceeding shall not
have been dismissed within a period of sixty (60) days after its commencement or
(ii) an order for relief against such Credit Party or such Subsidiary shall have
been entered in such proceeding;
(h) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, administrator, trustee or similar officer for a Credit Party or any of
its Subsidiaries or for all or any part of its property shall be appointed or a
warrant of attachment, execution, writ of seizure or seizure and sale or similar
process shall be issued against any part of the property of a Credit Party or
any of its Subsidiaries;
(i) (x) a Credit Party or any of its Subsidiaries shall file a
certificate of dissolution or like process under applicable state, provincial or
federal law or shall be liquidated, dissolved or wound-up or shall commence or
have commenced against it any action or proceeding for dissolution, winding-up
or liquidation, or shall take any corporate action in furtherance thereof or (y)
any distress, hypothecary action by a landlord or analogous process is levied
upon all or any material part of a Credit Party's or all or any material part
any of its Subsidiaries' property;
(j) all or any material part of the property of a Credit Party
or any of its Subsidiaries shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or of
such Credit Party or such Subsidiary shall be assumed by any Governmental
Authority or any court of competent jurisdiction at the instance of any
Governmental Authority or any other Person, except where contested in good faith
by proper proceedings diligently pursued where a stay of enforcement is in
effect;
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(k) any guaranty of the Obligations shall be terminated,
revoked or declared void or invalid;
(l) one or more judgments or orders for the payment of money
aggregating in excess of $250,000, which amount shall not be fully covered by
insurance, satisfied, stayed or fully bonded, shall be rendered against a Credit
Party or any of its Subsidiaries;
(m) any loss, theft, damage or destruction of any item or
items of Collateral or other property of a Credit Party or any Subsidiary occurs
which has a Material Adverse Effect and which would reasonably be expected to
impair the Credit Parties' ability to pay the Obligations;
(n) intentionally omitted;
(o) there is filed against a Credit Party or any of its
Subsidiaries any civil or criminal action, suit or proceeding under any federal,
provincial or state racketeering, proceeds of crime or money laundering statute
(including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not dismissed
within one hundred twenty (120) days, and (2) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(p) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens, pursuant
to the Loan Documents, any Loan Document ceases to be in full force and effect
or any Lien with respect to any material portion of the Collateral intended to
be secured thereby ceases to be, or is not, valid, perfected and prior to all
other Liens (other than Permitted Liens) or is terminated, revoked or declared
void;
(q) an ERISA Event shall occur which is reasonably likely to
result in a Material Adverse Effect occurs or arises in connection with any plan
of the Borrower, its Subsidiaries or one of their ERISA Affiliates; or
(r) there occurs a Change of Control.
11.2. REMEDIES.
(a) If a Default or an Event of Default exists, the Agent may,
in its discretion, and shall, at the direction of the Majority Lenders, do one
or more of the following at any time or times and in any order, without notice
to or demand on the Borrower or any other Person: (i) reduce the Maximum
Revolver Amount or the advance rates against Eligible Accounts and/or Eligible
Inventory used in computing the Availability of the Borrower, or reduce one or
more of the other elements used in computing the Availability of the Borrower;
(ii) restrict the amount of or refuse to make Revolving Loans; and (iii)
restrict or refuse to arrange for or provide Letters of Credit or Credit
Support. If an Event of Default exists, the Agent shall, at the direction of the
Majority Lenders, do one or more of the following, in addition to the actions
described in the preceding sentence, at any time or times and in any order,
without notice to or
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demand on the Borrower or any other Person: (a) terminate the Commitments and
this Agreement; (b) declare any or all Obligations to be immediately due and
payable; PROVIDED, HOWEVER, that upon the occurrence of any Event of Default
described in SECTIONS 11.1(f), (g), (h), or (i)(x), the Commitments shall
automatically and immediately expire and all Obligations shall automatically
become immediately due and payable without notice or demand of any kind; and (c)
pursue its other rights and remedies under the Loan Documents and applicable
law.
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured party
under the UCC, PPSA and the Civil Code of Quebec; (ii) the Agent may, at any
time, take possession of the Collateral and keep it on the Borrower's or its
Subsidiaries' premises, at no cost to the Agent or any Lender, or remove any
part of it to such other place or places as the Agent may desire, or the
Borrower shall, upon the Agent's demand, at the Borrower's cost, assemble, or
cause its Subsidiaries to assemble, the Collateral and make it available to the
Agent at a place reasonably convenient to the Agent; and (iii) the Agent may
sell and deliver any Collateral at public or private sales, for cash, upon
credit or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it reasonable,
postpone or adjourn any sale of the Collateral by an announcement at the time
and place of sale or of such postponed or adjourned sale without giving a new
notice of sale. Without in any way requiring notice to be given in the following
manner, the Borrower agrees that any notice by the Agent of sale, disposition or
other intended action hereunder or in connection herewith, whether required by
the UCC or otherwise, shall constitute reasonable notice to the Borrower if such
notice is mailed by registered or certified mail, return receipt requested,
postage prepaid, or is delivered personally against receipt, at least ten (10)
Business Days prior to such action to the Borrower's address specified in or
pursuant to SECTION 15.8. If any Collateral is sold on terms other than payment
in full at the time of sale, no credit shall be given against the Obligations
until the Agent or the Lenders receive payment, and if the buyer defaults in
payment, the Agent may resell the Collateral without further notice to the
Borrower. In the event the Agent seeks to take possession of all or any portion
of the Collateral by judicial process, the Borrower irrevocably waives: (a) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (b) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (c) any requirement that
the Agent retain possession and not dispose of any Collateral until after trial
or final judgment. The Borrower agrees that the Agent has no obligation to
preserve rights to the Collateral or marshal any Collateral for the benefit of
any Person. The Agent is hereby granted a license or other right to use, without
charge, the Borrower's labels, patents, copyrights, name, trade secrets, trade
names, trademarks, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and the
Borrower's rights under all licenses and all franchise agreements shall inure to
the Agent's benefit for such purpose. The proceeds of sale shall be applied
first to all expenses of sale, including attorneys' fees, and then to the
Obligations in whatever order the Agent elects. The Agent will return any excess
to the Borrower and the Borrower shall remain liable for any deficiency.
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(c) If an Event of Default occurs, the Borrower hereby waives
to the extent permitted by applicable law all rights to notice and hearing prior
to the exercise by the Agent of the Agent's rights to repossess the Collateral
without judicial process or to replevy, attach or levy upon the Collateral
without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
12.1. TERM AND TERMINATION.
THE TERM OF THIS AGREEMENT SHALL END ON THE STATED TERMINATION
DATE UNLESS AUTOMATICALLY EXTENDED AS PROVIDED IN THIS SECTION 12. THIS
AGREEMENT SHALL BE RENEWED ON THE STATED TERMINATION DATE AND AT THE END OF ANY
RENEWAL TERM FOR SUCCESSIVE ONE (1) YEAR TERMS, UNLESS THIS AGREEMENT IS
TERMINATED AS PROVIDED BELOW. THE AGENT, EACH LENDER AND THE BORROWER SHALL HAVE
THE RIGHT TO TERMINATE THIS AGREEMENT ON THE STATED TERMINATION DATE OR AT THE
END OF ANY RENEWAL TERM BY GIVING THE OTHER WRITTEN NOTICE NOT LESS THAN ONE
HUNDRED FIFTY (150) DAYS PRIOR TO THE END OF SUCH TERM. THE AGENT UPON DIRECTION
FROM THE MAJORITY LENDERS MAY TERMINATE THIS AGREEMENT WITHOUT NOTICE UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT. Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including, without
limitation, all unpaid principal, accrued interest and any early termination or
prepayment fees or penalties) shall become immediately due and payable and the
Borrower shall immediately arrange for the cancellation of Letters of Credit
then outstanding. Notwithstanding the termination of this Agreement, until all
Obligations are paid and performed in full in cash, the Borrower shall remain
bound by the terms of this Agreement and shall not be relieved of any of their
Obligations hereunder, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including, without limitation, the Agent's Liens
in and all rights and remedies with respect to all then existing and
after-arising Collateral). Thereafter the Agent's Liens shall be automatically
be reinstated effective as of the original date of execution of this Agreement,
if at any time payment, in whole or in part, of any of the Obligations is
reduced, rescinded or must otherwise be restored or returned by the Agent or any
of the Lenders for any reason whatsoever, including the bankruptcy, insolvency,
dissolution, liquidation or reorganization of any of the Credit Parties or upon
or as a result of the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to any of the Credit Parties or any of
their property or otherwise.
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ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1. NO WAIVERS; CUMULATIVE REMEDIES.
No failure by the Agent or any Lender to exercise any right,
remedy, or option under this Agreement or any present or future supplement
thereto, or in any other agreement between or among the Borrower and the Agent
and/or any Lender, or delay by the Agent or any Lender in exercising the same,
will not operate as a waiver thereof. No waiver by the Agent or any Lender will
be effective unless it is in writing, and then only to the extent specifically
stated. No waiver by the Agent or the Lenders on any occasion shall affect or
diminish the Agent's and each Lender's rights thereafter to require strict
performance by the Borrower of any provision of this Agreement. The Agent's and
each Lender's rights under this Agreement will be cumulative and not exclusive
of any other right or remedy which the Agent or any Lender may have.
13.2. AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Agreement or
any other Loan Document, and no consent with respect to any departure by the
Borrower therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Lenders (or by the Agent at the written request of the
Majority Lenders) and the Borrower and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall,
unless in writing and signed by all the Lenders and the Borrower and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Lenders
or any of them to take any action hereunder;
(e) increase any of the percentages set forth in the
definition of Availability;
(f) amend this SECTION 13.2 or any provision of the Agreement
providing for consent or other action by all Lenders;
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(g) release Collateral other than as permitted by SECTION
14.12;
(h) change the definitions of "Majority Lenders" or "Required
Lenders";
(i) increase the Maximum Revolver Amount, the Maximum
Inventory Loan, and Unused Letter of Credit Subfacility.
and, PROVIDED, FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent, affect the rights or duties of the Agent under
this Agreement or any other Loan Document.
13.3. ASSIGNMENTS; PARTICIPATIONS.
(a) Any Lender may, with the written consent of the Agent
(and, so long as no Default or Event of Default shall have occurred and be
continuing, the Borrower, which consent shall not be reasonably withheld or
delayed), assign and delegate to one or more assignees (PROVIDED, that no
written consent of the Agent shall be required in connection with any assignment
and delegation by a Lender to an Affiliate of such Lender) (each an "Assignee")
all, or any ratable part of all, of the Loans, the Commitments and the other
rights and obligations of such Lender hereunder, in a minimum amount of
$5,000,000 or if less the entire amount of such Lender's Commitment; PROVIDED,
HOWEVER, that the Borrower and the Agent may continue to deal solely and
directly with such Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee,
shall have been given to the Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrower
and the Agent an Assignment and Acceptance in the form of EXHIBIT G ("ASSIGNMENT
AND ACCEPTANCE"); and (iii) the assignor Lender or Assignee has paid to the
Agent a processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations,
including, but not limited to, the obligation to participate in Letters of
Credit and Credit Support have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no
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responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document furnished pursuant hereto; (2) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, SDI
Canada or any other Person or the performance or observance by the Borrower, SDI
Canada or any other Person of any of their obligations under this Agreement or
any other Loan Document furnished pursuant hereto; (3) such Assignee confirms
that it has received a copy of this Agreement, together with such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (4) such
Assignee will, independently and without reliance upon the Agent, such assigning
Lender or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (5) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (6) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender PRO TANTO.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the Borrower
(a "Participant") participating interests in any Loans, the Commitment of that
Lender and the other interests of that Lender (the "originating Lender")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the originating Lender shall remain solely responsible for the performance
of such obligations, (iii) the Borrower and the Agent shall continue to deal
solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, and all amounts payable by the Borrower hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
and subject to the same limitation as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.
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(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
ARTICLE 14
THE AGENT
14.1. APPOINTMENT AND AUTHORIZATION.
Each Lender hereby designates and appoints the Bank as its
Agent under this Agreement and the other Loan Documents and each Lender hereby
irrevocably authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Agent agrees to act as such on the express
conditions contained in this ARTICLE 14. The provisions of this ARTICLE 14 are
solely for the benefit of the Agent and the Lenders and the Borrower shall have
no rights as a third party beneficiary of any of the provisions contained
herein. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining
from taking any actions which the Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including, without
limitation, (a) the determination of the applicability of ineligibility criteria
with respect to the calculation of the Availability of the Borrower, (b) the
making of Agent Advances pursuant to SECTION 2.2(i) and Over Advances pursuant
to SECTION 2.2(j), and (c) the exercise of remedies pursuant to SECTION 11.2,
and any action so taken or not taken shall be deemed consented to by the
Lenders.
14.2. DELEGATION OF DUTIES.
The Agent may execute any of its duties under this Agreement
or any other Loan Document by or through agents, employees or attorneys-in-fact
and shall be entitled
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to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
14.3. LIABILITY OF AGENT.
None of the Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by the Borrower or any Subsidiary or Affiliate
of the Borrower, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Borrower or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of the Borrower's
Subsidiaries or Affiliates.
14.4. RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Lenders as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in SECTION 10.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
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14.5. NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Agent for the account of the Lenders, unless the Agent shall have received
written notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." The Agent will notify the Lenders of its receipt of any
such notice. The Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Lenders in accordance with
SECTION 11; PROVIDED, HOWEVER, that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable.
14.6. CREDIT DECISION.
Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereinafter taken, including any review of the affairs of the Borrower and
its Affiliates, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender. Each Lender represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower and
its Affiliates, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower. Each Lender also represents that
it will, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower and its Affiliates. Except for notices, reports
and other documents expressly herein required to be furnished to the Lenders by
the Agent, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrower and its Affiliates which may come into the possession of any of the
Agent-Related Persons.
14.7. INDEMNIFICATION.
Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Borrower and without
limiting the obligation of the Borrower to do so), pro rata, from and against
any and all Indemnified Liabilities as such
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term is defined in SECTION 15.11; PROVIDED, HOWEVER, that no Lender shall be
liable for the payment to the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this SECTION 14.7 shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
14.8. AGENT IN INDIVIDUAL CAPACITY.
The Bank and its Affiliates may make loans to, issue letters
of credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Borrower and its Subsidiaries and
Affiliates as though the Bank were not the Agent hereunder and without notice to
or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, the Bank or its Affiliates may receive information regarding the
Borrower or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such Affiliates) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to its Loans, the Bank shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Agent, and the terms "Lender" and "Lenders"
include the Bank in its individual capacity.
14.9. SUCCESSOR AGENT.
The Agent may, and at the request of the Required Lenders
shall, resign as Agent upon thirty (30) days' notice to the Lenders and the
Borrower. In the event the Bank sells all of its Commitments and Revolving Loans
as part of a sale, transfer or other disposition by the Bank of substantially
all of its loan portfolio, the Bank shall resign as Agent and such purchaser or
transferee shall become the successor Agent hereunder. If the Agent resigns
under this Agreement, subject to the proviso in the preceding sentence, the
Majority Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Borrower, a successor agent from among the Lenders (it being
understood that such resignation shall not become effective until a successor
has been duly appointed and has accepted its appointment). Upon the acceptance
of its appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Agent and the term
"Agent" shall mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the
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provisions of this SECTION 14 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
14.10. WITHHOLDING TAX.
(a) Each Lender that is not created or organized under the
laws of the United States or a political subdivision thereof (each a "Non-U.S.
Lender") shall deliver to the Borrower and the Agent not later than the date on
which such Lender becomes a Lender hereunder:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 before the
payment of any interest in the first calendar year and before
the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid under
this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade
or business of such Lender, two properly completed and
executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and
in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9;
(iii) if such Lender claims an exemption from United
States withholding tax under Section 871(h) or 881(c) of the
Internal Revenue Code with respect to payments of "portfolio
interest" (a "Registered Holder"), (A) a certificate that such
Registered Holder is entitled to the benefits of Section
871(h) or 881(c) of the Internal Revenue Code and (B) two (2)
duly completed copies of W-8; and
(iv) such other form or forms as may be required
under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
Neither the Borrower nor the Agent shall be required to pay
any additional amount to, or to indemnify, pursuant to SECTION 5.1, any Non-U.S.
Lender in respect of United States federal withholding tax to the extent imposed
as a result of (A) the failure by such Non-U.S. Lender to comply with the
provisions of this SECTION 14.10(a), (b) a representation made pursuant to the
provisions of this SECTION 14.10(a) having been false or incorrect when made;
PROVIDED, HOWEVER, that to the extent required by law, the
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Borrower shall deduct Taxes from any such payments made to such Non-U.S. Lender
and pay such deducted Taxes to the governmental authority of the applicable
Jurisdiction.
(b) Each Non-U.S. Lender agrees to deliver to the Borrower and
the Agent further duly completed copies of the above-mentioned IRS forms on or
before the earlier of (i) the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to obtaining
an exemption from withholding of United States federal income tax, and (ii)
thirty (30) days after the occurrence of any event requiring any change in the
most recent form previously delivered by such Non-U.S. Lender to the Borrower
and the Agent, unless any change in treaty, law, regulation, or official
interpretation thereof which would render such form inapplicable or which would
prevent such Non-U.S. Lender from duly completing and delivering such form has
occurred prior to the date on which any such delivery would otherwise be
required and such Non-U.S. Lender promptly advises the Borrower that it is not
capable of receiving payments hereunder without any deduction or withholding of
United States federal income tax.
(c) If any Non-U.S. Lender claims exemption from, or reduction
of, withholding tax and such Non-U.S. Lender sells, assigns, grants a
participation in, or otherwise transfers to a third party all or part of the
Obligations of the Borrower to such Non-U.S. Lender, such Non-U.S. Lender agrees
to notify the Borrower and the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Borrower to such Non-U.S.
Lender. To the extent of such percentage amount, the Borrower and the Agent will
treat such Non-U.S. Lender's forms as no longer valid.
(d) If any Lender claiming exemption from United States
withholding tax pursuant to SECTIONS 14.10(a)(ii) or (iii) assigns, grants a
participation in, or otherwise transfers to a third party all or part of the
Obligations of the Borrower to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(e) If any Lender is entitled to a reduction in the otherwise
applicable withholding tax, the Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this SECTION 14.10 are not delivered to the Agent, then the
Agent may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the otherwise applicable
withholding tax.
(f) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Lender, or
any of its participants, (because the appropriate form was not delivered, was
not properly executed, or because such Lender failed to notify the Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender and its
participants shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or
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otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this SECTION 14.10,
together with all costs and expenses (including Attorney Costs). The obligation
of the Lenders under this SECTION 14.10 shall survive the payment of all
Obligations and the resignation or replacement of the Agent.
14.11. INTENTIONALLY OMITTED.
14.12. COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by the Borrower of all Loans and reimbursement obligations
in respect of Letters of Credit and Credit Support, and the termination of all
outstanding Letters of Credit (whether or not any of such obligations are due)
and all other Obligations; (ii) constituting property of the Borrower or any
other Credit Party being sold or disposed of if the Borrower or any other Credit
Party certifies to the Agent that the sale or disposition is made in compliance
with SECTION 9.9 (and the Agent may rely conclusively on any such certificate,
without further inquiry); (iii) constituting property of the Borrower or any
other Credit Party in which the Borrower or any other Credit Party owned no
interest at the time the Lien was granted or at any time thereafter; or (iv)
constituting property leased to the Borrower or a Subsidiary under a lease which
has expired or been terminated in a transaction permitted under this Agreement.
Except as provided above, the Agent will not release any of the Agent's Liens
without the prior written authorization of the Lenders; PROVIDED that the Agent
may, in its discretion, release the Agent's Liens on Collateral valued in the
aggregate not in excess of $1,000,000 in any one year period without the prior
written authorization of the Lenders. Upon request by the Agent or the Borrower
at any time, the Lenders will confirm in writing the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral pursuant
to this SECTION 14.12.
(b) Upon receipt by the Agent of any authorization required
pursuant to SECTION 14.12(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral, and upon
at least five (5) Business Days' prior written request by the Borrower, the
Agent shall (and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the Agent's Liens
upon such Collateral; PROVIDED, HOWEVER that (i) the Agent shall not be required
to execute any such document on terms which, in the Agent's opinion, would
expose the Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
the Borrower or any other Credit Party in respect of) all interests retained by
the Borrower or any other Credit Party, including (without limitation) the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by the Borrower or
any other Credit Party or is
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cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent pursuant to any of the Loan Documents, it
being understood and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any manner it may deem
appropriate, in its sole discretion given the Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Agent shall have
no other duty or liability whatsoever to any Lender as to any of the foregoing.
14.13. RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF
PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express consent of all Lenders, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of all Lenders, set off against the
Obligations, any amounts owing by such Lender to the Borrower or any other
Credit Party or any accounts of the Borrower or any other Credit Party now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by the Agent, take or cause
to be taken any action to enforce its rights under this Agreement or against the
Borrower or any other Credit Party, including, without limitation, the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of the Borrower to such Lender arising
under, or relating to, this Agreement or the other Loan Documents, except for
any such proceeds or payments received by such Lender from the Agent pursuant to
the terms of this Agreement, or (ii) payments from the Agent in excess of such
Lender's ratable portion of all such distributions by the Agent, such Lender
shall promptly (1) turn the same over to the Agent, in kind, and with such
endorsements as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (2) purchase, without recourse or warranty, an undivided
interest and participation in the Obligations owed to the other Lenders so that
such excess payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; PROVIDED, HOWEVER, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
14.14. AGENCY FOR PERFECTION.
Each Lender hereby appoints each other Lender as agent for the
purpose of perfecting the Lenders' security interest in assets which, in
accordance with Article 9 of the
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UCC or the applicable provision of the PPSA can be perfected only by possession.
Should any Lender (other than the Agent) obtain possession of any such
Collateral, such Lender shall notify the Agent thereof, and, promptly upon the
Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15. PAYMENTS BY AGENT TO LENDERS.
All payments to be made by the Agent to the Lenders shall be
made by bank wire transfer or internal transfer of immediately available funds
to such wire transfer instructions as each party may designate for itself by
written notice to the Agent. Concurrently with each such payment, the Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Revolving Loans or otherwise.
14.16. CONCERNING THE COLLATERAL AND THE RELATED LOAN
DOCUMENTS.
Each Lender authorizes and directs the Agent to enter into
this Agreement and the other Loan Documents relating to the Collateral, for the
ratable benefit of the Agent and the Lenders. Each Lender agrees that any action
taken by the Agent, Majority Lenders or Required Lenders, as applicable, in
accordance with the terms of this Agreement or the other Loan Documents relating
to the Collateral, and the exercise by the Agent, the Majority Lenders, or the
Required Lenders, as applicable, of their respective powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
14.17. FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY
LENDERS.
By signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by the
Agent;
(b) expressly agrees and acknowledges that neither the Bank
nor the Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or other party performing
any audit or examination will inspect only specific information regarding the
Borrower or other Credit Parties and will rely significantly upon the Borrower's
or such Credit Parties' books and records, as well as on representations of the
Borrower's or such Credit Parties' personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
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(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold the
Agent and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to the Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of the Borrower; and (ii) to pay and protect, and indemnify,
defend and hold the Agent and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including, without limitation attorney costs) incurred by the
Agent and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.
14.18. RELATION AMONG LENDERS.
The Lenders are not partners or co-venturers, and no Lender
shall be liable for the acts or omissions of, or (except as otherwise set forth
herein in case of the Agent) authorized to act for, any other Lender.
ARTICLE 15
MISCELLANEOUS
15.1. CUMULATIVE REMEDIES; NO PRIOR RECOURSE TO COLLATERAL.
The enumeration herein of the Agent's and each Lender's rights
and remedies is not intended to be exclusive, and such rights and remedies are
in addition to and not by way of limitation of any other rights or remedies that
the Agent and the Lenders may have under the UCC or other applicable law. The
Agent and the Lenders shall have the right, in their sole discretion, to
determine which rights and remedies are to be exercised and in which order. The
exercise of one right or remedy shall not preclude the exercise of any others,
all of which shall be cumulative. The Agent and the Lenders may, without
limitation, proceed directly against the Borrower to collect the Obligations
without any prior recourse to the Collateral. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
15.2. SEVERABILITY.
The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Agreement or any instrument or agreement required hereunder.
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15.3. GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY
TRIAL WAIVER.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS, PROVIDED, THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE
OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF
ILLINOIS; PROVIDED, THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF BORROWER, THE AGENT AND THE
LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF BORROWER, THE AGENT AND THE
LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE
FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
(c) BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO BORROWER AT ITS ADDRESS
SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS.
NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
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15.4. WAIVER OF JURY TRIAL.
BORROWER, THE LENDERS AND THE AGENT EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. BORROWER, THE LENDERS AND THE AGENT
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS
SECTION 15.4 AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
15.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All of the Borrower's representations and warranties contained
in this Agreement shall survive the execution, delivery, and acceptance thereof
by the parties, notwithstanding any investigation by the Agent or the Lenders or
their respective agents.
15.6. OTHER SECURITY AND GUARANTIES.
The Agent, may, without notice or demand and without affecting
the Borrower's obligations hereunder, from time to time: (a) take from any
Person and hold collateral (other than the Collateral) for the payment of all or
any part of the Obligations and exchange, enforce or release such collateral or
any part thereof; and (b) accept and hold any endorsement or guaranty of payment
of all or any part of the Obligations and release or substitute any such
endorser or guarantor, or any Person who has given any Lien in any other
collateral as security for the payment of all or any part of the Obligations, or
any other Person in any way obligated to pay all or any part of the Obligations.
15.7. FEES AND EXPENSES.
The Borrower agrees to pay to the Agent, for its benefit, on
demand, all costs and expenses that Agent pays or incurs in connection with the
negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement or any of the other Loan Documents (excluding
syndication), including, without limitation: (a)
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Attorney Costs; (b) costs and expenses (including attorneys' and paralegals'
fees and disbursements which shall include the allocated costs of Agent's
in-house counsel fees and disbursements) for any amendment, supplement, waiver,
consent, or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for recording,
filing financing statements and continuations, and other actions to perfect,
protect, and continue the Agent's Liens (including costs and expenses paid or
incurred by the Agent in connection with the consummation of Agreement); (e)
sums paid or incurred to pay any amount or take any action required of the
Borrower or its Subsidiaries under the Loan Documents that the Borrower or its
Subsidiaries fails to pay or take; (f) costs of appraisals, inspections, and
verifications of the Collateral, including, without limitation, travel, lodging,
and meals for inspections of the Collateral and the Borrower's operations by the
Agent plus the Agent's then customary charge for field examinations and audits
and the preparation of reports thereof (such charge is currently $600 per day
(or portion thereof) for each agent or employee of the Agent with respect to
each field examination or audit); (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining Payment Accounts and lock boxes; (h) costs and expenses of
preserving and protecting the Collateral; and (i) costs and expenses (including
attorneys' and paralegals' fees and disbursements which shall include the
allocated cost of Agent's in-house counsel fees and disbursements) paid or
incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to defend any claims made or threatened against the
Agent or any Lender arising out of the transactions contemplated hereby
(including without limitation, preparations for and consultations concerning any
such matters). The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by the
Borrower. All of the foregoing costs and expenses shall be charged to the
Borrower's Loan Account as Revolving Loans as described in SECTION 4.7.
15.8. NOTICES.
Except as otherwise provided herein, all notices, demands and
requests that any party is required or elects to give to any other shall be in
writing, or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, but not limited to, delivery by overnight mail and courier service,
(b) four (4) days after it shall have been mailed by United States mail, first
class, certified or registered, with postage prepaid, or (c) in the case of
notice by such a telecommunications device, when properly transmitted, in each
case addressed to the party to be notified as follows:
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If to the Agent or to the Bank:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Portfolio Manager
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Bank of America N.A.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower:
Industrial Systems Associates, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9. WAIVER OF NOTICES.
Unless otherwise expressly provided herein, the Borrower
waives presentment, protest and notice of demand or dishonor and protest as to
any instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled, except for such notices as are expressly
required by this Agreement. No notice to or demand on the Borrower which the
Agent or any Lender may elect to give shall entitle the Borrower to any or
further notice or demand in the same, similar or other circumstances.
15.10. BINDING EFFECT.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective representatives, successors, and assigns
of the parties hereto;
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PROVIDED, HOWEVER, that no interest herein may be assigned by the Borrower
without prior written consent of the Agent and each Lender. The rights and
benefits of the Agent and the Lenders hereunder shall, if such Persons so agree,
inure to any party acquiring any interest in the Obligations or any part
thereof.
15.11. INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWER.
The Borrower agree to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement, any other
Loan Document, or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); PROVIDED, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting from the willful misconduct or gross negligence of such Indemnified
Person. The agreements in this SECTION 15.11 shall survive payment of all other
Obligations. An Indemnified Party shall promptly notify the Borrower of a claim
for which indemnification may be sought under this SECTION 15.11, shall consult
with the Borrower concerning the defense of such claim and shall allow the
Borrower to participate in the defense of such claim to the extent the
Indemnified Party's rights are not adversely affected by such participation.
15.12. LIMITATION OF LIABILITY.
No claim may be made by the Borrower, any Lender or other
Person against the Agent, any Lender, or the affiliates, directors, officers,
officers, employees, or agents of any of them for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement or any other Loan Document, or any act, omission
or event occurring in connection therewith, and the Borrower and each Lender
hereby waive, release and agree not to ▇▇▇ upon any claim for such damages,
whether or not accrued and whether or not know or suspected to exist in its
favor.
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15.13. FINAL AGREEMENT; REFERENCES.
This Agreement and the other Loan Documents are intended by
the Borrower, the Agent and the Lenders to be the final, complete, and exclusive
expression of the agreement between them. This Agreement supersedes any and all
prior oral or written agreements relating to the subject matter hereof. No
modification, rescission, waiver, release, or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written
agreement signed by the Credit Party party thereto and a duly authorized officer
of each of the Agent and the requisite Lenders. Each of the Loan Documents and
any and all other agreements, documents or instruments now or hereafter executed
and delivered pursuant to the terms of the Original Loan Agreement or pursuant
to the terms hereof are hereby amended so that any reference therein to the
Original Loan Agreement shall mean a reference to this Agreement. All loans
outstanding by the Lenders under the Original Loan Agreement (and all accrued
and unpaid interest thereon and fees in respect thereof) shall remain
outstanding and shall be restated and extended as Revolving Loans hereunder, and
all letters of credit issued under the Original Loan Agreement (and all fees in
respect thereof) shall remain outstanding and shall be Letters of Credit
hereunder.
15.14. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
and by the Agent, each Lender and the Borrower in separate counterparts, each of
which shall be an original, but all of which shall together constitute one and
the same agreement.
15.15. CAPTIONS.
The captions contained in this Agreement are for convenience
of reference only, are without substantive meaning and should not be construed
to modify, enlarge, or restrict any provision.
15.16. RIGHT OF SETOFF.
In addition to any rights and remedies of the Lenders provided
by law, if an Event of Default exists or the Loans have been accelerated, each
Lender is authorized at any time and from time to time, without prior notice to
the Borrower, any such notice being waived by the Borrower 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 by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Borrower against any and all Obligations owing to such Lender by
the Borrower, now or hereafter existing, irrespective of whether or not the
Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrower and the Agent after any such
set-off and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice shall not affect the validity
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of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY DEPOSIT
ACCOUNT OR PROPERTY OF BORROWER OR ANY OTHER CREDIT PARTY HELD OR MAINTAINED BY
SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
15.17. AMENDMENT AND RESTATEMENT.
This Agreement amends and restates the Original Loan Agreement
in its entirety. This Agreement and the Loan Documents govern the present
relationship between Agent, Lenders and the Borrower. This Agreement, however,
is in no way intended, nor shall it be construed, to affect, replace, impair or
extinguish the creation, attachment, perfection or priority of the security
interests in, and other liens on, the Collateral in favor of Agent, for the
benefit of Lenders and Agent, which security interests and other liens the
Borrower, by this Agreement, acknowledges, reaffirms and confirms to Agent. In
addition, all obligations, liabilities and indebtedness created or existing
under, pursuant to, or as a result of, the original Loan Documents shall
continue in existence within the definition of "Obligations" under this
Agreement, which obligations, liabilities and indebtedness the Borrower, by this
Agreement, acknowledges, reaffirms and confirms. This Agreement shall not affect
calculations of interest or fees provided for in the Original Loan Agreement for
any period prior to the Restatement Date which calculations shall be governed by
the Original Loan Agreement.
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IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
"BORROWER"
INDUSTRIAL SYSTEMS ASSOCIATES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title:
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"AGENT"
BANK OF AMERICA, N.A., as Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title:
--------------------------------------
"LENDERS"
Commitment: $25,000,000 BANK OF AMERICA, N.A., as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title:
--------------------------------------
Commitment: $25,000,000 MELLON BANK, N.A., as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Title:
--------------------------------------
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ACKNOWLEDGMENT
Each of the undersigned as of the date first written above (a)
consents and agrees to the foregoing Agreement, (b) reaffirms its obligations
under its Guaranty in favor of the Agent and the other Lenders and under the
other Loan Documents to which it is a party, and (c) agrees that each reference
in the Loan Documents to which it is a party to the Original Loan Agreement is
amended to be a reference to the foregoing Agreement.
STRATEGIC DISTRIBUTION, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
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STRATEGIC DISTRIBUTION (CANADA)
HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Title:
---------------------------------------
STRATEGIC DISTRIBUTION (CANADA)
COMPANY/STRATEGIC (CANADA) DE
COMPAGNIE DISTRIBUTION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Title:
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