Exhibit 10.11
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$40,000,000 CREDIT FACILITY
CREDIT AGREEMENT
DATED AS OF DECEMBER 31, 2002
BY AND AMONG
TRUE TEMPER SPORTS, INC.,
AS BORROWER
ANTARES CAPITAL CORPORATION
FOR ITSELF, AS A LENDER AND AS AGENT FOR ALL LENDERS
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
AS LENDERS
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TABLE OF CONTENTS
Page
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ARTICLE I - THE CREDITS....................................................................................1
1.1 Amounts and Terms of Commitments............................................................1
(a) The Term Loan..........................................................................1
(b) The Revolving Credit...................................................................1
(c) Lender Letters of Credit and Letter of Credit Participation Agreements.................2
1.2 Notes.......................................................................................3
1.3 Interest....................................................................................4
1.4 Loan Accounts...............................................................................4
1.5 Procedure for Revolving Credit Borrowing....................................................5
1.6 Conversion and Continuation Elections.......................................................6
1.7 Optional Prepayments........................................................................7
1.8 Mandatory Prepayments of Loans and Commitment Reductions....................................7
(a) Scheduled Term Loan Payments...........................................................7
(b) Revolving Loan.........................................................................8
(c) Asset Dispositions.....................................................................8
(d) Issuance of Securities.................................................................8
(e) Excess Cash Flow.......................................................................9
(f) Application of Prepayments.............................................................9
1.9 Fees........................................................................................9
(a) Arrangement, Closing and Agent's Fees..................................................9
(b) Commitment Fee.........................................................................9
(c) Letter of Credit Participation Fee....................................................10
1.10 Payments by the Borrower...................................................................10
1.11 Payments by the Lenders to the Agent; Settlement...........................................11
ARTICLE II - CONDITIONS PRECEDENT.........................................................................13
2.1 Conditions of Initial Loans................................................................13
(a) Credit Agreement and Notes............................................................13
(b) Secretary's Certificates; Resolutions; Incumbency.....................................13
(c) Certificate of Incorporation; By-laws and Good Standing...............................13
(d) Collateral Documents..................................................................14
(e) Legal Opinion.........................................................................15
(f) Payment of Fees.......................................................................15
(g) Certificate...........................................................................15
(h) Financial Statements..................................................................16
(i) Insurance Policies....................................................................16
(j) Environmental Review..................................................................16
(k) Due Diligence.........................................................................16
(l) Insurance Review......................................................................16
(m) Availability..........................................................................16
(n) Prior Indebtedness....................................................................17
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(o) Subordinated Holdings Discount Notes..................................................17
(p) Projections...........................................................................17
(q) EBITDA................................................................................17
(r) Other Documents.......................................................................17
2.2 Conditions to All Borrowings...............................................................17
(a) Notice of Borrowing...................................................................18
(b) Continuation of Representations and Warranties........................................18
(c) No Existing Default...................................................................18
(d) Availability Certificate..............................................................18
ARTICLE III - REPRESENTATIONS AND WARRANTIES..............................................................19
3.1 Corporate Existence and Power..............................................................19
3.2 Corporate Authorization; No Contravention..................................................20
3.3 Governmental Authorization.................................................................20
3.4 Binding Effect.............................................................................21
3.5 Litigation.................................................................................21
3.6 No Default.................................................................................21
3.7 ERISA Compliance...........................................................................21
3.8 Use of Proceeds; Margin Regulations........................................................22
3.9 Title to Properties........................................................................22
3.10 Taxes......................................................................................22
3.11 Financial Condition........................................................................23
3.12 Environmental Matters......................................................................23
3.13 Collateral Documents.......................................................................24
3.14 Regulated Entities.........................................................................24
3.15 Solvency...................................................................................24
3.16 Labor Relations............................................................................24
3.17 Copyrights, Patents, Trademarks and Licenses, etc..........................................25
3.18 Subsidiaries...............................................................................25
3.19 Brokers' Fees; Transaction Fees............................................................25
3.20 Insurance..................................................................................26
3.21 Designated Senior Debt.....................................................................26
3.22 Full Disclosure............................................................................26
ARTICLE IV - AFFIRMATIVE COVENANTS........................................................................26
4.1 Financial Statements.......................................................................26
4.2 Certificates; Other Information............................................................27
4.3 Notices....................................................................................29
4.4 Preservation of Corporate Existence, Etc...................................................31
4.5 Maintenance of Property....................................................................31
4.6 Insurance..................................................................................32
4.7 Payment of Obligations.....................................................................33
4.8 Compliance with Laws.......................................................................33
4.9 Inspection of Property and Books and Records...............................................33
4.10 Use of Proceeds............................................................................34
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4.11 Solvency...................................................................................34
4.12 Further Assurances.........................................................................34
4.13 Interest Rate Protection...................................................................35
4.14 BNY Subordinated Holdings Discount Note....................................................35
ARTICLE V - NEGATIVE COVENANTS............................................................................35
5.1 Limitation on Liens........................................................................36
5.2 Disposition of Assets......................................................................38
5.3 Consolidations and Mergers.................................................................38
5.4 Loans and Investments......................................................................39
5.5 Limitation on Indebtedness.................................................................41
5.6 Transactions with Affiliates...............................................................42
5.7 Management Fees and Compensation...........................................................43
5.8 Use of Proceeds............................................................................43
5.9 Contingent Obligations.....................................................................44
5.10 Compliance with ERISA......................................................................44
5.11 Restricted Payments........................................................................45
5.12 Change in Business.........................................................................47
5.13 Change in Structure........................................................................48
5.14 Accounting Changes.........................................................................48
5.15 Amendments to Subordinated Indebtedness; Designated Senior Debt............................48
5.16 No Negative Pledges........................................................................48
ARTICLE VI - FINANCIAL COVENANTS.........................................................................49
6.1 Capital Expenditures.......................................................................49
6.2 Leverage Ratio.............................................................................50
6.3 Fixed Charge Coverage Ratio................................................................51
6.4 Interest Coverage Ratio....................................................................51
6.5 EBITDA.....................................................................................52
ARTICLE VII - EVENTS OF DEFAULT...........................................................................52
7.1 Event of Default............................................................................52
(a) Non-Payment............................................................................52
(b) Representation or Warranty.............................................................53
(c) Specific Defaults......................................................................53
(d) Other Defaults.........................................................................53
(e) Cross-Default..........................................................................53
(f) Insolvency; Voluntary Proceedings......................................................54
(g) Involuntary Proceedings................................................................54
(h) ERISA..................................................................................54
(i) Monetary Judgments.....................................................................55
(j) Non-Monetary Judgments.................................................................55
(k) Collateral.............................................................................55
(l) Ownership..............................................................................55
(m) Holdings Defaults......................................................................56
(n) Invalidity of Subordination Provisions.................................................56
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7.2 Remedies....................................................................................56
7.3 Rights Not Exclusive........................................................................57
7.4 Cash Collateral for Letters of Credit.......................................................57
ARTICLE VIII - THE AGENT..................................................................................57
8.1 Appointment and Authorization..............................................................57
8.2 Delegation of Duties.......................................................................58
8.3 Liability of Agent.........................................................................58
8.4 Reliance by Agent..........................................................................58
8.5 Notice of Default..........................................................................59
8.6 Credit Decision............................................................................59
8.7 Indemnification............................................................................60
8.8 Agent in Individual Capacity...............................................................60
8.9 Successor Agent............................................................................61
8.10 Collateral Matters.........................................................................61
ARTICLE IX - MISCELLANEOUS................................................................................62
9.1 Amendments and Waivers.....................................................................62
9.2 Notices....................................................................................63
9.3 No Waiver; Cumulative Remedies.............................................................64
9.4 Costs and Expenses.........................................................................64
9.5 Indemnity..................................................................................65
9.6 Marshaling; Payments Set Aside.............................................................66
9.7 Successors and Assigns.....................................................................66
9.8 Assignments, Participations, etc...........................................................66
9.9 Confidentiality............................................................................69
9.10 Set-off; Sharing of Payments...............................................................69
9.11 Notification of Addresses, Lending Offices, Etc............................................70
9.12 Counterparts...............................................................................70
9.13 Severability...............................................................................70
9.14 Captions...................................................................................71
9.15 Independence of Provisions.................................................................71
9.16 Interpretation.............................................................................71
9.17 No Third Parties Benefited.................................................................71
9.18 Governing Law and Jurisdiction.............................................................71
9.19 Waiver of Jury Trial.......................................................................72
9.20 Entire Agreement; Release..................................................................72
ARTICLE X - TAXES, YIELD PROTECTION AND ILLEGALITY........................................................73
10.1 Taxes......................................................................................73
10.2 Illegality.................................................................................75
10.3 Increased Costs and Reduction of Return....................................................76
10.4 Funding Losses.............................................................................77
10.5 Inability to Determine Rates...............................................................78
10.6 Reserves on LIBOR Rate Loans...............................................................78
10.7 Certificates of Lenders....................................................................78
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10.8 Survival...................................................................................79
10.9 Replacement of Lender in Respect of Increased Costs........................................79
10.10 Change of Lending Office...................................................................79
ARTICLE XI - DEFINITIONS..................................................................................79
11.1 Defined Terms..............................................................................79
11.2 Other Interpretive Provisions..............................................................98
(a) Defined Terms.........................................................................98
(b) The Agreement.........................................................................98
(c) Certain Common Terms..................................................................98
(d) Performance; Time.....................................................................98
(e) Contracts.............................................................................98
(f) Laws..................................................................................99
11.3 Accounting Principles......................................................................99
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SCHEDULES
Schedule 1.1(a) Term Loan Commitments
Schedule 1.1(b) Revolving Loan Commitments
Schedule 3.2 Capitalization
Schedule 3.5 Litigation
Schedule 3.7 ERISA
Schedule 3.12 Environmental
Schedule 3.17 Intellectual Property
Schedule 3.18 Subsidiaries
Schedule 5.1 Liens
Schedule 5.5 Indebtedness
Schedule 5.9 Contingent Obligations
Schedule 11.1 Prior Indebtedness
EXHIBITS
Exhibit 1.8(e) Excess Cash Flow Certificate
Exhibit 4.2(b) Compliance Certificate
Exhibit 11.1(a) Availability Certificate
Exhibit 11.1(b) Notice of Borrowing
Exhibit 11.1(c) Notice of Continuation/Conversion
Exhibit 11.1(d) Revolving Note
Exhibit 11.1(e) Term Note
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement") is entered into as of December
31, 2002, by and among True Temper Sports, Inc., a Delaware corporation (the
"Borrower"), Antares Capital Corporation, a Delaware corporation, as agent for
the several financial institutions from time to time party to this Agreement
(collectively, the "Lenders" and individually each a "Lender") and for itself as
a Lender, and such Lenders.
W I T N E S S E T H:
WHEREAS, the Borrower has requested, and the Lenders have agreed to make
available to the Borrower, a revolving credit facility (including a letter of
credit subfacility) and a term loan upon and subject to the terms and conditions
set forth in this Agreement;
WHEREAS, (i) this Agreement, among other things, refinances that certain
Credit Agreement, dated as of the September 30, 1998, as amended to date, among
the Borrower, various lenders, DLJ Capital Funding, Inc., as syndicate agent,
and Bank One, NA, as administrative agent and (ii) all of the Obligations (as
defined below) owing pursuant to this Agreement are "Designated Senior Debt" as
defined in the Indenture (as defined below);
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I - THE CREDITS
1.1 Amounts and Terms of Commitments.
(a) The Term Loan.
Each Lender with a Term Loan Commitment severally and not jointly agrees,
on the terms and conditions hereinafter set forth, to lend to the Borrower on
the Closing Date the amount set forth opposite such Lender's name in Schedule
1.1(a) under the heading "Term Loan Commitment" (such amount being referred to
herein as such Lender's "Term Loan Commitment"). Amounts borrowed under this
subsection 1.1(a) are referred to as the "Term Loan." Amounts borrowed as a Term
Loan which are repaid or prepaid by the Borrower may not be reborrowed.
(b) The Revolving Credit.
Each Lender with a Revolving Loan Commitment severally and not jointly
agrees, on the terms and conditions hereinafter set forth, to make Loans to the
Borrower (each such Loan, a "Revolving Loan") from time to time on any Business
Day during the period from the Closing Date to the Revolving Termination Date,
in an aggregate amount not to exceed at any time outstanding the amount set
forth opposite such Lender's name in Schedule 1.1(b) under the heading
"Revolving Loan Commitment" (such amount as the same
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may be reduced from time to time pursuant to subsection 1.8(f) hereof or as a
result of one or more assignments pursuant to Section 9.8, being referred to
herein as such Lender's "Revolving Loan Commitment"); provided, however, that,
after giving effect to any Borrowing of Revolving Loans, the aggregate principal
amount of all outstanding Revolving Loans shall not exceed the Maximum Revolving
Loan Balance. Subject to the other terms and conditions hereof, amounts borrowed
under this subsection 1.1(b) may be repaid and reborrowed from time to time. The
"Maximum Revolving Loan Balance" from time to time will be the lesser of:
(i) (x) the product obtained by multiplying (A) Adjusted Leverage EBITDA,
times (B) the Leverage Multiple then in effect, minus (y) outstanding Total Debt
(exclusive of the Revolving Loans), as calculated pursuant to the most recent
Availability Certificate in effect from time to time, or
(ii) the Aggregate Revolving Loan Commitment;
less, in either case, the amount of any Letter of Credit Participation
Liability. If at any time the Revolving Loans exceed the Maximum Revolving Loan
Balance, the Borrower shall prepay the Revolving Loans within five (5) Business
Days in an amount sufficient to eliminate such excess.
(c) Lender Letters of Credit and Letter of Credit Participation
Agreements.
Subject to the terms and conditions of this Agreement and in reliance upon
the representations and warranties of the Borrower herein set forth, the
Revolving Loan Commitment may, in addition to advances under the Revolving Loan,
be utilized, upon the request of the Borrower, for (i) the issuance of letters
of credit by Agent (each such letter of credit, a "Lender Letter of Credit") or
(ii) the issuance of letter of credit participation agreements by Agent (each
such letter of credit participation, a "Letter of Credit Participation
Agreement") to confirm payment to banks (whether or not such banks are Lenders)
which issue letters of credit for the account of the Borrower on behalf of each
Lender having a Revolving Loan Commitment (severally and not jointly) according
to such Lender's Revolving Loan Commitment. The aggregate amount of Letter of
Credit Participation Liability with respect to all Lender Letters of Credit and
Letter of Credit Participation Agreements outstanding at any time shall not
exceed $3,000,000.
The Borrower shall be irrevocably and unconditionally obligated forthwith
without presentment, demand, protest or other formalities of any kind, to
reimburse the Agent for any amounts paid by the Agent under any Lender Letter of
Credit or Letter of Credit Participation Agreement. The Borrower hereby
authorizes and directs the Lenders with Revolving Loan Commitments, at the
Agent's option, to make a Revolving Loan in the amount of any payment made by
the Agent with respect to any Lender Letter of Credit or Letter of Credit
Participation Agreement. All amounts paid by the Agent with respect to any
Lender Letter of Credit or Letter of Credit Participation Agreement that are not
immediately repaid by the Borrower with the proceeds of a Revolving Loan or
otherwise shall bear interest at the interest rate then applicable to Revolving
Loans, calculated using the Base
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Rate and the Applicable Margin then in effect. Each Lender agrees to fund its
Commitment Percentage of any Revolving Loan made pursuant to this subsection
1.1(c) and, if no such Revolving Loans are made, each Lender with a Revolving
Loan Commitment agrees to purchase, and shall be deemed to have purchased, a
participation in such Lender Letter of Credit or Letter of Credit Participation
Agreement in an amount equal to its ratable share of such Lender Letter of
Credit or Letter of Credit Participation Agreement based upon the Revolving Loan
Commitments then in effect and each Lender agrees to pay to the Agent such share
of any payments made by the Agent under such Lender Letter of Credit or Letter
of Credit Participation Agreement. The obligations of each Lender under the
preceding two (2) sentences shall be absolute and unconditional and such
remittance shall be made notwithstanding the occurrence or continuation of an
Event of Default or Default or the failure to satisfy any condition set forth in
Section 2.2 hereof.
In addition to all other terms and conditions set forth in this Agreement,
the issuance by Agent of any Lender Letter of Credit or Letter of Credit
Participation Agreement shall be subject to the condition precedent that the
Lender Letter of Credit, Letter of Credit Participation Agreement or the letter
of credit or written contract for which the Borrower requests a Letter of Credit
Participation Agreement shall support a transaction entered into by the Borrower
or one of its Subsidiaries in the Ordinary Course of Business, or otherwise
reasonably acceptable to Agent, and shall be in such form, be for such amount,
and contain such terms in connection with the issuance thereof as are reasonably
satisfactory to Agent.
The expiration date of each Lender Letter of Credit shall be on a date
which is the earlier of (a) one year from its date of issuance, or (b) the fifth
(5th) day before the date set forth in clause (a) of the definition of Revolving
Termination Date. Each Letter of Credit Participation Agreement shall provide
that the Letter of Credit Participation Agreement terminates and all demands or
claims for payment must be presented by a date certain, which date will be the
earlier of (a) one year from its date of issuance, or (b) the fifth (5th) day
before the date set forth in clause (a) of the definition of Revolving
Termination Date.
The Borrower shall give Agent at least seven (7) Business Days prior
notice specifying the date a Lender Letter of Credit or Letter of Credit
Participation Agreement is to be issued, identifying the beneficiary and
describing the nature of the transactions proposed to be supported thereby. The
notice shall be accompanied by the drawing terms for the Lender Letter of Credit
or form of each letter of credit or other written contract which will be
supported by the Letter of Credit Participation Agreement.
1.2 Notes.
The Term Loan made by each Lender with a Term Loan Commitment shall be
evidenced by a Term Note payable to the order of such Lender in an amount equal
to such Lender's Term Loan Commitment. The Revolving Loans made by each Lender
with a Revolving Loan Commitment shall be evidenced by a Revolving Note payable
to the order of such Lender in an amount equal to such Lender's Revolving Loan
Commitment.
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1.3 Interest.
(a) Subject to subsections 1.3(c) and 1.3(d), each Loan shall bear
interest on the outstanding principal amount thereof from the date when made at
a rate per annum equal to the LIBOR or the Base Rate, as the case may be, plus
the Applicable Margin. Each determination of an interest rate by the Agent shall
be conclusive and binding on the Borrower and the Lenders in the absence of
demonstrable error. All computations of fees and interest payable under this
Agreement shall be made on the basis of a 360-day year and actual days elapsed.
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to but (subject to the provisions
of subsections 1.10(a) and 1.10(b) hereof) excluding the last day thereof.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any payment or
prepayment of Loans in full.
(c) At the election of the Agent or the Required Lenders while any Event
of Default exists, the Borrower shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the Obligations, at
a rate per annum which is determined by adding two percent (2.00%) per annum to
the Applicable Margin then in effect for such Loans (plus the LIBOR or Base
Rate, as the case may be) and, in the case of Obligations not subject to an
Applicable Margin (other than the fees described in Section 1.9), at a rate per
annum equal to the rate per annum applicable to Revolving Loans which are Base
Rate Loans (including the Applicable Margin with respect thereto) plus two
percent (2.00%); provided, however, that, on and after the expiration of any
Interest Period applicable to any LIBOR Rate Loan outstanding during the
continuance of such Event of Default, the principal amount of such Loan shall,
during the continuation of such Event of Default, bear interest at a rate per
annum equal to the Base Rate plus the Applicable Margin plus two percent
(2.00%). All such interest shall be payable on demand of the Agent or the
Required Lenders.
(d) Anything herein to the contrary notwithstanding, the obligations of
the Borrower hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is computed
hereunder, to the extent (but only to the extent) that contracting for or
receiving such payment by the respective Lender would be contrary to the
provisions of any law applicable to such Lender limiting the highest rate of
interest which may be lawfully contracted for, charged or received by such
Lender, and in such event the Borrower shall pay such Lender interest at the
highest rate permitted by applicable law.
1.4 Loan Accounts.
The Agent, on behalf of the Lenders, shall record on its books and records
the amount of each Loan made, the interest rate applicable, all payments of
principal and interest thereon and the principal balance thereof from time to
time outstanding. The Agent shall deliver to the Borrower on a monthly basis a
loan statement setting forth such record for the immediately preceding month.
Such record shall, absent demonstrable error, be conclusive
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evidence of the amount of the Loans made by the Lenders to the Borrower and the
interest and payments thereon. Any failure to so record or any error in doing
so, or any failure to deliver such loan statement shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder (and under any Note)
to pay any amount owing with respect to the Loans or provide the basis for any
claim against the Agent.
1.5 Procedure for Revolving Credit Borrowing.
(a) Each Borrowing under the Revolving Loan shall be made upon the
Borrower's irrevocable (subject to Section 10.5 hereof) written notice delivered
to the Agent in the form of a Notice of Borrowing, which notice must be received
by the Agent prior to 11:00 a.m. (Chicago time) (i) on the requested Borrowing
date in the case of each Base Rate Loan equal to or less than $1,000,000 and in
the case of the initial Loans to be made on the Closing Date, (ii) on the date
which is one (1) Business Day prior to the requested Borrowing date of each Base
Rate Loan in excess of $1,000,000 but equal to or less than $3,000,000 and (iii)
on the day which is three (3) Business Days prior to the requested Borrowing
date in the case of each LIBOR Rate Loan and each Base Rate Loan in excess of
$3,000,000; provided, that with respect to Loans subsequent to the initial
Loans, the Borrower may give notice of the requested Borrowing to the Agent by
telephone call or e-mail, with such notice confirmed not later than the
following Business Day by delivery to the Agent of a signed Notice of Borrowing.
Such Notice of Borrowing shall specify:
1. the amount of the Borrowing (which shall be in an aggregate
minimum principal amount of $100,000 and multiples of $50,000 in excess
thereof);
2. the requested Borrowing date, which shall be a Business Day;
3. whether the Borrowing is to be comprised of LIBOR Rate Loans or
Base Rate Loans; and
4. if the Borrowing is to be LIBOR Rate Loans, the Interest Period
applicable to such Loans.
provided, however, that with respect to the Borrowing to be made on the Closing
Date, such Borrowing will consist of Base Rate Loans only and shall remain so
for not less than three (3) Business Days. Thereafter, the Borrower may request
that Revolving Loans be made as LIBOR Rate Loans and that Loans be converted to
or continued as LIBOR Rate Loans provided only LIBOR Rate Loans having an
Interest Period of one (1) month shall be permitted during the first sixty (60)
days after the Closing Date.
(b) Upon receipt of the Notice of Borrowing, the Agent will promptly
notify each Lender with a Commitment affected thereby of such Notice and of the
amount of such Lender's Commitment Percentage of the Borrowing.
(c) Unless Agent is otherwise directed in writing by the Borrower, the
proceeds of each requested Borrowing after the Closing Date will be made
available to the
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Borrower by the Agent by wire transfer (or ACH transfer) of such amount to the
Borrower pursuant to the wire transfer instructions specified on the signature
page hereto.
1.6 Conversion and Continuation Elections.
(a) The Borrower may upon irrevocable (subject to subsection 10.2(c) and
Section 10.5) written notice to the Agent in accordance with subsection 1.6(b)
elect to convert on any Business Day, any Base Rate Loans into LIBOR Rate Loans
or elect to continue on the last day of the applicable Interest Period any LIBOR
Rate Loans having Interest Periods maturing on such day, in each instance, in
whole or in part in an amount not less than $100,000, or that is in an integral
multiple of $50,000 in excess thereof.
(b) The Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Agent not later than 11:00 a.m. (Chicago time) at least three
(3) Business Days in advance of the requested Conversion Date or continuation
date, specifying:
(i) the proposed Conversion Date or continuation date;
(ii) the aggregate amount of Loans to be converted or continued;
and
(iii) the duration of the requested Interest Period with respect to
the Loans to be converted or continued as LIBOR Rate Loans.
(c) If upon the expiration of any Interest Period applicable to LIBOR Rate
Loans, the Borrower has failed to select timely a new Interest Period to be
applicable to such LIBOR Rate Loans or if any Event of Default shall then exist,
the Borrower shall be deemed to have elected to convert such LIBOR Rate Loans
into Base Rate Loans effective as of the expiration date of such current
Interest Period.
(d) Upon receipt of a Notice of Conversion/Continuation, the Agent will
promptly notify each Lender thereof. In addition, the Agent will, with
reasonable promptness, notify the Borrower and the Lenders of each determination
of a LIBOR Rate; provided that any failure to do so shall not relieve the
Borrower of any liability hereunder or provide the basis for any claim against
the Agent. All conversions and continuations shall be made pro rata according to
the respective outstanding principal amounts of the Loans with respect to which
the notice was given held by each Lender.
(e) Unless the Agent or Required Lenders shall otherwise agree, during the
existence of an Event of Default, the Borrower may not elect to have a Loan
converted into or continued after the expiration date of the current Interest
Period of such Loan as a LIBOR Rate Loan.
(f) Notwithstanding any other provision contained in this Agreement, after
giving effect to any Borrowing, or to any continuation or conversion of any
Loans, there shall not be more than ten (10) different Interest Periods in
effect.
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1.7 Optional Prepayments.
(a) The Borrower may at any time upon at least one (1) Business Day's
prior written notice to the Agent, prepay the Loans in whole or in part, and in
the case of Term Loans, in an amount greater than or equal to $100,000, in each
instance, without penalty or premium except as provided in Section 10.4.
Optional partial prepayments of Term Loans shall be applied in the manner set
forth in subsection 1.8(f). Optional partial prepayments of Term Loans in
amounts less than $100,000 shall not be permitted.
(b) The notice of any prepayment shall not thereafter be revocable by the
Borrower and the Agent will promptly notify each Lender thereof and of such
Lender's Commitment Percentage of such prepayment. The payment amount specified
in such notice shall be due and payable on the date specified therein. Together
with each prepayment under this Section 1.7, the Borrower shall pay any amounts
required pursuant to Section 10.4.
1.8 Mandatory Prepayments of Loans and Commitment Reductions.
(a) Scheduled Term Loan Payments.
The principal amount of the Term Loan shall be paid in installments on the
dates and in the respective amounts shown below (as reduced pursuant to the
provisions of subsection 1.8(f) hereof):
Date of Payment Amount of Payment
--------------- -----------------
March 28, 2003 $1,000,000
June 27, 2003 $1,000,000
September 26, 2003 $1,000,000
December 31, 2003 $1,000,000
March 26, 2004 $1,125,000
June 25, 2004 $1,125,000
September 24, 2004 $1,125,000
December 31, 2004 $1,125,000
April 1, 2005 $1,250,000
July 1, 2005 $1,250,000
September 30, 2005 $1,250,000
December 31, 2005 $1,250,000
March 31, 2006 $1,375,000
June 30, 2006 $1,375,000
September 29, 2006 $1,375,000
December 31, 2006 $1,375,000
March 30, 2007 $1,500,000
June 27, 2007 $1,500,000
September 26, 2007 $1,500,000
December 31, 2007 $1,500,000
-7-
(b) Revolving Loan.
The Borrower shall repay to the Lenders in full on the date specified in
clause (a) of the definition of "Revolving Termination Date" the aggregate
principal amount of the Revolving Loans outstanding on the Revolving Termination
Date.
(c) Asset Dispositions.
If the Borrower or any of its Subsidiaries (other than the China
Subsidiary) shall at any time or from time to time:
(i) make a Disposition; or
(ii) suffer an Event of Loss;
and the aggregate amount of the Net Proceeds received by the Borrower and its
Subsidiaries (other than the China Subsidiary) in connection with such
Disposition or Event of Loss and all other Dispositions and Events of Loss
exceeds (1) $500,000 during any fiscal year of the Borrower or (2) $2,000,000
during the term of this Agreement, then (A) the Borrower shall promptly notify
the Agent of such Disposition or Event of Loss (including the amount of the
estimated Net Proceeds to be received by the Borrower and/or any of its
Subsidiaries in respect thereof) and (B) promptly upon receipt by the Borrower
or such Subsidiary of the Net Proceeds of such Disposition or Event of Loss, the
Borrower or such Subsidiary shall deliver such Net Proceeds to the Agent for
distribution to the Lenders as a prepayment of the Loans, which prepayment shall
be applied in accordance with subsection 1.8(f) hereof. Notwithstanding the
foregoing, and provided no Event of Default shall have occurred and be
continuing, such prepayment shall not be required to the extent the Borrower (I)
notifies the Agent in writing of its election to (x) reinvest the Net Proceeds
of such Disposition or Event of Loss or a portion thereof, in productive assets
of a kind then used or usable in the business of the Borrower or such
Subsidiary, within one hundred eighty (180) days after the date of such
Disposition or Event of Loss or (y) enter into a binding commitment thereof
within said one hundred eighty (180) day period, and (II) the Borrower, in fact,
(x) so reinvests such Net Proceeds, or such portion thereof, within said one
hundred eighty(180) day period or (y) enters into a binding commitment thereof
within said one hundred eighty (180) day period and subsequently makes such
reinvestment. Pending such reinvestment, the Net Proceeds shall be delivered to
the Agent, for distribution to the Lender, as a prepayment of the Revolving
Loans, but not as a permanent reduction of the Revolving Loan Commitment. Any
portion of Net Proceeds not reinvested as provided herein shall applied as a
prepayment of the Loans, which prepayment shall be applied in accordance with
subsection 1.8(f) hereof.
(d) Issuance of Securities.
Immediately upon the receipt by Holdings, the Borrower or any of its
Subsidiaries of the Net Issuance Proceeds in excess of $500,000 in the aggregate
during the
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term of this Agreement of the issuance of equity securities or debt securities
(other than Net Issuance Proceeds from the issuance of (i) debt securities in
respect of Indebtedness permitted hereunder, (ii) equity securities to
management, (iii) equity securities, the proceeds of which are used on or around
the date they are received by Holdings, the Borrower or any of its Subsidiaries
to finance Permitted Acquisitions and Capital Expenditures permitted HEREUNDER
and (iv) provided no Event of Default has occurred and is continuing, equity
securities issued after the Closing Date to Persons who are stockholders of
Holdings on the Closing Date (the proceeds referred to in this clause (iv) are
collectively referred to as "Excluded Equity Proceeds"), the Borrower shall
deliver to Agent an amount equal to such proceeds, net of underwriting discounts
associated therewith, for application to the Loans in accordance with subsection
1.8(f).
(e) Excess Cash Flow.
Within five (5) days after the annual financial statements are required to
be delivered under subsection 4.1(a) hereof, commencing with the fiscal year
ending December 31, 2003, the Borrower shall deliver to the Agent a written
calculation of Excess Cash Flow of the Borrower for such fiscal year in the form
of Exhibit 1.8(e) and certified as correct on behalf of the Borrower by a
Responsible Officer and concurrently therewith shall deliver to the Agent, for
distribution to the Lenders, an amount equal to 50% of such Excess Cash Flow,
for application to the Loans in accordance with the provisions of subsection
1.8(f) hereof. Excess Cash Flow shall be calculated in the manner set forth in
Exhibit 1.8(e).
(f) Application of Prepayments.
Any prepayments pursuant to Section 1.7 and subsections 1.8(c), (d) and
(e) shall be applied first to prepay installments of the Term Loan coming due
pro rata against all such scheduled installments based upon the respective
amounts thereof, and then in reduction of the Revolving Loan, effective as of
the earlier of the date that such prepayment is made or the date by which such
prepayment is due and payable hereunder. To the extent permitted by the
foregoing sentence, amounts prepaid shall be applied first to any Base Rate
Loans then outstanding and then to outstanding LIBOR Rate Loans with the
shortest Interest Periods remaining. Together with each prepayment under this
Section 1.8, the Borrower shall pay any amounts required pursuant to Section
10.4 hereof.
1.9 Fees.
(a) Arrangement, Closing and Agent's Fees.
The Borrower shall pay to Antares for Antares' own account an arrangement
fee, a closing fee and an agent's fee in the amounts and at the times set forth
in a letter agreement between the Borrower and Antares dated of even date
herewith.
(b) Commitment Fee.
The Borrower shall pay to Agent, for the ratable benefit of the Lenders
having Revolving Loan Commitments, a fee (the "Commitment Fee") in an amount
equal to
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(i) the Aggregate Revolving Loan Commitment, less
(ii) the sum of (x) the average daily balance of all Revolving Loans
outstanding plus (y) the average daily amount of the Letter of Credit
Participation Liability, in each case, during the preceding month,
multiplied by one-half of one percent (0.50%) per annum, such fee to be payable
monthly in arrears on the first day of the month following the date hereof and
the first day of each month thereafter. The Commitment Fee provided in this
subsection 1.9(b) shall accrue at all times from and after mutual execution and
delivery of this Agreement.
(c) Letter of Credit Participation Fee.
The Borrower shall pay to Agent, for the ratable benefit of the Lenders
having Revolving Loan Commitments, fees for each Lender Letter of Credit and
each Letter of Credit Participation Agreement (the "Letter of Credit
Participation Fee") for the period from and including the date of issuance of
same to and excluding the date of expiration or termination, equal to the
average daily amount of Letter of Credit Participation Liability multiplied by
three and one-half of one percent (3.50%) per annum; provided, however, at
Agent's or Required Lenders' option, while an Event of Default exists such
percent shall be increased to five and one-half of one percent (5.50%) per
annum, such fees to be payable monthly in arrears on the first day of the month
following the date hereof and the first day of each month thereafter. The
Borrower shall also reimburse Agent for any and all fees and expenses, if any,
paid by Agent, or required to be paid, to the issuer of any Letter of Credit or
any letter of credit subject to a Letter of Credit Participation Agreement.
1.10 Payments by the Borrower.
(a) All payments (including prepayments) to be made by the Borrower on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off, recoupment, counterclaim or deduction of any kind,
shall, except as otherwise expressly provided herein, be made to the Agent for
the ratable account of the Lenders at the address for payment specified on the
signature page hereof in relation to the Agent (or such other address as Agent
may from time to time specify in accordance with Section 9.2), and shall be made
in Dollars and in immediately available funds, no later than noon (Chicago time)
on the date due. Any payment which is received by the Agent later than noon
(Chicago time) shall be deemed to have been received on the immediately
succeeding Business Day and any applicable interest or fee shall continue to
accrue. The Borrower hereby authorizes Agent and each Lender to make a Revolving
Loan (which shall be a Base Rate Loan) to pay (i) interest, principal, agent
fees, Commitment Fees and Letter of Credit Participation Fees, in each instance,
on the date due, or (ii) after five (5) Business Days prior notice to the
Borrower, other fees, costs or expenses payable by the Borrower or any of its
Subsidiaries pursuant to the terms of this Agreement or the other Loan
Documents.
(b) Subject to the provisions set forth in the definition of "Interest
Period" herein, if any payment hereunder shall be stated to be due on a day
other than a Business
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Day, such payment shall be made on the next succeeding 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) Except for payments collected or received prior to the occurrence of
an Event of Default in respect of a specific Obligation, all amounts collected
or received by Agent shall be applied as follows:
first, to payment of costs and expenses, including Attorney Costs,
of Agent payable or reimbursable by Borrower under the Loan Documents;
second, to the payment of fees owed to Agent;
third, to payment of Attorney Costs of Lenders payable or
reimbursable by Borrower under this Agreement;
fourth, to payment of all accrued unpaid interest on the
Obligations;
fifth, to payment of principal of the Obligations (including, if an
Event of Default has occurred and is continuing, cash collateralization of
Letter of Credit Participation Liability);
sixth, to payment of any other amounts owing constituting
Obligations;
seventh, to payment of any Rate Contract Obligations; and
eighth, any remainder shall be for the account of and paid to
whoever may be lawfully entitled thereto.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to the next
succeeding category; (ii) each of Lenders shall receive an amount equal to its
pro rata share of amounts available to be applied pursuant to clauses third,
fourth, fifth, sixth and seventh above.
1.11 Payments by the Lenders to the Agent; Settlement.
(a) As set forth in subsection 1.5(b), upon receipt of a Notice of
Borrowing, the Agent will promptly notify each Lender of such Lender's
Commitment Percentage of the Borrowing requested thereby. Each Lender with a
Revolving Loan Commitment will fund its Commitment Percentage of Borrowings of
Revolving Loans to Agent at Agent's account specified on its signature page
hereto, or to such other account as Agent may designate in writing, no later
than 1:00 p.m. (Chicago time) on the scheduled Borrowing date.
(b) Unless the Agent shall have received notice from a Lender on the
Closing Date or, with respect to each Borrowing after the Closing Date, by 12:00
p.m. (Chicago time) on the date of any proposed Borrowing, that such Lender will
not make available to the Agent as and when required hereunder for the account
of the Borrower the amount of such
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Lender's Commitment Percentage of the proposed Borrowing, the Agent may assume
that each Lender has made such amount available to the Agent in immediately
available funds on the applicable Borrowing date and the Agent may (but shall
not be 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 next Business Day following the
date of such Borrowing make such amount available to the Agent, together with
interest at the Federal Funds Rate for and determined as of each day during such
period. A notice of the Agent submitted to any Lender with respect to amounts
owing under this subsection 1.11(b) 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 next Business Day
following the date of such Borrowing, the Agent shall notify the Borrower of
such failure to fund and, no later than one (1) Business Day after 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.
(c) The failure of any Lender to make any Loan on any date of Borrowing
shall not relieve any other Lender of any obligation hereunder to make a Loan on
the date of such Borrowing, 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 the date
of any Borrowing. Without limiting the generality of the foregoing, each Lender
shall be obligated to fund its Commitment Percentage of any Revolving Loan made
after any acceleration of the Obligations with respect to any draw on any Lender
Letter of Credit or any payment made under any Letter of Credit Participation
Agreement.
(d) Provided that such Lender has made all payments required to be made by
it under this Agreement, the Agent will pay to such Lender, by wire transfer to
such Lender's account (as specified by such Lender on such Lender's respective
signature page to this Agreement or the applicable Assignment and Acceptance)
such Lender's Commitment Percentage of principal, interest, Commitment Fees and
Letter of Credit Participation Fees, in each instance, received by Agent,
promptly after Agent's receipt thereof.
(e) Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Lenders hereunder that the Borrower
will not make such payment in full as and when required hereunder, 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, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If the Agent pays
an amount to a Lender under this Agreement in the belief or expectation that a
related payment has been or will be received by the Agent from the Borrower and
such related payment is not received by the Agent, the Agent shall be entitled
to recover such amount from such Lender, and each Lender shall repay to Agent on
demand such amount, together with interest thereon for each day from the date
such amount
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is distributed to such Lender until the date such Lender repays such amount to
the Agent, at the Federal Funds Rate, without setoff, recoupment, counterclaim
or deduction of any kind. If the Agent determines at any time that any amount
received by the Agent under this Agreement must be returned to the Borrower or
paid to any other Person pursuant to any solvency, fraudulent conveyance or
similar law or otherwise, then, notwithstanding any other term or condition of
this Agreement, the Agent will not be required to distribute any portion of such
payment to any Lender. In addition, each Lender will repay to the Agent on
demand any portion of such amount that the Agent has distributed to such Lender,
together with interest thereon at such rate, if any, as the Agent is required to
pay to the Borrower or such other Person, without setoff, recoupment,
counterclaim or deduction of any kind.
ARTICLE II - CONDITIONS PRECEDENT
2.1 Conditions of Initial Loans.
The obligation of each Lender to make its initial Loan and of the Agent to
issue the initial Lender Letter of Credit or Letter of Credit Participation
Agreement hereunder, is subject to the condition that the following conditions
shall have been met, and that the Agent shall have received on or before the
Closing Date all of the following, in form and substance reasonably satisfactory
to the Agent and each Lender and (except for the Notes and any instruments or
documents which are Pledged Collateral) in sufficient counterparts for each
Lender, duly executed by all parties thereto:
(a) Credit Agreement and Notes.
This Agreement executed by the Borrower, the Agent and each of the
Lenders, and the Notes executed by the Borrower;
(b) Secretary's Certificates; Resolutions; Incumbency.
A certificate of the Secretary or Assistant Secretary of Holdings, the
Borrower, and each Subsidiary of the Borrower which is a party to any Loan
Documents, certifying:
(i) the names and true signatures of the officers of Holdings, the
Borrower and each such Subsidiary authorized to execute, deliver and
perform, as applicable, this Agreement, and all other Loan Documents to be
delivered hereunder; and
(ii) copies of the resolutions of the board of directors or other
governing body of Holdings, the Borrower and each such Subsidiary
approving and authorizing the execution, delivery and performance, as
applicable, by Holdings, the Borrower or such Subsidiary of this Agreement
and the other Loan Documents to be executed or delivered by it hereunder;
(c) Certificate of Incorporation; By-laws and Good Standing.
Each of the following documents:
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(i) the Organization Documents of Holdings, the Borrower and each
Subsidiary of the Borrower which is party to any Loan Documents, as such
Organization Documents are in effect on the Closing Date, certified by the
Secretary of State (or similar, applicable Governmental Authority) of the
state of incorporation or formation, as applicable, of Holdings, the
Borrower or such Subsidiary as of a recent date, if and as applicable, all
certified by the Secretary or Assistant Secretary of Holdings, the
Borrower or such Subsidiary as of the Closing Date; and
(ii) a good standing certificate for Holdings, the Borrower and each
Subsidiary of the Borrower which is a party to any Loan Document from the
Secretary of State (or similar, applicable Governmental Authority) of its
state of incorporation or formation, as applicable, and each state where
Holdings, the Borrower or such Subsidiary is qualified to do business as a
foreign entity as of a recent date;
(d) Collateral Documents.
The Collateral Documents, executed by Holdings, the Borrower or any
Subsidiary of the Borrower, as applicable, in appropriate form for recording,
where necessary, together with:
(i) acknowledgment copies of all UCC-l financing statements filed,
registered or recorded to perfect the security interests of the Agent, for
the benefit of Agent and the Lenders, granted pursuant to the Collateral
Documents, or other evidence reasonably satisfactory to the Agent that
there has been filed, registered or recorded all financing statements and
other filings, registrations and recordings reasonably necessary and
advisable to perfect the Liens of the Agent, for the benefit of Agent and
the Lenders, granted pursuant to the Collateral Documents, in accordance
with applicable law;
(ii) uniform commercial code financing statement, federal and state
tax lien, pending litigation and judgment searches as the Agent shall have
reasonably requested of Holdings and the Borrower and its Subsidiaries,
and such termination statements, releases or other documents as may be
reasonably necessary to confirm that the Collateral is subject to no other
Liens in favor of any Persons (other than Permitted Liens);
(iii) all certificates and instruments representing the Pledged
Collateral, irrevocable proxies and stock transfer powers executed in
blank or other executed endorsements reasonably satisfactory to the Agent,
with signatures guaranteed as the Agent may require;
(iv) evidence that all other actions reasonably necessary or, in the
reasonable opinion of the Agent, desirable to perfect and protect the
Liens created by the Collateral Documents have been taken;
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(v) funds sufficient to pay any filing or recording tax or fee in
connection with any and all UCC-1 financing statements and, if applicable,
the Mortgages, all title insurance premiums, documentary stamp or
intangible taxes, recording fees and mortgage taxes payable in connection
with the recording of any Mortgage or filing of any financing statements
or the issuance of the title insurance policies (whether due on the
Closing Date or in the future), including sums due in connection with any
future advances in connection with each of the foregoing (so long as
invoices have been provided on or prior to the date hereof);
(vi) with respect to the Olive Branch, Mississippi property and
Amory, Mississippi leased premises for which there is delivered a Mortgage
(the "Mortgaged Properties"), an A.L.T.A. mortgagee policy of title
insurance or a binder issued by a title insurance company reasonably
satisfactory to the Agent insuring (or undertaking to insure, in the case
of a binder) that the Mortgage creates and constitutes a valid first Lien
against such real Property in favor of the Agent, for the benefit of Agent
and the Lenders, in an amount and subject only to exceptions reasonably
acceptable to the Agent, with such endorsements and affirmative insurance
as the Agent may reasonably request;
(vii) current ALTA surveys and surveyor's certifications as to the
Mortgaged Properties, each in form and substance reasonably satisfactory
to the Agent; and
(viii) such landlord's waiver executed by landlords for the leased
premises located at Amory, Mississippi, El Cajon, California and Memphis,
Tennessee;
(e) Legal Opinion.
The legal opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, as special counsel to Holdings, the
Borrower and its Subsidiaries, addressed to the Agent and the Lenders, in form
and substance reasonably satisfactory to Agent;
(f) Payment of Fees.
The Borrower shall have paid all accrued and unpaid fees, costs and
expenses to the extent then due and payable on the Closing Date, together with
reasonable Attorney Costs of the Agent;
(g) Certificate.
A certificate signed on behalf of the Borrower by a Responsible Officer,
dated as of the Closing Date, stating that:
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(i) the representations and warranties contained in Article III
hereof are true and correct in all material respects on and as of such
date, as though made on and as of such date;
(ii) no Default or Event of Default exists or would result from the
initial Borrowing or issuance of the initial Lender Letter of Credit or
Letter of Credit Participation Agreement; and
(iii) there has occurred since December 31, 2001 no event or
circumstance that has resulted in or would reasonably be expected to
result in a Material Adverse Effect;
(h) Financial Statements.
Copies of all of the financial statements of the Borrower and its
Subsidiaries referred to in Section 3.11 together with a pro forma balance sheet
giving effect to the transactions contemplated hereby and the Related
Transactions, certified on behalf of the Borrower by a Responsible Officer;
(i) Insurance Policies.
Evidence reasonably satisfactory to the Agent that all insurance required
to be maintained in accordance with Section 4.6 has been obtained and is in full
force and effect;
(j) Environmental Review.
An environmental site assessment with respect to any real Property owned
or operated by the Borrower or any of its Subsidiaries, dated as of a recent
date prior to the Closing Date, prepared by a qualified firm reasonably
acceptable to the Agent and the Lenders;
(k) Due Diligence.
Evidence of completion to the satisfaction of the Agent of such
investigations, reviews and audits with respect to the Borrower and the Related
Transactions as the Agent or any Lender may deem appropriate;
(l) Insurance Review.
A review of the Borrower's insurance coverages, prepared by a qualified
firm reasonably acceptable to the Agent, dated as of a recent date prior to the
Closing Date and otherwise in form and substance reasonably satisfactory to the
Agent;
(m) Availability.
Not more than $1,000,000 in Revolving Loans shall be advanced and no more
than $1,000,00 of Letter of Credit Participation Liability shall be outstanding,
in each case,
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on the Closing Date, and after giving effect to the funding of the initial Loans
and issuance of initial Letters of Credit, the Maximum Revolving Loan Balance
shall exceed the outstanding principal balance of Revolving Loans by not less
than $13,500,000;
(n) Prior Indebtedness.
A payoff letter from each lender of any Prior Indebtedness in form and
substance reasonably satisfactory to the Agent, together with such UCC-3
termination statements, releases of mortgage Liens and other instruments,
documents and/or agreements necessary or appropriate to terminate any Liens in
favor of such lenders securing Prior Indebtedness which is to be paid off on the
Closing Date as the Agent may reasonably request, duly executed and in form and
substance reasonably satisfactory to the Agent;
(o) Subordinated Holdings Discount Notes.
(i) $14,100,000 shall have been applied to reduce the Indebtedness
evidenced by the Subordinated Holdings Discount Note held by Canterbury
Mezzanine Capital II, L.P., with $13,428,571.43 applied to the principal balance
thereof and $671,428.57 applied to satisfy a prepayment penalty and other
amounts owing thereunder and (ii) $9,400,000 shall have been funded into an
account of Holdings in which no other funds are, or will be, maintained, for
further distribution on or prior to April 1, 2003 to reduce the Indebtedness
evidenced by the Subordinated Holdings Discount Note held by BNY Capital
Partners, L.P., with $8,952,380.95 to be applied to the principal balance
thereof and $447,619.05 to be applied to satisfy a prepayment penalty and other
amounts owing thereunder;
(p) Projections.
Projections satisfactory to Agent with respect to the Borrower for the
five (5) year period ending December 31, 2007;
(q) EBITDA.
The Borrower's EBITDA for the twelve (12) month period ending on November
30, 2002 shall be at least $31,500,000; and
(r) Other Documents.
Such other approvals, opinions, documents or materials as the Agent or any
Lender may reasonably request.
2.2 Conditions to All Borrowings.
The obligation of each Lender to make any Loan and of the Agent to issue
any Lender Letter of Credit or Letter of Credit Participation Agreement, is
subject to the satisfaction of the following conditions precedent on the
relevant Borrowing or issuance date:
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(a) Notice of Borrowing.
The Agent shall have received a Notice of Borrowing in accordance with
Section 1.5;
(b) Continuation of Representations and Warranties.
The representations and warranties made by the Borrower contained in
Article III shall be true and correct in all material respects on and as of such
Borrowing or issuance date with the same effect as if made on and as of such
Borrowing or issuance date (except to the extent such representations and
warranties (i) expressly refer to an earlier date, in which case they shall be
true and correct in all material respects as of such earlier date, or (ii) are
not true and correct due to events or conditions, the occurrence or existence of
which are not prohibited by this Agreement or the other Loan Documents and which
do not, in and of themselves, constitute a Default or an Event of Default);
(c) No Existing Default.
No Default or Event of Default shall exist or shall result from such
Borrowing or issuance;
(d) Availability Certificate.
After giving effect to such Borrowing or issuance, the outstanding
principal balance of the Revolving Loans does not exceed the then Maximum
Revolving Loan Balance; and
Each Notice of Borrowing submitted by the Borrower hereunder shall
constitute a representation and warranty by the Borrower hereunder, as of the
date of each such notice or application and as of the date of each Borrowing or
issuance that the conditions in Section 2.2 are satisfied.
2.3 Conditions to Certain Loans. In the event the proceeds of the
Revolving Loan are to be used to finance all or a portion of the purchase price
of a Permitted Acquisition, the obligations of each Lender to make such Loan is
subject to the satisfaction of the following conditions precedent on the
relevant Borrowing date:
(a) Evidence of Perfected First Priority Security Interest. With respect
to the Target acquired or financed with the proceeds of a Loan, and prior to or
simultaneously with the funding of such Loan, the Agent shall have been granted,
for the benefit of Agent and the Lenders, a first priority Lien on and security
interest in such Target thereof, subject only to Permitted Liens, and shall have
received, without limitation, (a) the items described in subsection 2.1(d)(ii)
and Section 4.11, and (b) duly executed uniform commercial code financing
statements or amendments to existing financing statements with respect to such
Target, in form and substance reasonably satisfactory to the Agent and which,
upon filing, shall perfect the first priority security interest of the Agent,
for the benefit of Agent and the Lenders, in such Property to the extent such
security interest can be perfected by filing such
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financing statements. In the event real Property is being acquired in connection
with such Acquisition, prior to or simultaneously with the funding of such Loan,
to the extent the Agent requests, the Agent shall have received (x) to the
extent not encumbered with a Lien permitted under subsection 5.1(h) (so long as
the underlying documents pertaining to such Lien prohibit the Borrower from
granting a Mortgage with respect to the real Property subject to such Lien), a
fully executed Mortgage, in form and substance reasonably satisfactory to the
Agent together with an A.L.T.A. lender's title insurance policy issued by a
title insurer reasonably satisfactory to the Agent, in form and substance and in
an amount reasonably satisfactory to the Agent insuring that the Mortgage is a
valid and enforceable first priority Lien on the respective Property, free and
clear of all defects, encumbrances and Liens other than Permitted Liens, (y) to
the extent not encumbered with a Lien permitted under subsection 5.1(h) (so long
as the underlying documents pertaining to such Lien prohibit the Borrower from
granting a Mortgage with respect to the real Property subject to such Lien),
then current A.L.T.A. surveys, certified to the Agent by a licensed surveyor
sufficient to allow the issuer of the lender's title insurance policy to issue
such policy without a survey exception and (z) an environmental site assessment
prepared by a qualified firm reasonably acceptable to the Agent and the Required
Lenders, in form and substance reasonably satisfactory to the Agent and the
Required Lenders.
(b) Approval. Such Acquisition is a Permitted Acquisition.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each Lender that the
following are true, correct and complete:
3.1 Corporate Existence and Power.
Holdings, the Borrower and each of its Subsidiaries:
(a) is a corporation, limited liability company or limited partnership, as
applicable, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation, as applicable;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and execute, deliver, and perform its obligations under, the Loan Documents to
which it is a party;
(c) is duly qualified as a foreign corporation, limited liability company
or limited partnership, as applicable, and licensed and in good standing, under
the laws of each jurisdiction where its ownership, lease or operation of
Property or the conduct of its business requires such qualification or license;
and
(d) is in compliance with all Requirements of Law;
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except, in each case referred to in clause (c) or clause (d) above, to the
extent that the failure to do so would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
3.2 Corporate Authorization; No Contravention.
(a) The execution, delivery and performance by the Borrower of this
Agreement, and Holdings, the Borrower and its Subsidiaries of any other Loan
Document to which such Person is party, have been duly authorized by all
necessary action, and do not and will not:
(i) contravene the terms of any of that Person's Organization
Documents;
(ii) conflict with or result in any material breach or
contravention of, or result in the creation of any Lien under, any
document evidencing any material Contractual Obligation to which such
Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its Property is subject; or
(iii) violate any material Requirement of Law in any material
respect.
(b) Schedule 3.2 sets forth the authorized equity securities of (i)
Holdings as of the Closing Date and (ii) Borrower and each Subsidiary of
Borrower. All issued and outstanding equity securities of each of Holdings,
Borrower and each Subsidiary of Borrower are duly authorized and validly issued,
fully paid, non-assessable, and, with respect to equity securities of Borrower
and its Subsidiaries, are free and clear of all Liens other than those in favor
of Agent, for the benefit of Agent and Lenders. All such securities were issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. All of the issued and outstanding equity securities of Borrower
is owned by Holdings. All of the issued and outstanding equity securities of
each Subsidiary of Borrower is owned by Borrower. As of the Closing Date, all of
the issued and outstanding equity securities of Holdings is owned by the Persons
and in the amounts set forth on Schedule 3.2. Except as set forth on Schedule
3.2, there are no pre-emptive or other outstanding rights, options, warrants,
conversion rights or other similar agreements or understandings for the purchase
or acquisition of any shares of capital stock, membership interests or other
securities of Borrower, any of its Subsidiaries and, as of the Closing Date,
Holdings.
3.3 Governmental Authorization.
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, Holdings, the Borrower or any of the Borrower's Subsidiaries of this
Agreement or any other Loan Document except
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(a) for recordings and filings in connection with the Liens granted to the Agent
under the Collateral Documents and (b) those obtained or made on or prior to the
Closing Date.
3.4 Binding Effect.
This Agreement and each other Loan Document to which Holdings, the
Borrower or any of the Borrower's Subsidiaries is a party constitute the legal,
valid and binding obligations of Holdings, the Borrower and each such Subsidiary
which is a party thereto, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
3.5 Litigation.
Except as specifically disclosed in Schedule 3.5, there are no actions,
suits, proceedings, claims or disputes pending, or to the best knowledge of the
Borrower, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against Holdings, the Borrower, or the
Borrower's Subsidiaries or any of their respective Properties which:
(a) purport to pertain to this Agreement or any other Loan Document; or
(b) would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, or (without limiting the foregoing) result
in equitable relief or monetary judgment(s), individually or in the aggregate,
in excess of $1,500,000.
No injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental Authority purporting
to enjoin or restrain the execution, delivery or performance of this Agreement,
any other Loan Document, or directing that the transactions provided for herein
or therein not be consummated as herein or therein provided.
3.6 No Default.
No Default or Event of Default exists or would result from the incurring
of any Obligations by the Borrower or the grant or perfection of the Agent's
Liens on the Collateral. Neither Holdings, the Borrower nor any of the
Borrower's Subsidiaries is in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, would reasonably be expected to have a Material Adverse Effect or that
would, if such default had occurred after the Closing Date, create an Event of
Default under subsection 7.1(e).
3.7 ERISA Compliance.
(a) Schedule 3.7 lists all Qualified Plans and Multiemployer Plans as of
the Closing Date. The Borrower and each of its Subsidiaries is in compliance in
all material respects with all requirements of each Plan, and each Plan complies
in all material respects,
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and is operated in compliance in all material respects, with all applicable
provisions of law. The Borrower is not aware, after due inquiry, of any item of
non-compliance which could potentially result in the loss of Plan qualification
or tax-exempt status, or give rise to a material excise tax or other penalty
imposed by a Governmental Authority. No material proceeding, claim, lawsuit
and/or investigation is pending concerning any Plan. All required contributions
have been and will be made in accordance with the provisions of each Qualified
Plan and Multiemployer Plan, and with respect to the Borrower or any ERISA
Affiliate, there are, have been and will be no material Unfunded Pension
Liabilities or Withdrawal Liabilities.
(b) No ERISA Event has occurred or would reasonably be expected to occur
with respect to any Qualified Plan, Multiemployer Plan or Plan that would be
materially adverse to Borrower or result in any liability in excess of $200,000.
(c) Members of the Controlled Group currently comply and have complied in
all material respects with the notice and continuation coverage requirements of
Section 4980B of the Code.
3.8 Use of Proceeds; Margin Regulations.
The proceeds of the Loans are intended to be and shall be used solely for
the purposes set forth in and permitted by Section 4.10, and are intended to be
and shall be used in compliance with Section 5.8. Neither Holdings, the Borrower
nor any of its Subsidiaries is generally engaged in the business of purchasing
or selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock. Proceeds of the Loans shall not be used for the purpose
of purchasing or carrying Margin Stock.
3.9 Title to Properties.
Holdings, the Borrower and each of its Subsidiaries have good record and
marketable title in fee simple to, or valid leasehold interests in, all real
Property necessary in the ordinary conduct of their respective businesses,
except for Permitted Liens. The Property of Holdings, the Borrower and its
Subsidiaries is subject to no Liens, other than Permitted Liens.
3.10 Taxes.
Holdings, the Borrower and its Subsidiaries have filed all federal and
other material tax returns and reports required to be filed, and have paid all
federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their Properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings diligently prosecuted and for which adequate reserves
have been provided in accordance with GAAP and, to the Borrower's knowledge, no
notice of Lien has been filed or recorded with the applicable Governmental
Authority. To the Borrower's knowledge, there is no proposed tax assessment
against
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Holdings, the Borrower or any of its Subsidiaries which would, if the assessment
were made, either individually or in the aggregate, have a Material Adverse
Effect.
3.11 Financial Condition.
(a) Each of (i) the audited consolidated balance sheet of the Borrower and
its Subsidiaries dated December 31, 2001, and the related audited consolidated
statements of income or operations, shareholders' equity and cash flows for the
fiscal year ended on that date and (ii) the unaudited interim consolidated
balance sheet of the Borrower and its Subsidiaries dated November 30, 2002 and
the related unaudited consolidated statements of income, shareholders' equity
and cash flows for the eleven (11) months then ended:
(x) were prepared in accordance with GAAP consistently applied
throughout the respective periods covered thereby, except as otherwise
expressly noted therein, subject to, in the case of the unaudited interim
financial statements, normal year-end adjustments and the lack of footnote
disclosures; and
(y) present fairly in all material respects the consolidated
financial condition of the Borrower and its Subsidiaries as of the dates
thereof and results of operations for the periods covered thereby.
(b) Since December 31, 2001, there has been no Material Adverse Effect.
(c) Holdings, the Borrower and its Subsidiaries have no Indebtedness other
than Indebtedness permitted pursuant to Section 5.5 and have no Contingent
Obligations other than Contingent Obligations permitted pursuant to Section 5.9.
(d) The projections delivered to Agent and Lenders under subsection 2.1(p)
have been prepared by the Borrower in good faith and are based on reasonable
estimates and assumptions believed by the Borrower to be reasonable in light of
the conditions which existed at the time the projections were prepared and as of
the Closing Date.
3.12 Environmental Matters.
(a) The on-going operations of Holdings, the Borrower and each of its
Subsidiaries comply in all respects with all Environmental Laws, except for any
such non-compliance which would not (if enforced in accordance with applicable
law) reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect.
(b) Holdings, the Borrower and each of its Subsidiaries have obtained all
licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for their respective
Ordinary Course of Business, all such Environmental Permits are in good
standing, and Holdings, the Borrower and each of its Subsidiaries are in
compliance with all material terms and conditions of such Environmental Permits,
except where the failure to obtain, to maintain in good standing, or
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to be in compliance with such Environmental Permits would not reasonably be
expected to result in, either individually or in the aggregate, a Material
Adverse Effect.
(c) Except as set forth on Schedule 3.12, none of Holdings, the Borrower,
any of its Subsidiaries or any of their respective present Property or
operations, is subject to any outstanding written order from or agreement with
any Governmental Authority, nor subject to any judicial or docketed
administrative proceeding, respecting any liability relating to any
Environmental Law, Environmental Claim or Hazardous Material.
(d) Except as set forth on Schedule 3.12, there are no Hazardous Materials
existing with respect to any Property, or arising from operations prior to the
Closing Date, of Holdings, the Borrower or any of its Subsidiaries that would
reasonably be expected to result, either individually or in the aggregate, in a
Material Adverse Effect. In addition, neither Holdings, the Borrower nor any of
its Subsidiaries has any underground storage tanks (i) that are not properly
registered or permitted under applicable Environmental Laws, or (ii) that are
leaking or disposing of Hazardous Materials.
3.13 Collateral Documents.
All representations and warranties of Holdings, the Borrower, any of its
Subsidiaries or any other party to any Collateral Document (other than the Agent
and/or any Lender) contained in the Collateral Documents are true and correct in
all material respects as of the date made or deemed made.
3.14 Regulated Entities.
None of the Borrower, any Person controlling the Borrower, or any
Subsidiary of the Borrower, is (a) an "investment company" within the meaning of
the Investment Company Act of 1940; or (b) 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.
3.15 Solvency.
The Borrower, individually, is and Holdings, the Borrower and the
Borrower's Subsidiaries, on a consolidated basis, are, Solvent.
3.16 Labor Relations.
There are no strikes, lockouts or other labor disputes against Holdings,
the Borrower or any of its Subsidiaries, or, to the best of the Borrower's
knowledge, threatened against or affecting Holdings, the Borrower or any of its
Subsidiaries, in any case which would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect and no significant
unfair labor practice complaint is pending against Holdings, the Borrower or any
of its Subsidiaries or, to the best knowledge of the Borrower, threatened
against any of them before any Governmental Authority in any case which would,
-24-
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
3.17 Copyrights, Patents, Trademarks and Licenses, etc.
Schedule 3.17 identifies all registered United States and foreign patents,
trademarks, service marks, trade names and copyrights, and all registrations and
applications for registration thereof and all licenses thereof, owned or held by
Holdings, the Borrower or any of the Borrower's Subsidiaries on the Closing
Date, and identifies the jurisdictions in which such registrations and
applications have been filed. Except as otherwise disclosed in Schedule 3.17, as
of the Closing Date, Holdings, the Borrower and the Borrower's Subsidiaries are
the sole beneficial owners of, or have the right to use, free from any
restrictions, claims, rights encumbrances or burdens, the intellectual property
identified on Schedule 3.17 and all other processes, designs, formulas, computer
programs, computer software packages, trade secrets, inventions, product
manufacturing instructions, technology, research and development, know-how and
all other intellectual property that are necessary for the operation of
Holdings', the Borrower's and the Borrower's Subsidiaries' businesses as being
operated on the Closing Date. Each patent, trademark, service ▇▇▇▇, trade name,
copyright and license listed on Schedule 3.17 is in full force and effect except
to the extent the failure to be in effect will not and would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect. Except as set forth in Schedule 3.17, to the best knowledge of the
Borrower, as of the Closing Date (a) none of the present or contemplated
products or operations of Holdings, the Borrower or the Borrower's Subsidiaries
infringes any patent, trademark, service ▇▇▇▇, trade name, copyright, license of
intellectual property or other right owned by any other Person, and (b) there is
no pending or threatened claim or litigation against or affecting Holdings, the
Borrower or any of the Borrower's Subsidiaries contesting the right of any of
them to manufacture, process, sell or use any such product or to engage in any
such operation except for claims and/or litigation which will not and would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. None of the trademark registrations set forth on
Schedule 3.17 is an "intent-to-use" registration.
3.18 Subsidiaries.
Neither Holdings nor the Borrower has any Subsidiaries or equity
investments in any other corporation or entity other than those specifically
disclosed in Schedule 3.18 (as the such Schedule may be amended in connection
with a Permitted Acquisition or as otherwise amended with the prior written
consent of Agent, which such consent shall not be unreasonably denied).
3.19 Brokers' Fees; Transaction Fees.
Except as permitted by subsection 5.7(d), neither Holdings,
the Borrower nor any of its Subsidiaries has any obligation to any Person in
respect of any finder's, broker's or investment banker's fee in connection with
the transactions contemplated hereby.
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3.20 Insurance.
Holdings, the Borrower and its Subsidiaries and their respective
Properties are insured with financially sound and reputable insurance companies
which are not Affiliates of the Borrower, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar Properties in localities where Holdings,
the Borrower or such Subsidiary operates. A true and complete listing of such
insurance, including issuers, coverages and deductibles, has been provided to
the Agent.
3.21 Designated Senior Debt.
The entire Indebtedness hereunder constitutes "Designated Senior Debt" as
defined in the Indenture and no other "Designated Senior Debt" is outstanding.
3.22 Full Disclosure.
None of the representations or warranties made by the Borrower or any of
its Subsidiaries in the Loan Documents as of the date such representations and
warranties are made or deemed made, and, subject to the last sentence of this
Section 3.22, none of the statements concerning Holdings, the Borrower or any of
the Borrower's Subsidiaries contained in each exhibit, report, statement or
certificate furnished by or on behalf of Holdings, the Borrower or any of the
Borrower's Subsidiaries pursuant to the Loan Documents (including the offering
and disclosure materials, if any, delivered by or on behalf of Holdings, the
Borrower to the Lenders prior to the Closing Date) or to the SEC, when taken as
a whole, 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 materially
misleading as of the time when made or delivered. The Agent and the Lenders
recognize that the projections delivered pursuant to this Agreement are not to
be viewed as fact, that actual results may vary from such projections and that
the Borrower does not make any representation that such projections will be
realized; provided that Borrower represents and warrants that such projections
have been prepared by the Borrower in good faith and are based on reasonable
estimates and assumptions believed by the Borrower to be reasonable in light of
the conditions which existed at the time the projections were prepared.
ARTICLE IV - AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other Obligation (other than contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) shall remain unpaid or unsatisfied, unless the Required Lenders waive
compliance in writing:
4.1 Financial Statements.
The Borrower shall maintain, and shall cause Holdings and each of its
Subsidiaries to maintain, a system of accounting established and administered in
accordance
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with sound business practices to permit the preparation of financial statements
in conformity with GAAP (provided that monthly financial statements shall not be
required to have footnote disclosure and are subject to normal year-end
adjustments). The Borrower shall deliver to the Agent:
(a) as soon as available, but not later than one hundred and five (105)
days after the end of each fiscal year, a copy of the audited consolidated
balance sheets of Holdings, the Borrower and each of its Subsidiaries as at the
end of such year and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year,
and accompanied by the unqualified opinion (without any going concern
qualification or exception) of any "Big Four" or other nationally-recognized
independent public accounting firm reasonably acceptable to the Agent which
report shall state that such consolidated financial statements present fairly in
all material respects the financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years. Such
opinion shall not be qualified or limited because of a restricted or limited
examination by such accountant of any material portion of Holdings', the
Borrower's or any Subsidiary's records; and
(b) as soon as available, but not later than thirty five (35) days (or
forty five (45) days with respect to any fiscal month ending on or around March
31, June 30, September 30 or December 31) after the end of each fiscal month of
each year, a copy of the unaudited consolidated balance sheets of Holdings, the
Borrower and each of its Subsidiaries, and the related consolidated statements
of income, shareholders' equity and cash flows as of the end of such month and
for the portion of the fiscal year then ended, all certified on behalf of the
Borrower by an appropriate Responsible Officer as being complete and correct and
fairly presenting in all material respects, in accordance with GAAP, the
financial position and the results of operations of Holdings, the Borrower and
each of its Subsidiaries, subject to normal year-end adjustments and absence of
footnote disclosure.
4.2 Certificates; Other Information.
The Borrower shall furnish to the Agent:
(a) concurrently with the delivery of the annual financial statements
referred to in subsection 4.1(a) above, a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements referred to
in subsections 4.1(a) and 4.1(b) (it being understood that financial covenant
calculations referred to in item (c) of the compliance certificate in the form
of Exhibit 4.2(b) need only be submitted on a quarterly basis) above, a fully
and properly completed compliance certificate ("Compliance Certificate") in the
form of Exhibit 4.2(b), certified on behalf of the Borrower by a Responsible
Officer;
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(c) promptly after the same are sent, copies of all financial statements
and reports which Holdings, the Borrower or any of its Subsidiaries sends to its
shareholders or other equity holders, as applicable, generally in their capacity
as shareholders or equity holders; and promptly after the same are filed, copies
of all financial statements and regular, periodic or special reports which
Holdings, the Borrower or any of its Subsidiaries may make to, or file with, the
SEC or any successor or similar Governmental Authority;
(d) within thirty five (35) days (or forty five (45) days with respect to
any fiscal month ending on or around March 31, June 30, September 30 or December
31) after the end of each fiscal month (and after the occurrence and
continuation of an Event of Default, at such other times as the Agent may
reasonably request) and no later than five (5) days prior to the consummation of
a Permitted Acquisition, an Availability Certificate certified on behalf of the
Borrower by a Responsible Officer, as at the end of the most-recently ended
fiscal month (or as at such other time as the Agent may reasonably require);
(e) [Intentionally Omitted];
(f) [Intentionally Omitted];
(g) as soon as available and in any event no later than thirty (30) days
after the first day of each fiscal year of the Borrower, projections of the
Borrower's and each of its Subsidiaries' consolidated financial performance for
such year on a quarter by quarter basis;
(h) annually, concurrently with the Borrower's delivery of the financial
statements under subsection 4.1(a), the Borrower shall supplement in writing and
deliver to the Agent revisions of and supplements to the Schedules hereto
related to Article III hereof to the extent (i) pertaining to representations
and warranties which do not expressly relate to the Closing Date and (ii)
necessary to disclose new or changed facts or circumstances after the Closing
Date with respect thereto; provided that delivery or receipt of such subsequent
disclosure shall not constitute a waiver by the Agent or any Lender or a cure of
any Default or Event of Default resulting in connection with the matters
disclosed;
(i) promptly upon receipt thereof, copies of any reports submitted by the
Borrower's certified public accountants in connection with each annual, interim
or special audit or review of any type of the financial statements or internal
control systems of Holdings, the Borrower or any of its Subsidiaries made by
such accountants, including any comment letters submitted by such accountants to
management of Holdings, the Borrower or any of its Subsidiaries in connection
with their services;
(j) from time to time, if the Agent determines in good faith that
obtaining appraisals is necessary in order for the Agent or any Lender to comply
with applicable laws or regulations, and at any time if an Event of Default
shall have occurred and be continuing, the Agent may, or may require the
Borrower to, in either case at the Borrower's expense, obtain appraisals in form
and substance and from appraisers reasonably satisfactory to the Agent stating
the then current fair market value of all or any portion of the real or personal
Property of Holdings the Borrower or any of its Subsidiaries;
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(k) annually (or quarterly, during the existence of an Event of Default),
concurrently with the Borrower's delivery of the financial statements under
subsection 4.1(a) (and during the existence of an Event of Default, concurrently
with the Borrower's delivery of the financial statements under subsection 4.1(b)
for each fiscal quarter), the Borrower shall deliver to the Agent a report
indicating the value and location of all tangible Property of Holdings, Borrower
or any of its Subsidiaries located outside of the United States (it being
understood that the Agent and Lenders have the right to obtain perfected Liens
against such Property in accordance with this Agreement); and
(l) promptly, such additional business, financial, corporate affairs,
perfection certificates and other information, in each case, regarding Holdings,
the Borrower or any of its Subsidiaries as the Agent may from time to time
reasonably request.
4.3 Notices.
The Borrower shall promptly notify the Agent and each Lender of each of
the following (and in no event later than five (5) Business Days after a
Responsible Officer becoming aware thereof):
(a) the occurrence or existence of any Default or Event of Default, or any
event or circumstance that would reasonably be likely to become a Default or
Event of Default due to a failure to comply with any provision of Article VI
hereof;
(b) any breach or non-performance by Holdings, the Borrower or any of
Borrower's Subsidiaries of, or any default by Holdings, the Borrower or any of
Borrower's Subsidiaries under, any Contractual Obligation of Holdings, the
Borrower or any of its Subsidiaries, or any violation of, or non-compliance by
Holdings, the Borrower or any of Borrower's Subsidiaries with, any Requirement
of Law, which would reasonably be expected to result, either individually or in
the aggregate, in a Material Adverse Effect, including a description of such
breach, non-performance, default, violation or non-compliance and the steps, if
any, Holdings, the Borrower or any such Subsidiary has taken, is taking or
proposes to take in respect thereof;
(c) any dispute, litigation, investigation, proceeding or suspension which
may exist at any time between Holdings, the Borrower or any of its Subsidiaries
and any Governmental Authority which would reasonably be expected to result,
either individually or in the aggregate, in a Material Adverse Effect;
(d) the commencement of, or any material development in, any litigation or
proceeding affecting Holdings, the Borrower or any of its Subsidiaries, (i) in
which the amount of damages claimed is $1,500,000 (or its equivalent in another
currency or currencies) or more, (ii) in which injunctive or similar relief is
sought and which, if adversely determined, would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect, or (iii) in
which the relief sought is an injunction or other stay of the performance of
this Agreement or any other Loan Document;
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(e) any of the following if the same would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect: (i) any
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened against Holdings, the Borrower or any of its
Subsidiaries or any of their respective Properties pursuant to any applicable
Environmental Laws, (ii) any other Environmental Claims, and (iii) any
environmental or similar condition on any real Property adjoining the Property
of Holdings, the Borrower or any Subsidiary that would reasonably be anticipated
to cause Holdings', the Borrower's or any of its Subsidiaries' Property or any
part thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use of such Property under any Environmental Laws;
(f) any of the following if the same would reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect, together
with a copy of any notice with respect to such event that may be required to be
filed with a Governmental Authority and any notice delivered by a Governmental
Authority to the Borrower or any member or its Controlled Group with respect to
such event:
(i) an ERISA Event;
(ii) the adoption of any new Qualified Plan that is subject to
Title IV of ERISA or Section 412 of the Code by any member of the
Controlled Group;
(iii) the adoption of any amendment to a Qualified Plan that is
subject to Title IV of ERISA or Section 412 of the Code, if such amendment
results in a material increase in benefits or unfunded liabilities; or
(iv) the commencement of contributions by any member of the
Controlled Group to any Multiemployer Plan or Qualified Plan that is
subject to Title IV of ERISA or Section 412 of the Code;
(g) the adoption of any Qualified Plan or Mutliemployer Plan (whether or
not such adoption would reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect), other than any Qualified Plan or
Multiemployer Plan listed on Schedule 3.7;
(h) any Material Adverse Effect subsequent to the date of the most recent
audited financial statements of the Borrower delivered to the Agent and Lenders
pursuant to this Agreement;
(i) any material change in accounting policies or financial reporting
practices by Holdings, the Borrower or any of its Subsidiaries;
(j) the expiration of any union agreement or the occurrence of any labor
controversy resulting in or threatening to result in any strike, work stoppage,
boycott, shutdown or other labor disruption against or involving Holdings, the
Borrower or any of its
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Subsidiaries if the same would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect;
(k) the creation, establishment or acquisition of any Subsidiary; and
(l) the occurrence of a default or event of default under the Indenture or
any document evidencing the Subordinated Holdings Discount Notes.
Each notice pursuant to this Section shall be accompanied by a written statement
by a Responsible Officer on behalf of the Borrower setting forth details of the
occurrence referred to therein, and stating what action the Borrower proposes to
take with respect thereto and at what time. Each notice under subsection 4.3(a)
shall describe with particularity any and all clauses or provisions of this
Agreement or other Loan Document that have been breached or violated.
4.4 Preservation of Corporate Existence, Etc.
The Borrower shall, and shall cause each of its Subsidiaries and Holdings
to:
(a) preserve and maintain in full force and effect its corporate existence
and good standing under the laws of its state or jurisdiction of incorporation,
organization or formation, as applicable, except, with respect to the Borrower's
Subsidiaries, in connection with transactions permitted by Section 5.3;
(b) preserve and maintain in full force and effect all rights, privileges,
qualifications, permits, licenses and franchises necessary in the normal conduct
of its business except in connection with transactions permitted by Section 5.3
and sales of assets permitted by Section 5.2 and except as would not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect;
(c) use its reasonable efforts, in the Ordinary Course of Business and in
the reasonable business judgment of the Borrower, to preserve its business
organization and preserve the goodwill and business of the customers, suppliers
and others having material business relations with it; and
(d) preserve or renew all of its registered trademarks, trade names and
service marks, the non-preservation of which would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.
4.5 Maintenance of Property.
The Borrower shall maintain, and shall cause each of its Subsidiaries and
Holdings to maintain, and preserve all of its Property which is used or useful
in its business in good working order and condition, ordinary wear and tear and
damage by casualty (subject to Borrower's obligation to repair to the extent
insurance proceeds therefrom are not used to prepay Loans) excepted and shall
make all necessary repairs thereto and renewals and replacements thereof, in
each case, except where the failure to do so would not
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reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
4.6 Insurance.
The Borrower shall maintain, and shall cause each of its Subsidiaries and
Holdings to maintain, with financially sound and reputable independent insurers,
insurance with respect to its Properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons, including workers' compensation
insurance, public liability and property and casualty insurance, which amounts
shall not be reduced by Holdings, the Borrower or any of its Subsidiaries in the
absence of thirty (30) days' prior notice to the Agent and business interruption
insurance in an amount not less than projected EBITDA (EBITDA is computed in the
manner set forth in Exhibit 4.2(b)) for a period of not less than six (6) months
and, in any event, in an amount not less than $15,000,000. All property damage
and casualty insurance shall name the Agent as loss payee/mortgagee, all
liability insurance shall name the Agent and the Lenders as additional insureds
and all business interruption insurance shall name Agent as assignee. Subject to
the provisions of subsection 1.8(c) and so long as no Event of Default is then
in existence, to the extent the Agent receives Net Proceeds of property damage
or casualty insurance, the Agent shall make such Net Proceeds available to the
Borrower to repair and reconstruct the Borrower's or its Subsidiaries' Property
to the extent covered thereby. Upon written request of the Agent or any Lender,
the Borrower shall furnish the Agent, at reasonable intervals (but not more than
once per calendar year) a certificate of a Responsible Officer on behalf of the
Borrower (and, if requested by the Agent, any insurance broker of the Borrower)
setting forth the nature and extent of all insurance maintained by Holdings, the
Borrower and its Subsidiaries in accordance with this Section 4.6. Unless the
Borrower provides Agent with evidence of the insurance coverage required by this
Agreement, Agent may upon ten (10) days prior written notice purchase insurance
at the Borrower's expense to protect Agent's and Lenders' interests in
Holdings', the Borrower's and its Subsidiaries' Properties. This insurance may,
but need not, protect Holdings', the Borrower's and its Subsidiaries' interests.
The coverage that Agent purchases may not pay any claim that Holdings, the
Borrower or any Subsidiary of the Borrower makes or any claim that is made
against Holdings, the Borrower or any Subsidiary of the Borrower in connection
with said Property. The Borrower may later cancel any insurance purchased by
Agent, but only after providing Agent with evidence that the Borrower has
obtained insurance as required by this Agreement. If Agent purchases insurance,
the Borrower will be responsible for the costs of that insurance, including
interest and any other charges Agent may impose in connection with the placement
of insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Obligations. The costs
of the insurance may be more than the cost of insurance the Borrower may be able
to obtain on its own.
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4.7 Payment of Obligations.
The Borrower shall, and shall cause its Subsidiaries and Holdings to, pay,
discharge and perform:
(a) all material tax liabilities, assessments and governmental charges or
levies upon it or its Properties or assets, unless the same are being contested
in good faith by appropriate proceedings diligently prosecuted which stay the
enforcement of any Lien and for which adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Subsidiary;
(b) all material lawful claims which, if unpaid, would by law become a
Lien (other than Permitted Liens) upon its Property unless the same are being
contested in good faith by appropriate proceedings diligently prosecuted which
stay the imposition or enforcement of the Lien and for which adequate reserves
in accordance with GAAP are being maintained by the Borrower or such Subsidiary;
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained herein and/or in any instrument or agreement
evidencing such Indebtedness, the non-payment of all or any portion of which
would result in an Event of Default under subsection 7.1(e); and
(d) all obligations under any Contractual Obligation (other than
obligations with respect to Indebtedness) to which the Borrower or any of its
Subsidiaries is bound, or to which it or any of its Properties is subject,
except where the failure to perform would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
4.8 Compliance with Laws.
The Borrower shall comply, and shall cause each of its Subsidiaries and
Holdings to comply, in all material respects, with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including, without limitation, all Environmental Laws), except (a) such as may
be contested in good faith by appropriate proceedings diligently prosecuted
without risk of loss of any Collateral, (b) as to which a bona fide dispute
exists, (c) for which appropriate reserves have been established on the
Borrower's financial statements and (d) where the failure to comply would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
4.9 Inspection of Property and Books and Records.
The Borrower shall maintain and shall cause each of its Subsidiaries and
Holdings to maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of
Holdings, the Borrower and such Subsidiaries. The Borrower shall permit, and
shall cause each of its Subsidiaries and Holdings to permit, representatives and
independent contractors of the Agent (at the expense
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of the Borrower, provided that the Borrower shall be responsible for such
expenses not more than one (1) time per year unless an Event of Default has
occurred and is continuing), or any Lender accompanying the Agent (at such
Lender's expense unless an Event of Default shall have occurred and be
continuing), to visit and inspect any of their respective Properties, to conduct
appraisals (to the extent permitted hereunder), to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants
(provided that the Borrower shall be afforded the opportunity to be present at
any meeting with the Borrower's independent public accountants), at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Borrower; provided, however, when
an Event of Default exists the Agent or any Lender may do any of the foregoing
at the expense of the Borrower at any time during normal business hours and
without advance notice.
4.10 Use of Proceeds.
The Borrower shall use the proceeds of the Loans solely as follows: (a) to
repay the Prior Indebtedness and to repay certain of the obligations evidenced
by the Subordinated Holdings Discount Notes as contemplated by subsection
2.1(o), in each case, on the Closing Date (except as otherwise provided for in
subsection 2.1(o)), (b) to repay all or any portion of the remaining
Subordinated Holdings Discount Notes after the Closing Date to the extent
permitted by subsection 5.11, (c) to pay costs and expenses of the Related
Transactions and costs and expenses required to be paid pursuant to subsection
2.1, (d) to consummate Permitted Acquisitions and (e) for working capital and
other general corporate purposes not in contravention of any Requirement of Law
and not in violation of this Agreement.
4.11 Solvency.
The Borrower, individually, and Holdings, the Borrower and its
Subsidiaries, on a consolidated basis, shall at all times be Solvent.
4.12 Further Assurances.
(a) Subject to the succeeding sentence, the Borrower shall ensure that all
written information, exhibits and reports taken as a whole furnished by Equity
Sponsor or its Affiliates (with respect to the transactions contemplated
hereby), Holdings, the Borrower or the Borrower's Subsidiaries concerning
Holdings, the Borrower or any of their respective Subsidiaries to the Agent or
the Lenders do not and will not contain any untrue statement of a material fact
and do not and will not omit to state any material fact or any fact necessary to
make the statements contained therein not materially misleading in light of the
circumstances in which made, and will promptly disclose to the Agent and the
Lenders and correct any defect or error that may be discovered therein or in any
Loan Document or in the execution, acknowledgement or recordation thereof. Agent
and Lenders recognize that the projections delivered pursuant to this Agreement
are not to be viewed as fact, that actual results may
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vary from such projections and that Borrower does not make any representation
that such projections will be realized.
(b) Promptly upon written request by the Agent, the Borrower shall (and
shall cause each of its Subsidiaries and Holdings to) take such additional
actions as the Agent may reasonably require from time to time in order (i) to
subject to the Liens created by any of the Collateral Documents any of the
Properties, rights or interests covered by any of the Collateral Documents, (ii)
to perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby, and (iii) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm to
the Agent and Lenders the rights granted or now or hereafter intended to be
granted to the Agent and the Lenders under any Loan Document or under any other
document executed in connection therewith. Without limiting the generality of
the foregoing and except as otherwise approved in writing by Required Lenders,
the Borrower shall (x) cause each of its Subsidiaries (other than the China
Subsidiary) to guaranty the Obligations (y) cause each such Subsidiary (other
than the China Subsidiary) to grant to Agent, for the benefit of Agent and
Lenders, a security interest in all of such Subsidiary's Property to secure such
guaranty and to (z) deliver to Agent, such opinions of counsel as Agent may
reasonably request. Furthermore and except as otherwise approved in writing by
the Required Lenders, the Borrower shall pledge the stock or other equity
interests (but not more than 65%, or such lesser percentage to the extent a
pledge of a greater percentage would violate applicable law as demonstrated by
such documentation as Agent may reasonably request, of the equity interests of
the China Subsidiary) of each of its Subsidiaries to Agent, for the benefit of
Agent and Lenders, to secure the Obligations. In connection with each pledge of
stock or other equity interests, the Borrower shall deliver, or cause to be
delivered, to Agent, the items described in subsection 2.1(d)(iii), if
applicable, and such opinions of counsel as Agent may reasonably request.
4.13 [Intentionally Omitted.]
4.14 BNY Subordinated Holdings Discount Note.
On or prior to April 1, 2003, $9,400,000 shall have been disbursed from
the account of Holdings referenced in subsection 2.1(o) and applied to reduce
the Indebtedness evidenced by the Subordinated Holdings Discount Note held by
BNY Capital Partners, L.P., with $8,952,380.95 applied to the principal balance
thereof and $447,619.05 applied to satisfy a prepayment penalty or other amounts
owing thereunder.
ARTICLE V - NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other Obligation (other than contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) shall remain unpaid or unsatisfied, unless the Required Lenders waive
compliance in writing:
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5.1 Limitation on Liens.
The Borrower shall not, and shall not suffer or permit Holdings or any of
its Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its Property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) any Lien existing on the Property of Holdings, the Borrower or its
Subsidiaries on the Closing Date and set forth in Schedule 5.1 securing
Indebtedness outstanding on such date and permitted by subsection 5.5(c),
including replacement Liens on the Property currently subject to such Liens
securing Indebtedness permitted by subsection 5.5(c);
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental charges (i)
which are not delinquent or remain payable without penalty, or (ii) the
non-payment thereof is permitted by Section 4.7, provided that, in respect of
this clause (ii), all such Liens secure claims in the aggregate at any time
outstanding for the Borrower and its Subsidiaries not exceeding $1,500,000;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the Ordinary Course of Business
which are not delinquent for more than ninety (90) days or remain payable
without penalty or which are being contested in good faith and by appropriate
proceedings diligently prosecuted, which proceedings have the effect of
preventing the forfeiture or sale of the Property subject thereto and for which
adequate reserves in accordance with GAAP are being maintained;
(e) Liens (other than any Lien imposed by ERISA) consisting of pledges or
deposits required in the Ordinary Course of Business (i) in connection with
workers' compensation, unemployment insurance and other social security
legislation, (ii) to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeals bonds, bids, leases, governmental contract,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money) or
(iii) to secure liability to insurance carriers;
(f) Liens consisting of judgment or judicial attachment liens, provided
that the enforcement of such Liens is effectively stayed and all such Liens
secure claims in the aggregate at any time outstanding for the Borrower and its
Subsidiaries do not exceed $1,500,000;
(g) easements, rights-of-way, zoning and other restrictions, minor defects
or other irregularities in title, and other similar encumbrances incurred in the
Ordinary Course of Business which, either individually or in the aggregate, do
not in any case materially detract from the value of the Property subject
thereto or interfere in any material respect with the ordinary conduct of the
businesses of the Borrower and/or its Subsidiaries;
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(h) Liens on any Property acquired or held by the Borrower or its
Subsidiaries in the Ordinary Course of Business, securing Indebtedness incurred
or assumed for the purpose of financing (or refinancing) all or any part of the
cost of acquiring or construction or improvement (or refinancing thereof within
180 days of purchase) such Property and permitted under subsection 5.5(d) or
(l); provided that (i) any such Lien attaches to such Property concurrently with
or within ninety (90) days after the acquisition thereof, (ii) such Lien
attaches solely to the Property so acquired in such transaction, and (iii) the
principal amount of the debt secured thereby does not exceed 100% of the cost of
such Property;
(i) Liens securing Capital Lease Obligations permitted under subsection
5.5(d);
(j) any interest or title of a lessor, sublessor, licensor or sublicensor
under any lease or license permitted by this Agreement;
(k) Liens arising from precautionary UCC financing statements filed under
any lease permitted by this Agreement;
(l) rights of set off and bankers' Liens upon deposits of cash made (i) in
the Ordinary Course of Business and held by, and in favor of, banks and other
depository institutions and (ii) in connection with Permitted Acquisitions;
(m) Liens existing on any Property or asset of any Person at the time of
acquisition thereof pursuant to a Permitted Acquisition or existing on any
Property or asset of any Person that becomes a Subsidiary of Borrower after the
date hereof in connection with the consummation of a Permitted Acquisition at
the time such Person becomes a Subsidiary of Borrower, provided that (i) such
Lien is not created in contemplation of or in connection with such acquisition
or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall
not apply to any other Property or assets of Holdings, Borrower or any of its
Subsidiaries and (iii) such Lien shall secure only those obligations that it
secures on the date of acquisition or the date such Person becomes a Subsidiary
and such obligations are permitted hereunder;
(n) Liens in favor of collecting banks arising under Section 4-210 of the
UCC;
(o) Liens, subordinate to the Liens created under the Loan Documents,
securing Rate Contracts;
(p) Liens in the nature of trustee's Liens granted pursuant to the
Indenture in favor of the trustee under the Indenture and securing only
obligations to pay compensation to such trustee, to reimburse its expenses and
to indemnify it under the terms thereof;
(q) Liens of sellers of goods to the Borrower and any of its Subsidiaries
arising under Section 2-502 of the UCC in the Ordinary Course of Business,
covering only the goods sold and securing only the unpaid purchase price for
such goods and related expenses; and
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(r) other Liens not described above securing obligations other than
Indebtedness provided such Liens do not secure obligations in excess of $250,000
in the aggregate at any one time.
5.2 Disposition of Assets.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, directly or indirectly, sell, assign, lease (as
lessor), convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any Property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory, or dispositions or exchanges of used,
worn-out or surplus assets, all in the Ordinary Course of Business;
(b) dispositions by Borrower and its Subsidiaries not otherwise permitted
hereunder which are made for fair market value and the mandatory prepayment in
the amount of the Net Proceeds of such disposition is made as and to the extent
provided in subsection 1.8; provided, that (i) at the time of any disposition,
no Event of Default shall then exist or shall result from such disposition, (ii)
at least seventy five percent (75%) of the aggregate sales price from such
disposition shall be paid in cash and (iii) the aggregate fair market value of
all assets so disposed by the Borrower and its Subsidiaries, together, shall not
exceed in any fiscal year $1,500,000;
(c) upon not less than five (5) Business Day's prior written notice to the
Agent, transfers by the Borrower to a U.S. Wholly-Owned Subsidiary of the
Borrower, or by a Subsidiary of the Borrower to Borrower or a U.S. Wholly-Owned
Subsidiary of the Borrower, in each instance, for bona fide business purposes
and, if the transferee is a Subsidiary of the Borrower, the Borrower and such
Subsidiary shall have complied with Section 4.12 hereof;
(d) transactions permitted by subsections 5.1, 5.3 and 5.4;
(e) sales of Cash Equivalents in the Ordinary Course of Business;
(f) discount or sales on a non-recourse basis of past-due receivables in
the Ordinary Course of Business in connection with the collection or compromise
thereof; and
(g) sales of those Investments permitted pursuant to subsection 5.4(r).
5.3 Consolidations and Mergers.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, merge, consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except (i)
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upon not less than five (5) Business Days prior written notice to Agent, any
Subsidiary of the Borrower may merge with, or dissolve or liquidate into, the
Borrower or a U.S. Wholly-Owned Subsidiary of the Borrower, provided that the
Borrower or such U.S. Wholly-Owned Subsidiary shall be the continuing or
surviving corporation and (ii) in connection with a Permitted Acquisition.
5.4 Loans and Investments.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, (i) purchase or acquire, or make any commitment to
purchase or acquire, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any other Person, including the
establishment or creation of a Subsidiary, or (ii) make or commit to make any
Acquisitions, or any other acquisition of all or substantially all of the assets
of another Person, or of any business or division of any Person, including
without limitation, by way of merger, consolidation or other combination or
(iii) make or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person including any Affiliate
of the Borrower but excluding trade payables, accrued operating expenses,
prepaid operating expenses and accounts receivable, in each instance, incurred,
made or arising in the Ordinary Course of Business (the items described in
clauses (i), (ii) and (iii) are referred to as "Investments"), except:
(a) Investments in cash and Cash Equivalents;
(b) extensions of credit by (i) the Borrower to any of its U.S.
Wholly-Owned Subsidiaries, (ii) any Subsidiary of the Borrower to the Borrower
or (iii) any Subsidiary of the Borrower to or in the Borrower or any other U.S.
Wholly-Owned Subsidiary of the Borrower; provided the obligations of each
obligor shall be evidenced by notes, which notes shall be pledged to Agent, for
the benefit of Agent and Lenders;
(c) loans and advances to employees in the Ordinary Course of Business not
to exceed $1,000,000 in the aggregate at any time outstanding;
(d) loans, advances and other Investments in an aggregate of up to
$3,000000 made, and transfers of Borrower's equipment with an aggregate book
value of up to $5,000,000 (minus the amount of the amount of the aforementioned
loans, advances and other Investments made under this clause (d)), in each case
from the Borrower to a newly-formed, Wholly-Owned Subsidiary of the Borrower
with operations solely in China (formed for the purpose of manufacturing the
Borrower's products) (the "China Subsidiary"), the proceeds of which are used to
fund the start-up costs and working capital investments associated with the
operations of such Subsidiary, so long as, after giving effect to the making of
each such loan, advance, Investment or transfer, (i) the structure of such
Subsidiary and the documentation evidencing such loan, advance, Investment or
transfer are each reasonably acceptable to the Agent in all respects, (ii) no
Event of Default exists, (iii) the Borrower is in compliance on a pro forma
basis with the covenants set forth in Article VI, computed for the most recent
month for which financial statements have been delivered, (iv) the Maximum
Revolving Loan Balance exceeds the aggregate outstanding principal balance
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of Revolving Loans by not less than $2,000,000 and (v) the Borrower has caused
the requirements set forth in the last two sentences of Section 4.12(b) to be
satisfied with respect to such Subsidiary;
(e) Investments in customers and account debtors of the Borrower or any of
its Subsidiaries received in the Ordinary Course of Business in connection with
the bankruptcy or reorganization, or in settlement of delinquent obligations, of
such Persons, provided such Investments are pledged to the Agent, for the
benefit of the Agent and the Lenders, as security for the Obligations;
(f) Investments received as the non-cash portion of consideration received
in connection with transactions permitted pursuant to Section 5.2(b), provided
such Investments are pledged to the Agent, for the benefit of the Agent and the
Lenders, as security for the Obligations to the extent required by the
Collateral Documents;
(g) the Borrower and its Subsidiaries may make pledges and deposits
permitted under this Agreement;
(h) the Borrower and its Subsidiaries may hold Investments to the extent
such Investments reflect an increase in the value of the Investments;
(i) Investments consisting of endorsements for collection or deposit in
the Ordinary Course of Business;
(j) Investments in deposit accounts opened in the Ordinary Course of
Business;
(k) the Borrower and its Subsidiaries may capitalize or forgive any
Indebtedness owed to it by any of its other U.S. Wholly-Owned Subsidiaries;
(l) Capital Expenditures permitted hereunder by Borrower and its
Subsidiaries;
(m) Investments in existence on the Closing Date and disclosed on Schedule
5.4;
(n) to the extent constituting Investments, Contingent Obligations
permitted hereunder;
(o) loans by the Borrower or any of its Wholly-Owned Subsidiaries to
Holdings to the extent constituting Holdings Loans;
(p) Investments held by any Non-U.S. Subsidiary in any other Wholly-Owned
Non-U.S. Subsidiary;
(q) Investments permitted under Section 5.3 hereof;
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(r) other Investments not listed above in an aggregate amount not to
exceed $1,000,000; and
(s) Permitted Acquisitions.
5.5 Limitation on Indebtedness.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness of such Person consisting of Contingent Obligations of
such Person permitted pursuant to Section 5.9;
(c) Indebtedness existing on the Closing Date and set forth in Schedule
5.5 including extensions and refinancings thereof which do not increase the
principal amount of such Indebtedness as of the date of such extension or
refinancing;
(d) Indebtedness of the Borrower and its Subsidiaries not to exceed
$3,000,000 (less the amount of any such Indebtedness covered by subsection
5.5(c)) in the aggregate at any time outstanding, consisting of Capital Lease
Obligations or secured by Liens permitted by subsection 5.1(h);
(e) unsecured Indebtedness of the Borrower in respect of the Subordinated
Borrower Publicly Traded Notes in an aggregate principal amount at any time
outstanding not to exceed $100,000,000 (plus capitalized interest and accrued
interest thereon), and Indebtedness of the Borrower which refinances such
Indebtedness, provided that after giving effect to such refinancing, (i) the
principal amount of the outstanding Indebtedness is not increased, (ii) neither
the tenor nor the average life thereof is reduced, (iii) such refinancing
Indebtedness shall be unsecured, (iv) the refinancing Indebtedness is
subordinated to the same degree as the Indebtedness being refinanced and (v) had
such refinancing been subject to the Indenture, the terms of such refinancing
would not require any consent pursuant to Section 5.15(a);
(f) unsecured Indebtedness of Holdings with respect of the Subordinated
Holdings Discount Notes in an aggregate amount at any time outstanding not to
exceed (i) $17,400,000, prior to the application of $9,400,000 to the
obligations evidenced by the Subordinated Holdings Discount Note held by BNY
Capital Partners, L.P. as contemplated by Section 4.14(a) and (ii) $8,000,000,
at any time after the application of $9,400,000 to the obligations evidenced by
the Subordinated Holdings Discount Note held by BNY Capital Partners, L.P. as
contemplated by Section 4.14(a);
(g) unsecured intercompany Indebtedness permitted pursuant to subsection
5.4;
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(h) Rate Contracts of the Borrower or any of its Subsidiaries in respect
of the Obligations or otherwise entered into by the Borrower or any of its
Subsidiaries to hedge against interest rate, currency exchange rate or commodity
price risk relating to commodity agreements for the purchase of raw materials
and/or energy resources (including without limitation natural gas) used by the
Borrower or any of its Subsidiaries, in each case, arising in the Ordinary
Course of Business of the Borrower and its Subsidiaries and not for speculative
purposes;
(i) Indebtedness, subordinated to the Obligations in a manner acceptable
to the Agent, of Holdings or the Borrower consisting of promissory notes issued
to officers, directors and employees (or their estates or beneficiaries under
their estates) of Holdings, the Borrower or any Subsidiary of the Borrower as
consideration for the purchase or redemption of capital stock of Holdings, in
all cases only upon death, disability, retirement or termination of employment
(the "Management Redemption Notes");
(j) Indebtedness for bank overdrafts incurred in the Ordinary Course of
Business that are promptly repaid;
(k) to the extent constituting Indebtedness, obligations secured by Liens
permitted under subsection 5.1(e);
(l) to the extent constituting Indebtedness, purchase price adjustments in
connection with Permitted Acquisitions;
(m) Assumed Indebtedness of the Borrower and its Subsidiaries incurred in
connection with a Permitted Acquisition, the aggregate principal amount of which
at any time outstanding shall not exceed $500,000;
(n) Indebtedness which is subordinated to the Obligations in a manner
satisfactory to Agent and Requisite Lenders and which is incurred in connection
with the consummation of any Permitted Acquisition and which is owing to a
seller of stock or assets sold to Borrower or any Subsidiary of Borrower; and
(o) other unsecured Indebtedness of Borrower or its Subsidiaries not
exceeding in the aggregate at any time outstanding $2,500,000.
5.6 Transactions with Affiliates.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, enter into any transaction with any Affiliate of
the Borrower or of any such Subsidiary, except:
(a) as expressly permitted by this Agreement;
(b) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of Holdings, the Borrower or such Subsidiary upon
fair and reasonable terms no less favorable to Holdings, the Borrower or such
Subsidiary than would
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be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of Holdings, the Borrower or such Subsidiary; and
(c) transactions described on Schedule 5.6.
5.7 Management Fees and Compensation.
The Borrower shall not, and shall not permit any of its Subsidiaries or
Holdings to, pay any management, consulting or similar fees to any Affiliate of
the Borrower or to any officer, director or employee of Holdings, the Borrower
or any of its Subsidiaries or any Affiliate of the Borrower except (a) payment
of customary and reasonable salary, bonus and other benefits payable to
officers, employees and other consultants of the Borrower and its Subsidiaries
and the payment of customary and reasonable salary, bonus and other benefits
payable to officers, employees and other consultants of Holdings to the extent
permitted by Section 5.11, (b) payment of customary and reasonable fees and
expenses paid to members of the board of directors of Holdings and payments in
respect of indemnification obligations to such board members, in each case to
the extent permitted by Section 5.11, (c) management, consulting and advisory
fees payable by the Borrower to Cornerstone Equity Investors, LLC pursuant to
Section 3(a) of the Equity Sponsor Management Agreement in an amount not to
exceed in the aggregate $500,000 in any fiscal year of the Borrower; provided,
however, that no such fees described in this clause (c) shall be paid (i) during
any period while an Event of Default under any of subsections 7.1(a), 7.1(c)
(pertaining to breaches of Article VI hereof), 7.1(f), (g), (l) or (m) has
occurred and is continuing or would arise as a result of such payment, (ii)
unless after giving effect to such payment, the Borrower is in compliance on a
pro forma basis with the covenants set forth in Article VI, computed for the
most recent month for which financial statements have been delivered and (iii)
unless after giving effect to such payment, the Maximum Revolving Loan Balance
exceeds the aggregate outstanding principal balance of Revolving Loans by not
less than $1,000,000 and (d) payment, on or around the date of the consummation
of a Permitted Acquisition or any other Acquisition permitted under this
Agreement, of transaction fees by Borrower to Cornerstone Equity Investors, LLC
pursuant to Section 3(b) of the Equity Sponsor Management Agreement in
connection with such Permitted Acquisition or such other Acquisition in an
amount of up to 1% of the transaction value of such Permitted Acquisition or
such other Acquisition. Notwithstanding the foregoing, in the event that
Borrower is prohibited from making the payments contemplated under clause (c)
above as a result of its failure to satisfy the conditions set forth in
sub-clauses (i), (ii) and (iii), Borrower may make such payments if and when it
satisfies each of the conditions set forth in such sub-clauses as of the time of
eventual payment (without regard to the $500,000 limitation set forth in such
clause (c)).
5.8 Use of Proceeds.
The Borrower shall not and shall not suffer or permit any of its
Subsidiaries or Holdings to use any portion of the Loan proceeds, directly or
indirectly, to purchase or carry Margin Stock or repay or otherwise refinance
Indebtedness of the Borrower or others incurred to purchase or carry Margin
Stock, or otherwise in any manner which is in contravention of any Requirement
of Law or in violation of this Agreement.
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5.9 Contingent Obligations.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, create, incur, assume or suffer to exist any
Contingent Obligations except in respect of the Obligations and except:
(a) endorsements for collection or deposit in the Ordinary Course of
Business;
(b) Rate Contracts to the extent such Rate Contracts would be permitted by
Section 5.5(h) if they constituted Indebtedness;
(c) Contingent Obligations of Holdings, the Borrower and its Subsidiaries
existing as of the Closing Date and listed in Schedule 5.9, including extensions
and renewals thereof which do not increase the amount of such Contingent
Obligations as of the date of such extension or renewal;
(d) Contingent Obligations incurred in the Ordinary Course of Business
with respect to surety and appeal bonds, performance bonds and other similar
obligations;
(e) Contingent Obligations arising under indemnity agreements to title
insurers to cause such title insurers to issue to Agent title insurance
policies;
(f) Contingent Obligations arising with respect to customary
indemnification obligations in favor of (i) purchasers in connection with
transactions permitted under Section 5.2(b), (ii) sellers in connection with
Permitted Acquisitions, and (iii) officers and directors of Holdings, the
Borrower and any of its Subsidiaries in the Ordinary Course of Business;
(g) Contingent Obligations arising under Lender Letters of Credit and
other letters of credit which are the subject of a Letter of Credit
Participation Agreement;
(h) Contingent Obligations arising under guarantees made in the Ordinary
Course of Business by Holdings, the Borrower or any of its Subsidiaries of
obligations of the Borrower or any of its Wholly-Owned U.S. Subsidiaries, which
obligations are otherwise permitted hereunder (it being understood that no such
guarantees shall be permitted to be made with respect to the Subordinated
Holdings Discount Notes); and
(i) Contingent Obligations arising under guarantees of the Subordinated
Borrower Publicly Traded Notes so long as such guarantees are made on the same
terms and conditions of the Subordinated Publicly Traded Notes (including
without limitation subordination provisions).
5.10 Compliance with ERISA.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to:
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(a) terminate any Plan subject to Title IV of ERISA so as to result in any
material liability to Holdings, the Borrower or any of its Subsidiaries;
(b) permit to exist any ERISA Event, or any other event or condition,
which would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect;
(c) make a complete or partial withdrawal (within the meaning of ERISA
Section 4201) from any Multiemployer Plan so as to result in any material
liability to Holdings, the Borrower or any of its Subsidiaries;
(d) enter into any new Plan or modify any existing Plan so as to increase
its obligations thereunder which would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect; or
(e) permit the present value of all nonforfeitable accrued benefits under
any Plan (using the actuarial assumptions utilized by the PBGC upon termination
of a Plan) materially to exceed the fair market value of Plan assets allocable
to such benefits, all determined as of the most recent valuation date for each
such Plan.
5.11 Restricted Payments.
The Borrower shall not, and shall not suffer or permit any of its Subsidiaries
or Holdings to, (i) declare or make any dividend payment or other distribution
of assets, Properties, cash, rights, obligations or securities on account of any
shares of any class of its capital stock, partnership interests, membership
interests or other equity securities, (ii) purchase, redeem or otherwise acquire
for value any shares of its capital stock, partnership interests, membership
interests or other equity securities or any warrants, rights or options to
acquire such shares, interests or securities now or hereafter outstanding or
(iii) make any payment or prepayment of principal of, premium, if any, interest,
fees, redemption, exchange, purchase, retirement, defeasance, sinking fund or
similar payment with respect to Subordinated Indebtedness or any earn-out
obligation (the items described in clauses (i), (ii) and (iii) are referred to
as "Restricted Payments"); except that any Wholly-Owned Subsidiary of the
Borrower may declare and pay dividends to the Borrower or any U.S. Wholly-Owned
Subsidiary of the Borrower, and except that Holdings, the Borrower and its
Subsidiaries may:
(a) declare and make dividend payments or other distributions payable
solely in its stock or other equity interests;
(b) Borrower and its Wholly-Owned Subsidiaries may make distributions to
Holdings which are promptly used by Holdings to redeem from management
stockholders shares of Holdings stock or warrants or options to acquire any such
shares, or to make payments in respect of Management Redemption Notes, provided,
that, in each instance, all of the following conditions are satisfied:
(i) no Default or Event of Default has occurred and is continuing or
would arise as a result of such Restricted Payment;
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(ii) after giving effect to such Restricted Payment, the Borrower is
in compliance on a pro forma basis with the covenants set forth in Article
VI, recomputed for the most recent month for which financial statements
have been delivered;
(iii) the aggregate Restricted Payments permitted (x) in any fiscal
year of the Borrower shall not exceed $1,000,000 and (y) during the term
of this Agreement shall not exceed $3,000,000; and
(iv) after giving effect to such Restricted Payment, the Maximum
Revolving Loan Balance exceeds the aggregate outstanding principal balance
of Revolving Loans by not less than $1,000,000;
(c) in the event the Borrower files a consolidated income tax return with
Holdings, the Borrower may make Restricted Payments to Holdings to permit
Holdings to pay federal and state income taxes then due and owing, franchise
taxes and other similar licensing expenses incurred in the Ordinary Course of
Business provided, that the amount of such distribution shall not be materially
greater, nor the receipt by the Borrower of tax benefits material less, than
they would have been had the Borrower not filed a consolidated return with
Holdings (it being understood that solely for the purposes of this proviso, in
calculating the amount of tax attributable to Borrower, the Holdings
Subordinated Discount Notes shall be considered to be held by Borrower rather
than by Holdings);
(d) the Borrower and its Wholly-Owned Subsidiaries may make Restricted
Payments to Holdings of up to an aggregate amount of $1,000,000 in any fiscal
year of the Borrower to permit Holdings to pay out-of-pocket costs and expenses
incurred by Holdings in the ordinary course and solely in Holdings' capacity as
a holding company or for services rendered on behalf of the Borrower or its
Subsidiaries, including, without limitation, (i) customary and reasonably
salary, bonus and other benefits payable to officers, employees and consultants
of Holdings, (ii) customary and reasonable fees and expenses paid to members of
the board of directors of Holdings or payments in respect of indemnification
obligations to such board members and (iii) reasonable general corporate
overhead expenses of Holdings;
(e) Borrower may make regularly scheduled (i) semi-annual payments of
interest on June 1 and December 1 of each year at a rate of 10?% per annum
pursuant to Section 1 of the Subordinated Borrower Publicly Traded Notes and
(ii) principal payments on December 1, 2008 (it being understood that such date
is beyond the term of this Agreement) on the Subordinated Borrower Publicly
Traded Notes; provided, however, no such payment under either clause (i) or (ii)
shall be allowed during the occurrence of an Event of Default under subsection
7.1(a) or if such payment would otherwise violate the subordination provisions
pertaining to the Subordinated Borrower Publicly Traded Notes;
(f) Borrower and its Subsidiaries may make distributions to Holdings that
are promptly used by Holdings prior to December 31, 2004 to pay (i) amounts of
up to $6,600,000 in respect of principal under the Subordinated Holdings
Discount Notes and (ii)
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amounts of up to $1,000,000 in respect of prepayment premiums owing under the
Subordinated Holdings Discount Notes, in each case so long as, after giving
effect to the making of any such distribution (1) no Event of Default exists,
(2) the Borrower is in compliance on a pro forma basis with the covenants set
forth in Article VI, computed for the most recent month for which financial
statements have been delivered and (3) the Maximum Revolving Loan Balance
exceeds the aggregate outstanding principal balance of Revolving Loans by not
less than $2,000,000;
(g) Borrower and its Subsidiaries may make distributions to Holdings that
are promptly used by Holdings to pay regularly scheduled cash interest payments
on March 31, June 30, September 30 and December 31 of each year at a rate of
12.25% per annum owing under the Subordinated Holdings Discount Notes, in each
case so long as, after giving effect to the making of any such distribution (1)
no Event of Default exists, (2) the Borrower is in compliance on a pro forma
basis with the covenants set forth in Article VI, computed for the most recent
month for which financial statements have been delivered and (3) the Maximum
Revolving Loan Balance exceeds the aggregate outstanding principal balance of
Revolving Loans by not less than $2,000,000;
(h) disburse on or prior to April 1, 2003, $9,400,000 from the account of
Holdings referenced in subsection 2.1(o) for application to the obligations
evidenced by the Subordinated Holdings Discount Note held by BNY Capital
Partners, L.P. as contemplated by Section 4.14; and
(i) Borrower may make a payment or prepayment of principal of, premium, if
any, interest, fees, redemption, exchange, purchase, retirement, defeasance,
sinking fund or similar payment (collectively, a "Payment") with respect to (x)
Subordinated Indebtedness so long as the Payment is made solely with Excluded
Equity Proceeds received by the Borrower (for the express purpose of making such
Subordinated Debt Payment) on or around the date of such Subordinated Debt
Payment or (y) Subordinated Borrower Publicly Traded Notes, proceeds, received
by the Borrower on or around the date of such Payment, of refinancing
Indebtedness of the type permitted pursuant subsection 5.5(e) which refinances
such Subordinated Borrower Publicly Traded Notes, and in the case of each of
clause (x) and (y) above, Agent is given five (5) Business Days advance written
notice of such Payment.
5.12 Change in Business.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
to, engage in any material line of business substantially different from those
lines of business carried on by it on the date hereof or any business similarly
related to or which constitutes a reasonable extension thereof.
(b) The Borrower shall not permit Holdings to engage in any business
activity or incur any Indebtedness other than (i) the ownership of the equity
interests of Borrower and the ownership of notes issued by officers, directors
or employees in connections with the purchase of stock or options by such
Persons, (ii) the performance of its obligations under the Loan Documents to
which it is a party and the Subordinated Holdings Discount Notes,
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(iii) the performance of certain administrative and managerial functions on
behalf of itself and its Subsidiaries, (iv) Indebtedness under the Subordinated
Holdings Discount Notes and (v) any business similarly related to or which
constitutes a reasonable extension thereof and, after giving effect thereto,
Holdings continues to function as a passive holding company of Borrower as
contemplated in clauses (i), (ii), (iii) and (iv) above.
5.13 Change in Structure.
Except as expressly permitted under Section 5.3, the Borrower shall not,
and shall not permit any of its Subsidiaries to, amend any of its Organization
Documents in each case in any material respect or in any respect which is
adverse to the Agent or the Lenders in their capacity as such.
5.14 Accounting Changes.
The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, make any significant change in accounting treatment
or reporting practices, except as required by GAAP or the SEC or except, to the
extent that such change would not affect the calculation of the financial
covenants set forth in Article VI in any significant manner, as permitted by
GAAP, or change the fiscal year of Holdings, the Borrower or of any of its
consolidated Subsidiaries.
5.15 Amendments to Subordinated Indebtedness; Designated Senior Debt.
(a) The Borrower shall not, and shall not permit any of its Subsidiaries
or Holdings to, directly or indirectly to change or amend the terms of any
Subordinated Indebtedness if the effect of such amendment is to: (i) increase
the interest rate on such Indebtedness; (ii) shorten the dates upon which
payments of principal or interest are due on such Indebtedness; (iii) add or
change in a manner adverse to Holdings, the Borrower or any of its Subsidiaries
any event of default or add or make more restrictive any covenant with respect
to such Indebtedness; (iv) change in any manner adverse to Holdings, the
Borrower, any Subsidiary of Borrower or the Lenders the prepayment or redemption
provisions of such Indebtedness; (v) change the subordination provisions thereof
(or the subordination terms of any guaranty thereof); or (vi) change or amend
any other term if such change or amendment would materially increase the
obligations of the obligor or confer additional material rights on the holder of
such Indebtedness in a manner adverse to Holdings, the Borrower, any of its
Subsidiaries, Agent or Lenders.
(b) The Borrower shall not, and shall not suffer or permit any of its
Subsidiaries or Holdings to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness that constitutes "Designated Senior Debt" as defined in the
Indenture (other than the Obligations hereunder).
5.16 No Negative Pledges.
(a) The Borrower will not, and will not permit any of its Subsidiaries,
directly or indirectly, to create or otherwise cause or suffer to exist or
become effective any
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consensual restriction or encumbrance of any kind on the ability of any such
Subsidiary to pay dividends or make any other distribution on any of such
Subsidiary's equity securities or to pay fees, including management fees, or
make other payments and distributions to the Borrower or any of its
Subsidiaries, except as provided herein, the Subordinated Holdings Discount
Notes and the Indenture.
(b) The Borrower shall not issue, and shall not permit any of its
Subsidiaries to issue, any shares of stock (i) if such issuance would result in
an Event of Default under subsection 7.1(l) and (ii) unless, to the extent
required by the Collateral Documents, such shares are pledged to Agent, for the
benefit of Agent and Lenders, as security for the Obligations, on substantially
the same terms and conditions as the shares of the Borrower's stock owned by
Holdings are pledged to Agent as of the Closing Date.
ARTICLE VI - FINANCIAL COVENANTS
The Borrower covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other Obligation (other than contingent
indemnification Obligations to the extent no claim giving rise thereto has been
asserted) shall remain unpaid or unsatisfied, unless the Required Lenders waive
compliance in writing:
6.1 Capital Expenditures.
The Borrower and its Subsidiaries shall not make or commit to
make Capital Expenditures for any fiscal year (or shorter period) set forth
below to exceed the amount set forth in the table below (the "Capital
Expenditure Limitation") with respect to such fiscal year (or shorter period):
Capital Expenditure
Fiscal Period Limitation
------------- -------------------
Closing Date through December 31, 2003 $4,500,000
Each fiscal year thereafter $4,000,000
; provided, however, in the event the Borrower and its Subsidiaries do not
expend the entire Capital Expenditure Limitation in any fiscal year, the
Borrower and its Subsidiaries may carry forward to the immediately succeeding
fiscal year 50% of the unutilized portion. All Capital Expenditures shall first
be applied to reduce the applicable Capital Expenditure Limitation and then to
reduce the carry forward from the previous fiscal year, if any.
"Capital Expenditures" shall be calculated in the manner set forth in Exhibit
4.2(b).
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6.2 Leverage Ratio.
The Borrower shall not permit its Leverage Ratio as of the last day of the
fiscal quarter for the twelve month period ending on any date set forth below to
be greater than the maximum ratio set forth in the table below opposite such
date:
Date Maximum Leverage Ratio
---- ----------------------
March 28, 2003 4.60 to 1.00
June 27, 2003 4.60 to 1.00
September 26, 2003 4.60 to 1.00
December 31, 2003 4.60 to 1.00
March 26, 2004 4.35 to 1.00
June 25, 2004 4.35 to 1.00
September 24, 2004 4.35 to 1.00
December 31, 2004 4.30 to 1.00
April 1, 2005 4.15 to 1.00
July 1, 2005 4.15 to 1.00
September 30, 2005 4.00 to 1.00
December 31, 2005 4.00 to 1.00
March 31, 2006 3.90 to 1.00
June 30, 2006 3.90 to 1.00
September 29, 2006 3.80 to 1.00
December 31, 2006 3.80 to 1.00
March 30, 2007 and each fiscal quarter
thereafter 3.75 to 1.00
"Leverage Ratio" shall be calculated in the manner set forth in Exhibit 4.2(b).
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6.3 Fixed Charge Coverage Ratio.
The Borrower shall not permit its Fixed Charge Coverage Ratio as of the
last day of any fiscal quarter for the twelve month period ending on the last
day of such fiscal quarter to be less 1.10 to 1.00.
"Fixed Charge Coverage Ratio" shall be calculated in the manner set forth in
Exhibit 4.2(b).
6.4 Interest Coverage Ratio.
The Borrower shall not permit its Interest Coverage Ratio determined as of
the last day of any fiscal quarter set forth below for the twelve months then
ended to be less than the minimum ratio set forth in the table below opposite
such date:
Fiscal Quarter Ending Minimum Interest Coverage Ratio
--------------------- -------------------------------
March 28, 2003 2.15 to 1.00
June 27, 2003 2.15 to 1.00
September 26, 2003 2.15 to 1.00
December 31, 2003 2.15 to 1.00
March 26, 2004 2.25 to 1.00
June 25, 2004 2.25 to 1.00
September 24, 2004 2.30 to 1.00
December 31, 2004 2.30 to 1.00
April 1, 2005 2.40 to 1.00
July 1, 2005 2.40 to 1.00
September 30, 2005 2.40 to 1.00
December 31, 2005 2.40 to 1.00
March 31, 2006 2.45 to 1.00
June 30, 2006 2.45 to 1.00
September 29, 2006 2.45 to 1.00
December 31, 2006 and each fiscal quarter
thereafter 2.50 to 1.00
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"Interest Coverage Ratio" shall be calculated in the manner set forth in Exhibit
4.2(b).
6.5 EBITDA
The Borrower shall not permit its EBITDA as of the last day of any fiscal
quarter for the twelve month period ending on any date set forth below to be
less than the minimum EBITDA amount set forth in the table below opposite such
date:
Date Minimum EBITDA
---- --------------
March 28, 2003 $27,000,000
June 27, 2003 $27,000,000
September 26, 2003 $27,000,000
December 31, 2003 $27,000,000
March 26, 2004 $27,500,000
June 25, 2004 $27,500,000
September 24, 2004 $28,000,000
December 31, 2004 $28,000,000
April 1, 2005 $28,500,000
July 1, 2005 $28,500,000
September 30, 2005 and each fiscal quarter
thereafter $29,000,000
"EBITDA" shall be calculated in the manner set forth in Exhibit 4.2(b).
ARTICLE VII - EVENTS OF DEFAULT
7.1 Event of Default.
Any of the following shall constitute an "Event of Default":
(a) Non-Payment.
The Borrower fails to pay, (i) when and as required to be paid herein, any
amount of principal of or interest on any Loan, including after maturity of the
Loans, whether by acceleration or otherwise, or (ii) after written notice from
Agent of and within
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five (5) days after the same shall become due, any fee or any other amount
payable hereunder or pursuant to any other Loan Document; or
(b) Representation or Warranty.
Any representation, warranty or certification by or on behalf of Holdings,
the Borrower or any of its Subsidiaries made or deemed made herein, in any other
Loan Document, or which is contained in any certificate, document or financial
or other statement by Holdings, the Borrower, any of its Subsidiaries, or their
respective Responsible Officers, furnished at any time under this Agreement, or
in or under any other Loan Document, shall prove to have been incorrect in any
material respect, or with respect to any representation, warranty or
certification evaluated by a materiality or Material Adverse Effect standard, in
any respect, in each instance, on or as of the date made or deemed made; or
(c) Specific Defaults.
The Borrower fails to perform or observe any term, covenant or agreement
contained in (i) Sections 4.1, 4.2(b), 4.2(d), 4.6, 4.9 or Article V or Article
VI hereof or (ii) Section 4.3 within ten (10) days after the date such
performance or observance is required by Section 4.3; or
(d) Other Defaults.
Holdings, the Borrower or any of its Subsidiaries fails to perform or
observe any other term, covenant or agreement contained in this Agreement or any
other Loan Document, and such default shall continue unremedied for a period of
thirty (30) days after the earlier to occur of (i) the date upon which a
Responsible Officer becomes aware of such default and (ii) the date upon which
written notice thereof is given to the Borrower by the Agent or Required
Lenders; or
(e) Cross-Default.
The Borrower or any of its Subsidiaries or Holdings (i) fails to make any
payment in respect of any Indebtedness (other than the Obligations) or
Contingent Obligation having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $5,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto on the date of
such failure; or (ii) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent Obligation, if the
effect of such failure, event or condition is to cause, or to permit the holder
or holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and
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payable prior to its stated maturity, or such Contingent Obligation to become
payable or cash collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings.
Holdings, the Borrower or any of its Subsidiaries (i) ceases or fails to
be Solvent, (ii) generally fails to pay, or admits in writing its inability to
pay, its debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (iii) voluntarily ceases to conduct its
business in the ordinary course; (iv) commences any Insolvency Proceeding with
respect to itself; or (v) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings.
(i) Any involuntary Insolvency Proceeding is commenced or filed against
Holdings, the Borrower or any Subsidiary of the Borrower, or any writ, judgment,
warrant of attachment, execution or similar process, is issued or levied against
a substantial part of Holdings', the Borrower's or any of its Subsidiaries'
Properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within sixty (60) days after commencement,
filing or levy; (ii) Holdings, the Borrower or any of its Subsidiaries admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) Holdings, the Borrower or any of its
Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its Property or business;
(h) ERISA.
(i) A member of the Controlled Group shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its Withdrawal Liability under a Multiemployer Plan; (ii) a member of the
Controlled Group shall fail to satisfy its contribution requirements under
Section 412(c)(11) of the Code, whether or not it has sought a waiver under
Section 412(d) of the Code; (iii) the occurrence of an ERISA Event; (iv) a Plan
that is intended to be qualified under Section 401(a) of the Code shall lose its
qualification; (v) any member of the Controlled Group engages in or otherwise
becomes liable for a non-exempt prohibited transaction; (vi) a violation of
section 404 or 405 of ERISA or the exclusive benefit rule under section 401(a)
of the Code; (vii) any member of the Controlled Group is assessed a tax under
section 4980B of the Code or incurs a liability under Section 601 et seq. of
ERISA; and, the occurrence of any such event listed in clauses (i) through
(vii), or the occurrence of any combination of events listed in clauses (i)
through (vii) results in, or would reasonably be expected to result in, a
Material Adverse Effect or result in exposure to the Borrower in an amount in
excess of $1,000,000.
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(i) Monetary Judgments.
One or more judgments, non-interlocutory orders, decrees or arbitration
awards shall be entered against Holdings, the Borrower or any of its
Subsidiaries involving in the aggregate a liability (to the extent not covered
by independent third-party insurance) as to any single or related series of
transactions, incidents or conditions, of $1,500,000 or more, and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a period of thirty
(30) days after the entry thereof; or
(j) Non-Monetary Judgments.
One or more non-monetary judgments, order or decree shall be rendered
against Holdings, the Borrower or any of its Subsidiaries which does or would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, and there shall be any period of ten (10) consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
(k) Collateral.
Any material provision of any Collateral Document shall for any reason
(except in accordance with its terms) cease to be valid and binding on or
enforceable against Holdings, the Borrower or any Subsidiary of the Borrower
party thereto or Holdings, the Borrower or any Subsidiary of the Borrower shall
so state in writing or bring an action to limit its obligations or liabilities
thereunder; or any Collateral Document shall for any reason (other than pursuant
to the terms thereof) cease to create a valid security interest in any material
portion of the Collateral purported to be covered thereby or, if such security
interest is a perfected security interest, such security interest shall for any
reason (other than the failure of the Agent to take any action solely within its
control) cease to be a perfected and first priority security interest subject
only to Permitted Liens; or
(l) Ownership.
(i) Cornerstone Equity Investors IV, L.P., a Delaware limited partnership
("Equity Sponsor") or any Affiliate (provided that for the purpose of this
subsection 7.1(l) only, the reference to 5% in the definition of Affiliate shall
be deemed to refer to 51%) of Equity Sponsor, at any time ceases to maintain in
the aggregate a direct or indirect beneficial equity interest in Holdings at
least equal to 51% of the aggregate equity interests of the Borrower, or fails
to own beneficially, directly or indirectly, capital stock representing voting
control of Holdings, in each instance, free and clear of all Liens, rights,
options, warrants or other similar agreements or understandings; or (ii)
Holdings at any time ceases to maintain in the aggregate a direct beneficial
equity interest in the Borrower equal to one hundred percent (100%) of the
aggregate equity interests of the Borrower, or fails to own beneficially,
directly, or indirectly, all of the capital stock of the Borrower entitled to
vote, in each instance, free and clear of all Liens (other than Liens in favor
of Agent for the benefit of Lenders), rights, options, warrants or other similar
agreements or understanding, or (iii) except as otherwise permitted hereunder,
the Borrower at any time ceases to maintain in the
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aggregate a direct beneficial equity interest in its Subsidiaries equal to one
hundred percent (100%) of the aggregate equity interests of such Subsidiaries,
or fails to own beneficially, directly or indirectly, all of the capital stock
of such Subsidiaries entitled to vote, in each instance free and clear of all
Liens (other than Liens in favor of Agent for the benefit of Lenders), rights,
options, warrants or other similar agreements or understand or (iv) a "Change of
Control" occurs as defined in the Indenture; or
(m) Holdings Defaults.
(i) Holdings shall fail in any material respect to perform or observe any
term, covenant or agreement in the Holdings Guaranty, the Holdings Pledge
Agreement, the Holdings Security Agreement or any other Loan Document to which
Holdings is a party; or (ii) the Holdings Guaranty, the Holdings Pledge
Agreement, the Holdings Security Agreement or any other Loan Document to which
Holdings is a party shall for any reason be partially (including with respect to
future advances) or wholly revoked or invalidated, or otherwise cease to be in
full force and effect, except in accordance with its terms; or (iii) Holdings
shall contest in any manner the validity or enforceability thereof or deny that
it has any further liability or obligation thereunder; or
(n) Invalidity of Subordination Provisions.
The subordination provisions of the Indenture any other agreement or
instrument governing any Subordinated Indebtedness shall for any reason be
revoked or invalidated, or otherwise cease to be in full force and effect
(except in accordance with its terms or by the Agent's waiver thereof), or
Holdings, the Borrower or any of its Subsidiaries shall contest in any manner
the validity or enforceability thereof or deny that it has any further liability
or obligation thereunder, or the Obligations shall for any reason not have the
priority contemplated by this Agreement or such subordination provisions or the
Obligations incurred hereunder shall fail to constitute "Designated Senior Debt"
under the Indenture.
7.2 Remedies.
Upon the occurrence and during the continuance of any Event of Default,
the Agent may, and shall at the request of the Required Lenders:
(a) declare all or any portion of the Commitment of each Lender to make
Loans or issue Lender Letters of Credit or Letter of Credit Participation
Agreements to be terminated, whereupon such Commitments shall forthwith be
terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable;
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
(c) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;
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provided, however, that upon the occurrence of any event specified in
subsections 7.1(f) or 7.1(g) above (in the case of clause (i) of subsection
7.1(g) upon the expiration of the 60-day period mentioned therein), the
obligation of each Lender to make Loans and the obligation of Agent to issue
Lender Letters of Credit and Letter of Credit Participation Agreements shall
automatically terminate and the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable without further act of the Agent or any Lender.
7.3 Rights Not Exclusive.
The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
7.4 Cash Collateral for Letters of Credit.
If an Event of Default has occurred and is continuing or this Agreement
(or the Revolving Loan Commitment) shall be terminated for any reason, then the
Agent may, and upon request of Lenders holding at least sixty six and two-thirds
percent (66-2/3%) of the Revolving Loan Commitments shall, demand (which demand
shall be deemed to have been delivered automatically upon any acceleration of
the Loans and other obligations hereunder pursuant to Section 7.2 hereof or upon
payment in full of the Term Loan), and the Borrower shall thereupon deliver to
the Agent, to be held for the benefit of the Agent and the Lenders entitled
thereto, an amount of cash equal to the amount of Letter of Credit Participation
Liability (determined in accordance with subsection 1.1(c) hereof) as additional
collateral security for the Borrower's Obligations in respect of any outstanding
Lender Letter of Credit and Letter of Credit Participation Agreement. The Agent
may at any time apply any or all of such cash and cash collateral to the payment
of any or all of the Borrower's Obligations in respect of any Lender Letters of
Credit or Letter of Credit Participation Agreements. Pending such application,
the Agent may (but shall not be obligated to) invest the same in an interest
bearing account in the Agent's name, for the benefit of the Agent and the
Lenders entitled thereto, under which deposits are available for immediate
withdrawal, at such bank or financial institution as the Agent may, in its
discretion, select.
ARTICLE VIII - THE AGENT
8.1 Appointment and Authorization.
Each Lender hereby irrevocably appoints, designates and 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.
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
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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.
8.2 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 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 with reasonable care.
8.3 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 (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
for the value of any Collateral 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.
8.4 Reliance by Agent.
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, email transmission or telephone message, statement
or other document or conversation believed by it to be genuine 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 Lenders (or, where an action or waiver need only be approved by the Required
Lenders, by the Required 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 Lenders
(or, where an action
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or waiver need only be approved by the Required Lenders, by the Required
Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
8.5 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". In the event that the Agent receives such a notice, the Agent shall
give notice thereof to the Lenders. The Agent shall take such action with
respect to such Default or Event of Default as shall be requested by the
Required Lenders in accordance with Article VII; provided, however, that unless
and until the Agent shall have 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 or
in the best interest of the Lenders.
8.6 Credit Decision.
Each Lender expressly 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
Subsidiaries shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent 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 Subsidiaries, and
all applicable bank regulatory laws relating to the transactions contemplated
thereby, and made its own decision to enter into this Agreement and extend
credit to the Borrower hereunder. Each Lender also represents that it will,
independently and without reliance upon the Agent 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. 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
which may come into the possession of the Agent.
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8.7 Indemnification.
Whether or not the transactions contemplated hereby shall be consummated,
upon demand therefor the Lenders shall indemnify the Agent (to the extent not
reimbursed by or on behalf of the Borrower and without limiting the obligation
of the Borrower to do so), ratably from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind whatsoever which may at any time
(including at any time following the repayment of the Loans and the termination
or resignation of the Agent) be imposed on, incurred by or asserted against the
Agent 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
thereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; provided, however, that no Lender shall be liable for the
payment to the Agent of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. In
addition, each Lender shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including reasonable 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. Without limiting the generality of the foregoing, if the Internal
Revenue Service 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 (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 shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and interest,
and including any taxes imposed by any jurisdiction on the amounts payable to
the Agent under this Section 8.7, together with all related costs and expenses
(including reasonable Attorney Costs). The obligation of the Lenders in this
Section 8.7 shall survive the payment of all Obligations hereunder.
8.8 Agent in Individual Capacity.
Antares 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 or other business with
the Borrower and its Subsidiaries and Affiliates as though Antares were not the
Agent hereunder and without notice to or consent of the Lenders. With respect to
its Loans, Antares 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" shall include Antares in its individual
capacity. Each other Lender and the Affiliates of each such Lender may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity
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interests in and generally engage in any kind of banking, trust, financial
advisory or other business with the Borrower and its Subsidiaries and
Affiliates.
8.9 Successor Agent.
The Agent may resign as Agent upon thirty (30) days' prior notice to the
Lenders and to the Borrower. If the Agent shall resign as Agent under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders, which successor shall, if no Event of Default has
occurred and is continuing, be reasonably acceptable to the Borrower. If no
successor agent is appointed prior to the effective date of the resignation of
the Agent, the Agent may thereupon appoint a successor agent from among the
Lenders reasonably acceptable to the Borrower. 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 provisions of this Article VIII and Sections 9.4 and 9.5
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is thirty (30) days following a retiring
Agent's notice of resignation (or, if later, ten (10) days after the date upon
which the Agent designates a successor agent), the retiring Agent's resignation
shall nevertheless thereupon become effective and the Lenders shall perform all
of the duties of the Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.
8.10 Collateral Matters.
(a) The Agent is authorized (but not required) on behalf of all the
Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
the Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral:
(i) upon termination of the Commitments and payment in full of all
Loans and all other Obligations then payable under this Agreement and
under any other Loan Document;
(ii) constituting Property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder;
(iii) consisting of an instrument evidencing Indebtedness or of any
other debt instrument, if the Indebtedness evidenced thereby has been paid
in full; or
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(iv) if approved, authorized or ratified in writing by the Required
Lenders or all the Lenders, as the case may be, as provided in subsection
9.1(f).
Upon request by the Agent at any time, the Lenders will confirm in writing the
Agent's authority to release particular types or items of Collateral pursuant to
this subsection 8.10(b).
(c) Each Lender agrees with and in favor of each other Lender (which
agreement shall not be for the benefit of the Borrower or any of its
Subsidiaries) that the Borrower's Obligations to such Lender under this
Agreement and the other Loan Documents shall be equally and ratably secured by
any Property and/or other collateral now or hereafter securing any obligations
of Holdings, the Borrower or any of its Subsidiaries to such Lender, whether or
not the same constitutes Collateral hereunder.
ARTICLE IX - MISCELLANEOUS
9.1 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 Required Lenders, the Borrower and acknowledged by the Agent, and then such
waiver 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, the Borrower and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to subsection 7.2(a));
(b) postpone or delay any date fixed for, or waive, any payment of
principal, interest, fees or other amounts due to the Lenders (or any of them)
hereunder or under any other Loan Document (other than any postponement or delay
of any date fixed for any mandatory prepayment of the Loans pursuant to
subsection 1.8(c), 1.8(d) or 1.8(e));
(c) reduce the principal of, or the rate of interest specified herein or
the amount of interest payable in cash specified herein on any Loan, or of any
fees or other amounts payable hereunder or under any other Loan Document (other
than waiver of default interest);
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for the Lenders or any of
them to take any action hereunder;
(e) amend this Section 9.1 or the definition of Required Lenders or any
provision providing for consent or other action by all Lenders; or
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(f) discharge Holdings, the Borrower or any Subsidiary of the Borrower
from their respective Obligations under the Loan Documents, or release all or
substantially all of the Collateral except as otherwise may be provided in this
Agreement or the other Loan Documents;
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Lenders or all the
Lenders, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document.
9.2 Notices.
(a) All notices, requests and other communications provided for hereunder
shall be in writing (including, unless the context expressly otherwise provides,
by facsimile transmission) and mailed by certified or registered mail, faxed or
delivered by personal or overnight delivery, to the address or facsimile number
specified for notices on the applicable signature page hereof; or, if directed
to the Borrower or the Agent, to such other address as shall be designated by
such party in a written notice to each of the other parties hereto given in
compliance herewith, or, if directed to any other party hereto, to such other
address as shall be designated by such party in a written notice given in
compliance herewith to the Borrower and the Agent.
(b) All such notices, requests and communications shall be effective (i)
if delivered in person, when delivered, (ii) if delivered by facsimile
transmission, on the date of transmission if transmitted on a Business Day
before 4:00 p.m. Chicago time, otherwise on the next Business Day, (iii) if
delivered by overnight courier, one (1) Business Day after delivery to the
courier properly addressed and (iv) if mailed, upon the third (3rd) Business Day
after the date deposited into the U.S. Mail, certified or registered; except
that notices pursuant to Article I shall not be effective until actually
received by the Agent.
(c) The Borrower acknowledges and agrees that any agreement of the Agent
and the Lenders in Article I hereof to receive certain notices by telephone and
facsimile transmission is solely for the convenience and at the request of the
Borrower. The Agent and the Lenders shall be entitled to rely on the authority
of any Person purporting to be a Person authorized by the Borrower to give such
notice and the Agent and the Lenders shall not have any liability to the
Borrower or other Person on account of any action taken or not taken by the
Agent or the Lenders in reliance upon such telephonic or facsimile notice. The
obligation of the Borrower to repay the Loans shall not be affected in any way
or to any extent by any failure by the Agent and the Lenders to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Lenders of a confirmation which is at variance with the terms understood
by the Agent and the Lenders to be contained in the telephonic or facsimile
notice.
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9.3 No Waiver; Cumulative Remedies.
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.
No course of dealing between Borrower, any Affiliate of Borrower, Agent or any
Lender shall be effective to amend, modify or discharge any provision of this
Agreement or any of the other Loan Documents. No provision in any Loan Document
and no course of dealing between the parties hereto or thereto shall be deemed
to create a fiduciary duty owing by Agent or any Lender to Holdings, Borrower or
any of their Subsidiaries.
9.4 Costs and Expenses.
Whether or not the transactions contemplated hereby shall be consummated,
the Borrower shall pay or reimburse:
(a) Antares (including in its capacity as Agent) within five (5) Business
Days after demand (except as otherwise provided in subsection 2.1(f)) for all
reasonable out-of-pocket costs and expenses incurred by Antares (including in
its capacity as Agent) in connection with the development, preparation,
syndication, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any other Loan Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the reasonable Attorney
Costs incurred by Antares (including in its capacity as Agent) with respect
thereto and for all Attorney Costs and out-of-pocket costs and expenses incurred
by Antares (including in its capacity as Agent) in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
during the existence of an Event of Default (including in connection with any
"workout" or restructuring regarding the Loans, and including any Insolvency
Proceeding or appellate proceeding) under this Agreement, any other Loan
Document, and any such other documents;
(b) Lenders within five (5) Business Days after demand for all
out-of-pocket costs and expenses and Attorney Costs of one law firm, on behalf
of all Lenders (other than Antares) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
during the existence of an Event of Default (including in connection with any
"workout" or restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding) under this Agreement or any other Loan
Document; and
(c) Agent within five (5) Business Days after demand for all out-of-pocket
appraisal, audit, environmental inspection and review (including the allocated
cost of such internal services, search and filing costs, fees and expenses,
incurred or sustained by Agent in connection with the matters referred to under
clause (a) of this Section 9.4.
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9.5 Indemnity.
Whether or not the transactions contemplated hereby shall be consummated,
the Borrower shall indemnify, defend and hold harmless each Lender, the Agent
and each of their respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") from and against any and all
liabilities, obligations, actual losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses or disbursements (including reasonable Attorney
Costs):
(a) of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and any
other Loan Documents, or the transactions contemplated hereby and thereby, and
with respect to any investigation, litigation, suit or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to this Agreement or the
Loans, or the use of the proceeds thereof, whether or not any Indemnified Person
is a party thereto; and
(b) which may be incurred by or asserted against such Indemnified Person
in connection with or arising out of any pending or threatened investigation,
litigation or proceeding, or any action taken by any Person, with respect to any
Environmental Claim arising out of or related to any Property of the Borrower or
any of its Subsidiaries;
(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 to the extent arising from the gross
negligence or willful misconduct of any Indemnified Person or its officers,
employees, agents and attorneys-in-fact, as determined by a court of competent
jurisdiction.
No action taken by legal counsel chosen by the Agent or any Lender in
defending against any investigation, litigation or proceeding or requested
remedial, removal or response action shall vitiate or any way impair the
Borrower's obligation and duty hereunder to indemnify and hold harmless the
Agent and each Lender. In no event shall any site visit, observation, or testing
by the Agent or any Lender (or any contractee of the Agent or any Lender) be
deemed a representation or warranty that Hazardous Materials are or are not
present in, on, or under, the site, or that there has been or shall be
compliance with any Environmental Law. Neither the Borrower nor any other Person
is entitled to rely on any site visit, observation, or testing by the Agent or
any Lender. Neither the Agent nor any Lender owes any duty of care to protect
the Borrower or any other Person against, or to inform the Borrower or any other
Person of, any Hazardous Materials or any other adverse condition affecting any
site or Property. Neither the Agent nor any Lender shall be obligated to
disclose to the Borrower or any other Person any report or findings made as a
result of, or in connection with, any site visit, observation, or testing by the
Agent or any Lender.
The obligations in this Section 9.5 shall survive payment of all other
Obligations. At the election of any Indemnified Person, the Borrower shall
defend such Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such
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Person's sole discretion, at the sole cost and expense of the Borrower. All
amounts owing under this Section 9.5 shall be paid within thirty (30) days after
demand.
9.6 Marshaling; Payments Set Aside.
Neither the Agent nor any Lender shall be under any obligation to marshal
any assets in favor of the Borrower or any other Person or against or in payment
of any or all of the Obligations. To the extent that the Borrower makes a
payment or payments to the Agent or any Lender, or the Agent or any Lender
enforces its Liens or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the Agent in
its discretion) to be repaid to a trustee, receiver or any other party in
connection with any Insolvency Proceeding, or otherwise, then:
(a) to the extent of such recovery the Obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred; and
(b) each Lender severally agrees to pay to the Agent upon demand its
ratable share of the total amount so recovered from or repaid by the Agent.
9.7 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided that any assignment by any Lender shall be subject to the provisions of
Section 9.8 hereof, and provided further that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Lender.
9.8 Assignments, Participations, etc.
(a) Any Lender may, with the written consent of the Borrower, which
consent shall not be unreasonably withheld (provided that such consent shall not
be required at any time that an Event of Default exists or in connection with an
assignment of a Term Loan to a Related Fund) and of Agent, at any time assign
and delegate to one or more Eligible Assignees (provided that the written
consent of the Agent or the Borrower shall not be required in connection with
any assignment and delegation by a Lender to an Eligible Assignee that is an
Affiliate of such Lender) (each an "Assignee") all, or any part of, the Loans,
the Commitments and the other rights and obligations of such Lender hereunder,
in a minimum amount of $5,000,000 (or such lesser amount as Agent in its sole
discretion may agree) or, if less, the entire Commitment or Loan(s) of such
Lender; 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,
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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 form and substance
reasonably satisfactory to Agent, such Lender and its Assignee (an
"Assignment and Acceptance");
(iii) such Assignee, if it is to become a Non-U.S. Lender, shall
have complied with the provisions of subsection 10.1(f); and
(iv) the assignor Lender or the Assignee has paid to the Agent a
processing fee in the amount of $3,500.
(b) Subject to the provisions of subsection 9.8(f) below, from and after
the date that the Agent notifies the assignor Lender that the Agent has received
and provided its consent with respect to 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 hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under this Agreement and the other 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 the Loan Documents.
(c) Subject to the provisions of subsection 9.8(f) below, immediately upon
the making of the processing fee payment to the Agent in respect of 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 Commitment of the
assigning Lender to the same extent.
(d) Any Lender may at any time sell to one or more commercial banks 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;
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(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 shall have rights to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would
require unanimous consent of the Lenders as described in the first proviso
to Section 9.1.
In the case of any such participation, the Participant shall not have any rights
under this Agreement, or any of the other Loan Documents, and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation.
(e) Notwithstanding any other provision contained in this Agreement or any
other Loan Document to the contrary, any Lender may assign (i) all or any
portion of the Loans held by it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Federal Reserve
Board and any Operating Circular issued by such Federal Reserve Bank or (ii)
pledge all or any portion of the Loans held by it (and Notes evidencing such
Loans) to its unaffiliated lenders for collateral security purposes, provided
that any payment in respect of such assigned Loans made by the Borrower to or
for the account of the assigning or pledging Lender in accordance with the terms
of this Agreement shall satisfy the Borrower's obligations hereunder in respect
to such assigned or pledged Loans to the extent of such payment. No such
assignment or pledge shall release the assigning Lender from its obligations
hereunder.
(f) The Agent shall, on behalf of the Borrower, maintain at its address
referred to in Section 9.2 a copy of each Assignment and Acceptance delivered to
it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of demonstrable error, and the Borrower, the Agent
and the Lenders shall treat each Person whose name is recorded in the Register
as the owner of the Commitments, Loans and any Notes evidencing such Loans
recorded therein for all purposes of this Agreement. Any assignment of any
Commitment and/or Loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register.
Any assignment or transfer of all or part of a Commitment and/or Loan evidenced
by a Note shall be registered on the Register only upon a surrender or
registration of assignment or transfer of the Note evidencing such Loan,
accompanied by a duly executed Assignment and Acceptance; thereupon one or more
new Notes in the same aggregate principal amount shall be issued to the
designated assignee and, if applicable, assignor, and the old Notes shall be
returned by the Agent to the Borrower marked "cancelled". The Register shall be
available for inspection by the Borrower or any Lender (with respect to any
entry relating to such Lender's Commitments and Loans) at any reasonable time
and from time to time upon reasonable prior notice.
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9.9 Confidentiality.
Each of the Agent and the Lenders shall maintain in confidence in
accordance with its customary procedures for handling confidential information,
all written information that Holdings, the Borrower or any of its Subsidiaries,
or any of their authorized representatives, furnishes to the Agent or any Lender
on a confidential basis ("Confidential Information"), other than any such
Confidential Information that becomes generally available to the public other
than as a result of a breach by the Agent or any Lender of its obligations
hereunder or that is or becomes available to the Agent or such Lender from a
source other than Holdings, the Borrower or any of its Subsidiaries, or any of
their authorized representatives, and that is not, to the actual knowledge of
the recipient thereof, subject to obligations of confidentiality with respect
thereto; provided, however, that the Agent and each Lender shall in any event
have the right to deliver copies of any such documents, and to disclose any such
information, to:
(a) (i) its directors, officers, trustees, partners, employees, agents,
attorneys, and professional consultants who are informed of the confidential
nature thereof and (ii) portfolio management services and rating agencies;
(b) any other Lender and any successor Agent;
(c) any Person to which such Lender offers to sell any Loan or any part
thereof or interest or participation therein (provided such Person agrees to
keep such information confidential on the terms set forth in this Section 9.9);
(d) any federal or state regulatory authority or examiner, or any
insurance industry association, regulating or having jurisdiction over the Agent
or such Lender; and
(e) any other Person to which such delivery or disclosure may be necessary
or appropriate (i) in compliance with any applicable law, rule, regulation or
order, (ii) in response to any subpoena or other legal process or informal
investigative demand (in which event the Agent or such Lender agrees to provide
notice thereof to the Borrower), (iii) in connection with any litigation to
which the Agent or such Lender is a party (in which event the Agent or such
Lender agrees to provide notice thereof to the Borrower), or (iv) in connection
with the enforcement of the rights and remedies of the Agent or the Lenders
under this Agreement and the other Loan Documents at any time when an Event of
Default shall have occurred and be continuing.
The confidentiality provisions hereunder shall not apply to disclosures
consisting of general portfolio information that does not identify the Borrower.
9.10 Set-off; Sharing of Payments.
In addition to any rights and remedies now or hereafter granted under
applicable law, and not by way of limitation of any such rights or remedies at
any time and from time to time, upon the occurrence and during the continuance
of any Event of Default, each Lender is hereby authorized by the Borrower, with
reasonably prompt subsequent
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notice to the Borrower or to any other Person (any prior or contemporaneous
notice being hereby expressly waived by the Borrower) to set off and to
appropriate and to apply any and all
(a) balances held by such Lender at any of its offices for the account of
the Borrower or any of its Subsidiaries (regardless of whether such balances are
then due to the Borrower or any of its Subsidiaries); and
(b) other Property at any time held or owing by such Lender to or for the
credit or for the account of the Borrower or any of its Subsidiaries;
against and on account of any and all Obligations which are not paid when due;
except that no Lender shall exercise such right without the prior written
consent of the Agent. Any Lender having a right to set off shall purchase for
cash (and the other Lenders shall sell) participations in each such other
Lender's pro rata share of the Obligations as would be necessary to cause such
Lender to share the benefit of such right of set-off with each other Lender in
accordance with their respective pro rata shares of the Obligations. The
Borrower agrees, to the fullest extent permitted by law, that (i) any Lender may
exercise its right to set off with respect to amounts in excess of its pro rata
share of the Obligations and may sell participations to other Lenders, and (ii)
any Lender so purchasing a participation in the Obligations held by other
Lenders may exercise all rights of setoff, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Obligations in the amount of such participation. The
Borrower hereby grants to each Lender a security interest in all such deposits
and other Property, whether now existing or hereafter arising, held by each
Lender for the purposes set forth herein.
9.11 Notification of Addresses, Lending Offices, Etc.
Each Lender shall notify the Agent in writing of any changes in the
address to which notices to the such Lender should be directed, of addresses of
its Lending Office, of payment instructions in respect of all payments to be
made to it hereunder and of such other administrative information as the Agent
shall reasonably request.
9.12 Counterparts.
This Agreement may be executed by one or more of the parties to this
Agreement in any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be lodged with each
of the Borrower and the Agent.
9.13 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
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agreement required hereunder. Any Loan Document (but not the Notes), or other
agreement, document or instrument, delivered by facsimile transmission shall
have the same force and effect as the original thereof had been delivered.
9.14 Captions.
The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
9.15 Independence of Provisions.
The parties hereto acknowledge that this Agreement and other Loan
Documents may use several different limitations, tests or measurements to
regulate the same or similar matters, and that such limitations, tests and
measurements are cumulative and must each be performed, except as expressly
stated to the contrary in this Agreement.
9.16 Interpretation.
This Agreement is the result of negotiations among and has been reviewed
by counsel to the Agent, the Borrower and other parties hereto, and is the
product of all parties hereto. Accordingly, this Agreement and the other Loan
Documents shall not be construed against the Lenders or the Agent merely because
of the Agent's or Lenders' involvement in the preparation of such documents and
agreements.
9.17 No Third Parties Benefited.
This Agreement is made and entered into for the sole protection and legal
benefit of the Borrower, the Lenders and the Agent, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents. Neither the
Agent nor any Lender shall have any obligation to any Person not a party to this
Agreement or the other Loan Documents.
9.18 Governing Law and Jurisdiction.
(A) THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES; PROVIDED THAT THE AGENT AND THE
LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(B) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
LOAN DOCUMENT AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
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DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER
IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST AGENT OR ANY LENDER OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
9.19 Waiver of Jury Trial.
THE 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 PARTIES,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
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 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.
9.20 Entire Agreement; Release.
This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among Holdings, the Borrower, its
Subsidiaries, the Lenders and the Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, oral or written,
relating to the subject matter hereof and thereof and any prior arrangements
made with respect to the payment by the Borrower of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Agent or the Lenders. Borrower has relied exclusively on the terms
and provisions contained in this Agreement and the other Loan Documents in its
execution and delivery hereof and thereof and entering into the transactions
which are the subject hereof and thereof. Execution of this Agreement by the
Borrower constitutes a full, complete and irrevocable release of any and all
claims which the Borrower may have at law or in equity in
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respect of all prior discussions and understandings, oral or written, relating
to the subject matter of this Agreement and the other Loan Documents. Neither
Agent nor any Lender shall be liable to the Borrower or any other Person on any
theory of liability for any special, indirect, consequential or punitive
damages.
ARTICLE X - TAXES, YIELD PROTECTION AND ILLEGALITY
10.1 Taxes.
(a) Subject to subsection 10.1(g), any and all payments by the Borrower to
each Lender or the Agent under this Agreement shall be made free and clear of,
and without deduction or withholding for, any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction under the laws of which such Lender
or the Agent, as the case may be, is organized or maintains a Lending Office or
any political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes").
(b) In addition, the Borrower shall pay 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 Document (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 10.1(g), the Borrower shall 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 10.1) 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 from the date such Lender or the Agent makes written
demand therefor.
(d) 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, subject to subsection 10.1(g):
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 10.1) 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 been made;
(ii) the Borrower shall make such deductions; and
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(iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable law.
(e) Within thirty (30) days after the date of any payment by the Borrower
of Taxes or Other Taxes, the Borrower shall furnish to the Agent the original or
a certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Lender that is not a citizen or resident of the United States of
America, a corporation, partnership or other entity created or organized in or
under the laws of the United States (or any jurisdiction thereof), or any estate
or trust that is subject to federal income taxation regardless of the source of
its income (a "Non-U.S. Lender") shall deliver to the Borrower and the Agent two
copies of each U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or any
subsequent versions thereof or successors thereto, or (which in the case of a
Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", shall be a Form W-8BEN, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender delivers a Form W-8BEN, a
certificate representing that such Non-U.S. Lender is not a "bank" for purposes
of Section 881(c) of the Code, is not a ten-percent (10%) shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by the Borrower under this Agreement and
the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Agreement. In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the
U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this subsection, a Non-U.S. Lender shall not be required to deliver any form
pursuant to this subsection that such Non-U.S. Lender is not legally able to
deliver.
(g) The Borrower will not be required to pay any additional amounts in
respect of United States Federal income tax pursuant to subsection 10.1(d) to
any Lender for the account of any Lending Office of such Lender:
(i) if the obligation to pay such additional amounts would not have
arisen but for a failure by such Lender to comply with its obligations
under subsection 10.1(f) in respect of such Lending Office;
(ii) if such Lender shall have delivered to the Borrower a Form
W-8BEN and/or Form W-8ECI, or any subsequent versions thereof or
successors thereto, in respect of such Lending Office pursuant to
subsection 10.1(f), and such Lender shall not at any time be entitled to
exemption from deduction or
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withholding of United States Federal income tax in respect of payments by
the Borrower hereunder for the account of such Lending Office for any
reason other than a change in United States law, treaty or regulations or
in the official interpretation of such law or regulations by any
Governmental Authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the date of
delivery of such Form W-8BEN and/or Form W-8ECI, or any subsequent
versions thereof or successors thereto; or
(iii) if such Lender shall have delivered to the Borrower a Form
W-8BEN, or any subsequent versions thereof or successors thereto, in
respect of such Lending Office pursuant to subsection 10.1(f), and such
Lender shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by
the Borrowers hereunder for the account of such Lending Office for any
reason other than a change in the United States law or regulations or any
applicable tax treaty or regulations or in the official interpretation of
any such law, treaty or regulations by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having
the force of law) after the date of delivery of such Form W-8BEN (or
subsequent versions thereof or successors thereto).
(h) If, at any time, the Borrower requests any Lender to deliver any forms
or other documentation pursuant to subsection 10.1(f), then the Borrower shall,
on demand of such Lender through the Agent, reimburse such Lender for any costs
and expenses (including reasonable Attorney Costs) reasonably incurred by such
Lender in the preparation or delivery of such forms or other documentation.
(i) If the Borrower is required to pay additional amounts to any Lender or
the Agent pursuant to subsection 10.1(d), then such Lender shall use its
reasonable best 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.
10.2 Illegality.
(a) If after the date hereof any Lender shall determine that the
introduction of any Requirement of Law, or any change in any Requirement of Law
or in the interpretation or administration thereof by the applicable
Governmental Authority, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for any Lender or its
Lending Office to make LIBOR Rate Loans, then, on notice thereof by such Lender
to the Borrower through the Agent, the obligation of that Lender to make LIBOR
Rate Loans shall be suspended until such Lender shall have notified the Agent
and the Borrower that the circumstances giving rise to such determination no
longer exists.
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(b) Subject to clause (c) below, if any Lender shall determine that it is
unlawful to maintain any LIBOR Rate Loan, the Borrower shall prepay in full all
LIBOR Rate Loans of such Lender then outstanding, together with interest accrued
thereon, either on the last day of the Interest Period thereof if such Lender
may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBOR
Rate Loans, together with any amounts required to be paid in connection
therewith pursuant to Section 10.4.
(c) If the obligation of any Lender to make or maintain LIBOR Rate Loans
has been terminated, the Borrower may elect, by giving notice to the Lender
through the Agent that all Loans which would otherwise be made by any such
Lender as LIBOR Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent pursuant to this Section 10.2,
the affected Lender shall designate a different Lending Office with respect to
its LIBOR Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Lender, be
illegal or otherwise disadvantageous to the Lender.
10.3 Increased Costs and Reduction of Return.
(a) If any Lender shall determine that, due to either (i) the introduction
of, or any change in, or in the interpretation by the applicable Governmental
Authority of, any law or regulation or (ii) the compliance with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law) made, in the case of clause (i) or (ii) subsequent to
the date hereof, there shall be any increase in the cost to such Lender of
agreeing to make or making, funding or maintaining any LIBOR Rate Loans, then
the Borrower shall be liable for, and shall from time to time, within 30 days of
demand therefor by such Lender (with a copy of such demand 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; provided, that the Borrower
shall not be required to compensate a Lender pursuant to this subsection 10.3(a)
for any increased costs incurred more than one hundred eighty (180) days prior
to the date that such Lender notifies the Borrower of the law, rule, regulation,
order, guideline, request or other legal requirement of any central bank or
other Governmental Authority (whether or not having the force of law) giving
rise to such increased costs and of such Lender's intention to claim
compensation therefore; provided, further, that if such law, rule, regulation,
order, guideline, request or other legal requirement giving rise to such
increased costs is retroactive, then the one hundred eighty-day (180-day) period
referred to above shall be extended to include the period of retroactive effect
thereof.
(b) If any Lender shall have determined that:
(i) the introduction of any Capital Adequacy Regulation;
(ii) any change in any Capital Adequacy Regulation;
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(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 such Lender (or its Lending Office) or any
corporation controlling the Lender, with any Capital Adequacy Regulation;
affects the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and (taking into consideration
such Lender's or such corporation'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(s), loans, credits or
obligations under this Agreement, then, within thirty (30) days of demand of
such Lender (with a copy to the Agent), the Borrower shall upon demand pay to
such Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate such Lender for such increase; provided, that the
Borrower shall not be required to compensate a Lender pursuant to this
subsection 10.3(b) for any such increase incurred more than one hundred eighty
(180) days prior to the date that such Lender notifies the Borrower of the
Capital Adequacy Regulation giving rise to such increase and of such Lender's
intention to claim compensation therefore; provided, further, that if such
Capital Adequacy Regulation giving rise to such increase is retroactive, then
the one hundred eighty-day (180-day) period referred to above shall be extended
to include the period of retroactive effect thereof.
10.4 Funding Losses.
The Borrower agrees to reimburse each Lender and to hold each Lender
harmless from any loss (but excluding any loss of profit) or expense which such
Lender may sustain or incur as a consequence of:
(a) the failure of the Borrower to make any payment or mandatory
prepayment of principal of any LIBOR Rate Loan when due (including payments made
after any acceleration thereof);
(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;
(c) the failure of the Borrower to make any prepayment after the Borrower
has given a notice in accordance with Section 1.7;
(d) the prepayment (including pursuant to Section 1.8) by the Borrower of
a LIBOR Rate Loan on a day which is not the last day of the Interest Period with
respect thereto; or
(e) the conversion pursuant to Section 1.6 of any LIBOR Rate Loan to a
Base Rate Loan on a day that is not the last day of the applicable Interest
Period;
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including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Rate Loans hereunder or from fees
payable to terminate the deposits from which such funds were obtained (but
excluding any loss of profit). Solely for purposes of calculating amounts
payable by the Borrower to the Lenders under this Section 10.4 and under
subsection 10.3(a): each LIBOR Rate Loan made by a Lender (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the LIBOR used in determining the interest rate for such
LIBOR Rate Loan by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such LIBOR Rate Loan is in fact so funded.
10.5 Inability to Determine Rates.
If the Agent shall have determined in good faith that for any reason
adequate and reasonable means do not exist for ascertaining the LIBOR for any
requested Interest Period with respect to a proposed LIBOR Rate Loan or that the
LIBOR applicable pursuant to subsection 1.3(a) 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 forthwith
give notice of such determination to the Borrower and each Lender. Thereafter,
the obligation of the Lenders to make or maintain LIBOR Rate 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
Loans.
10.6 Reserves on LIBOR Rate Loans.
The Borrower shall pay to each Lender, as long as such Lender shall be
required under regulations of the Federal Reserve Board to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
funds or deposits (currently known as "Eurocurrency liabilities"), additional
costs on the unpaid principal amount of each LIBOR Rate Loan equal to actual
costs of such reserves allocated to such Loan by such Lender (as determined by
the Lender in good faith, which determination shall be conclusive absent
demonstrable error), payable on each date on which interest is payable on such
Loan provided the Borrower shall have received at least fifteen (15) days' prior
written notice (with a copy to the Agent) of such additional interest from the
Lender. If a Lender fails to give notice fifteen (15) days prior to the relevant
Interest Payment Date, such additional interest shall be payable fifteen (15)
days from receipt of such notice.
10.7 Certificates of Lenders.
Any Lender claiming reimbursement or compensation pursuant to this Article
X shall deliver to the Borrower (with a copy to the Agent) a certificate setting
forth in
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reasonable detail the amount payable to such Lender hereunder and such
certificate shall be conclusive and binding on the Borrower in the absence of
demonstrable error.
10.8 Survival.
The agreements and obligations of the Borrower in this Article X shall
survive the payment of all other Obligations.
10.9 Replacement of Lender in Respect of Increased Costs.
Within forty-five (45) days after receipt by the Borrower of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional costs as provided in subsections 10.1, 10.3 and 10.6, the Borrower
may, at its option, notify the Agent and such Affected Lender of the Borrower's
intention to obtain, at the Borrower's expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to the Agent. In the event the Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender shall sell and assign its Loans and Commitments to
such Replacement Lender, provided that the Borrower has reimbursed such Affected
Lender for its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment.
10.10 Change of Lending Office.
Each Lender agrees that, upon the occurrence of any event giving rise to
the operation of Section 10.1(c) or Section 10.3 with respect to such Lender, it
will, if requested by the Borrower, use reasonable efforts (subject to overall
policy considerations of such Lender) to designate another lending office for
any Loans affected by such event with the object of avoiding or minimizing the
consequences of such event; provided that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section 10.10 shall affect or postpone any of the
obligations of the Borrower or the rights of any Lender pursuant to this
Agreement or any other Loan Document.
ARTICLE XI - DEFINITIONS
11.1 Defined Terms.
The following terms are defined in the Sections or subsections referenced
opposite such terms:
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"Adjusted Leverage EBITDA" Exhibit 4.2
"Affected Lender" 10.9
"Agreement" Preamble
"Assignee" 9.8(a)
"Assignment and Acceptance" 9.8(a)(ii)
"Borrower" Preamble
"Capital Expenditures" Exhibit 4.2(b)
"China Subsidiary" 5.4(d)
"Commitment Fee" 1.9(b)
"Compliance Certificate" 4.2(b)
"Confidential Information" 9.9
"EBITDA" Exhibit 4.2(b)
"Environmental Permits" 3.12(b)
"Event of Default" 7.1
"Excess Cash Flow" Exhibit 1.8(d)
"Excluded Equity Proceeds" 1.8(d)
"Fixed Charge Coverage Ratio" Exhibit 4.2(b)
"Form W-8BEN" 10.1(f)
"Form W-8ECI" 10.1(f)
"Indemnified Person" 9.5
"Indemnified Liabilities" 9.5
"Investments" 5.4
"Interest Coverage Ratio" Exhibit 4.2(b)
"Interest Settlement Date" 1.12(d)
"Lender" Preamble
"Lender Letter of Credit" 1.1(c)
"Letter of Credit Participation Agreement" 1.1(c)
"Letter of Credit Participation Fee" 1.9(b)
"Leverage Ratio" Exhibit 4.2(b)
"Management Redemption Notes" 5.5(i)
"Maximum Revolving Loan Balance" 1.1(b)
"Mortgaged Properties" 2.1(d)
"Non-U.S. Lender" 10.1(f)
"Originating Lender" 9.8 (d)
"Other Taxes" 10.1(b)
"Participant" 9.8(d)
"Permitted Liens" 5.1
"Register" 9.8(g)
"Restricted Payments" 5.11
"Replacement Lender" 10.9
"Revolving Loan Commitment" 1.1(b)
"Revolving Loan" 1.1(b)
"Settlement Date" 1.12(b)
"Taxes" 10.1(a)
"Term Loan" 1.1(a)
"Term Loan Commitment" 1.1(a)
In addition to the terms defined elsewhere in this Agreement, the following
terms have the following meanings:
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"Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of fifty percent (50%) of
the capital stock, partnership interests or equity of any Person or otherwise
causing any Person to become a Subsidiary of the Borrower, or (c) a merger or
consolidation or any other combination with another Person (other than a merger
of a Wholly-Owned Subsidiary of the Borrower with another Wholly-Owned
Subsidiary of the Borrower).
"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. 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. Without
limitation, any director, executive officer or beneficial owner of five percent
(5%) or more of the equity of a Person shall for the purposes of this Agreement,
be deemed to control the other Person. Notwithstanding the foregoing, neither
the Agent nor any Lender shall be deemed an "Affiliate" of the Borrower or of
any Subsidiary of the Borrower.
"Agent" means Antares in its capacity as agent for the Lenders hereunder,
and any successor agent, in such capacity appointed pursuant to this Agreement.
"Agent-Related Persons" means Antares and any successor agent arising
under Section 8.9, together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Aggregate Revolving Loan Commitment" means the combined Revolving Loan
Commitments of the Lenders, which shall initially be in the amount of
$15,000,000, as such amount may be reduced from time to time pursuant to this
Agreement.
"Aggregate Term Loan Commitment" means the combined Term Loan Commitments
of the Lenders, which shall initially be in the amount of $25,000,000, as such
amount may be reduced from time to time pursuant to this Agreement.
"Antares" means Antares Capital Corporation, a Delaware corporation..
"Applicable Margin" means with respect to Base Rate Loans, 2.25%, and with
respect to LIBOR Rate Loans, 3.50%.
"Assumed Indebtedness" means with respect to Indebtedness of a Person that
is acquired in connection with a Permitted Acquisition (or Indebtedness assumed
at the time of a Permitted Acquisition of assets, as opposed to a Permitted
Acquisition of equity) which (i) is in existence at the time such Person becomes
a Subsidiary of the Borrower as a result of such Permitted Acquisition or such
asset is acquired pursuant to such Permitted Acquisition, as applicable, and
(ii) has not been incurred or created in connection with, or in anticipation or
contemplation of, such Permitted Acquisition.
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"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
"Availability Certificate" means a duly completed certificate of the
Borrower in substantially the form of Exhibit 11.1(a) hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. ss.101, et seq.), as amended and in effect from time to time and the
regulations issued from time to time thereunder.
"Base Rate" means, for any day, a rate of interest equal to the greater of
(a) the rate of interest which is identified as the "Prime Rate" and normally
published in the Money Rates section of The Wall Street Journal (or, if such
rate ceases to be so published, as quoted from such other generally available
and recognizable source as the Agent may select) and (b) the sum of the Federal
Funds Rate plus one half of one percent (0.50%). Any change in the Base Rate due
to a change in the "Prime Rate" or the Federal Funds Rate shall be effective on
the effective date of such change in the "Prime Rate" or the Federal Funds Rate.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Borrower Pledge Agreement" means that certain Pledge Agreement dated as
of even date herewith, in form and substance reasonably acceptable to Agent and
Borrower made by Borrower in favor of the Agent, for the benefit of Agent and
the Lenders.
"Borrower Security Agreement" means that certain Security Agreement dated
as of even date herewith, in form and substance reasonably acceptable to Agent
and Borrower, made by Borrower in favor of Agent, for the benefit of Agent and
the Lenders.
"Borrowing" means a borrowing hereunder consisting of Loans made to the
Borrower on the same day by the Lenders pursuant to Article I.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in Chicago, Illinois or New York, New York are authorized
or required by law to close and, if the applicable Business Day relates to any
LIBOR Rate Loan, a day on which dealings are carried on in the London interbank
market.
"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 Lender or of any corporation controlling a Lender.
"Capital Lease" means any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
"Capital Lease Obligations" means all monetary obligations of the Borrower
or any of its Subsidiaries under any Capital Leases.
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"Cash Equivalents" means: (a) securities issued or fully guaranteed or
insured by the United States Government or any agency thereof having maturities
of not more than six (6) months from the date of acquisition; (b) certificates
of deposit, time deposits, repurchase agreements, reverse repurchase agreements,
or bankers' acceptances, having in each case a tenor of not more than six (6)
months, issued by any Lender, or by any U.S. commercial bank or any branch or
agency of a non-U.S. bank licensed to conduct business in the U.S. having
combined capital and surplus of not less than $250,000,000; and (c) commercial
paper of an issuer rated at least A-1 by Standard & Poor's Rating Services, a
division of the McGraw Hill Companies, or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.
and in either case having a tenor of not more than twelve (12) months; (d) money
market funds provided that substantially all of the assets of such funds are
comprised of securities of the type described in clauses (a) through (c) above;
(e) mutual funds provided that substantially all of the assets of such funds are
comprised of securities of the type described in clauses (a) through (c) above;
and (f) in the case of any Non-U.S. Subsidiary, investments denominated in the
currency of the jurisdiction in which such Non-U.S. Subsidiary is organized or
has its principal place of business provided that substantially all of the
assets of such funds are comprised of securities similar to the type described
in clauses (a) through (e) above.
"Closing Date" means the date on which all conditions precedent set forth
in Section 2.1 are satisfied or waived by the Agent and all Lenders.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Collateral" means all Property and interests in Property and proceeds
thereof now owned or hereafter acquired by Holdings, the Borrower or any other
Person as debtor and their respective Subsidiaries and any other Person who has
granted a Lien to Agent, in or upon which a Lien now or hereafter exists in
favor of any Lender or the Agent for the benefit of the Lenders, whether under
this Agreement or under any other documents executed by any such Persons and
delivered to the Agent.
"Collateral Documents" means, collectively, the Security Agreements, the
Mortgages, the Guarantees, the Pledge Agreements, and all other security
agreements, patent and trademark assignments, lease assignments, guarantees and
other similar agreements, and all amendments, restatements, modifications or
supplements thereof or thereto, by or between any one or more of Holdings, the
Borrower, Borrower's Subsidiaries or any other Person pledging or granting a
Lien on Collateral and the Agent for the benefit of Agent and the Lenders now or
hereafter delivered to the Agent pursuant to or in connection with the
transactions contemplated hereby, and all financing statements (or comparable
documents now or hereafter filed in accordance with the UCC or comparable law)
against Holdings, the Borrower or Borrower's Subsidiaries as debtor in favor of
any Lender or the Agent for the benefit of Agent and the Lenders, as secured
party.
"Commitment" means, for each Lender, the sum of its Revolving Loan
Commitment and Term Loan Commitment.
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"Commitment Percentage" means, as to any Lender, the percentage equivalent
of such Lender's Revolving Loan Commitment or Term Loan Commitment divided by
the Aggregate Revolving Loan Commitment or Aggregate Term Loan Commitment, as
applicable.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability, contingent or otherwise, of that Person: (i) with respect to any
Indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that
such liability will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such liability will be
protected (in whole or in part) against loss with respect thereto; (ii) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings; (iii) under
any Rate Contracts; (iv) to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement; or
(v) for the obligations of another through any agreement to purchase, repurchase
or otherwise acquire such obligation or any Property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another Person; provided, however, that Contingent Obligations shall
not include endorsements of instruments for deposit or collection, in each
instance, in the Ordinary Course of Business. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported or, if not a fixed and determined amount, the maximum amount
so guaranteed or supported.
"Contractual Obligations" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its Property is bound.
"Controlled Group" means the Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Borrower pursuant to Section 414(b), (c), (m) or (o) of the Code or Section 4001
of ERISA.
"Conversion Date" means any date on which the Borrower converts a Base
Rate Loan to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of a grace period, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Disposition" means (a) the sale, lease, conveyance or other disposition
of Property, other than (i) Events of Loss and (ii) sales or other dispositions
expressly permitted under subsection 5.2(a), 5.2(c), 5.2(d), 5.2(e), 5.2(f) and
5.2(g), and (b) the sale or transfer by the Borrower or any Subsidiary of the
Borrower of any equity securities issued by any Subsidiary of the Borrower and
held by such transferor Person.
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"Dollars", "dollars" and "$" each mean lawful money of the United States
of America.
"Eligible Assignee" means any of: (a) a commercial bank organized under
the laws of the United States, or any State thereof; (b) a commercial bank
organized under the laws of any other country; (c) a finance company, insurance
company or other financial institution or fund which is engaged in making,
purchasing or otherwise investing in commercial loans for its own account in the
ordinary course of its business; or (d) a Related Fund.
"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 or threat to public health, personal injury (including
sickness, disease or death), Property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon the presence, placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental, placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by the Borrower.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters; including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Emergency Planning and
Community Right-to-Know Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b), 414(c), 414(m) or 414(o) of the Code or of Section 4001 of
ERISA.
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by the Borrower or any ERISA
Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section 4041
or 4041A of ERISA or the commencement of proceedings by the PBGC
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to terminate a Qualified Plan or Multiemployer Plan subject to Title IV of
ERISA; (e) a failure by the Borrower or any member of the Controlled Group to
make required contributions to a Qualified Plan or Multiemployer Plan; (f) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Qualified Plan or Multiemployer Plan; (g) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Borrower or any
ERISA Affiliate; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Plan; (i) a non-exempt prohibited transaction occurs with respect to any Plan
for which the Borrower or any Subsidiary of the Borrower may be directly or
indirectly liable; or (j) a violation of the applicable requirements of Section
404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the
Code by any fiduciary or disqualified person with respect to any Plan for which
the Borrower or any member of the Controlled Group may be directly or indirectly
liable.
"Equity Sponsor Management Agreement" means that certain Management
Services Agreement between Borrower and Cornerstone Equity Investors, LLC dated
as of September 30, 1998, as amended by amendments dated as of November 23,
1998, September 30, 1998 and December 31, 2002.
"Event of Loss" means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property or (b) any actual
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such Property, or confiscation of such Property or the requisition
of the use of such Property.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward to the nearest 1/100th of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day,
provided that if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to the
Agent on such day on such transactions as determined by the Agent in a
commercially reasonable manner.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"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 comparable stature and authority within the accounting
profession), which are applicable to the circumstances as of the date of
determination.
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"Governmental Authority" means any nation or government, any state 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.
"Guarantees" means the Holdings Guaranty and the Subsidiary Guaranty"
"Hazardous Materials" means all those substances which are regulated by,
or which may form the basis of liability under, any Environmental Law.
"Holdings" means True Temper Corporation, a Delaware corporation.
"Holdings Guaranty" means that certain Guaranty, dated as of even date
herewith, in form and substance reasonably acceptable to Agent and Holdings,
made by Holdings in favor of the Agent, for the benefit of Agent and the
Lenders.
"Holdings Loans" means intercompany loans made by the Borrower or one of
its Wholly-Owned Subsidiaries to Holdings to the extent that, at the time such
loan is made, a dividend from the Borrower to Holdings would be permitted under
Section 5.11 and provided that the proceeds of such loans are used for the
purposes specified in Section 5.11.
"Holdings Pledge Agreement" means that certain Pledge Agreement dated as
of even date herewith, in form and substance reasonably acceptable to Agent and
Holdings, made by Holdings in favor of the Agent, for the benefit of Agent and
the Lenders.
"Holdings Security Agreement" means the Security Agreement, dated as of
even date herewith, in form and substance reasonably satisfactory to Agent and
Holdings, made by Holdings in favor of the Agent, for the benefit of Agent and
the Lenders.
"Indebtedness" of any Person means, without duplication: (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services (other than trade
payables and accrued operating expenses, in each instance, incurred in the
Ordinary Course of Business); (c) the face amount of all letters of credit
issued for the account of such Person and without duplication, all drafts drawn
thereunder and all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments issued by such Person; (d)
all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of Property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to Property acquired by the Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such Property); (f) all
Capital Lease Obligations; (g) the principal balance outstanding under any
synthetic lease, off-balance sheet loan or similar off-balance sheet financing
product; (h) all indebtedness referred to in clauses (a) through (g) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in Property
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(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such indebtedness;
and (i) all Contingent Obligations described in clause (i) of the definition
thereof in respect of indebtedness or obligations of others of the kinds
referred to in clauses (a) through (h) above. Notwithstanding anything to the
contrary contained herein, "Indebtedness" shall not include Contingent
Obligations of the Borrower or any of the Borrower's Subsidiaries incurred in
the Ordinary Course of Business with respect to surety and appeal bonds,
performance bonds and other similar obligations.
"Indenture" means that certain Indenture dated as of November 23, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust Company of New York pertaining
to the Subordinated Borrower Publicly Traded Notes.
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case in (a) and (b) above, undertaken under U.S. Federal,
State or foreign law, including the Bankruptcy Code.
"Interest Payment Date" means, (a) with respect to any LIBOR Rate Loan
(other than a LIBOR Rate Loan having an Interest Period of six (6) months) the
last day of each Interest Period applicable to such Loan, (b) with respect to
any LIBOR Rate Loan having an Interest Period of six (6) months, the last day of
each three (3) month interval, and (c) with respect to Base Rate Loans, the
first day of each calendar month.
"Interest Period" means, with respect to any LIBOR Rate Loan, the period
commencing on the Business Day such Loan is disbursed or continued or on the
Conversion Date on which a Base Rate Loan is converted to the LIBOR Rate Loan
and ending on the date one, two, three or six months thereafter, as selected by
the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(a) if any Interest Period pertaining to a LIBOR Rate Loan would
otherwise end on a day which is not a Business Day, that Interest Period
shall be extended to the next succeeding 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
immediately preceding Business Day;
(b) 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;
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(c) no Interest Period for the Term Loan shall extend beyond the
last scheduled payment date therefor and no Interest Period for any
Revolving Loan shall extend beyond the Revolving Termination Date; and
(d) no Interest Period applicable to the Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled
principal payment in respect of the Term Loan unless the aggregate
principal amount of the Term Loan represented by Base Rate Loans or by
LIBOR Rate Loans having Interest Periods that will expire on or before
such date is equal to or in excess of the amount of such principal
payment.
"Lending Office" means, with respect to any Lender, the office or offices
of the Lender specified as its "Lending Office" opposite its name on the
applicable signature page hereto, or such other office or offices of such Lender
as it may from time to time notify the Borrower and the Agent.
"Letter of Credit Participation Liability" means, as to each Lender Letter
of Credit and each Letter of Credit Participation Agreement, all reimbursement
obligations and all other liabilities of the Borrower or any of its Subsidiaries
to Agent and the Lenders in connection with the Lender Letter of Credit or to
the obligee with respect to the transaction for which the Letter of Credit
Participation Agreement was issued, whether contingent or otherwise, including
with respect to any letter of credit: (a) the amount available to be drawn or
which may become available to be drawn; (b) without duplication, all amounts
which have been paid or made available by the issuing bank or by the Agent under
such Lender Letter of Credit or Letter of Credit Participation Agreement, in
each instance, to the extent not reimbursed; and (c) all unpaid interest, fees
and expenses.
"Leverage Multiple" means, as of the applicable date, the following:
Date Leverage Multiple
---- -----------------
December 31, 2002 to March 28, 2003 4.60 to 1.00
March 29, 2004 to June 27, 2003 4.60 to 1.00
June 28, 2003 to September 26, 2003 4.60 to 1.00
September 27, 2004 to December 31, 2003 4.60 to 1.00
January 1, 2004 to March 26, 2004 4.35 to 1.00
March 27, 2004 to June 25, 2004 4.35 to 1.00
June 26, 2004 to September 24, 2004 4.35 to 1.00
September 25, 2004 to December 31, 2004 4.30 to 1.00
January 1, 2005 to April 1, 2005 4.15 to 1.00
April 2, 2005 to July 1, 2005 4.15 to 1.00
July 2, 2005 to September 30, 2005 4.00 to 1.00
October 1, 2005 to December 31, 2005 4.00 to 1.00
January 1, 2006 to March 31, 2006 3.90 to 1.00
April 1, 2006 to June 30, 2006 3.90 to 1.00
July 1, 2006 to September 30, 2006 3.80 to 1.00
October 1, 2006 to December 31, 2006 3.80 to 1.00
Thereafter 3.75 to 1.00
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"LIBOR" means, for each Interest Period, the offered rate per annum for
deposits of Dollars for the applicable Interest Period that appears on Telerate
Page 3750 as of 11:00 A.M. (London, England time) two (2) Business Days prior to
the first day in such Interest Period. If no such offered rate exists, such rate
will be the rate of interest per annum, as determined by the Agent (rounded
upwards, if necessary, to the nearest 1/16 of 1%) at which deposits of Dollars
in immediately available funds are offered at 11:00 A.M. (London, England time)
two (2) Business Days prior to the first day in such Interest Period by major
financial institutions reasonably satisfactory to the Agent in the London
interbank market for such Interest Period for the applicable principal amount on
such date of determination.
"LIBOR Rate Loan" means a Loan that bears interest based on LIBOR.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
otherwise) or preference, priority or other security interest of any kind or
nature whatsoever (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a lessor
under a Capital Lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as debtor,
under the UCC or any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a lessor under a
lease which is not a Capital Lease.
"Loan" means an extension of credit by a Lender to the Borrower pursuant
to Article I hereof, and may be a Base Rate Loan or a LIBOR Rate Loan.
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"Loan Documents" means this Agreement, the Notes, the Collateral Documents
and all documents delivered to the Agent and/or any Lender in connection with
any of the foregoing.
"Margin Stock" means "margin stock" as such term is defined in Regulation
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 financial
condition of Holdings, the Borrower's Subsidiaries taken as a whole; (b) a
material impairment of the ability of Holdings, the Borrower, any of its
Subsidiaries or any other Person (other than Agent or Lenders) to perform in any
material respect its obligations under any Loan Document; or (c) a material
adverse effect upon (i) the legality, validity, binding effect or enforceability
of any Loan Document, or (ii) the perfection or priority of any Lien granted to
the Lenders or to the Agent for the benefit of Agent and the Lenders under any
of the Collateral Documents.
"Mortgage" means any deed of trust, leasehold deed of trust, mortgage,
leasehold mortgage, deed to secure debt, leasehold deed to secured debt or other
document creating a Lien on real property or any interest in real Property.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA) and to which the Borrower or any member of the
Controlled Group may have any liability.
"Net Issuance Proceeds" means, in respect of any issuance of debt or
equity, cash proceeds and non-cash proceeds received or receivable in connection
therewith, net of reasonable out-of-pocket costs and expenses paid or incurred
in connection therewith in favor of any Person not an Affiliate of the Borrower.
"Net Proceeds" means proceeds in cash, checks or other cash equivalent
financial instruments (including Cash Equivalents) as and when received by the
Person making a Disposition and insurance proceeds received on account of an
Event of Loss, net of: (a) in the event of a Disposition (i) the reasonable
out-of-pocket costs and expenses relating to such Disposition excluding amounts
payable to the Borrower or any Affiliate of the Borrower, (ii) sale, use or
other transaction taxes paid or payable as a result thereof, (iii) amounts
required to be applied to repay principal, interest and prepayment premiums and
penalties on Indebtedness secured by a Lien on the asset which is the subject of
such Disposition and (iv) any cash reserves established in connection with such
Disposition provided such amounts shall constitute Net Proceeds as and to the
extent such cash is returned to Holdings, the Borrower or its Subsidiaries and
(b) in the event of an Event of Loss, (i) all money actually applied to repair
or reconstruct the damaged Property or Property affected by the condemnation or
taking, (ii) all of the costs and expenses reasonably incurred in connection
with the collection of such proceeds, award or other payments, and (iii) any
amounts retained by or paid to parties having superior rights to such proceeds,
awards or other payments.
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"Note" means any Revolving Note or Term Note and "Notes" means all such
Notes.
"Notice of Borrowing" means a notice given by the Borrower to the Agent
pursuant to Section 1.5, in substantially the form of Exhibit 11.1(b) hereto.
"Notice of Conversion/Continuation" means a notice given by the Borrower
to the Agent pursuant to Section 1.6, in substantially the form of Exhibit
11.1(c) hereto.
"Obligations" means all Loans, and other Indebtedness, advances, debts,
liabilities, obligations, covenants and duties owing by the Borrower to any
Lender, the Agent, or any other Person required to be indemnified, that arises
under any Loan Document, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification or
in any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. "Obligations" shall also include, for
purposes of the Collateral Documents only, any Rate Contract Obligations.
"Ordinary Course of Business" means, in respect of any transaction
involving Holdings, the Borrower or any Subsidiary of the Borrower, the ordinary
course of such Person's business, as conducted by any such Person in accordance
with past practice and undertaken by such Person in good faith and not for
purposes of evading any covenant or restriction in any Loan Document.
"Organization Documents" means, (a) for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation, (b) for any
partnership, the partnership agreement and, if applicable, certificate of
limited partnership or (c) for any limited liability company, the operating
agreement and articles or certificate of formation.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"Permitted Acquisition" means any Acquisition by Borrower or any domestic
Wholly-Owned Subsidiary of Borrower of assets located in the United States or
capital stock or other equity securities of an entity organized under the laws
of the United States, any state thereof, or the District of Columbia, to the
extent that each of the following conditions shall have been satisfied:
(a) the conditions set forth in subsection 2.3 shall have been
satisfied regardless of whether or not the Acquisition will be financed in
whole or in part with proceeds of Loans;
(b) the Borrower shall have furnished to the Agent and each Lender
at least ten (10) Business Days prior to the consummation of such
Acquisition (1) to the
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extent available, an executed term sheet and/or commitment letter (setting
forth in reasonable detail the terms and conditions of such Acquisition)
and, at the request of the Agent, such other information and documents
that the Agent may reasonably request, including, without limitation,
executed counterparts of the respective agreements, documents or
instruments pursuant to which such Acquisition is to be consummated
(including, without limitation, any related management, non-compete,
employment, option or other material agreements), any schedules to such
agreements, documents or instruments and all other material ancillary
agreements, instruments and documents to be executed or delivered in
connection therewith, (2) pro forma financial statements of Holdings, the
Borrower and its Subsidiaries after giving effect to the consummation of
such Acquisition, (3) a certificate of the chief financial officer of the
Borrower, demonstrating on a pro forma basis compliance with all covenants
set forth in Article VI hereof (recomputed for the most recent month for
which financial statements have been delivered) after giving effect to the
consummation of such Acquisition, (4) a statement identifying non-core
assets which Borrower intends to sell after consummation of such
Acquisition and (5) copies of such other agreements, instruments and other
documents in connection therewith as the Agent shall reasonably request;
(c) the agreements, instruments and other documents referred to in
paragraph (b) above shall provide that (1) neither Holdings, Borrower nor
any of its Subsidiaries shall, in connection with such Acquisition, assume
or remain liable in respect of any Indebtedness of the seller or sellers,
or other obligation of the seller or sellers (except for obligations
incurred in the Ordinary Course of Business in operating the property so
acquired and necessary and desirable to the continued operation of such
property and except for Indebtedness otherwise permitted hereunder), and
(2) all property to be so acquired in connection with such Acquisition
shall be free and clear of any and all Liens, except for Permitted Liens
(and if any such property is subject to any Lien not permitted by this
clause (2) then concurrently with such Acquisition such Lien shall be
released);
(d) the Target shall be engaged in business the Borrower is
permitted to engage in hereunder;
(e) such Acquisition shall be effected in such a manner so that the
acquired capital stock, other equity securities or assets are owned either
by Borrower or a domestic Wholly-Owned Subsidiary of Borrower and, if
effected by merger or consolidation, Borrower or a domestic Wholly-Owned
Subsidiary shall be the continuing or surviving Person;
(f) such Acquisition is not hostile and has been approved by the
board of directors (or other similar body) and/or the stockholders or
other equityholders of the Target;
(g) no Default or Event of Default shall then exist or would exist
after giving effect thereto and, without limiting the foregoing, after
giving effect to the
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Acquisition, the representations and warranties of Borrower and its
Subsidiaries contained herein and in the other Loan Documents shall be
true and correct;
(h) Borrower updates the schedules hereto and to each of the other
Loan Documents, as applicable, provided in no event may any schedule be
updated in a manner that would reflect or evidence a Default or Event of
Default;
(i) after giving effect to such Acquisition on a pro forma basis,
the Maximum Revolving Loan Balance shall exceed the outstanding principal
balance of Revolving Loans by not less than $5,000,000; and
(j) the Total Consideration to be paid for such Acquisition does not
exceed $5,000,000 (or $7,500,000 if Borrower's EBITDA, immediately before
and after giving effect to such Acquisition, is equal to or greater than
$32,000,000), and together with the Total Consideration paid with respect
to all other Permitted Acquisitions during the term of this Agreement does
not exceed $10,000,000;
For the purposes of the definition of Permitted Acquisition, "Total
Consideration" means the total consideration paid with respect to any
Acquisition, including without limitation, (i) all payments made in cash
and property, (ii) to the extent not included in clause (i) above, the
amount paid or to be paid pursuant to non-compete agreements and
consulting agreements, (iii) the amount of debt and other liabilities
assumed and/or incurred (including in the case of an Acquisition of stock
or other equity interests, the amount of debt and other liabilities of the
Person to be acquired), (iv) anticipated Capital Expenditures related to
an Acquisition and identified to Agent prior to the consummation of such
acquisition and (v) the amount of all transaction fees.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower or any member of the Controlled Group sponsors or
maintains or to which the Borrower or any member of the Controlled Group may
have any liability.
"Pledge Agreements" means the Borrower Pledge Agreement and the Holdings
Pledge Agreement.
"Pledged Collateral" has the meaning specified in the Pledge Agreements.
"Prior Indebtedness" means the indebtedness and obligations specified on
Schedule 11.1 hereto.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
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"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes, is
making or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least five (5)
plan years, but excluding any Multiemployer Plan.
"Rate Contract Obligations" means obligations of Borrower under a Rate
Contract between Borrower and a Lender, or an affiliate of a Lender, permitted
hereunder.
"Rate Contracts" means swap agreements (as such term is defined in Section
101 of the Bankruptcy Code), hedge agreements and any other agreements or
arrangements designed to provide protection against fluctuations in interest or
currency exchange rates.
"Related Fund" means (a) any fund, trust or similar entity that invests in
commercial loans in the Ordinary Course of Business and is advised or managed by
(i) a Lender, (ii) an Affiliate of a Lender, (iii) the same investment advisor
that manages a Lender or (iv) an Affiliate of an investment advisor that manages
a Lender or (b) any finance company, insurance company or other financial
institution which temporarily warehouses Loans for any Lender or any Person
described in clause (a) above.
"Related Transactions" means the transactions contemplated by the (i) the
repayment in full on the Closing Date of the Prior Indebtedness and (ii) the
partial repayment of, and funding into escrow with respect to, the Subordinated
Holdings Discount Notes on the Closing Date as contemplated by subsection
2.1(o).
"Reportable Event" means, as to any Plan, (a) any of the events set forth
in Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the thirty-day (30-day) notice requirement under ERISA has been
waived in regulations issued by the PBGC, (b) a withdrawal from a Plan described
in Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Required Lenders" means at any time (a) Lenders then holding at least
sixty six and two-thirds percent (66-2/3%) of the sum of the Aggregate Revolving
Loan Commitment then in effect plus the aggregate unpaid principal balance of
the Term Loan then outstanding, or (b) if the Revolving Loan Commitments have
been terminated, Lenders then having at least sixty six and two-thirds percent
(66-2/3%) of the aggregate unpaid principal amount of Loans then outstanding.
"Requirement of Law" means, as to any Person, any law (statutory or
common), ordinance, treaty, rule, regulation, order, policy, other legal
requirement or determination of an arbitrator or of a Governmental Authority, in
each case applicable to or binding upon such Person or any of its Property or to
which the Person or any of its Property is subject.
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"Responsible Officer" means the chief executive officer, the president or
any vice president of the Borrower, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance with
financial covenants or delivery of financial information, the chief financial
officer or the treasurer of the Borrower, or any other officer having
substantially the same authority and responsibility.
"Revolving Note" means a promissory note of the Borrower payable to the
order of a Lender in substantially the form of Exhibit 11.1(d) hereto,
evidencing Indebtedness of the Borrower under the Revolving Loan Commitment of
such Lender.
"Revolving Termination Date" means the earlier to occur of: (a) December
31, 2007; and (b) the date on which the Aggregate Revolving Loan Commitment
shall terminate in accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any entity
succeeding to any of its principal functions.
"Security Agreements" means the Borrower Security Agreement, Holdings
Security Agreement and the Subsidiary Security Agreement.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32)(A) of the Bankruptcy Code and, in the alternative, for purposes of the
Uniform Fraudulent Transfer Act; (b) the present fair saleable value (on a going
concern basis) of the Property of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured; (c) such Person is able to realize upon its
Property and generally pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities) as they mature in the normal course of
business; (d) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's Property would constitute unreasonably small capital.
"Subordinated Borrower Publicly Traded Notes" the senior subordinated
notes issued by the Borrower pursuant to the Indenture.
"Subordinated Holdings Discount Notes" means the Senior Discount Notes of
Holdings issued on March 27, 2000 pursuant to that certain Note and Warrant
Purchase Agreement, dated March 27, 2000, between Holdings and BNY Capital
Partners, L.P. and Canterbury Mezzanine Capital II, L.P., as the investors
thereunder.
"Subordinated Indebtedness" means the Indebtedness owing under (i) the
Subordinated Borrower Publicly Traded Notes and (ii) the Subordinated Holdings
Discount Notes.
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"Subsidiary" of a Person means any corporation, association, limited
liability company, 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 such Person, or one or more of the Subsidiaries of such Person, or
a combination thereof.
"Subsidiary Guaranty" means that certain Guaranty, dated as of even date
herewith, in form and substance reasonably acceptable to Agent and Borrower,
made by each Subsidiary of Borrower in favor of the Agent, for the benefit of
Agent and the Lenders.
"Subsidiary Security Agreement" means the Security Agreement, dated as of
even date herewith, in form and substance reasonably satisfactory to Agent and
Borrower made by each Subsidiary (other than the China Subsidiary) of Borrower
in favor of the Agent, for the benefit of Agent and the Lenders.
"Target" means any other Person or business unit or asset group of any
other Person acquired or proposed to be acquired in an Acquisition.
"Term Note" means a promissory note of the Borrower payable to the order
of a Lender, in substantially the form of Exhibit 11.1(e) hereto, evidencing the
Indebtedness of the Borrower to such Lender resulting from the Term Loan made to
the Borrower by such Lender.
"Total Debt" means, as of any determination date, all Indebtedness of
Holdings, the Borrower and the Subsidiaries of Borrower other than the
Indebtedness evidenced by the Subordinated Holdings Discount Notes.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of Illinois.
"Unfunded Pension Liabilities" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used by the Plan's
actuaries for funding the Plan pursuant to section 412 for the applicable plan
year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any Subsidiary in which (other than
directors' qualifying shares required by law) 100% of the capital stock (or
other equity interests in the event the Subsidiary is not a corporation) of each
class having ordinary voting power, and 100% of the capital stock (or other
equity interests in the event the Subsidiary is not a corporation) of every
other class, in each case, at the time as of which any determination is being
made, is owned, beneficially and of record, by the Borrower, or by one or more
of the other Wholly-Owned Subsidiaries, or both.
"Withdrawal Liabilities" means, as of any determination date, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA
if the Controlled Group
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made a complete withdrawal from all Multiemployer Plans and any increase in
contributions pursuant to Section 4243 of ERISA.
11.2 Other Interpretive Provisions.
(a) Defined Terms.
Unless otherwise specified herein or therein, all terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto. The meaning of defined terms shall
be equally applicable to the singular and plural forms of the defined terms.
Terms (including uncapitalized terms) not otherwise defined herein and that are
defined in the UCC shall have the meanings therein described.
(b) The Agreement.
The words "hereof", "herein", "hereunder" and words of similar import when
used in this Agreement shall 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) Certain Common Terms.
The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced. The term "including" is not limiting and means "including without
limitation."
(d) Performance; Time.
Whenever any performance obligation hereunder (other than a payment
obligation) shall be stated to be due or required to be satisfied on a day other
than a Business Day, such performance shall be made or satisfied on the next
succeeding Business Day. 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." If any provision of this Agreement refers to any
action taken or to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be interpreted to encompass any and all means,
direct or indirect, of taking, or not taking, such action.
(e) Contracts.
Unless otherwise expressly provided herein, references to agreements and
other contractual instruments, including this Agreement and the other Loan
Documents, shall be deemed to include all subsequent amendments, thereto,
restatements thereof and other modifications and supplements thereto which are
in effect from time to time, but only to the extent such amendments,
restatements and other modifications are not prohibited by the terms of any Loan
Document.
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(f) Laws.
References to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
11.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting terms
not expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied.
(b) References herein to "fiscal year", "fiscal quarter" and "fiscal
month" refer to such fiscal periods of the Borrower.
(c) If any change in GAAP results in a change in the calculation of the
financial covenants or interpretation of related provisions of this Agreement or
any other Loan Document, then the Borrower, the Agent and the Lenders agree to
amend such provisions of this Agreement so as to equitably reflect such changes
in GAAP with the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such change in GAAP as if such
change had not been made, provided that, notwithstanding any other provision of
this Agreement, the Required Lenders' agreement to any amendment of such
provisions shall be sufficient to bind all Lenders.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
-99-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
TRUE TEMPER SPORTS, INC.
By:
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Title:
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Borrower's FEIN:
Address for notices:
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Attn:
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Facsimile:
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Address for Wire Transfers:
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ANTARES CAPITAL CORPORATION, as
Agent and as a Lender
By:
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Title: Director
Address for notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Portfolio Manager
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Address for Payments - Lending Office:
Antares Capital Corporation
Account #4070-6016
Citibank N.A., NY
ABA #▇▇▇▇▇▇▇▇▇
Reference: True Temper Sports, Inc.
Please advise ▇▇▇ ▇▇▇▇▇▇▇▇▇ at
(▇▇▇) ▇▇▇-▇▇▇▇ upon receipt
-100-
SCHEDULE 1.1(A)
TERM LOAN COMMITMENTS
Lender Term Loan Commitment
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Antares Capital Corporation $25,000,000
SCHEDULE 1.1(B)
REVOLVING LOAN COMMITMENTS
Lender Revolving Loan Commitment
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Antares Capital Corporation $15,000,000