1
Exhibit 4.1
================================================================================
CREDIT AGREEMENT
by and among
INSTEEL INDUSTRIES, INC.
as Borrower,
BANK OF AMERICA, N.A.,
as Administrative Agent and as Lender,
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
January 31, 2000
================================================================================
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager,
2
TABLE OF CONTENTS
ARTICLE I
Definitions and Terms
Page
----
1.1 Definitions .........................................................................................2
1.2 Rules of Interpretation ............................................................................31
ARTICLE II
The Credit Facilities
2.1 Term Loan . .......................................................................................33
2.2 Revolving Loans ...................................................................................35
2.3 Use of Proceeds ...................................................................................38
2.4 Notes .............................................................................................38
2.5 Swing Line ........................................................................................39
ARTICLE III
Letters of Credit
3.1 Letters of Credit .................................................................................41
3.2 Reimbursement and Participations ..................................................................41
ARTICLE IV
Eurodollar Funding, Fees, and Payment Conventions
4.1 Interest Rate Options .............................................................................45
4.2 Conversions and Elections of Subsequent Interest Periods ..........................................45
4.3 Payment of Interest ...............................................................................46
4.4 Prepayments of Eurodollar Rate Loans ..............................................................46
4.5 Manner of Payment .................................................................................46
4.6 Fees ..............................................................................................47
4.7 Pro Rata Payments .................................................................................48
4.8 Computation of Rates and Fees .....................................................................48
4.9 Deficiency Advances; Failure to Purchase Participations ...........................................48
4.10 Intraday Funding...................................................................................49
3
ARTICLE V
Security
5.1 Security ..........................................................................................51
5.2 Further Assurances ................................................................................51
5.3 Information Regarding Collateral ..................................................................52
ARTICLE VI
Change in Circumstances
6.1 Increased Cost and Reduced Return .................................................................54
6.2 Limitation on Types of Loans.......................................................................55
6.3 Illegality ........................................................................................56
6.4 Treatment of Affected Loans .......................................................................56
6.5 Compensation ......................................................................................57
6.6 Taxes .............................................................................................57
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
7.1 Conditions of Term Loan and Initial Advance ......................................................60
7.2 Conditions of Revolving Loans and Letter of Credit ...............................................64
ARTICLE VIII
Representations and Warranties
8.1 Organization and Authority .......................................................................66
8.2 Loan Documents ...................................................................................66
8.3 Solvency .........................................................................................67
8.4 Subsidiaries and Stockholders ....................................................................67
8.5 Ownership Interests ..............................................................................67
8.6 Financial Condition ..............................................................................68
8.7 Title to Properties ..............................................................................68
8.8 Taxes ............................................................................................69
8.9 Other Agreements .................................................................................69
8.10 Litigation .......................................................................................69
8.11 Margin Stock .....................................................................................69
8.12 Investment Company ...............................................................................70
8.13 Patents, Etc. ....................................................................................70
8.14 No Untrue Statement ..............................................................................70
ii
4
8.15 No Consents, Etc . .................................................................................70
8.16 Employee Benefit Plans .............................................................................70
8.17 No Default .........................................................................................72
8.18 Environmental Laws .................................................................................72
8.19 Employment Matters .................................................................................72
8.20 RICO ...............................................................................................73
8.21 Year 2000 Compliance ...............................................................................73
ARTICLE IX
Affirmative Covenants
9.1 Financial Reports, Etc. ............................................................................74
9.2 Maintain Properties ................................................................................76
9.3 Existence, Qualification, Etc. .....................................................................76
9.4 Regulations and Taxes ..............................................................................76
9.5 Insurance ..........................................................................................76
9.6 True Books .........................................................................................76
9.7 Year 2000 Compliance ...............................................................................77
9.8 Right of Inspection and Field Examinations .........................................................77
9.9 Observe all Laws ...................................................................................77
9.10 Governmental Licenses ..............................................................................77
9.11 Covenants Extending to Other Persons ...............................................................77
9.12 Officer's Knowledge of Default .....................................................................77
9.13 Suits or Other Proceedings .........................................................................78
9.14 Notice of Environmental Complaint or Condition .....................................................78
9.15 Environmental Compliance ...........................................................................78
9.16 Indemnification ....................................................................................78
9.17 Further Assurances .................................................................................79
9.18 Employee Benefit Plans .............................................................................79
9.19 Continued Operations ...............................................................................80
9.20 New Subsidiaries ...................................................................................80
9.21 Rate Hedging Obligations ...........................................................................83
ARTICLE X
Negative Covenants
10.1 Financial Covenants ................................................................................84
10.2 Acquisitions .......................................................................................85
10.3 Capital Expenditures ...............................................................................85
10.4 Liens ..............................................................................................86
10.5 Indebtedness .......................................................................................87
10.6 Transfer of Assets .................................................................................88
iii
5
10.7 Investments .........................................................................................88
10.8 Merger or Consolidation .............................................................................89
10.9 Restricted Payments .................................................................................89
10.10 Transactions with Affiliates ........................................................................89
10.11 Compliance with ERISA, the Code and Foreign Benefit Laws ............................................89
10.12 Fiscal Year .........................................................................................90
10.13 Dissolution, etc. ...................................................................................90
10.14 Limitations on Sales and Leasebacks .................................................................90
10.15 Change in Control ...................................................................................91
10.16 Rate Hedging Obligations ............................................................................91
10.17 Negative Pledge Clauses .............................................................................91
10.18 Prepayments, Etc. of Indebtedness ...................................................................91
ARTICLE XI
Events of Default and Acceleration
11.1 Events of Default ..................................................................................92
11.2 Agent to Act .......................................................................................95
11.3 Cumulative Rights ..................................................................................95
11.4 No Waiver ..........................................................................................95
11.5 Allocation of Proceeds .............................................................................95
ARTICLE XII
The Agent
12.1 Appointment, Powers, and Immunities ................................................................97
12.2 Reliance by Agent ..................................................................................97
12.3 Defaults ...........................................................................................98
12.4 Rights as Lender ...................................................................................98
12.5 Indemnification ....................................................................................98
12.6 Non-Reliance on Agent and Other Lenders ............................................................99
12.7 Resignation of Agent ...............................................................................99
ARTICLE XIII
Miscellaneous
13.1 Assignments and Participations ....................................................................100
13.2 Notices ...........................................................................................102
13.3 Right of Set-off; Adjustments .....................................................................103
13.4 Survival ..........................................................................................104
13.5 Expenses ..........................................................................................104
iv
6
13.6 Amendments and Waivers ...........................................................................104
13.7 Counterparts; Facsimile Signatures ...............................................................105
13.8 Termination ......................................................................................105
13.9 Indemnification; Limitation of Liability .........................................................106
13.10 Severability .....................................................................................107
13.11 Entire Agreement .................................................................................107
13.12 Agreement Controls ...............................................................................107
13.13 Usury Savings Clause .............................................................................108
13.14 Payments . .......................................................................................108
13.15 Confidentiality . ................................................................................108
13.16 GOVERNING LAW; WAIVER OF JURY TRIAL ..............................................................109
EXHIBIT A Applicable Commitment Percentages .................................................A-1
EXHIBIT B Form of Assignment and Acceptance .................................................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative.................C-1
EXHIBIT D Form of Borrowing Base Certificate ................................................D-1
EXHIBIT E-1 Form of Borrowing Notice ........................................................E-1-1
EXHIBIT E-2 Form of Borrowing Notice--Swing Line Loans ......................................E-2-1
EXHIBIT F Form of Interest Rate Selection Notice ............................................F-1
EXHIBIT G-1 Form of Revolving Note ..........................................................G-1-1
EXHIBIT G-2 Form of Swing Line Note .........................................................G-2-1
EXHIBIT G-3 Form of Term Note ...............................................................G-3-1
EXHIBIT H Form of Opinion of Borrower's Counsel .............................................H-1
EXHIBIT I Compliance Certificate ............................................................I-1
EXHIBIT J Form of Facility Guaranty .........................................................J-1
EXHIBIT K Form of Security Agreement ........................................................K-1
EXHIBIT L Form of Intellectual Property Security Agreement ..................................L-1
EXHIBIT M Form of Pledge Agreement ..........................................................M-1
EXHIBIT N Form of Warehouseman's Estoppel Certificate .......................................N-1
Schedule 1.1(a) Existing Indebtedness
Schedule 1.1(b) Existing Letters of Credit
Schedule 5.3 Information Regarding Collateral
Schedule 8.4 Subsidiaries and Investments in Other Persons
Schedule 8.6 Indebtedness
Schedule 8.7 Liens
Schedule 8.8 Tax Matters
Schedule 8.10 Litigation
Schedule 8.18 Environmental
Schedule 8.19 Employment Matters
Schedule 9.5 Insurance
Schedule 10.10 Transactions with Affiliates
v
7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 31, 2000 (the "Agreement"),
is made by and among INSTEEL INDUSTRIES, INC., a North Carolina corporation
having its principal place of business in Mount Airy, North Carolina (the
"Borrower"), BANK OF AMERICA, N.A., a national banking association organized and
existing under the laws of the United States, in its capacity as a Lender ("Bank
of America"), and each other financial institution executing and delivering a
signature page hereto and each other financial institution which may hereafter
execute and deliver an instrument of assignment with respect to this Agreement
pursuant to Section 13.1 (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"), and
BANK OF AMERICA, N.A., a national banking association organized and existing
under the laws of the United States, in its capacity as agent for the Lenders
(in such capacity, and together with any successor agent appointed in accordance
with the terms of Section 12.7, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make available to
the Borrower a Term Loan facility in the principal amount of $80,000,000 and a
revolving credit facility of up to $60,000,000, the revolving credit facility to
include a letter of credit facility of up to $10,000,000 for the issuance of
standby letters of credit and a swing line facility of up to $5,000,000; and
WHEREAS, the Borrower will have acquired, as of the date hereof, all of
the outstanding stock of Florida Wire and Cable, Inc. (the "Acquired Company");
and
WHEREAS, the credit facilities are to be used (i) to refinance the
outstanding principal amount of certain existing indebtedness of the Borrower
and the Acquired Company, (ii) to pay the cash portion of the purchase price for
the Acquired Company pursuant to the Purchase Agreement (as defined below) and
related documents, (iii) to pay fees and expenses incurred in connection with
the Acquisition Transaction (as defined below), and (iv) to provide working
capital and for other general corporate purposes of the Borrower and its
Subsidiaries; and
WHEREAS, the Lenders are willing to make such term loan and revolving
credit facilities available to the Borrower upon the terms and conditions set
forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
1
8
ARTICLE I
Definitions and Terms
1.1 Definitions. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Accounts Receivable" means all Accounts of the Borrower and
its Subsidiaries as defined in the Security Agreement.
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon exercise
of an option or warrant for, or conversion of securities into, such
equity interest, or (ii) assets of another Person which constitute all
or any material part of the assets of such Person or of a line or lines
of business conducted by such Person.
"Acquisition Transaction" means the transaction provided for
in the Transaction Documents whereby the Borrower acquires all of the
issued and outstanding capital stock of the Acquired Company.
"Advance" means any of (i) the borrowing under the Term Loan
Facility or (ii) a borrowing under the Revolving Credit Facility
consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns
or holds 5% or more of any class of the outstanding voting stock (or in
the case of a Person which is not a corporation, 5% or more of the
equity interest) of the Borrower; or 5% or more of any class of the
outstanding voting stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Borrower. The term "control" means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through ownership of voting stock, by contract or otherwise.
"Applicable Commitment Fee" means that percent per annum set
forth below, which shall be based upon the Consolidated Leverage Ratio.
2
9
Tier Consolidated Leverage Ratio Applicable Commitment Fee
----------- ----------------------------------------- -------------------------
I Less than or equal to 1.5 to 1.0 .30%
II Less than or equal to 2.0 to 1.0
but greater than 1.5 to 1.0 .30%
III Less than or equal to 2.5 to 1.0
but greater than 2.0 to 1.0 .375%
IV Less than or equal to 3.0 to 1.0
but greater than 2.5 to 1.0 .50%
V Greater than 3.0 to 1.0 .50%
The Applicable Commitment Fee shall be established at the end of each fiscal
quarter of the Borrower (the "Determination Date"). Any change in the Applicable
Commitment Fee following each Determination Date shall be determined based upon
the computations set forth in the certificate furnished to the Agent pursuant to
Section 9.1(a)(ii) and Section 9.1(b)(ii), subject to review and approval of
such computations by the Agent and shall be effective commencing on the fifth
Business Day following the date such certificate is received until the fifth
Business Day following the date on which a new certificate is delivered or is
required to be delivered, whichever shall first occur; provided however, if the
Borrower shall fail to deliver any such certificate within the time period
required by Section 9.1, then the Applicable Commitment Fee shall be Tier V
from the date such certificate was due until the appropriate certificate is so
delivered, reviewed and approved. From the Closing Date to the first
Determination Date, the Applicable Commitment Fee shall be Tier V.
"Applicable Commitment Percentage" means, for each Lender at any time,
a fraction, (i) with respect to the Revolving Credit Facility and the Letter of
Credit Facility the numerator of which shall be such Lender's Revolving Credit
Commitment and the denominator of which shall be the Total Revolving Credit
Commitment, and (ii), with respect to the Term Loan Facility, the numerator of
which shall be such Lender's Term Loan Commitment and the denominator shall be
the Total Term Loan Commitment, which Applicable Commitment Percentage for each
Lender as of the Closing Date is as set forth in Exhibit A; provided that the
Applicable Commitment Percentage of each Lender shall be increased or decreased
to reflect any assignments to or by such Lender effected in accordance with
Section 13.1.
"Applicable Lending Office" means, for each Lender and for each Type of
Loan, the "Lending Office" of such Lender (or of an affiliate of such Lender)
designated for such Type of Loan on the signature pages hereof or such other
office of such Lender (or an affiliate of such Lender) as such Lender may from
time to time specify to the Agent and the Borrower
3
10
by written notice in accordance with the terms hereof as the office by which its
Loans of such Type are to be made and maintained.
"Applicable Margin" means that percent per annum as set forth below,
which shall be based upon the Consolidated Leverage Ratio:
Applicable Margin
-------------------------------------------
Tier Consolidated Leverage Ratio Base Rate Eurodollar Rate
----------- ---------------------------------------------- --------------- ----------------------
I Less than or equal to 1.5 to 1.0 0% 1.50%
II Less than or equal to 2.0 to 1.0
but greater than 1.5 to 1.0 0% 1.75%
III Less than or equal to 2.5 to 1.0
but greater than 2.0 to 1.0 .25% 2.00%
IV Less than or equal to 3.0 to 1.0
but greater than 2.5 to 1.0 .50% 2.25%
V Greater than 3.0 to 1.0 .75% 2.50%
The Applicable Margin shall be established at the end of each fiscal quarter of
the Borrower (each, a "Determination Date"). Any change in the Applicable Margin
following each Determination Date shall be determined based upon the
computations set forth in the certificate furnished to the Agent pursuant to
Section 9.1(a)(ii) and Section 9.1(b)(ii), subject to review and approval of
such computations by the Agent, and shall be effective commencing on the fifth
Business Day following the date such certificate is received until the fifth
Business Day following the date on which a new certificate is delivered or is
required to be delivered, whichever shall first occur; provided however, if the
Borrower shall fail to deliver any such certificate within the time period
required by Section 9.1, then the Applicable Margin shall be Tier V for Base
Rate Loans and Tier V for Eurodollar Rate Loans from the date such certificate
was due until the appropriate certificate is so delivered, reviewed and
approved. From the Closing Date to the Determination Date next following the
fiscal quarter ending June 30, 2000, the Applicable Margin shall be 1.0% for
Base Rate Loans and 2.75% for Eurodollar Rate Loans.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or similar
documentation, executed by the Borrower from time to time and delivered to the
Issuing Bank to support the issuance of Letters of Credit.
"Asset Disposition" means any voluntary disposition, whether by sale,
lease or other transfer, of (a) any of the assets, excluding cash and cash
equivalents and inventory sold in the ordinary course of business, of the
Borrower or its Subsidiaries, and (b) any of the capital
4
11
stock, or securities or investments exchangeable, exercisable or convertible for
or into, or otherwise entitling the holder to receive any of the capital stock,
of any Subsidiary (other than a disposition to the Borrower or a Guarantor).
"Assignment and Acceptance" shall mean an Assignment and Acceptance in
the form of Exhibit B (with blanks appropriately filled in) delivered to the
Agent in connection with an assignment of a Lender's interest under this
Agreement pursuant to Section 13.1.
"Assignment of Leases" means, collectively, the Assignment of Lease
delivered from time to time after the Closing Date by the Borrower to the agent
relating to any property leased after the Closing Date by the Borrower or its
Subsidiaries.
"Authorized Representative" means any of the President or any Vice
President, the Chief Financial Officer and Treasurer of the Borrower or, with
respect to financial matters, the Chief Financial Officer and Treasurer,
Controller and Accounting Manager of the Borrower, or any other Person expressly
designated by the Board of Directors of the Borrower (or the appropriate
committee thereof) as an Authorized Representative of the Borrower, as set forth
from time to time in a certificate in the form of Exhibit C.
"Bank of America" means Bank of America, N.A. and its successors.
"BAS" means Banc of America Securities LLC and its successors.
"Base Rate" means, for any day, the rate per annum equal to the sum of
(a) the higher of (i) the Federal Funds Rate for such day plus one-half of one
percent (0.5%) and (ii) the Prime Rate for such day plus (b) the Applicable
Margin. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan (including a Segment) for which the rate
of interest is determined by reference to the Base Rate.
"Base Rate Segment" means a Segment bearing interest or to bear
interest at the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan or Swing Line Loan
made either to (i) satisfy Reimbursement Obligations arising from a drawing
under a Letter of Credit or (ii) pay Bank of America in respect of Swing Line
Outstandings.
"Board" means the Board of Governors of the Federal Reserve System (or
any successor body).
5
12
"Borrower's Account" means a demand deposit account with the Agent or
any successor account with the Agent, which may be maintained at one or more
offices of the Agent or an agent of the Agent.
"Borrowing Base" means, as of any date of determination thereof, the
sum of (i) all Eligible Receivables as set forth in the most recent Borrowing
Base Certificate delivered pursuant to Section 7.1 or Section 9.1(f), as
applicable, multiplied by 85%, and (ii) all Eligible Inventory as set forth in
the most recent Borrowing Base Certificate delivered pursuant to Section 7.1 or
Section 9.1(f), as applicable, multiplied by the applicable percentage, as set
forth below, minus the Revolver Reserve:
Eligible Finished Goods/
Period Eligible Raw Material Resales (Scrap)
------ --------------------- ---------------
Closing to March 31, 2000 65% 60%
April 1, 2000 to June 30, 2000 60% 55%
July 1, 2000 and thereafter 55% 50%
"Borrowing Base Certificate" means a certificate of an Authorized
Representative in the form attached hereto as Exhibit D.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit Facility
or a Swing Line Loan, in the forms of Exhibits E-I and E-2, respectively.
"Business Day" means, (i) except as expressly provided in clause (ii),
any day which is not a Saturday, Sunday or a day on which banks in the States of
New York and North Carolina are authorized or obligated by law, executive order
or governmental decree to be closed and, (ii) with respect to the selection,
funding, interest rate, payment, and Interest Period of any Eurodollar Rate
Loan, any day which is a Business Day, as described above, and on which the
relevant international financial markets are open for the transaction of
business contemplated by this Agreement in London, England, New York, New York
and Charlotte, North Carolina.
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries, for any period the sum of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by the Borrower or
any Subsidiary during such period for items that would be classified as
"property, plant or equipment" or comparable items on the consolidated balance
sheet of the Borrower and its Subsidiaries, including without limitation all
transactional costs incurred in connection with such expenditures provided the
same have been capitalized, excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty insurance as evidenced in
writing and submitted to the Agent together with any compliance certificate
delivered pursuant to Section 9.1(a) or (b), and (ii) with respect to any
Capital Lease entered into by the Borrower or its Subsidiaries during such
period, the present value of the lease payments due under such Capital Lease
over the term
6
13
of such Capital Lease applying a discount rate equal to the interest rate
provided in such lease (or in the absence of a stated interest rate, that rate
used in the preparation of the financial statements described in Section 9.1
(a)), all the foregoing in accordance with GAAP applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time including
Statement No. 13 of the Financial Accounting Standards Board and any successor
thereof.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) other than the ▇▇▇▇▇ Family and
▇▇▇▇▇▇▇ Concrete either (A) becomes the "beneficial owner" (as defined
in Rule l3d-3 of the Exchange Act), directly or indirectly, of Voting
Securities of the Borrower (or securities convertible into or
exchangeable for such Voting Securities) representing 30% or more of
the combined voting power of all Voting Securities of the Borrower (on
a fully diluted basis) or (B) otherwise has the ability, directly or
indirectly, to elect a majority of the board of directors of the
Borrower;
(ii) during any period of up to 24 consecutive months,
commencing on the Closing Date, individuals who at the beginning of
such 24-month period were directors of the Borrower shall cease for
any reason (other than the death, disability or retirement of an
officer of the Borrower that is serving as a director at such time so
long as another officer of the Borrower replaces such Person as a
director) to constitute a majority of the board of directors of the
Borrower; or
(iii) any Person or two or more Persons acting in concert shall
have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result
in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or policies of
the Borrower.
"Closing Date" means the date as of which this Agreement is executed by
the Borrower, the Lenders and the Agent and on which the conditions set forth in
Section 7.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Collateral" means, collectively, all property of the Borrower, any
Subsidiary or any other Person in which the Agent or any Lender is granted a
Lien as security for all or any portion of the Obligations under any Security
Instrument.
7
14
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited financial
statements of the Borrower referred to as of the Closing Date in Section 8.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for any Four-Quarter Period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) taxes on income, (iv) amortization, and (v)
depreciation, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis; provided, however, that with respect to an
Acquisition that is accounted for as a "purchase," for the four Four-Quarter
Periods ending next following the date of such Acquisition, Consolidated EBITDA
shall include the results of operations of the Person or assets so acquired,
which amounts shall be determined on a historical pro forma basis as if such
Acquisition had been consummated as a "pooling of interests".
"Consolidated Fixed Charge Ratio" means, with respect to the Borrower
and its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the ratio of (i) Consolidated EBITDA for such period less
(without duplication) (a) Capital Expenditures for such period and (b) cash
taxes paid during such period, to (ii) Consolidated Fixed Charges for such
period.
"Consolidated Fixed Charges" means, with respect to the Borrower and
its Subsidiaries for any Four-Quarter Period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Interest Expense,
(ii) current maturities of Consolidated Indebtedness, and (iii) all Restricted
Payments, all determined on a consolidated basis in accordance with GAAP applied
on a Consistent Basis.
"Consolidated Indebtedness" means all Indebtedness for Money Borrowed
of the Borrower and its Subsidiaries, all determined on a consolidated basis.
"Consolidated Interest Expense" means, with respect to any period of
computation thereof, the gross interest expense of the Borrower and its
Subsidiaries, including without limitation or duplication (i) the current
amortized portion of debt discounts, (ii) the current amortized portion of all
fees (including fees payable in respect of any Rate Hedging Obligations) payable
in connection with the incurrence of Indebtedness and (iii) the portion of any
payments made in connection with Capital Leases allocable to interest expense,
all determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis; provided, however, for the purpose of determining Consolidated
Interest Expense for the one, two and three fiscal quarter periods of the
Borrower ending April 1, 2000, July 1, 2000 and September 30, 2000 Consolidated
Interest Expense for such periods shall be multiplied by four, two and
four-thirds, respectively.
8
15
"Consolidated Leverage Ratio" means, as of the date of computation
thereof, the ratio of (i) Consolidated Indebtedness (determined as at such date)
to (ii) Consolidated EBITDA (for the Four-Quarter Period ending on (or most
recently ended prior to) such date).
"Consolidated Net Income" means, for any period of computation thereof,
the gross revenues from operations of the Borrower and its Subsidiaries
(including payments received by the Borrower and its Subsidiaries of (i)
interest income, and (ii) dividends and distributions made in the ordinary
course of their businesses by Persons in which investment is permitted pursuant
to this Agreement and not related to an extraordinary event), less all operating
and non-operating expenses of the Borrower and its Subsidiaries including taxes
on income, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis; but excluding (for all purposes other than
compliance with Section 10.1(a) hereof) as income: (i) net gains on the sale,
conversion or other disposition of capital assets, (ii) net gains on the
acquisition, retirement, sale or other disposition of capital stock and other
securities of the Borrower or its Subsidiaries, (iii) net gains on the
collection of proceeds of life insurance policies, (iv) any write-up of any
asset, and (v) any other net gain or credit of an extraordinary nature as
determined in accordance with GAAP applied on a Consistent Basis; provided,
however, that for purposes of determining compliance with the provisions of
Section 10.1(a) hereof, there shall be disregarded any increase in Consolidated
Net Income upon giving effect to any Acquisition which results from the
treatment of such Acquisition as a "pooling of interests."
"Consolidated Net Worth" means, as of any date on which the amount
thereof is to be determined, Consolidated Shareholders' Equity all as determined
on a consolidated basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Shareholders' Equity" means, as of any date on which the
amount thereof is to be determined, the sum of the following in respect of the
Borrower and its Subsidiaries (determined on a consolidated basis and excluding
any upward adjustment after the Closing Date due to revaluation of assets): (i)
the amount of issued and outstanding share capital, plus (ii) the amount of
additional paid-in capital and retained earnings (or, in the case of a deficit,
minus the amount of such deficit), plus (iii) the amount of any foreign currency
translation adjustment (if positive, or, if negative, minus the amount of such
translation adjustment), minus (iv) the amount of any treasury stock, all as
determined in accordance with GAAP applied on a Consistent Basis.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person with respect to any Indebtedness, lease, dividend,
guaranty, letter of credit or other obligation (each a "primary obligation") of
another Person,(the "primary obligor"), whether or not contingent, (a) to
purchase, repurchase or otherwise acquire any such primary obligation or any
property constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the primary obligor in
respect of any such primary obligation or otherwise to maintain the net worth or
solvency or any balance sheet
9
16
item, level of income or financial condition of such primary obligor, or (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
thereof to make payment of such primary obligation, or (d) otherwise to assure
or hold harmless the owner of any such primary obligation against loss or
failure or inability to perform in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof.
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 4.2 hereof of a Eurodollar Rate Loan of one
Type as a Eurodollar Rate Loan of the same Type from one Interest Period to the
next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a conversion
pursuant to Section 4.2 of one Type of Loan into another Type of Loan.
"Cost of Acquisition" means, with respect to any Acquisition, as at the
date of entering into any agreement therefor, the sum of the following (without
duplication): (i) the value of the capital stock, warrants or options to acquire
capital stock of Borrower or any Subsidiary to be transferred in connection
therewith, (ii) the amount of any cash and fair market value of other property
(excluding property described in clause (i) and the unpaid principal amount of
any debt instrument) given as consideration, (iii) the amount (determined by
using the face amount or the amount payable at maturity, whichever is greater)
of any Indebtedness incurred, assumed or acquired by the Borrower or any
Subsidiary in connection with such Acquisition, (iv) all additional purchase
price amounts in the form of earnouts and other contingent obligations that
should be recorded on the financial statements of the Borrower and its
Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of
covenants not to compete, consulting agreements that should be recorded on
financial statements of the Borrower and its Subsidiaries in accordance with
GAAP, and other affiliated contracts in connection with such Acquisition, (vi)
the aggregate fair market value of all other consideration given by the Borrower
or any Subsidiary in connection with such Acquisition, and (vii) out of pocket
transaction costs for the services and expenses of attorneys, accountants and
other consultants incurred in effecting such transaction, and other similar
transaction costs so incurred. For purposes of determining the Cost of
Acquisition for any transaction, (A) the capital stock of the Borrower shall be
valued (I) in the case of capital stock that is then designated as a national
market system security by the National Association of Securities Dealers, Inc.
("NASDAQ") or is listed on a national securities exchange, the average of the
last reported bid and ask quotations or the last prices reported thereon, and
(II) with respect to any other shares of capital stock, as determined by the
Board of Directors of the Borrower and, if requested by the Agent, determined to
be a reasonable valuation by the independent public accountants referred to in
Section 9.1(a), (B) the capital stock of any Subsidiary shall be valued as
determined by the Board of Directors of such Subsidiary and, if requested by the
Agent, determined to be a reasonable valuation by the
10
17
independent public accountants referred to in Section 9.1(a), and (C) with
respect to any Acquisition accomplished pursuant to the exercise of options or
warrants or the conversion of securities, the Cost of Acquisition shall include
both the cost of acquiring such option, warrant or convertible security as well
as the cost of exercise or conversion.
"Credit Parties" means, collectively, the Borrower, each Guarantor and
each other Person providing Collateral pursuant to any Security Instrument.
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of Default
hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate Loan,
until the end of the Interest Period applicable thereto, a rate of two percent
(2%) above the Eurodollar Rate applicable to such Loan, and thereafter at a rate
of interest per annum which shall be two percent (2%) above the Base Rate, (ii)
with respect to Base Rate Loans, Swing Line Loans, Reimbursement Obligations,
fees, and other amounts payable in respect of Obligations or (except as
otherwise expressly provided therein) the obligations of any other Credit Party
under any of the other Loan Documents, a rate of interest per annum which shall
be two percent (2%) above the Base Rate and (iii) in any case, the maximum rate
permitted by applicable law, if lower.
"Dollars" and the symbol "$" means dollars constituting legal tender
for the payment of public and private debts in the United States of America.
"Domestic Subsidiary" means any Subsidiary of the Borrower organized
under the laws of the United States of America, any state or territory thereof
or the District of Columbia.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a Lender,
and (iii) any other Person approved by the Agent and, unless an Event of Default
has occurred and is continuing at the time any assignment is effected in
accordance with Section 13.1, the Borrower, such approval not to be
unreasonably withheld by the Agent or the Borrower (provided that the incurrence
by the Borrower of additional costs pursuant to Section 6.6 as a result of such
assignment shall constitute a reasonable basis for withholding such consent) or
delayed by the Borrower and such approval to be deemed given by the Borrower (in
the absence of notice to the contrary, effective upon receipt) within two
Business Days after notice of such proposed assignment has been provided by the
assigning Lender to the Borrower; provided, however, that neither the Borrower
nor an affiliate of the Borrower shall qualify as an Eligible Assignee.
"Eligible Inventory" means all Inventory of the Borrower and its
Subsidiaries (valued at the lower of cost or fair market value) in which the
Agent has a perfected security interest pursuant to the Security Instruments,
subject only to Liens permitted pursuant to Section 10.4. Eligible Inventory
excludes all the following:
11
18
(a) all work in process and supplies and packaging including but not
limited to coating and banding materials used in the production of finished
goods;
(b) all Inventory that is not at a location listed on Schedule 7(f) to
the Security Agreement or other locations permitted by Section 7(f) of the
Security Agreement or otherwise not in transit or in the possession or control
of any Credit Party;
(c) all Inventory held at a warehouse operated by a warehouseman from
which the Agent does not have a duly executed Warehouseman's Estoppel
Certificate;
(d) all Inventory held at a location leased by the Borrower or a
Subsidiary pursuant to a lease entered into prior to the Closing Date and with
respect to which the Agent has not received a duly executed Landlord Consent
from the owner of such leased premises; provided, however, that for a period of
90 days following the Closing Date, Inventory of the Acquired Company located
in leased premise at ▇▇▇▇▇ County, Florida, ▇▇▇▇ County, Illinois and Bend
County, Texas, shall not be excluded by reason of the failure to receive an
executed Landlord Consent;
(e) all Inventory received or sold on consignment;
(f) all Inventory produced to specifications or labeled finished goods
(bulk or collated) such that the Agent in its sole discretion determines is not
generally marketable; provided, however, that up to $2,000,000 of collated or
bulk nails which are labeled may be included in Eligible Inventory so long as
the Agent in its sole discretion determines such nails are saleable;
(g) all Inventory that is not in good and saleable condition or that
fails to meet any applicable governmental standards; and
(h) all Inventory that the Agent in its sole discretion determines to
be slow moving or obsolete or that the Agent, in the exercise of reasonable
discretion, determines not to be Eligible Inventory.
"Eligible Receivables" means all the Accounts Receivable of the
Borrower and its Subsidiaries representing the right to payment for goods sold
or leased or for rendition of services by or on behalf of the Borrower or any of
its Subsidiaries as to which the creation was in the ordinary course of business
and the right to receive payment is absolute and not contingent upon the
fulfillment of any condition whatsoever (other than retainages pursuant to
contract terms in the ordinary course of business) and in which the Agent has a
perfected security interest pursuant to the Security Instruments, subject only
to Liens permitted pursuant to Section 10.4. Eligible Receivables shall
specifically exclude:
(a) any Account Receivable where an invoice has not been issued to the
account debtor;
12
19
(b) any Account Receivable to the extent such receivable, together with
all other receivables from a single customer constitutes more than twenty
percent (20%) of the total Accounts Receivable of the Borrower and its
Subsidiaries on a consolidated basis;
(c) any Account Receivable which is more than 60 days past due but not
to exceed 120 days from the date of invoice;
(d) any Account Receivable which represents an obligation of any local,
state or federal governmental agency or entity unless (i) such receivable has
been assigned to the Agent pursuant to applicable Federal or state law, (ii) in
which the Agent has a first priority security interest and (iii) the Borrower
has agreed to pay to the Agent all such fees and expenses associated with
including such Accounts Receivable as an Eligible Receivable;
(e) any Account Receivable arising from "sale on approval", "sale or
return", "consignment" or subject to any other repurchase, return or guaranteed
sales agreement;
(f) any Account Receivable where the underlying goods or services have
been rejected and/or returned;
(g) any Account Receivable where delivery of goods to the account
debtor pursuant to terms of sale has not been completed;
(h) Accounts Receivable in an aggregate amount in excess of $1,500,000
which represents an obligation of an account debtor which is not a resident of
the United States unless such Accounts Receivable in an aggregate amount in
excess of $1,500,000 are secured by a letter of credit which (i) is issued by an
issuer acceptable to the Agent, (ii) is in an amount and contains terms
acceptable to the Agent, and (iii) has been, to the extent required under the
Security Agreement, assigned to the Agent;
(i) any Account Receivable which arises from the sale or lease to or
performance of services for, or represents an obligation of, an employee,
partner, Subsidiary, or Affiliate (other than SRP and ▇▇▇▇▇▇▇ Concrete Company
in arms-length transactions in the ordinary course of business so long as the
aggregate amount of such Accounts Receivables do not at anytime exceed $500,000
of total Accounts Receivables of the Borrower and its Subsidiaries) of the
Borrower or its Subsidiaries;
(j) any Account Receivable due from a given Account Debtor when fifty
percent (50%) or more of aggregate Accounts Receivable due from the account
debtor are not eligible pursuant to clause (c) of this definition of Eligible
Receivables;
(k) that portion of the aggregate Accounts Receivable due from a given
account debtor to the extent the Borrower or any of its Subsidiaries owes
amounts to that account debtor;
13
20
(1) any Account Receivable on which the Agent is not or does not
continue to be, in the Agent's sole discretion, satisfied with the credit
standing of the account debtor in relation to the amount of credit extended;
(m) any Account Receivable which arises out of a contract or order
which, by its terms, forbids or makes void or unenforceable any assignment by
the Borrower or its Subsidiaries of the Account Receivable arising with respect
thereto; and
(n) any Account Receivable that the Agent in its sole discretion deems
doubtful for collection for whatever reason or that the Agent, in the exercise
of reasonable discretion, determines not to be an Eligible Receivable.
"Eligible Securities" means the following obligations and any other
obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the laws of any
state of the United States of America or under the laws of any other nation,
payable in the United States of America, expressed to mature not later than 270
days following the date of issuance thereof and rated in an investment grade
rating category by S&P and ▇▇▇▇▇'▇;
(c) interest bearing demand or time deposits issued by any Lender or
certificates of deposit maturing within one year from the date of issuance
thereof and issued by a bank or trust company organized under the laws of the
United States or of any state thereof having capital surplus and undivided
profits aggregating at least $400,000,000 and being rated "A" or better by S&P
or "A" or better by ▇▇▇▇▇'▇;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations described in
paragraphs (a) through (f) above, the shares of which mutual funds are at all
times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred stock issued by a
Person having a rating of its long term unsecured debt of "A" or better by S&P
or "A-2" or better by ▇▇▇▇▇'▇; and
(i) asset-backed remarketed certificates of participation representing
a fractional undivided interest in the assets of a trust, which certificates are
rated at least "A-1 " by S&P and "P-1" by ▇▇▇▇▇'▇.
14
21
"Employee Benefit Plan" means (i) any employee benefit plan, including
any Pension Plan, within the meaning of Section 3(3) of ERISA which (A) is
maintained for employees of the Borrower or any of its ERISA Affiliates, or any
Subsidiary or is assumed by the Borrower or any of its ERISA Affiliates, or any
Subsidiary in connection with any Acquisition or (B) has at any time been
maintained for the employees of the Borrower, any current or former ERISA
Affiliate, or any Subsidiary and (ii) any plan, arrangement, understanding or
scheme maintained by the Borrower or any Subsidiary that provides retirement,
deferred compensation, employee or retiree medical or life insurance, severance
benefits or any other benefit covering any employee or former employee and which
is administered under any Foreign Benefit Law or regulated by any Governmental
Authority other than the United States of America.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license regulating,
relating to, or imposing liability or standards of conduct concerning, any
environmental matters or conditions, environmental protection or conservation,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended; the Superfund Amendments and
Reauthorization Act of 1986, as amended; the Resource Conservation and Recovery
Act, as amended; the Toxic Substances Control Act, as amended; the Clean Air
Act, as amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate," as applied to the Borrower, means any Person or
trade or business which is a member of a group which is under common control
with the Borrower, who together with the Borrower, is treated as a single
employer within the meaning of Section 414(b) and (c) of the Code.
"Eurodollar Rate Loan" means a Loan (including a Segment) for which the
rate of interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
-----------------------------
Rate 1- Reserve Requirement Margin
"Eurodollar Rate Segment" means a Segment bearing interest or to bear
interest at the Eurodollar Rate.
15
22
"Event of Default" means any of the occurrences set forth as such in
Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder.
"Existing Indebtedness" means the Indebtedness of the Borrower and the
Acquired Company to be repaid on the Closing Date, as more particularly
described on Schedule 1.1(a) hereto.
"Existing Letters of Credit" means those letters of credit described on
Schedule 1.1(b) issued by First Union National Bank.
"Facility Guaranty" means each Guaranty Agreement between one or more
Guarantors and the Agent for the benefit of the Agent and the Lenders, delivered
as of the Closing Date and otherwise pursuant to Section 9.20, as the same may
be amended, modified or supplemented.
"Facility Termination Date" means such date as all of the following
shall have occurred: (a) the Borrower shall have permanently terminated the
Revolving Credit Facility and the Swing Line by payment in full of all Revolving
Credit Outstandings and Letter of Credit Outstandings and Swing Line
Outstandings, together with all accrued and unpaid interest thereon, except for
the undrawn portion of Letters of Credit as have been fully cash collateralized
in a manner consistent with the terms of Section 11.1(B), (b) the Borrower
shall have paid all Term Loan Outstandings in full, together with all accrued
and unpaid interest thereon, (c) all Swap Agreements shall have been terminated,
expired or cash collateralized, (d) all Term Loan Commitments, Revolving Credit
Commitments and Letter of Credit Commitments shall have terminated or expired
and (e) the Borrower shall have fully, finally and irrevocably paid and
satisfied in full all Obligations (other than Obligations consisting of
continuing indemnities and other contingent Obligations of the Borrower or any
Guarantor that may be owing to the Lenders pursuant to the Loan Documents and
expressly survive termination of this Agreement);
"FASB 133 Adjustments" means entries on or adjustments to any balance
sheet or statement of income in respect of derivatives or hedging instruments as
required or permitted by Statement of Financial Accounting Standards No. 133.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with 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 (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for
16
23
such day shall be the average rate charged to the Agent (in its individual
capacity) on such day on such transactions as determined by the Agent.
"Fiscal Year" means the 52-53 week period of the Borrower and its
Subsidiaries ending on the Saturday nearest the last day of September in each
year.
"Foreign Benefit Law" means any applicable statute, law, ordinance,
code, rule, regulation, order or decree of any foreign nation or any province,
state, territory, protectorate or other political subdivision thereof
regulating, relating to, or imposing liability or standards of conduct
concerning, any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one accounting
period.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles, being those principles of accounting set forth
in pronouncements of the Financial Accounting Standards Board, the American
Institute of Certified Public Accountants, or which have other substantial
authoritative support and are applicable in the circumstances as of the date of
a report.
"Government Securities" means direct obligations of, or obligations the
timely payment of principal and interest on which are fully and unconditionally
guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.
"Guarantors" means, at any date, the Subsidiaries who are required to
be parties to a Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant, contaminant, or
hazardous, toxic or dangerous waste, substance or material (including without
limitation petroleum products, asbestos-containing materials and lead), the
generation, handling, storage, transportation, disposal, treatment, release,
discharge or emission of which is subject to any Environmental Law.
"Historical Financial Statements" means, effectively, (i) the
consolidated financial statements of the Borrower and its Subsidiaries for the
Fiscal Years ended September 30, 1996, 1997, 1998 and 1999, including balance
sheets and related statements of income and cash flows audited by independent
certified public accountants of recognized national
17
24
standing and prepared in conformity with GAAP; (ii) the consolidated financial
statements of the Acquired Company and its subsidiaries for the fiscal years
ended December 31, 1996, 1997, and 1998, including balance sheets (including an
audited balance sheet as of the Closing Date) and related statements of income
and cash flows prepared in conformity with GAAP; and (iii) the consolidated
unaudited financial statements for the twelve month period ended October 2,
1999 and September 30, 1999 for each of the Borrower and the Acquired Company,
respectively, including balance sheets and related statements of income and
cash flows, in all cases to be acceptable in form and substance to the Agent.
"Historical Pro Forma Financial Statements" means the historical pro
forma projected balance sheet of the Borrower and its Subsidiaries as of the
Closing Date, giving pro forma effect to the Acquisition Transaction and the
transactions to be consummated in connection therewith, and reflecting estimated
purchase price accounting adjustments, in form and substance acceptable to the
Agent and prepared in conformity with GAAP.
"Indebtedness" means as to any Person, without duplication, (a) all
Indebtedness for Money Borrowed of such Person, (b) all Rate Hedging Obligations
of such Person, (c) all indebtedness secured by any Lien on any property or
asset owned or held by such Person regardless or whether the indebtedness
secured thereby shall have been assumed by such Person or is non-recourse to the
credit of such Person, and (d) all Contingent Obligations of such Person.
"Indebtedness for Money Borrowed" means with respect to any Person,
without duplication, all indebtedness in respect of money borrowed, including
without limitation, all obligations under Capital Leases, the deferred purchase
price of any property or services, the aggregate face amount of all surety
bonds, letters of credit, and bankers' acceptances, and (without duplication)
all payment and reimbursement obligations in respect thereof whether or not
matured, evidenced by a promissory note, bond, debenture or similar written
obligation for the payment of money (including reimbursement agreements and
conditional sales or similar title retention agreements), other than trade
payables and accrued expenses incurred in the ordinary course of business.
"Intellectual Property Security Agreement" means, collectively (or
individually as the context may indicate), (i) the Intellectual Property
Security Agreement dated as of the date hereof by the Borrower and certain of
its Subsidiaries to the Agent, and (ii) any additional Intellectual Property
Security Agreement delivered to the Agent pursuant to Section 9.20, each in the
form of Exhibit L and as hereafter modified, amended or supplemented from time
to time.
"Interbank Offered Rate" means, with respect to any Eurodollar Rate
Loan for the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary), to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such
18
25
Interest Period. If for any reason such rate is not available, the term
"Interbank Offered Rate" shall mean, with respect to any Eurodollar Rate Loan
for the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period,
provided, however; if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or Converted or
Continued and ending, at the Borrower's option, on the date one, two, three or
six months thereafter, subject to availability, as notified to the Agent by the
Authorized Representative in accordance with the terms hereof; provided that,
(i) if an Interest Period for a Eurodollar Rate Loan would
end on a day which is not a Business Day, such Interest Period shall be
extended to the next Business Day (unless such extension would cause
the applicable Interest Period to end in the succeeding calendar month,
in which case such Interest Period shall end on the next preceding
Business Day); and
(ii) any Interest Period which 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 a calendar month.
"Interest Rate Selection Notice" means the written notice delivered by
an Authorized Representative in connection with the election of a subsequent
Interest Period for any Eurodollar Rate Loan or the Conversion of any Eurodollar
Rate Loan into a Base Rate Loan or the Conversion of any Base Rate Loan into a
Eurodollar Rate Loan, in the form of Exhibit F.
"Inventory" means all Inventory of the Borrower and its Subsidiaries as
defined in the Security Agreement.
"Issuing Bank" means Bank of America as issuer of Letters of Credit
under Article III and First Union National Bank as issuer of the Existing
Letters of Credit.
"▇▇▇▇▇▇▇ Concrete" means ▇▇▇▇▇▇▇ Concrete Company, Inc. and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and any lineal descendants of each of them and
any spouse, parent and any trust established for the benefit of any of the
foregoing individuals so long as such trust is controlled directly or indirectly
by one of the foregoing persons.
19
26
"LC Account Agreement" means the LC Account Agreement dated as of the
date hereof between the Borrower and the Agent, as amended, modified or
supplemented from time to time.
"Letter of Credit" means a standby letter of credit issued by the
Issuing Bank pursuant to Article III hereof for the account of the Borrower or
the Borrower and a Subsidiary in favor of a Person advancing credit or securing
an obligation on behalf of the Borrower or the Borrower and a Subsidiary and the
Existing Letters of Credit.
"Letter of Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to acquire Participations in respect of Letters of
Credit and Reimbursement Obligations up to an aggregate amount at any one time
outstanding equal to such Lender's Applicable Commitment Percentage of the Total
Letter of Credit Commitment as the same may be increased or decreased from time
to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in Article III
hereof providing for the issuance by the Issuing Bank for the account of the
Borrower of Letters of Credit in an aggregate stated amount at any time
outstanding not exceeding the Total Letter of Credit Commitment minus
outstanding Reimbursement Obligations.
"Letter of Credit Outstandings" means, as of any date of determination,
the aggregate amount available to be drawn under all Letters of Credit plus
Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. For the purposes of this
Agreement, the Borrower and any Subsidiary shall be deemed to be the owner of
any property which it has acquired or holds subject to a conditional sale
agreement, financing lease, or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes.
"Loan" or "Loans" means any of the Revolving Loans or the Term Loan,
including any Segment, made under the Revolving Credit Facility or the Term Loan
Facility, respectively.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the Applications
and Agreements for Letter of Credit, and all other instruments and documents
heretofore or hereafter executed or delivered to or in favor of any Lender
(including the Issuing Bank) or the Agent in connection with the Loans made and
transactions contemplated under this Agreement, as the same may be amended,
supplemented or replaced from time to time.
20
27
"Material Adverse Effect" means a material adverse effect on (i) the
business, properties, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole, (ii) the
ability of the Credit Parties, taken as a whole, to pay or perform their
respective obligations, liabilities and indebtedness under the Loan Documents as
such payment or performance becomes due in accordance with the terms thereof, or
(iii) the rights, powers and remedies of the Agent or any Lender under any Loan
Document or the validity, legality or enforceability thereof.
"Mortgage" means, collectively, all Mortgages, leasehold mortgages,
deeds of trust and deeds to secure debt and Assignments of Leases granting a
Lien to the Agent (or a trustee for the benefit of the Agent) for the benefit of
the Lenders in Collateral constituting real property (including certain real
property leases), as such documents may be amended, modified or supplemented
from time to time.
"Mortgaged Property" means, collectively, the real property, leasehold
interests, improvements, fixtures and other items of real and personal property
related thereto and the products and proceeds thereof of the Borrower and its
Subsidiaries at the Closing Date, and thereafter, any of such property owned or
acquired by the Borrower or any Subsidiary, including any Subsidiary that is or
is required to become a Guarantor after the Closing Date pursuant to Section
9.20.
"Mortgage Property Support Documents" means, for each Mortgaged
Property, (i) the Title Policy pertaining thereto, (ii) such surveys, flood
hazard certifications and environmental assessments thereof as the Agent may
require prepared by recognized experts in their respective fields selected by
the Borrower and reasonably satisfactory to the Agent, (iii) as to Mortgaged
Properties located in a flood hazard area, such flood hazard insurance as the
Agent may require, (iv) as to leasehold interests, such lessor estoppel, waiver
and consent certificates, (v) with respect to facilities leased or subleased to
third parties, such lessees' estoppel, waiver and consent certificates and
subordination, nondisturbance and attornment agreements, (vi) such owner's or
lessee's affidavits as the Agent may require, (vii) such opinions of local
counsel with respect to the Mortgages or leasehold mortgages, as applicable, as
the Agent may require, and (viii) such other documentation as the Agent may
reasonably require, in each case as shall be in form and substance reasonably
acceptable to the Agent.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States of
America or of any municipal
21
28
corporation or other public body organized under the laws of any such state
which are rated in the highest investment rating category by both S&P and
Moody's.
"Net Proceeds" (a) from any public or private offering of any security
or Indebtedness means cash payments received by the Borrower or any Subsidiary
therefrom as and when received, net of all legal, accounting, banking and
underwriting fees and expenses, commissions, discounts and other issuance
expenses incurred in connection therewith and all taxes required to be paid or
accrued as a consequence of such issuance; and (b) from any Asset Disposition
means cash payments received by the Borrower therefrom (including any cash
payments received pursuant to any note or other debt security received in
connection with any Asset Disposition) as and when received, net of (i) all
legal fees and expenses and other fees and expenses paid to third parties and
incurred in connection therewith, (ii) all taxes required to be paid or accrued
as a consequence of such disposition, (iii) all amounts applied to repayment of
Indebtedness (other than the Obligations) secured by a Lien on the asset or
property disposed and (iv) all amounts reinvested by the Borrower or a
Subsidiary substantially contemporaneously with such disposition (or to be
invested within 90 days pursuant to an investment plan approved by the Agent) in
replacement assets of substantially equal or greater value and utility;
"Notes" means, collectively, the Term Notes, the Swing Line Note and
the Revolving Notes.
"Obligations" means the obligations, liabilities and Indebtedness of
the Borrower with respect to (i) the principal and interest on the Loans as
evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in
respect of the Letters of Credit, (iii) all liabilities of Borrower to any
Lender (or any affiliate of any Lender) which arise under a Swap Agreement, (iv)
obligations to any Lender for control disbursement and automated clearing house
risk arising out of the provision of cash management services, and (v) the
payment and performance of all other obligations, liabilities and Indebtedness
of the Borrower to the Lenders (including the Issuing Bank), the Agent or BAS
hereunder, under any one or more of the other Loan Documents or with respect to
the Loans.
"Operating Documents" means with respect to any corporation, limited
liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated entity,
the bylaws, operating agreement, partnership agreement, limited partnership
agreement, shareholder agreement or other applicable documents relating to the
operation, governance or management of such entity.
"Organizational Action" means with respect to any corporation, limited
liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated entity,
any corporate, organizational or partnership action (including any required
shareholder, member or partner action), or other similar official action, as
applicable, taken by such entity.
22
29
"Organizational Documents" means with respect to any corporation,
limited liability company, partnership, limited partnership, limited liability
partnership or other legally authorized incorporated or unincorporated entity,
the articles of incorporation, certificate of incorporation, articles of
organization, certificate of limited partnership or other applicable
organizational or charter documents relating to the creation of such entity.
"Participation" means, (i) with respect to any Lender (other than the
Issuing Bank) and a Letter of Credit, the extension of credit represented by the
participation of such Lender hereunder in the liability of the Issuing Bank in
respect of a Letter of Credit issued by the Issuing Bank in accordance with the
terms hereof and (ii) with respect to any Lender (other than Bank of America)
and a Swing Line Loan, the extension of credit represented by the participation
of such Lender hereunder in the liability of Bank of America in respect of a
Swing Line Loan made by Bank of America in accordance with the terms hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code and
which (i) is maintained for employees of the Borrower or any of its ERISA
Affiliates or is assumed by the Borrower or any of its ERISA Affiliates in
connection with any Acquisition or (ii) has at any time been maintained for the
employees of the Borrower or any current or former ERISA Affiliate.
"Person" means an individual, partnership, corporation, limited
liability company, limited liability partnership, trust, unincorporated
organization, association, joint venture or a government or agency or political
subdivision thereof.
"Pledge Agreement" means collectively (or individually as the context
may indicate), (i) that certain Securities Pledge Agreement dated as of the date
hereof between the Borrower and the Agent for the benefit of the Agent and the
Lenders, and (ii) any additional Securities Pledge Agreement delivered to the
Agent pursuant to Section 5.1 and 9.20.
"Pledge Agreement Supplement" means, with respect to each Pledge
Agreement, the Pledge Agreement Supplement in the form affixed as an Exhibit to
such Pledge Agreement.
"Pledged Interests" means the Subsidiary Securities required to be
pledged as Collateral pursuant to Article V or the terms of any Pledge
Agreement.
"Pre-Refunded Municipal Obligations" means obligations of any state of
the United States of America or of any municipal corporation or other public
body organized under the laws of any such state which are rated, based on the
escrow, in the highest investment rating category by both S&P and Moody's and
which have been irrevocably called for redemption and advance refunded through
the deposit in escrow of Government Securities or other debt securities which
are (i) not callable at the option of the issuer thereof prior to maturity, (ii)
23
30
irrevocably pledged solely to the payment of all principal and interest on such
obligations as the same becomes due and (iii) in a principal amount and bear
such rate or rates of interest as shall be sufficient to pay in full all
principal of, interest, and premium, if any, on such obligations as the same
becomes due as verified by a nationally recognized firm of certified public
accountants.
"Price Adjustment" has the meaning set forth in Section 2.2 of the
Purchase Agreement.
"Prime Rate" means the per annum rate of interest established from time
to time by Bank of America as its prime rate, which rate may not be the lowest
rate of interest charged by Bank of America to its customers.
"Principal Office" means the principal office of Bank of America,
presently located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇-▇▇-▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Agency Services, or such other
office and address as the Agent may from time to time designate.
"Pro Forma Projections" means the consolidated pro forma projected
balance sheet and consolidated pro forma statements of projected income and cash
flows for each of the Fiscal Years ending 1999 through 2004 of the Borrower and
its Subsidiaries, including the Acquired Company and its subsidiaries, giving
effect to the Acquisition Transaction, in form and substance acceptable to the
Agent.
"Purchase Agreement" means the Stock Purchase Agreement between GS
Technologies Operating Co., Inc. and the Borrower dated November 19, 1999, with
only such amendments thereto as shall have been disclosed to and consented to by
the Agent.
"Rate Hedging Obligations" means, without duplication, any and all
obligations of the Borrower or any Subsidiary, whether absolute or contingent
and howsoever and whensoever created, arising, evidenced or acquired (including
all renewals, extensions and modifications thereof and substitutions therefor),
under (i) any and all agreements, devices or arrangements designed to protect at
least one of the parties thereto from the fluctuations of interest rates,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; (ii) all other "derivative instruments" as
defined in FASB 133 and which are subject to the reporting requirements of FASB
133; and (iii) any and all cancellations, buybacks, reversals, terminations or
assignments of any of the foregoing.
"Registrar" means, with respect to any Subsidiary Securities, any
Person authorized or obligated to maintain records of the registration of
ownership or transfer of ownership of
24
31
interests in such Subsidiary Securities, and in the event no such Person shall
have been expressly designated by the related Subsidiary, shall mean (i) as to
any corporation or limited liability company, its Secretary (or comparable
official), and (ii) as to any partnership, its general partner (or managing
general partner if one shall have been appointed).
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Reimbursement Obligation" shall mean at any time, the obligation of
the Borrower with respect to any Letter of Credit to reimburse the Issuing Bank
and the Lenders to the extent of their respective Participations (including by
the receipt by the Issuing Bank of proceeds of Loans pursuant to Section
2.2(c)(iii)) for amounts theretofore paid by the Issuing Bank pursuant to a
drawing under such Letter of Credit.
"Repurchase Agreement" means a repurchase agreement entered into with
any financial institution whose debt obligations or commercial paper are rated
"A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by Moody's.
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating (i) if there shall be fewer than
five (5) Lenders, 75% of the aggregate Credit Exposures of all Lenders on such
date, and (ii) if there shall be five (5) or more Lenders 66 2/3% of the
aggregate Credit Exposures of all the Lenders on such date. For purposes of the
preceding sentence, the amount of the "Credit Exposure" of each Lender shall be
equal at all times (a) other than following the occurrence and during the
continuance of an Event of Default, to the sum of its Revolving Credit
Commitment and Term Loan Commitment, and (b) following the occurrence and during
the continuance of an Event of Default, to the sum of (i) the amount of such
Lender's Applicable Commitment Percentage of Term Loan Outstandings plus (ii)
the aggregate principal amount of such Lender's Applicable Commitment Percentage
of Revolving Credit Outstandings plus (iii) the amount of such Lender's
Applicable Commitment Percentage of Letter of Credit Outstandings and Swing Line
Outstandings; provided that, for the purpose of this definition only, (A) if any
Lender shall have failed to fund its Applicable Commitment Percentage of any
Advance, then the Term Loan Commitment or Revolving Credit Commitment, as
applicable, of such Lender shall be deemed reduced by the amount it so failed to
fund for so long as such failure shall continue and such Lender's Credit
Exposure attributable to such failure shall be deemed held by any Lender making
more than its Applicable Commitment Percentage of such Advance to the extent it
covers such failure, (B) if any Lender shall have failed to pay to the Issuing
Bank upon demand its Applicable Commitment Percentage of any drawing under any
Letter of Credit resulting in an outstanding Reimbursement Obligation (whether
by funding its Participation therein or otherwise), such Lender's Credit
Exposure attributable to all Letter of Credit Outstandings shall be deemed to be
held by the Issuing Bank until such Lender shall pay such deficiency amount to
the Issuing Bank together with interest thereon as provided in Section 4.9 and
(C) if any Lender shall have failed to pay to Bank of America on demand its
Applicable Commitment Percentage of any
25
32
Swing Line Loan (whether by funding its Participation therein or otherwise),
such Lender's Credit Exposure attributable to all Swing Line Outstandings shall
be deemed to be held by Bank of America until such Lender shall pay such
deficiency amount to Bank of America together with interest thereon as provided
in Section 4.9;
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks with respect to (i) any category
of liabilities which includes deposits by reference to which the Eurodollar Rate
is to be determined, or (ii) any category of extensions of credit or other
assets which include Eurodollar Rate Loans. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Requirement.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
or any Subsidiary Securities of its Subsidiaries (other than those payable or
distributable solely to the Borrower) now or hereafter outstanding, except a
dividend payable solely in shares of a class of stock to the holders of that
class; (b) any redemption, conversion, exchange, retirement or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of stock of Borrower or any of its Subsidiaries (other than those
payable or distributable solely to the Borrower) now or hereafter outstanding;
(c) any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of stock of
Borrower or any Subsidiary Securities of its Subsidiaries now or hereafter
outstanding; and (d) any issuance and sale of Subsidiary Securities of any
Subsidiary of the Borrower (or any option, warrant or right to acquire such
stock) other than to the Borrower.
"Revolver Reserve" means $1,500,000 which amount shall be adjusted
downward based upon information received by the Agent and approved by the
Required Lenders demonstrating that a reduction in the level of the reserve is
justified as the result of the partial or total remediation or elimination of
environmental problems.
"Revolving Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to make Revolving Loans to the Borrower up to an
aggregate principal amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Revolving Credit Commitment.
"Revolving Credit Facility" means the facility described in Section 2.2
hereof providing for Loans to the Borrower by the Lenders in the aggregate
principal amount of the Total Revolving Credit Commitment.
26
33
"Revolving Credit Outstandings" means, as of any date of determination,
the aggregate principal amount of all Revolving Loans then outstanding.
"Revolving Credit Termination Date" means (i) the Stated Termination
Date or (ii) such earlier date of termination of Lenders' obligations pursuant
to Section 11.1 upon the occurrence of an Event of Default, or (iii) such date
as the Borrower may voluntarily and permanently terminate the Revolving Credit
Facility by payment in full of all Revolving Credit Outstandings, Swing Line
Outstandings and Letter of Credit Outstandings and cancellation of all Letters
of Credit, together with all accrued and unpaid interest and fees thereon.
"Revolving Loan" means any borrowing pursuant to an Advance under the
Revolving Credit Facility in accordance with Section 2.2.
"Revolving Notes" means, collectively, the promissory notes of the
Borrower evidencing Revolving Loans executed and delivered to the Lenders as
provided in Section 2.4 substantially in the form of Exhibit G-1, with
appropriate insertions as to amounts, dates and names of Lenders.
"S&P" means Standard & Poor's Ratings Group, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SRP" means Structural Reinforcement Products, Inc., a Delaware
corporation.
"Security Agreement" means, collectively (or individually as the
context may indicate), (i) each Security Agreement dated as of the date hereof
by the Borrower and its Subsidiaries to the Agent, and (ii) any additional
Security Agreement delivered to the Agent pursuant to Section 9.20, as hereafter
modified, amended or supplemented from time to time.
"Security Instruments" means, collectively, the Pledge Agreement, the
Security Agreement, the Intellectual Property Security Agreement, the Mortgage,
the Assignment of Leases, the Warehouseman's Estoppel Certificate and all other
agreements (including control agreements), instruments and other documents,
whether now existing or hereafter in effect, pursuant to which the Borrower or
any Subsidiary shall grant or convey to the Agent or the Lenders a Lien in, or
any other Person shall acknowledge any such Lien in, property as security for
all or any portion of the Obligations, as any of them may be amended, modified
or supplemented from time to time.
"Segment" means a portion of the Term Loan (or all thereof) with
respect to which a particular interest rate is (or is proposed to be)
applicable.
"Solvent" means, when used with respect to any Person, that at the time
of determination:
27
34
(a) the fair value of its assets (both at fair valuation and at
present fair saleable value on an orderly basis) is in excess of the total
amount of its liabilities, including Contingent Obligations; and
(b) it is then able and expects to be able to pay its debts as
they mature; and
(c) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Stated Termination Date" means January 31, 2005.
"Subsidiary" means any corporation or other entity in which more than
50% of its outstanding Voting Securities or more than 50% of all equity
interests is owned or controlled directly or indirectly by the Borrower and/or
by one or more of the Borrower's Subsidiaries.
"Subsidiary Securities" means the shares of capital stock or the other
equity interests issued by or equity participations in any Subsidiary, whether
or not constituting a "security" under Article 8 of the Uniform Commercial Code
as in effect in any jurisdiction.
"Swap Agreement" means one or more agreements between the Borrower and
any Person with respect to Indebtedness evidenced by any or all of the Notes, on
terms mutually acceptable to Borrower and such Person and approved by the
Required Lenders, which agreements create Rate Hedging Obligations; provided,
however, that no such approval of the Lenders shall be required to the extent
such agreements are entered into between the Borrower and any Lender or any
affiliate of any Lender.
"Swing Line" means the revolving line of credit established by Bank of
America in favor of the Borrower pursuant to Section 2.5.
"Swing Line Loans" means loans made by Bank of America to the Borrower
pursuant to Section 2.5.
"Swing Line Note" means the promissory note of the Borrower evidencing
the Swing Line executed and delivered to Bank of America as provided in Section
2.4 substantially in the form of Exhibit G-2.
"Swing Line Outstandings" means, as of any date of determination, the
aggregate principal amount of all Swing Line Loans then outstanding.
"Term Loan" means the loan made pursuant to the Term Loan Facility in
accordance with Section 2.1.
"Term Loan Commitment" means, with respect to each Lender, the
obligation of such Lender to make the Term Loan to the Borrower in a principal
amount equal to such Lender's
28
35
Applicable Commitment Percentage of the Total Term Loan Commitment as set forth
on Exhibit A.
"Term Loan Facility" means the facility described in Section 2.1
providing for a Term Loan to the Borrower by the Lenders in the original
principal amount of $80,000,000.
"Term Loan Maturity Date" means January 31, 2005.
"Term Loan Outstandings" means, as of any date of determination, the
aggregate principal amount of the Term Loan then outstanding and all interest
accrued thereon.
"Term Loan Termination Date" means (i) the Term Loan Maturity Date or
(ii) such earlier date of termination of Lenders' obligations pursuant to
Section 11.1 upon the occurrence of an Event of Default, or (iii) such date as
the Borrower may voluntarily and permanently terminate the Term Loan Facility by
payment in full of all Obligations incurred in connection with the Term Loan.
"Term Notes" means, collectively, the promissory notes of the Borrower
evidencing Term Loans executed and delivered to the Lenders as provided in
Section 2.4 substantially in the form of Exhibit G-3, with appropriate
insertions as to amounts, dates and names of Lenders.
"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the notice
requirement has been waived by applicable regulation); or (ii) the withdrawal of
the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA
or was deemed such under Section 4062(e) of ERISA; or (iii) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; or (iv) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (v) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the termination of
a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA; or
(x) any event or condition with respect to any Employee Benefit Plan which is
regulated by any Foreign Benefit Law that results in the termination of such
Employee Benefit Plan or the revocation of such Employee Benefit Plan's
authority to operate under the applicable Foreign Benefit Law.
29
36
"Title Policy" means, with respect to each Mortgaged Property, the
mortgagee title insurance policy (together with such endorsements as the Agent
may reasonably require) issued to the Agent in respect of such Mortgaged
Property by an insurer selected by the Borrower and reasonably acceptable to the
Agent, insuring (in an amount satisfactory to the Agent) the Lien of the Agent
for the benefit of the Agent and the Lenders on such Mortgaged Property to be
duly perfected and of first priority, subject only to such exceptions as shall
be acceptable to the Agent.
"Total Letter of Credit Commitment" means an amount not to exceed
$10,000,000.
"Total Revolving Credit Commitment" means a principal amount equal to
$60,000,000, as reduced from time to time in accordance with Section 2.2(e).
"Total Term Loan Commitment" means a principal amount equal to
$80,000,900.
"Transaction Documents" means, collectively, the Purchase Agreement and
all other documents, agreements and instruments executed and delivered in
connection with the Acquisition Transaction.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or a
Eurodollar Rate Loan).
"Voting Securities" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of which
are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right so to vote has been suspended by the happening of such a
contingency.
"Warehouseman's Estoppel Certificate" means, collectively, each of the
Warehouseman's Estoppel Certificates required to be delivered by the
warehouseman holding Inventory of the Borrower or its Subsidiaries or arising
after the Closing Date and delivered by the Borrower or a Subsidiary, as
applicable, pursuant to Article V, substantially in the form of Exhibit N, or in
such other form as the Agent shall approve, as the same may be amended,
modified, supplemented or amended and restated from time to time.
"▇▇▇▇▇ Family" means each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇. ▇▇▇▇▇,
the lineal descendants of each of them, any spouse, parent and any trust
established for the benefit of any of the foregoing persons so long as such
trust is controlled directly or indirectly by one or more of the foregoing
persons.
"Year 2000 Compliant" means all computer applications (including those
affected by information received from its suppliers and vendors) that are
material to the Borrower's or any of its Subsidiaries' business and operations
are able to perform properly date-sensitive functions involving all dates on and
after January 1, 2000;
30
37
"Year 2000 Problem" means the risk that computer applications used by
the Borrower or any of its Subsidiaries (including those affected by information
received from its suppliers and vendors) may be unable to recognize and perform
properly date-sensitive functions involving certain dates on and after January
1, 2000.
1.2 Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in accordance
with GAAP applied on a Consistent Basis.
(b) Each term defined in Articles 1, 8 or 9 of the North Carolina
Uniform Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of another
jurisdiction is controlling, in which case such terms shall have the meaning
given in the Uniform Commercial Code of the applicable jurisdiction.
(c) The headings, subheadings and table of contents used herein or
in any other Loan Document are solely for convenience of reference and shall not
constitute a part of any such document or affect the meaning, construction or
effect of any provision thereof.
(d) Except as otherwise expressly provided, references in any Loan
Document to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections, paragraphs,
clauses, annexes, appendices, exhibits and schedules in or to such Loan
Document.
(e) All definitions set forth herein or in any other Loan Document
shall apply to the singular as well as the plural form of such defined term, and
all references to the masculine gender shall include reference to the feminine
or neuter gender, and vice versa, as the context may require.
(f) When used herein or in any other Loan Document, words such as
"hereunder," "hereto," "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the whole
of the applicable document and not to any particular article, section,
subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting the
generality of any description preceding such term, and for purposes hereof the
rule of ejusdem generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to matters
similar to those specifically mentioned.
(h) Except as otherwise expressly provided, all dates and times of
day specified herein shall refer to such dates and times at Charlotte, North
Carolina.
31
38
(i) Whenever interest rates or fees are established in whole or in
part by reference to a numerical percentage expressed as "_%," such arithmetic
expression shall be interpreted in accordance with the convention that 1%=100
basis points.
(j) Each of the parties to the Loan Documents and their counsel
have reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that ambiguities
are to be resolved against the drafting party shall be inapplicable in the
construing and interpretation of the Loan Documents and all exhibits, schedules
and appendices thereto.
(k) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to refer to
each other officer of such Person, however titled, exercising the same or
substantially similar functions.
(l) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such document
or agreement, as the case may be, as amended, modified or supplemented from time
to time only as and to the extent permitted therein and in the Loan Documents.
32
39
ARTICLE II
The Credit Facilities
2.1 Term Loan.
(a) Funding. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make an Advance of the Term Loan to
the Borrower on the Closing Date on a pro rata basis determined by its
Applicable Commitment Percentage up to the Term Loan Commitment of such Lender.
The principal amount of each Segment of the Term Loan outstanding hereunder from
time to time shall bear interest and the Term Loan shall be repayable as herein
provided. No amount of the Term Loan repaid or prepaid by the Borrower may be
reborrowed hereunder, and no subsequent Advances of Term Loan amounts shall be
made by any Lender after the initial such Advance.
(b) Term Loan Advance. Not later than 1:00 P.M., on the Closing
Date, each Lender shall, pursuant to the terms and subject to the conditions of
this Agreement, make the amount of the Term Loan Advance to be made by it on
such day available by wire transfer to the Agent in the amount of its Term Loan
Commitment. Such wire transfer shall be directed to the Agent at the Principal
Office and shall be in the form of immediately available, freely transferable
Dollars. The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by delivery of
the proceeds thereof to the Borrower's Account or otherwise as shall be directed
by the Authorized Representative and reasonably acceptable to the Agent.
(c) Payment of Principal. The principal amount of the Term Loan
shall be repaid in twenty (20) consecutive quarterly installments on the dates
and in the amounts set forth below:
Date Amount
----------------------------- ---------------------
March 31, 2000 $2,000,000
June 30, 2000 $2,000,000
September 30, 2000 $2,000,000
December 31, 2000 $2,000,000
March 31, 2001 $2,500,000
June 30, 2001 $2,500,000
September 30, 2001 $2,500,000
December 31, 2001 $2,500,000
33
40
March 31, 2002 $4,250,000
June 30, 2002 $4,250,000
September 30, 2002 $4,250,000
December 31, 2002 $4,250,000
March 31, 2003 $4,750,000
June 30, 2003 $4,750,000
September 30, 2003 $4,750,000
December 31, 2003 $4,750,000
March 31, 2004 $6,500,000
June 30, 2004 $6,500,000
September 30, 2004 $6,500,000
Term Loan Maturity Date $6,500,000
provided, however, that the entire amount of Term Loan Outstandings shall be due
and payable in full on the Term Loan Termination Date.
(d) Optional Prepayments. The Borrower may prepay the Term Loan in
whole or in part from time to time on any Business Day, without penalty or
premium, upon at least three (3) Business Days' telephonic notice from an
Authorized Representative (effective upon receipt) to the Agent prior to 10:30
A.M., which notice shall be irrevocable. The Authorized Representative shall
provide the Agent written confirmation of each such telephonic notice but
failure to provide such confirmation shall not affect the validity of such
telephonic notice. Any prepayment, whether of a Base Rate Segment or a
Eurodollar Rate Segment, shall be made at a prepayment price equal to (i) the
amount of principal to be prepaid, plus (ii) all accrued and unpaid interest on
the amount so prepaid, to the date of prepayment. All prepayments under this
Section 2.1(d) shall be made in the minimum principal amount of $3,000,000 or
any integral multiple of $1,000,000 in excess thereof (or in the entire
remaining principal balance of the Term Loan), and all such prepayments of
principal shall be applied to installments of principal in inverse order of
their maturities.
(e) Mandatory Prepayments. In addition to the required payments of
principal of the Term Loan set forth in Section 2.1(c) and any optional payments
of principal of the Term Loan or reductions of the Revolving Credit Facility
effected under Section 2.1(d) or Section 2.2(e), the Borrower shall make, or
shall cause each applicable Subsidiary to make, a prepayment from the proceeds
of (i) each private or public offering of equity securities of the Borrower or
any Subsidiary (other than securities issued to the Borrower or a Guarantor) in
an amount equal to fifty percent (50%) of the Net Proceeds of each issuance of
equity
34
41
securities of the Borrower or any Subsidiary (including without limitation any
security not constituting Indebtedness exchangeable, exercisable or convertible
for or into equity securities), (ii) the issuance of any Indebtedness for Money
Borrowed permitted by the Required Lenders, in an amount equal to one hundred
percent (100%) of the Net Proceeds from the issuance of such Indebtedness
excluding Indebtedness permitted to be issued under Section 10.5(a), (iii) each
Asset Disposition permitted under Section 10.6(c), (f) and (g) in an amount
equal to one hundred percent (100%) of the Net Proceeds of such Asset
Disposition, and (iv) one hundred percent (100%) of the amount of any Price
Adjustment received by the Borrower, each such prepayment to be made within
fifteen (15) Business Days of receipt of such proceeds and upon not less than
five (5) Business Days' written notice to the Agent, which notice shall include
a certificate of an Authorized Representative setting forth in reasonable detail
the calculations utilized in computing the amount of such prepayment;
The Agent shall give each Lender, within one (1) Business Day,
telefacsimile notice of each notice of prepayment described in this Section
2.1(e). All mandatory prepayments made pursuant to this Section 2.1(e) shall be
applied (i) to installments of principal of the Term Loan in inverse order of
their maturities (as adjusted to give effect to any prior payments or
prepayments of principal), and (ii) in the event that the Term Loan shall have
been fully repaid, to the Revolving Credit Outstandings; provided that the Total
Revolving Credit Commitment shall not be permanently reduced by any such
prepayment except that prepayments of Revolving Credit Outstandings pursuant to
Section 2.1(e)(iii) above shall permanently reduce the Total Revolving Credit
Commitment by the amount of such prepayment.
2.2 Revolving Loans.
(a) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, provided, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Agent has accelerated
the maturity of any of the Notes as a result of an Event of Default; provide
further, however, that immediately after giving effect to each such Advance, the
amount of Revolving Credit Outstandings plus Letter of Credit Outstandings plus
Swing Line Outstandings shall not exceed the lesser of the Borrowing Base and
the Total Revolving Credit Commitment. Within such limits and subject to the
other terms and conditions of this Agreement, the Borrower may borrow, repay and
reborrow under the Revolving Credit Facility on a Business Day from the Closing
Date until, but (as to borrowings and reborrowings) not including, the Revolving
Credit Termination Date.
35
42
(b) Amounts. Except as otherwise permitted by the Lenders from time to
time, the amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings shall not exceed at any time the
lesser of the Borrowing Base and the Total Revolving Credit Commitment, and, in
the event there shall be outstanding any such excess, the Borrower shall
immediately make such payments and prepayments as shall be necessary to comply
with this restriction. Each Advance under the Revolving Credit Facility, other
than Base Rate Refunding Loans, shall be in an amount of at least $3,000,000,
and, if greater than $3,000,000, an integral multiple of $1,000,000.
(c) Advances.
(i) An Authorized Representative shall give the Agent (1)
at least three (3) Business Days' irrevocable telephonic notice of each
Eurodollar Rate Loan (whether representing an additional borrowing or
the Continuation of a borrowing hereunder or the Conversion of a
borrowing hereunder from a Base Rate Loan to a Eurodollar Rate Loan)
prior to 11:00 A.M. and (2) irrevocable telephonic notice of each Base
Rate Loan (other than Base Rate Refunding Loans to the extent the same
are effected without notice pursuant to Section 2.2(c)(iii) and whether
representing an additional borrowing hereunder or the Conversion of
borrowing hereunder from Eurodollar Rate Loans to Base Rate Loans)
prior to 11:00 A.M. on the day of such proposed Revolving Loan. Each
such notice shall be effective upon receipt by the Agent, shall specify
the amount of the borrowing, the type of Revolving Loan (Base Rate or
Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan,
the Interest Period to be used in the computation of interest. The
Authorized Representative shall provide the Agent written confirmation
of each such telephonic notice in the form of a Borrowing Notice or
Interest Rate Selection Notice (as applicable) with appropriate
insertions but failure to provide such confirmation shall not affect
the validity of such telephonic notice. Notice of receipt of such
Borrowing Notice or Interest Rate Selection Notice, as the case may be,
together with the amount of each Lender's portion of an Advance
requested thereunder, shall be provided by the Agent to each Lender by
telefacsimile transmission with reasonable promptness, but (provided
the Agent shall have received such notice by 11:00 A.M.) not later than
1:00 P.M. on the same day as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for
each borrowing under this Section 2.2, each Lender shall, pursuant to
the terms and subject to the conditions of this Agreement, make the
amount of the Advance or Advances to be made by it on such day
available by wire transfer to the Agent in the amount of its pro rata
share, determined according to such Lender's Applicable Commitment
Percentage of the Revolving Loan or Revolving Loans to be made on such
day. Such wire transfer shall be directed to the Agent at the Principal
Office and shall be in the form of Dollars constituting immediately
available funds. The amount so received by the Agent shall, subject to
the terms and conditions of this Agreement, be made available to the
Borrower by delivery of the proceeds thereof to the Borrower's
36
43
Account or otherwise as shall be directed in the applicable Borrowing
Notice by the Authorized Representative and reasonably acceptable to
the Agent.
(iii) Notwithstanding the foregoing, if a drawing is made
under any Letter of Credit, such drawing is honored by the Issuing
Bank, and the Borrower shall not immediately fully reimburse the
Issuing Bank in respect of such drawing from other funds available to
the Borrower, (A) provided that the conditions to making a Revolving
Loan as herein provided shall then be satisfied, the Reimbursement
Obligation arising from such drawing shall be paid to the Issuing Bank
by the Agent without the requirement of notice to or from the Borrower
from immediately available funds which shall be advanced as a Base Rate
Refunding Loan to the Agent at its Principal Office by each Lender
under the Revolving Credit Facility in an amount equal to such Lender's
Applicable Commitment Percentage of such Reimbursement Obligation, and
(B) if the conditions to making a Revolving Loan as herein provided
shall not then be satisfied, each of the Lenders shall fund by payment
to the Agent (for the benefit of the Issuing Bank) at its Principal
Office in immediately available Rinds the purchase from the Issuing
Bank of their respective Participations in the related Reimbursement
Obligation based on their respective Applicable Commitment Percentages
of the Total Letter of Credit Commitment. If a drawing is presented
under any Letter of Credit in accordance with the terms thereof and the
Borrower shall not immediately reimburse the Issuing Bank in respect
thereof, then notice of such drawing or payment shall be provided
promptly by the Issuing Bank to the Agent and the Agent shall provide
notice to each Lender by telephone or telefacsimile transmission. If
notice to the Lenders of a drawing under any Letter of Credit is given
by the Agent at or before 12:00 noon on any Business Day, each Lender
shall either make a Base Rate Refunding Loan or fund the purchase of
its Participation as specified above in the amount of such Lender's
Applicable Commitment Percentage of such drawing or payment and shall
pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before
2:30 P.M. on the same Business Day. If such notice to the Lenders is
given by the Agent after 12:00 noon on any Business Day, each Lender
shall either make such Base Rate Refunding Loan or fund such purchase
before 12:00 noon on the next following Business Day.
(d) Repayment of Revolving Loans The principal amount of
each Revolving Loan shall be due and payable to the Agent for the
benefit of each Lender in full on the Revolving Credit Termination
Date, or earlier as specifically provided herein. The principal amount
of any Revolving Loan may be prepaid in whole or in part on any
Business Day, upon (A) at least five (5) Business Days' irrevocable
telephonic notice in the case of each Revolving Loan that is a
Eurodollar Rate Loan from an Authorized Representative (effective upon
receipt) to the Agent prior to 11:00 A.M. and (B) irrevocable
telephonic notice in the case of each Revolving Loan that is a Base
Rate Loan from an Authorized Representative (effective upon receipt) to
the Agent prior to 11:00 A.M. on the day of such proposed repayment.
The Authorized Representative shall provide the Agent written
confirmation of
37
44
each such telephonic notice but failure to provide such confirmation
shall not effect the validity of such telephonic notice. All
prepayments of Revolving Loans made by the Borrower shall be in the
amount of $3,000,000 or such greater amount which is an integral
multiple of $1,000,000, or the amount equal to all Revolving Credit
Outstandings, or such other amount as necessary to comply with Section
2.2(b).
(e) Reductions. The Borrower shall, by notice from an
Authorized Representative, have the right from time to time but not
more frequently than once each calendar month, upon not less than five
(5) Business Days' written notice to the Agent, effective upon receipt,
to reduce the Total Revolving Credit Commitment. The Agent shall give
each Lender, within one (1) Business Day of receipt of such notice,
telefacsimile notice, or telephonic notice (confirmed in writing), of
such reduction. Each such reduction shall be in the aggregate amount of
$3,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment
and shall permanently reduce the Total Revolving Credit Commitment.
Each reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of the Revolving Loans (and, if necessary,
cancellation of outstanding Letters of Credit) to the extent that the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings plus Swing Line Outstandings exceeds the Total Revolving
Credit Commitment after giving effect to such reduction, together with
accrued and unpaid interest and fees on the amounts prepaid. In
addition to the foregoing, Revolving Credit Outstandings shall be
subject to mandatory prepayment and the Total Revolving Credit
Commitment shall be permanently reduced as provided in Section 2.1(e).
2.3 Use of Proceeds.
(a) The proceeds of the Loans shall be used by the Borrower
exclusively (i) to repay Existing Indebtedness; (ii) to pay the cash portion of
the purchase price for the Acquired Company pursuant to the Transaction
Documents; (iii) to pay fees and expenses incurred in connection with the
Acquisition Transaction; and (iv) to provide for working capital, Capital
Expenditures and other general corporate purposes of the Borrower and its
Subsidiaries.
2.4 Notes.
(a) Revolving Notes. Revolving Loans made by each Lender shall be
evidenced by the Revolving Note payable to the order of such Lender in the
respective amount of its Applicable Commitment Percentage of the Total Revolving
Credit Commitment, which Revolving Note shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
(b) Term Notes. The portion of the Term Loan made by each Lender
shall be evidenced by the Term Note payable to the order of such Lender in the
respective amount of its Term Loan Commitment, which Term Notes shall be dated
the Closing Date or a later
38
45
date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
(c) Swing Line Note. The Swing Line Outstandings shall be
evidenced by a separate Swing Line Note payable to the order of Bank of America
in the amount of the Swing Line, which Note shall be dated the Closing Date and
shall be duly completed, executed and delivered by the Borrower.
2.5 Swing Line.
(a) Notwithstanding any other provision of this Agreement to the
contrary, in order to administer the Revolving Credit Facility in an efficient
manner and to minimize the transfer of funds between the Agent and the Lenders,
Bank of America shall make available Swing Line Loans to the Borrower prior to
the Revolving Credit Termination Date. Bank of America shall not be obligated to
make any Swing Line Loan pursuant hereto (i) if to the actual knowledge of Bank
of America, the Borrower is not in compliance with all the conditions to the
making of Revolving Loans set forth in this Agreement, (ii) if after giving
effect to such Swing Line Loan, the Swing Line Outstandings exceed $5,000,000,
or (iii) if after giving effect to such Swing Line Loan, the sum of the Swing
Line Outstandings, Revolving Credit Outstandings and Letter of Credit
Outstandings exceeds the Total Revolving Credit Commitment. The Borrower may,
subject to the conditions set forth in the preceding sentence, borrow, repay and
reborrow under this Section 2.5. Unless notified to the contrary by Bank of
America, borrowings under the Swing Line shall be made in the minimum amount of
$100,000 or, if greater, in amounts which are integral multiples of $50,000, or
in the amount necessary to effect a Base Rate Refunding Loan, upon written
request by telefacsimile transmission, effective upon receipt, by an Authorized
Representative of the Borrower made to Bank of America not later than 12:30 P.M.
on the Business Day of the requested borrowing. Each such Borrowing Notice shall
specify the amount of the borrowing and the date of borrowing, and shall be in
the form of Exhibit E-2, with appropriate insertions. Unless notified to the
contrary by Bank of America, each repayment of a Swing Line Loan shall be in an
amount which is an integral multiple of $100,000 or the aggregate amount of all
Swing Line Outstandings.
(b) The interest payable on Swing Line Loans is solely for the
account of Bank of America. Swing Line Loans shall bear interest solely at the
Base Rate. From and after the occurrence of an Event of Default, Swing Line
Loans shall accrue interest at the Default Rate, and all accrued and unpaid
interest on Swing Line Loans shall be payable, on the dates and in the manner
provided in Sections 4.3 with respect to interest on Base Rate Loans.
(c) Upon the making of a Swing Line Loan, each Lender shall be
deemed to have purchased from Bank of America a Participation therein in an
amount equal to that Lender's Applicable Commitment Percentage of such Swing
Line Loan. Upon demand made by Bank of America, each Lender shall, according to
its Applicable Commitment Percentage of such Swing Line Loan, promptly provide
to Bank of America its purchase price therefor in an
39
46
amount equal to its Participation therein. Any Advance made by a
Lender pursuant to demand of Bank of America of the purchase price of
its Participation shall when made be deemed to be (i) provided that
the conditions to making Revolving Loans shall be satisfied, a Base
Rate Refunding Loan under Section 2.2, and (ii) in all other cases,
the funding by each Lender of the purchase price of its Participation
in such Swing Line Loan. The obligation of each Lender to so provide
its purchase price to Bank of America shall be absolute and
unconditional and shall not be affected by the occurrence of an Event
of Default or any other occurrence or event.
The Borrower, at its option and subject to the terms hereof, may
request an Advance pursuant to Section 2.2 in an amount sufficient to repay
Swing Line Outstandings on any date and the Agent shall provide from the
proceeds of such Advance to Bank of America the amount necessary to repay such
Swing Line Outstandings (which Bank of America shall then apply to such
repayment) and credit any balance of the Advance in immediately available funds
in the manner directed by the Borrower pursuant to Section 2.2(c)(ii). The
proceeds of such Advances shall be paid to Bank of America for application to
the Swing Line Outstandings and the Lenders shall then be deemed to have made
Loans in the amount of such Advances. The Swing Line shall continue in effect
until the Revolving Credit Termination Date, at which time all Swing Line
Outstandings and accrued interest thereon shall be due and payable in full.
40
47
ARTICLE III
Letters of Credit
3.1 Letters of Credit. The Issuing Bank agrees, subject to the
terms and conditions of this Agreement, upon request of the Borrower or the
Borrower and a Subsidiary (in which case the Borrower shall be fully liable for
all Reimbursement Obligations arising under such Letter of Credit) to issue from
time to time for the account of the Borrower or the Borrower and a Subsidiary,
as the case may be, Letters of Credit upon delivery to the Issuing Bank of an
Application and Agreement for Letter of Credit relating thereto in form and
content acceptable to the Issuing Bank; provided, that (i) the Issuing Bank
shall not be obligated to issue (or renew) any Letter of Credit if it has been
notified by the Agent or has actual knowledge that a Default or Event of Default
has occurred and is continuing, (ii) the Letter of Credit Outstandings shall not
exceed the Total Letter of Credit Commitment and (iii) no Letter of Credit shall
be issued (or renewed) if, after giving effect thereto, Letter of Credit
Outstandings plus Revolving Credit Outstandings plus Swing Line Outstandings
shall exceed the Total Revolving Credit Commitment. No Letter of Credit shall
have an expiry date (including all rights of the Borrower or any beneficiary
named in such Letter of Credit to require renewal) or payment date occurring
later than the earlier to occur of one year after the date of its issuance or
the seventh Business Day prior to the Stated Termination Date.
3.2 Reimbursement and Participations.
(a) The Borrower hereby unconditionally agrees to pay to
the Issuing Bank immediately at the Principal Office all amounts
required to pay all drafts drawn or purporting to be drawn under the
Letters of Credit and all reasonable expenses incurred by the Issuing
Bank in connection with the Letters of Credit, and in any event and
without demand to place in possession of the Issuing Bank (which shall
include Advances under the Revolving Credit Facility if permitted by
Section 2.2 and Swing Line Loans if permitted by Section 2.5)
sufficient funds to pay all debts and liabilities arising under any
Letter of Credit. The Issuing Bank agrees to give the Borrower prompt
notice of any request for a draw under a Letter of Credit. The Issuing
Bank may charge any account the Borrower may have with it for any and
all amounts the Issuing Bank pays under a Letter of Credit, plus
charges and reasonable expenses as from time to time agreed to by the
Issuing Bank and the Borrower; provided that to the extent permitted by
Section 2.2(c)(iii) and Section 2.5, amounts shall be paid pursuant to
Advances under the Revolving Credit Facility or, if the Borrower shall
elect, by Swing Line Loans. The Borrower agrees to pay the Issuing Bank
interest on any Reimbursement Obligations not paid when due hereunder
at the Default Rate.
(b) In accordance with the provisions of Section 2.2(c),
the Issuing Bank shall notify the Agent of any drawing under any Letter
of Credit promptly following the receipt by the Issuing Bank of such
drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on the date of issuance thereof, a Participation
in the liability of the Issuing Bank in respect of each
41
48
Letter of Credit in an amount equal to such Lender's Applicable
Commitment Percentage of such liability, and to the extent that the
Borrower is obligated to pay the Issuing Bank under Section 3.2(a),
each Lender (other than the Issuing Bank) thereby shall absolutely,
unconditionally and irrevocably assume, and shall be unconditionally
obligated to pay to the Issuing Bank, its Applicable Commitment
Percentage of the liability of the Issuing Bank under such Letter of
Credit in the manner and with the effect provided in Section
2.2(c)(iii).
(d) Simultaneously with the making of each payment by a
Lender to the Issuing Bank pursuant to Section 2.2(c)(iii)(B), such
Lender shall, automatically and without any further action on the part
of the Issuing Bank or such Lender, acquire a Participation in an
amount equal to such payment (excluding the portion thereof
constituting interest accrued prior to the date the Lender made its
payment) in the related Reimbursement Obligation of the Borrower. Each
Lender's obligation to make payment to the Agent for the account. of
the Issuing Bank pursuant to Section 2.2(c)(iii) and Section 3.2(c),
and the right of the Issuing Bank to receive the same, shall be
absolute and unconditional, shall not be affected by any circumstance
whatsoever and shall be made without any offset, abatement, withholding
or reduction whatsoever. In the event the Lenders have purchased
Participations in any Reimbursement Obligation as set forth above, then
at any time payment (in fully collected, immediately available funds)
of such Reimbursement Obligation, in whole or in part, is received by
the Issuing Bank from the Borrower, the Issuing Bank shall promptly pay
to each Lender an amount equal to its Applicable Commitment Percentage
of such payment from the Borrower.
(e) Promptly following the end of each calendar quarter,
the Issuing Bank shall deliver to the Agent a notice describing the
aggregate undrawn amount of all Letters of Credit at the end of such
quarter. Upon the request of any Lender from time to time, the Issuing
Bank shall deliver to the Agent, and the Agent shall deliver to such
Lender, any other information reasonably requested by such Lender with
respect to each Letter of Credit outstanding.
(f) The issuance by the Issuing Bank of each Letter of
Credit shall, in addition to the conditions precedent set forth in
Article VII, be subject to the conditions that such Letter of Credit be
in such form and contain such terms as shall be satisfactory to the
Issuing Bank consistent with the then current practices and procedures
of the Issuing Bank with respect to similar letters of credit, and the
Borrower shall have executed and delivered such other instruments and
agreements relating to such Letters of Credit as the Issuing Bank shall
have requested consistent with such practices and procedures. All
Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 or, if the
Issuing Bank shall elect by express reference in an affected Letter of
Credit, the International Chamber of Commerce International Standby
Practices commonly referred to as "ISP98," or any subsequent amendment
or revision of either thereof.
42
49
(g) The Borrower agrees that the Issuing Bank may, in its
sole discretion, accept or pay, as complying with the terms of any
Letter of Credit, any drafts or other documents otherwise in order
which may be signed or issued by an administrator, executor, trustee in
bankruptcy, debtor in possession, assignee for the benefit of
creditors, liquidator, receiver, attorney in fact or other legal
representative of a party who is authorized under such Letter of Credit
to draw or issue any drafts or other documents.
(h) Without limiting the generality of the provisions of
Section 13.9, the Borrower hereby agrees to indemnify and hold harmless
the Issuing Bank, each other Lender and the Agent from and against any
and all claims and damages, losses, liabilities, reasonable costs and
expenses which the Issuing Bank, such other Lender or the Agent may
incur (or which may be claimed against the Issuing Bank, such other
Lender or the Agent) by any Person by reason of or in connection with
the issuance or transfer of or payment or failure to pay under any
Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, (i) caused by the willful misconduct or gross
negligence of the party to be indemnified as determined in a final,
non-appealable judgment by a court of competent jurisdiction or (ii)
caused by the failure of the Issuing Bank to pay under any Letter of
Credit after the presentation to it of a request for payment strictly
complying with the terms and conditions of such Letter of Credit,
unless such payment is prohibited by any law, regulation, court order
or decree. The indemnification and hold harmless provisions of this
Section 3.2(h) shall survive repayment of the Obligations, occurrence
of the Revolving Credit Termination Date, the Facility Termination Date
and expiration or termination of this Agreement.
(i) Without limiting Borrower's rights as set forth in
Section 3.2(h), the obligation of the Borrower to immediately reimburse
the Issuing Bank for drawings made under Letters of Credit and the
Issuing Bank's right to receive such payment shall be absolute,
unconditional and irrevocable, and such obligations of the Borrower
shall be performed strictly in accordance with the terms of this
Agreement and such Letters of Credit and the related Application and
Agreement for any Letter of Credit, under all circumstances whatsoever,
including the following circumstances:
(i) any lack of validity or enforceability of the Letter
of Credit, the obligation supported by the Letter of Credit or any
other agreement or instrument relating thereto (collectively, the
"Related LC Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other
than the defense of payment in accordance with the terms of this
Agreement) or other rights which the Borrower may have at any time
against any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom any such beneficiary or any such
43
50
transferee may be acting), the Agent, the Lenders or any other Person,
whether in connection with the Loan Documents, the Related LC Documents
or any unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit
(or any persons or entities for whom such beneficiary or any such
transferee may be acting), the Agent, the Lenders or any other Person;
(v) any draft, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or
other indulgence or modification granted or agreed to by the Agent,
with or without notice to or approval by the Borrower in respect of any
of Borrower's Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
44
51
ARTICLE IV
Eurodollar Funding, Fees, and Payment Conventions
4.1 Interest Rate Options. Eurodollar Rate Loans and Base Rate
Loans may be outstanding at the same time and, so long as no Default or Event of
Default shall have occurred and be continuing, the Borrower shall have the
option to elect the Type of Loan and the duration of the initial and any
subsequent Interest Periods and to Convert Revolving Loans and Segments of the
Term Loan in accordance with Sections 2.2(c)(i) and 4.2, as applicable;
provided, however, (a) there shall not be outstanding at any one time Eurodollar
Rate Loans having more than eight (8) different Interest Periods, (b) each
Eurodollar Rate Loan (including each Conversion into and each Continuation as a
Eurodollar Rate Loan) shall be in an amount of $3,000,000 or, if greater than
$3,000,000, an integral multiple of $ 1,000,000, and (c) no Eurodollar Rate
Segment shall have an Interest Period that extends beyond the Term Loan
Termination Date and no other Eurodollar Rate Loan shall have an Interest Period
that extends beyond the Stated Termination Date. If the Agent does not receive a
Borrowing Notice or an Interest Rate Selection Notice giving notice of election
of the duration of an Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by
Sections 2.2(c)(i) and 4.2, as applicable, the Borrower shall be deemed to have
elected to obtain or Convert such Loan to (or Continue such Loan as) a Base Rate
Loan until the Borrower notifies the Agent in accordance with Section 4.2. The
Borrower shall not be entitled to elect to Continue any Loan as or Convert any
Loan into a Eurodollar Rate Loan if a Default or Event of Default shall have
occurred and be continuing.
4.2 Conversions and Elections of Subsequent Interest Periods.
Subject to the limitations set forth in the definition of "Interest Period" and
in Section 4.1 and Article VI, the Borrower may:
(a) upon delivery of telephonic notice to the Agent
(which shall be irrevocable) on or before 11:00 A.M. on any Business
Day, Convert any Eurodollar Rate Loan to a Base Rate Loan on the last
day of the Interest Period for such Eurodollar Rate Loan; and
(b) provided that no Default or Event of Default shall
have occurred and be continuing, upon delivery of telephonic notice to
the Agent (which shall be irrevocable on or before 11:00 A.M. three (3)
Business Days' prior to the date of such Conversion or Continuation:
(i) elect a subsequent Interest Period for any
Eurodollar Rate Loan to begin on the last day of the then current
Interest Period for such Eurodollar Rate Loan; or
(ii) Convert any Base Rate Loan to a Eurodollar
Rate Loan on any Business Day.
Each such notice shall be effective upon receipt by the Agent, shall specify the
amount of the Eurodollar Rate Loan affected, the type of Loan (Revolving Loan or
Segment of the Term Loan)
45
52
affected, and, if a Continuation as or Conversion into a Eurodollar Rate Loan,
the Interest Period to be used in the computation of interest. The Authorized
Representative shall provide the Agent written confirmation of each such
telephonic notice in the form of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions but failure to provide such
confirmation shall not affect the validity of such telephonic notice. Notice of
receipt of such Borrowing Notice or Interest Rate Selection Notice, as the case
may be, shall be provided by the Agent to each Lender by telefacsimile
transmission with reasonable promptness, but (provided the Agent shall have
received such notice by 11:00 A.M.) not later than 3:00 P.M. on the same day as
the Agent's receipt of such notice. All such Continuations or Conversions of
Loans shall be effected pro rata based on the Applicable Commitment Percentages
of the Lenders.
4.3 Payment of Interest. The Borrower shall pay interest on the
outstanding and unpaid principal amount of each Segment of the Term Loan and on
each Revolving Loan, commencing on the first date of such Segment or Revolving
Loan until such Segment or Revolving Loan, as the case may be, shall be repaid,
at the applicable Base Rate or Eurodollar Rate as designated by the Borrower in
the related Borrowing Notice or Interest Rate Selection Notice or as otherwise
provided hereunder. Interest on each Segment and on each Revolving Loan shall be
paid on the earlier of (a) in the case of any Base Rate Loan, quarterly in
arrears of the last Business Day of each March, June, September and December,
commencing on March 31, 2000, until, as to any Base Rate Segment, the Term Loan
Termination Date, and as to any other Base Rate Loans, the Revolving Credit
Termination Date, at which date as applicable the entire principal amount of and
all accrued interest on the Term Loan and the Revolving Loans, respectively,
shall be paid in full, (b) in the case of any Eurodollar Rate Loan, on the last
day of the applicable Interest Period for such Eurodollar Rate Loan and if such
Interest Period extends for more than three (3) months, at intervals of three
(3) months after the first day of such Interest Period, and (c) upon payment in
full of the Term Loan (or Segment thereof) or the related Revolving Loan;
provided, however, that if any Event of Default shall occur and be continuing,
all amounts outstanding hereunder shall bear interest thereafter (for so long as
such Event of Default is continuing) until paid in full at the Default Rate.
4.4 Prepayments of Eurodollar Rate Loans. Whenever any payment of
principal shall be made in respect of any Loan hereunder, whether at maturity,
on acceleration, by optional or mandatory prepayment or as otherwise required or
permitted hereunder, with the effect that any Eurodollar Rate Loan shall be
prepaid in whole or in part prior to the last day of the Interest Period
applicable to such Eurodollar Rate Loan, such payment of principal shall be
accompanied by the additional payment, if any, required by Section 6.5.
4.5 Manner of Payment.
(a) Each payment of principal (including any prepayment)
and payment of interest and fees, and any other amount required to be
paid by or on behalf of the Borrower to the Lenders, the Issuing Bank,
the Agent, or Bank of America with respect to any Loan, Letter of
Credit, Reimbursement Obligation, or Swing Line Loan, shall be made to
the Agent at the Principal Office in Dollars in immediately available
funds without condition or deduction for any setoff, recoupment,
deduction or counterclaim on or before 12:30 P.M. on
46
53
the date such payment is due. The Agent may, but shall not be obligated
to, debit the amount of such payment from any one or more ordinary
deposit accounts of the Borrower with the Agent.
(b) Any payment made by or on behalf of the Borrower that
is not made both in Dollars in immediately available funds and prior to
12:30 P.M. on the date such payment is to be made shall constitute a
non-conforming payment. Any such non-conforming payment shall not be
deemed to be received until the later of (i) the time such funds become
available funds and (ii) the next Business Day. Any non-conforming
payment may constitute or become a Default or Event of Default as
otherwise provided herein. Interest shall continue to accrue at the
Default Rate on any principal or fees as to which no payment or a
non-conforming payment is made from the date such amount was due and
payable until the later of (i) the date such funds become available
funds or (ii) the next Business Day.
(c) In the event that any payment hereunder or under any
of the Notes becomes due and payable on a day other than a Business
Day, then such due date shall be extended to the next succeeding
Business Day unless provided otherwise under the definition of
"Interest Period"; provided, however, that interest shall continue to
accrue during the period of any such extension; and provided further,
however, that in no event shall any such due date be extended (i) for
any Term Loan, beyond the Term Loan Termination Date, and (ii) for any
Revolving Loan, beyond the Revolving Credit Termination Date.
4.6 Fees.
(a) Commitment Fee. For the period beginning on the
Closing Date and ending on the Revolving Credit Termination Date, the
Borrower agrees to pay to the Agent, for the pro rata benefit of the
Lenders based on their Applicable Commitment Percentages, a commitment
fee equal to the Applicable Commitment Fee multiplied by the average
daily amount by which the Total Revolving Credit Commitment exceeds the
sum of (i) Revolving Credit Outstandings (without giving effect to
Swing Line Outstandings) plus (ii) Letter of Credit Outstandings. Such
fees shall be due in arrears on the last Business Day of each March,
June, September and December commencing March 31, 2000 to and on the
Revolving Credit Termination Date. Notwithstanding the foregoing, so
long as any Lender fails to make available any portion of its Revolving
Credit Commitment when requested, such Lender shall not be entitled to
receive payment of its pro rata share of such fee until such Lender
shall make available such portion.
(b) Letter of Credit Facility Fees. The Borrower shall
pay to the Agent, for the pro rata benefit of the Lenders based on
their Applicable Commitment Percentages, a fee on the aggregate amount
available to be drawn on each outstanding Letter of Credit at a rate
equal to the Applicable Margin for Eurodollar Rate Loans. Such fees
shall be due with respect to each Letter of Credit quarterly in arrears
on the last day of each March, June, September and December, the first
such payment to be made on the first such date occurring after the date
of issuance of a Letter of Credit.
47
54
(c) Letter of Credit Fronting and Administrative Fees.
The Borrower shall pay to the Issuing Bank a fronting fee of one-eighth
percent (.125%) per annum on the aggregate amount available to be
drawn on each outstanding Letter of Credit, such fee to be payable
quarterly in arrears with respect to each Letter of Credit on the dates
established in Section 4.6(b) for the payment of Letter of Credit
facility fees with respect to such Letter of Credit. The Borrower shall
also pay to the Issuing Bank such administrative fee and other fees, if
any, in connection with the Letters of Credit in such amounts and at
such times as the Issuing Bank and the Borrower shall agree from time
to time.
(d) Agent Fees. The Borrower agrees to pay to the Agent,
for the Agent's individual account, an annual Agent's fee, such fee to
be payable in such amounts and at such dates as from time to time
agreed to by the Borrower and Agent in writing.
(e) Monitoring Fee. The Borrower agrees to pay to Bank of
America, for its own account, a monthly monitoring fee, plus all fees
and expenses associated with monitoring the Collateral, such fee to be
in such amounts as the Borrower and Bank of America shall agree from
time to time.
4.7 Pro Rata Payments. Except as otherwise specified herein, (a)
each payment on account of the principal of and interest on Loans, the fees
described in Section 4.6(a) and (b), and Swing Line Loans and Reimbursement
Obligations as to which the Lenders have funded their respective Participations
which remain outstanding, shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, and (b) the
Agent will promptly distribute to the Lenders in immediately available funds
payments received in fully collected, immediately available funds from the
Borrower.
4.8 Computation of Rates and Fees. Except as may be otherwise
expressly provided (i) the Prime Rate shall be computed on the basis of a year
of 365/366 days and computed for actual days elapsed, and (ii) all other
interest rates (including the Federal Funds Rate, each Eurodollar Rate, and the
Default Rate) and fees shall be computed on the basis of a year of 360 days and
calculated for actual days elapsed.
4.9 Deficiency Advances; Failure to Purchase Participations. No
Lender shall be responsible for any default of any other Lender in respect to
such other Lender's obligation to make any Loan or Advance hereunder or to fund
its purchase of any Participation hereunder nor shall the Revolving Credit
Commitment, Term Loan Commitment or Letter of Credit Commitment of any Lender
hereunder be increased as a result of such default of any other Lender. Without
limiting the generality of the foregoing or the provisions of Section 4.10, in
the event any Lender shall fail to advance funds to the Borrower as herein
provided, the Agent may in its discretion, but shall not be obligated to,
advance under the applicable Note in its favor as a Lender all or any portion of
such amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at the same interest rate or rates to which such other
Lender would have been entitled had it made such Advance under its
48
55
Note; provided that, (i) such defaulting Lender shall not be entitled to receive
payments of principal, interest or fees with respect to such deficiency advance
until such deficiency advance (together with interest thereon as provided in
clause (ii)) shall be paid by such Lender and (ii) upon payment to the Agent
from such other Lender of the entire outstanding amount of each such deficiency
advance, together with accrued and unpaid interest thereon, from the most recent
date or dates interest was paid to the Agent by a Borrower on each Loan
comprising the deficiency advance at the Federal Funds Rate, then such payment
shall be credited against the applicable Note of the Agent in full payment of
such deficiency advance and such Borrower shall be deemed to have borrowed the
amount of such deficiency advance from such other Lender as of the most recent
date or dates, as the case may be, upon which any payments of interest were made
by such Borrower thereon. In the event any Lender shall fail to fund its
purchase of a Participation after notice from the Issuing Bank or Bank of
America as the Swing Line lender, as applicable, such Lender shall pay to the
Issuing Bank or Bank of America as the Swing Line lender, as applicable, such
amount on demand, together with interest at the Federal Funds Rate on the amount
so due from the date of such notice to the date such purchase price is received
by the Issuing Bank or Bank of America as the Swing Line lender, as applicable.
4.10 Intraday Funding. Without limiting the provisions of Section
4.9, unless the Borrower or any Lender has notified the Agent not later than
12:00 Noon of the Business Day before the date any payment (including in the
case of Lenders any Advance) to be made by it is due, that it does not intend to
remit such payment, the Agent may, in its discretion, assume that Borrower or
each Lender, as the case may be, has timely remitted such payment in the manner
required hereunder and may, in its discretion and in reliance thereon, make
available such payment (or portion thereof) to the Person entitled thereto as
otherwise provided herein. If such payment was not in fact remitted to the agent
in the manner required hereunder, then:
(i) if Borrower failed to make such payment, each Lender
shall forthwith on demand repay to the Agent the amount of such assumed
payment made available to such Lender, together with interest thereon
in respect of each day from and including the date such amount was made
available by the Agent to such Lender to the date such amount is repaid
to the Agent at the Federal Funds Rate; and
(ii) if any Lender failed to make such payment, the Agent
shall be entitled to recover such corresponding amount forthwith upon
the Agent's demand therefor, the Agent promptly shall notify the
Borrower, and the Borrower shall promptly pay such corresponding amount
to the Agent in immediately available funds upon receipt of such
demand. The Agent also shall be entitled to recover interest on such
corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to
the date such corresponding amount is recovered by the Agent, (A) from
such Lender at a rate per annum equal to the daily Federal Funds Rate
or (B) from the Borrower, at a rate per annum equal to the interest
rate applicable to the Loan which includes such corresponding amount.
Until the Agent shall recover such corresponding amount together with
interest thereon, such corresponding amount shall constitute a
deficiency advance
49
56
within the meaning of Section 4.9. Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill its commitments
hereunder or to prejudice any rights which the Agent or the Borrower
may have against any Lender as a result of any default by such Lender
hereunder.
50
57
ARTICLE V
Security
5.1 Security. As security for the full and timely payment and
performance of all Obligations, the Borrower shall, and shall cause all other
Credit Parties to, on or before the Closing Date, do or cause to be done all
things necessary in the opinion of the Agent and its counsel to grant to the
Agent for the benefit of the Agent and the Lenders a duly perfected first
priority security interest in all Collateral subject to no prior Lien or other
encumbrance or restriction on transfer (other than matters appearing as
exceptions on the Title Policies and acceptable to the Agent, Liens described in
and permitted under Section 8.7 and Section 10.4 and restrictions on transfer
imposed by applicable securities laws). Without limiting the foregoing, the
Borrower and each Subsidiary having rights in any Subsidiary Securities shall on
the Closing Date deliver to the Agent, in form and substance reasonably
acceptable to the Agent, (A) a Pledge Agreement which shall pledge to the Agent
for the benefit of the Agent and the Lenders all of the Subsidiary Securities of
each Domestic Subsidiary, (B) if such Subsidiary Securities are in the form of
certificated securities, such certificated securities, together with undated
stock powers or other appropriate transfer documents endorsed in blank
pertaining thereto, (C) if such Subsidiary Securities do not constitute
securities and the Subsidiary has not elected to have such interests treated as
securities under Article 8 of the Uniform Commercial Code, a control agreement
(containing the provisions described in Section 9.20) from the Registrar of such
Subsidiary Securities and (D) Uniform Commercial Code financing statements
reflecting the Lien in favor of the Agent on such Subsidiary Securities, each in
form and substance acceptable to the Agent, and shall take such further action
and deliver or cause to be delivered such further documents as required by the
Security Instruments or otherwise as the Agent may request to effect the
transactions contemplated by this Article V. The Borrower shall, and shall cause
each Subsidiary to, pledge to the Agent for the benefit of the Agent and the
Lenders (and as appropriate to reaffirm its prior pledge of) all of the Pledged
Interests of any Domestic Subsidiary acquired or created after the Closing Date
and to deliver to the Agent all of the documents and instruments in connection
therewith as are required pursuant to the terms of section 9.20 and of the
Security Instruments.
5.2 Further Assurances. At the request of the Agent, the Borrower
will or will cause all other Credit Parties, as the case may be, to execute, by
its duly authorized officers, alone or with the Agent, any certificate,
instrument, financing statement, control agreement, statement or document, or to
procure any such certificate, instrument, statement or document, or to take such
other action (and pay all connected costs) which the Agent reasonably deems
necessary from time to time to create, continue or preserve the liens and
security interests in Collateral (and the perfection and priority thereof) of
the Agent contemplated hereby and by the other Loan Documents and specifically
including all Collateral acquired by the Borrower or other Credit Party after
the Closing Date. The Agent is hereby irrevocably authorized to execute and file
or cause to be filed, with or if permitted by applicable law without the
signature of the Borrower or any Credit Party appearing thereon, all Uniform
Commercial Code financing statements reflecting the Borrower or any other Credit
Party as "debtor" and the Agent as "secured party", and continuations thereof
and
51
58
amendments thereto, as the Agent reasonably deems necessary or advisable to give
effect to the transactions contemplated hereby and by the other Loan Documents.
5.3 Information Regarding Collateral. The Borrower represents,
warrants and covenants that (i) the chief executive office of the Borrower and
each other Person providing Collateral pursuant to a Security Instrument (each,
a "Grantor") at the Closing Date is located at the address or addresses
specified on Schedule 5.3, and (ii) Schedule 5.3 contains a true and complete
list of (a) the exact legal name, jurisdiction of formation, and address of each
Grantor and of each other Person that has effected any merger or consolidation
with a Grantor or contributed or transferred to a Grantor any property
constituting Collateral having an aggregate value of greater than $500,000 at
any time since October 1, 1994 (excluding Persons making sales in the ordinary
course of their businesses to a Grantor of property constituting inventory in
the hands of such seller), (b) the exact legal name, jurisdiction of formation,
and each location of the chief executive office of each Grantor at any time
since October 1, 1994, (c) each location in which goods constituting Collateral
are or have been located since October 1, 1994 (together with the name of each
owner of the property located at such address if not the applicable Grantor, and
a summary description of the relationship between the applicable Grantor and
such Person) other than locations where goods were formerly, but no longer, held
on consignment, and (d) each trade style used by any Grantor since October 1,
1994 and the purposes for which it was used. Borrower shall not change, and
shall not permit any other Grantor to change, its name, jurisdiction of
formation (whether by reincorporation, merger or otherwise), the location of its
chief executive office or any location specified in clause (c) of the
immediately preceding sentence, or use or permit any other Grantor to use, any
additional trade style, except upon giving not less than thirty (30) days' prior
written notice to the Agent and taking or causing to be taken all such action at
Borrower's or such other Grantor's expense as may be reasonably requested by the
Agent to perfect or maintain the perfection of the Lien of the Agent in
Collateral.
5.4 Mortgages. Without limiting the generality of Section 5.1, the
Borrower (as security for all Obligations now existing or hereafter arising) and
each Subsidiary (as security for the Guarantor's Obligations (as defined in the
Facility Guaranty to which such Guarantor is or becomes a party)), as
applicable, shall deliver to the Agent (a) on the Closing Date, with respect to
each parcel of real property owned by the Borrower or a Subsidiary and leased
property of a subsidiary located in Delaware, a Mortgage and the related
Mortgaged Property Support Documents, and (b) thereafter, with respect to each
parcel of real property owned, acquired or leased by the Borrower or a
Subsidiary, a Mortgage (to the extent permitted as to leased property) with
respect to such parcel of real property and the related Mortgaged Property
Support Documents.
5.5 Warehouseman's Estoppel Certificates. As security for the full
and timely payment and performance of (i) all Obligations now existing or
hereafter arising and (ii) if applicable, the Guarantors' Obligations under the
Facility Guaranty, the Borrower shall, and shall cause each Subsidiary to, on
the Closing Date deliver to the Agent, in form and substance reasonably
acceptable to the Agent, to the extent obtainable on the exercise of reasonable
efforts by the Borrower, the Warehouseman's Estoppel Certificates. The
Warehouseman's Estoppel Certificates shall be
52
59
delivered on the Closing Date and, subject to Section 9.20, thereafter within 30
days after any new or additional warehouse space under the control of a
warehouseman is leased by the Borrower or any Subsidiary to the extent
obtainable on the exercise of reasonably diligent efforts by the Borrower.
5.6 Collection Account and Lock Box Arrangement. The Agent and the
Borrower shall, upon the request of the Agent, establish and maintain one or
more special lockbox or blocked accounts for the collection of the Accounts
Receivable. Each such special account shall be with either the Agent or other
financial institution acceptable to the Agent (which may be an affiliate of the
Agent or other subagent designated by the Agent) and shall be subject to the
Agent's standard form of documentation. Any checks or other remittances against
Accounts Receivable which are received by the Borrower shall be held in trust
for the Agent and turned over by the Borrower to the Agent or to a Person
designated by the Agent in the identical form received (except for any necessary
endorsement) promptly upon receipt.
53
60
ARTICLE VI
Change in Circumstances
6.1 Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change in any applicable
law, rule, or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Applicable Lending Office)
with any request or directive (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency:
(i) shall subject such Lender (or its
Applicable Lending Office) to any tax, duty, or other charge
with respect to any Eurodollar Rate Loans, its Note, or its
obligation to make Eurodollar Rate Loans, or change the basis
of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Agreement or its Note in
respect of any Eurodollar Rate Loans (other than taxes imposed
on the overall net income of such Lender by the jurisdiction
in which such Lender has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, compulsory loan, or
similar requirement (other than the Reserve Requirement
utilized in the determination of the Eurodollar Rate) relating
to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the Term
Loan Commitment or Revolving Credit Commitment of such Lender
hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the London interbank market
any other condition affecting this Agreement or its Note or
any of such extensions of credit or liabilities or
commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing, or maintaining any Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate Loans, then
the Borrower shall pay to such Lender on demand such amount or amounts
as will compensate such Lender for such increased cost or reduction. If
any Lender requests compensation by the Borrower under this Section
6.1(a), the Borrower may, by notice to such Lender (with a copy to the
Agent), suspend the obligation of such Lender to make or Continue Loans
of the Type with respect to which such compensation is requested, or to
Convert Loans of any other Type into Loans of such Type, until the
event or condition giving rise to such request ceases to be in effect
(in which case the provisions of Section 6.4 shall be applicable);
54
61
provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any governmental authority,
central bank, or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence
of such Lender's obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its policies
with respect to capital adequacy), then from time to time upon demand
the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant
to this Section 6.1 and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 6.1 shall furnish to the Borrower and
the Agent a statement setting forth the additional amount or
amounts to be paid to it hereunder which shall be conclusive in the
absence of manifest error. In determining such amount, such Lender
may use any reasonable averaging and attribution methods.
6.2 Limitation on Types of Loans. If on or prior to the first day
of any Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders determine (which determination
shall be conclusive) and notify the Agent that the Eurodollar Rate will
not adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
55
62
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
6.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Rate Loans
hereunder, then such Lender shall promptly notify the Borrower thereof and such
Lender's obligation to make or Continue Eurodollar Rate Loans and to Convert
other Types of Loans into Eurodollar Rate Loans shall be suspended until such
time as such Lender may again make, maintain, and fund Eurodollar Rate Loans (in
which case the provisions of Section 6.4 shall be applicable).
6.4 Treatment of Affected Loans. If the obligation of any Lender
to make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section 6.1
or 6.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 6.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 6.1 or 6.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have
been so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued
by such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 6.1 or 6.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 6.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Term Loan
Commitments and Revolving Credit Commitments.
56
63
6.5 Compensation. Upon the request of any Lender, the Borrower
shall pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any actual loss, cost,
or expense (including loss of anticipated profits) incurred by it as a result
of:
(a) any payment, prepayment, or Conversion of a
Eurodollar Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 11.1) on a date other than the
last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any condition precedent specified
in Article VII to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing, Conversion, Continuation,
or prepayment specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Agreement.
6.6 Taxes.
(a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which such Lender (or its Applicable Lending Office)
or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable under
this Agreement or any other Loan Document to any Lender or the Agent,
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 6.6) such Lender or the
Agent receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law, and (iv) the Borrower shall furnish to the Agent, at
its address referred to in Section 13.2, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all
present or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Agreement or any other Loan Document or from
the execution or delivery of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
57
64
(c) The Borrower agrees to indemnify each Lender and the
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 6.6) paid by such
Lender or the Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each Lender
listed on the signature pages hereof and on or prior to the date on
which it becomes a Lender in the case of each other Lender, and from
time to time thereafter if requested in writing by the Borrower or the
Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender
is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments
of interest or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or
business in the United States, (ii) Internal Revenue Service Form W-8
or W-9, as appropriate, or any successor form prescribed by the
Internal Revenue Service, and (iii) any other form or certificate
required by any taxing authority (including any certificate required by
Sections 871(h) and 881(c) of the Internal Revenue Code), certifying
that such Lender is entitled to an exemption from or a reduced rate of
tax on payments pursuant to this Agreement or any of the other Loan
Documents.
(e) For any period with respect to which a Lender has
failed to provide the Borrower and the Agent with the appropriate form
pursuant to Section 6.6(d) (unless such failure is due to a change in
treaty, law, or regulation occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 6.6(a) or 6.6(b) with respect
to Taxes imposed by the United States; provided, however, that should a
Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax, become subject to Taxes (because of its failure) to
deliver a form required hereunder, the Borrower shall take such steps
as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(f) If the Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to this Section 6.6, then
such Lender will agree to use reasonable efforts to change the
jurisdiction of its Applicable Lending Office so as to eliminate or
reduce any such additional payment which may thereafter accrue if such
change, in the judgment of such Lender, is not otherwise
disadvantageous to such Lender.
58
65
(g) Within thirty (30) days after the date of any payment
of Taxes, the Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of
the Borrower contained in this Section 6.6 shall survive the
termination of the Revolving Credit Commitments, Term Loan Commitments
and the payment in full of the Notes and the Facility Termination Date.
59
66
ARTICLE VII
Conditions to Making Loans and Issuing Letters of Credit
7.1 Conditions of Term Loan and Initial Advance. The obligation of
the Lenders to make the Term Loan and the initial Advance under the Revolving
Credit Facility, and of the Issuing Bank to issue any Letter of Credit, and of
Bank of America to make any Swing Line Loan, is subject to the conditions
precedent that:
(a) the Agent shall have received on the Closing Date, in
form and substance satisfactory to the Agent and Lenders, the
following:
(i) executed originals of each of this
Agreement, the Notes, the initial Facility Guaranties, the
Security Instruments, the LC Account Agreement, and the other
Loan Documents, together with all schedules and exhibits
thereto;
(ii) evidence that the Acquisition Transaction
shall have been consummated for an aggregate purchase price
not in excess of $68,500,000, subject to the Price Adjustment,
in accordance with the terms of the Transaction Documents as
furnished to and approved by the Agent (without any amendment
thereto or waiver of any condition therein contained except
with the prior written consent of the Agent), and in
compliance with applicable law and regulatory approvals
(including the expiration or early termination of any
applicable waiting or regulatory review period without further
action or inquiry by any applicable regulatory agency),
including copies (certified by an officer of the Borrower to
be true, correct and complete) of the Transaction Documents,
of which the Purchase Agreement shall contain indemnification
provisions for environmental issues from Ivaco, Inc. to the
benefit of the Borrower and any successor owner of the
property subject to the Purchase Agreement;
(iii) the favorable written opinion or opinions
with respect to the Loan Documents and the transactions
contemplated thereby of counsel to the Credit Parties and of
local counsel dated the Closing Date, addressed to the Agent
and the Lenders and satisfactory to ▇▇▇▇▇ ▇▇▇▇▇ Mulliss &
▇▇▇▇▇, L.L.P., special counsel to the Agent, substantially in
the form of Exhibit H;
(iv) resolutions of the boards of directors or
other appropriate governing body (or of the appropriate
committee thereof) of each Credit Party and, to the extent
necessary, the shareholders or other equity owners of each
Credit Party, certified by its secretary or assistant
secretary as of the Closing Date, approving the Acquisition
Transaction and approving and adopting the Loan Documents to
be executed by such Person, and authorizing the execution and
delivery thereof;
60
67
(v) specimen signatures of officers or other
appropriate representatives executing the Loan Documents on
behalf of each of the Credit Parties, certified by the
secretary or assistant secretary of such Credit Party;
(vi) the Organizational Documents of each of the
Credit Parties certified as of a recent date by the Secretary
of State of its state of organization;
(vii) Operating Documents of each of the Credit
Parties certified as of the Closing Date as true and correct
by its secretary or assistant secretary;
(viii) certificates issued as of a recent date by
the Secretaries of State of the respective jurisdictions of
formation of each of the Credit Parties as to the due
existence and good standing of such Person;
(ix) appropriate certificates of qualification to
do business, good standing and, where appropriate, authority
to conduct business under assumed name, issued in respect of
each of the Credit Parties as of a recent date by the
Secretary of State or comparable official of each jurisdiction
in which the failure to be qualified to do business or
authorized so to conduct business could have a Material
Adverse Effect;
(x) notice of appointment of the initial
Authorized Representative(s);
(xi) certificate of an Authorized Representative
dated the Closing Date giving historical pro forma effect to
the Acquisition Transaction and demonstrating compliance with
the financial covenants contained in Sections 10.1(a)
through 10.1(c) and 10.3 as of the end of the fiscal quarter
most recently ended prior to the Closing Date, substantially
in the form of Exhibit I;
(xii) evidence that the Existing Indebtedness and
all fees and other obligations associated therewith shall have
been paid in full contemporaneously with the initial advance
hereunder and the credit facilities (and all related Liens)
under which the Existing Indebtedness was outstanding shall
have been irrevocably terminated;
(xiii) evidence of all insurance required by the
Loan Documents;
(xiv) executed counterpart of a Rod Supply
Agreement between the Acquired Company and GS Industries, Inc.
and a letter agreement regarding limited application material
("▇▇▇") pursuant to which the Acquired Company is granted a
right of first refusal to purchase ▇▇▇, each containing terms
and conditions acceptable to the Agent together with an
assignment of such
61
68
agreements to the Agent as security for the Obligations and a
consent to such assignment by GS Industries, Inc.;
(xv) shareholders agreements and management
documents of the Borrower and its Subsidiaries, including but
not limited to, employment contracts;
(xvi) an initial Borrowing Notice, if any, and, if
elected by the Borrower, Interest Rate Selection Notice;
(xvii) receipt of Uniform Commercial Code financing
statements required to be filed in all places required by
applicable law to perfect the Liens of the Agent under the
Security Instruments as a first priority Lien (subject to no
other Liens except for those permitted in the Loan Documents)
as to items of Collateral in which a security interest may be
perfected by the filing of financing statements, and such
other documents and/or evidence of (other actions as may be)
necessary under applicable law to perfect the Liens of the
Agent under the Security Instruments as a first priority Lien
in and to such other Collateral as the Agent may require,
including without limitation:
(i) delivery of all Mortgages and the
issuance of the Title Policies (or marked up
commitment therefor with all conditions to issuance
of the final Title Policy deleted) related thereto;
and
(ii) the delivery by the Borrower of all
stock certificates evidencing Pledged Interests,
accompanied in each case by duly executed stock
powers (or other appropriate transfer documents) in
blank affixed thereto;
(xviii) the Historical Financial Statements and
Historical Pro Forma Financial Statements;
(xix) the Pro Forma Projections;
(xx) evidence that all fees payable by the
Borrower on the Closing Date to the Agent, BAS and the Lenders
have been paid in full;
(xxi) evidence that (A) the Acquired Company, its
subsidiaries, the Borrower and its Subsidiaries have taken all
necessary and appropriate steps to successfully address,
business and financial risks, if any, resulting from the Year
2000 Problem, including risks resulting from the failure of
key vendors and customers of the Acquired Company, the
Borrower and their respective subsidiaries to successfully
address the Year 2000 Problem, and (B) the Acquired
62
69
Company's, the Borrower's and their respective subsidiaries'
material computer applications and those of their key vendors
and customers have adequately addressed the Year 2000 Problem
in all material respects;
(xxii) Uniform Commercial Code search results
showing only those Liens as are acceptable to the Lenders;
(xxiii) Uniform Commercial Code termination
statements sufficient to release all Liens securing the
Existing Indebtedness;
(xxiv) the initial Borrowing Base Certificate; and
(xxv) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby; and
(b) In the good faith judgment of the Agent and the
Lenders:
(i) there shall not have occurred or become
known to the Agent or the Lenders any event, condition,
situation or status since October 2, 1999 in the business,
assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries or since January 1, 2000 in the
business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of
the Acquired Company and its subsidiaries other than as
described in writing to the Lenders, or in the facts and
information regarding such entities as represented as of the
Closing Date that has had or could reasonably be expected to
result in a Material Adverse Effect;
(ii) there shall not exist (A) any order, decree,
judgment, ruling or injunction which restrains the
consummation of the Acquisition Transaction in the manner
contemplated by the Transaction Documents, and (B) any pending
or threatened action, suit, investigation or proceeding,
which, if adversely determined, could materially and adversely
affect the Borrower or its Subsidiaries or any Guarantor
(including the Acquired Company and its subsidiaries) from
performing their respective obligations under the Transaction
Documents or the Loan Documents or the ability of the Lenders
to exercise their rights under the Loan Documents; and
(iii) the Credit Parties shall have received all
approvals, consents and waivers, and shall have made or given
all necessary filings and notices as shall be required to
consummate the Acquisition Transaction and the transactions
contemplated hereby without the occurrence of any default
under, conflict with or violation of (A) any applicable law,
rule, regulation, order or decree of any
63
70
Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Credit
Parties is a party or by which any of them or their properties
is bound, except for such approvals, consents, waivers,
filings and notices the receipt, making or giving of which
will not have a Material Adverse Effect.
7.2 Conditions of Revolving Loans and Letter of Credit. The
obligations of the Lenders to make any Revolving Loans, and the Issuing Bank to
issue (or renew) Letters of Credit and Bank of America to make Swing Line Loans,
hereunder on or subsequent to the Closing Date are subject to the satisfaction
of the following conditions:
(a) the Agent or, in the case of Swing Line Loans, Bank
of America shall have received a Borrowing Notice if required by
Article II;
(b) the representations and warranties of the Credit
Parties set forth in Article VIII and in each of the other Loan
Documents shall be true and correct in all material respects on and as
of the date of such Advance, Swing Line Loan or Letter of Credit
issuance or renewal, with the same effect as though such
representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties expressly
relate to an earlier date and except that the financial statements
referred to in Section 8.6(a) shall be deemed (solely for the purpose
of the representation and warranty contained in such Section 8.6(a) but
not for the purpose of any cross reference to such Section 8.6(a) or to
the financial statements described therein contained in any other
provision of Section 8.6 or elsewhere in Article 8) to be those
financial statements most recently delivered to the Agent and the
Lenders pursuant to Section 9.1 from the date financial statements are
delivered to the agent and the Lenders in accordance with such Section;
(c) in the case of the issuance of a Letter of Credit,
the borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each
Advance, Swing Line Loan or the issuance of a Letter of Credit, no
Default or Event of Default specified in Article XI shall have occurred
and be continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal
balance of all outstanding Revolving Loans for each Lender
shall not exceed such Lender's Revolving Credit Commitment;
64
71
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Participations
in Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total Letter
of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line
Outstandings shall not exceed $5,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a
Letter of Credit or renewal thereof, the sum of Letter of
Credit Outstandings plus Revolving Credit Outstandings plus
Swing Line Outstandings shall not exceed the lesser of the
Borrowing Base and the Total Revolving Credit Commitment.
65
72
ARTICLE VIII
Representations and Warranties
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (and giving effect to the Acquisition Transaction) (which
representations and warranties shall survive the delivery of the documents
mentioned herein and the making of Loans), that:
8.1 Organization and Authority.
(a) The Borrower and each Subsidiary is a corporation,
limited liability company or partnership duly organized and validly
existing under the laws of the jurisdiction of its formation;
(b) The Acquisition Transaction has been consummated in
accordance with the terms of the Transaction Documents;
(c) The Borrower and each Subsidiary (x) has the
requisite power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in the
Loan Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material
Adverse Effect;
(d) The Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(e) Each Credit Party (other than the Borrower) has the
power and authority to execute, deliver and perform the Facility
Guaranty and each of the other Loan Documents to which it is a party;
and
(f) When executed and delivered, each of the Loan
Documents to which any Credit Party is a party will be the legal, valid
and binding obligation or agreement, as the case may be, of such Credit
Party, enforceable against such Credit Party in accordance with its
terms, subject to the effect of any applicable bankruptcy, moratorium,
insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of
general principles of equity (whether considered in a proceeding at law
or in equity).
8.2 Loan Documents. The execution, delivery and performance by
each Credit Party of each of the Loan Documents to which it is a party:
66
73
(a) have been duly authorized by all requisite
Organizational Action of such Credit Party required for the lawful
execution, delivery and performance thereof;
(b) do not violate any provisions of (i) any applicable
law, rule or regulation, (ii) any judgment, writ, order, determination,
decree or arbitral award of any Governmental Authority or arbitral
authority binding on such Credit Party or its properties, or (iii) the
Organizational Documents or Operating Documents of such Credit Party;
(c) does not and will not be in conflict with, result in
a breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract, indenture, agreement or other instrument or
document to which such Credit Party is a party, or by which the
properties or assets of such Credit Party are bound; and
(d) does not and will not result in the creation or
imposition of any Lien upon any of the properties or assets of such
Credit Party or any Subsidiary except any Liens in favor of the Agent
and the Lenders created by the Security Instruments, which Liens and
Security Interests under the Security Instruments have been perfected.
8.3 Solvency. Each Credit Party is Solvent after giving effect to
the transactions contemplated by the Loan Documents.
8.4 Subsidiaries and Stockholders. The Borrower has no
Subsidiaries other than those Persons listed as Subsidiaries in Schedule 8.4 and
additional Subsidiaries created or acquired after the Closing Date in compliance
with Section 9.20; Schedule 8.4 states as of the date hereof the organizational
form of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in Schedule
8.4, free and clear of any Lien.
8.5 Ownership Interests. Borrower owns no equity or other
ownership interest in any Person other than the Persons listed in Schedule 8.4,
equity investments in Persons not constituting Subsidiaries permitted under
Section 10.7 and additional Subsidiaries created or acquired after the Closing
Date in compliance with Section 9.20.
67
74
8.6 Financial Condition.
(a) The Borrower has heretofore furnished to each Lender
the Historical Financial Statements. The Historical Financial
Statements (including the notes thereto) present fairly the financial
condition of the Borrower and its Subsidiaries as of the end of such
Fiscal Years and interim periods and results of their operations and
the changes in stockholders' equity for the respective fiscal years and
interim periods then ended, all in conformity with GAAP applied on a
Consistent Basis, subject however, in the case of unaudited interim
statements to year end audit adjustments;
(b) the Borrower has heretofore furnished each Lender (i)
the Historical Pro Forma Financial Statements, which fairly present the
combined historical pro forma financial condition and results of
operations of the Borrower and its Subsidiaries and the Acquired
Company and its subsidiaries as of the dates and for the periods set
forth therein, in each case in accordance with GAAP applied on a
Consistent Basis (except as set forth therein) and (ii) five-year Pro
Forma Projections of the Borrower and its Subsidiaries, which Pro Forma
Projections were prepared in good faith based upon assumptions as to
future performance which were reasonable as of the date of preparation
of such Pro Forma Projections and remain reasonable as of the Closing
Date.
(c) since the later of (i) the date of the most recent
audited financial statements delivered pursuant to Section 8.6(a)
hereof or (ii) the date of the audited financial statements most
recently delivered pursuant to Section 9.1(a) hereof, there has been no
material adverse change in the condition, financial or otherwise, of
the Borrower or any of its Subsidiaries or in the businesses,
properties, performance, prospects or operations of the Borrower or its
Subsidiaries, nor have such businesses or properties been materially
adversely affected as a result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo or
act of God; and
(d) except as set forth in the most recent financial
statements referred to in Section 8.6(a) or in Schedule 8.6 or
permitted by Section 10.5, neither the Borrower nor any Subsidiary has
incurred, other than in the ordinary course of business, any material
Indebtedness, Contingent Obligation or other commitment or liability
which remains outstanding or unsatisfied.
8.7 Title to Properties. The Borrower and each of its Subsidiaries
and each other Credit Party has good and marketable title to all its real and
personal properties, subject to no transfer restrictions or Liens of any kind,
except for the transfer restrictions and Liens described in Schedule 8.7 and
Liens permitted by Section 10.4.
68
75
8.8 Taxes. Except as set forth in Schedule 8.8, the Borrower and
each of its Subsidiaries has filed or caused to be filed all federal, state and
local tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in Section 8.6(a) or Sections 9.1(a) or (b) and satisfactory to the
Borrower's independent certified public accountants have been established, have
paid or caused to be paid all taxes as shown on said returns or on any
assessment received by it, to the extent that such taxes have become due.
8.9 Other Agreements. No Credit Party nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions,
which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect; or
(b) in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which such Credit Party or
any Subsidiary is a party, which default has, or if not remedied within
any applicable grace period could reasonably be likely to have, a
Material Adverse Effect.
8.10 Litigation. Except as set forth in Schedule 8.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or other Credit Party or affecting the Borrower or any Subsidiary or
other Credit Party or any properties or rights of the Borrower or any Subsidiary
or other Credit Party, which could reasonably be likely to have a Material
Adverse Effect.
8.11 Margin Stock. The proceeds of the borrowings made hereunder
will be used by the Borrower only for the purposes expressly authorized herein.
None of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 221) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.
69
76
8.12 Investment Company. No Credit Party is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended (15 U.S.C. ss.80a- 1, et seq.). The application
of the proceeds of the Loans and repayment thereof by the Borrower and the
performance by the Borrower and the other Credit Parties of the transactions
contemplated by the Loan Documents will not violate any provision of said Act,
or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder, in each case as in effect on the date hereof.
8.13 Patents. Etc. The Borrower and each other Credit Party owns or
has the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person.
8.14 No Untrue Statement. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of the Borrower or any other Credit Party in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Agent in connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement contained
therein not misleading.
8.15 No Consents, Etc. Neither the respective businesses or
properties of the Credit Parties or any Subsidiary, nor any relationship among
the Credit Parties or any Subsidiary and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of any Credit Party as a
condition to the execution, delivery and performance of, or consummation of the
transactions contemplated by the Loan Documents, which, if not obtained or
effected, would be reasonably likely to have a Material Adverse Effect, or if
so, such consent, approval, authorization, filing, registration or qualification
has been duly obtained or effected, as the case may be.
8.16 Employee Benefit Plans.
(a) The Borrower and each ERISA Affiliate is in compliance
with all applicable provisions of ERISA and the regulations and
published interpretations thereunder and in compliance with all Foreign
Benefit Laws with respect to all Employee Benefit Plans except for any
required amendments for which the remedial amendment period as defined
in Section 401 (b) of the Code has not yet expired. Each Employee
70
77
Benefit Plan that is intended to be qualified under Section 401 (a) of the Code
has been determined or the Borrower or its Subsidiaries is in the process of
obtaining a determination by the Internal Revenue Service to be so qualified,
each trust related to such plan has been determined to be exempt under Section
501 (a) of the Code, and each Employee Benefit Plan subject to any Foreign
Benefit Law has received the required approvals by any Governmental Authority
regulating such Employee Benefit Plan. No material liability has been incurred
by the Borrower or any ERISA Affiliate which remains unsatisfied for any taxes
or penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged in a
nonexempt prohibited transaction described in Section 4975 of the Code or
Section 406 of ERISA affecting any of the Employee Benefit Plans or the trusts
created thereunder which could subject any such Employee Benefit Plan or trust
to a material tax or penalty on prohibited transactions imposed under Internal
Revenue Code Section 4975 or ERISA, (ii) incurred any accumulated funding
deficiency with respect to any Employee Benefit Plan, whether or not waived, or
any other liability to the PBGC which remains outstanding other than the payment
of premiums and there are no premium payments which are due and unpaid, (iii)
failed to make a required contribution or payment to a Multiemployer Plan, (iv)
failed to make a required installment or other required payment under Section
412 of the Code, Section 302 of ERISA or the terms of such Employee Benefit
Plan, or (v) failed to make a required contribution or payment, or otherwise
failed to operate in compliance with any Foreign Benefit Law regulating any
Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan or Multiemployer Plan, and neither the
Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal liability
with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under each
Employee Benefit Plan which is subject to Title IV of ERISA, or the funding of
which is regulated by any Foreign Benefit Law did not, as of the most recent
valuation date for all such plans of the Borrower and its Subsidiaries, exceed
the then current value of the assets of such Employee Benefit Plan allocable to
such benefits by more than $1,250,000;
(e) To the best of the Borrower's knowledge, each Employee Benefit
Plan which is subject to Title IV of ERISA or the funding of which is regulated
by any Foreign Benefit Law, maintained by the Borrower or any ERISA Affiliate,
has been administered in accordance with its terms in all material respects and
is in compliance in all material respects with all applicable requirements of
ERISA, applicable Foreign Benefit Law and other applicable laws, regulations and
rules;
71
78
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after
due inquiry, is threatened concerning or involving any Employee
Benefit Plan;
8.17 No Default. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
8.18 Environmental Laws. Except as listed on Schedule 8.18, the
Borrower and each Subsidiary is in compliance with all applicable Environmental
Laws and has been issued and currently maintains all required federal, state and
local permits, licenses, certificates and approvals. Except as listed on
Schedule 8.18, neither the Borrower nor any Subsidiary has been notified of any
pending or threatened action, suit, proceeding or investigation, and neither the
Borrower nor any Subsidiary is aware of any facts, which (a) calls into
question, or could reasonably be expected to call into question, compliance by
the Borrower or any Subsidiary with any Environmental Laws, (b) seeks, or could
reasonably be expected to form the basis of a meritorious proceeding, to
suspend, revoke or terminate any license, permit or approval necessary for the
operation of the Borrower's or any Subsidiary's business or facilities or for
the generation, handling, storage, treatment or disposal of any Hazardous
Materials, or (c) seeks to cause, or could reasonably be expected to form the
basis of a meritorious proceeding to cause, any property of the Borrower or any
Subsidiary or other Credit Party to be subject to any restrictions on ownership,
use, occupancy or transferability under any Environmental Law.
8.19 Employment Matters.
(a) Except as set forth on Schedule 8.19, none of the
employees of the Borrower or any Subsidiary is subject to any
collective bargaining agreement and there are no strikes, work
stoppages, election or decertification petitions or proceedings, unfair
labor charges, equal opportunity proceedings, or other material
labor/employee related controversies or proceedings pending or, to the
best knowledge of the Borrower, threatened against the Borrower or any
Subsidiary or between the Borrower or any Subsidiary and any of its
employees, other than employee grievances arising in the ordinary
course of business which could not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance
would not have a Material Adverse Effect, the Borrower and each
Subsidiary is in compliance in all respects with all applicable laws,
rules and regulations pertaining to labor or employment matters,
including without limitation those pertaining to wages, hours,
occupational safety and taxation and there is neither pending or
threatened any litigation,
72
79
administrative proceeding nor, to the knowledge of the Borrower, any
investigation, in respect of such matters which, if decided adversely,
could reasonably be likely, individually or in the aggregate, to have
a Material Adverse Effect.
8.20 RICO. Neither the Borrower nor any Subsidiary is engaged in or
has engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
8.21 Year 2000 Compliance. The Borrower reasonably believes that
all computer applications (including those affected by information received from
its suppliers and vendors) that are material to its or any of its Subsidiaries'
business and operations are Year 2000 Compliant, except to the extent that a
failure to be so could not reasonably be expected to have a Material Adverse
Effect.
73
80
ARTICLE IX
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Subsidiary to:
9.1 Financial Reports, Etc.
(a) As soon as practical and in any event within 90 days after
the end of each Fiscal Year of the Borrower, deliver or cause to be
delivered to the Agent and each Lender (i) consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at
the end of such Fiscal Year, and the notes thereto, and the related
consolidated and consolidating statements of income, stockholders'
equity and cash-flows, and the respective notes thereto, for such
Fiscal Year, setting forth (other than for consolidating statements)
comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP applied on a Consistent Basis and
containing, with respect to the consolidated financial statements,
opinions of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or other such independent certified
public accountants selected by the Borrower and approved by the Agent,
which are unqualified as to the scope of the audit performed and as to
the "going concern" status of the Borrower and without any exception
not acceptable to the Lenders, and (ii) a certificate of an Authorized
Representative demonstrating compliance with Sections 10.1(a) through
10.1(c) and 10.3, which certificate shall be in the form of Exhibit I;
(b) as soon as practical and in any event within 45 days after
the end of each fiscal quarter (except the last fiscal quarter of the
Fiscal Year), deliver to the Agent and each Lender (i) consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at
the end of such fiscal quarter, and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows
for such fiscal quarter and for the period from the beginning of the
then current Fiscal Year through the end of such reporting period, and
accompanied by a certificate of an Authorized Representative to the
effect that such financial statements present fairly the financial
position of the Borrower and its Subsidiaries as of the end of such
fiscal period and the results of their operations and the changes in
their financial position for such fiscal period, in conformity with the
standards set forth in Section 8.6(a) with respect to interim financial
statements, and (ii) a certificate of an Authorized Representative
containing computations for such quarter comparable to that required
pursuant to Section 9.1(a)(ii);
(c) together with each delivery of the financial statements
required by Section 9.1(a)(i), deliver to the Agent and each Lender a
letter from the Borrower's accountants specified in Section 9.1(a)(i)
stating that in performing the audit necessary to render an opinion on
the financial statements delivered under Section 9.1(a)(i), they
74
81
obtained no knowledge of any Default or Event of Default by the
Borrower in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the
date of such statement remains uncured); or if the accountants have
obtained knowledge of such Default or Event of Default, a statement
specifying the nature and period of existence thereof;
(d) promptly upon their becoming available to the Borrower,
the Borrower shall deliver to the Agent and each Lender a copy of (i)
all regular or special reports or effective registration statements
which Borrower or any Subsidiary shall file with the Securities and
Exchange Commission (or any successor thereto) or any securities
exchange, (ii) any proxy statement distributed by the Borrower or any
Subsidiary to its shareholders, bondholders or the financial community
in general, and (iii) any management letter or other report submitted
to the Borrower or any Subsidiary by independent accountants in
connection with any annual, interim or special audit of the Borrower
or any Subsidiary; and
(e) not later than the last Business Day of each Fiscal Year,
deliver to the Agent and each Lender a capital and operating expense
budget and consolidated financial projections for the Borrower and its
Subsidiaries for the next Fiscal Year, prepared in accordance with
GAAP applied on a Consistent Basis;
(f) not less frequently than weekly, but in any event within
two (2) Business Days of the request by the Agent, furnish to the
Agent a Borrowing Base Certificate setting forth the Borrowing Base as
at a date within three (3) Business Days of the date of delivery of
such certificate;
(g) as soon as practical and in any event within 15 days
after the end of each month deliver to the Agent (i) an Accounts
Receivable trial balance aged from the date of invoice, (ii) an
accounts payable trial balance aged from the date of invoice, and
(iii) a list of the Inventory summarized as required by the Agent,
each of the foregoing to be in form and detail acceptable to the
Agent.
(h) promptly, from time to time, deliver or cause to be
delivered to the Agent and each Lender such other information
regarding Borrower's and any Subsidiary's operations, business affairs
and financial condition as the Agent or such Lender may reasonably
request;
The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any written
request therefor or in the ordinary course of examination of loan files, or to
any other Person who shall acquire or consider the assignment of, or acquisition
of any participation interest in, any Obligation permitted by this Agreement.
75
82
9.2 Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
trademarks, trade names, patents, copyrights, trade secrets, know-how, and other
intellectual property and proprietary information (or adequate licenses
thereto), in each case as are reasonably necessary to conduct its business as
currently conducted or as contemplated hereby, all in accordance with customary
and prudent business practices.
9.3 Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 10.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material
rights and franchises, and maintain its license or qualification to do business
as a foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary except where the failure to so qualify would not
have a Material Adverse Effect.
9.4 Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes subject to execution against such property.
9.5 Insurance. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated
and otherwise as required by the Security Instruments, (b) maintain general
public liability insurance at all times with responsible insurance carriers
against liability on account of damage to persons and property and (c) maintain
insurance under all applicable workers' compensation laws (or in the
alternative, maintain required reserves if self-insured for workers'
compensation purposes) and against loss by reason by business interruption such
policies of insurance to have such limits, deductibles, exclusions, co-insurance
and other provisions providing no less coverages than that specified in Schedule
9.5, such insurance policies to be in form reasonably satisfactory to the Agent.
Each of the policies of insurance described in this Section 9.5 shall provide
that the insurer shall give the Agent not less than thirty (30) days' prior
written notice before any such policy shall be terminated, lapse or be altered
in any manner.
9.6 True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by GAAP
with respect to doubtful accounts and all taxes,
76
83
assessments, charges, levies and claims and with respect to its business in
general, and include such reserves in interim as well as year-end financial
statements.
9.7 Year 2000 Compliance. The Borrower will promptly notify the
Agent and the Lenders in the event the Borrower discovers or determines that any
computer application (including those affected by information received from its
suppliers and vendors) that is material to its or any of its Subsidiaries'
business and operations is not Year 2000 Compliant, except to the extent that
such failure could not reasonably be expected to have a Material Adverse Effect.
9.8 Right of Inspection and Field Examinations. Permit any Person
designated by any Lender or the Agent to visit and inspect any of the
properties, corporate books and financial reports of the Borrower or any
Subsidiary and to conduct field evaluations and valuations of Inventory and
Accounts Receivables and to discuss its affairs, finances and accounts with its
principal officers and independent certified public accountants, all at
reasonable times during normal business hours, at reasonable intervals and with
reasonable prior notice, such field evaluations and valuations to be at
Borrower's expense; provided, however, that prior to the occurrence and
continuation of a Default or Event of Default, only one such field evaluation of
the Inventory and Accounts Receivables or valuation shall be made in a fiscal
quarter at the expense of Borrower.
9.9 Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business.
9.10 Governmental Licenses. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental Authorities
as are required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
9.11 Covenants Extending to Other Persons. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in Sections 9.2 through 9.11, and 9.20
inclusive.
9.12 Officer's Knowledge of Default. Upon any officer of the
Borrower obtaining knowledge of any Default or Event of Default hereunder or
under any other obligation of the Borrower or any Subsidiary or other Credit
Party to any Lender, or any event, development or occurrence which could
reasonably be expected to have a Material Adverse Effect, cause such officer or
an Authorized Representative to promptly notify the Agent of the nature thereof,
the period of existence thereof, and what action the Borrower or such Subsidiary
or other Credit Party proposes to take with respect thereto.
77
84
9.13 Suits or Other Proceedings. Upon any officer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary or other Credit Party, or any
attachment, levy, execution or other process being instituted against any
assets of the Borrower or any Subsidiary or other Credit Party, making a claim
or claims in an aggregate amount greater than $1,000,000 not otherwise covered
by insurance, promptly deliver to the Agent written notice thereof stating the
nature and status of such litigation, dispute, proceeding, levy, execution or
other process.
9.14 Notice of Environmental Complaint or Condition. Promptly
provide to the Agent true, accurate and complete copies of any and all notices,
complaints, orders, directives, claims or citations received by the Borrower or
any Subsidiary relating to any (a) violation or alleged violation by the
Borrower or any Subsidiary of any applicable Environmental Law; (b) release or
threatened release by the Borrower or any Subsidiary, or by any Person handling,
transporting or disposing of any Hazardous Material on behalf of the Borrower
or any Subsidiary, or at any facility or property owned or leased or operated by
the Borrower or any Subsidiary, of any Hazardous Material, except where
occurring legally pursuant to a permit or license; or (c) liability or alleged
liability of the Borrower or any Subsidiary for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials.
9.15 Environmental Compliance. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or any Subsidiary has violated any Environmental Law,
has released any Hazardous Material, or is liable for the costs of cleaning up,
removing, remediating or responding to a release of Hazardous Materials, the
Borrower and any Subsidiary shall, within the time period permitted and to the
extent required by the applicable Environmental Law or the Governmental
Authority responsible for enforcing such Environmental Law, remove or remedy, or
cause the applicable Subsidiary to remove or remedy, such violation or release
or satisfy such liability, unless and only during the period that the
applicability of the Environmental Law, the fact of such violation or liability
or the action required to remove or remedy such violation is being contested by
the Borrower or the applicable Subsidiary by appropriate proceedings diligently
conducted and all reserves with respect thereto as may be required under
Generally Accepted Accounting Principles, if any, have been made, and no Lien in
connection therewith shall have attached to any property of the Borrower or the
applicable Subsidiary which shall have become subject to execution against such
property.
9.16 Indemnification. Without limiting the generality of Section
13.9, the Borrower hereby agrees to indemnify and hold the Agent and the Lenders
and any affiliate of any Lender party to a Swap Agreement, and their respective
officers, directors, employees and agents, harmless from and against any and all
claims, losses, penalties, liabilities, damages and expenses (including
assessment and cleanup costs and reasonable attorneys', consultants' or other
expert fees, expenses and disbursements) arising directly or indirectly from,
out of or by reason of (a) the violation of any Environmental Law by the
Borrower or any Subsidiary or with respect to any property owned, operated or
leased by the Borrower or any Subsidiary or (b) the handling,
78
85
storage, transportation, treatment, emission, release, discharge or disposal of
any Hazardous Materials by or on behalf of the Borrower or any Subsidiary, or on
or with respect to property owned or leased or operated by the Borrower or any
Subsidiary, except to the extent that such claim, loss, penalty, liability,
damage or expense is solely the result of any gross negligence or willful
misconduct by the Agent or Lenders. The provisions of this Section 9.16 shall
survive repayment of the Obligations and the Facility Termination Date and
expiration or termination of this Agreement.
9.17 Further Assurances. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement, the Security Instruments and the other Loan Documents.
9.18 EMPLOYEE BENEFIT PLANS.
(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Agent of (a) the establishment of
any new Pension Plan (which notice shall include a copy of such plan),
(b) the commencement of contributions to any Employee Benefit Plan to
which the Borrower or any of its ERISA Affiliates was not previously
contributing, (c) any material increase in the benefits of any existing
Employee Benefit Plan, (d) each funding waiver request filed with
respect to any Pension Plan and all communications received or sent by
the Borrower or any ERISA Affiliate with respect to such request and
(e) the failure of the Borrower or any ERISA Affiliate to make a
required installment or payment under Section 302 of ERISA or Section
412 of the Code (in the case of Employee Benefit Plans regulated by the
Code or ERISA) or under any Foreign Benefit Law (in the case of
Employee Benefit Plans regulated by any Foreign Benefit Law) by the due
date;
(b) Promptly and in any event within fifteen (15) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such
term is defined in Section 406 of ERISA or Section 4975 of the Code, in
connection with any Employee Benefit Plan or any trust created
thereunder, deliver to the Agent a notice specifying the nature
thereof, what action the Borrower or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (a), (b) and (c), deliver to the
Agent copies of (a) any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an Employee
Benefit Plan under Section 401(a) of the Code, (b) all notices
received by the
79
86
Borrower or any ERISA Affiliate of the PBGC's or any Governmental
Authority's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan, (c) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed
by the Borrower or any ERISA Affiliate with the Internal Revenue
Service with respect to each Employee Benefit Plan and (d) all notices
received by the Borrower or any ERISA Affiliate from a Multiemployer
Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA. The Borrower will notify
the Agent in writing within five (5) Business Days of the Borrower or
any ERISA Affiliate obtaining knowledge or reason to know that the
Borrower or any ERISA Affiliate has filed or intends to file a notice
of intent to terminate any Pension Plan under a distress termination
within the meaning of Section 4041(c) of ERISA.
9.19 Continued Operations. Continue at all times to conduct its
business and engage, principally in the same or related line or lines of
business substantially as heretofore conducted.
9.20 New Subsidiaries. Within thirty (30) days of the acquisition
or creation of any Domestic Subsidiary, cause to be delivered to the Agent each
of the following:
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of Exhibit J;
(b) the Security Instruments, including (i) a Security
Agreement of such Subsidiary substantially in the form of Exhibit K,
(ii) such Uniform Commercial Code financing statements on Form UCC-1
or otherwise duly executed by such Subsidiary as "Debtor" and naming
the Agent for the benefit of the Agent and the Lenders as "Secured
Party," in form, substance and number sufficient in the reasonable
opinion of the Agent and its special counsel to be filed in all Uniform
Commercial Code filing offices in all jurisdictions in which filing is
necessary or advisable to perfect in favor of the Agent for the benefit
of the Agent and the Lenders the Lien on Collateral conferred under
such Security Instrument to the extent such Lien may be perfected by
Uniform Commercial Code filing, (iii) an Intellectual Property Security
Agreement, substantially in the form of Exhibit L, (iv) the Mortgages,
and (v) the Mortgaged Property Support Documents;
(c) if the Subsidiary Securities issued by such
Subsidiary that are, or are required to become, Pledged Interests,
shall be owned by a Subsidiary who has not then executed and delivered
to the Agent a Pledge Agreement granting a Lien to the Agent, for the
benefit of the Agent and the Lenders, in such equity interests, a
Pledge Agreement executed by the Subsidiary that directly owns such
Subsidiary Securities substantially in the form attached hereto as
Exhibit M (or, as to the Pledged Interests issued by any Direct Foreign
Subsidiary, in a form acceptable to the Agent), and if such Subsidiary
Securities shall be owned by the Borrower or a Subsidiary who has
previously executed a Pledge Agreement, a Pledge Agreement Supplement
in the form required by such Pledge Agreement pertaining to such
Subsidiary Securities;
80
87
(d) if the Pledged Interests issued by such Subsidiary
constitute securities under Article 8 of the Uniform Commercial Code
(i) the certificates representing 100% of such Subsidiary Securities
and (ii) duly executed, undated stock powers or other appropriate
powers of assignment in blank affixed thereto;
(e) (i) Uniform Commercial Code financing statements on form
UCC-1 or otherwise duly executed by the pledgor as "Debtor" and naming
the Agent for the benefit of the Agent and the Lenders as "Secured
Party," in form, substance and number sufficient in the reasonable
opinion of the Agent and its special counsel to be filed in all Uniform
Commercial Code filing offices and in all jurisdictions in which filing
is necessary or advisable to perfect in favor of the Agent for the
benefit of the Agent and the Lenders the Lien on such Subsidiary
Securities and (ii) if the Pledged Interests issued by such Subsidiary
do not constitute securities and such Subsidiary has not elected to
have such interests treated as securities under Article 8 of the
applicable Uniform Commercial Code, a control agreement from the
Registrar of such Subsidiary, in form and substance acceptable to the
Agent and in which the Registrar (1) acknowledges that the pledgor is
at the date of such acknowledgment the sole record, and to its
knowledge, beneficial owner of such Subsidiary Securities, (2)
acknowledges the Lien in favor of the Agent conferred under the Pledge
Agreement and that such Lien will be reflected on the registry for such
Subsidiary Securities, (3) agrees that it will not register any
transfer of such Subsidiary Securities nor acknowledge any Lien in
favor of any other Person on such Subsidiary Securities, without the
prior written consent of the Agent, in each instance, until it receives
notice from the Agent that all Liens on such Collateral in favor of the
Agent for the benefit of the Agent and the Lenders have been released
or terminated, and (4) agrees that upon receipt of notice from the
Agent that an Event of Default has occurred and is continuing and that
the Subsidiary Securities identified in such notice have been
transferred to a transferee identified in such notice, it will duly
record such transfer of Subsidiary Securities on the appropriate
registry without requiring further consent from the pledgor and shall
thereafter treat the transferee as the sole record and beneficial owner
of such Subsidiary Securities pending further transfer, notwithstanding
any contrary instruction received from the pledgor;
(f) a supplement to the appropriate schedule attached to the
appropriate Security Instruments listing the additional Collateral,
certified as true, correct and complete by the Authorized
Representative (provided that the failure to deliver such supplement
shall not impair the rights conferred under the Security Instruments in
after acquired Collateral);
(g) an opinion or opinions of counsel to the Subsidiary
(including local counsel in each jurisdiction where Mortgaged Property
is located) dated as of the date of delivery of the Facility Guaranty
and other Loan Documents provided for in this
81
88
Section 9.20 and addressed to the Agent and the Lenders, in form and
substance reasonably acceptable to the Agent (which opinion may include
assumptions and qualifications of similar effect to those contained in
the opinions of counsel delivered pursuant to Section 7. 1 (a)), to the
effect that:
(i) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted and proposed to be conducted and to execute, deliver
and perform the Facility Guaranty and other Loan Documents
described in this Section 9.20 to which such Subsidiary is a
signatory, and is duly qualified to transact business and is
in good standing as a foreign corporation or partnership in
each other jurisdiction in which the character of the
properties owned or leased, or the business carried on by
it, requires such qualification and the failure to be so
qualified would reasonably be likely to result in a Material
Adverse Effect;
(ii) the execution, delivery and performance of the
Facility Guaranty and other Loan Documents described in this
Section 9.20 to which such Subsidiary is a signatory have been
duly authorized by all requisite corporate or partnership
action (including any required shareholder or partner
approval), each of such agreements has been duly executed and
delivered and constitutes the valid and binding agreement of
such Subsidiary, enforceable against such Subsidiary in
accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general
principles of equity (whether considered in a proceeding at
law or in equity); and
(iii) the Subsidiary Securities of such Subsidiary
are duly authorized, validly issued, fully paid and
nonassessable, and free of any preemptive rights, and the
applicable Security Instrument is effective to create a valid
security interest in favor of the Agent for the benefit of the
Agent and the Lenders in such Subsidiary Securities as
constitute Pledged Interests; and
(iv) the Uniform Commercial Code financing statements
on Form UCC-1 delivered to the Agent by the Subsidiary in
connection with the delivery of the Security Instruments of
such Subsidiary have been duly executed by the Subsidiary and
are in form, substance and number sufficient for filing in all
Uniform Commercial Code filing offices in all jurisdictions in
which filing is necessary to perfect in favor of the Agent for
the benefit of the Agent and the Lenders the Lien on
Collateral conferred under such Security Instruments to the
extent such Lien may be perfected by Uniform Commercial Code
filing; and
82
89
(v) each Mortgage is in appropriate form for due
recordation and upon recordation shall constitute a valid and
effective, fully perfected Lien on the real property and
fixtures described therein;
(h) current copies of the Organizational Documents and
Operating Documents of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if
required by such Organizational Documents, Operating Documents or
applicable law, of the shareholders, members or partners) of such
Subsidiary authorizing the actions and the execution and delivery of
documents described in this Section 9.20.
9.21 Rate Hedging Obligations. Within ninety (90) days of the
Closing Date, enter into one or more Swap Agreements which limit the risk of
interest rate fluctuations with respect to not less than $50,000,000 of
Indebtedness arising under this Agreement.
83
90
ARTICLE X
Negative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Subsidiary to:
10.1 Financial Covenants.
(a) Consolidated Net Worth. Permit Consolidated Net Worth to
be less than (i) $70,000,000 from the Closing Date until (but
excluding) the last day of the fiscal quarter that includes the Closing
Date (the "Closing Date Quarter"), and (ii) as at the last day of each
fiscal quarter of the Borrower ending after the Closing Date and until
(but excluding) the last day of the next following fiscal quarter of
the Borrower, the sum of (A) the amount of Consolidated Net Worth
required to be maintained pursuant to this Section 10.1(a) as at the
end of the immediately preceding fiscal quarter (or, in the case of the
Closing Date Quarter, required to be maintained as of the Closing
Date), plus (B) 50% of Consolidated Net Income (with no reduction for
net losses during any period) for the fiscal quarter of the Borrower
ending on such day (including within "Consolidated Net Income" certain
items otherwise excluded, as provided for in the definition of
"Consolidated Net Income"), plus (C) 100% of the aggregate amount of
all increases in the stated capital and additional paid-in capital
accounts of the Borrower resulting from the issuance of equity
securities or other capital investments.
(b) Consolidated Leverage Ratio. Permit at any time during the
respective periods set forth below the Consolidated Leverage Ratio to
be greater than that set forth opposite each such period:
Period Consolidated Leverage Ratio
-------------------------- ---------------------------
Closing Date through 3.50 to 1.00
September 29, 2000
September 30, 2000 through 3.25 to 1.00
▇▇▇▇▇ ▇ ▇, ▇▇▇▇
▇▇▇▇▇ 31, 2001 and 3.00 to 1.00
thereafter
(c) Consolidated Fixed Charge Ratio. Permit during the
respective periods set forth below the Consolidated Fixed Charge Ratio
to be less than that set forth opposite each such period:
84
91
Period Fixed Charge Ratio Must Exceed
---------------------------- ------------------------------
Closing Date through 1.10 to 1.00
September 30, 2000
From October 1, 2000 through 1.15 to 1.00
June 30, 2001
On and after September 29, 2001 1.25 to 1.00
(d) Adjusted Consolidated EBITA. For the purpose of Section
10.1(b) and (c) only, for the Four-Quarter Periods ending January 1,
2000, April 1, 2000, July 1, 2000 and September 30, 2000, there shall
be a one-time, non recurring addition as of such fiscal quarter end
for such Four Quarter Period to Consolidated EBITDA of $2,000,000
$1,500,000, $1,000,000 and $500,000, respectively.
10.2 Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same or related as
one or more line or lines of business conducted by the Borrower and its
Subsidiaries, (ii) no Default or Event of Default shall have occurred and be
continuing either immediately prior to or immediately after giving effect to
such Acquisition and the Borrower shall have furnished to the Agent (A) pro
forma historical financial statements as of the end of the most recently
completed Fiscal Year of the Borrower and most recent interim fiscal quarter, if
applicable giving effect to such Acquisition and (B) a certificate in the form
of Exhibit I prepared on a historical pro forma basis as of the most recent date
for which financial statements have been furnished pursuant to Section 8.6a or
Section 9.1(a) or (b) giving effect to such Acquisition, which certificate shall
demonstrate that no Default or Event of Default would exist immediately after
giving effect thereto, (iii) the Person acquired shall be a Subsidiary, or be
merged into the Borrower or a wholly-owned Subsidiary, immediately upon
consummation of the Acquisition (or if assets are being acquired, the acquiror
shall be the Borrower or a Subsidiary), (iv) if the Cost of Acquisition shall
exceed $10,000,000, the Required Lenders shall consent to such Acquisition in
their discretion, and (v) after giving effect to such Acquisition, the aggregate
Costs of Acquisition incurred in any Fiscal Year (on a noncumulative basis, with
the effect that amounts not incurred in any Fiscal Year may not be carried
forward to a subsequent period) shall not exceed $20,000,000.
10.3 Capital Expenditures. Make or become committed to make Capital
Expenditures, excluding Costs of Acquisitions, which exceed in the aggregate in
any Fiscal Year of the Borrower described below (on a noncumulative basis, with
the effect that amounts not expended
85
92
in any Fiscal Year may not be carried forward to a subsequent period), the
amount set forth opposite each such period:
Fiscal Year Ending: Capital Expenditures Not to Exceed:
------------------ -----------------------------------
September 30, 2000 $15,000,000
Each Fiscal Year
thereafter $12,000,000
10.4 Liens. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary, other
than
(a) Liens created under the Security Instruments in favor of
the Agent and the Lenders, and otherwise existing as of the date hereof
and as set forth in Schedule 8.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently
conducted, which, except as expressly so specified on Schedule 8.7, are
inferior in respect of the Collateral to the Liens conferred under the
Security Instruments, and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet subject to execution against the
property to which such Lien attaches;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted, which, except as expressly so specified on
Schedule 8.7 are inferior in respect of the Collateral to the Liens
conferred under the Security Instruments, and with respect to which
adequate reserves or other appropriate provisions are being maintained
in accordance with GAAP and which Liens are not yet subject to
execution against the property to which such Lien attaches;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds)
in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations
86
93
and zoning and other restrictions, charges or encumbrances (whether or
not recorded), which do not interfere materially with the ordinary
conduct of the business of the Borrower or any Subsidiary and which do
not materially detract from the value of the property to which they
attach or materially impair the use thereof to the Borrower or any
Subsidiary;
(f) purchase money Liens to secure Indebtedness permitted
under Section 10.5(d) and incurred to purchase fixed assets, provided
such Indebtedness represents not less than 75% of the purchase price of
such assets as of the date of purchase thereof and no property other
than the assets so purchased secures such Indebtedness; and
(g) Liens arising in connection with Capital Leases permitted
under Section 10.5(d); provided that no such Lien shall extend to any
Collateral or to any other property other than the assets subject to
such Capital Leases.
10.5 Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth
in Schedule 8.6; provided, none of the instruments and agreements
evidencing or governing such Indebtedness shall be amended, modified or
supplemented after the Closing Date to change any terms of
subordination, repayment or rights of enforcement, conversion, put,
exchange or other rights from such terms and rights as in effect on the
Closing Date;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) purchase money Indebtedness and Capital Leases described
in Section 10.4(h) and (g) not to exceed an aggregate outstanding
principal amount at any time of $1,000,000;
(e) Indebtedness arising from Rate Hedging Obligations
permitted under Section 9.21;
(f) unsecured intercompany Indebtedness for loans and advances
made by the Borrower or any Guarantor to the Borrower or any Guarantor;
and
(g) additional unsecured Indebtedness for Money Borrowed not
otherwise covered by clauses (a) through (f) above, provided that the
aggregate outstanding
87
94
principal amount of all such other Indebtedness permitted under this
clause (g) shall in no event exceed $1,000,000 at any time.
10.6 Transfer of Assets. Sell, lease, transfer or otherwise dispose
of any assets of Borrower or any Subsidiary other than (a) dispositions of
inventory in the ordinary course of business, (b) dispositions of equipment
which, in the aggregate during any Fiscal Year, have a fair market value or book
value, whichever is less, of $1,000,000 or less and is not replaced by equipment
having at least equivalent value, and (c) dispositions of property that is
substantially worn, damaged, obsolete or, in the judgment of the Borrower, no
longer best used or useful in its business or that of any Subsidiary so long as
the Net Proceeds are applied as required in Section 2.1(e), (d) transfers of
assets necessary to give effect to merger or consolidation transactions
permitted by Section 10.8, (e) the disposition of Eligible Securities in the
ordinary course of management of the investment portfolio of the Borrower and
its Subsidiaries, (f) dispositions of assets to the extent permitted under
Section 10.14 provided that the proceeds there from shall be applied as provided
in Section 2. 1 (e) and (g) any other Asset Disposition(~J of less than all or
substantially all of the assets of the Borrower and its Subsidiaries approved by
the Required Lenders, provided that the proceeds therefrom shall be applied as
provided in Section 2.1(e).
10.7 Investments. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may maintain investments or
invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder;
(b) Eligible Securities;
(c) investments described in Schedule 8.4;
(d) accounts receivable arising and trade credit granted
in the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss; and
(e) investments in Subsidiaries which are Guarantors;
(f) loans between the Borrower and the Guarantors
described in Section 10.5(f); and
(g) other loans, advances and investments in an aggregate
principal amount at any time outstanding not to exceed $5,000,000.
88
95
10.8 Merger or Consolidation. (a) Consolidate with or merge into
any other Person, or (b) permit any other Person to merge into it, or (c) sell,
transfer or lease or otherwise dispose of all or substantially all of its assets
(other than sales permitted under Section 10.6); provided, however, (i) any
Subsidiary of the Borrower may merge or transfer all or substantially all of its
assets into or consolidate with the Borrower or any wholly-owned Subsidiary of
the Borrower, and (ii) any other Person may merge into or consolidate with the
Borrower or any wholly-owned Subsidiary and any Subsidiary may merge into or
consolidate with any other Person in order to consummate an Acquisition
permitted by Section 10.2, provided further, that any resulting or surviving
entity shall execute and deliver such agreements and other documents, including
a Facility Guaranty, and take such other action as the Agent may require to
evidence or confirm its express assumption of the obligations and liabilities of
its predecessor entities under the Loan Documents.
10.9 Restricted Payments. Make any Restricted Payment or apply or
set apart any of their assets therefor or agree to do any of the foregoing;
provided, however, the Borrower may pay cash dividends to holders of its common
stock and redeem its capital stock, so long as the aggregate amount of such cash
dividends and stock redeemed does not exceed $3,000,000 in any Fiscal Year (on a
non-cumulative basis, with the effect that amounts not paid in any Fiscal Year
may not be carried over for payment in a subsequent period) if immediately prior
to and immediately after giving effect thereto no Default or Event of Default
shall exist or occur and be continuing.
10.10 Transactions with Affiliates. Other than transactions
described on Schedule 10.10 and transactions permitted under Sections 10.7 and
10.8, enter into any transaction after the Closing Date, including, without
limitation, the purchase, sale, lease or exchange of property, real or personal,
or the rendering of any service, with any Affiliate of the Borrower, except (a)
that such Persons may render services to the Borrower or its Subsidiaries for
compensation at the same rates generally paid by Persons engaged in the same or
similar businesses for the same or similar services, (b) that the Borrower or
any Subsidiary may render services to such Persons for compensation at the same
rates generally charged by the Borrower or such Subsidiary and (c) in either
case in the ordinary course of business and pursuant to the reasonable
requirements of the Borrower's (or any Subsidiary's) business consistent with
past practice of the Borrower and its Subsidiaries and upon fair and reasonable
terms no less favorable to the Borrower (or any Subsidiary) than would be
obtained in a comparable arm's-length transaction with a Person not an
Affiliate.
10.11 Compliance with ERISA, the Code and Foreign Benefit Laws.
With respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of the Borrower or any ERISA
Affiliate to the PBGC or to any Governmental Authority; or
89
96
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to
Section 502(i) of ERISA or a tax pursuant to Section 4975 of the Code
may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits; or
(g) establish or amend any Employee Benefit Plan which
establishment or amendment could result in liability to the Borrower
or any ERISA Affiliate or increase the obligation of the Borrower or
any ERISA Affiliate to a Multiemployer Plan which annual liability or
increase, individually or together with all similar liabilities and
increases, is in excess of $ 1,000,000; or
(h) fail, or permit the Borrower or any ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Laws and all other applicable
laws and the regulations and interpretations thereof.
10.12 Fiscal Year. Change its Fiscal Year.
10.13 Dissolution, etc. Wind up, liquidate or dissolve (voluntarily
or involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 10.8.
10.14 Limitations on Sales and Leasebacks. Enter into any
arrangement or arrangements with any Person providing for the leasing by the
Borrower or any Subsidiary of real or personal property, whether now owned or
hereafter acquired in a single transaction or series of related transactions,
which has been or is to be sold or transferred by the Borrower or any Subsidiary
to such Person or to any other Person to whom funds have been or are to be
advanced by such Person on the security of such property or rental obligations
of the Borrower
90
97
or any Subsidiary; provided, however, so long as no Default or Event of Default
has occurred and is continuing or would exist as a result of such transaction,
the Borrower and its Subsidiaries shall be permitted to enter into sale and
leaseback transactions so long as (i) the aggregate net cash proceeds received
for all such sales or dispositions does not exceed $5,000,000 during the term of
this Agreement and (ii) the purchase price for each such sale and leaseback is
no less than the fair market value of the applicable asset at the time of sale.
10.15 Change in Control. Cause, suffer or permit to exist or occur
any Change of Control.
10.16 Rate Hedging Obligations. Except as set forth in Section 9.21,
incur any Rate Hedging Obligations or enter into any agreements, arrangements,
devices or instruments relating to Rate Hedging Obligations except Rate Hedging
Obligations incurred to limit risks of currency or interest rate fluctuations to
which the Borrower or its Subsidiaries are otherwise subject by operation of
their respective businesses and not for speculative purposes.
10.17 Negative Pledge Clauses. Enter into or cause, suffer or permit
to exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or limits
the ability of any of the Borrower or any Subsidiary to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, provided that the Borrower and any Subsidiary
may enter into such an agreement in connection with, and that applies only to,
property subject to any Lien permitted by this Agreement and not released after
the date hereof, when such prohibition or limitation is by its terms effective
only against the assets subject to such Lien.
10.18 Prepayments, Etc. of Indebtedness.
(a) Prepay, redeem, purchase, defease or otherwise satisfy
prior to the scheduled maturity thereof in any manner, or make any
payment in violation of any subordination terms of, any Indebtedness;
or
(b) amend, modify or change in any manner any term or
condition of any Indebtedness described in Section 10.5(a) or any lease
so that the terms and conditions thereof are less favorable to the
Agent and the Lenders than the terms of such Indebtedness or leases as
of the Closing Date.
91
98
ARTICLE XI
Events of Default and Acceleration
11.1 Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other
Obligation, when and as the same shall be due and payable whether
pursuant to any provision of Article 11 or Article III or Article IV,
at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or
other Obligation or of any fees or other amounts payable to any of the
Lenders or the Agent on the date on which the same shall be due and
payable; or
(c) if default shall be made in the performance or observance
of any covenant set forth in Section 9.8, 9.12, 9.13, 9.20 or
Article X;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for thirty (30) or more days after the earlier of receipt of
notice of such default by the Authorized Representative from the Agent
or an officer of the Borrower becomes aware of such default, or if a
default shall be made in the performance or observance of, or shall
occur under, any covenant, agreement or provision contained in any of
the other Loan Documents (beyond any applicable grace period, if any,
contained therein) or in any instrument or document evidencing or
creating any obligation, guaranty, or Lien in favor of the Agent or any
of the Lenders or delivered to the Agent or any of the Lenders in
connection with or pursuant to this Agreement or any of the
Obligations, or if any Loan Document ceases to be in full force and
effect (other than as expressly provided for hereunder or thereunder or
with the express written consent of the Agent), or if without the
written consent of the Lenders, this Agreement or any other Loan
Document shall be disaffirmed or shall terminate, be terminable or be
terminated or become void or unenforceable for any reason whatsoever
(other than as expressly provided for hereunder or thereunder or with
the express written consent of the Agent); or
(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with
respect to any Indebtedness (other
92
99
than the Loans and other Obligations) of the Borrower or any Subsidiary
in an amount not less than $1,000,000 in the aggregate outstanding, or
(ii) a default, which is not waived, in the performance, observance or
fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness may have
been issued, created, assumed, guaranteed or secured by the Borrower or
any Subsidiary, or (iii) any other event of default as specified in any
agreement or instrument under or pursuant to which any such
Indebtedness may have been issued, created, assumed, guaranteed or
secured by the Borrower or any Subsidiary, and such default or event of
default shall continue for more than the period of grace, if any,
therein specified, or such default or event of default shall permit the
holder of any such Indebtedness (or any agent or trustee acting on
behalf of one or more holders) to accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Agent or any Lender by or on
behalf of the Borrower or any other Credit Party pursuant to or in
connection with any Loan Document, or otherwise, shall be false or
misleading in any material respect when given; or
(g) if the Borrower or any Subsidiary or other Credit Party
shall be unable to pay its debts generally as they become due; file a
petition to take advantage of any insolvency statute; make an
assignment for the benefit of its creditors; commence a proceeding for
the appointment of a receiver, trustee, liquidator or conservator of
itself or of the whole or any substantial part of its property; file a
petition or answer seeking liquidation, reorganization or arrangement
or similar relief under the federal bankruptcy laws or any other
applicable law or statute or have entered against it an order for
relief under the federal bankruptcy laws; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or other
Credit Party or of the whole or any substantial part of its properties
and such order, judgment or decree continues in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
any Subsidiary seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state,
which petition is not dismissed within sixty (60) days; or if, under
the provisions of any other law for the relief or aid of debtors, a
court of competent jurisdiction shall assume custody or control of the
Borrower or any Subsidiary or other Credit Party or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against the Borrower
or any Subsidiary or other Credit Party any proceeding or petition
seeking reorganization, arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state which proceeding or petition remains
undismissed
93
100
for a period of sixty (60) days; or if the Borrower or any Subsidiary
or other Credit Party takes any action to indicate its consent to or
approval of any such proceeding or petition; or
(i) if (i) one or more judgments or orders where the
amount not covered by insurance (or the amount as to which the insurer
denies liability) is in excess of $100,000 is rendered against the
Borrower or any Subsidiary, or (ii) there is any attachment, injunction
or execution against any of the Borrower's or Subsidiaries' properties
for any amount in excess of $100,000 in the aggregate; and such
judgment, attachment, injunction or execution remains unpaid, unstayed,
undischarged, unbonded or undismissed for a period of thirty (30) days;
or
(j) if the Borrower or any Subsidiary shall, other than
in the ordinary course of business (as determined by past practices),
suspend all or any part of its operations material to the conduct of
the business of the Borrower and its Subsidiaries, taken as a whole,
for a period of more than 30 days; or
(k) if there shall occur and not be waived an Event of
Default as defined in any of the other Loan Documents after the
expiration of any applicable grace period;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall have not been waived,
(A) either or both of the following actions may be taken:
(i) the Agent may, and at the direction of the Required Lenders shall,
declare any obligation of the Lenders and the Issuing Bank to make
further Revolving Loans and Swing Line Loans or to issue additional
Letters of Credit terminated, whereupon the obligation of each Lender
to make further Revolving Loans, of Bank of America to make further
Swing Line Loans, and of the Issuing Bank to issue additional Letters
of Credit, hereunder shall terminate immediately, and (ii) the Agent
shall at the direction of the Required Lenders, at their option,
declare by notice to the Borrower any or all of the Obligations to be
immediately due and payable, and the same, including all interest
accrued thereon and all other obligations of the Borrower to the Agent
and the Lenders, shall forthwith become immediately due and payable
without presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything contained
herein or in any instrument evidencing the Obligations to the contrary
notwithstanding; provided, however, that notwithstanding the above, if
there shall occur an Event of Default under clause (g) or (h) above,
then the obligation of the Lenders to make Revolving Loans, of Bank of
America to make Swing Line Loans, and of the Issuing Bank to issue
Letters of Credit hereunder shall automatically terminate and any and
all of the Obligations shall be immediately due and payable without the
necessity of any action by the Agent or the Required Lenders or notice
to the Agent or the Lenders;
94
101
(B) The Borrower shall, upon demand of the Agent or the
Required Lenders, deposit cash with the Agent in an amount equal to the
amount of any Letter of Credit Outstandings, as collateral security for
the repayment of any future drawings or payments under such Letters of
Credit, and such amounts shall be held by the Agent pursuant to the
terms of the LC Account Agreement; and
(C) the Agent and each of the Lenders shall have all of
the rights and remedies available under the Loan Documents or under any
applicable law.
11.2 Agent to Act. In case any one or more Events of Default shall
occur and not have been waived, the Agent may, and at the direction of the
Required Lenders shall, proceed to protect and enforce their rights or remedies
either by suit in equity or by action at law, or both, whether for the specific
performance of any covenant, agreement or other provision contained herein or in
any other Loan Document, or to enforce the payment of the Obligations or any
other legal or equitable right or remedy.
11.3 Cumulative Rights. No right or remedy herein conferred upon
the Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right or
remedy shall be cumulative and shall be in addition to every other such right or
remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute, or otherwise.
11.4 No Waiver. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
11.5 Allocation of Proceeds. If an Event of Default has occurred
and not been waived, and the maturity of the Notes has been accelerated pursuant
to Article XI hereof, all payments received by the Agent hereunder, in respect
of any principal of or interest on the Obligations or any other amounts payable
by the Borrower hereunder, shall be applied by the Agent in the following order:
(a) the reasonable expenses incurred in connection with
retaking, holding, preserving, processing, maintaining or preparing for
sale, lease or other disposition of, any Collateral, including
reasonable attorney's fees and legal expenses pertaining thereto;
(b) amounts due to the Lenders and the Issuing Bank
pursuant to Sections 4.6(a), 4.6(b), 4.6(c), 4.6(d) and 13.5;
(c) amounts due to the Agent pursuant to Section 4.6(e);
▇▇
▇▇▇
(▇) payments of interest on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to Bank of America);
(e) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of the
Lenders (with amounts payable in respect of Swing Line Outstandings
being included in such calculation and paid to Bank of America);
(f) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 11.1(B);
(g) amounts due to the Issuing Bank, the Agent and the
Lenders pursuant to Sections 3.2(h), 9.16 and 13.9;
(h) payments of all other amounts due under any of the
Loan Documents, if any, to be applied for the ratable benefit of the
Lenders;
(i) amounts due to any of the Lenders or their affiliates
in respect of Obligations consisting of liabilities under any Swap
Agreement with any of the Lenders or their affiliates on a pro rata
basis according to the amounts owed; and
j) any surplus remaining after application as provided
for herein, to the Borrower or otherwise as may be required by
applicable law.
96
103
ARTICLE XII
The Agent
12.1 Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 12.5 and
the first sentence of Section 12.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents):
(a) shall not have any duties or responsibilities except
those expressly set forth in this Agreement and shall not be a trustee
or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any
recital, statement, representation, or warranty (whether written or
oral) made in or in connection with any Loan Document or any
certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value,
validity, effectiveness, genuineness, enforceability, or sufficiency of
any Loan Document, or any other document referred to or provided for
therein or for any failure by any Credit Party or any other Person to
perform any of its obligations thereunder;
(c) shall not be responsible for or have any duty to
ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Credit Party or the satisfaction of any
condition;
(d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document except,
subject to Section 12.2, at the direction of the Required Lender; and
(e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan
Document, except for its own gross negligence or willful misconduct.
The Agent may employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
12.2 Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telefacsimile)
believed by it to be genuine and correct and to have been signed, sent or made
by or on behalf of the proper Person or Persons, and upon advice and statements
97
104
of legal counsel (including counsel for any Credit Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Agent receives and accepts an Assignment and Acceptance executed
in accordance with Section 13.1 hereof. As to any matters not expressly provided
for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding on all of the Lenders; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to any Loan Document or applicable law or unless it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking any such action.
12.3 Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default or
Event of Default and stating that such notice is a "Notice of Default." In the
event that the Agent receives such a notice of the occurrence of a Default or
Event of Default, the Agent shall give prompt notice thereof to the Lenders. The
Agent shall (subject to Section 12.2 hereof) take such action with respect to
such Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that unless and until the Agent shall have received such
directions, 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 in the best interest of the Lenders.
12.4 Rights as Lender. With respect to its Revolving Credit
Commitment and Term Loan Commitment and the Loans made by it and Letters of
Credit issued by it, Bank of America (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. Bank of
America (and any successor acting as Agent) and its affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Credit Party or any of its
Subsidiaries or affiliates as if it were not acting as Agent, and Bank of
America (and any successor acting as Agent) and its affiliates may accept fees
and other consideration from any Credit Party or any of its Subsidiaries or
affiliates for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
12.5 Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 13.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments and Term Loan Commitments, for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys' fees), or disbursements of any
98
105
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Agent (including by any Lender) in any way relating to or arising
out of any Loan Document or the transactions contemplated thereby or any action
taken or omitted by the Agent under any Loan Document; provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 13.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this Section 12.5 shall survive payment in full of the Loans and all other
amounts payable under this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Loan Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or any of its Subsidiaries or
affiliates that may come into the possession of the Agent or any of its
affiliates.
12.7 Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent with, so long as no Default or Event of Default has occurred and is
continuing, the consent of the Borrower, which consent shall not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent which shall be a
commercial bank organized under the laws of the United States of America having
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor, such successor shall
thereupon succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article XII shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Agent.
99
106
ARTICLE XIII
Miscellaneous
13.1 Assignments and Participations.
(a) Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Loans, its Note, its
Revolving Credit Commitment and its Term Loan Commitment); provided, however,
that
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's rights
and obligations under this Agreement, any such partial
assignment shall be in an amount at least equal to $5,000,000
or an integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of
a constant, and not varying, percentage of all of its rights
and obligations under this Agreement and the Notes (except
that any assignment by Bank of America shall not include its
rights, benefits or duties as the Issuing Bank or as the
provider of Swing Line Loans); and
(iv) the parties to such assignment shall execute
and deliver to the Agent for its acceptance an Assignment and
Acceptance in the form of Exhibit B hereto, together with any
Note subject to such assignment and a processing fee of
$3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 6.6.
(b) The Agent shall maintain at its address referred to
in Section 13.2 a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Revolving Credit
100
107
Commitments and Term Loan Commitments of, and principal amount of the
Loans owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Note subject to such
assignment and payment of the processing fee, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially
the form of Exhibit B hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the parties thereto.
(d) Each Lender may sell participations to one or more
Persons in all or a portion of its rights, obligations or rights and
obligations under this Agreement (including all or a portion of its
Revolving Credit Commitment or Term Loan Commitment or its Loans);
provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the participant shall be entitled to the benefit of
the yield protection provisions contained in Article VI (other than to
the extent such Lender was or is subject to increased costs or yield
limitations at the time of the sale of such participation) and the
right of set-off contained in Section 13.3, and (iv) the Borrower
shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Loans and its Note and to
approve any amendment, modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or waivers decreasing
the amount of principal of or the rate at which interest is payable on
such Loans or Note, extending any scheduled principal payment date or
date fixed for the payment of interest on such Loans or Note, or
extending its Revolving Credit Commitment or Term Loan Commitments).
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any
portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment shall release
the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender
from time to time to assignees and participants (including prospective
assignees and participants).
101
108
(g) Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party and all covenants,
provisions and agreements by or on behalf of the Borrower which are
contained in the Loan Documents shall inure to the benefit of the
successors and permitted assigns of the Agent, the Lenders, or any of
them. The Borrower may not assign or otherwise transfer to any other
Person any right, power, benefit, or privilege (or any interest
therein) conferred hereunder or under any of the other Loan Documents,
or delegate (by assumption or otherwise) to any other Person any duty,
obligation, or liability arising hereunder or under any of the other
Loan Documents, and any such purported assignment, delegation or other
transfer shall be void.
13.2 Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which
delivered (including hand delivery by commercial courier service) to such party
(against receipt therefor), (ii) on the date of transmission to such party, in
the case of notice by telefacsimile (where the proper transmission of such
notice is either acknowledged by the recipient or electronically confirmed by
the transmitting device), or (iii) on the fifth Business Day after the day on
which mailed to such party, if sent prepaid by certified or registered mail,
return receipt requested, in each case delivered, transmitted or mailed, as the
case may be, to the address or telefacsimile number, as appropriate, set forth
below or such other address or number as such party shall specify by notice
hereunder:
(a) if to the Borrower:
Insteel Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: H.O. ▇▇▇▇▇, III
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Financial Officer
Insteel Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) if to the Agent:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 15th Floor
102
109
NC1-001-15-04
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agency Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bank of America, N.A.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
(d) if to any other Credit Party, at the address set
forth on the signature page of the Facility Guaranty or Security
Instrument executed by such Credit Party, as the case may be.
13.3 Right of Set-off; Adjustments.
(a) Upon the occurrence and during the continuance of any
Event of Default, each Lender (and each of its affiliates) is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its
affiliates) to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note held by such Lender,
irrespective of whether such Lender shall have made any demand under
this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this
Section 13.3 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that such Lender may have.
(b) If any Lender (a "benefitted Lender") shall at any
time receive any payment of all or part of the Loans owing to it, or
interest thereon, or receive any
103
110
collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Loans owing to it, or interest thereon,
such benefitted Lender shall purchase for cash from the other Lenders
a participating interest in such portion of each such other Lender's
Loans owing to it, or shall provide such other Lenders with the
benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the
Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted
Lender or is repaid in whole or in part by such benefitted Lender in
good faith settlement of a pending or threatened avoidance claim, such
purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery or settlement payment, but
without interest. The Borrower agrees that any Lender so purchasing a
participation from a Lender pursuant to this Section 13.3 may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of the Borrower in
the amount of such participation.
13.4 Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
Revolving Credit Commitment or Term Loan Commitment hereunder or the Borrower
has continuing obligations hereunder unless otherwise provided herein.
13.5 Expenses. The Borrower agrees to pay on demand all reasonable
costs and expenses of the Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Agreement, the other Loan Documents, and the other documents to be delivered
hereunder, including, without limitation, the fees and expenses of counsel for
the Agent and BAS with respect thereto and with respect to due diligence and
advising the Agent as to its rights and responsibilities under the Loan
Documents. The Borrower further agrees to pay on demand the reasonable costs and
expenses of the Agent and the Lenders, if any (including, without limitation,
reasonable attorneys' fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings, or otherwise) of the Loan
Documents and the other documents to be delivered hereunder.
13.6 Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower or other applicable Credit
Party to such Loan Document and either the Required Lenders or (as to Loan
Documents other than the Credit Agreement) the Agent on behalf of the Required
Lenders (and, if Article XII or the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or waiver shall, unless
signed by all the Lenders affected thereby, (i) increase the Revolving Credit
Commitments or
104
111
Term Loan Commitments of the Lenders, the Total Revolving Credit Commitment or
the Total Term Loan Commitment (ii) reduce the principal of or rate of interest
on any Loan or any fees or other amounts payable hereunder, (iii) postpone any
date fixed for the payment of any scheduled installment of principal of or
interest on any Loan or any fees or other amounts payable hereunder or for
termination of any Revolving Credit Commitment or Term Loan Commitment, or (iv)
change the percentage of the Revolving Credit Commitment or Term Loan Commitment
or of the unpaid principal amount of the Notes, or the number of Lenders, which
shall be required for the Lenders or any of them to take any action under this
Section 13.6 or any other provision of this Agreement, or (v) release all or
substantially all of the Guarantors or all or substantially all of the
Collateral except as expressly contemplated in the Loan Documents, or (vi) amend
the definition of "Borrowing Base" to increase any percentage set forth therein;
and provided, further, that no such amendment or waiver that affects the rights,
privileges or obligations of Bank of America as provider of Swing Line Loans,
shall be effective unless signed in writing by Bank of America or that affects
the rights, privileges or obligations of the Issuing Bank as issuer of Letters
of Credit, shall be effective unless signed in writing by the Issuing Bank;
No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances, except as otherwise expressly provided herein. No delay or
omission on any Lender's or the Agent's part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.
13.7 Counterparts: Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
fully-executed counterpart. Signatures on communications and other documents may
be transmitted by facsimile only with the consent of the Agent in its sole and
absolute discretion in each instance. The effectiveness of any such signatures
accepted by the Agent shall, subject to applicable law, have the same force and
effect as manual signatures and shall be binding on all parties. The Agent may
also require that any such signature be confirmed by a manually-signed hardcopy
thereof. Each party hereto hereby adopts as an original executed signature page
each signature page hereafter furnished by such party to the Agent (or an agent
of the Agent) bearing (with the consent of the Agent) a facsimile signature by
or on behalf of such party. Nothing contained in this Section shall limit the
provisions of Section 12.2.
13.8 Termination. The termination of this Agreement shall not
affect any rights of the Borrower, the Lenders or the Agent or any obligation of
the Borrower, the Lenders or the Agent, arising prior to the effective date of
such termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders under the Loan Documents shall
105
112
continue in full force and effect, notwithstanding the termination of this
Agreement, until all of the Obligations have been paid in full after the
termination hereof (other than Obligations in the nature of continuing
indemnities or expense reimbursement obligations not yet due and payable, which
shall continue) or the Borrower has furnished the Lenders and the Agent with an
indemnification satisfactory to the Agent and each Lender with respect thereto.
Notwithstanding the foregoing, if after receipt of any payment of all or any
part of the Obligations, any Lender is for any reason compelled to surrender
such payment to any Person because such payment is determined to be void or
voidable as a preference, impermissible setoff, a diversion of trust funds or
for any other reason, this Agreement shall continue in full force and the
Borrower shall be liable to, and shall indemnify and hold the Agent or such
Lender harmless for, the amount of such payment surrendered until the Agent or
such Lender shall have been finally and irrevocably paid in full. The provisions
of the foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Agent or the Lenders in
reliance upon such payment, and any such contrary action so taken shall be
without prejudice to the Agent or the Lenders' rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable.
13.9 Indemnification; Limitation of Liability.
(a) The Borrower agrees to indemnify and hold harmless
the Agent, BAS and each Lender and each of their affiliates and their
respective officers, directors, employees, agents, and advisors (each,
an "Indemnified Party") from and against any and all claims, damages,
losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees and expenses and settlement
costs) that may be incurred by or asserted or awarded against any
Indemnified Party (and will reimburse each Indemnified Party as the
same are incurred), in each case arising out of or in connection with
or by reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Acquisition Transaction, the Loan Documents,
any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Loans, except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful
misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 13.9 applies, such
indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by the Borrower, its directors,
shareholders or creditors or an Indemnified Party or any other Person
or any Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated. The Borrower
agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to it, any of its
Subsidiaries, any Guarantor, or any security holders or creditors
thereof arising out of, related to or in connection with the
transactions contemplated herein, except to the extent that such
liability is found in a final nonappealable judgment by a court of
competent jurisdiction to have directly resulted from
106
113
such Indemnified Party's gross negligence or willful misconduct. The
Borrower agrees not to assert any claim against the Agent, any Lender,
any of their affiliates, or any of their respective directors,
officers, employees, attorneys, agents, and advisers, on any theory of
liability, for special, indirect, consequential, or punitive damages
arising out of or otherwise relating to the Loan Documents, any of the
transactions contemplated herein or the actual or proposed use of the
proceeds of the Loans. In no event shall the Borrower be responsible
for the fees and expenses of more than one counsel for all Indemnified
Parties, so long as the counsel selected is acceptable to the
Indemnified Parties. In the event of the assertion against any
Indemnified Party of any claim or the commencement of any such action
or proceeding, the Indemnified Party will use its best efforts to keep
the Borrower advised of such claim, action or proceeding and the
status thereof and will permit the Borrower to suggest appropriate
responses and actions that may be reasonably made and taken by the
Indemnified Party in respect thereof. In addition, an Indemnified
Party shall not refuse to settle or compromise in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may( be sought hereunder if such settlement,
compromise or consent is fully paid by the Borrower and includes an
unconditional release of each Indemnified Party from all liability
arising out of such claim, action, suit or proceeding.
(b) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of
the Borrower contained in this Section 13.9 shall survive the payment
in full of the Loans and all other amounts payable under this
Agreement.
13.10 Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
13.11 Entire Agreement. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto (except that those
provisions (if any) which by the express terms of the commitment letter dated as
of September 17, 1999, executed by Bank of America and BAS and accepted by the
Borrower, survive the closing of the Revolving Credit Facility, Letter of Credit
Facility and Term Loan Facility, shall survive and continue in effect).
13.12 Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
107
114
13.13 Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the
foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
13.14 Payments. All principal, interest, and other amounts to be
paid by the Borrower under this Agreement and the other Loan Documents shall be
paid to the Agent at the Principal Office in Dollars and in immediately
available funds, without setoff, recoupment, deduction or counterclaim. Subject
to the definition of "Interest Period" herein, whenever any payment under this
Agreement or any other Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of interest and fees, as applicable, and as the case may be.
13.15 Confidentiality. The Administrative Agent and each Lender
(each, a "Lending Party") agrees to keep confidential any information furnished
or made available to it by the Borrower pursuant to this Agreement that is
marked confidential; provided that nothing herein shall prevent any Lending
Party from disclosing such information (a) to any other Lending Party or any
affiliate of any Lending Party, or any officer, director, employee, agent, or
advisor of any Lending Party or affiliate of any Lending Party, (b) to any other
Person if reasonably incidental to the administration of the Revolving Credit
Facilities provided herein, (c) as required by any law, rule, or regulation, (d)
upon the order of any court or administrative agency, (e) upon the
108
115
request or demand of any regulatory agency or authority, (f) that is or becomes
available to the public or that is or becomes available to any Lending Party
other than as a result of a disclosure by any Lending Party prohibited by this
Agreement or through disclosure by any other Person whom the Administrative
Agent or such Lender has reason to believe disclosed such information in
violation or contrary to the confidentiality, requirements or policies of the
Borrower or a Subsidiary, (g) in connection with any litigation to which such
Lending Party or any of its affiliates may be a party, (h) to the extent
necessary in connection with the exercise of any remedy under this Agreement or
any other Loan Document, and (i) subject to provisions substantially similar to
those contained in this Section 13.15, to any actual or proposed participant or
assignee.
13.16 Governing Law; Waiver of Jury Trial.
(A) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER
THAN THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL
BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH
CAROLINA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED,
IN SUCH STATE.
(B) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY
BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
MECKLENBURG, STATE OF NORTH CAROLINA, UNITED STATES OF AMERICA AND, BY
THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE
BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING.
(C) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE
MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR
OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE
BORROWER PROVIDED IN SECTION 13.2, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER
109
116
THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH CAROLINA.
(D) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF
SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY
THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
APPLICABLE LAW.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.
(F) THE BORROWER HEREBY EXPRESSLY WAIVES ANY OBJECTION IT
MAY HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT
TO THE TERMS HEREOF IS AN INCONVENIENT FORUM.
[Signatures on following pages]
110
117
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
INSTEEL INDUSTRIES, INC., as Borrower
WITNESS:
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ By: /s/ H. O. ▇▇▇▇▇ III
------------------------------ ----------------------------------------
Name: H. O. ▇▇▇▇▇ III
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Title: President and Chief Executive Officer
------------------------------
Signature Page 1 of 5
118
BANK OF AMERICA, N.A.,
as Agent for the Lenders
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
BANK OF AMERICA, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Lending Office for Base Rate Loans:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 15th Floor
NC1-001-15-04
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agency Services
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile:(▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer Instructions:
Bank of America, N.A.
ABA# ▇▇▇▇▇▇▇▇▇
Account No.: 000683260102
Reference: Insteel Industries, Inc.
Attention: Agency Services
Lending Office for Eurodollar Rate Loans:
Bank of America, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 15th Floor
NC1-001-15-04
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agency Services
Telephone:(▇▇▇) ▇▇▇-▇▇▇▇
Telefacsimile:(▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer Instructions:
Bank of America, N.A.
ABA# ▇▇▇▇▇▇▇▇▇
Account No.: 000683260102
Reference: Insteel Industries, Inc.
Attention: Agency Services
Signature Page 2 of 5
119
BRANCH BANKING AND TRUST COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Lending Office:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Wire Transfer Instructions:
Branch Banking and Trust Company
Mt. Airy, North Carolina
ABA #▇▇▇▇▇▇▇▇▇
Account #4580022222
Attention: ▇▇▇▇ ▇▇▇▇
Reference: Insteel Industries, Inc.
Signature Page 3 of 5
120
FIRST UNION NATIONAL BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
Lending Office:
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Wire Transfer Instructions:
First Union National Bank
Charlotte, North Carolina
ABA #▇▇▇▇▇▇▇▇▇
Account #1459160000005
Account Name: Loan Support
Attention: ▇▇▇▇▇ ▇▇▇▇
Reference: Insteel Industries, Inc.
Signature Page 4 of 5
121
NATIONAL BANK OF CANADA,
A CANADIAN CHARTERED BANK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and Manager
By: /s/ ▇▇▇▇ ▇. Council IV
--------------------------------------------------
Name: ▇▇▇▇ ▇. Council IV
Title: Vice President
Wire Transfer Instructions:
National Bank of Canada
(Receiving Bank: Bankers Trust-NY)
New York, New York
ABA #▇▇▇▇▇▇▇▇▇
Account #▇▇▇▇▇▇▇▇
Attention:NBC-Charlotte Office for Insteel Industries
Account Name: National Bank of Canada-New York
Reference: Insteel Industries, Inc.
Signature Page 5 of 5
122
EXHIBIT J
Form of Facility Guaranty
THIS GUARANTY AGREEMENT (this "Guaranty Agreement), dated as of
__________ is made by EACH OF THE UNDERSIGNED (each a "Guarantor" and
collectively the "Guarantors") to BANK OF AMERICA, N.A., a national banking
association organized and existing under the laws of the United States, as
administrative agent (in such capacity, the "Agent") for each of the lenders
(the "Lenders" and collectively with the Agent, the "Secured Parties") now or
hereafter party to the Credit Agreement (as defined below). All capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in the Credit Agreement.
WITNESSETH:
WHEREAS, the Secured Parties have provided to Insteel Industries, Inc.
(the "Borrower") certain credit facilities, including a term loan facility and
revolving credit facility with a letter of credit and swing line sublimit
pursuant to the terms of that certain Credit Agreement dated as of January 31,
2000, among the Borrower, the Agent and the Lenders (as from time to time
amended, modified, supplemented or restated, the "Credit Agreement"); and
WHEREAS, each Guarantor is, directly or indirectly, a Subsidiary of
the Borrower and will materially benefit from the Loam and Advances made and to
be made, and the Letters of Credit issued and to be issued, under the Credit
Agreement; and
WHEREAS, each Guarantor is required to enter into this Guaranty
Agreement pursuant to the terms of the Credit Agreement; and
WHEREAS, a material part of the consideration given in connection with
and as an inducement to the execution and delivery of the Credit Agreement by
the Secured Parties was the obligation of the Borrower to cause each Guarantor
to enter into this Guaranty Agreement, and the Secured Parties are unwilling to
extend and maintain the credit facilities provided under the Loan Documents
unless the Guarantors enter into this Guaranty Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1. GUARANTY. Each Guarantor hereby jointly and severally,
unconditionally, absolutely, continually and irrevocably guarantees to the
Agent for the benefit of the Secured Parties the payment and performance in
full of the Borrower's Liabilities (as defined below). For all purposes of this
Guaranty Agreement, "Borrower's Liabilities" means: (a) the Borrower's prompt
payment in full, when due or declared due and at all such times. of all
Obligations and all other amounts pursuant to the terms of the Credit
Agreement, the Notes, and all other Loan Documents heretofore.
J-1
123
now or at any time or times hereafter owing, arising, due or payable from the
Borrower to any one or more of the Secured Parties, including principal,
interest, premiums and fees (including, but not limited to, loan fees and
attorneys' fees and expenses); (b) the Borrower's prompt, full and faithful
performance, observance and discharge of each and every agreement, undertaking,
covenant and provision to be performed, observed or discharged by the Borrower
under the Credit Agreement and all other Loan Documents; and (c) the Borrower's
prompt payment in full, when due or declared due and at all such times, of Rate
Hedging Obligations now or hereafter arising under Swap Agreements. The
Guarantors' obligations to the Secured Parties under this Guaranty Agreement
are hereinafter collectively referred to as the "Guarantors' Obligations" and,
with respect to each Guarantor individually, the "Guarantor's Obligations".
Notwithstanding the foregoing, the liability of each Guarantor individually
with respect to its Guarantor's Obligations shall be limited to an aggregate
amount equal to the largest amount that would not render its obligations
hereunder subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any applicable state law.
Each Guarantor agrees that it is jointly and severally, directly and
primarily liable (subject to the limitation in the immediately preceding
sentence) for the Borrower's Liabilities.
The Guarantors' Obligations are secured by various Security
Instruments referred to in the Credit Agreement, including without limitation
the Security Agreement, the Intellectual Property Security Agreement, the
Pledge Agreement, the Mortgages and the Assignments of Leases.
2. PAYMENT. If the Borrower shall default in payment or performance
of any of the Borrower's Liabilities, whether principal, interest, premium, fee
(including, but not limited to, loan fees and attorneys' fees and expenses), or
otherwise, when and as the same shall become due, and after expiration of any
applicable grace period, whether according to the terms of the Credit
Agreement, by acceleration, or otherwise, or upon the occurrence and during the
continuance of any Event of Default under the Credit Agreement, then any or all
of the Guarantors will, upon demand thereof by the Agent fully pay to the
Agent, for the benefit of the Secured Parties, subject to any restriction on
each Guarantor's Obligations set forth in Section 1 hereof, an amount equal to
all the Borrower's Liabilities then due and owing.
3. ABSOLUTE RIGHTS AND OBLIGATIONS. This is a guaranty of payment and
not of collection. The Guarantors' Obligations under this Guaranty Agreement
shall be joint and several, absolute and unconditional irrespective of, and
each Guarantor hereby expressly waives, to the extent permitted by law, any
defense to its obligations under this Guaranty Agreement and all Security
Instruments to which it is a party by reason of:
(a) any lack of legality, validity or enforceability of the
Credit Agreement, of any of the Notes, of any other Loan Document, or
of any other agreement or instrument creating, providing security for,
or otherwise relating to any of the Guarantors' Obligations, any of
the Borrower's Liabilities, or any other guaranty of any of the
Borrower's Liabilities (the Loan
J-2
124
Documents and all such other agreements and instruments being
collectively referred to as the "RELATED Agreements");
(b) any action taken under any of the Related Agreements, any
exercise of any right or power therein conferred, any failure or
omission to enforce any right conferred thereby, or any waiver of any
covenant or condition therein provided;
(c) any acceleration of the maturity of any of the Borrower's
Liabilities, of the Guarantor's Obligations of any other Guarantor, or
of any other obligations or liabilities of any Person under any of the
Related Agreements;
(d) any release, exchange, non-perfection, lapse in
perfection, disposal, deterioration in value, or impairment of any
security for any of the Borrower's Liabilities, for any of the
Guarantor's Obligations of any Guarantor, or for any other obligations
or liabilities of any Person under any of the Related Agreements;
(e) any dissolution of the Borrower or any Guarantor or any
other party to a Related Agreement or the combination or consolidation
of the Borrower or any Guarantor or any other party to a Related
Agreement into or with another entity or any transfer or disposition
of any assets of the Borrower or any Guarantor or any other party to a
Related Agreement;
(f) any extension (including without limitation extensions of
time for payment), renewal, amendment, restructuring or restatement
of, and any acceptance of late or partial payments under, the Credit
Agreement, any of the Notes or any other Loan Document or any other
Related Agreement, in whole or in part;
(g) the existence, addition, modification, termination,
reduction or impairment of value, or release of any other guaranty (or
security therefor) of the Borrower's Liabilities (including without
limitation the Guarantor's Obligations of any other Guarantor and
obligations arising under any other Facility Guaranty now or hereafter
in effect);
(h) any waiver of, forbearance or indulgence under, or other
consent to any change in or departure from any term or provision
contained in the Credit Agreement, any other Loan Document or any
other Related Agreement, including without limitation any term
pertaining to the payment or performance of any of the Borrower's
Liabilities, any of the Guarantor's Obligations of any other
Guarantor, or any of the obligations or liabilities of any party to
any other Related Agreement;
(i) any other circumstance whatsoever (with or without notice
to or knowledge of any Guarantor) which may or might in any manner or
to any extent vary the risks of such Guarantor, or might otherwise
constitute a legal or equitable defense available to, or discharge of,
a surety or a guarantor, including without limitation any right to
require or
J-3
125
claim that resort be had to the Borrower or any other Credit Party or
to any collateral in respect of the Borrower's Liabilities or
Guarantors' Obligations, whether arising under North Carolina General
Statutes Sections 26-7 and 26-9 or otherwise.
It is the express purpose and intent of the parties hereto that this Guaranty
Agreement and the Guarantors' Obligations hereunder shall be absolute and
unconditional under any and all circumstances and shall not be discharged
except by payment as herein provided.
4. CURRENCY AND FUNDS OF PAYMENT. All Guarantors' Obligations will be
paid in lawful currency of the United States of America and in immediately
available funds, regardless of any law, regulation or decree now or hereafter
in effect that might in any manner affect the Borrower's Liabilities, or the
rights of any Secured Party with respect thereto as against the Borrower, or
cause or permit to be invoked any alteration in the time, amount or manner of
payment by the Borrower of any or all of the Borrower's Liabilities.
5. EVENTS OF DEFAULT. Without limiting the provisions of Section 2
hereof, in the event that there shall occur and be continuing an Event of
Default, then notwithstanding any collateral or other security or credit
support for the Borrower's Liabilities, at the Agent's election and without
notice thereof or demand therefor, the Guarantors' Obligations shall
immediately be and become due and payable.
6. SUBORDINATION. Until this Guaranty Agreement is terminated in
accordance with Section 23 hereof, each Guarantor hereby subordinates all
present and future debts, liabilities or obligations now or hereafter owing to
such Guarantor (i) of the Borrower, to the payment in full of the Borrower's
Liabilities, (ii) of every other Guarantor (an "obligated guarantor"), to the
payment in full of the Guarantors' Obligations of such obligated guarantor, and
(iii) of each other Person now or hereafter constituting a Credit Party, to the
payment in full of the obligations of such Credit Party owing to any Secured
Party and arising under the Loan Documents; provided, however, that each
Guarantor may make payments in the ordinary course of business so long as no
Default or Event of Default has occurred. All amounts due under such
subordinated debts, liabilities, or obligations shall, upon the occurrence and
during the continuance of an Event of Default, be collected and, upon request
by the Agent, paid over forthwith to the Agent for the benefit of the Secured
Parties on account of the Borrower's Liabilities, the Guarantors' Obligations,
or such other obligations, as applicable, and, after such request and pending
such payment, shall be held by such Guarantor as agent and bailee of the
Secured Parties separate and apart from all other funds, property and accounts
of such Guarantor.
7. SUITS. Each Guarantor from time to time shall pay to the Agent for
the benefit of the Secured Parties, on demand, at the Agent's place of business
set forth in the Credit Agreement or such other address as the Agent shall give
notice of to such Guarantor, the Guarantors' Obligations as they become or are
declared due, and in the event such payment is not made forthwith, The Agent
may proceed to suit against any one or more or all of the Guarantors. At the
Agent's election, one or more and successive or concurrent suits may be brought
hereon by the Agent against any one or
J-4
126
more or all of the Guarantors, whether or not suit has been commenced against
the Borrower, any other Guarantor, or any other Person and whether or not the
Secured Parties have taken or failed to take any other action to collect all or
any portion of the Borrower's Liabilities or have taken or failed to take any
actions against any collateral securing payment or performance of all or any
portion of the Borrower's Liabilities, and irrespective of any event,
occurrence, or condition described in Section 3 hereof
8. SET-OFF AND WAIVER. Each Guarantor waives any right to assert
against any Secured Party as a defense, counterclaim, set-off or cross claim,
any defense (legal or equitable) or other claim which such Guarantor may now or
at any time hereafter have against the Borrower or the Secured Parties without
waiving any additional defenses, set-offs, counterclaims or other claims
otherwise available to such Guarantor. Each Guarantor agrees that each Secured
Party shall have a lien for all the Guarantor's Obligations upon all deposits
or deposit accounts, of any kind, or any interest in any deposits or deposit
accounts, now or hereafter pledged, mortgaged, transferred or assigned to such
Secured Party or otherwise in the possession or control of such Secured Party
for any purpose (other than solely for safekeeping) for the account or benefit
of such Guarantor, including any balance of any deposit account or of any
credit of such Guarantor with the Secured Party, whether now existing or
hereafter established, and hereby authorizes each Secured Party from and after
the occurrence of an Event of Default at any time or times with or without
prior notice to apply such balances or any part thereof to such of the
Guarantor's Obligations to the Secured Parties then due and in such amounts as
provided for in the Credit Agreement or otherwise as they may elect. For the
purposes of this Section 8, all remittances and property shall be deemed to be
in the possession of a Secured Party as soon as the same may be put in transit
to it by mail or carrier or by other bailee.
9. WAIVER OF NOTICE: SUBROGATION.
(a) Each Guarantor hereby waives to the extent permitted by law
notice of the following events or occurrences: (i) acceptance of this Guaranty
Agreement; (ii) the Lenders' heretofore, now or from time to time hereafter
making Loans and issuing Letters of Credit and otherwise loaning monies or
giving or extending credit to or for the benefit of the Borrower, whether
pursuant to the Credit Agreement or the Notes or any other Loan Document or
Related Agreement or any amendments, modifications, or supplements thereto, or
replacements or extensions thereof; (iii) presentment, demand, default,
non-payment, partial payment and protest; and (iv) any other event, condition,
or occurrence described in Section 3 hereof. Each Guarantor agrees that each
Secured Party may heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as each Secured
Party, in its sole and absolute discretion, deems advisable, without in any way
or respect impairing, affecting, reducing or releasing such Guarantor from its
Guarantor's Obligations, and each Guarantor hereby consents to each and all of
the foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by
such Guarantor of its Guarantor's Obligations under this Guaranty Agreement may
be enforced by the Agent on behalf
J-5
127
of the Secured Parties upon demand by the Agent to such Guarantor without the
Agent being required, such Guarantor expressly waiving to the extent permitted
by law any right it may have to require the Agent, to (i) prosecute collection
or seek to enforce or resort to any remedies against the Borrower or any other
Guarantor or any other guarantor of the Borrower's Liabilities, or (ii) seek to
enforce or resort to any remedies with respect to any security interests, Liens
or encumbrances granted to the Agent or any Lender or other party to a Related
Agreement by the Borrower, any other Guarantor or any other Person on account
of the Borrower's Liabilities or any guaranty thereof, IT BEING EXPRESSLY
UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY SUCH GUARANTOR THAT DEMAND UNDER THIS
GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE PROVISIONS HEREOF ENFORCED
BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS
CONTINUING UNDER THE CREDIT AGREEMENT.
(c) Each Guarantor further agrees with respect to this Guaranty
Agreement that it shall have no right of subrogation, reimbursement,
contribution or indemnity, nor any right of recourse to security for the
Borrower's Liabilities unless and until 93 days immediately following the
Facility Termination Date shall have elapsed without the filing or
commencement, by or against any Credit Party, of any state or federal action,
suit, petition or proceeding seeking any reorganization, liquidation or other
relief or arrangement in respect of creditors of, or the appointment of a
receiver, liquidator, trustee or conservator in respect to, such Credit Party
or its assets. This waiver is expressly intended to prevent the existence of
any claim within the meaning of Section 101 of the Bankruptcy Code in respect
to such subrogation, reimbursement, contribution or indemnity by any Guarantor
against the estate of any other Credit Party, in the event of a subsequent case
involving any other Credit Party. If an amount shall be paid to any Guarantor
on account of such rights at any time prior to termination of this Guaranty
Agreement in accordance with the provisions of Section 23 hereof, such amount
shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Agent, for the benefit of the Secured Parties, to be
credited and applied upon the Guarantors' Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement or otherwise as
the Secured Parties may elect. The agreements in this subsection shall survive
repayment of all of the Guarantors' Obligations, the termination or expiration
of this Guaranty Agreement in any manner, including but not limited to
termination in accordance with Section 23 hereof, and occurrence of the
Facility Termination Date.
10. EFFECTIVENESS: ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date first above written and shall continue in full force
and effect until termination in accordance with Section 23 hereof. Any claim or
claims that the Secured Parties may at any time hereafter have against a
Guarantor under this Guaranty Agreement may be asserted by the Agent on behalf
of the Secured Parties by written notice directed to such Guarantor in
accordance with Section 25 hereof
11. REPRESENTATIONS AND WARRANTIES. Each Guarantor warrants and
represents to the Agent, for the benefit of the Secured Parties, that it is
duly authorized to execute, deliver and perform this Guaranty Agreement; that
this Guaranty Agreement has been duly executed and delivered on behalf of such
Guarantor by its duly authorized representatives; that this Guaranty
J-6
128
Agreement is legal, valid, binding and enforceable against such Guarantor in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles; and that such Guarantor's execution, delivery and performance of
this Guaranty Agreement do not violate or constitute a breach of any of its
Operating Documents or Organizational Documents, any agreement or instrument to
which such Guarantor is a party, or any law, order, regulation. decree or award
of any governmental authority or arbitral body to which it or its properties or
operations is subject.
12. EXPENSES Each Guarantor agrees to be jointly and severally liable
for the payment of all reasonable fees and expenses, including attorneys' fees,
incurred by any Secured Party in connection with the enforcement of this
Guaranty Agreement whether or not suit be brought.
13. REINSTATEMENT. Each Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any
time payment received by any Secured Party in respect of any Borrower's
Liabilities is rescinded or must be restored for any reason or is repaid in
whole or in part in good faith settlement of upending or threatened avoidance
claim.
14. ATTORNEY-IN-FACT To the extent permitted by law, each Guarantor
hereby appoints the Agent, for the benefit of the Secured Parties, as such
Guarantor's attorney-in-fact for the purposes of carrying out the provisions of
this Guaranty Agreement and making any action and executing any instrument
which the Agent may deem necessary or advisable to accomplish the purposes
hereof, which appointment is coupled with an interest and is irrevocable;
provided that the Agent shall have and may exercise rights under this power of
attorney only upon the occurrence and during the continuance of an Event of
Default.
15. RELIANCE. Each Guarantor represents and warrants to the Agent,
for the benefit of the Secured Parties, that: (a) such Guarantor has adequate
means to obtain on a continuing basis (i) from the Borrower, information
concerning the Borrower and the Borrower's financial condition and affairs and
(ii) from other reliable sources, such other information as it deems material
in deciding to provide this Guaranty Agreement ("Other Information"), and has
full and complete access to the Borrower's books and records and to such Other
Information; (b) such Guarantor is not relying on any Secured Party or its or
their employees, directors, agents or other representatives or affiliates, to
provide any such information, now or in the future: (c) such Guarantor has been
furnished with and reviewed the terms of the Credit Agreement and such other
Loan Documents as it has requested, is executing this Guaranty Agreement freely
and deliberately, and understands the obligations and financial risk undertaken
by providing this Guaranty Agreement; (d) such Guarantor has relied solely on
the Guarantor's own independent investigation, appraisal and analysis of the
Borrower, the Borrower's financial condition and affairs, the "Other
Information", and such other matters as it deems material in deciding to
provide this Guaranty Agreement and is fully aware of the same; and (e) such
Guarantor has not depended or relied on any Secured Party or its or their
employees. directors, agents or other representatives or affiliates, for any
information whatsoever concerning the Borrower or the Borrower's financial
condition and affairs or any other matters material to such
J-7
129
Guarantor's decision to provide this Guaranty Agreement or for any counseling,
guidance, or special consideration or any promise therefor with respect to such
decision. Each Guarantor agrees that no Secured Party has any duty or
responsibility whatsoever, now or in the future, to provide to such Guarantor
any information concerning the Borrower or the Borrower's financial condition
and affairs, or any Other Information, other than as expressly provided herein,
and that, if such Guarantor receives any such information from any Secured
Party or its or their employees, directors, agents or other representatives or
affiliates, such Guarantor will independently verify the information and will
not rely on any Secured Party or its or their employees, directors, agents or
other representatives or affiliates, with respect to such information.
16. RULES OF INTERPRETATION. The rules of interpretation contained in
Sections 1.2(c) through 1.2(l) of the Credit Agreement shall be applicable to
this Guaranty Agreement and are hereby incorporated by reference. All
representations and warranties contained herein shall survive the delivery of
documents and any extension of credit referred to herein or guaranteed hereby.
17. ENTIRE AGREEMENT. This Guaranty Agreement, together with the
Credit Agreement and other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements, understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Except as provided in Section 23, neither this Guaranty Agreement nor
any portion or provision hereof may be changed, altered, modified,
supplemented, discharged, canceled, terminated, or amended orally or in any
manner other than as provided in the Credit Agreement.
18. BINDING AGREEMENT; ASSIGNMENT. This Guaranty Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and to their respective heirs, legal
representatives, successors and assigns; provided, however, that no Guarantor
shall be permitted to assign any of its rights, powers, duties or obligations
under this Guaranty Agreement or any other interest herein without the prior
written consent of the Agent. Without limiting the generality of the foregoing
sentence of this Section 18, any Lender may assign to one or more Persons, or
grant to one or more Persons participations in or to, all or any part of its
rights and obligations under the Credit Agreement (to the extent permitted by
the Credit Agreement); and to the extent of any such assignment or
participation such other Person shall, to the fullest extent permitted by law,
thereupon become vested with all the benefits in respect thereof granted to
such Lender herein or otherwise, subject however, to the provisions of the
Credit Agreement, including Article XII thereof (concerning the Agent) and
Section 13.1 thereof concerning assignments and participations. All references
herein to the Agent shall include any successor thereof.
19. SWAP AGREEMENTS. All obligations of the Borrower under Swap
Agreements to which any Lender or its affiliates are a party shall be deemed to
be Borrower's Liabilities, and each Lender or affiliate of a Lender party to
any such Swap Agreement shall be deemed to be a Secured Party hereunder with
respect to such Borrower's Liabilities; provided, however, that such
obligations
J-8
130
shall cease to be Borrower's Liabilities at such time as such Person (or
affiliate of such Person) shall cease to be a "Lender" under the Credit
Agreement.
20. SEVERABILITY. The provisions of this Guaranty Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, but this Guaranty Agreement shall be construed as if such
invalid or unenforceable provision had never been contained herein.
21. COUNTERPARTS. This Guaranty Agreement may be executed in any
number of counterparts each of which when so executed and delivered shall be
deemed an original, and it shall not be necessary in making proof of this
Guaranty Agreement to produce or account for more than one such counterpart
executed by the Guarantor against whom enforcement is sought.
22. INDEMNIFICATION. Without limitation of Section 13.9 of the Credit
Agreement or any other indemnification provision in any Loan Document, each
Guarantor agrees to indemnify and hold harmless each Secured Party and each of
their affiliates and their respective officers, directors, employees, agents,
and advisors (each, an "Indemnified Party') from and against any and all
claims, damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of defense in
connection therewith) the Loan Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans or other
extension of credit under the Loan Documents, except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 22 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by such Guarantor or any
other Credit Party, any of their respective directors, shareholders or
creditors, or an Indemnified Party or any other Person, or any Indemnified
Party is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. Each Guarantor agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract or tort
or otherwise) to it, any of its subsidiaries or affiliates, or any security
holders or creditors thereof arising out of, related to or in connection with
the transactions contemplated herein, except to the extent that such liability
is found in a final non-appealable judgment by a court of competent
jurisdiction to have directly resulted from such Indemnified Party's gross
negligence or willful misconduct. Each Guarantor agrees not to assert any claim
against any Secured Party, any of its affiliates, or any of their directors,
officers, employees, attorneys, agents, or advisers, on any theory of
liability, for special, indirect, consequential, or punitive damages arising
out of or otherwise relating to the Loan Documents, any of the transactions
contemplated therein or the actual or proposed use of the proceeds of the Loans
or other extension of credit under the Loan Documents. The agreements in this
Section 22 shall survive repayment of all of the Guarantors' Obligations and
the termination or expiration of this Guaranty Agreement in
J-9
131
any manner, including but not limited to termination upon occurrence of the
Facility Termination Date.
23. TERMINATION. Subject to reinstatement pursuant to Section 13
hereof, this Guaranty Agreement and all of the Guarantors' Obligations
hereunder (excluding those obligations and liabilities that expressly survive
such termination) shall terminate on the Facility Termination Date.
24. REMEDIES CUMULATIVE: LATE PAYMENTS. All remedies hereunder are
cumulative and are not exclusive of any other rights and remedies of the Agent
or any other Secured Party provided by law or under the Credit Agreement, the
other Loan Documents or other applicable agreements or instruments. The making
of the Loans and other extensions of credit to the Borrower pursuant to the
Credit Agreement shall be conclusively presumed to have been made or extended,
respectively, in reliance upon each Guarantor's guaranty of the Borrower's
Liabilities pursuant to the terms hereof. Any amounts not paid when due under
this Guaranty Agreement shall bear interest at the Default Rate.
25. NOTICES. Any notice required or permitted hereunder shall be
given, (a) with respect to each Guarantor, at the address of the Borrower
indicated in Section 13.2 of the Credit Agreement and (b) with respect to the
Agent or any other Secured Party, at the Agent's address indicated in
Section 13.2 of the Credit Agreement. All such addresses may be modified, and
all such notices shall be given and shall be effective, as provided in
Section 13.2 of the Credit Agreement.
26. Governing Law: Venue: Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF MECKLENBURG, STATE OF NORTH CAROLINA, UNITED STATES OF AMERICA AND,
BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, SUCH GUARANTOR
EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND
ITS PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR
PROCEEDING, AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS GENERALLY
AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING.
J-10
132
(c) EACH GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE
BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED
OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF FOR NOTICES TO
SUCH GUARANTOR IN EFFECT PURSUANT TO SECTION 25 HEREOF, OR BY ANY
OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN
EFFECT IN THE STATE OF NORTH CAROLINA.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) or (c) HEREOF SHALL
PRECLUDE THE AGENT FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE ANY GUARANTOR OR ANY OF SUCH GUARANTOR'S PROPERTY
OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY
ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE
UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, EACH GUARANTOR AND
THE AGENT ON BEHALF OF THE SECURED PARTIES HEREBY AGREE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY
IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT ANY SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION,
SUIT OR PROCEEDING.
(f) EACH GUARANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT
MAY HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED
PURSUANT TO THE TERMS HEREOF IS AN INCONVENIENT FORUM.
[Signature page follows)
J-11
133
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Guaranty Agreement as of the day and year first written above.
GUARANTORS:
insert Name(s) of Guarantor(s)
-------------------------------------
WITNESS:
By:
--------------------------- ----------------------------------
Name:
--------------------------- --------------------------------
Title:
-------------------------------
AGENT:
BANK OF AMERICA, N.A., as Agent for the Lenders
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Signature Page 1 of 1
134
EXHIBIT K
Form of Security Agreement
THIS SECURITY AGREEMENT (this "Security Agreement") is made and entered
into as of ____________, ____________ by INSTEEL INDUSTRIES, INC., a North
Carolina corporation (the "Borrower" and a "Grantor"), and EACH OF THE
UNDERSIGNED SUBSIDIARIES OF THE BORROWER (each a "Guarantor" and a "Grantor",
and collectively with the Borrower, the "Grantors"), and BANK OF AMERICA, N. A.,
a national banking association, as administrative agent (in such capacity, the
"Agent") for each of the lenders (the "Lenders" and collectively with the Agent,
the "Secured Parties") now or hereafter party to the Credit Agreement (as
defined below). All capitalized terms used but not otherwise defined herein or
pursuant to Section 1 hereof shall have the respective meanings assigned thereto
in the Credit Agreement (as defined below).
WITNESSETH:
WHEREAS, the Secured Parties have provided to the Borrower a certain
term loan facility and revolving credit facility with a letter of credit
sublimit and swing line facility pursuant to the Credit Agreement dated as of
January 31, 2000 by and among the Borrower, the Agent and the Lenders (as from
time to time amended, revised, modified, supplemented or amended and restated,
the "Credit Agreement"); and
WHEREAS, as collateral security for payment and performance of its
Obligations, the Borrower is willing to grant to the Agent for the benefit of
the Secured Parties a security interest in all of its personal property and
assets described herein; and
WHEREAS, each Guarantor will materially benefit from the Loans and
Advances to be made, and the Letters of Credit to be issued, under the Credit
Agreement and each Guarantor is a party to a Facility Guaranty pursuant to which
each Guarantor guarantees the Obligations of the Borrower; and
WHEREAS, as collateral security for payment and performance by each
Guarantor of its Guarantor's Obligations (as defined in the Facility Guaranty to
which such Guarantor is a party), each Guarantor is willing to grant to the
Agent for the benefit of the Secured Parties a security interest in all of its
personal property and assets pursuant to the terms of this Security Agreement;
and
WHEREAS, the Secured Parties are unwilling to enter into the Loan
Documents unless the Borrower and the Guarantors enter into this Security
Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into
the Loan Documents and to make Loans and issue Letters of Credit, and in further
consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:
K-1
135
1. CERTAIN DEFINITIONS. Terms used in this Security Agreement,
not otherwise expressly defined herein or in the Credit Agreement, and for which
meanings are provided in the Uniform Commercial Code of the State of North
Carolina (the "UCC"), shall have such meanings. The parties agree that with
respect to terms that describe items or types of Collateral, the parties intend
to and do hereby give effect, upon their respective effective dates, to
revisions to the UCC effective after the date hereof to the extent, but only to
the extent, such revisions either (i) provide meanings of terms not previously
defined as items or types of property or (ii) expand the items of or interests
in property that are included within a previously defined term, with the effect
that each of such terms describing items or types of property shall at all times
be interpreted in its broadest sense. The term "Qualifying Control Agreement"
shall have the meaning set forth on Schedule 1 hereto.
2. GRANT OF SECURITY INTEREST. The Borrower hereby grants as
collateral security for the payment, performance and satisfaction of all of the
Borrower's Obligations, and each Guarantor hereby grants as collateral security
for the payment, performance and satisfaction of all of its Guarantor's
Obligations (as defined in its Facility Guaranty) and the prompt payment and
performance when due of its obligations and liabilities hereunder (collectively,
the "Secured Obligations"), to the Agent for the benefit of the Secured Parties
a continuing first priority security interest in and to, and collaterally
assigns to the Agent for the benefit of the Secured Parties, all of the personal
property of such Grantor or in which such Grantor has or may have or acquire an
interest, whether now owned or existing or hereafter created, acquired or
arising and wheresoever located, including the following:
(a) All accounts, and including accounts receivable,
contracts, bills, acceptances, choses in action, and other forms of
monetary obligations at any time owing to such Grantor arising out of
property sold, leased, licensed, assigned or otherwise disposed of or
for services rendered or to be rendered by such Grantor, and all of
such Grantor's rights with respect to any property represented thereby,
whether or not delivered, property returned by customers and all rights
as an unpaid vendor or lienor, including rights of stoppage in transit
and of recovering possession by proceedings including replevin and
reclamation (collectively referred to hereinafter as "Accounts");
(b) All inventory, including all goods manufactured or
acquired for sale or lease, and any piece goods, raw materials, work in
process and finished merchandise, component materials, and all
supplies, goods, incidentals, office supplies, packaging materials and
any and all items used or consumed in the operation of the business of
such Grantor or which may contribute to the finished product or to the
sale, promotion and shipment thereof, in which such Grantor now or at
any time hereafter may have an interest, whether or not the same is in
transit or in the constructive, actual or exclusive occupancy or
possession of such Grantor or is held by such Grantor or by others for
such Grantor's account (collectively referred to hereinafter as
"Inventory");
(c) All goods, including all machinery, equipment, motor
vehicles, parts, supplies, apparatus, appliances, tools, patterns,
molds, dies, blueprints, fittings, furniture,
K-2
136
furnishings, fixtures and articles of tangible personal property of
every description (collectively referred to hereinafter as
"Equipment");
(d) All general intangibles, including all rights now or
hereafter accruing to such Grantor under contracts, leases, agreements
or other instruments to perform or receive services, to purchase or
sell goods, to hold or use land or facilities, and to enforce all
rights thereunder, all causes of action, corporate or business records,
inventions, designs, goodwill, trade names, trade secrets, trade
processes, licenses, permits, franchises, customer lists, computer
programs and software, all payment intangibles, all claims under
guaranties, tax refund claims, all rights and claims against carriers
and shippers, leases, all claims under insurance policies, all
interests in general and limited partnerships and limited liability
companies, all rights to indemnification and all other intangible
personal property and intellectual property of every kind and nature
(collectively referred to hereinafter as "General Intangibles");
(e) All chattel paper, including tangible chattel paper,
electronic chattel paper, or any hybrid thereof (collectively referred
to hereinafter as "Chattel Paper");
(f) All instruments, including all promissory notes
(collectively referred to hereinafter as "Instruments");
(g) All documents, including warehouse receipts, bills of
lading and other documents of title (collectively referred to
hereinafter as "Documents");
(h) All supporting obligations pertaining to any of the
foregoing, including all letter of credit rights (including rights to
proceeds of letters of credit), and all guaranties and other Contingent
Obligations of any Person (collectively referred to hereinafter as
"Supporting Obligations");
(i) The commercial tort claims identified on Schedule
9(i) hereto, as such Schedule may be supplemented from time to time in
accordance with the terms hereof (collectively referred to hereinafter
as "Commercial Tort Claims");
(j) All books and records relating to any of the forgoing
(including customer data, credit files, ledgers, computer programs,
printouts, and other computer materials and records (and all media on
which such data, files, programs, materials and records are or may be
stored)); and
(k) All proceeds, products and replacements of,
accessions to, and substitutions for, any of the foregoing, including
without limitation proceeds of insurance policies insuring any of the
foregoing.
All of the property and interests in property described in subsections
(a) through (k) are herein collectively referred to as the "Collateral."
K-3
137
3. PERFECTION. At the time of execution of this Security
Agreement, each Grantor shall have:
(a) furnished the Agent with properly executed financing
statements in form, number and substance suitable for filing,
sufficient under applicable law, and satisfactory to the Agent in order
that upon the filing of the same the Agent, for the benefit of the
Secured Parties, shall have a duly perfected security interest in all
Collateral in which a security interest can be perfected by the filing
of financing statements;
(b) to the extent expressly required by the terms hereof or of
the Credit Agreement, or otherwise as the Agent may request, furnished
the Agent with properly executed Qualifying Control Agreements,
registrars' certificates, issuer acknowledgments of the Agent's
interest in letter of credit rights, and evidence of the electronic
identification of the Agent's interest in electronic chattel paper and
of the placement of a restrictive legend on tangible chattel paper, as
appropriate, with respect to Collateral in which either (i) a security
interest can be perfected only by control or such electronic
identification or restrictive legending, or (ii) a security interest
perfected by control or accompanied by such electronic identification
or restrictive legending shall have priority as against a security
interest perfected by Persons not having control or not accompanied by
such electronic identification or restrictive legending, in each case
in form and substance acceptable to the Agent and sufficient under
applicable law so that the Agent, for the benefit of the Secured
Parties, shall have a security interest in all such Collateral
perfected by control; and
(c) to the extent expressly required by the terms hereof or of
the Credit Agreement, or otherwise as the Agent may request, delivered
to the Agent or, if the Agent shall specifically consent in each
instance, an agent or bailee of the Agent who has acknowledged such
status in a properly executed Qualifying Control Agreement possession
of all Collateral with respect to which either a security interest can
be perfected only by possession or a security interest perfected by
possession shall have priority as against Persons not having
possession, and including in the case of Instruments and Documents,
duly executed endorsements or stock powers in blank, as the case may
be, affixed thereto in form and substance acceptable to the Agent and
sufficient under applicable law so that the Agent, for the benefit of
the Secured Parties, shall have a security interest in all such
Collateral perfected by possession;
subject in each case only to Liens allowed to exist and have priority under
Section 10. of the Credit Agreement ("Permitted Liens"). All financing
statements (including all amendments thereto and continuations thereof), control
agreements, certificates, acknowledgments, stock powers and other documents,
electronic identification, restrictive legends, and instruments furnished in
connection with the creation, enforcement, protection, perfection or priority of
the Agent's security interest in Collateral, including such items as are
described above in this Section 3 are sometimes referred to herein as
"Perfection Documents." The delivery of possession of items of or evidencing
Collateral, causing other Persons to execute and deliver Perfection Documents as
appropriate, the filing or recordation of Perfection Documents, and the taking
of such other actions as may be necessary or
K-4
138
advisable in the determination of the Agent to create, enforce, protect,
perfect, or establish or maintain the priority of, the security interest of the
Agent for the benefit of the Secured Parties in the Collateral is sometimes
referred to herein as "Perfection Action."
4. MAINTENANCE OF SECURITY INTEREST; FURTHER ASSURANCES.
(a) Each Grantor will from time to time at its own expense,
deliver specific assignments of Collateral or such other Perfection
Documents, and take such other or additional Perfection Action, as may
be required by the terms of the Loan Documents or as the Agent may
reasonably request in connection with the administration or enforcement
of this Security Agreement or related to the Collateral or any part
thereof in order to carry out the terms of this Security Agreement, to
perfect, protect, maintain the priority of or enforce the Agent's
security interest in the Collateral, subject only to Permitted Liens,
or otherwise to better assure and confirm unto the Agent its rights,
powers and remedies for the benefit of the Secured Parties hereunder.
Without limiting the foregoing, if upon request by the Agent, any
Grantor does not furnish duly executed financing statements to the
Agent, such Grantor hereby irrevocably authorizes the Agent to execute
and file (with, or to the extent permitted by applicable law, without
the signature of the Grantor appearing thereon) financing statements or
other Perfection Documents (including copies thereof) showing such
Grantor as "debtor" at such time or times and in all filing offices as
the Agent may from time to time determine to be necessary or advisable
to perfect or protect the rights of the Agent and the Secured Parties
hereunder, or otherwise to give effect to the transactions herein
contemplated.
(b) With respect to any and all Collateral, each Grantor
agrees to do and cause to be done all things necessary to perfect,
maintain the priority of and keep in full force the security interest
granted in favor of the Agent for the benefit of the Secured Parties,
including, but not limited to, the prompt payment upon demand therefor
by the Agent of all reasonable fees and expenses (including documentary
stamp, excise or intangibles taxes) incurred in connection with the
preparation, delivery, or filing of any Perfection Document or the
taking of any Perfection Action to perfect, protect or enforce a
security interest in Collateral in favor of the Agent for the benefit
of the Secured Parties, subject only to Permitted Liens. All amounts
not so paid when due shall constitute additional Secured Obligations
and (in addition to other rights and remedies resulting from such
nonpayment) shall bear interest from the date of demand until paid in
full at the Default Rate.
(c) Each Grantor agrees to maintain among its books and
records appropriate notations or evidence of, and to make or cause to
be made appropriate disclosure upon its financial statements of, the
security interest granted hereunder to the Agent for the benefit of the
Secured Parties.
5. Receipt of Payment. In the event an Event of Default shall
occur and be continuing and a Grantor (or any of its affiliates, subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Collateral, including without limitation monies, checks, notes,
K-5
139
drafts or any other items of payment, each Grantor shall hold all such items of
payment in trust for the Agent for the benefit of the Secured Parties, and as
the property of the Agent for the benefit of the Secured Parties, separate from
the funds and other property of such Grantor, and no later than the first
Business Day following the receipt thereof, at the election of the Agent, such
Grantor shall cause such Collateral to be forwarded to the Agent for its
custody, possession and disposition on behalf of the Secured Parties in
accordance with the terms hereof and of the other Loan Documents.
6. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) THE AGENT SHALL be under no duty or liability with respect
to the collection, protection or preservation of the Collateral, or
otherwise, except to the extent expressly contemplated under Section
25. Each Grantor shall be responsible for the safekeeping of its
Collateral, and in no event shall the Agent have any responsibility for
(i) any loss or damage thereto or destruction thereof occurring or
arising in any manner or fashion from any cause, (ii) any diminution in
the value thereof, or (iii) any act or default of any carrier,
warehouseman, bailee or forwarding agency thereof or other Person in
any way dealing with or handling such Collateral.
(b) Each Grantor shall keep and maintain its tangible personal
property Collateral in good operating condition and repair, ordinary
wear and tear excepted. No Grantor shall permit any such items to
become a fixture to real property (unless such Grantor has granted the
Agent for the benefit of the Secured Parties a Lien on such real
property having a priority acceptable to the Agent) or accessions to
other personal property.
(c) Each Grantor agrees (i) to pay when due all taxes, charges
and assessments against the Collateral in which has any interest,
unless being contested in good faith by appropriate proceedings
diligently conducted and against which adequate reserves have been
established in accordance with GAAP applied on a Consistent Basis and
evidenced to the satisfaction of the Agent and provided that all
enforcement proceedings in the nature of levy or foreclosure are
effectively stayed, and (ii) to cause to be terminated and released all
Liens (other than Permitted Liens) on the Collateral. Upon the failure
of any Grantor to so pay or contest such taxes, charges, or
assessments, or cause such Liens to be terminated, the Agent at its
option may pay or contest any of them or amounts relating thereto (the
Agent having the sole right to determine the legality or validity and
the amount necessary to discharge such taxes, charges, Liens or
assessments) but shall not have any obligation to make any such payment
or contest. All sums so disbursed by the Agent, including reasonable
attorneys' fees, court costs, expenses and other charges related
thereto, shall be payable on demand by the applicable Grantor to the
Agent and shall be additional Secured Obligations secured by the
Collateral, and any amounts not so paid on demand (in addition to other
rights and remedies resulting from such nonpayment) shall bear interest
from the date of demand until paid in full at the Default Rate.
K-6
140
7. STATUS OF GRANTORS AND COLLATERAL GENERALLY. Each Grantor
represents and warrants to, and covenants with, the Agent for the benefit of the
Secured Parties, with respect to itself and the Collateral as to which it has or
acquires any interest, that:
(a) It is (or as to Collateral acquired after the date hereof
will be upon the acquisition of the same) and, except as permitted by
the Credit Agreement and subsection (b) of this Section 7, will
continue to be, the owner of the Collateral, free and clear of all
Liens, other than the security interest hereunder in favor of the Agent
for the benefit of the Secured Parties and Permitted Liens, and that it
will at its own cost and expense defend such Collateral and any
products and proceeds thereof against all claims and demands of all
Persons (other than holders of Permitted Liens) at any time claiming
the same or any interest therein adverse to the Secured Parties. Upon
the failure of any Grantor to so defend, the Agent may do so at its
option but shall not have any obligation to do so. All sums so
disbursed by the Agent, including reasonable attorneys' fees, court
costs, expenses and other charges related thereto, shall be payable on
demand by the applicable Grantor to the Agent and shall be additional
Secured Obligations secured by the Collateral, and any amounts not so
paid on demand (in addition to other rights and remedies resulting from
such nonpayment) shall bear interest from the date of demand until paid
in full at the Default Rate.
(b) It shall not (i) sell, assign, transfer, lease, license or
otherwise dispose of any of, or grant any option with respect to, the
Collateral, except for dispositions permitted under the Credit
Agreement, (ii) create or suffer to exist any Lien upon or with respect
to any of the Collateral except for the security interests created by
this Security Agreement and Permitted Liens, or (iii) take any other
action in connection with any of the Collateral that would materially
impair the value of the interest or rights of such Grantor in the
Collateral taken as a whole or that would materially impair the
interest or rights of the Agent for the benefit of the Secured Parties.
(c) It has full power, legal right and lawful authority to
enter into this Security Agreement and to perform its terms, including
the grant of the security interests in the Collateral herein provided
for.
(d) No authorization, consent, approval or other action by,
and no notice to or filing with, any Governmental Authority or any
other Person is required either (i) for the grant by such Grantor of
the security interests granted hereby or for the execution, delivery or
performance of this Security Agreement by such Grantor, or (ii) for the
perfection of or the exercise by the Agent, on behalf of the Secured
Parties, of its rights and remedies hereunder, except for action
required by the Uniform Commercial Code to perfect the security
interest conferred hereunder.
(e) No effective financing statement or other Perfection
Document similar in effect, nor any other Perfection Action, covering
all or any part of the Collateral purported to be granted or taken by
or on behalf of such Grantor (or by or on behalf of any other Person
and which remains effective as against all or any part of the
Collateral) has been filed in any
K-7
141
recording office, delivered to another Person for filing (whether upon
the occurrence of a contingency or otherwise), or otherwise taken, as
the case may be, except such as pertain to Permitted Liens and such as
may have been filed for the benefit of, delivered to, or taken in favor
of, the Agent for the benefit of the Secured Parties in connection with
the security interests conferred hereunder.
(f) Schedule 7(f) attached hereto contains true and complete
information as to each of the following: (i) the exact legal name of
each Grantor as it appears in its Organizational Documents as of the
date hereof and at any time during the five (5) year period ending as
of the date hereof (the "Covered Period"), (ii) the jurisdiction of
formation and form of organization of each Grantor, (iii) each address
of the chief executive office of each Grantor as of the date hereof and
at any time during the Covered Period, (iv) all trade names or trade
styles used by such Grantor as of the date hereof and at any time
during the Covered Period, (v) the address of each location of such
Grantor at which any tangible personal property Collateral (including
Account Records and Account Documents) is located at the date hereof or
has been located at any time during the Covered Period, (vi) with
respect to each location described in clause (v) that is not owned
beneficially and of record by such Grantor, the name and address of the
owner thereof; and (vii) the name of each Person other than such
Grantor and the address of such Person at which any tangible personal
property Collateral of such Grantor is held under any warehouse,
consignment, bailment or other arrangement as of the date hereof. No
Grantor shall change its name, change its jurisdiction of formation
(whether by reincorporation, merger or otherwise), change the location
of its chief executive office, utilize any additional location where
tangible personal property Collateral (including Account Records and
Account Documents) may be located, change or use any additional or
different trade name or style, except in each case upon giving not less
than thirty (30) days' prior written notice to the Agent and taking or
causing to be taken at such Grantor's expense all such Perfection
Action, including the delivery of such Perfection Documents, as may be
reasonably requested by the Agent to perfect or protect, or maintain
the perfection and priority of, the Lien of the Agent for the benefit
of the Secured Parties in Collateral contemplated hereunder.
(g) No Grantor shall engage in any consignment transaction in
respect of any of the Collateral, whether as consignee or consignor,
where the aggregate cost of all Collateral held on consignment and as
to which all necessary Perfection Action has not been completed to the
satisfaction of the Agent exceeds $500,000, without the prior written
consent of the Agent in each instance.
(h) No Grantor shall cause, suffer or permit any of the
tangible personal property Collateral having an aggregate cost in
excess of $500,000 (i) to be evidenced by any document of title (except
for shipping documents as necessary or customary to effect the delivery
of inventory to customers in the ordinary course of business) or (ii)
to be in the possession, custody or control of any warehouseman or
other bailee unless there shall have been delivered to the Agent a
Warehouseman's Estoppel Certificate.
K-8
142
(i) Except for a period of ninety days following the date
hereof in the case of Inventory of Florida Wire and Cable, Inc. and its
subsidiaries located in leased premises in ▇▇▇▇▇ County, Florida, Bend
County, Texas and ▇▇▇▇ County, Illinois, no tangible personal property
Collateral is or shall be located at any location that is leased by
such Grantor from any other Person other than Inventory the value of
which, when aggregated with all other Inventory kept at any location
which is leased by all Grantors, is less than $500,000, unless (x) such
location and lessor is set forth on Schedule 7(10 attached hereto or
such Grantor provides not less than thirty (30) days' prior written
notice thereof to the Agent, (y) such lessor acknowledges the Lien in
favor of the Agent for the benefit of the Secured Parties conferred
hereunder and waives its statutory and consensual liens and rights with
respect to such Collateral in form and substance acceptable to the
Agent and delivered in writing to the Agent prior to any Collateral
being located at any such location, and (z) the Grantor shall have
caused at its expense to be prepared and executed such additional
Perfection Documents and to be taken such other Perfection Action as
the Agent may deem necessary or advisable to carry out the transactions
contemplated by this Security Agreement.
(j) Subject to the provision of Section 9(b)(iii) hereof,
Grantor will, immediately upon learning thereof, report to Agent: any
reclamation, return or repossession of goods, any loss or destruction
of, or substantial damage to any of the Collateral and any other
matters affecting the value, enforceability of collectibility of any of
the Collateral.
(k) Notwithstanding any other provision of this Security
Agreement, the aggregate amount of Collateral described in subsections
(g),(h) and (i) of this Section 7 and Section 9(c)(iii) as to which
the Agent does not have a perfected security interest shall not at
anytime exceed $1,000,000.
8. INSPECTION. The Agent (by any of its officers, employees and
agents), on behalf of the Secured Parties, shall have the right upon prior
notice to an executive officer of any Grantor, and at any reasonable times
during such Grantor's usual business hours, to inspect the Collateral, all
records related thereto (and to make extracts or copies from such records), and
the premises upon which any of the Collateral is located, to discuss such
Grantor's affairs and finances with any Person (other than Persons obligated on
any Accounts ("Account Debtors") except as expressly otherwise permitted in the
Loan Documents) and to verify with any Person other than (except as expressly
otherwise permitted in the Loan Documents) Account Debtors the amount, quality,
quantity, value and condition of, or any other matter relating to, the
Collateral and, if an Event of Default has occurred and is continuing, to
discuss such Grantor's affairs and finances with such Grantor's Account Debtors
and to verify the amount, quality, value and condition of, or any other matter
relating to, the Collateral with such Account Debtors. Upon or after the
occurrence and during the continuation of an Event of Default, the Agent may at
any time and from time to time employ and maintain on such Grantor's premises a
custodian selected by the Agent who shall have full authority to do all acts
necessary to protect the Agent's (for the benefit of the Secured Parties)
interest. All expenses incurred by the Agent, on behalf of the Secured Parties,
by reason of the employment of such custodian shall be paid by such Grantor on
demand from time to time and shall be added to the Secured Obligations secured
by the Collateral, and any amounts not so paid on demand (in addition
K-9
143
to other rights and remedies resulting from such nonpayment) shall bear interest
from the date of demand until paid in full at the Default Rate.
9. SPECIFIC COLLATERAL.
(a) ACCOUNTS. With respect to its Accounts whether now
existing or hereafter created or acquired and wheresoever
located, each Grantor represents, warrants and covenants to the
Agent for the benefit of the Secured Parties that:
(i) Each Grantor shall keep accurate and complete
records of its Accounts ("Account Records") and from time to
time at intervals designated by the Agent such Grantor shall
provide the Agent with a schedule of Accounts in form and
substance acceptable to the Agent describing all Accounts
created or acquired by such Grantor ("Schedule of Accounts");
provided, however , that such Grantor's failure to execute and
deliver any such Schedule of Accounts shall not affect or limit
the Agent's security interest or other rights in and to any
Accounts for the benefit of the Secured Parties. If requested by
the Agent, each Grantor shall furnish the Agent with copies of
proof of delivery and other documents relating to the Accounts
so scheduled, including without limitation repayment histories
and present status reports (collectively, "Account Documents")
and such other matter and information relating to the status of
then existing Accounts as the Agent shall request.
(ii) All Account Records and Account Documents are
and shall at all times be located only at such Grantor's current
chief executive office as set forth on Schedule 7(f) attached
hereto, such other locations as are specifically identified on
Schedule 7(f) attached hereto as an "Account Documents
location," or as to which the Grantor has complied with Section
7(f) hereof
(iii) The Accounts are genuine, are in all respects
what they purport to be, are not evidenced by an instrument or
document or, if evidenced by an instrument or document, are only
evidenced by one original instrument or document.
(iv) The Accounts cover bona fide sales and
deliveries of Inventory usually dealt in by such Grantor, or the
rendition by such Grantor of services, to an Account Debtor in
the ordinary course of business.
(v) The amounts of the face value of any Account
shown or reflected on any Schedule of Accounts, invoice
statement, or certificate delivered to the Agent, are actually
owing to such Grantor and are not contingent for any reason; and
there are no setoffs, discounts, allowances, claims,
counterclaims or disputes of any kind or description in an
amount greater than $500,000 in the aggregate, or greater than
$250,000 individually, existing or asserted with respect thereto
and such Grantor has not made any agreement with any Account
Debtor thereunder for any deduction
K-10
144
therefrom, except as may be stated in the Schedule of Accounts
and reflected in the calculation of the face value of each
respective invoice related thereto.
(vi) Except for conditions generally applicable to
such Grantor's industry and markets, there are no facts, events,
or occurrences known to such Grantor pertaining particularly to
any Accounts which are reasonably expected to materially impair
in any way the validity, collectibility or enforcement of
Accounts that would reasonably be likely, in the aggregate, to
be of material economic value, or in the aggregate materially
reduce the amount payable thereunder from the amount of the
invoice face value shown on any Schedule of Accounts, or on any
certificate, contract, invoice or statement delivered to the
Agent with respect thereto.
(vii) The goods or services giving rise thereto are
not, and were not at the time of the sale or performance
thereof, subject to any Lien, claim, encumbrance or security
interest, except those of the Agent for the benefit of Secured
Parties and Permitted Liens.
(viii) In the event any amounts due and owing in excess
of $250,000 individually, or $500,000 in the aggregate amount,
are in dispute between any Account Debtor and a Grantor (which
shall include without limitation any dispute in which an offset
claim or counterclaim may result), such Grantor shall provide
the Agent with written notice thereof as soon as practicable,
explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy.
(b) INVENTORY. With respect to its Inventory whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the Agent for the benefit
of the Secured Parties that:
(i) Each Grantor shall keep accurate and complete
records itemizing and describing the kind, type, location and
quantity of Inventory, its cost, and the daily withdrawals
therefrom and additions thereto, and shall furnish to the Agent
from time to time at reasonable intervals designated by the
Agent, a current schedule of Inventory ("Schedule of Inventory")
based upon its most recent physical inventory and its daily
inventory records. Each Grantor shall conduct a physical
inventory no less frequently than annually, and shall furnish to
the Agent such other documents and reports thereof as the Agent
shall reasonably request with respect to the Inventory.
(ii) All Inventory is and shall at all times be located
only at such Grantor's locations as set forth on Schedule 7F
attached hereto or at such other locations as to which such
Grantor has complied with Section 7(f) hereof. No Grantor shall,
other than in the ordinary course of business in connection with
its sale, lease, license or other permitted disposition, remove
any Inventory having an aggregate value in excess of that stated
in the preceding sentence from such locations.
K-11
145
(iii) If any Account Debtor returns any Inventory to a
Grantor after shipment thereof, and such return generates a
credit in excess of $250,000 on any individual Account or
$500,000 in the aggregate on any Accounts of such Account
Debtor, such Grantor shall notify the Agent in writing of the
same as soon as practicable.
(c) EQUIPMENT. With respect to its Equipment whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the Agent for the benefit
of the Secured Parties that:
(i) The Grantors, as soon as practicable following a
request therefor by the Agent, shall deliver to the Agent any
and all evidence of ownership of any of the Equipment (including
without limitation certificates of title and applications for
title).
(ii) The Grantors shall maintain accurate, itemized
records describing the kind, type, quality, quantity and value
of its Equipment and shall furnish the Agent upon request with a
current schedule containing the foregoing information, but,
other than during the continuance of an Event of Default, not
more often than once per fiscal quarter.
(iii) All Equipment, other than Equipment having a value
of less than $500,000 in the aggregate for all locations, is and
shall at all times be located only at such Grantor's locations
as set forth on Schedule 7(f) attached hereto or at such other
locations as to which such Grantor has complied with Section
7(f) hereof No Grantor shall, other than as expressly permitted
under the Credit Agreement, sell, lease, transfer, dispose of or
remove any Equipment from such locations, except that the
Grantor may temporarily remove equipment for repair or transfer
to another location of the Borrower where the necessary
Perfection Action has been taken with respect to such location
of the Borrower.
(d) SUPPORTING OBLIGATIONS. With respect to its Supporting
Obligations whether now existing or hereafter created or acquired and
wheresoever located, each Grantor represents, warrants and covenants to
the Agent for the benefit of the Secured Parties that:
(i) Each Grantor shall (i) maintain at all times, and
furnish to the Agent from time to time at the Agent's request, a
current list identifying in reasonable detail each Supporting
Obligation relating to any Collateral from a single obligor in
excess of $100,000, and (ii) upon the request of the Agent from
time to time following the occurrence and during the continuance
of any Default or Event of Default, deliver to the Agent the
originals of all documents evidencing or constituting Supporting
Obligations, together with such other documentation (executed as
appropriate by the Grantor) and information as may be necessary
to enable the Agent to realize upon the Supporting Obligations
in accordance with their respective terms or transfer the
K-12
146
Supporting Obligations as may be permitted under the Loan
Documents or by applicable law.
(ii) With respect to each letter of credit that
constitutes a Supporting Obligation and has an aggregate stated
amount available to be drawn in excess of $100,000, each
Grantor shall, at the request of the Agent within thirty (30)
days of the issuance of each such letter of credit, use its best
efforts to cause the issuer thereof to execute and deliver to
the Agent a Qualifying Control Agreement.
(iii) With respect to each transferable letter of credit
that constitutes a Supporting Obligation and has an aggregate
stated amount available to be drawn in excess of $ 100,000, each
Grantor shall, at the Agent's request upon and during the
continuance of any Default or Event of Default, deliver to the
Agent a duly executed, undated transfer form in blank sufficient
in form and substance under the terms of the related letter of
credit to effect, upon completion and delivery to the letter of
credit issuer together with any required fee, the transfer of
such letter of credit to the transferee identified in such form.
Each Grantor hereby expressly authorizes the Agent following the
occurrence and during the continuance of any Event of Default to
complete and tender each such transfer form as transferor in its
own name or in the name, place and stead of the Grantor in order
to effect any such transfer, either to the agent or to another
transferee, as the case may be, in connection with any sale or
other disposition of Collateral or for any other purpose
permitted under the Loan Documents or by applicable law.
(e) CHATTEL PAPER. With respect to its Chattel Paper whether
now existing or hereafter created or acquired and wheresoever located,
each Grantor represents, warrants and covenants to the Agent for the
benefit of the Secured Parties that:
(i) Each Grantor shall at all times retain sole
physical possession of the originals of all Chattel Paper (other
than electronic Chattel Paper); provided. however, that (x)
upon the request of the Agent upon the occurrence and during the
continuance of any Default or Event of Default, such Grantor
shall immediately deliver physical possession of such Chattel
Paper to the Agent or its designee, and (y) in the event that
there shall be created more than one original counterpart of any
document that alone or in conjunction with any other physical or
electronic document constitutes Chattel Paper, then such
counterparts shall be numbered consecutively starting with "1"
and such Grantor shall retain the counterpart numbered "1".
(ii) All counterparts of all Chattel Paper shall
immediately upon the creation or acquisition thereof by any
Grantor be conspicuously legended as follows: "A FIRST PRIORITY
SECURITY INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO BANK
OF AMERICA, N.A., FOR ITSELF AND AS AGENT FOR CERTAIN LENDERS
PURSUANT TO A SECURITY AGREEMENT DATED AS OF ________ AS AMENDED
FROM TIME TO
K-13
147
TIME TO TIME. NO SECURITY INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER
PERSON MAY BE CREATED BY THE TRANSFER OF PHYSICAL POSSESSION OF THIS CHATTEL
PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY OR WITH THE CONSENT OF THE
AFORESAID AGENT AS PROVIDED IN SUCH SECURITY AGREEMENT"; provided, however in
the case of electronic Chattel Paper (including the electronic components of
hybrid Chattel Paper), each Grantor may utilize other means acceptable to the
Agent and sufficient under applicable law to constitute perfection by control in
order to identify the interest of the Agent for the benefit of the Secured
Parties.
(ii) Other than in the ordinary course of business and
in keeping with reasonable and customary practice, no Grantor
shall amend, modify, waive or terminate any provision of, or
fail to exercise promptly and diligently each material right or
remedy conferred under or in connection with, any Chattel Paper,
in any case in such a manner as could reasonably be expected to
materially adversely affect the value of affected Chattel Paper
as collateral.
(f) INSTRUMENTS. With respect to its Instruments whether now
existing or hereafter created or acquired and wheresoever located, each
Grantor represents, warrants and covenants to the Agent for the benefit
of the Secured Parties that:
(i) Each Grantor shall (i) maintain at all times, and
furnish to the Agent from time to time at the Agent's request, a
current list identifying in reasonable detail Instruments of
which such Grantor is the payee or holder and having a face
amount payable in excess of $100,000, and (ii) upon the request
of the Agent from time to time and in any event following the
occurrence and during the continuance of any Default or Event of
Default, deliver to the Agent the originals of all such
Instruments, together with duly executed undated endorsements in
blank affixed thereto and such other documentation and
information as may be necessary to enable the Agent to realize
upon the Instruments in accordance with their respective terms
or transfer the Instruments as may be permitted under the Loan
Documents or by applicable law.
(ii) Other than in the ordinary course of business and
in keeping with reasonable and customary practice, no Grantor
shall amend, modify, waive or terminate any provision of, or
fail to exercise promptly and diligently each material right or
remedy conferred under or in connection with, any Instrument, in
any case in such a manner as could reasonably be expected to
materially adversely affect the value of affected Instrument as
collateral.
(g) Commercial Tort Claims. With respect to its Commercial
Tort Claims whether now existing or hereafter created or acquired and
wheresoever located, each Grantor represents, warrants and covenants to
the Agent for the benefit of the Secured Parties that:
K-14
148
(i) Schedule 9(h) attached hereto contains a true and
complete list of all Commercial Tort Claims in which any Grantor
has an interest and which have been identified by a Grantor as
of the date hereof, and as to which the Pledgor believes in good
faith there exists the possibility of recovery (including by way
of settlement) of monetary relief in excess of $100,000
("Grantor Claims"). Each Grantor shall furnish to the Agent
quarterly, and in any event not later than the respective dates
established in Sections 9.1(a) and 9.1(b) of the Credit
Agreement for the delivery of financial statements, a
certificate of an officer of such Grantor referring to this
Section (h) and (x) identifying all Grantor Claims that are not
then described on Schedule 9(h) attached hereto and stating that
each of such additional Grantor Claims shall be deemed added to
such Schedule 9(h) and shall constitute a Commercial Tort
Claim, a Grantor Claim, and additional Collateral hereunder, and
(y) summarizing the status or disposition of any Grantor Claims
that have been settled, or have been made the subject of any
binding mediation, judicial or arbitral proceeding, or any
judicial or arbitral order on the merits, or that have been
abandoned. With respect to each such additional Grantor Claim,
such Grantor Claim shall be and become part of the Collateral
hereunder from the date such claim is identified to the Agent as
provided above without further action, and (ii) the Agent is
hereby authorized at the expense of the applicable Grantor to
execute and file such additional financing statements or
amendments to previously filed financing statements, and take
such other action as it may deem necessary or advisable, to
perfect the Lien on such additional Grantor Claims conferred
hereunder, and the Grantor shall, if required by applicable law
or otherwise at the request of the Agent, execute and deliver
such Perfection Documents and take such other Perfection Action
as the Agent may determine to be necessary or advisable to
perfect or protect the Lien of the Agent for the benefit of the
Secured Parties in such additional Grantor Claims conferred
hereunder.
10. CASUALTY AND LIABILITY INSURANCE REQUIRED.
(a) Without limiting the provisions pertaining to insurance
contained in any other Loan Document, each Grantor will keep the
Collateral continuously insured against such risks as are customarily
insured against by businesses of like size and type engaged in the same
or similar operations including:
(i) casualty insurance on the Inventory and the
Equipment in an amount not less than the full insurable value
thereof, against loss or damage by theft, fire, lightning and
other hazards ordinarily included under uniform broad form
standard extended coverage policies, limited only as may be
provided in the standard broad form of extended coverage
endorsement at the time in use in the states in which the
Collateral is located;
(ii) comprehensive general liability insurance against
claims for bodily injury, death or property damage occurring
with or about such Collateral (such
K-15
149
coverage to include provisions waiving subrogation against the
Secured Parties), with the Agent and the Lenders as additional
insureds thereunder, in amounts as shall be reasonably
satisfactory to Agent;
(iii) liability insurance with respect to the operation
of its facilities under the workers' compensation laws of the
states in which such Collateral is located, in amounts as shall
be reasonably satisfactory to Agent; and
(iv) business interruption insurance in amounts as shall
be reasonably satisfactory to Agent.
(b) Each insurance policy obtained in satisfaction of the
requirements of Section 10(a):
(i) may be provided by blanket policies now or hereafter
maintained by each or any Grantor or by the Borrower;
(ii) shall be issued by such insurer (or insurers) as
shall be financially responsible, of recognized standing and
reasonably acceptable to the Agent;
(iii) shall be in such form and have such provisions
(including without limitation the loss payable clause, the
waiver of subrogation clause, the deductible amount, if any, and
the standard mortgagee endorsement clause) as are generally
considered standard provisions for the type of insurance
involved and are reasonably acceptable in all respects to the
Agent;
(iv) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer
without at least 30 days' prior written notice to the Agent,
except for non-payment of premium, as to which such policies
shall provide for at least ten (10) days' prior written notice
to the Agent;
(v) without limiting the generality of the foregoing,
all insurance policies where applicable under Section 10(a)(i)
carried on the Collateral shall name the Agent, for the benefit
of the Secured Parties, as loss payee and the Agent and Lenders
as parties insured thereunder in respect of any claim for
payment.
(c) Prior to expiration of any such policy, such Grantor
shall furnish the Agent with evidence satisfactory to the Agent that the
policy or certificate has been renewed or replaced or is no longer
required by this Security Agreement.
(d) Each Grantor hereby makes, constitutes and appoints the
Agent (and all officers, employees or agents designated by the Agent),
for the benefit of the Secured Parties, as such Grantor's true and
lawful attorney (and agent-in-fact) for the purpose of making, settling
and adjusting claims under such policies of insurance, endorsing the
name of such
K-16
150
Grantor on any check, draft, instrument or other item or payment for
the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance,
which appointment is coupled with an interest and is irrevocable;
provide, however, that the powers pursuant to such appointment shall be
exercisable only upon the occurrence and during the continuation of an
Event of Default.
(e) In the event such Grantor shall fail to maintain, or
fail to cause to be maintained, the full insurance coverage required
hereunder or shall fail to keep any of its Collateral in good repair and
good operating condition, the Agent may (but shall be under no
obligation to), without waiving or releasing any Secured Obligation or
Default or Event of Default by such Grantor hereunder, contract for the
required policies of insurance and pay the premiums on the same or make
any required repairs, renewals and replacements; and all sums so
disbursed by Agent, including reasonable attorneys' fees, court costs,
expenses and other charges related thereto, shall be payable on demand
by such Grantor to the Agent, shall be additional Secured Obligations
secured by the Collateral, and (in addition to other rights and remedies
resulting from such nonpayment) shall bear interest from the date of
demand until paid in full at the Default Rate.
(f) Each Grantor agrees that to the extent that it shall
fail to maintain, or fail to cause to be maintained, the full insurance
coverage required by Section 10(a), it shall in the event of any loss or
casualty pay promptly to the Agent, for the benefit of the Secured
Parties, to be held in a separate account for application in accordance
with the provisions of Sections 10(h), such amount as would have been
received as Net Proceeds (as hereinafter defined) by the Agent, for the
benefit of the Secured Parties, under the provisions of Section 10(h)
had such insurance been carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to
the provisions of Sections 10(a)(ii) and 10(a)(iii) shall be applied
by such Grantor toward satisfaction of the claim or liability with
respect to which such insurance proceeds may be paid.
(h) The Net Proceeds of the insurance carried with respect
to the Collateral pursuant to the provisions of Section 10(a)(i)
hereof shall be paid to such Grantor and held by such Grantor in a
separate account and applied, as long as no Event of Default shall have
occurred and be continuing, as follows: after any loss under any such
insurance and payment of the proceeds of such insurance, each Grantor
shall have a period of 30 days after payment of the insurance proceeds
with respect to such loss to elect to either (x) repair or replace the
Collateral so damaged, (y) deliver such Net Proceeds to the Agent, for
the benefit of the Secured Parties, as additional Collateral or (z)
apply such Net Proceeds to the acquisition of tangible assets
constituting Collateral used or useful in the conduct of the business of
such Grantor, subject to the provisions of this Security Agreement. If
such Grantor elects to repair or replace the Collateral so damaged, such
Grantor agrees the Collateral shall be repaired to a condition
substantially similar to or of better quality or higher value than its
condition prior to damage or replaced with Collateral in a condition
substantially similar to or of better quality or higher value than the
condition of the Collateral so replaced prior to damage. At
K-17
151
all times during which an Event of Default shall have occurred and be
continuing, the Agent shall be entitled to receive direct and immediate
payment of the proceeds of such insurance and such Grantor shall take
all action as the Agent may reasonably request to accomplish such
payment. Notwithstanding the foregoing, in the event such Grantor shall
receive any such proceeds, such Grantor shall immediately deliver such
proceeds to such Agent for the benefit of the Secured Parties as
additional Collateral, and pending such delivery shall hold such
proceeds in trust for the benefit of the Secured Parties and keep the
same segregated from its other funds.
(i) "Net Proceeds" when used with respect to any insurance
proceeds shall mean the gross proceeds from such proceeds, award or
other amount, less all taxes, fees and expenses (including attorneys'
fees) incurred in the realization thereof.
(j) In case of any material damage to, destruction or loss
of, or claim or proceeding against, all or any material part of the
Collateral pledged hereunder by a Grantor, such Grantor shall give
prompt notice thereof to the Agent. Each such notice shall describe
generally the nature and extent of such damage, destruction, loss, claim
or proceeding. Subject to Section 10(d), each Grantor is hereby
authorized and empowered to adjust or compromise any loss under any such
insurance other than losses relating to claims made directly against any
Secured Party as to which the insurance described in Section 10(a)(ii)
or (iii) is applicable.
(k) The provisions contained in this Security Agreement
pertaining to insurance shall be cumulative with any additional
provisions imposing additional insurance requirements with respect to
the Collateral or any other property on which a Lien is conferred under
any Security Instrument.
11. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. Upon and after an
Event of Default, the Agent shall have the following rights and remedies on
behalf of the Secured Parties in addition to any rights and remedies set forth
elsewhere in this Security Agreement or the other Loan Documents, all of which
may be exercised with or, if allowed by law, without notice to a Grantor:
(a) All of the rights and remedies of a secured party under
the UCC or under other applicable law, all of which rights and remedies
shall be cumulative, and none of which shall be exclusive, to the extent
permitted by law, in addition to any other rights and remedies contained
in this Security Agreement or any other Loan Document;
(b) The right to foreclose the Liens and security interests
created under this Security Agreement by any available judicial
procedure or without judicial process;
(c) The right to (i) enter upon the premises of a Grantor
through self-help and without judicial process, without first obtaining
a final judgment or giving such Grantor notice or opportunity for a
hearing on the validity of the Agent's claim and without any obligation
to pay rent to such Grantor, or any other place or places where any
Collateral is
K-18
152
located and kept, and remove the Collateral therefrom to the premises of
the Agent or any agent of the Agent, for such time as the Agent may
desire, in order effectively to collect or liquidate the Collateral,
(ii) require such Grantor or any bailee or other agent of such Grantor
to assemble the Collateral and make it available to the Agent at a place
to be designated by the Agent that is reasonably convenient to both
parties, and (iii) notify any or all Persons party to a Qualifying
Control Agreement or who otherwise have possession of or control over
any Collateral of the occurrence of an Event of Default and other
appropriate circumstances, and exercise control over and take possession
or custody of any or all Collateral in the possession, custody or
control of such other Persons;
(d) The right to (i) exercise all of a Grantor's rights and
remedies with respect to the collection of Accounts Chattel Paper,
Instruments, Supporting Obligations and General Intangibles
(collectively, "Payment Collateral"), including the right to demand
payment thereof and enforce payment, by legal proceedings or otherwise;
(ii) settle, adjust, compromise, extend or renew all or any Payment
Collateral or any legal proceedings pertaining thereto; (iii) discharge
and release all or any Payment Collateral; (iv) take control, in any
manner, of any item of payment or proceeds referred to in Section 5
above; (v) prepare, file and sign a Grantor's name on any Proof of Claim
in bankruptcy, notice of Lien, assignment or satisfaction of Lien or
similar document in any action or proceeding adverse to any obligor
under any Payment Collateral or otherwise in connection with any Payment
Collateral; (vi) endorse the name of a Grantor upon any chattel paper,
document, instrument, invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar
document or agreement relating to any Collateral; (vii) use the
information recorded on or contained in any data processing equipment
and computer hardware and software relating to any Collateral to which a
Grantor has access; (viii) open such Grantor's mail and collect any and
all amounts due to such Grantor from any Account Debtors or other
obligor in respect of Payment Collateral; (ix) take over such Grantor's
post office boxes or make other arrangements as the Agent, on behalf of
the Secured Parties, deems necessary to receive such Grantor's mail,
including notifying the post office authorities to change the address
for delivery of such Grantor's mail to such address as the Agent, on
behalf of the Secured Parties, may designate; (x) notify any or all
Account Debtors or other obligor on any Payment Collateral that such
Payment Collateral has been assigned to the Agent for the benefit of the
Secured Parties and that Agent has a security interest therein for the
benefit of the Secured Parties (provided that the Agent may at any time
give such notice to an Account Debtor that is a department, agency or
authority of the United States government); each Grantor hereby agrees
that any such notice, in the Agent's sole discretion, may (but need not)
be sent on such Grantor's stationery, in which event such Grantor shall
co-sign such notice with the Agent; and (xi) do all acts and things and
execute all documents necessary, in Agent's sole discretion, to collect
the Payment Collateral; and
(e) The right to sell all or any Collateral in its then
existing condition, or after any further manufacturing or processing
thereof, at such time or times, at public or private sale or sales, with
such notice as may be required by law, in lots or in bulk, for cash or
on credit, with or without representations and warranties, all as the
Agent, in its sole discretion, may
K-19
153
deem advisable. The Agent shall have the right to conduct such sales on
a Grantor's premises or elsewhere and shall have the right to use a
Grantor's premises without charge for such sales for such time or times
as the Agent may see fit. The Agent may, if it deems it reasonable,
postpone or adjourn any sale of the Collateral from time to time by an
announcement at the time and place of such postponed or adjourned sale,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned. Each Grantor agrees that the Agent has no
obligation to preserve rights to the Collateral against prior parties or
to ▇▇▇▇▇▇▇▇ any Collateral for the benefit of any Person. The Agent for
the benefit of the Secured Parties is hereby granted a license or other
right to use, without charge, each Grantor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any property of a similar nature,
as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral and a Grantor's rights
under any license and any franchise agreement shall inure to the Agent's
benefit. If any of the Collateral shall require repairs, maintenance,
preparation or the like, or is in process or other unfinished state, the
Agent shall have the right, but shall not be obligated, to perform such
repairs, maintenance, preparation, processing or completion of
manufacturing for the purpose of putting the same in such saleable form
as the Agent shall deem appropriate, but the Agent shall have the right
to sell or dispose of the Collateral without such processing and no
Grantor shall have any claim against the Agent for the value that may
have been added to such Collateral with such processing. In addition,
each Grantor agrees that in the event notice is necessary under
applicable law, written notice mailed to such Grantor in the manner
specified herein ten (10) days prior to the date of public sale of any
of the Collateral or prior to the date after which any private sale or
other disposition of the Collateral will be made shall constitute
commercially reasonable notice to such Grantor. All notice is hereby
waived with respect to any of the Collateral which threatens to decline
speedily in value or is of a type customarily sold on a recognized
market. The Agent may purchase all or any part of the Collateral at
public or, if permitted by law, private sale, free from any right of
redemption which is hereby expressly waived by such Grantor and, in lieu
of actual payment of such purchase price, may set off the amount of such
price against the Secured Obligations. Each Grantor recognizes that the
Agent may be unable to effect a public sale of certain of the Collateral
by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Securities Act"), and applicable state law, and
may be otherwise delayed or adversely affected in effecting any sale by
reason of present or future restrictions thereon imposed by governmental
authorities ("Affected Collateral"), and that as a consequence of such
prohibitions and restrictions the Agent may be compelled (i) to resort
to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire Affected
Collateral for their own account, for investment and not with a view to
the distribution or resale thereof, or (ii) to seek regulatory approval
of any proposed sale or sales, or (iii) to limit the amount of Affected
Collateral sold to any Person or group. Each Grantor agrees and
acknowledges that private sales so made may be at prices and upon terms
less favorable to such Grantor than if such Affected Collateral was sold
either at public sales or at private sales not subject to other
regulatory restrictions, and that the Agent has no obligation to delay
the sale of any Affected Collateral for the period of time necessary to
permit the Grantor or any other Person to register or
K-20
154
otherwise qualify them under or exempt them from any applicable
restriction, even if such Grantor or other Person would agree to
register or otherwise qualify or exempt such Affected Collateral so as
to permit a public sale under the Securities Act or applicable state
law. Each Grantor further agrees, to the extent permitted by applicable
law, that the use of private sales made under the foregoing
circumstances to dispose of Affected Collateral shall be deemed to be
dispositions in a commercially reasonable manner. Each Grantor hereby
acknowledges that a ready market may not exist for Affected Collateral
that is not traded on a national securities exchange or quoted on an
automated quotation system.
The net cash proceeds resulting from the collection, liquidation, sale, or other
disposition of the Collateral shall be applied first to the expenses (including
all attorneys' fees) of retaking, holding, storing, processing and preparing for
sale, selling, collecting, liquidating and the like, and then to the
satisfaction of all Secured Obligations in accordance with the terms of Section
11.5 of the Credit Agreement. Each Grantor shall be liable to the Agent, for
the benefit of the Secured Parties, and shall pay to the Agent, for the benefit
of the Secured Parties, on demand any deficiency which may remain after such
sale, disposition, collection or liquidation of the Collateral.
12. ATTORNEY-IN-FACT. Each Grantor hereby appoints the Agent as the
Grantor's attorney-in-fact for the purposes of carrying out the provisions of
this Security Agreement and taking any action and executing any instrument which
the Agent may deem necessary or advisable to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest; provided, that
the Agent shall have and may exercise rights under this power of attorney only
upon the occurrence and during the continuance of an Event of Default. Without
limiting the generality of the foregoing, upon the occurrence and during the
continuance of an Event of Default, the Agent shall have the right and power
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above;
(c) to endorse such Grantor's name on any checks, notes,
drafts or any other payment relating to or constituting proceeds of the
Collateral which comes into the Agent's possession or the Agent's
control, and deposit the same to the account of the Agent, for the
benefit of the Secured Parties, on account and for payment of the
Secured Obligations.
(d) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent, for the benefit of the Secured Parties, with respect to
any of the Collateral; and
K-21
155
(e) to execute, in connection with any sale or other
disposition of Collateral provided for herein, any endorsement,
assignments, or other instruments of conveyance or transfer with respect
thereto.
13. REINSTATEMENT. The granting of a security interest in the
Collateral and the other provisions hereof shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Secured
Obligations is rescinded or must otherwise be returned by any Secured Party or
is repaid in whole or in part in a good faith settlement of a pending or
threatened avoidance claim, whether upon the insolvency, bankruptcy or
reorganization of any Grantor or any other Credit Party or otherwise, all as
though such payment had not been made. The provisions of this Section 13 shall
survive repayment of all of the Secured Obligations and the termination or
expiration of this Security Agreement in any manner, including but not limited
to termination upon occurrence of the Facility Termination Date.
14. CERTAIN WAIVERS BY THE GRANTORS. Each Grantor waives to the
extent permitted by applicable law (a) any right to require any Secured Party or
any other obligee of the Secured Obligations to (x) proceed against any
Person or entity, including without limitation any Credit Party, (y) proceed
against or exhaust any Collateral or other collateral for the Secured
Obligations, or (z) pursue any other remedy in its power; (b) any defense
arising by reason of any disability or other defense of any other Person, or by
reason of the cessation from any cause whatsoever of the liability of any other
Person or entity, (c) any right of subrogation, (d) any right to enforce any
remedy which any Secured Party or any other obligee of the Secured Obligations
now has or may hereafter have against any other Person and any benefit of and
any right to participate in any collateral or security whatsoever now or
hereafter held by the Agent for the benefit of the Secured Parties. Each Grantor
authorizes each Secured Party and each other obligee of the Secured Obligations
without notice (except notice required by applicable law) or demand and without
affecting its liability hereunder or under the Loan Documents from time to time
to: (i) take and hold security, other than the Collateral herein described, for
the payment of such Secured Obligations or any part thereof, and exchange,
enforce, waive and release the Collateral herein described or any part thereof
or any such other security; and (ii) apply such Collateral or other security and
direct the order or manner of sale thereof as such Secured Party or obligee in
its discretion may determine.
The Agent may at any time deliver (without representation, recourse or
warranty) the Collateral or any part thereof to a Grantor and the receipt
thereof by such Grantor shall be a complete and full acquittance for the
Collateral so delivered, and the Agent shall thereafter be discharged from any
liability or responsibility therefor.
15. CONTINUED POWERS. Until the Facility Termination Date shall have
occurred, the power of sale and other rights, powers and remedies granted to the
Agent for the benefit of the Secured Parties hereunder shall continue to exist
and may be exercised by the Agent at any time and from time to time irrespective
of the fact that any of the Secured Obligations or any part thereof may have
become barred by any statute of limitations or that any part of the liability of
any Grantor may have ceased.
K-22
156
16. OTHER RIGHTS. The rights, powers and remedies given to the Agent
for the benefit of the Secured Parties by this Security Agreement shall be in
addition to all rights, powers and remedies given to the Agent or any Secured
Party under any Related Agreement or by virtue of any statute or rule of law.
Any forbearance or failure or delay by the Agent in exercising any right, power
or remedy hereunder shall not be deemed to be a waiver of such right, power or
remedy, and any single or partial exercise of any right, power or remedy
hereunder shall not preclude the further exercise thereof; and every right,
power and remedy of the Secured Parties shall continue in full force and effect
until such right, power or remedy is specifically waived in accordance with the
terms of the Credit Agreement.
17. ANTI-MARSHALING PROVISIONS. The right is hereby given by each
Grantor to the Agent, for the benefit of the Secured Parties, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Agent without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not impair
in any manner the validity of or priority of the Liens and security interests in
the remaining Collateral conferred hereunder, nor release any Grantor from
personal liability for the Secured Obligations. Notwithstanding the existence of
any other security interest in the Collateral held by the Agent, for the benefit
of the Secured Parties, the Agent shall have the right to determine the order in
which any or all of the Collateral shall be subjected to the remedies provided
in this Security Agreement. Each Grantor hereby waives any and all right to
require the marshaling of assets in connection with the exercise of any of the
remedies permitted by applicable law or provided herein or in any Related
Agreement.
18. ENTIRE AGREEMENT. This Security Agreement, together with the
Credit Agreement and other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as contained in the Loan Documents. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. Neither this Security Agreement nor any portion or
provision hereof may be changed, altered, modified, supplemented, discharged,
canceled, terminated, or amended orally or in any manner other than as provided
in the Credit Agreement.
19. THIRD PARTY RELIANCE. Each Grantor hereby consents and agrees
that all issuers of or obligors in respect of any Collateral, and all securities
intermediaries, warehousemen, bailees, public officials and other Persons having
any interest in, possession of, control over or right, privilege, duty or
discretion in respect of, any Collateral shall be entitled to accept the
provisions hereof as conclusive evidence of the right of the Agent, on behalf of
the Secured Parties, to exercise its rights hereunder with respect to the
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by any Grantor or any other Person to any of such
Persons.
20. BINDING AGREEMENT; ASSIGNMENT. This Security Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and to their respective successors and assigns,
except that no Grantor shall be permitted to assign
K-23
157
this Security Agreement or any interest herein or, except as expressly permitted
herein or in the Credit Agreement, in the Collateral or any part thereof, or
otherwise, except as expressly permitted herein or in the Credit Agreement,
pledge, encumber or grant any option with respect to the Collateral or any part
thereof. Without limiting the generality of the foregoing sentence of this
Section 20, any Lender may assign to one or more Persons, or grant to one or
more Persons participations in or to, all or any part of its rights and
obligations under the Credit Agreement (to the extent permitted by the Credit
Agreement); and to the extent of any such assignment or participation such other
Person shall, to the fullest extent permitted by law, thereupon become vested
with all the benefits in respect thereof granted to such Lender herein or
otherwise, subject however, to the provisions of the Credit Agreement, including
Article XII thereof (concerning the Agent) and Section 13.1 thereof (concerning
assignments and participations). All references herein to the Agent and to the
Secured Parties shall include any successor thereof or permitted assignee, and
any other obligees from time to time of the Secured Obligations.
21. SWAP AGREEMENTS. All obligations of each Grantor under or in
respect of Swap Agreements (which are not prohibited under the terms of the
Credit Agreement) to which any Lender or any affiliate of any Lender is a party,
shall be deemed to be Secured Obligations secured hereby, and each Lender or
affiliate of a Lender party to any such Swap Agreement shall be deemed to be a
Secured Party hereunder with respect to such Secured Obligations; provided,
however, that such obligations shall cease to be Secured Obligations at such
time as such Person (or affiliate of such Person) shall cease to he a "Lender"
under the Credit Agreement.
22. SEVERABILITY. The provisions of this Security Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or unenforceability
shall not affect the validity or enforceability of any other provision hereof,
but this Security Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
23. COUNTERPARTS. This Security Agreement may be executed in any
number of counterparts each of which when so executed and delivered shall be
deemed an original, and it shall not be necessary in making proof of this
Security Agreement to produce or account for more than one such counterpart
executed by the Grantor against whom enforcement is sought.
24. TERMINATION. Subject to the provisions of Section 13, this
Security Agreement and all obligations of the Grantors hereunder (excluding
those obligations and liabilities that expressly survive such termination) shall
terminate without delivery of any instrument or performance of any act by any
party on the Facility Termination Date. Upon such termination of this Security
Agreement, the Agent shall, at the request and sole expense of the Grantors,
promptly deliver to the Grantors such termination statements and take such
further actions as the Grantors may reasonably request to terminate of record,
or otherwise to give appropriate notice of the termination of, any Lien
conferred hereunder.
25. INDEMNIFICATION. Without limitation of Section 13.9 of the
Credit Agreement or any other indemnification provision in any Loan Document,
the Grantors agree jointly and severally to
K-24
158
indemnify and hold harmless each Secured Party and each of their affiliates, and
their respective officers, directors, employees, agents, and advisors (each, an
"Indemnified Party"), from and against any and all claims, damages, losses,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of defense in connection therewith) the
Loan Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans or other extension of credit under the
Loan Documents except to the extent such claim, damage, loss, liability, cost,
or expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 25 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by any Grantor or any other Credit Party, any of their respective
directors, shareholders or creditors, or an Indemnified Party or any other
Person, or any Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated. Each Grantor agrees
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to it, any of its subsidiaries or affiliates,
or any security holders or creditors thereof arising out of, related to or in
connection with the transactions contemplated herein or in the other Loan
Documents, except to the extent that such liability is found in a final
non-appealable judgment by a court of competent jurisdiction to have directly
resulted from such Indemnified Party's gross negligence or willful misconduct.
Each Grantor agrees not to assert any claim against any Secured Party, any of
its affiliates, or any of their respective directors, officers, employees,
attorneys, agents, or advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or otherwise
relating to the Loan Documents, any of the transactions contemplated therein or
the actual or proposed use of the proceeds of the Loans or other extensions of
credit under the Loan Documents. The agreements in this Section 25 shall survive
repayment of all of the Secured Obligations and the termination or expiration of
this Security Agreement in any manner, including but not limited to termination
upon occurrence of the Facility Termination Date.
26. NOTICES. Any notice required or permitted hereunder shall be
given (a) with respect to the Borrower, at the address for the giving of notice
then in effect under the Credit Agreement, (b) with respect to any Grantor, at
the address then in effect for the giving of notices to such Grantor under the
Facility Guaranty to which it is a party, and (c) with respect to the Agent or a
Lender, at the Agent's address indicated in Section 13.2 of the Credit
Agreement. All such addresses may be modified, and all such notices shall be
given and shall be effective, as provided in Section 13.2 of the Credit
Agreement.
27. RULES OF INTERPRETATION. The rules of interpretation contained
in Sections 1.2(c) through 1.2(1) of the Credit Agreement shall be applicable
to this Security Agreement and are hereby incorporated by reference. All
representations and warranties contained herein shall survive the delivery of
documents and any extension of credit referred to herein or secured hereby.
28. GOVERNING LAW; WAIVERS.
K-25
159
(a) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE
TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE;
PROVIDED THAT (i) WITH RESPECT TO THOSE INSTANCES IN WHICH THE
APPLICABLE CHOICE OF LAWS RULES OF SUCH STATE, INCLUDING SECTION 9-103
OF THE UCC, REQUIRE THAT THE MANNER OF CREATION OF A SECURITY INTEREST
IN SPECIFIC COLLATERAL OR THE MANNER OR EFFECT OF PERFECTION OR
NONPERFECTION OR THE RULES GOVERNING PRIORITY OF SECURITY INTERESTS ARE
TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION, THEN THE LAWS OF
SUCH OTHER JURISDICTION SHALL GOVERN SUCH MATTERS, AND (ii) IN THOSE
INSTANCES IN WHICH THE LAWS OF THE JURISDICTION IN WHICH COLLATERAL IS
LOCATED GOVERN MATTERS PERTAINING TO THE METHODS AND EFFECT OF REALIZING
ON COLLATERAL, SUCH LAWS SHALL BE GIVEN EFFECT WITH RESPECT TO SUCH
MATTERS.
(b) EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS SECURITY AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY
BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
MECKLENBURG, STATE OF NORTH CAROLINA, UNITED STATES OF AMERICA AND, BY
THE EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE
VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED
IN SECTION 26 OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH CAROLINA.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF
SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
K-26
160
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH
GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY
REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE
UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO THIS SECURITY AGREEMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY
AND HEREBY EXPRESSLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT
OR PROCEEDING.
(f) EACH GRANTOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY
HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO
THE TERMS HEREOF IS AN INCONVENIENT FORUM.
[Signature pages follow]
K-27
161
IN WITNESS WHEREOF, the parties have duly executed this Security
Agreement on the day and year first written above.
GRANTORS
[Insert Name(s) of Grantor(s)]
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Signature Page 1 of 2
162
AGENT:
BANK OF AMERICA, N.A., as Agent for the
Lenders
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Signature Page 2 of 2
163
EXHIBIT L
INTELLECTUAL PROPERTY SECURITY AGREEMENT
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "Agreement") is
made this _____, ___, by EACH OF THE UNDERSIGNED (each a "Grantor" and
collectively the "Grantors") in favor of BANK OF AMERICA, N.A., a national
banking association organized and existing under the laws of the United States,
as Agent (the "Agent") for each of the lenders (the "Lenders" and collectively
with the Agent, the "Secured Parties") now or hereafter party to the Credit
Agreement (as defined below). All capitalized terms used but not otherwise
defined herein shall have the respective meanings assigned thereto in the Credit
Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have provided to Insteel Industries, Inc.
(the "Borrower" and a "Grantor") a certain term loan facility and a revolving
credit facility with a letter of credit sublimit, pursuant to the Credit
Agreement dated as of January 31, 2000 among the Borrower, the Agent and the
Lenders (as from time to time amended, revised, modified, supplemented, or
amended and restated, the "Credit Agreement"); and
WHEREAS, each Grantor will materially benefit from the Loans and
Advances to be made, and the Letters of Credit to be issued, under the Credit
Agreement; and
WHEREAS, each Grantor that is a Subsidiary of the Borrower has entered
or will enter into a Facility Guaranty; and
WHEREAS, as collateral security for payment and performance of the
Obligations (as defined in the Credit Agreement) and the obligations of the
Grantors under the Loan Documents, each Grantor is willing to grant to the Agent
for the benefit of the Secured Parties a security interest in the assets
described herein; and
WHEREAS, pursuant to the terms of the Credit Agreement, each Grantor is
required to enter into this Agreement;
NOW, THEREFORE, in order to induce the Secured Parties to enter into
the Loan Documents and to make Loans and Advances and issue Letters of Credit
and in consideration of the premises and the mutual covenants contained herein,
the parties hereto agree as follows:
1. GRANT OF SECURITY. Each Grantor hereby grants a security
interest in and collaterally assigns to the Agent, for the benefit of the
Secured Parties, all of the following (collectively, the "Collateral"):
164
(a) all of such Grantor's right, title and interest, whether
now owned or hereafter acquired, in and to all United States and
foreign patents and patent applications (including without limitation
the patents and patent applications identified on Schedule I attached
hereto and incorporated herein by reference) and including the right to
recover for all past, present and future infringements thereof and all
reissues, divisions, continuations, continuations-in-part, substitutes,
renewals, and extensions thereof, all improvements thereon, and all
other rights of any kind whatsoever of such Grantor accruing thereunder
or pertaining thereto (collectively, the "Patents");
(b) all of such Grantor's right, title and interest, whether
now owned or hereafter acquired, in and to all United States and
foreign trademarks, trade names, trade dress, service marks, trademark
and service ▇▇▇▇ registrations, and applications for trademark or
service ▇▇▇▇ registration and any renewals thereof (including without
limitation each trademark, trade name, trade dress, registration and
application identified in Schedule II attached hereto and incorporated
herein by reference) and including all income, royalties, damages and
payments now and hereafter due and/or payable with respect thereto
(including without limitation damages for past or future infringements
thereof), the right to ▇▇▇ or otherwise recover for all past, present
and future infringements thereof, all rights corresponding thereto
throughout the world (but only such rights as now exist or may come to
exist under applicable local law) and all other rights of any kind
whatsoever of each Grantor accruing thereunder or pertaining thereto,
together in each case with the goodwill of the business connected with
the use of, and symbolized by, each such trademark and service ▇▇▇▇
(collectively, the "Trademarks");
(c) all of such Grantor's right, title and interest, whether
now owned or hereafter acquired, in and to all United States and
foreign copyrights and copyright applications (including without
limitation the copyrights and copyright applications identified on
Schedule III attached hereto and incorporated herein by reference) and
including the right to recover for all past, present and future
infringements thereof and all reissues, divisions, continuations,
continuations-in-part, substitutes, renewals, and extensions thereof,
all improvements thereon, and all other rights of any kind whatsoever
of such Grantor accruing thereunder or pertaining thereto
(collectively, the "Copyrights");
(d) all license agreements regarding Patents, Trademarks or
Copyrights with any other party, whether such Grantor is a licensor or
licensee under any such license agreement (including without limitation
the licenses listed on Schedule IV attached hereto and incorporated
herein by reference), and the right to prepare for sale, sell and
advertise for sale, all Inventory (as defined in the Security
Agreement) now or hereafter owned by such Grantor and now or hereafter
covered by such licenses (collectively, the "Licenses")); and
(e) all proceeds of any of the foregoing.
In addition, each Grantor has executed in blank and delivered to the
Agent an assignment of licenses and federally registered patents, trademarks and
copyrights (the "IP Assignment") owned
L-2
165
by it in the form of Exhibit A hereto. Each Grantor hereby authorizes the Agent
to complete as Assignee and record with the United States Patent and Trademark
Office (the "Patent and Trademark Office") and the United States Copyright
Office (the "Copyright Office") each IP Assignment upon the occurrence of an
Event of Default that is continuing at the time of filing.
2. SECURITY FOR OBLIGATIONS. The security interests granted under
this Agreement (the "Security Interests") by each Grantor secure the payment of
all Obligations (as defined in the Credit Agreement) and all obligations of such
Grantor under, in respect of or in connection with this Agreement, the Facility
Guaranty and each other Loan Document to which such Grantor is or becomes a
party (all such Obligations and other obligations being referred to collectively
as the "Secured Obligations").
The Security Interests granted by this Agreement are granted in
conjunction with the security interests granted to the Agent, for the benefit of
the Secured Parties, in other assets of each Grantor pursuant to the other Loan
Documents.
3. COLLATERAL ASSIGNMENT. In addition to, and not in limitation
of, the grant of the Security Interests in the Patents, Trademarks, Copyrights
and Licenses in Section I above, each Grantor hereby grants, assigns, transfers,
conveys and sets over to the Agent, for the benefit of the Secured Parties, the
Grantor's entire right, title and interest in and to the Patents, Trademarks,
Copyrights and Licenses; provided, that such grant, assignment, transfer and
conveyance shall become effective only at the election of the Agent after the
occurrence of an Event of Default that is continuing at the time of such
election. Each Grantor hereby agrees that after the effectiveness of such grant,
assignment, transfer and conveyance of any of the Patents, Trademarks,
Copyrights and License, the use by the Agent of any of such Patents, Trademarks,
Copyrights and Licenses shall be without any liability for royalties or other
related charges from the Agent to any Grantor.
4. FURTHER ASSURANCES.
(a) Each Grantor agrees that from time to time, at the expense
of such Grantor, such Grantor will promptly execute and deliver all
further instruments and documents and take all further action that may
be necessary or desirable in the Agent's determination, or that the
Agent may reasonably request, in order to (i) continue, perfect and
protect any Security Interest granted or purported to be granted
hereby, (ii) perfect the Agent's (for the benefit of the Secured
Parties) Security Interest in and assign to the Agent, for the benefit
of the Secured Parties, as security for the repayment and satisfaction
of the Secured Obligations, all Collateral located in any foreign
jurisdiction, and (iii) enable the Agent, for the benefit of the
Lenders, to exercise and enforce its rights and remedies hereunder
with respect to any part of the Collateral. Without limiting the
generality of the foregoing, each Grantor will execute and file (with
the appropriate governmental offices, authorities, agencies and
regulatory bodies in the United States and any applicable foreign
jurisdiction) such supplements to this Agreement and such financing or
continuation statements, or amendments thereto, and such other
instruments or notices, including executed IP Assignments, with the
Patent and Trademark Office and the Copyright Office, as may be
L-3
166
necessary or desirable, or as the Agent, on behalf of the Secured Parties, may
reasonably request, in order to perfect and preserve the Security Interests
granted hereby.
(b) Each Grantor hereby authorizes the Agent, on behalf of the Secured
Parties, upon the occurrence and during the continuation of an Event of Default,
to file, where permitted by law, one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of such Grantor. A carbon, photographic or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Each Grantor will furnish to the Agent, on behalf of the Secured
Parties, from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Agent, on behalf of the Secured Parties, may reasonably
request, all in reasonable detail.
(d) Each Grantor agrees that, should it have or obtain an ownership
interest in any United States or foreign patent or patent application that is
not now identified on Schedule I, any trademark or trademark application that is
not now identified on Schedule II or any copyright or copyright application that
is not now identified on Schedule III or any license agreement in respect of any
patent, trademark or copyright that is not now identified on Schedule IV: (i)
the provisions of this Agreement shall automatically apply to such item, and
such item shall automatically become part of the Collateral; (ii) such Grantor
shall, within three months after acquiring or becoming aware of such ownership
interest, (A) give written notice thereof to the Agent, (B) with respect to
Trademarks and Patents, cause such Trademarks and Patents to be properly
registered with the Patent and Trademark Office, (C) with respect to Copyrights,
cause such Copyrights to be registered with the Copyright Office and (D) with
respect to Patents, Trademarks, Copyrights and Licenses, prepare, execute and
file in the Patent and Trademark Office, the Copyright Office or in the
equivalent agencies in any foreign jurisdiction, within the requisite time
period, all documents that are known by such Grantor to be necessary or that the
Agent, on behalf of the Secured Parties, reasonably requests in order to perfect
the Security Interest of the Agent, on behalf of the Secured Parties, therein.
Each Grantor authorizes the Agent, on behalf of the Secured Parties, to execute
and file such a document in the name of such Grantor if such Grantor fails to do
so.
(e) Each Grantor agrees that should any of its Subsidiaries (other
than a corporation which is a party hereto and whether now or hereafter
existing) obtain any ownership interest in any United States or foreign
intellectual property of a nature that would be Collateral hereunder if owned by
such Grantor, such Grantor shall either cause such corporation (i) to become a
party hereto and a party to a Facility Guaranty and other Security Instruments
in accordance with Section 9.20 of the Credit Agreement, or (ii) to transfer and
assign all such corporation's ownership interests therein to such Grantor,
whereupon the provisions of subsection (d) of this Section 4 shall be applicable
thereto.
L-4
167
(f) Each Grantor agrees: (i) to take all necessary steps in any
proceeding before the Patent and Trademark Office, the Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof or in any court, to maintain and pursue each patent application now or
hereafter included in the Collateral and to maintain each patent, trademark or
copyright now or hereafter included in the Collateral, including the filing of
divisional, continuation, continuation-in-part and substitute applications, the
filing of applications for reissue, renewal or extensions, the payment of
maintenance fees, and the participation in interference, reexamination,
opposition and infringement proceedings; (ii) to take corresponding steps with
respect to material unpatented inventions on which such Grantor is now or
hereafter becomes entitled to seek protection; (iii) to bear any expenses
incurred in connection with such activities; and (iv) not to abandon any right
to file a material patent application, or abandon any material pending
application with respect to any of the Collateral, without the prior written
consent of the Agent.
(g) No Grantor shall do any act or omit to do any act whereby any of
the Collateral may become dedicated or abandoned, except where such dedication
or abandonment (i) will not materially adversely affect the business, condition
(financial or otherwise), operations, performance, or properties of such Grantor
individually or of such Grantor and its Subsidiaries taken as a whole, and (ii)
is in the ordinary course of such Grantor's business. Each Grantor agrees to
notify the Agent promptly and in writing if it learns that any of the Collateral
may become abandoned or dedicated or of any adverse determination or any
development (including without limitation the institution of any proceeding in
the Patent and Trademark Office, the Copyright Office or in the equivalent
agencies in any foreign jurisdiction, or any court) regarding any material part
of the Collateral.
(h) Each Grantor agrees that in the event that any of the Collateral
as to which it has granted the Security Interests is infringed or
misappropriated by a third party, such Grantor shall promptly notify the Agent
and shall take all reasonable steps to terminate the infringement or
misappropriation, and take such other actions as such Grantor shall deem
appropriate under the circumstances to protect such Collateral. Any expense
incurred in connection with such activities shall be borne by such Grantor.
(i) Each Grantor agrees to maintain the quality of any and all
products in connection with which the Collateral is used, consistent with the
quality standards established by such Grantor for said products as of the date
of determination.
(j) Each Grantor agrees that it will promptly correct any defect or
error that may be discovered in this Agreement, any document executed pursuant
hereto or the execution, acknowledgment or recordation thereof.
(k) Each Grantor shall continue to ▇▇▇▇ its products according to
statute with the numbers of all appropriate Patents.
L-5
168
5. GENERAL REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) It has the unqualified right to enter into this Agreement
and to perform its terms.
(b) No authorization, consent, approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body or any other Person is required either (i) for the
grant by such Grantor of the Security Interests granted hereby
(excluding such licenses which, by their terms, required the consent of
the licensor to assign the license but as to which such Grantor
represents and warrants such consent has been made in writing, copies
of which have been delivered to the Secured Parties) or for the
execution, delivery or performance of this Agreement by such Grantor,
or (ii) for the perfection of or the exercise by the Agent, on behalf
of the Secured Parties, of its rights and remedies hereunder, except
for the filing of this Agreement with the Patent and Trademark Office,
the Copyright Office and with the equivalent offices in any foreign
jurisdiction with respect to each Trademark, and the filings required
by the Uniform Commercial Code of the State in which such Grantor
maintains its chief executive office, and except to the extent that the
exercise of rights and remedies may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors rights generally or by general principles of
equity.
(c) Set forth on Schedule IV is a list, which is complete and
accurate in all material respects as of the date hereof, of Licenses of
such Grantor necessary for the conduct of its business as currently
conducted or utilized and material in such Grantor's operations or
materially used in the selling or marketing of such Grantor's products,
including the expiration date of such Licenses.
(d) Each License of such Grantor identified on Schedule IV is
validly subsisting and has not been adjudged invalid or unenforceable,
in whole or in part, and is, to such Grantor's knowledge, valid and
enforceable. No action or proceeding is pending or threatened seeking
to limit, cancel or question the validity of Collateral.
(e) It has notified the Agent in writing of all uses of any
Patent, Trademark or Copyright, prior to such Grantor's use, of which
such Grantor is aware, which would in the reasonable judgment of such
Grantor lead to such item becoming invalid or unenforceable, including
prior unauthorized uses by third parties and uses that were not
supported by the goodwill of the business connected with such item.
(f) It has not granted any release, covenant not to ▇▇▇, or
non-assertion assurance to any third person, nor allowed any shop right
to arise with respect to any third person, with respect to any part of
the Collateral.
L-6
169
(g) Its products have been marked as required by statute with
respect to the Collateral.
(h) The actions contemplated under or in connection with the
Loan Documents will not impair the legal right of such Grantor to use
any of the Collateral.
(i) Except as disclosed to the Lenders in writing prior to the
date of this Agreement, such Grantor has no knowledge of the existence
of any right under any patent, trademark, license agreement, trade
name, trade secret, know-how, confidential research, development and
commercial information, or other proprietary information held by any
other Person that would preclude such Grantor from publishing,
distributing, marketing, selling, or using any product currently made
by it, being made for it or sold or used by it, imported by it or
exported by it, as the case may be, or to use any processes currently
used by it (except, in each case, to the extent that such Grantor has
granted an exclusive license to another Person), or materially
interfere with the ability of such Grantor to carry on its business as
currently carried on, and such Grantor has no knowledge of any claim to
the contrary that is likely to be made.
(j) Such Grantor has used consistent standards of quality in
manufacturing, distribution and marketing of each product sold and
provision of each service provided under any Collateral, and has taken
all steps necessary to ensure that all licensed users of any Collateral
use such consistent standards of quality.
(k) None of such Grantor's Subsidiaries (except to the extent
that such Subsidiaries are also Grantors hereunder or grantors under
any other Security Instrument relating to such property) has an
ownership interest in any patents, patent applications, copyrights,
copyright applications, trademark, trade name, trade dress, service
marks, trademark or service ▇▇▇▇ registrations or any applications for
trademark or service ▇▇▇▇ registration or any other intellectual
property of a nature that would be Collateral hereunder if owned by
such Grantor.
(l). No claim has been made (and, as to Collateral with
respect to which such Grantor is a licensor, to the knowledge of such
Grantor, no claim has been made against the third party licensee), and
such Grantor has no knowledge of any claim that is likely to be made,
that the use by such Grantor of any Collateral does or may violate the
rights of any Person.
6. PATENT REPRESENTATIONS AND WARRANTIES. Each Grantor represents
and warrants as follows:
(a) It is the sole legal and beneficial owner of the Patents
set forth opposite its name on Schedule 1 hereto, free and clear of any
Lien, security interest, option, charge, pledge, assignment (whether
conditional or not), or any other encumbrance except for the security
interests created or permitted by this Agreement or the Credit
Agreement and certain
L-7
170
Licenses and registered user agreements described on Schedule IV and no
financing statement or other instrument similar in effect covering all
or any part of such Collateral is on file in any recording office,
except such as may have been filed in favor of the Agent, for the
benefit of the Secured Parties.
(b) Set forth on Schedule I is a list of all of the Patents
owned by such Grantor necessary for the conduct of its business as
currently conducted or utilized in such Grantor's operations or used in
the selling or marketing of such Grantor's products.
(c) Each Patent of such Grantor identified on Schedule I
hereto is subsisting and has not been adjudged unpatentable, invalid or
unenforceable, in whole or in part, and to the knowledge of such
Grantor is patentable, valid and enforceable, and each of such Patent
applications has been filed in conformity with applicable rules and
procedures of the Patent and Trademark Office and of the equivalent
agencies in each applicable foreign jurisdiction and will be diligently
prosecuted in conformity therewith so as not to become improperly
abandoned.
7. TRADEMARK REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
(a) It is the sole, legal and beneficial owner of the entire
right, title and interest in and to the Trademarks purported to be
granted by it hereunder, free and clear of any Lien, security interest,
option, charge, pledge, registered user agreement, assignment (whether
conditional or not), or covenant, or any other encumbrance, except for
the Security Interests created or permitted by this Agreement or the
Credit Agreement and certain Licenses and registered user agreements
described on Schedule IV. No financing statement or other instrument
similar in effect covering all or any part of the Trademarks purported
to be granted by such Grantor hereunder is on file in any recording
office, including, without limitation, the Patent and Trademark Office
and the equivalent offices in any foreign jurisdiction, except such as
may have been filed in favor of the Agent, for the benefit of the
Secured Parties.
(b) Set forth on Schedule II is a list of all of the
Trademarks owned by such Grantor necessary for the conduct of its
business as currently conducted or utilized and material in such
Grantor's operations or used in the selling or marketing of such
Grantor's products.
(c) Each Trademark of such Grantor identified on Schedule 11
is validly subsisting and has not been abandoned or adjudged invalid,
unregistrable or unenforceable, in whole or in part, and is, to such
Grantor's knowledge, valid, registrable and enforceable.
8. COPYRIGHT REPRESENTATIONS AND WARRANTIES. Each Grantor
represents and warrants as follows:
L-8
171
(a) It is the sole, legal and beneficial owner of the entire right,
title and interest in and to the Copyrights purported to be granted by it
hereunder, free and clear of any Lien, security interest, option, charge,
pledge, registered user agreement, assignment (whether conditional or not), or
covenant or any other encumbrance, except for the Security Interests created or
permitted by this Agreement or the Credit Agreement and certain Licenses and
registered user agreements described on Schedule IV. No effective financing
statement or other instrument similar in effect covering all or any part of the
Copyrights purported to be granted by such Grantor hereunder is on file in any
recording office, including, without limitation, the Copyright Office and the
equivalent offices in any foreign jurisdiction, except such as may have been
filed in favor of the Agent, for the benefit of the Secured Parties.
(b) Set forth on Schedule III is a list of all of the Copyrights owned
by such Grantor necessary for the conduct of its business as currently conducted
or utilized and material in such Grantor's operations or materially used in the
selling or marketing of such Grantor's products.
(c) Each Copyright of such Grantor identified on Schedule III is
validly subsisting and has not been abandoned or adjudged invalid, unregistrable
or unenforceable, in whole or in part, and is, to such Grantor's knowledge,
valid, registrable and enforceable.
9. TRANSFERS AND OTHER LIENS. No Grantor shall:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of, or grant any option with respect to, the Collateral, except
as permitted by the Credit Agreement, except that any Grantor may license the
Collateral (i) in the ordinary course of such Grantor's business, provided that
such license is necessary or desirable in the conduct of such Grantor's
business, or (ii) in connection with a sale of assets in compliance with the
Credit Agreement, provided that such license shall be on terms reasonably
expected to maximize the gain to such Grantor resulting from the granting of
such license. The Agent, for the benefit of the Secured Parties, shall execute
any documents that such Grantor may reasonably request in order to permit the
Grantor to exercise its right hereunder to license the Collateral, provided that
the Agent shall not be required to do anything that may, in the sole judgment of
the Agent, adversely affect the validity of the Security Interests or the
assignment of the Collateral located in any foreign jurisdiction;
(b) create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral except for
the Security Interests created by this Agreement; or
(c) take any other action in connection with any of the Collateral
that would impair the value of the interest or rights of such Grantor in the
Collateral taken as a whole or that would impair the interest or rights of the
Agent for the benefit of the Secured Parties.
L-9
172
10. AGENT APPOINTED ATTORNEY-IN-FACT. Without limiting any other
provision of this Agreement, upon the occurrence and during the continuance of
an Event of Default, each Grantor hereby irrevocably appoints the Agent, for the
benefit of the Secured Parties, as such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument that the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation:
(a) to ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Agent, for the benefit of the Secured Parties, with respect to
any of the Collateral; and
(d) to execute, in connection with the sale provided for in
Section 13 hereof, any endorsement, assignments, or other instruments
of conveyance or transfer with respect to the Collateral.
11. AGENT MAY PERFORM.
(a) If any Grantor fails to perform any agreement contained
herein, the Agent may itself perform, or cause performance of, such
agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by such Grantor under Section 14(b) hereof
to the fullest extent permitted by applicable law.
(b) The Agent or its designated representatives shall have the
right to the extent reasonably requested and upon reasonable prior
notice, at any reasonable time during normal business hours of such
Grantors and from time to time, to inspect the Grantors' premises and
to examine the Grantors' books, records and operations relating to the
Collateral.
12. THE AGENT'S DUTIES. The powers conferred on the Agent, for the
benefit of the Secured Parties, hereunder are solely to protect the interest of
the Secured Parties in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
neither the Agent nor any Lender shall have any duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against other parties or
any other rights pertaining to any Collateral. Each Secured Party shall be
deemed to have exercised reasonable care in the custody and
L-10
173
preservation of the Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which such party accords its own similar
property.
13. REMEDIES UPON ACCELERATION EVENT. If an Event of Default shall
have occurred and be continuing:
(a) The Agent, for the benefit of the Secured Parties, may
exercise in respect of the Collateral of any defaulting Grantor, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under the Uniform Commercial Code as in effect in the State of
North Carolina (the "UCC") and also may (i) exercise any and all rights
and remedies of such Grantor under, in connection with, or otherwise in
respect of, such Collateral, including the completion and filing of the
IP Assignment, (ii) require such Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of the Agent
forthwith, assemble all or part of the documents embodying such
Collateral as directed by the Agent and make it available to the Agent,
for the benefit of the Secured Parties, at a place to be designated by
the Agent that is reasonably convenient to both the Agent and such
Grantor, (iii) occupy any premises owned or leased by such Grantor
where documents embodying such Collateral or any part thereof are
assembled for a reasonable period in order to effectuate the Agent's
rights and remedies hereunder or under applicable law, without
obligation to such Grantor in respect of such occupation, (iv) license
such Collateral or any part thereof, and (v) without notice except as
specified below, sell such Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Agent's offices
or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Agent may deem commercially reasonable. Each Grantor
agrees that at least ten days' notice to such Grantor of the time and
place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Agent shall not
be obligated to make any sale of the Collateral regardless of notice of
sale having been given. The Agent may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(b) All payments received by any defaulting Grantor under or
in connection with any of such Collateral shall be received in trust
for the benefit of the Secured Parties, shall be segregated from other
funds of such Grantor and shall be immediately paid over to the Agent,
for the benefit of the Secured Parties, in the same form as so received
(with any necessary endorsement).
(c) All payments made under or in connection with or otherwise
in respect of the Collateral of any defaulting Grantor, and all cash
proceeds received by the Agent in respect of any sale of, collection
from, or other realization upon all or any part of such Collateral may,
in the discretion of the Agent, be held by the Agent, for the benefit
of the Secured Parties, as collateral for, and then or at any time
thereafter applied (after payment of any amounts payable to the Agent
pursuant to Section 14 hereof) for the ratable benefit of the Secured
Parties against all or any part of the Secured Obligations, in such
order set forth in
L-11
174
Section 11.5 of the Credit Agreement. Any sale or other disposition of
the Collateral and the possession thereof by the Agent shall be in
compliance with all provisions of applicable law (including applicable
provisions of the UCC).
14. INDEMNITY AND EXPENSES.
(a) Each Grantor agrees to indemnify each of the Secured
Parties from and against any and all claims, losses and liabilities
growing out of or resulting from this Agreement that are incurred
thereby (including without limitation enforcement of this Agreement),
except claims, losses or liabilities directly resulting from such
Secured Party's gross negligence or willful misconduct. The agreements
in this subsection (a) shall survive repayment of all Secured
Obligations, termination or expiration of this Agreement in any manner,
including but not limited to termination in accordance with Section 28
hereof, and occurrence of the Facility Termination Date.
(b) Each Grantor will upon demand pay to the Agent the amount
of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, that the
Agent, for the benefit of the Secured Parties, may incur in connection
with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Secured Parties, or (iv) the
failure by any Grantor to perform or observe any of the provisions
hereof.
15. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured
Parties in the Security Interests granted hereunder, and each of the Secured
Obligations, shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to departure from, the
Credit Agreement or any other Loan Document, including, but not limited
to, (i) an increase or decrease in the Secured Obligations and (ii) an
amendment of any Loan Document to permit the Agent or the Lenders or
any one or more of them to extend further or additional credit to any
Borrower in any form including credit by way of loan, purchase of
assets, guarantee or otherwise, which credit shall thereupon be and
become subject to the Credit Agreement and the other Loan Documents as
a Secured Obligation;
(b) any taking and holding of collateral or guarantees
(including without limitation any collateral pledged as security for
the Secured Obligations under the other Security Instruments) for all
or any of the Secured Obligations; or any amendment, alteration,
exchange, substitution, transfer, enforcement, waiver, subordination,
termination or release of any such collateral or guarantees, or any
non-perfection of any such collateral, or any consent to departure from
any such guaranty;
L-12
175
(c) any manner of application of collateral, or proceeds
thereof, securing payment or enforcement of all or any of the Secured
Obligations, or the manner of sale of any such collateral;
(d) any consent by the Secured Parties to the change,
restructure or termination of the corporate structure or existence of
any Grantor and any corresponding restructure of the Secured
Obligations, or any other restructure or refinancing of the Secured
Obligations or any portion thereof;
(e) any modification, compromise, settlement or release by the
Secured Parties, by operation of law or otherwise, collection or other
liquidation of the Secured Obligations or the liability of any Grantor
or any guarantor, or of any collateral for the Secured Obligations
(including without limitation any collateral pledged as security for
the Secured Obligations under the other Security Instruments), in whole
or in part, and any refusal of payment by the Agent or any Lender in
whole or in part, from any obligor or guarantor in connection with any
of the Secured Obligations, whether or not with notice to, or further
assent by, or any reservation of rights against, any Grantor; or
(f) any other circumstance (including without limitation any
statute of limitations) that might otherwise constitute a defense
available to, or a discharge of, any Grantor or any guarantor.
The granting of a Security Interest in the Collateral shall continue to
be effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must otherwise be returned by any
Secured Party, upon the insolvency, bankruptcy or reorganization of any Grantor
or otherwise, all as though such payment had not been made.
16. WAIVER. Each Grantor hereby waives (to the extent permitted by
applicable law) presentment for payment, demand, protest, promptness, diligence,
notice of acceptance, notice of protest, notice of demand, notice of default or
dishonor, notice of payment or non-payment, and any other notice with respect to
any of the Secured Obligations and this Agreement and any requirement that the
Secured Parties protect, secure, perfect or insure any Security Interest or any
Collateral subject thereto or exhaust any right or take any action against any
Grantor or any other Person (including without limitation any guarantor) or any
collateral securing payment of the Secured Obligations (including without
limitation any collateral pledged as security for the Secured Obligations under
the other Security Instruments).
17. SUBROGATION. Each Grantor further agrees with respect to this
Agreement that it shall have no right of subrogation, reimbursement or
indemnity, nor any right of recourse to security for the Secured Obligations
unless and until 93 days immediately following the Facility Termination Date
shall have elapsed without the filing or commencement, by or against any Credit
Party, of any state or federal action, suit, petition or proceeding seeking any
reorganization, liquidation or other relief or arrangement in respect of
creditors of, or the appointment of a receiver, liquidator, trustee or
conservator in respect to, such Credit Party or its assets. This waiver is
expressly intended to
L-13
176
prevent the existence of any claim in respect to such reimbursement by any
Subsidiary Grantor against the estate of any Borrower within the meaning of
Section 101 of the Bankruptcy Code, and to prevent any Subsidiary Grantor from
constituting a creditor of any Borrower in respect of such reimbursement within
the meaning of Section 547(b) of the Bankruptcy Code in the event of a
subsequent case involving such Borrower. If an amount shall be paid to any
Grantor on account of such subrogation rights at any time prior to termination
of this Agreement in accordance with the provisions of Section 28 hereof, such
amount shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Agent, for the benefit of the Secured Parties, to be
credited and applied upon the Secured Obligations, whether matured or unmatured,
in accordance with the terms of the Credit Agreement.
18. AMENDMENTS. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any Grantor therefrom shall in any
event be effective unless the same shall be in writing and signed by the Agent,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
19. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER THE CREDIT
AGREEMENT
(a) This Agreement shall create a continuing Security Interest
in the Collateral and shall remain in full force and effect until
terminated in accordance with the provisions of Section 28 hereof.
(b) Except as permitted by the Credit Agreement, no Grantor
shall sell, lease, transfer or otherwise dispose of any item of
Collateral during the term of this Agreement without the prior written
consent of the Agent to such sale, lease, transfer or other
disposition.
(c) Upon the termination of this agreement in accordance with
Section 28 hereof, the Collateral shall be automatically released from
the Liens created hereby, all rights to the Collateral shall
automatically revert to the Grantors, and this Agreement and all
obligations of the Grantors hereunder shall terminate without delivery
of any instrument or performance of any act by any party. Upon such
termination of this Agreement, the Agent shall reassign and redeliver
such Collateral then held by or for the Secured Parties and execute and
deliver to each Grantor such documents as it shall reasonably request
to evidence such termination.
20. ADDITIONAL COLLATERAL. If any Grantor shall acquire or hold
any additional Patents, Trademarks, Copyrights or Licenses not listed on
Schedules I, II, III or IV hereto (any such Patents, Trademarks, Copyrights or
Licenses being referred to herein as the "Additional Collateral"), such Grantor
shall promptly deliver to the Agent for the benefit of the Secured Parties (i) a
revised Schedule I, II, III or IV hereto, as applicable, reflecting the
ownership and pledge of such Additional Collateral and (ii) an Intellectual
Property Security Agreement Supplement in the form of Exhibit B hereto with
respect to such Additional Collateral duly completed and signed by such Grantor.
Each Grantor shall comply with the requirements of this Section 20 concurrently
with the acquisition of any such Additional Collateral.
L-14
177
21. DEFINITIONS. All terms used herein shall be defined in
accordance with the appropriate definitions appearing in the UCC, and such
definitions are hereby incorporated herein by reference and made a part hereof
22. ENTIRE AGREEMENT. This Agreement, together with the Credit
Agreement and the other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, inducements,
commitments or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
Neither this Agreement nor any portion or provision hereof may be changed,
altered, modified, supplemented, discharged, canceled, terminated, or amended
orally or in any manner other than as provided in the Credit Agreement.
23. FURTHER ASSURANCES. Each Grantor agrees at its own expense to
do such further acts and things, and to execute and deliver such additional
conveyances, assignments, financing statements, agreements and instruments, as
the Agent may at any time reasonably request in connection with the
administration or enforcement of this Agreement or related to the Collateral or
any part thereof or in order better to assure and confirm unto the Agent its
rights, powers and remedies for the benefit of the Secured Parties hereunder.
Each Grantor hereby consents and agrees that the issuers of or obligors in
respect of the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of the Agent, on behalf of the Secured Parties,
to exercise its rights hereunder with respect to the Collateral, notwithstanding
any other notice or direction to the contrary heretofore or hereafter given by
any Grantor or any other Person to any of such issuers or obligors.
24. BINDING AGREEMENT: ASSIGNMENT. This Agreement, and the terms,
covenants, conditions, rights and remedies hereof, shall be binding upon and
inure to the benefit of the parties hereto, and to their respective heirs, legal
representatives, successors and assigns; provided. however, that no Grantor
shall be permitted to assign any of its rights, powers, duties or obligations
under this Agreement or any interest herein or in the Collateral, or any part
thereof, or otherwise pledge, encumber or grant any option with respect to the
Collateral, or any part thereof, or any cash or property held by the Agent as
Collateral under this Agreement, without the prior written consent of the Agent.
Without limiting the generality of the foregoing sentence of this Section 24,
any Lender may assign to one or more Persons, or grant to one or more Persons
participation in or to, all or any part of its rights and obligations under the
Credit Agreement (to the extent permitted by the Credit Agreement); and to the
extent of any such assignment or participation such other Person shall, to the
fullest extent permitted by law, thereupon become vested with all the benefits
in respect thereof granted to such Lender herein or otherwise, subject however,
to the provisions of the Credit Agreement, including Article XII thereof
(concerning the Agent) and Section 13.1 thereof concerning assignments and
participations. All references herein to the Agent shall include any successor
thereof, each Lender and any other obligees from time to time of the Secured
Obligations.
25. SWAP AGREEMENTS. All obligations of any Borrower under Swap
Agreements to which any Lender or its affiliates are a party shall be deemed to
be Secured Obligations secured
L-15
178
hereby, and each Lender or affiliate of a Lender party to any such Swap
Agreement shall be deemed to be a Secured Party hereunder.
26. SEVERABILITY. If any term or provision of this Agreement is or
shall become illegal, invalid or unenforceable in any jurisdiction, all other
terms and provisions of this Agreement shall remain legal, valid and enforceable
in such jurisdiction and such illegal, invalid or unenforceable provision shall
be legal, valid and enforceable in any other jurisdiction.
27. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement.
28. TERMINATION. This Agreement and all obligations of each
Grantor hereunder shall terminate on the Facility Termination Date (except for
obligations of any Grantor that expressly survive such termination under the
respective provisions of this Agreement).
29. REMEDIES CUMULATIVE. All remedies hereunder are cumulative and
are not exclusive of any other rights and remedies of the Agent or any Lender
provided by law or under the Credit Agreement, the other Loan Documents, or
other applicable agreements or instruments. The making of the Loans to, and
issuing of Letters of Credits for the benefit of, any Borrower pursuant to the
Credit Agreement shall be conclusively presumed to have been made or extended,
respectively, in reliance upon the each Grantor's grant of a Security Interest
in the Collateral pursuant to the terms hereof.
30. NOTICES. Any notice required or permitted hereunder shall be
given, (a) with respect to each Pledgor, at the address of the Borrower
indicated in Section 13.2 of the Credit Agreement and (b) with respect to the
Agent or a Lender, at the Agent's address indicated in Section 13.2 of the
Credit Agreement. All such notices shall be given and shall be effective as
provided in Section 13.2 of the Credit Agreement.
31. GOVERNING LAW, VENUE: WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE
NOTWITHSTANDING ITS EXECUTION AND DELIVERY OUTSIDE SUCH STATE.
(b) EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
MECKLENBURG, STATE OF NORTH CAROLINA, UNITED STATES OF AMERICA AND, BY
THE
L-16
179
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE IN, OR TO THE EXERCISE OF
JURISDICTION OVER IT AND ITS PROPERTY BY ANY SUCH COURT IN ANY SUCH SUIT, ACTION
OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH GRANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL
(POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED BY SECTION 13.2 OF THE
CREDIT AGREEMENT, OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH CAROLINA.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE
ANY SECURED PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN THE COURTS OF ANY PLACE
WHERE ANY GRANTOR OR ANY OF SUCH GRANTOR'S PROPERTY OR ASSETS MAY BE FOUND OR
LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH GRANTOR AND THE AGENT ON BEHALF OF THE
SECURED PARTIES HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signature pages follow]
L-17
180
IN WITNESS WHEREOF, the parties have duly executed this Intellectual
Property Security Agreement on the day and year first written above.
GRANTORS:
Insert Name(s) of Grantor(s)
-----------------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT
SIGNATURE PAGE 1
181
AGENT:
BANK OF AMERICA, N.A., as Agent for the Secured
Parties
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
INTELLECTUAL PROPERTY SECURITY AGREEMENT
SIGNATURE PAGE 2
182
STATE OF )
)ss.
COUNTY OF )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ____ day of _________________, _______, personally appeared
_________________________ to me known personally, and who, being by me duly
sworn, deposes and says that he is the _________________ of
______________________, and that the foregoing instrument was signed and sealed
on behalf of said corporation by authority of its Board of Directors, and said
___________________ acknowledged said instrument to be the free act and deed of
said corporation.
------------------------------------
[NOTARY SEAL] Notary Public
My commission expires:
STATE OF )
)ss.
COUNTY OF )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ___ day of _________, ____, personally appeared
__________________ to me known personally, and who, being by me duly sworn,
deposes and says that he is a _________________ of Bank of America, N.A., a
national banking association, and that foregoing instrument was signed and
sealed on behalf of said national banking association by authority of its Board
of Directors, and said ______________ acknowledged said instrument to be the
free act and deed of said national banking association.
------------------------------------
[NOTARY SEAL] Notary Public
My commission expires:
INTELLECTUAL PROPERTY SECURITY AGREEMENT
SIGNATURE PAGE 3
183
EXHIBIT M
SECURITIES PLEDGE AGREEMENT
(SUBSIDIARY)
THIS SECURITIES PLEDGE AGREEMENT (this "Pledge Agreement") is made
and entered into as of this ___ day of __________, _____ by and among THE
UNDERSIGNED (the "Pledgor") and BANK OF AMERICA, N. A., a national banking
association, as Agent (as defined in the Credit Agreement referred to below) for
each of the Lenders (as defined in the Credit Agreement referred to below and,
collectively with the Agent, the "Secured Parties") now or hereafter party to
the Credit Agreement (as defined below). All capitalized terms used but not
otherwise defined herein shall have the respective meanings assigned thereto in
the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Secured Parties have provided to Insteel Industries, Inc.,
a North Carolina corporation (the "Borrower"), a revolving credit facility with
a letter of credit sublimit and a term loan facility pursuant to the Credit
Agreement dated as of January 31, 2000 among the Borrower, the Agent and the
Lenders (as from time to time amended, revised, modified, supplemented, or
amended and restated, the "Credit Agreement"); and
WHEREAS, the Pledgor is a Domestic Subsidiary of the Borrower and will
materially benefit from the Loans and other credit facilities made or to be made
available under the Credit Agreement, and in connection therewith and pursuant
to the terms of the Credit Agreement the Pledgor substantially simultaneously
herewith has entered into a Facility Guaranty pursuant to which it has
guaranteed the full and prompt payment and performance of the Obligations and is
required to execute and deliver this Pledge Agreement; and
WHEREAS, the Secured Parties are unwilling to make available or
maintain the credit facilities under the Credit Agreement unless the Pledgor
enters into this Pledge Agreement; and
WHEREAS, as collateral security for the payment and performance of its
Guarantor's Obligations (as defined in the Facility Guaranty to which it is a
party), the Pledgor is willing to pledge and grant to the Agent for the benefit
of the Secured Parties a security interest in all of the Subsidiary Securities
of each of its Subsidiaries whether now existing or hereafter created or
acquired (collectively, the "Pledged Interests"), and certain related property,
including without limitation the Pledged Interests more particularly described
on Schedule I hereto (such Subsidiaries, together with all other Subsidiaries
whose Subsidiary Securities may be required to be subject to this Pledge
Agreement from time to time, are hereinafter referred to collectively as the
"Pledged Subsidiaries");
184
NOW, THEREFORE, in order to induce the Secured Parties to enter into
the Loan Documents and to make or maintain the credit facilities provided for
therein available to or for the account of the Borrower, and in consideration of
the premises and the mutual covenants contained herein, the parties hereto agree
as follows:
1. PLEDGE OF PLEDGED INTERESTS; OTHER COLLATERAL.
(a) As collateral security for the payment and performance by
the Pledgor of its now or hereafter existing Guarantor's Obligations
(collectively, the "Secured Obligations"), the Pledgor hereby grants,
pledges and collaterally assigns to the Agent for the benefit of the
Secured Parties a first priority security interest in all of the
following items of property in which it now has or may at any time
hereafter acquire an interest, and wheresoever located:
(i) the Pledged Interests; and
(ii) all cash, securities, dividends, rights, and
other property at any time and from time to time (x) declared
or distributed in respect of or in exchange for or on
conversion of any Pledged Interest, or (y) by its or their
terms exchangeable or exercisable for or convertible into any
Pledged Interest; and
(iii) all other property hereafter delivered to the
Agent in substitution for or as an addition to any of the
foregoing, and all certificates and instruments representing
or evidencing such property, all security entitlements
constituting any Pledged Interest, and all securities accounts
to which may at any time be credited any or all of the Pledged
Interests; and
(iv) all proceeds of any of the foregoing.
All such Pledged Interests, certificates, instruments, cash,
securities, interests, dividends, rights and other property referred to
in clauses (i) through (iv) of this Section 1 are herein collectively
referred to as the "Collateral."
(b) Subject to Section 10(a), the Pledgor agrees to deliver
all certificates, instruments or other documents representing any
Collateral to the Agent at such location as the Agent shall from time
to time designate by written notice pursuant to Section 23 for its
custody at all times until termination of this Pledge Agreement,
together with such instruments of assignment and transfer as requested
by the Agent.
(c) The Pledgor agrees to execute and deliver, or cause to be
executed and delivered by other Persons, at Pledgor's expense, all
share certificates, documents, instruments, agreements, financing
statements (and amendments thereto and continuations thereof),
assignments, control agreements, or other writings as the Agent may
request from time to time to carry out the terms of this Pledge
Agreement or to protect or enforce the Agent's Lien and security
interest in the Collateral hereunder granted to the Agent for the
M-2
185
benefit of the Secured Parties and further agrees to do and cause to be
done upon the Agent's request, at Pledgor's expense, all things
determined by the Agent to be necessary or advisable to perfect and
keep in full force and effect the Lien in the Collateral hereunder
granted to the Agent for the benefit of the Secured Parties, including
the prompt payment of all out-of-pocket fees and expenses incurred in
connection with any filings made to perfect or continue the Lien and
security interest in the Collateral hereunder granted in favor of the
Agent for the benefit of the Secured Parties. If Pledgor shall fail to
promptly deliver to the Agent upon request financing statements and
amendments thereto and continuations thereof, the Pledgor hereby
irrevocably authorizes the Agent to execute and file, with or if
permitted by applicable law without the signature of such Pledgor, all
such financing statements and amendments thereto and continuations
thereof reflecting such Pledgor as "debtor" and the Agent as "secured
party," as the Agent may at any time deem necessary or advisable to
carry out the purposes of this Pledge Agreement.
(d) All filing fees, advances, charges, costs and expenses,
including reasonable attorneys' fees, incurred or paid by the Agent or
any Lender in exercising any right, power or remedy conferred by this
Pledge Agreement, or in the enforcement thereof, shall become a part of
the Secured Obligations secured hereunder and shall be paid to the
Agent for the benefit of the Secured Parties by the Pledgor in respect
of which the same was incurred immediately upon demand therefor, and
any amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the
date of demand until paid in full at the Default Rate.
(e) The Pledgor agrees to register and cause to be registered
the interest of the Agent, for the benefit of the Secured Parties, in
the Collateral on its own books and records and the registration books
of each of the Pledged Subsidiaries.
2. STATUS OF PLEDGED INTERESTS. The Pledgor hereby represents,
warrants and covenants to the Agent for the benefit of the Secured Parties, with
respect to itself and the Collateral as to which it has or acquires any
interest, that:
(a) All of the Pledged Interests are and shall at all times be
validly issued and outstanding, fully paid and nonassessable and
constitute all of the issued and outstanding Subsidiary Securities of
each Pledged Subsidiary, and are accurately described on Schedule I.
(b) The Pledgor is and shall at all times be the sole
registered and record and beneficial owner of the Pledged Interests,
free and clear of all Liens, charges, equities, encumbrances and
restrictions on pledge or transfer (other than the pledge hereunder and
applicable restrictions pursuant to federal and state securities laws).
(c) At no time shall any Pledged Interests (i) be held or
maintained in the form of a security entitlement or credited to any
securities account and (ii) which constitute a "security" (or as to
which the related Pledged Subsidiary has elected to have treated as a
M-3
186
"security") under Article 8 of the Uniform Commercial Code of the State of North
Carolina or of any other jurisdiction whose laws may govern (the "UCC") be
maintained in the form of uncertificated securities. With respect to Pledged
Interests that are "securities" under the UCC, or as to which the issuer has
elected at any time to have such interests treated as "securities" under the
UCC, such Pledged Interests are, and shall at all times be, represented by the
share certificates listed on Schedule I hereto, which share certificates, with
stock powers duly executed in blank by the Pledgor, have been delivered to the
Agent or are being delivered to the Agent simultaneously herewith or, in the
case of Additional Interests as defined in Section 22, shall be delivered
pursuant to Section 22. With respect to Pledged Interests that are not
"securities" under the UCC and the applicable Pledged Subsidiary has not elected
to have such interests treated as "securities" under the UCC, the Pledgor has
simultaneously herewith delivered to the Agent (or has previously delivered to
the Agent or, in the case of Additional Interests as defined in Section 22,
shall deliver pursuant to Section 22) a control agreement (or appropriate
amendments thereto) duly executed by the Registrar of the applicable Pledged
Subsidiary, in form and substance acceptable to the Agent and in which the
Registrar (A) acknowledges that the Pledgor is at the date of such
acknowledgment the sole record, and to its knowledge, beneficial owner of the
Pledged Interests, (B) acknowledges the Lien in favor of the Agent for the
benefit of the Secured Parties conferred hereunder and that such Lien will be
reflected on the registry for such Pledged Interests, (C) agrees that it will
not consent to, effect, acknowledge or register any transfer of such Pledged
Interests nor acknowledge or register any Lien in favor of any other Person on
such Pledged Interests, without the prior written consent of the Agent in each
instance, until it receives notice from the Agent that all Liens on such
Collateral in favor of the Secured Parties have been released or terminated, and
(D) agrees that upon receipt of notice from the Agent that an Event of Default
has occurred and is continuing and that the Pledged Interests identified in such
notice have been transferred to a transferee (including any Secured Party)
identified in such notice, it will duly record such transfer of such Pledged
Interests on the appropriate registry without requiring further consent from the
Pledgor and shall thereafter treat the transferee as the sole record and
beneficial owner of such Pledged Interests pending further transfer, in each
case notwithstanding any contrary instruction received from the Pledgor. In
addition, with respect to all Pledged Interests, the Pledgor has simultaneously
herewith delivered to the Agent (or has previously delivered to the Agent or, in
case of Additional Interests shall deliver pursuant to Section 22) Uniform
Commercial Code financing statements on Form UCC-1 (or appropriate amendments
thereto) duly executed by or on behalf of the Pledgor as "debtor" and naming the
Agent for the benefit of the Secured Parties as "secured party," in form,
substance and number sufficient in the reasonable opinion of the Agent to be
filed in all UCC filing offices and in all jurisdictions in which filing is
necessary or advisable to perfect in favor of the Agent for the benefit of the
Secured Parties the Lien on such Pledged Interests, together with all required
filing fees.
(d) It has full corporate power, legal right and lawful authority to
execute this Pledge Agreement and to pledge, assign and transfer its Pledged
Interests in the manner and form hereof.
M-4
187
(e) The pledge, assignment and delivery of its Pledged Interests
(along with undated stock powers executed in blank, financing statements and
control agreements) to the Agent for the benefit of the Secured Parties pursuant
to this Pledge Agreement creates or continues, as applicable, a valid and
perfected first priority security interest in such Pledged Interests in favor of
the Agent for the benefit of the Secured Parties, securing the payment of the
Secured Obligations, assuming, in the case of the Pledged Interests which
constitute certificated "securities" under the UCC, continuous and uninterrupted
possession by or on behalf of the Agent.
(f) Except as otherwise expressly provided herein or in the Credit
Agreement, none of the Pledged Interests (nor any interest therein or thereto)
shall be sold, transferred or assigned without the Agent's prior written
consent, which may be withheld for any reason.
(G) It shall at all times cause the Pledged Interests that constitute
"securities" (or as to which the issuer elects to have treated as "securities")
under the UCC to be represented by the certificates now and hereafter delivered
to the Agent in accordance with Sections 1, 2 and 22 hereof and that it shall
cause each of the Pledged Subsidiaries not to issue any Subsidiary Securities,
or securities convertible into, or exchangeable or exercisable for, Subsidiary
Securities, at any time during the term of this Pledge Agreement unless the
Pledged Interests of such Pledge Subsidiary are issued solely to either (y) the
Pledgor who shall immediately comply with Sections 2 and 2.2 hereof with respect
to such property or (z) another Credit Party who shall immediately pledge such
additional Subsidiary Securities to the Agent for the benefit of the Secured
Parties on substantially identical terms as are contained herein and deliver or
cause to be delivered the appropriate documents described in Section 2(c) hereof
to the Agent and take such further actions as the Agent may deem necessary in
order to perfect a first priority security interest in such Subsidiary
Securities.
(h) The exact legal name, jurisdiction of formation, and location of
the chief executive office of such Pledgor are (i) with respect to the Pledgor
if granting a Lien to the Agent under a Security Instrument at the Closing Date,
as specified on Schedule 5.3 to the Credit Agreement, and (ii) otherwise, as
specified on Schedule II attached hereto. The Pledgor shall not change its name,
jurisdiction of formation (whether by reincorporation, merger or otherwise), the
location of its chief executive office, except upon giving not less than thirty
(30) days' prior written notice to the Agent and taking or causing to be taken
all such action at such Pledgor's expense as may be reasonably requested by the
Agent to perfect or maintain the perfection of the Lien of the Agent in
Collateral.
G) The Pledgor shall not cause, suffer or permit to occur a change
in the identity of any Registrar for any Pledged Interests except upon giving
not less than ten (10) days' prior written notice to the Agent and providing
evidence reasonably satisfactory to the Agent (which shall include the written
acknowledgment of such new Registrar if the Agent shall elect) of continuing
compliance with the provisions of Sections 1(e) and 2(c) hereof
M-5
188
3. PRESERVATION AND PROTECTION OF COLLATERAL.
(a) The Agent shall be under no duty or liability with respect
to the collection, protection or preservation of the Collateral, or
otherwise, beyond the use of reasonable care in the custody and
preservation thereof while in its possession.
(b) The Pledgor agrees to pay when due all taxes, charges,
Liens and assessments against the Collateral in which it has an
interest, unless being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves
have been established in accordance with GAAP applied on a Consistent
Basis and evidenced to the satisfaction of the Agent and provided that
all enforcement proceedings in the nature of levy or foreclosure are
effectively stayed. Upon the failure of the Pledgor to so pay or contest
such taxes, charges, Liens or assessments, or upon the failure of the
Pledgor to pay any amount pursuant to Section 1(c), the Agent at its
option may pay or contest any of them (the Agent having the sole right
to determine the legality or validity and the amount necessary to
discharge such taxes, charges, Liens or assessments) but shall not have
any obligation to make any such payment or contest. All sums so
disbursed by the Agent, including reasonable attorneys' fees, court
costs, expenses and other charges related thereto, shall be payable on
demand by the applicable Pledgor to the Agent and shall be additional
Secured Obligations secured by the Collateral, and any amounts not so
paid on demand (in addition to other rights and remedies resulting from
such nonpayment) shall bear interest from the date of demand until paid
in full at the Default Rate.
(c) The Pledgor hereby irrevocably authorizes the Agent to file
(with, or to the extent permitted by applicable law, without the
signature of the Pledgor appearing thereon) financing statements
(including amendments thereto and continuations and copies thereof)
showing such Pledgor as "debtor" at such time or times and in all filing
offices as the Agent may from time to time determine to be necessary or
advisable to perfect or protect the rights of the Agent and the Secured
Parties hereunder, or otherwise to give effect to the transactions
herein contemplated.
4. DEFAULT. Upon the occurrence and during the continuance of any
Event of Default, the Agent is given full power and authority, then or at any
time thereafter, to sell, assign, deliver or collect the whole or any part of
the Collateral, or any substitute therefor or any addition thereto, in one or
more sales, with or without any previous demands or demand of performance or,
to the extent permitted by law, notice or advertisement, in such order as the
Agent may elect; and any such sale may be made either at public or private sale
at the Agent's place of business or elsewhere, either for cash or upon credit
or for future delivery, at such price or prices as the Agent may reasonably
deem fair; and the Agent or any other Secured Party may be the purchaser of any
or all Collateral so sold and hold the same thereafter in its own right free
from any claim of the Pledgor or right of redemption. Demands of performance,
advertisements and presence of property and sale and notice of sale are hereby
waived to the extent permissible by law. Any sale hereunder may be conducted by
an auctioneer or any officer or agent of the Agent. The Pledgor recognizes that
the Agent may be unable to effect a public sale of the Collateral by reason of
certain prohibitions contained in the
M-6
189
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
law, and may be otherwise delayed or adversely affected in effecting any sale
by reason of present or future restrictions thereon imposed by governmental
authorities, and that as a consequence of such prohibitions and restrictions
the Agent may be compelled (i) to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof, or (ii) to seek regulatory
approval of any proposed sale or sales, or (iii) to limit the amount of
Collateral sold to any Person or group. The Pledgor agrees and acknowledges
that private sales so made may be at prices and upon terms less favorable to
such Pledgor than if such Collateral was sold either at public sales or at
private sales not subject to other regulatory restrictions, and that the Agent
has no obligation to delay the sale of any of the Collateral for the period of
time necessary to permit the Pledged Subsidiary to register or otherwise
qualify them, even if such Pledged Subsidiary would agree to register or
otherwise qualify such Collateral for public sale under the Securities Act or
applicable state law. The Pledgor further agrees, to the extent permitted by
applicable law, that the use of private sales made under the foregoing
circumstances to dispose of the Collateral shall be deemed to be dispositions
in a commercially reasonable manner. The Pledgor hereby acknowledges that a
ready market may not exist for the Pledged Interests if they are not traded on
a national securities exchange or quoted on an automated quotation system and
agrees and acknowledges that in such event the Pledged Interests may be sold
for an amount less than a pro rata share of the fair market value of the
Pledged Subsidiary's assets minus its liabilities. In addition to the
foregoing, the Secured Parties may exercise such other rights and remedies as
may be available under the Loan Documents, at law (including without limitation
the UCC) or in equity.
5. PROCEEDS OF SALE. The proceeds of the sale of any of the
Collateral and all sums received or collected from or on account of such
Collateral shall be applied by the Agent for the benefit of the Secured Parties
in the manner provided in Section 11.5 of the Credit Agreement.
6. PRESENTMENTS, DEMANDS AND NOTICES. Except as expressly provided
herein, the Agent shall not be under any duty or obligation whatsoever to make
or give any presentments, demands for performances, notices of nonperformance,
protests, notice of protest or notice of dishonor in connection with any
obligations or evidences of indebtedness held thereby as collateral, or in
connection with any obligations or evidences of indebtedness which constitute
in whole or in part the Secured Obligations secured hereunder.
7. ATTORNEY-IN-FACT. The Pledgor hereby appoints the Agent as the
Pledgor's attorney-in-fact for the purposes of carrying out the provisions of
this Pledge Agreement and taking any action and executing any instrument which
the Agent may deem necessary or advisable to accomplish the purposes hereof,
which appointment is irrevocable and coupled with an interest; provided, that
the Agent shall have and may exercise rights under this power of attorney only
upon the occurrence and during the continuance of a Default or an Event of
Default. Without limiting the generality of the foregoing, upon the occurrence
and during the continuance of a Default or an Event of Default, the Agent shall
have the right and power to receive, endorse and collect all checks and other
orders for the payment of money made payable to the Pledgor representing any
dividend,
M-7
190
interest payment, principal payment or other distribution payable or
distributable in respect to the Collateral or any part thereof and to give full
discharge for the same.
8. ABSOLUTE RIGHTS AND OBLIGATIONS. All rights of the Secured
Parties, and all obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) any lack of legality, validity or enforceability of the
Credit Agreement, of any of the Notes, of any other Loan Document, or of
any other agreement or instrument creating, providing security for,
guaranteeing, or otherwise relating to any of the Secured Obligations or
any guaranty of or other credit support for any of the Secured
Obligations (the Loan Documents and all such other agreements and
instruments being collectively referred to as the "Related Agreements");
(b) any action taken under any of the Related Agreements, any
exercise of any right or power therein conferred, any failure or
omission to enforce any right conferred thereby, or any waiver of any
covenant or condition therein provided;
(c) any acceleration of the maturity of any of the Secured
Obligations or of any other obligation or liability of any Person under
any of the Related Agreements;
(d) any release, exchange, non-perfection, lapse in perfection,
disposal, deterioration in value, or impairment of any security for any
of the Secured Obligations or for any other obligation or liability of
any Person under any of the Related Agreements;
(e) any dissolution of the Pledgor or any other party to a
Related Agreement, or the combination or consolidation of the Pledgor or
any other party to a Related Agreement into or with another entity or
any transfer or disposition of any assets of the Pledgor or any other
party to a Related Agreement;
(f) any extension (including without limitation extensions of
time for payment), renewal, amendment, restructuring or restatement of,
and any acceptance of late or partial payments under any of the Loan
Documents or any other Related Agreement, in whole or in part;
(g) the existence, addition, modification, termination,
reduction or impairment of value, or release of any guaranty or other
credit support, or any security therefor, of any of the Secured
Obligations or for any other obligation or liability of any Person under
any of the Related Agreements;
(h) any waiver of, forbearance or indulgence under, or other
consent to any change in or departure from any term or provision
contained in, any Loan Document or any other Related Agreement,
including without limitation any term pertaining to the payment or
performance of any of the Secured Obligations or any other obligation or
liability of any party to any other Related Agreement;
M-8
191
(i) any other circumstance whatsoever (with or without notice to
or knowledge of the Pledgor) which may or might in any manner or to any
extent vary the risks of the Pledgor, or might otherwise constitute a
legal or equitable defense available to, or discharge of, the Pledgor,
including without limitation any right to require or claim that resort
be had to any other Credit Party or to any other collateral in respect
of the Secured Obligations.
It is the express purpose and intent of the parties hereto that this
Pledge Agreement and the Secured Obligations hereunder shall be absolute and
unconditional under any and all circumstances and shall not be discharged
except by payment as provided in the Loan Documents.
The granting of a security interest in the Collateral and the other
provisions hereof shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Secured Obligations is
rescinded or must otherwise be returned by any Secured Party or is repaid in
whole or in part in a good faith settlement of a pending or threatened
avoidance claim, whether upon the insolvency, bankruptcy or reorganization of
the Pledgor or any other Credit Party or otherwise, all as though such payment
had not been made. The provisions of this Section 8 shall survive repayment of
all of the Secured Obligations and the termination or expiration of this Pledge
Agreement in any manner, including but not limited to termination upon
occurrence of the Facility Termination Date.
9. WAIVER BY THE PLEDGOR. The Pledgor waives to the extent permitted
by applicable law (a) any right to require any Secured Party or any other
obligee of the Secured Obligations to (x) proceed against any Person or entity,
including without limitation any Credit Party, (y) proceed against or exhaust
any Collateral or other collateral for the Secured Obligations, or (z) pursue
any other remedy in its power; (b) any defense arising by reason of any
disability or other defense of any other Person, or by reason of the cessation
from any cause whatsoever of the liability of any other Person or entity, (c)
any right of subrogation, (d) any right to enforce any remedy which any Secured
Party or any other obligee of the Secured Obligations now has or may hereafter
have against any other Person and any benefit of and any right to participate
in any collateral or security whatsoever now or hereafter held by the Agent for
the benefit of the Secured Parties. The Pledgor authorizes each Secured Party
and each other obligee of the Secured Obligations without notice (except notice
required by applicable law) or demand and without affecting its liability
hereunder or under the Loan Documents from time to time to: (i) take and hold
security, other than the Collateral herein described, for the payment of such
Secured Obligations or any part thereof, and exchange, enforce, waive and
release the Collateral herein described or any part thereof or any such other
security; and (ii) apply such Collateral or other security and direct the order
or manner of sale thereof as such Secured Party or obligee in its discretion
may determine.
The Agent may at any time deliver (without representation, recourse or
warranty) the Collateral or any part thereof to a Pledgor and the receipt
thereof by such Pledgor shall be a complete and full acquittance for the
Collateral so delivered, and the Agent shall thereafter be discharged from any
liability or responsibility therefor.
M-9
192
10. DIVIDENDS AND VOTING RIGHTS.
(a) All dividends and other distributions with respect to any of
the Pledged Interests shall be subject to the pledge hereunder,
provided, however, that cash dividends paid to a Pledgor as record owner
of the Pledged Interests, to the extent permitted by the Credit
Agreement to be declared and paid, may be retained by such Pledgor so
long as no Default or Event of Default shall have occurred and be
continuing, free from any Liens hereunder.
(b) So long as no Default or Event of Default shall have
occurred and be continuing, the registration of the Collateral in the
name of a Pledgor as record and beneficial owner shall not be changed
and such Pledgor shall be entitled to exercise all voting and other
rights and powers pertaining to the Collateral for all purposes not
inconsistent with the terms hereof.
(c) Upon the occurrence and during the continuance of any
Default or Event of Default, all rights of the Pledgor to receive and
retain cash dividends and other distributions upon the Collateral
pursuant to subsection (a) above shall cease and shall thereupon be
vested in the Agent for the benefit of the Secured Parties, and the
Pledgor shall, or shall cause, all such cash dividends and other
distributions with respect to the Pledged Interests shall be promptly
delivered to the Agent (together, if the Agent shall request, with the
documents described in Sections 1(c) and 2(c) hereof or other
negotiable documents or instruments so distributed) to be held, released
or disposed of by it hereunder or, at the option of the Agent, to be
applied to the Secured Obligations.
(d) Upon the occurrence and during the continuance of any
Default or Event of Default, at the option of the Agent, all rights of
the Pledgor to exercise the voting or consensual rights and powers which
it is authorized to exercise pursuant to subsection (b) above shall
cease and the Agent may thereupon (but shall not be obligated to), at
its request, cause such Collateral to be registered in the name of the
Agent or its nominee or agent for the benefit of the Secured Parties
and/or exercise such voting or consensual rights and powers as appertain
to ownership of such Collateral, and to that end the Pledgor hereby
appoints the Agent as its proxy, with full power of substitution, to
vote and exercise all other rights as a shareholder with respect to such
Pledged Interests hereunder upon the occurrence and during the
continuance of any Default or Event of Default, which proxy is coupled
with an interest and is irrevocable until the Facility Termination Date,
and the Pledgor hereby agrees to provide such further proxies as the
Agent may request; provided, however, that the Agent in its discretion
may from time to time refrain from exercising, and shall not be
obligated to exercise, any such voting or consensual rights or such
proxy.
11. CONTINUED POWERS. Until the Facility Termination Date shall have
occurred, the power of sale and other rights, powers and remedies granted to
the Agent for the benefit of the Secured Parties hereunder shall continue to
exist and may be exercised by the Agent at any time and from time to time
irrespective of the fact that any of the Secured Obligations or any part
thereof may
M-10
193
have become barred by any statute of limitations or that any part of the
liability of the Pledgor may have ceased.
12. OTHER RIGHTS. The rights, powers and remedies given to the Agent
for the benefit of the Secured Parties by this Pledge Agreement shall be in
addition to all rights, powers and remedies given to the Agent or any Secured
Party under any Related Agreement or by virtue of any statute or rule of law.
Any forbearance or failure or delay by the Agent in exercising any right, power
or remedy hereunder shall not be deemed to be a waiver of such right, power or
remedy, and any single or partial exercise of any right, power or remedy
hereunder shall not preclude the further exercise thereof; and every right,
power and remedy of the Secured Parties shall continue in full force and effect
until such right, power or remedy is specifically waived in accordance with the
terms of the Credit Agreement.
13. ANTI-MARSHALING PROVISIONS. The right is hereby given by the
Pledgor to the Agent, for the benefit of the Secured Parties, to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Agent without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not
impair in any manner the validity of or priority of the Liens and security
interests in the remaining Collateral conferred hereunder, nor release the
Pledgor from personal liability for the Secured Obligations. Notwithstanding
the existence of any other security interest in the Collateral held by the
Agent, for the benefit of the Secured Parties, the Agent shall have the right
to determine the order in which any or all of the Collateral shall be subjected
to the remedies provided in this Pledge Agreement. The Pledgor hereby waives
any and all right to require the marshaling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein
or in any Related Agreement.
14. ENTIRE AGREEMENT. This Pledge Agreement, together with the Credit
Agreement and other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as herein contained. The express terms hereof control and supersede any
course of performance or usage of the trade inconsistent with any of the terms
hereof. Neither this Pledge Agreement nor any portion or provision hereof may
be changed, altered, modified, supplemented, discharged, canceled, terminated,
or amended orally or in any manner other than as provided in the Credit
Agreement.
15. FURTHER ASSURANCES. The Pledgor agrees at its own expense to do
such further acts and things, and to execute and deliver, and cause to be
executed and delivered as may be necessary or advisable to give effect thereto,
such additional conveyances, assignments, financing statements, control
agreements, documents, certificates, stock powers, agreements and instruments,
as the Agent may at any time reasonably request in connection with the
administration or enforcement of this Pledge Agreement or related to the
Collateral or any part thereof or in order better to assure and confirm unto
the Agent its rights, powers and remedies for the benefit of the Secured
Parties hereunder. The Pledgor hereby consents and agrees that the Pledged
Subsidiaries and their respective Registrars, and all other Persons, shall be
entitled to accept the provisions hereof as
M-11
194
conclusive evidence of the right of the Agent, on behalf of the Secured
Parties, to exercise its rights, privileges, and remedies hereunder with
respect to the Collateral, notwithstanding any other notice or direction to the
contrary heretofore or hereafter given by the Pledgor or any other Person to
any of such Pledged Subsidiaries or Registrars or other Persons.
16. BINDING AGREEMENT; ASSIGNMENT. This Pledge Agreement, and the
terms, covenants and conditions hereof, shall be binding upon and inure to the
benefit of the parties hereto, and to their respective successors and assigns,
except that the Pledgor shall not be permitted to assign this Pledge Agreement
or any interest herein or in the Collateral, or any part thereof, or otherwise
pledge, encumber or grant any option with respect to the Collateral, or any
part thereof, or any cash or property held by the Agent as Collateral under
this Pledge Agreement. Without limiting the generality of the foregoing
sentence of this Section 16, any Lender may assign to one or more Persons, or
grant to one or more Persons participations in or to, all or any part of its
rights and obligations under the Credit Agreement (to the extent permitted by
the Credit Agreement); and to the extent of any such assignment or
participation such other Person shall, to the fullest extent permitted by law,
thereupon become vested with all the benefits in respect thereof granted to
such Lender herein or otherwise, subject however, to the provisions of the
Credit Agreement, including Article XII thereof (concerning the Agent) and
Section 13.1 thereof (concerning assignments and participations). All
references herein to the Agent and to the Secured Parties shall include any
successor thereof or permitted assignee, and any other obligees from time to
time of the Secured Obligations.
17. SWAP AGREEMENTS. All obligations of the Pledgor under or in
respect of Swap Agreements (which are not prohibited under the terms of the
Credit Agreement) to which any Lender or any affiliate of any Lender is a
party, shall be deemed to be Secured Obligations secured hereby, and each
Lender or affiliate of a Lender party to any such Swap Agreement shall be
deemed to be a Secured Party hereunder with respect to such Secured
Obligations; provided, however, that such obligations shall cease to be Secured
Obligations at such time as such Person (or affiliate of such Person) shall
cease to be a "Lender" under the Credit Agreement.
18. SEVERABILITY. The provisions of this Pledge Agreement are
independent of and separable from each other. If any provision hereof shall for
any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, but this Pledge Agreement shall be construed as if such
invalid or unenforceable provision had never been contained herein.
19. COUNTERPARTS. This Pledge Agreement may be executed in any number
of counterparts each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Pledge
Agreement to produce or account for more than one such counterpart executed by
the Pledgor against whom enforcement is sought.
M-12
195
20. TERMINATION. Subject to the provisions of Section 8, this Pledge
Agreement and all obligations of the Pledgor hereunder (excluding those
obligations and liabilities that expressly survive such termination) shall
terminate without delivery of any instrument or performance of any act by any
party on the Facility Termination Date. Upon such termination of this Pledge
Agreement, the Agent shall, at the sole expense of the Pledgor, promptly
deliver to the Pledgor the certificates evidencing its shares of Pledged
Interests (and any other property received as a dividend or distribution or
otherwise in respect of such Pledged Interests), together with any cash then
constituting the Collateral not then sold or otherwise disposed of in
accordance with the provisions hereof, and take such further actions at the
request of the Pledgor as may be necessary to effect the same.
21. INDEMNIFICATION. Without limitation of Section 13.9 of the Credit
Agreement or any other indemnification provision in any Loan Document, the
Pledgor agrees to indemnify and hold harmless each Secured Party and each of
their affiliates, and their respective officers, directors, employees, agents,
and advisors (each, an "Indemnified Party"), from and against any and all
claims, damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of defense in
connection therewith) the Loan Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans or other
extension of credit under the Loan Documents, except to the extent such claim,
damage, loss, liability, cost, or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 21 applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Pledgor or any other
Credit Party, any of their respective directors, shareholders or creditors, or
an Indemnified Party or any other Person, or any Indemnified Party is otherwise
a party thereto and whether or not the transactions contemplated hereby are
consummated. The Pledgor agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to it,
any of its subsidiaries or affiliates, or any security holders or creditors
thereof arising out of, related to or in connection with the transactions
contemplated herein or in the other Loan Documents, except to the extent that
such liability is found in a final non-appealable judgment by a court of
competent jurisdiction to have directly resulted from such Indemnified Party's
gross negligence or willful misconduct. The Pledgor agrees not to assert any
claim against any Secured Party, any of its affiliates, or any of their
respective directors, officers, employees, attorneys, agents, or advisers, on
any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Loan Documents, any of the
transactions contemplated therein or the actual or proposed use of the proceeds
of the Loans or other extensions of credit under the Loan Documents. The
agreements in this Section 21 shall survive repayment of all of the Secured
Obligations and the termination or expiration of this Pledge Agreement in any
manner, including but not limited to termination upon occurrence of the
Facility Termination Date.
▇-▇▇
▇▇▇
▇▇. ADDITIONAL INTERESTS. If the Pledgor shall at any time acquire or
hold any additional Pledged Interests, including any Pledged Interests issued
by any Subsidiary not listed on Schedule I hereto which are required to be
subject to a Lien pursuant to a Pledge Agreement by the terms hereof or of
Article V or any other provision of the Credit Agreement (any such shares being
referred to herein as the "Additional Interests"), such Pledgor shall deliver
to the Agent for the benefit of the Secured Parties (i) a Pledge Agreement
Supplement in the form of Exhibit A hereto with respect to such Additional
Interests duly completed and executed by such Pledgor and (iii) any other
document required in connection with such Additional Interests as described in
Section 2(c). The Pledgor shall comply with the requirements of this Section 22
concurrently with the acquisition of any such Additional Interests or, in the
case of Additional Interests to which Section 9.20 of the Credit Agreement
applies, within the time period specified in Article V, Section 9.20 or
elsewhere in the Credit Agreement with respect to such Additional Interests;
provided, however, that the failure to comply with the provisions of this
Section 22 shall not impair the Lien on Additional Interests conferred
hereunder.
23. NOTICES. Any notice required or permitted hereunder shall be given
(a) with respect to the Pledgor, at the address then in effect for the giving
of notices to such Pledgor under the Facility Guaranty to which it is a party,
and (b) with respect to the Agent or a Lender, at the Agent's address indicated
in Section 13.2 of the Credit Agreement. All such addresses may be modified,
and all such notices shall be given and shall be effective, as provided in
Section 13.2 of the Credit Agreement.
24. RULES OF INTERPRETATION. The rules of interpretation contained in
Sections 1.2 (c) through 1.2(1) of the Credit Agreement shall be applicable to
this Pledge Agreement and are hereby incorporated by reference. All
representations and warranties contained herein shall survive the delivery of
documents and any extension of credit referred to herein or secured hereby.
25. GOVERNING LAW; WAIVERS.
(a) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) THE PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS PLEDGE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE
INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
MECKLENBURG, STATE OF NORTH CAROLINA, UNITED STATES OF AMERICA AND, BY
THE EXECUTION AND DELIVERY OF THIS PLEDGE AGREEMENT, EXPRESSLY WAIVES
ANY OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE
VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND
M-14
197
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(c) THE PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PLEDGOR
PROVIDED IN SECTION 23 OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR
UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NORTH CAROLINA.
(d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE
OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE THE PLEDGOR OR ANY
OF SUCH PLEDGOR'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE
EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE
PLEDGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY
ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS
PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE UNDER
APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO THIS PLEDGE AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND
HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH
PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH ACTION, SUIT OR PROCEEDING.
(f) THE PLEDGOR HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY
HAVE THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO
THE TERMS HEREOF IS AN INCONVENIENT FORUM.
M-15
198
IN WITNESS WHEREOF, the parties have duly executed this Pledge Agreement
on the day and year first written above.
PLEDGOR:
[Insert Name(s) of Pledgor(s)]
------------------------------------------
By:
---------------------------------------
Name:
----------------------------------
Title:
----------------------------------
Signature Page 1 of 2
199
AGENT:
BANK OF AMERICA, N. A., as Agent for the
Lenders
By:
-------------------------------------
Name:
-------------------------------
Title:
-------------------------------
Signature Page 2 of 2