EXHIBIT 10.1
$140,000,000
CREDIT AGREEMENT
DATED AS OF JUNE 28, 2001
AMONG
KATY INDUSTRIES, INC,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
and
BANKERS TRUST COMPANY,
as Agent
DEUTSCHE BANC ALEX. ▇▇▇▇▇ INC.,
as Lead Arranger
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS....................................................................................................... 2
1.1 Certain Defined Terms............................................................................................. 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement................................ 44
1.3 Other Definitional Provisions..................................................................................... 45
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS........................................................................ 45
2.1 Commitments; Making of Loans; the Register; Notes................................................................. 45
2.2 Interest on the Loans............................................................................................. 52
2.3 Fees.............................................................................................................. 56
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments; General Provisions Regarding Payments;
Application of Proceeds of Collateral and Payments Under Guaranties............................................... 57
2.5 Use of Proceeds................................................................................................... 65
2.6 Special Provisions Governing Eurodollar Rate Loans................................................................ 66
2.7 Increased Costs; Taxes; Capital Adequacy.......................................................................... 68
2.8 Statement of Lenders; Obligation of Lenders and Issuing Lenders to Mitigate....................................... 73
2.9 Replacement of a Lender........................................................................................... 74
2.10 Collection, Deposit and Transfer of Payments in Respect of Accounts............................................... 74
Section 3. LETTERS OF CREDIT................................................................................................. 78
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein..................................... 78
3.2 Letter of Credit Fees............................................................................................. 80
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit............................................... 81
3.4 Obligations Absolute.............................................................................................. 84
3.5 Indemnification; Nature of Issuing Lenders' Duties................................................................ 85
3.6 Subsidiary Guarantors as Account Parties.......................................................................... 86
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT......................................................................... 88
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TABLE OF CONTENTS
(continued)
Page
4.1 Conditions to Term Loans and Initial Revolving Loans.............................................................. 88
4.2 Conditions to All Loans........................................................................................... 100
4.3 Conditions to Letters of Credit................................................................................... 101
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES.......................................................................... 101
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries..................................... 101
5.2 Authorization of Borrowing, etc................................................................................... 102
5.3 Financial Condition............................................................................................... 103
5.4 No Material Adverse Change; No Restricted Junior Payments......................................................... 104
5.5 Title to Properties; Liens; Real Property......................................................................... 104
5.6 Litigation; Adverse Facts......................................................................................... 105
5.7 Payment of Taxes.................................................................................................. 105
5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts...................................... 106
5.9 Governmental Regulation........................................................................................... 106
5.10 Securities Activities............................................................................................. 106
5.11 Employee Benefit Plans............................................................................................ 107
5.12 Certain Fees...................................................................................................... 107
5.13 Environmental Protection.......................................................................................... 107
5.14 Employee Matters.................................................................................................. 108
5.15 Solvency.......................................................................................................... 108
5.16 Matters Relating to Collateral.................................................................................... 108
5.17 Disclosure........................................................................................................ 109
5.18 Related Agreements................................................................................................ 110
5.19 Permits........................................................................................................... 110
5.20 Fiscal Periods.................................................................................................... 111
5.21 ▇▇▇▇▇............................................................................................................. 111
Section 6. COMPANY'S AFFIRMATIVE COVENANTS................................................................................... 111
6.1 Financial Statements and Other Reports............................................................................ 111
6.2 Existence, etc.................................................................................................... 118
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TABLE OF CONTENTS
(continued)
Page
6.3 Payment of Taxes and Claims; Tax.................................................................................. 118
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/ Condemnation Proceeds......................... 118
6.5 Inspection; Lender Meeting........................................................................................ 121
6.6 Compliance with Laws, etc......................................................................................... 121
6.7 Environmental Disclosure and Inspection........................................................................... 121
6.8 Company's Remedial Action Regarding Hazardous Materials........................................................... 123
6.9 Execution of Subsidiary Guaranty and Personal Property Collateral Documents After the Closing Date................ 123
6.10 Matters Relating to Real Property Collateral...................................................................... 124
6.11 Revised Article 9................................................................................................. 127
6.12 Deposit Accounts and Cash Management Systems...................................................................... 127
Section 7. COMPANY'S NEGATIVE COVENANTS...................................................................................... 128
7.1 Indebtedness...................................................................................................... 128
7.2 Liens and Related Matters......................................................................................... 129
7.3 Investments; Acquisitions......................................................................................... 131
7.4 Contingent Obligations............................................................................................ 132
7.5 Restricted Junior Payments........................................................................................ 133
7.6 Financial Covenants............................................................................................... 134
7.7 Restriction on Fundamental Changes; Asset Sales................................................................... 135
7.8 Consolidated Capital Expenditures................................................................................. 137
7.9 Restriction on Leases............................................................................................. 137
7.10 Sales and Lease-Backs............................................................................................. 138
7.11 Sale of Receivables............................................................................................... 138
7.12 Transactions with Shareholders and Affiliates..................................................................... 138
7.13 Disposal of Subsidiary Stock...................................................................................... 138
7.14 Conduct of Business............................................................................................... 139
7.15 Amendments or Waivers of Certain Agreements; Amendments of Documents Relating to Subordinated Indebtedness........ 139
7.16 Fiscal Periods.................................................................................................... 139
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TABLE OF CONTENTS
(continued)
Page
7.17 Deposit Accounts.................................................................................................. 140
7.18 Canadian Subsidiary Documents..................................................................................... 140
7.19 Inactive Subsidiaries............................................................................................. 140
Section 8. EVENTS OF DEFAULT................................................................................................. 140
8.1 Failure to Make Payments When Due................................................................................. 140
8.2 Default in Other Agreements....................................................................................... 141
8.3 Breach of Certain Covenants....................................................................................... 141
8.4 Breach of Warranty................................................................................................ 141
8.5 Other Defaults Under Loan Documents............................................................................... 141
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.............................................................. 142
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc................................................................ 142
8.8 Judgments and Attachments......................................................................................... 142
8.9 Dissolution....................................................................................................... 143
8.10 Employee Benefit Plans............................................................................................ 143
8.11 Change in Control................................................................................................. 143
8.12 Invalidity of Any Guaranty........................................................................................ 143
8.13 Failure of Security............................................................................................... 143
8.14 Conduct of Business By Holdings................................................................................... 143
8.15 Failure to Consummate Recapitalization and Other Transactions..................................................... 144
8.16 Contico Purchase Agreement........................................................................................ 144
8.17 ▇▇▇▇▇............................................................................................................. 144
Section 9. AGENT............................................................................................................. 145
9.1 Appointment....................................................................................................... 145
9.2 Powers and Duties; General Immunity............................................................................... 146
9.3 Independent Investigation by Lenders; No Responsibility For Appraisal of Creditworthiness......................... 148
9.4 Right to Indemnity................................................................................................ 148
9.5 Successor Agent................................................................................................... 148
9.6 Collateral Documents and Guaranties............................................................................... 149
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TABLE OF CONTENTS
(continued)
Page
9.7 Agent May File Proofs of Claim.................................................................................... 149
Section 10. MISCELLANEOUS..................................................................................................... 150
10.1 Successors and Assigns; Assignments and Participations in Loans and Letters of Credit............................. 150
10.2 Expenses.......................................................................................................... 153
10.3 Indemnity......................................................................................................... 154
10.4 Set-Off; Security Interest in Deposit Accounts.................................................................... 155
10.5 Ratable Sharing................................................................................................... 155
10.6 Amendments and Waivers............................................................................................ 156
10.7 Independence of Covenants......................................................................................... 157
10.8 Notices; Effectiveness of Signatures.............................................................................. 157
10.9 Survival of Representations, Warranties and Agreements............................................................ 158
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative............................................................. 158
10.11 Marshalling; Payments Set Aside................................................................................... 158
10.12 Severability...................................................................................................... 159
10.13 Obligations Several; Independent Nature of Lenders' Rights........................................................ 159
10.14 Headings.......................................................................................................... 159
10.15 Applicable Law.................................................................................................... 159
10.16 Construction of Agreement; Nature of Relationship................................................................. 159
10.17 Consent to Jurisdiction and Service of Process.................................................................... 160
10.18 Waiver of Jury Trial.............................................................................................. 160
10.19 Confidentiality................................................................................................... 161
10.20 Counterparts; Effectiveness....................................................................................... 162
10.21 Judgment.......................................................................................................... 162
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EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF REQUEST FOR ISSUANCE OF LETTER OF CREDIT
IV FORM OF REVOLVING NOTE
V FORM OF TERM NOTE
VI FORM OF COMPLIANCE CERTIFICATE
VII FORM OF SOLVENCY CERTIFICATE
VIII FORM OF BORROWING BASE CERTIFICATE
IX-A FORM OF OPINION OF HUNTON & ▇▇▇▇▇▇▇▇
IX-B FORM OF OPINION OF CANADIAN COUNSEL TO LOAN PARTIES
IX-C FORM OF OPINION OF U.K. COUNSEL TO LOAN PARTIES
X FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
XI FORM OF ASSIGNMENT AGREEMENT
XII FORM OF BLOCKED ACCOUNT AGREEMENT
XIII FORM OF COLLATERAL ACCESS AGREEMENT
XIV FORM OF LOCK BOX AGREEMENT
XV FORM OF SECURITY AGREEMENT
XVI FORM OF SUBSIDIARY GUARANTY
XVII FORM OF HOLDINGS GUARANTY
XVIII FORM OF MORTGAGE
XIX FORM OF U.K. SUBSIDIARY DEBENTURE
XX-A FORM OF GLIT SUBSIDIARY NOTE
XX-B FORM OF ▇▇▇▇▇ SUBSIDIARY NOTE
XXI FORM OF GLIT SUBSIDIARY SECURITY AGREEMENT
XXII FORM OF ▇▇▇▇▇ SUBSIDIARY SECURITY AGREEMENT
XXIII-A FORM OF GLIT SUBSIDIARY ACKNOWLEDGEMENT
XXIII-B FORM OF ▇▇▇▇▇ SUBSIDIARY ACKNOWLEDGEMENT
XXIV FORM OF ENVIRONMENTAL INDEMNITY AGREEMENT
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SCHEDULES
1.1A ELIGIBLE M&E
1.1B ELIGIBLE REAL PROPERTY
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE, CAPITAL AND OWNERSHIP STRUCTURE
4.1N CLOSING DATE ENVIRONMENTAL REPORTS
4.1P CLOSING DATE MORTGAGED PROPERTIES
5.1 SUBSIDIARIES OF HOLDINGS AND COMPANY
5.2B APPROVALS AND CONSENTS
5.2C GOVERNMENTAL CONSENTS
5.2F HOLDERS OF CONTICO EQUITY INTERESTS
5.5B REAL PROPERTY ASSETS
5.5C INTELLECTUAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
5.12 BROKER'S AND FINDER'S FEES
5.13 ENVIRONMENTAL MATTERS
6.10A POST-CLOSING DATE MORTGAGED PROPERTIES
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
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CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of June 28, 2001 and entered into by
and among KATY INDUSTRIES, INC., a Delaware corporation ("Company"), THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually
referred to herein as a "Lender" and collectively as "Lenders"), and BANKERS
TRUST COMPANY ("BTCo"), as agent for Lenders (in such capacity, "Agent").
R E C I T A L S
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WHEREAS, Holdings (this and other capitalized terms used in these
recitals without definition being used as defined in subsection 1.1) has been
newly formed by the Investors for the purpose of entering into the
Recapitalization Agreement, pursuant to which Holdings has agreed to purchase
from Company on the Closing Date not less than 700,000 shares of newly issued
preferred stock, $100.00 par value per share (together with the convertible
preferred stock issued as payment-in-kind dividends in accordance with the
Company Organizational Documents, the "Convertible Preferred Stock"),
convertible based on a price of $6.00 per share of common stock, $1.00 par value
per share, of Company (the "Common Stock"), inclusive of their respective
associated common stock purchase rights (the "Rights") issued pursuant to the
Rights Agreement (the shares of Common Stock and the associated Rights are
referred to herein as the "Common Shares"), into an aggregate of 11,666,666
Common Shares (equivalent to a conversion ratio of approximately 16.67 Common
Shares per share of Convertible Preferred Stock), for a purchase price of
$100.00 per share (or an aggregate purchase price of $70,000,000) (the
"Preferred Stock Purchase"), and Company has entered into the Contico Preferred
Unit Repurchase Agreement pursuant to which on the Closing Date Newcastle shall
tender to Contico, Contico shall repurchase from Newcastle, and Company shall
cause Contico to repurchase from Newcastle 165 units of the Contico Preferred
Units on the terms and conditions set forth in the Contico Preferred Unit
Repurchase Agreement (the "Contico Preferred Unit Repurchase") (the Contico
Preferred Unit Repurchase, the Preferred Stock Purchase and the other
transactions contemplated by the Recapitalization Agreement are collectively
referred to herein as the "Recapitalization");
WHEREAS, immediately prior to the consummation of the
Recapitalization, K&C Funds and other investors satisfactory to Agent (the
"Investors") will capitalize Holdings with not less than $70,000,000 in cash
(the "Equity Financing"), the proceeds of which Equity Financing will be used by
Holdings to purchase the Convertible Preferred Stock, all with the effect that
after giving effect to the Recapitalization and the other transactions
contemplated hereby, the Investors will own 100% of the outstanding capital
stock of Holdings on a fully diluted basis and Holdings will own no less than
51% of the outstanding capital stock of Company on a fully diluted basis;
WHEREAS, Company desires that Lenders extend certain credit facilities
to Company, the proceeds of which will be used together with the proceeds of the
Equity Financing from the Preferred Stock Purchase for (i) refinancing of the
Existing Credit Agreement in an aggregate amount of approximately $144,300,000,
(ii) the payment of the Transaction Costs of
approximately $9,000,000, (iii) the repurchase of 165 units of the Contico
Preferred Units and payment of accrued Priority Returns pursuant to the Contico
Preferred Unit Repurchase Agreement, (iv) making certain intercompany loans, and
(v) working capital and other general corporate purposes of Company and its
Subsidiaries and the issuance of Letters of Credit for the purposes set forth
herein;
WHEREAS, Company has agreed to secure its Obligations hereunder
and under the other Loan Documents by granting to Agent, on behalf of Lenders, a
First Priority Lien on substantially all of its real, personal and mixed
property, including a pledge of all of the capital stock and other ownership
interests of its Domestic Active Subsidiaries and 65% of the capital stock and
other ownership interests of its Foreign Active Subsidiaries; and
WHEREAS, Holdings and all of the Domestic Active Subsidiaries of
Company have agreed to guarantee the Obligations hereunder and under the other
Loan Documents and to secure their guaranties by granting to Agent, on behalf of
Lenders, a First Priority Lien on substantially all of their real, personal and
mixed property, including a pledge of all of the capital stock of Company owned
by Holdings and all of the capital stock and other ownership interests of their
Domestic Active Subsidiaries and 65% of the capital stock and other ownership
interests of their Foreign Active Subsidiaries.
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders and
Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms.
---------------------
The following terms used in this Agreement shall have the
following meanings:
"Account" means, with respect to any Person, all present and
future rights of such Person to payment for goods sold or leased or for services
rendered (except those evidenced by instruments or chattel paper), whether now
existing or hereafter arising and wherever arising, and whether or not they have
been earned by performance.
"Active Subsidiary" means any Domestic Active Subsidiary or
Foreign Active Subsidiary.
"Additional Mortgage" has the meaning assigned to that term in
subsection 6.10C.
"Additional Mortgaged Property" has the meaning assigned to that
term in subsection 6.10C.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, the rate per annum obtained by dividing (i) the offered quotation (rounded
--------
upward to the nearest 1/16 of one percent) to first class banks in the interbank
Eurodollar market by BTCo for U.S. dollar deposits of amounts in same day funds
comparable to the principal amount of the Eurodollar Rate Loan of BTCo for
2
which the Adjusted Eurodollar Rate is then being determined with maturities
comparable to such Interest Period as of approximately 12:00 Noon (New York City
time) on such Interest Rate Determination Date by (ii) a percentage equal to
--
100% minus the stated maximum rate of all reserve requirements (including,
-----
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable on such Interest Rate Determination Date to any member bank
of the Federal Reserve System in respect of "Eurocurrency liabilities" as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Adjusted Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing (i) the Revolving Loan Exposure of that Lender
--------
by (ii) the aggregate Revolving Loan Exposure of all Lenders other than Daily
--
Funding Lender.
"Affected Lender" has the meaning assigned to that term in subsection
2.6C.
"Affected Loans" has the meaning assigned to that term in subsection
2.6C.
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Affiliated Fund" means, with respect to any Lender, a fund that
invests in commercial loans and is managed by the same investment advisor as
such Lender, an Affiliate of such Lender or by an Affiliate of the same
investment advisor as such Lender.
"Agent" has the meaning assigned to that term in the introduction to
this Agreement, and, with respect to the issuance of any Letter of Credit and so
long as BTCo serves as Agent hereunder, includes any Affiliates of BTCo
(including, without limitation, Deutsche Bank AG) acting as an Issuing Lender,
and also means and includes any successor Agent appointed pursuant to subsection
9.5.
"Aggregate Amounts Due" has the meaning assigned to that term in
subsection 10.5.
"Agreement" means this Credit Agreement dated as of June 28, 2001, as
it may be amended, supplemented or otherwise modified from time to time.
"Asset Sale" means the sale by Holdings, Company or any of its
Subsidiaries to any Person other than Company or any of its Wholly-Owned
Subsidiaries that is a party to the Subsidiary Guaranty of (i) any of the stock
of Company or of any of Company's Subsidiaries, (ii) substantially all of the
assets of any division or line of business of Holdings, Company or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of
Holdings, Company or any of its Subsidiaries (other than (a) inventory sold in
the ordinary course of business and (b) any such other assets to the extent that
(x) so long as the Term Loan remains outstanding, the aggregate value of such
assets sold in any single transaction or series of
3
transactions is equal to $50,000 or less over the term of this Agreement and (y)
after the Term Loan has been repaid in full, the aggregate value of such assets
sold in any single transaction or series of transactions during any 12-month
period is equal to $1,000,000 or less).
"Assignment Agreement" means an Assignment Agreement in substantially
the form of Exhibit XI annexed hereto.
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"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Base Audit" has the meaning assigned to that term in subsection 6.5.
"Base Rate" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"Base Rate Margin" means the margin over the Base Rate used in
determining the rate of interest of Base Rate Loans pursuant to subsection 2.2A.
"Blocked Account Agreement" means the Blocked Account Agreement
executed and delivered by a Concentration Bank (or another financial institution
at which a Loan Party maintains a Deposit Account), Agent and the applicable
Loan Party, substantially in the form of Exhibit XII annexed hereto or such
-----------
other form as shall be reasonably satisfactory to Agent, as such Blocked Account
Agreement may be amended, supplemented or otherwise modified from time to time,
and "Blocked Account Agreements" means all such Blocked Account Agreements,
collectively.
"Borrowing Base Certificate" means a certificate substantially in the
form of Exhibit VIII annexed hereto delivered to Lenders by Company pursuant to
------------
subsection 4.1 or subsection 6.1(xviii).
"BTCo" has the meaning assigned to that term in the introduction to
this Agreement.
"BTCo Account" means an account maintained by Agent at BTCo into which
the applicable Concentration Banks or other financial institutions are
instructed to transfer funds on deposit in the applicable Concentration Accounts
or other Deposit Accounts pursuant to the terms of the applicable Blocked
Account Agreement, if any.
"BT Concentration Account" means an account under the exclusive
dominion and control of Agent that is maintained by any Loan Party with BTCo
into which the applicable Lock Box Account Banks are instructed to transfer
funds on deposit in the Lock Box Accounts pursuant to the terms of the Lock Box
Agreements.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or, for
purposes of Section 3 of this
4
Agreement, the laws of the state in which the applicable Issuing Lender is
domiciled, or is a day on which banking institutions located in any such state
are authorized or required by law or other governmental action to close.
"Canadian Dollars" means the lawful money of Canada.
"Canadian Subsidiary Documents" means, collectively, the Glit
Subsidiary Documents and the ▇▇▇▇▇ Subsidiary Documents.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance in a Deposit Account.
"Cash Equivalents" means, as at any date of determination, (a)
marketable securities (1) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (2) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (b) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Services ("S&P") or ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than
one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (d) certificates of deposit or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (1) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (2) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (e) shares of any money market mutual fund that (1)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (a) and (b) above, (2) has net assets of not less than
$500,000,000, and (3) has the highest rating obtainable from either S&P or
Moody's.
"Change in Control" means any of the following: (i) K&C Funds shall
cease to beneficially own and control 51% of the issued and outstanding shares
of capital stock of Holdings entitled (without regard to the occurrence of any
contingency) to vote for the election of members of the Governing Body of
Holdings; (ii) Holdings shall cease to beneficially own and control all of the
issued and outstanding shares of Convertible Preferred Stock; (iii) Holdings
shall cease to beneficially own and control at least 51% of the issued and
outstanding capital stock of Company on a fully diluted basis entitled (after
giving effect to conversion of the Convertible Preferred Stock, whether or not
such Convertible Preferred Stock is convertible at such time, but without regard
to the occurrence of any other contingency) to vote for the election of members
of the Governing Body of Company; (iv) the occurrence of a change in the
composition of the Governing Body of Holdings such that a majority of the
members of such Governing Body are not Continuing Members or the occurrence of a
change in the composition
5
of the Governing Body of Company such that a majority of the members of the
Governing Body of Company are not K&C Designated Members; (v) the occurrence of
any "Change in Control" or any "Trigger Event", in each case as defined in the
Contico Members Agreement or the exercise by any holder of the Contico Preferred
Units of any "Put Right", "Control Put Right" or "Trigger Event Right", in each
case as defined in the Contico Members Agreement; (vi) the occurrence of any
"Change in Control" as defined in the Company Organizational Documents; or (vii)
the occurrence of any "Distribution Date", "Section 11(a)(ii) Event" or "Section
13 Event", in each case as defined in the Rights Agreement. As used herein, the
term "beneficially own" or "beneficial ownership" shall have the Exchange Act
and the rules and regulations promulgated thereunder.
"Closing Date" means June 28, 2001, on which the initial Loans are
made.
"Closing Date Mortgage Policies" has the meaning set forth in
subsection 4.1P.
"Closing Date Mortgaged Property" has the meaning set forth in
subsection 4.1P.
"Closing Date Mortgages" has the meaning set forth in subsection 4.1P.
"Collateral" means, collectively, all of the real, personal and mixed
property (including capital stock and other ownership interests) in which Liens
are purported to be granted pursuant to the Collateral Documents as security for
the Obligations.
"Collateral Access Agreement" means any landlord waiver, mortgagee
waiver, bailee letter or any similar acknowledgement agreement of any landlord
or mortgagee in respect of any Real Property Asset where any Inventory is
located or any warehouseman or processor in possession of Inventory,
substantially in the form of Exhibit XIII annexed hereto, with such changes
------------
thereto as may be reasonably satisfactory to Agent.
"Collateral Account" has the meaning assigned to that term in the
Security Agreement.
"Collateral Documents" means the Security Agreement, the Foreign
Pledge Agreements, the Blocked Account Agreements, the Collateral Access
Agreements, the Mortgages, the Lock Box Agreements, the U.K. Subsidiary
Debenture, the Canadian Subsidiary Documents, and all other instruments or
documents delivered by any Loan Party pursuant to this Agreement or any of the
other Loan Documents in order to grant to Agent, on behalf of Lenders, a Lien on
any real, personal or mixed property of that Loan Party as security for the
Obligations.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.
"Commitments" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
6
"Common Shares" has the meaning set forth in the recitals to this
Agreement.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Company" has the meaning assigned to that term in the introduction to
this Agreement.
"Company Organizational Documents" means the Organizational Documents
of Company, in the form delivered to Agent prior to the execution of this
Agreement and as such Organizational Documents may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit VI annexed hereto delivered to Agent and Lenders by Company pursuant
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to subsection 6.1(iv).
"Concentration Accounts" means, collectively, the BT Concentration
Accounts and the Other Bank Concentration Accounts.
"Concentration Bank" means BTCo or any commercial bank satisfactory to
Agent at which any Loan Party maintains a Concentration Account.
"Confidential Information Memorandum" means the Confidential
Information Memorandum dated June 2001 prepared by Deutsche Banc Alex. ▇▇▇▇▇
Inc. relating to the credit facilities evidenced by this Agreement.
"Conforming Leasehold Interest" means any Recorded Leasehold Interest
as to which the lessor has agreed in writing for the benefit of Agent (which
writing has been delivered to Agent), whether under the terms of the applicable
lease, under the terms of a Landlord Consent and Estoppel, or otherwise, to the
matters described in the definition of "Landlord Consent and Estoppel", which
interest, if a subleasehold or sub-subleasehold interest, is not subject to any
contrary restrictions contained in a superior lease or sublease.
"Consolidated Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Company and its Subsidiaries)
by Company and its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or equipment" or comparable
items reflected in the consolidated statement of cash flows of Company and its
Subsidiaries.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense for such period excluding, however, any interest
--------- -------
expense not payable in Cash (including amortization of discount and amortization
of debt issuance costs).
"Consolidated Current Assets" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP, excluding
---------
Cash and Cash Equivalents, the current
7
portions of deferred tax assets which are not receivable in cash within one year
of such date of determination, and current assets which are LIFO reserves of
Contico.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP, excluding the current portions of long-term Indebtedness
---------
and Capital Leases, the current portions of deferred tax liabilities which are
not payable in cash within one year of such date of determination, and current
liabilities which are fees and expenses incurred and payable on or prior to the
six-month anniversary of the Closing Date in connection with the
Recapitalization.
"Consolidated EBITDA" means, for any period, the sum, without
duplication, of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense and Priority Return (as defined in the Contico LLC
Agreement in effect on the date hereof) paid to the holders of the Contico
Preferred Units with respect to the Contico Preferred Units, (iii) provisions
for taxes based on income, (iv) total depreciation expense, (v) total
amortization expense, (vi) all non-capitalized costs and expenses associated
with the Recapitalization for such period to the extent not disallowed by Agent
in its sole discretion, (vii) all unusual expenses and all other non-capitalized
restructuring expenses (including costs and expenses attributable to employee
severance obligations and facility consolidation costs) for such period to the
extent not disallowed by Agent in its sole discretion, (viii) all non-cash
expenses associated with asset write-downs for such period booked within one
year of the Closing Date to the extent not disallowed by Agent in its sole
discretion, (ix) any payment of or accrual for the Management Fee (as defined in
Section 2 thereof, as unamended) under the Management Agreement, (x) all other
payments made to K&C and its Affiliates during such period for expenses incurred
on behalf of Holdings, Company or any of their respective Subsidiaries pursuant
to Kohlberg Agreements, and (xi) other non-cash items (other than any such non-
cash item to the extent that it represents an accrual of or reserve for cash
expenditures in any future period), but only, in the case of clauses (ii)-(xi),
to the extent deducted in the calculation of Consolidated Net Income less other
----
non-cash items added in the calculation of Consolidated Net Income (other than
any such non-cash item to the extent that it will result in the receipt of cash
payments in any future period), all of the foregoing as determined on a
consolidated basis for Company and its Subsidiaries in conformity with GAAP;
provided that (a) in the event any Loan Party makes a Permitted Acquisition (or
--------
any other acquisition of any Person or any division or any business unit
permitted hereunder or consented to by the Requisite Lenders) during such
period, if Company provides Agent and Lenders financial statements with respect
to the business so acquired (which financial statements shall have been audited
by one of the "Big 5" accounting firms or another nationally recognized
accounting firm reasonably satisfactory to Agent or financial statements
otherwise satisfactory to Agent) reasonably satisfactory to the Requisite
Lenders, Consolidated EBITDA for such period shall be calculated on a pro forma
---------
basis, based on the results of such acquired Person or acquired assets as if
such Permitted Acquisition (or such other acquisition) had occurred on the first
day of such period, (b) in the event any Loan Party makes a Permitted
Disposition (or any other disposition of any Person or any division or any
business unit permitted hereunder or consented to by the Requisite Lenders)
during such period, Consolidated EBITDA for such period shall be calculated on a
pro forma basis, based on the results of such disposed Person or disposed assets
---------
as if such Permitted Disposition (or such other disposition) had occurred on the
first day of such period, (c) Consolidated EBITDA shall
8
be calculated as if the disposition of assets and liabilities of ▇▇▇▇▇▇▇ Tools,
Inc., was consummated on December 31, 2000, (d) Consolidated EBITDA shall be
calculated as if Company and its Subsidiaries have achieved cost reduction
during the first six months of Fiscal Year 2001 in an amount equal to $920,000
(in the case of Contico's manufacturing realignment initiative) and $1,036,990
(in the case of Company's corporate restructuring initiative), and (e) in the
case of clauses (ii)-(xi), any such amounts related to ▇▇▇▇▇ shall be included
to the extent (and only to the extent) of the net loss of ▇▇▇▇▇ included in
clause (i).
"Consolidated Excess Cash Flow" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of (a) Consolidated EBITDA and (b) the Consolidated Working Capital
Adjustment minus (ii) the sum, without duplication, of the amounts for such
-----
period of (a) voluntary and scheduled repayments of Consolidated Total Debt
(excluding repayments of Revolving Loans except to the extent the Revolving Loan
Commitments are permanently reduced in connection with such repayments), (b)
Consolidated Capital Expenditures (net of any proceeds of any related financings
with respect to such expenditures), (c) Consolidated Cash Interest Expense, (d)
the provision for current taxes based on income of Company and its Subsidiaries
and payable in cash with respect to such period, (e) the amounts added in
connection with clauses (vi)-(x) of Consolidated EBITDA to the extent Company or
its Subsidiaries made cash payments with respect to such amounts during such
period (whether such payment related to such period or to prior periods), and
(f) for any period which includes the first six months of Fiscal Year 2001, the
amount of increase in Consolidated EBITDA resulting from the operation of clause
(d) of the definition of Consolidated EBITDA to the extent the cost reductions
were not actually achieved during such six month period, plus (in the case of
----
decrease) or minus (in the case of increase) (iii) the amount of decrease (or
-----
increase) in Consolidated EBITDA resulting from the operation of clause (v) in
the definition of Consolidated Net Income and clause (e) in the definition of
Consolidated EBITDA.
"Consolidated Fixed Charges" means, for any period, the sum (without
duplication) of the amounts for such period of (A) the sum of (i) Consolidated
Interest Expense, (ii) scheduled principal payments in respect of Consolidated
Total Debt, (iii) provisions for taxes based on income, (iv) Restricted Junior
Payments paid or payable during such period pursuant to subsection 7.5, and (v)
the aggregate amount of all rents paid or payable during that period under all
Capital Leases to which Company or any of its Subsidiaries is a party, minus (B)
-----
the Consolidated Working Capital Adjustment, all of the foregoing as determined
on a consolidated basis for Company and its Subsidiaries in conformity with
GAAP.
"Consolidated Interest Expense" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, (i) any amounts referred to in subsection 2.3 payable to
--------- -------
Agent and Lenders on or before the Closing Date and (ii) interest paid in
connection with the ▇▇▇▇▇ Loan Agreement.
9
"Consolidated Leverage Ratio" means, as at any date, the ratio of (a)
Consolidated Total Debt as at such date to (b) Consolidated EBITDA for the
consecutive four Fiscal Quarters ending on the last day of the most recently
ended Fiscal Quarter.
"Consolidated Net Income" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
--------
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, (v) the net
income (and net loss of up to $1,250,000 for any twelve month period (or a
ratable portion thereof for any shorter period)) of ▇▇▇▇▇, (vi) any LIFO
reserves of Contico to the extent such LIFO reserves decrease net income of
Contico, and (vii) (to the extent not included in clauses (i) through (vi)
above) any net extraordinary gains or net extraordinary losses.
"Consolidated Rental Payments" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis determined in conformity with GAAP during that period under
all Capital Leases and Operating Leases to which Company or any of its
Subsidiaries is a party as lessee.
"Consolidated Total Debt" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that Consolidated Total Debt shall not include the Indebtedness of
--------
▇▇▇▇▇ under the ▇▇▇▇▇ Loan Agreement so long as such Indebtedness is not
included in the consolidated balance sheet of Company and its Subsidiaries.
"Consolidated Working Capital" means, as at any date of determination,
the excess (or deficit) of Consolidated Current Assets over Consolidated Current
Liabilities.
"Consolidated Working Capital Adjustment" means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated Working Capital as of the end of such period.
"Contico" means Contico International, L.L.C., a Delaware limited
liability company (formerly known as CII Acquisition, L.L.C), and a Subsidiary
of Company.
"Contico Common Units" means the Common Units of Contico as such term
is defined in the Contico LLC Agreement.
10
"Contico Documents" means the Contico Members Agreement, the Contico
LLC Agreement, the Contico Preferred Unit Repurchase Agreement and the Contico
Purchase Agreement.
"Contico LLC Agreement" means that certain Amended and Restated
Limited Liability Company Agreement of Contico International, L.L.C. (formerly
CII Acquisition, L.L.C.) by and between Newcastle and Company dated as of
January 8, 1999, as such agreement has been amended by First Amendment thereto
dated as of June 1, 1999, by Second Amendment thereto dated as March 28, 2001
and by Third Amendment thereto dated on or about June 27, 2001 and as in effect
on the Closing Date and as such agreement may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
"Contico Members Agreement" means that certain Members Agreement by
and between Newcastle and Company dated as of January 8, 1999, as amended by
that certain Amendment No. 1 to the Members Agreement by and between Newcastle
and Company dated as of March 29, 2001 and that certain Amendment No. 2 to the
Members Agreement by and between Newcastle and Company dated on or about June 1,
2001, as such agreement is in effect on the Closing Date and as such agreement
may be amended from time to time thereafter to the extent permitted under
subsection 7.15.
"Contico Preferred Unit Repurchase" has the meaning set forth in the
recitals to this Agreement.
"Contico Preferred Unit Repurchase Agreement" means that certain
Preferred Unit Repurchase Agreement by and among Contico, Newcastle and Company
dated as of March 29, 2001, as amended by that certain Amendment ▇▇. ▇ ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Agreement by and among Contico, Newcastle and Company
dated on or about June 2, 2001, as such agreement is in effect on the Closing
Date and as such agreement may be amended from time to time thereafter to the
extent permitted under subsection 7.15.
"Contico Preferred Units" means the Preferred Units of Contico as such
term is defined in the Contico LLC Agreement.
"Contico Purchase Agreement" means that certain Unit Purchase
Agreement by and among Newcastle, Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇ dated as of December
31, 1998, as such agreement is in effect on the Closing Date and as such
agreement may be amended from time to time thereafter to the extent permitted
under subsection 7.15.
"Contingent Obligation", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include, without
11
limitation, (a) the direct or indirect guaranty, endorsement (otherwise than for
collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar payments if
required regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of another
through any agreement (contingent or otherwise) (X) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise) or (Y) to
maintain the solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under subclauses
(X) or (Y) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"Continuing Member" means, as of any date of determination any member
of the Governing Body of Holdings who (i) was a member of such Governing Body on
the Closing Date or (ii) was nominated for election or elected to such Governing
Body with the affirmative vote of a majority of the members who were either
members of such Governing Body on the Closing Date or whose nomination or
election was previously so approved.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"Convertible Preferred Stock" has the meaning set forth in the
recitals to this Agreement.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement to which Company or any of its Subsidiaries is
a party.
"Daily Funding Lender" means Agent, in its individual capacity as a
Lender hereunder.
"Daily Funding Lender Discretionary Period" has the meaning assigned
to that term in subsection 2.1C(ii).
"Deposit Account" means a demand, time, savings, passbook or like
account (including without limitation disbursement accounts, remittance accounts
and zero balance accounts) maintained with a bank, savings and loan association,
credit union or like organization, other than an account evidenced by a
negotiable certificate of deposit.
"Dilution" means, for any period with respect to any Loan Party, the
fraction, expressed as a percentage, the numerator of which is the aggregate
amount of reductions in the Accounts of such Loan Party for such period other
than by reason of dollar for dollar cash
12
payment and the denominator of which is the aggregate dollar amount of the sales
of such Loan Party for such period.
"Dilution Reserves" means, as of any date of determination, the sum of
(i) such reserves as Agent may from time to time establish and revise with
respect to any Loan Party in its Permitted Discretion in such amounts as Agent
may determine in its Permitted Discretion to reflect the Dilution as of such
date with respect to the Accounts of such Loan Party for the immediately
preceding twelve-month period to the extent such Dilution exceeds five percent
(5%) plus (ii) Seasonal Dilution Reserves for such Loan Party. For purposes
----
hereof, "Seasonal Dilution Reserves" means, as of any date of determination for
any Loan Party, such seasonal reserves as Agent may from time to time establish
and revise with respect to such Loan Party in its Permitted Discretion in such
Seasonal Dilution Reserve Amount as Agent may determine in its Permitted
Discretion to anticipate and reserve for higher Dilutions with respect to the
Accounts of such Loan Party for future months. For purposes hereof, "Seasonal
Dilution Reserve Amount" means, as of any date of determination with respect to
any Loan Party, the percentage equal to the greater of (i) zero and (ii) that
percentage which allows Agent to reserve for higher Anticipated Dilution in
future months in four equal incremental increases (by way of illustration and
without limiting the generality of the foregoing, if the Anticipated Dilution
for January, February, March and April are 0%, 0%, 0% and 40%, respectively, the
Seasonal Dilution Reserve Amounts for such months would be 10%, 20%, 30% and
40%, respectively). For purposes hereof, "Anticipated Dilution" means for any
Loan Party, for any current or future month, the anticipated Dilution for such
month for such Loan Party, which shall be calculated as follows: (a) in the
event the historical Dilution for such Loan Party for the twenty-fourth month
preceding such month is unavailable, then such anticipated Dilution shall equal
the historical Dilution for such Loan Party for the twelfth month preceding such
month, and (b) otherwise, such anticipated Dilution shall equal the average of
the historical Dilutions for such Loan Party for the twelfth month preceding
such month and the twenty-fourth month preceding such month.
"Dollars" and the sign "$" mean the lawful money of the United States
of America.
"Domestic Active Subsidiary" means any Domestic Subsidiary of Company
(other than AGM Industries, Inc., a California corporation, Ashford Reinsurance
Intermediaries Corporation, a New York corporation, Capacity Managers
International, Inc. (PA), a Pennsylvania corporation, Consolidated Pool Mart,
Inc., a California corporation, and GFD Corporation, a Pennsylvania corporation,
in each case so long as each such specified Subsidiary does not own or acquire
assets with an aggregate fair market value in excess of the amount set forth in
subsection 6.9A).
"Domestic Subsidiary" means any Subsidiary of Company that is
incorporated or organized under the laws of the United States of America, any
state thereof or in the District of Columbia.
"Eligible Accounts Receivable" means, with respect to Company,
Company's Subsidiaries which are Subsidiary Guarantors, ▇▇▇▇▇ and Glit, Accounts
of such Loan Party deemed by Agent in the exercise of its Permitted Discretion
to be eligible for inclusion in the calculation of the Revolving Borrowing Base.
In determining the amount to be so included, the
13
face amount of such Accounts shall be reduced by the amount of all returns,
discounts, deductions, claims, credits, charges, or other allowances. Unless
otherwise approved in writing by Requisite Lenders, an Account shall not be an
Eligible Account Receivable if:
(a) it arises out of a sale made by such Loan Party to an
Affiliate; or
(b) its payment terms are longer than 30 days from date of
invoice, except that (i) (A) during the months of February through
June, up to $30,000,000 of Accounts with payment terms in excess of 30
days but not more than 60 days, (B) during the months of January and
July, up to $35,000,000 of Accounts with payment terms in excess of 30
days but not more than 60 days, and (C) during the months of August
through December, up to $40,000,000 of Accounts with payment terms in
excess of 30 days but not more than 60 days, may be included in
Eligible Accounts Receivable to the extent otherwise constituting an
Eligible Account Receivable, and (ii) (A) during the months of
February through August, up to $5,000,000 of Accounts of Duckback
Products, Inc. with payment terms in excess of 60 days, (B) during the
months of September through January, up to $3,000,000 of Accounts of
Duckback Products, Inc. with payment terms in excess of 60 days, and
(C) during any month of the year, up to $7,000,000 of Accounts of any
Loan Party (other than Duckback Products, Inc.) with payment terms in
excess of 60 days, may be included in Eligible Accounts Receivable to
the extent otherwise constituting an Eligible Account Receivable; or
(c) it is unpaid (i) more than 60 days after the original
payment due date on payment terms of 30 days or less from date of
invoice, or (ii) more than 120 days from date of invoice on payment
terms of more than 30 days from date of invoice except that, with
respect to clause (ii), up to $2,000,000 of such Accounts which are
unpaid more than 120 days from date of invoice may be included in
Eligible Accounts Receivable to the extent such Accounts otherwise
constitute Eligible Accounts Receivable; or
(d) it is from the same account debtor or its Affiliate and
fifty percent (50%) or more of all Accounts from that account debtor
(and its Affiliates) are ineligible under (c) above; or
(e) when aggregated with all other Accounts of an account
debtor, such Account exceeds 20% in face value of all Eligible
Accounts of all Loan Parties then outstanding, but only to the extent
of such excess, unless such excess is supported by an irrevocable
letter of credit satisfactory to Agent (as to form, substance and
issuer) and assigned to and directly drawable by Agent; or
(f) the account debtor for such Account is a creditor of such
Loan Party, has or has asserted a right of setoff against such Loan
Party, or has disputed its liability or otherwise has made any claim
with respect to such Account or any other Account which has not been
resolved, in each case to the extent of the amount owed by such Loan
Party to such account debtor, the amount of such
14
actual or asserted right of setoff, or the amount of such dispute or
claim, as the case may be; or
(g) the account debtor is (or its assets are) the subject of an
Insolvency Event; or
(h) (i) with respect to ▇▇▇▇▇ and Glit, (1) such Account is not
payable in Dollars or Canadian Dollars or (2) the account debtor for
such Account is located outside of Canada and the United States, (ii)
with respect to the U.K. division of Contico, (1) such Account is not
payable in Dollars or Pounds or (2) such account debtor for such
Account is located outside of England and the United States, and (iii)
with respect to each such Loan Party other than ▇▇▇▇▇ or Glit or the
U.K. division of Contico, (1) such Account is not payable in Dollars
or (2) the account debtor for such Account is located outside the
United States, except in each case to the extent that such Account is
supported by an irrevocable letter of credit satisfactory to Agent (as
to form, substance and issuer) and assigned to and directly drawable
by Agent; or
(i) the sale to the account debtor is on a ▇▇▇▇-and-hold,
guarantied sale, sale-and-return, sale on approval or consignment
basis or made pursuant to any other written agreement providing for
repurchase or return; or
(j) Agent in its Permitted Discretion determines by its own
credit analysis that collection of such Account is uncertain or that
such Account may not be paid; or
(k) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such Loan Party
duly assigns its rights to payment of such Account to Agent pursuant
to the Assignment of Claims Act of 1940, as amended (31 U.S.C. (S)(S)
3727 et seq.), or the account debtor is the Government of Canada or
any department, agency or instrumentality thereof, unless such Loan
Party duly assigns its rights to payment of such Account to Agent
pursuant to the Financial Administration Act (Canada), or the account
debtor is any other foreign country or any department, agency or
instrumentality thereof, or the account debtor is the Government of
England or any department, agency or instrumentality thereof; or
(l) the goods giving rise to such Account have not been shipped
and delivered to and accepted by the account debtor, the services
giving rise to such Account have not been performed and accepted, or
such Account otherwise does not represent a final sale; or
(m) such Account does not comply with all Requirements of Law,
including without limitation the Federal Consumer Credit Protection
Act, the Federal Truth in Lending Act and Regulation Z of the Board of
Governors of the Federal Reserve System; or
15
(n) such Account is subject to any adverse security deposit,
progress payment or other similar advance made by or for the benefit
of the applicable account debtor, but only to the extent thereof; or
(o) it is not subject to a valid and perfected First Priority
Lien in favor of Agent or does not otherwise conform to the
representations and warranties contained in the Loan Documents; or
(p) with respect to any Account of the U.K. division of Contico,
it is not Eligible U.K. Accounts Receivable.
provided that Agent, in the exercise of its Permitted Discretion, may impose
--------
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition.
"Eligible Assignee" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
--------
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies, in each case (under clauses (i) through
(iv) above) that is reasonably acceptable to Agent; and (B) any Lender, any
Affiliate of any Lender and any Affiliated Fund of any Lender; provided that
--------
neither Company nor any Affiliate of Company shall be an Eligible Assignee.
"Eligible Inventory" means, with respect to Company, Company's
Subsidiaries which are Subsidiary Guarantors, ▇▇▇▇▇ and Glit, the aggregate
amount of Inventory of such Loan Party deemed by Agent in the exercise of its
Permitted Discretion to be eligible for inclusion in the calculation of the
Revolving Borrowing Base. In determining the amount to be so included,
Inventory shall be valued at the lower of cost (based on FIFO) or market on a
basis consistent with such Loan Party's current and historical accounting
practice. Unless otherwise approved in writing by Requisite Lenders, an item of
Inventory shall not be included in Eligible Inventory if:
(a) it is not owned solely by such Loan Party or such Loan Party
does not have good, valid and marketable title thereto; or
(b) it is not located in the United States or, with respect to
Inventory owned by ▇▇▇▇▇ or Glit, it is not located in Canada or, with
respect to Inventory owned by Contico's U.K. division, it is not
located in England; or
(c) it is not located on property owned or leased by such Loan
Party or in a contract warehouse, in each case subject to a Collateral
Access Agreement executed by any applicable mortgagee, lessor or
contract warehouseman, as the case may be, and segregated or otherwise
separately identifiable from goods of
16
others, if any, stored on the premises; provided that if such
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Inventory is not subject to a Collateral Access Agreement, Agent may,
in its sole discretion, include such Inventory as Eligible Inventory
so long as a reserve (the "Rent Reserves") is established in an amount
equal to rental payments paid or payable by Loan Parties to applicable
mortgagees, lessors or contract warehousemen for the immediately
succeeding three-month period with respect to such Inventory; or
(d) it is work in progress Inventory; or
(e) it is not subject to a valid and perfected First Priority
Lien in favor of Agent (including Inventory covered by any negotiable
documents of title (including documents, warehouse receipts, dock
receipts and bills of lading) issued by any Person to the extent such
negotiable documents of title have not been delivered to Agent)
except, with respect to Inventory stored at sites described in clause
(c) above, for Liens for unpaid rent or normal and customary
warehousing charges; or
(f) it consists of goods returned or rejected by such Loan
Party's customers or goods in transit to third parties (other than to
warehouse sites covered by a Collateral Access Agreement); or
(g) it is not first-quality goods, is obsolete, slow moving,
unsalable (including, without limitation, unsalability due to
branding), damaged or unfit for further processing, or does not
otherwise conform to the representations and warranties contained in
the Loan Documents; or
(h) it consists of purchased components which are not classified
as raw materials and which are manufactured specifically for such Loan
Party; or
(i) it consists of components or supplies used or consumed in
the Loan Parties' business (other than raw materials used for
manufacturing of finished goods for sale), spare parts, packaging or
shipping materials; or
(j) it consists of Inventory delivered to or held by the Loan
Parties on "sale on approval", "sale or return", "consignment",
"guarantee sale" or "▇▇▇▇ and hold" or that is subject to any
repurchase or return agreement, or otherwise has terms by reason of
which the Loan Parties' ownership or possession thereof may be
conditional; or
(k) with respect to Inventory owned by Contico's U. K. division
and located in England, it is not Eligible U.K. Inventory.
provided that Agent, in the exercise of its Permitted Discretion, may impose
--------
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition.
"Eligible M&E" means, with respect to Company and Company's
Subsidiaries which are Subsidiary Guarantors, the aggregate amount of machinery
and equipment of such Loan Party which are:
17
(a) owned by Company or a Subsidiary Guarantor and is subject to
a First Priority Lien in favor of Agent for the benefit of Lenders;
(b) located on property owned or leased by Company or a
Subsidiary Guarantor, and in the case it is located on leased property a
Collateral Access Agreement has been executed by any applicable lessor and
it is segregated or otherwise separately identifiable from goods of others,
if any, stored on the premises; and
(c) listed in Schedule 1.1A annexed hereto.
-------------
"Eligible Real Property" means, with respect to Company and Company's
Subsidiaries which are Subsidiary Guarantors, the Real Property Assets of such
Loan Party which are:
(a) owned by Company or a Subsidiary Guarantor and is subject to
a First Priority Lien in favor of Agent for the benefit of Lenders; and
(b) listed in Schedule 1.1B annexed hereto.
-------------
"Eligible U.K. Accounts Receivable" means, with respect to Accounts of
Contico's U.K. division, such Accounts deemed by Agent in the exercise of its
Permitted Discretion to be eligible for inclusion in the calculation of the
Revolving Borrowing Base. Unless otherwise approved in writing by Requisite
Lenders, an Account shall not be included in Eligible U.K. Accounts Receivable
if:
(a) it is any Account described in any of clauses (a) through
(o) of the definition of Eligible Accounts Receivable; or
(b) it does not meet any additional eligibility requirements
required by Agent in its sole discretion after consultation with its U.K.
counsel;
; provided that (i) in no event shall any Account be included as Eligible U.K.
--------
Accounts Receivable on or after June 30,2002, and (ii) in no event shall any
Account be included as Eligible U.K. Accounts Receivable prior to the date on
which (1) all of the assets and liabilities of Contico (including its Inventory,
Accounts, Deposit Accounts and ledgers) are segregated and otherwise separately
identifiable from the assets and liabilities of Contico Manufacturing Limited,
(2) Contico shall have caused each bank at which each of its U.K. Deposit
Accounts is maintained to execute an acknowledgement in the form attached to the
U.K. Subsidiary Debenture and otherwise in form and substance satisfactory to
Agent, and (3) Company shall have delivered to Agent an Officer's Certificate to
such effect.
"Eligible U.K. Inventory" means, with respect to any Inventory owned
by Contico's U.K. division and located in England, such Inventory deemed by
Agent in the exercise of its Permitted Discretion to be eligible for inclusion
in the calculation of the Revolving Borrowing Base. Unless otherwise approved
in writing by Requisite Lenders, an item of Inventory shall not be included in
Eligible U.K. Inventory if:
18
(a) it is any Inventory described in any of clauses (a) through
(j) of the definition of Eligible Inventory; or
(b) it does not meet any additional eligibility requirements
required by Agent in its sole discretion after consultation with its U.K.
counsel;
; provided that (i) in no event shall any Inventory be included as Eligible U.K.
--------
Inventory on or after June 30,2002, and (ii) in no event shall any Inventory be
included as Eligible U.K. Inventory prior to the date on which (1) all of the
assets and liabilities of Contico (including its Inventory, Accounts, Deposit
Accounts and ledgers) are segregated and otherwise separately identifiable from
the assets and liabilities of Contico Manufacturing Limited, (2) Contico shall
have caused each bank at which each of its U.K. Deposit Accounts are maintained
to execute an acknowledgement in the form attached to the U.K. Subsidiary
Debenture and otherwise in form and substance satisfactory to Agent, and (3)
Company shall have delivered to Agent an Officer's Certificate to such effect.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates.
"Environmental Claim" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive, by any Government Authority or any other Person, arising (i)
pursuant to or in connection with any actual or alleged violation of any
Environmental Law, (ii) in connection with any Hazardous Materials or any actual
or alleged Hazardous Materials Activity, or (iii) in connection with any actual
or alleged damage, injury, threat or harm to health, safety, natural resources
or the environment.
"Environmental Indemnity Agreement" means the Environmental Indemnity
Agreement executed and delivered by Company and its existing Domestic Active
Subsidiaries on the Closing Date and to be executed and delivered by Company's
additional Domestic Subsidiaries from time to time thereafter in accordance with
subsection 6.9, substantially in the form of Exhibit XXIV annexed hereto, as
------------
such Environmental Indemnity Agreement may be amended, supplemented or otherwise
modified from time to time.
"Environmental Laws" means any and all current or future common law
duties or obligations, statutes, ordinances, orders, rules, regulations,
judgments, Governmental Authorizations, or any other requirements of Government
Authorities relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human health and
the environment, applicable to Holdings, Company or any of its Subsidiaries or
any of its or their assets or any Facility.
"Equity Financing" has the meaning set forth in the recitals to this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
19
"ERISA Affiliate" means, as applied to any Person, (i) any corporation
that is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) that is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of a Person or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of such Person
or such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of such Person or such Subsidiary and
with respect to liabilities arising after such period for which such Person or
such Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof,
or against Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in connection with any Employee Benefit Plan; (ix) receipt from the
Internal Revenue Service of notice of the failure of any Pension Plan (or any
other Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (x) the
20
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Eurodollar Rate Margin" means the margin over the Adjusted Eurodollar
Rate used in determining the rate of interest of Eurodollar Rate Loans pursuant
to subsection 2.2A.
"Excess Funded Amount" has the meaning assigned to that term in
subsection 2.1D(ii).
"Excess Paydown Amount" has the meaning assigned to that term in
subsection 2.1D(iii).
"Event of Default" means each of the events set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Exchange Rate" means, on any date when an amount expressed in a
currency other than Dollars is to be determined with respect to any Letter or
Credit, the nominal rate of exchange of the applicable Issuing Lender in the New
York foreign exchange market for the purchase of such Issuing Lender (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon (New York time)
one Business Day prior to such date, expressed as a number of units of such
currency per one Dollar.
"Existing Credit Agreement" means that certain Amended and Restated
Credit Agreement dated as of December 11, 1998 among Company, the lenders party
thereto and Bank of America, N.A. (formerly known as Bank of America National
Trust and Savings Association), as letter of credit issuing bank and as
administrative for the lenders, as amended to the date hereof, under which there
is approximately $144,300,000 aggregate amount of obligations outstanding.
"Facilities" means all real property (including, without limitation,
all buildings, fixtures or other improvements located thereon) and related
facilities now, hereafter or heretofore owned, leased, operated or used by
Company or any of its Subsidiaries or any of their respective predecessors or
Affiliates.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by Agent.
"Financial Plan" has the meaning assigned to that term in subsection
6.1(xii).
21
"First Priority" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i) such
Lien is perfected and has priority over any other Lien on such Collateral other
than nonconsensual property tax Liens that arise by operation of law and that
relate to amounts the payment of which are not required under subsection 6.3,
purchase money security interests for acquisitions of specific equipment
specified in Schedule 7.2, and purchase money security interests granted in
------------
connection with the acquisition of property pursuant to subsection 7.2A(viii)
hereof and (ii) such Lien is the only Lien (other than Permitted Encumbrances
and Liens permitted pursuant to subsection 7.2) to which such Collateral is
subject.
"Fiscal Quarter" means a fiscal quarter of Company and its
Subsidiaries of any Fiscal Year (it being understood by the parties hereto that
the Fiscal Quarters of Company and its Subsidiaries are dated March 31, June 30,
September 30 and December 31 but the books of Company and its Subsidiaries for
the first three such Fiscal Quarters in any Fiscal Year are closed as of the
thirteenth Friday of such Fiscal Quarters).
"Fiscal Year" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
"Flood Hazard Property" means a Closing Date Mortgaged Property or an
Additional Mortgaged Property located in an area designated by the Federal
Emergency Management Agency as having special flood or mud slide hazards.
"Foreign Active Subsidiary" means any Foreign Subsidiary of Company
(other than Glit Limited (English company number 2347069) and Labour Holdings,
Limited (English company number 1083809), in each case so long as each such
specified Subsidiary does not own or acquire assets with an aggregate fair
market value in excess of the amount set forth in subsection 6.9B).
"Foreign Pledge Agreement" means each pledge agreement or similar
instrument governed by the laws of a country other than the United States,
executed on the Closing Date or from time to time thereafter in accordance with
subsection 6.9 by Company or any Domestic Subsidiary that owns capital stock or
other ownership interests of one or more Foreign Active Subsidiaries organized
in such country, in form and substance satisfactory to Agent, as such Foreign
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time.
"Foreign Subsidiary" means any Subsidiary of Company that is not a
Domestic Subsidiary.
"Funding and Payment Office" means (i) the office of Agent located at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or (ii) such other office of Agent
as may from time to time hereafter be designated as such in a written notice
delivered by Agent to Company and each Lender.
"Funding Date" means the date of the funding of a Loan.
22
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"Glit" means Glit/Gemtex, Ltd., a Canadian corporation and a
Subsidiary of Company.
"Glit Subsidiary Acknowledgement" means that certain acknowledgement
dated June 28, 2001 by and among Glit, Company and Agent, substantially in the
form of Exhibit XXIII-A annexed hereto, as such acknowledgement is in effect on
---------------
the Closing Date and as such acknowledgement may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
"Glit Subsidiary Documents" means the Glit Subsidiary Note, Glit
Subsidiary Security Agreement and Glit Subsidiary Acknowledgement.
"Glit Subsidiary Note" means that certain promissory note dated June
28, 2001 executed by Glit in favor of Company, substantially in the form of
Exhibit XX-A annexed hereto, as such promissory note is in effect on the Closing
------------
Date and as such promissory note may be amended from time to time thereafter to
the extent permitted under subsection 7.15.
"Glit Subsidiary Security Agreement" means that certain security
agreement dated June 28, 2001 by and between Glit and Company, substantially in
the form of Exhibit XXI annexed hereto, as such security agreement is in effect
-----------
on the Closing Date and as such agreement may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
"Governing Body" means the board of directors or other body having the
power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.
"Government Authority" means any political subdivision or department
thereof, any other governmental or regulatory body, commission, central bank,
board, bureau, organ or instrumentality or any court, in each case whether
federal, state, local or foreign.
"Governmental Authorization" means any permit, license, registration,
authorization, plan, directive, consent order or consent decree of or from any
Government Authority.
"Guaranties" means the Holdings Guaranty and the Subsidiary Guaranty.
"Guarantor" means, at any time, Holdings and any of Company's
Subsidiaries that is then a party to the Subsidiary Guaranty.
23
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substance",
"hazardous waste", "hazardous material", "extremely hazardous waste", acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substance", or any other term or expression intended by Environmental
Laws to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws); (ii) any oil,
petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iv) any flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-containing materials; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any Government Authority or which may or could pose a hazard to the
health and safety of the owners, occupants or any Persons in the vicinity of any
Facility or to the indoor or outdoor environment.
"Hazardous Materials Activity" means any past, current or proposed
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, threatened discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"Hedge Agreement" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or currency
values, respectively.
"Hedge Reserve" means the fluctuating reserve established by Agent
against the Revolving Borrowing Base in an amount equal to the aggregate ▇▇▇▇-
to-Market Adjustment Amounts under all Secured Hedge Agreements then
outstanding. Agent shall adjust the Hedge Reserve to reflect any change in any
▇▇▇▇-to-Market Adjustment Amount under a Secured Hedge Agreement as set forth in
a certificate of the related Lender Counterparty.
"Holdings" means KKTY Holding Company, L.L.C., a Delaware limited
liability company.
"Holdings Guaranty" means the Holdings Guaranty executed and delivered
by Holdings on the Closing Date, substantially in the form of Exhibit XVII
------------
annexed hereto, as such Holdings Guaranty may thereafter be amended,
supplemented or otherwise modified from time to time.
"Holdings Member Agreement" means that certain Members' Agreement by
and among the members of Holdings named therein dated as of May 26, 2001, as
such agreement
24
is in effect on the Closing Date and as such agreement may be amended from time
to time thereafter to the extent permitted under subsection 7.15.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months from the date of incurrence
of the obligation in respect thereof or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute (X) in the case of Hedge Agreements, Contingent
Obligations, and (Y) in all other cases, Investments, and in neither case
constitute Indebtedness.
"Indemnified Liability" has the meaning assigned to that term in
subsection 10.3.
"Indemnitee" has the meaning assigned to that term in subsection 10.3.
"Insolvency Event" means, with respect to any Person, the occurrence
of any of the events described in subsection 8.6 or 8.7; provided that, solely
--------
for purposes of this definition, any references to Holdings, Company or any of
its Subsidiaries in subsection 8.6 or 8.7 shall be deemed to be a reference to
such Person.
"Insolvency Laws" means the Bankruptcy Code or any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect in the United
States of America or any state thereof or in any other jurisdiction in which
Holdings, Company or any of its Subsidiaries is incorporated, has assets or
carries on business.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, software, know-how and processes used in or necessary
for the conduct of the business of Company and its Subsidiaries as currently
conducted that are material to the condition (financial or otherwise), business
or operations of Company and its Subsidiaries, taken as a whole.
"Interest Payment Date" means (i) with respect to any Base Rate Loan,
the first Business Day of each calendar month, commencing on the first such date
to occur after the Closing Date, and (ii) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan; provided
--------
that in the case of each Interest Period of six months "Interest Payment Date"
shall also include the date that is three months after the commencement of such
Interest Period.
"Interest Period" has the meaning assigned to that term in subsection
2.2B.
25
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"Inventory" means, with respect to any Person, all goods, merchandise
and other personal property which are held by such Person for sale or lease,
including those held for display or demonstration, work in progress and any and
all raw materials used in connection with the foregoing.
"Investment" means (i) any direct or indirect purchase or other
acquisition by Holdings, Company or any of its Subsidiaries of, or of a
beneficial interest in, any Securities of any other Person (including any
Subsidiary of Holdings or Company), (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary of
Holdings or Company from any Person other than Company or any of its Wholly-
Owned Subsidiary Guarantors, of any equity Securities of such Subsidiary, (iii)
any direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Holdings, Company or any of its Subsidiaries to any other Person (other than a
Wholly-Owned Subsidiary of Company that is a party to the Subsidiary Guaranty),
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business, or (iv) Interest Rate Agreements or Currency
Agreements not constituting Hedge Agreements. The amount of any Investment shall
be the original cost of such Investment plus the cost of all additions thereto,
----
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"Investors" has the meaning set forth in the recitals to this
Agreement.
"IP Collateral" means, collectively, the Intellectual Property that
constitutes Collateral under the Security Agreement.
"Issuing Lender" means, with respect to any Letter of Credit, the
Lender that agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii); provided that any Issuing Lender
--------
may be an Affiliate of BTCo (including, without limitation, Deutsche Bank AG) so
long as (i) BTCo is a Lender under this Agreement and (ii) such Affiliate shall
have executed a counterpart of this Agreement on or prior to the date of any
issuance of any Letter of Credit by such Affiliate.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
--------
that in no event shall any Subsidiary of any Person be considered to be a Joint
Venture to which such Person is a party.
26
"K&C" means Kohlberg & Company, L.L.C., a Delaware limited liability
company.
"K&C Designated Member" means, as of any date of determination, (i)
any member of the Governing Body of Company who shall have been designated by
Holdings and elected at the 2001 annual meeting of Company's shareholders to
serve until the annual meeting of Company's shareholders to be held in 2003 and
(ii) their successors whose nomination for election or whose appointment to such
Governing Body shall have been designated or approved by Holdings and by a
majority of such members described in clause (i) or their successors who shall
have been so elected or appointed.
"K&C Funds" means Kohlberg Investors IV, L.P., ▇▇▇▇▇▇▇▇ ▇▇ Investors
IV, L.P., Kohlberg Offshore Investors, IV, L.P. and Kohlberg Partners IV, L.P.
"Kohlberg Agreements" means any and all agreements relating to any
services (including without limitation consulting, management, broker or
investment banking services) to be provided by K&C or any of its Affiliates to
any Loan Party, including the Management Agreement.
"Landlord Consent and Estoppel" means, with respect to any Material
Leasehold Property, a letter, certificate or other instrument in writing from
the lessor under the related lease, reasonably satisfactory in form and
substance to Agent, pursuant to which such lessor agrees, for the benefit of
Agent, (i) that without any further consent of such lessor or any further action
on the part of the Loan Party holding such Material Leasehold Property, such
Material Leasehold Property may be encumbered pursuant to a Mortgage and may be
assigned to the purchaser at a foreclosure sale or in a transfer in lieu of such
a sale (and to a subsequent third party assignee if Agent, any Lender, or an
Affiliate of either so acquires such Material Leasehold Property), (ii) that
such lessor shall not terminate such lease as a result of a default by such Loan
Party thereunder without first giving Agent notice of such default and at least
60 days or such shorter period as may be acceptable to Agent (or, if such
default cannot reasonably be cured by Agent within such period, such longer
period as may reasonably be required) to cure such default, (iii) to the matters
contained in a Collateral Access Agreement, and (iv) to such other matters
relating to such Material Leasehold Property as Agent may reasonably request.
"Leasehold Property" means any leasehold interest of any Loan Party as
lessee under any lease of real property.
"Lender" and "Lenders" means the Persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include BTCo as an Issuing Lender unless the context otherwise requires;
provided that the term "Lenders", when used in the context of a particular
--------
Commitment, shall mean Lenders having that Commitment.
"Lender Counterparty" means a Lender (or Affiliate of a Lender) party
to a Hedge Agreement.
27
"Letter of Credit" or "Letters of Credit" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders
for the account of Company or a Subsidiary Guarantor pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed out of the proceeds of Revolving
Loans pursuant to subsection 3.3B or otherwise reimbursed by Company. For
purposes of this definition, any amount described in clause (i) or (ii) of the
preceding sentence which is denominated in a currency other than Dollars shall
be valued based on the applicable Exchange Rate for such currency as of the
applicable date of determination; provided that Agent shall not be obligated to
--------
issue any Letter of Credit denominated in a foreign currency which in the
judgment of Agent is not readily and freely available.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Revolving Loans and the
Term Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by Company or any Subsidiary Guarantor in favor of an
Issuing Lender relating to, the Letters of Credit), the Guaranties, the
Collateral Documents, the Environmental Indemnity Agreement and the Master
Intercompany Note.
"Loan Parties" means any of Holdings, Company or any Subsidiary of
Company executing a Loan Document, including without limitation ▇▇▇▇▇ and Glit.
"Lock Box" means a lockbox maintained by any Loan Party pursuant to a
Lock Box Agreement.
"Lock Box Account" means a Deposit Account under the dominion and
control of Agent that is maintained by any Loan Party with a Lock Box Account
Bank pursuant to a Lock Box Agreement.
"Lock Box Account Bank" means any commercial bank satisfactory to
Agent at which any Loan Party maintains a Lock Box Account.
"Lock Box Agreement" means a Lock Box Agreement executed and delivered
by a Lock Box Bank, Agent and the applicable Loan Party, substantially in the
form of Exhibit XIV annexed hereto (with such modifications thereto in form and
-----------
substance satisfactory to Agent in the case of Lock Boxes maintained in the
United Kingdom or Canada), as such Lock Box Agreement may be amended,
supplemented or otherwise modified from time to time, and "Lock Box Agreements"
means all such Lock Box Agreements, collectively.
28
"Lock Box Bank" means any commercial bank satisfactory to Agent which
provides any Loan Party with a Lock Box service pursuant to a Lock Box
Agreement.
"Management Agreement" means that certain Management Agreement by and
between K&C and Company dated on or about June 28, 2001, as such agreement is in
effect as of the Closing Date and as such agreement may be amended from time to
time thereafter to the extent permitted under subsection 7.15.
"Margin Stock" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"▇▇▇▇-to-Market Adjustment Amount" means the fluctuating credit
exposure of a Lender Counterparty under a Secured Hedge Agreement based upon
increases or decreases in the interest rate or exchange rate. Each Lender
Counterparty shall provide to Agent a certificate containing the calculation of
the ▇▇▇▇-to-Market Adjustment Amount under the related Secured Hedge Agreement
in reasonable detail not less frequently than monthly.
"Master Intercompany Note" means that certain promissory note dated
June 28, 2001 executed by Company and its Active Subsidiaries named therein on
the Closing Date and to be executed and delivered by Company's additional
Subsidiaries from time to time thereafter in accordance with subsection 6.9 in
favor of Company and its Active Subsidiaries named therein, as such promissory
note is in effect on the Closing Date and as such promissory note may be amended
from time to time thereafter to the extent permitted under subsection 7.15.
"Material Adverse Effect" means (i) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, assets,
liabilities, condition (financial or otherwise) or prospects of Holdings or
Company or Company and its Subsidiaries taken as a whole, (ii) a material
impairment of the ability of Holdings or Company to perform under any Loan
Document and to avoid any Event of Default or of the ability of Company and its
Subsidiaries taken as a whole to perform under the Loan Documents and to avoid
any Event of Default, (iii) a material adverse effect upon the legality,
validity, binding effect or enforceability against Holdings or Company or any
Active Subsidiary of any Loan Document or (iv) a material adverse effect on the
value of the Collateral or the amount which Agent or Lenders would be likely to
receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of the Collateral.
"Material Contract" means any contract or other arrangement to which
Holdings, Company or any of its Subsidiaries is a party (other than the Loan
Documents) for which breach, nonperformance, cancellation or failure to renew
could have a Material Adverse Effect.
"Material Leasehold Property" means any Leasehold Property existing on
the Closing Date and listed in Part A of Schedule 5.5B annexed hereto, and any
-------------
Leasehold Property acquired after the Closing Date which (i) is a manufacturing
facility or (ii) provides for annual rent payments in excess of $250,000;
provided that in connection with a renewal of any lease of Leasehold Property
--------
existing on the Closing Date, no such Leasehold Property shall be deemed to
29
be Material Leasehold Property even if the conditions set forth in clause (i) or
(ii) are met if such Leasehold Property was not a Material Leasehold Property on
the Closing Date.
"Maximum Consolidated Capital Expenditure Amount" has the meaning
assigned to that term in subsection 7.8.
"Maximum Rate" has the meaning assigned to that term in subsection
2.2G.
"Mortgage" means (i) a security instrument (whether designated as a
deed of trust or a mortgage or by any similar title) executed and delivered by
any Loan Party, substantially in the form of Exhibit XVIII annexed hereto, with
-------------
such changes thereto as may be reasonably satisfactory to Agent, in each case
with such changes thereto as may be recommended by Agent's local counsel based
on local laws or customary local mortgage or deed of trust practices, or (ii) at
Agent's option, in the case of an Additional Mortgaged Property, an amendment to
an existing Mortgage, in form satisfactory to Agent, adding such Additional
Mortgaged Property to the Real Property Assets encumbered by such existing
Mortgage, in either case as such security instrument or amendment may be
amended, supplemented or otherwise modified from time to time. "Mortgages" means
all such instruments, including the Closing Date Mortgages and any Additional
Mortgages, collectively.
"Multiemployer Plan" means any Employee Benefit Plan that is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"Net Asset Sale Proceeds" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income or franchise
taxes reasonably estimated to be actually payable within two years of the date
of such Asset Sale as a result of any gain recognized in connection with such
Asset Sale and (ii) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than the Loans) that is
secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale.
"Net Insurance/Condemnation Proceeds" means any Cash payments or
proceeds received by Holdings, Company or any of its Subsidiaries (i) under any
business interruption or casualty insurance policy in respect of a covered loss
thereunder or (ii) as a result of the taking of any assets of Holdings, Company
or any of its Subsidiaries by any Person pursuant to the power of eminent
domain, condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs (including income or franchise taxes, if
any, reasonably estimated to be actually payable within two years of the receipt
of Net Insurance/Condemnation Proceeds as a result of any gain recognized in
connection therewith) incurred by Holdings, Company or any of its Subsidiaries
in connection with the adjustment or settlement of any claims of Holdings,
Company or such Subsidiary in respect thereof.
30
"Net Securities Proceeds" means the cash proceeds to Holdings, Company
or any of its Subsidiaries (net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith, including reasonable
legal fees and expenses) from the (i) issuance of Securities of or incurrence of
Indebtedness by Holdings, Company or any of its Subsidiaries and (ii) capital
contributions made by a holder of Securities of Holdings or Company.
"Newcastle" means Newcastle Industries, Inc., a Missouri corporation
formerly known as Contico International, Inc.
"Non-US Lender" has the meaning assigned to that term in subsection
2.7B(iii)(a).
"Notes" means one or more of the Term Notes, Revolving Notes or any
combination thereof.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Agent pursuant to subsection
---------
2.1B with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Agent pursuant to
----------
subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"Obligations" means all obligations of every nature of each Loan Party
from time to time owed to Agent, Lenders or any of them under the Loan
Documents, whether for principal, interest (including interest accruing on or
after the occurrence of an Insolvency Event), reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"Officer" means the president, chief executive officer, a vice
president, chief financial officer, treasurer, general partner (if an
individual), managing member (if an individual) or other individual appointed by
the Governing Body or the Organizational Documents of a corporation,
partnership, trust or limited liability company to serve in a similar capacity
as the foregoing.
"Officer's Certificate" means, as applied to any Person that is a
corporation, partnership, trust or limited liability company, a certificate
executed on behalf of such Person by one or more Officers of such Person or one
or more Officers of a general partner or a managing member if such general
partner or managing member is a corporation, partnership, trust or limited
liability company.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
31
"Organizational Documents" means the documents (including Bylaws, if
applicable) pursuant to which a Person that is a corporation, partnership, trust
or limited liability company is organized.
"Original Currency" has the meaning assigned to that term in
subsection 10.21A.
"Other Bank Concentration Account" means an account under the
exclusive dominion and control of Agent that is maintained by any Loan Party
with a Bank (other than BTCo) that is satisfactory to Agent pursuant to a
Blocked Account Agreement (which Blocked Account Agreement provides for an
automatic daily transfer to the BTCo Account) into which the applicable Lock Box
Account Banks are instructed to transfer funds on deposit in the Lock Box
Accounts pursuant to the terms of the Lock Box Agreements.
"Other Currency" has the meaning assigned to that term in subsection
10.21A.
"Participant" means a purchaser of a participation in the rights and
obligations under this Agreement pursuant to subsection 10.1C.
"Payee" has the meaning assigned to that term in subsection 2.1D(iv).
"Payor" has the meaning assigned to that term in subsection 2.1D(iv).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Perfection Certificate" means the Perfection Certificate annexed to
the Security Agreement as Exhibit 3.
"Permits" has the meaning assigned to that term in subsection 5.19.
"Permitted Acquisition" has the meaning assigned to that term in
subsection 7.3(vi).
"Permitted Discretion" means Agent's good faith judgment based upon
any factor which it believes in good faith: (i) will or could adversely affect
the value of any Collateral, the enforceability or priority of Agent's Liens
thereon or the amount which Agent and Lenders would be likely to receive (after
giving consideration to delays in payment and costs of enforcement) in the
liquidation of such Collateral; (ii) suggests that any collateral report or
financial information delivered to Agent by any Person on behalf of any Loan
Party is incomplete, inaccurate or misleading in any material respect; (iii)
materially increases the likelihood of a bankruptcy, reorganization or other
insolvency proceeding involving Holdings, Company or any of its Subsidiaries or
any of the Collateral; or (iv) creates or reasonably could be expected to create
a Potential Event of Default or Event of Default. In exercising such judgment,
Agent may consider such factors already included in or tested by the definition
of
32
Eligible Accounts Receivable or Eligible Inventory as well as any of the
following: (i) the financial and business climate of any Loan Party's industry
and general macroeconomic conditions, (ii) changes in collection history and
dilution with respect to Loan Parties' Accounts, (iii) changes in demand for,
and pricing of, Loan Parties' Inventory, (iv) changes in any concentration of
risk with respect to such Accounts or Inventory, and (v) any other factors that
change the credit risk of lending to Company on the security of such Accounts or
Inventory. The burden of establishing lack of good faith shall be on Company.
"Permitted Disposition" has the meaning assigned to that term in
subsection 7.7(iv).
"Permitted Encumbrances" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, any such Lien relating to or imposed in connection
with any Environmental Claim, and any such Lien expressly prohibited by any
applicable terms of any of the Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by subsection
6.3;
(ii) statutory Liens of landlords, statutory Liens and rights of
set-off of banks, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each
case incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 10 days) are being contested
in good faith by appropriate proceedings, so long as (1) such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall
have been made for any such contested amounts, and (2) in the case of a
Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents and not interfering
in any material respect with the ordinary conduct of the business of
Company or any of its
33
Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Obligations or a potential impediment to its
enforcement;
(vi) easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case which do not
and will not interfere in any material respect with the ordinary conduct of
the business of Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under
any lease not prohibited by this Agreement, (b) restriction or encumbrance
that the interest or title of such lessor or sublessor may be subject to,
or (c) subordination of the interest of the lessee or sublessee under such
lease to any restriction or encumbrance referred to in the preceding clause
(b), so long as the holder of such restriction or encumbrance agrees to
recognize the rights of such lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases not prohibited by this Agreement; (ix) Liens in
favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of
goods;
(x) any zoning or similar law or right reserved to or vested
in any governmental office or agency to control or regulate the use of any
real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating, reciprocal
easement or similar agreements entered into in the ordinary course of
business of Company and its Subsidiaries;
(xii) licenses of patents, trademarks and other intellectual
property rights granted by Company or any of its Subsidiaries in the
ordinary course of business and not interfering in any material respect
with the ordinary conduct of the business of Company or such Subsidiary;
and
(xiii) any exceptions to title as shown in the Closing Date
Mortgage Policies and the Post-Closing Date Mortgage Policies.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
34
"Pledged Collateral" means collectively, the "Pledged Collateral" as
defined in the Security Agreement and any Foreign Pledge Agreement.
"Post-Closing Date Mortgage Policies" has the meaning set forth in
subsection 6.10A.
"Post-Closing Date Mortgaged Property" has the meaning set forth in
subsection 6.10A.
"Post-Closing Date Mortgages" has the meaning set forth in subsection
6.10A.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"Preferred Stock Certificate of Designation" means Company's Preferred
Stock Certificate of Designation of Convertible Preferred Stock, $100.00 par
value per share relating to the Convertible Preferred Stock, in the form
delivered to Agent prior to the execution of this Agreement and as such
certificate may be amended from time to time thereafter to the extent permitted
under subsection 7.15.
"Preferred Stock Purchase" has the meaning set forth in the recitals
to this Agreement.
"Pricing Certificate" means an Officer's Certificate of Company
certifying the Consolidated Leverage Ratio as of the last day of any Fiscal
Quarter and setting forth the calculation of such Consolidated Leverage Ratio in
reasonable detail (which shall mean at least in as much detail as set forth in
the Compliance Certificate), which Officer's Certificate shall be delivered to
Agent on or before the 45th day following the end of each Fiscal Quarter
commencing with the first Fiscal Quarter ending after the first anniversary of
the Closing Date.
"Prime Rate" means the rate that BTCo announces from time to time as
its prime lending rate in the United States for Dollar denominated loans, as in
effect from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
BTCo or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Pro Rata Share" means (i) with respect to all payments, computations
and other matters relating to the Term Loan Commitment or the Term Loan of any
Lender, the percentage obtained by dividing (x) the Term Loan Exposure of that
--------
Lender by (y) the aggregate Term Loan Exposure of all Lenders, (ii) with respect
--
to all payments, computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans of any Lender or any Letters of Credit issued
or participations therein purchased by any Lender, the percentage obtained by
dividing (x) the Revolving Loan Exposure of that Lender by (y) the aggregate
-------- --
Revolving Loan Exposure of all Lenders, and (iii) for all other purposes with
respect to each Lender, the percentage obtained by dividing (x) the sum of the
--------
Term Loan Exposure of that Lender plus the Revolving Loan Exposure of that
----
Lender by (y) the sum of the aggregate Term Loan Exposure of all Lenders plus
-- ----
the aggregate Revolving Loan Exposure of all Lenders, in any such case as the
applicable percentage may be adjusted by assignments permitted pursuant to
35
subsection 10.1 or required pursuant to subsection 10.5. The initial Pro Rata
Share of each Lender for purposes of each of clauses (i), (ii) and (iii) of the
preceding sentence is set forth opposite the name of that Lender in Schedule 2.1
------------
annexed hereto.
"Proceedings" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration.
"Proxy Materials" means the Proxy Statement filed by Company on April
25, 2001 with the Securities and Exchange Commission pursuant to Section 14A of
the Exchange Act, as supplemented by the Proxy Statement Supplement filed by
Company on June 8, 2001, together with all exhibits, supplements and amendments
thereto and any other amendments prior to the date hereof.
"PTO" means the United States Patent and Trademark Office or any
successor or substitute office in which filings are necessary or, in the opinion
of Agent, desirable in order to create or perfect Liens on any IP Collateral.
"Real Property Asset" means, at any time of determination, any
interest then owned by Holdings, Company or any of its Subsidiaries (other than
any Foreign Subsidiary excluding ▇▇▇▇▇) in any real property.
"Recapitalization" has the meaning set forth in the recitals to this
Agreement.
"Recapitalization Agreement" means that certain Preferred Stock
Purchase and Recapitalization Agreement by and between Holdings and Company
dated as of June 2, 2001 (which supercedes that certain Preferred Stock Purchase
and Recapitalization Agreement by and between Holdings and Company dated as of
March 29, 2001 pursuant to that certain Termination of Preferred Stock Purchase
and Recapitalization Agreement between Holdings and Company dated as of June 1,
2001), as such agreement is in effect on the Closing Date and as such agreement
may be amended from time to time thereafter to the extent permitted under
subsection 7.15.
"Recorded Leasehold Interest" means a Material Leasehold Property with
respect to which a Record Document (as hereinafter defined) has been recorded or
registered in all places necessary or desirable, in Agent's reasonable judgment,
to give constructive notice of such Material Leasehold Property to third-party
purchasers and encumbrancers of the affected real property. For purposes of this
definition, the term "Record Document" means, with respect to any Material
Leasehold Property, (a) the lease evidencing such Material Leasehold Property or
a memorandum thereof, executed and acknowledged by the owner of the affected
real property, as lessor, or (b) if such Material Leasehold Property was
acquired or subleased from the holder of a Recorded Leasehold Interest, the
applicable assignment or sublease document, executed and acknowledged by such
holder, in each case in form sufficient to give such constructive notice upon
recordation or registration and otherwise in form reasonably satisfactory to
Agent.
"Register" has the meaning assigned to that term in subsection 2.1E.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
36
"Reimbursement Date" has the meaning assigned to that term in
subsection 3.3B.
"Related Agreements" means the Proxy Materials, Recapitalization
Agreement, the Stock Voting Agreement, the Company Organizational Documents
(including the Preferred Stock Certificate of Designation), the Holdings Member
Agreement, the Contico Documents, the Rights Agreement, the Management
Agreement, and all other agreements and instruments delivered pursuant to or in
connection with any of the foregoing, including any purchase agreement or
registration rights agreement.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the air,
soil, surface water or groundwater.
"Request for Issuance of Letter of Credit" means a request in the form
of Exhibit III annexed hereto delivered by Company to Agent pursuant to
-----------
subsection 3.1B(i) with respect to the proposed issuance of a Letter of Credit.
"Requirement of Law" means (a) the certificates or articles of
incorporation, by-laws and other organizational or governing documents of a
Person, or (b) any law, treaty, rule, regulation or determination of an
arbitrator, court or other Government Authority.
"Requisite Lenders" means Lenders having or holding more than 50% of
the sum of the aggregate Term Loan Exposure of all Lenders plus the aggregate
----
Revolving Loan Exposure of all Lenders.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
or other equity ownership interest of Company, Holdings or Contico now or
hereafter outstanding (including without limitation any Priority Return and
Profit Participation as such terms are defined in the Contico LLC Agreement),
except a dividend payable solely in shares of that class of stock or other
equity ownership interest to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock or other equity
ownership interest of Company, Holdings or Contico now or hereafter outstanding,
(iii) 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 or
other equity ownership interest of Company, Holdings or Contico now or hereafter
outstanding, (iv) any payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, retirement, defeasance (including in
substance or legal defeasance), sinking fund or similar payment with respect to,
any Subordinated Indebtedness, (v) any payment of the Management Fee (as defined
in Section 2 thereof, as unamended) under the Management Agreement or any
payment under any other Kohlberg Agreements (other than (a) payments to K&C and
its Affiliates, and to directors, officers, agents and employees of Holdings,
Company or any of their respective Subsidiaries, pursuant to indemnification and
contribution agreements
37
permitted under subsection 7.12(iii) hereof and (b) reimbursement of out-of-
pocket expenses incurred by K&C and its Affiliates on behalf of Holdings,
Company or any of their respective Subsidiaries pursuant to any Kohlberg
Agreements), and (vi) any payment with respect to the Rights under the Rights
Agreement.
"Revolving Borrowing Base" means, as at any date of determination, an
aggregate amount equal to:
(i) up to eighty-five percent (85%) of Eligible Accounts
Receivable; provided that in no event shall more than $1,000,000 of
--------
Eligible U.K. Accounts Receivable be included in the calculation of
Revolving Borrowing Base at any time (after giving effect to the
applicable advance rate) plus
(ii) the lesser of (a) up to sixty-five percent (65%) of
Eligible Inventory and (b) $75,000,000; provided that (A) with respect
--------
to clauses (i) and (ii), Eligible Accounts Receivable of ▇▇▇▇▇ and
Eligible Inventory of ▇▇▇▇▇ eligible for inclusion in the calculation
of the Revolving Borrowing Base (before giving effect to the
applicable advance rate) shall not exceed an aggregate amount equal to
the lesser of (1) $7,500,000 and (2) the principal amount of the ▇▇▇▇▇
Subsidiary Note outstanding on such date; and provided further that
-------- -------
with respect to clauses (i) and (ii), Eligible Accounts Receivable of
Glit and Eligible Inventory of Glit eligible for inclusion in the
calculation of the Revolving Borrowing Base (before giving effect to
the applicable advance rate) shall not exceed an aggregate amount
equal to the lesser of (1) $3,500,000 and (2) the principal amount of
the Glit Subsidiary Note outstanding on such date and (B) in no event
shall more than $2,000,000 of Eligible U.K. Inventory be included in
the calculation of Revolving Borrowing Base at any time (after giving
effect to the applicable advance rate); minus
-----
(iii) the sum of (a) the Hedge Reserve, (b) the Dilution
Reserves, (c) the Rent Reserves, (d) the Revolving Loan Repayment
Reserve, (e) the U.K. Reserves and (f) the aggregate amount of other
reserves, if any, established by Agent in the exercise of its
Permitted Discretion against Eligible Accounts Receivable and Eligible
Inventory;
provided that Agent, in the exercise of its Permitted Discretion, may (a)
--------
increase or decrease reserves against Eligible Accounts Receivable and Eligible
Inventory and (b) reduce the advance rates provided in this definition, or
restore such advance rates to any level equal to or below the advance rates in
effect as of the Closing Date.
"Revolving Lender" means a Lender that has a Revolving Loan Commitment
and/or that has an outstanding Revolving Loan.
"Revolving Loan Commitment" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(ii), and "Revolving Loan
Commitments" means such commitments of all Lenders in the aggregate.
"Revolving Loan Commitment Termination Date" means June 30, 2006.
38
"Revolving Loan Exposure" means, with respect to any Revolving Lender
as of any date of determination (i) prior to the termination of the Revolving
Loan Commitments, that Lender's Revolving Loan Commitment and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that Lender plus (b) in
----
the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage
in respect of all Letters of Credit issued by that Lender (in each case net of
any participations purchased by other Lenders in such Letters of Credit or in
any unreimbursed drawings thereunder) plus (c) the aggregate amount of all
----
participations purchased by that Lender in any outstanding Letters of Credit or
any unreimbursed drawings under any Letters of Credit.
"Revolving Loan Repayment Reserve" means the reserve established by
Agent against the Revolving Borrowing Base in an amount equal to the aggregate
of (i) all amounts applied by Agent to repay Revolving Loans pursuant to
2.4B(iv)(d)(i) and (ii) all Net Insurance/Condemnation Proceeds received by
Agent as loss payee and applied by Agent to repay Revolving Loans at the request
of Company pursuant to subsection 6.4C(iii).
"Revolving Loans" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(ii).
"Revolving Notes" means (i) the promissory notes of Company issued
pursuant to subsection 2.1F on the Closing Date and (ii) any promissory notes
issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Revolving Lenders, in each case substantially in the form of
Exhibit IV annexed hereto, as they may be amended, supplemented or otherwise
----------
modified from time to time.
"Rights" has the meaning set forth in the recitals to this Agreement.
"Rights Agreement" means that certain Rights Agreement by and between
Company and La Salle National Bank, as Rights Agent, dated as of January 13,
1995, as such agreement has been amended by the First Amendment thereto, the
Second Amendment thereto, the Third Amendment thereto and the Fourth Amendment
thereto and is in effect on the Closing Date and as such agreement may be
amended from time to time thereafter to the extent permitted under subsection
7.15.
"Secured Hedge Agreement" means a Hedge Agreement between Company and
one or more Lender Counterparties that provides interest rate protection to
Company in connection with this Agreement and which is (a) permitted under
subsection 7.4, (b) secured by the Collateral in accordance with the provisions
of the applicable Collateral Documents and (c) guaranteed under the Subsidiary
Guaranty in accordance with the terms thereof.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
39
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Security Agreement" means the Security Agreement executed and
delivered on the Closing Date, substantially in the form of Exhibit XV annexed
----------
hereto, as such Security Agreement may thereafter be amended, supplemented or
otherwise modified from time to time.
"▇▇▇▇▇" means Savannah Energy Systems Company, a Georgia limited
partnership.
"▇▇▇▇▇ Guaranty" means that certain Guaranty of Company in favor of
Resource Recovery Development Authority for the City of Savannah in respect of
obligations of ▇▇▇▇▇ dated as of December 1, 1984, as such guaranty may be
amended from time to time to the extent permitted under subsection 7.15.
"▇▇▇▇▇ Loan Agreement" means that certain Loan Agreement dated as of
December 1, 1984 between Resource Recovery Development Authority and ▇▇▇▇▇, as
amended by the First Amendment thereto dated as of March 1, 1985 and by the
Second Amendment thereto dated as of June 1, 1992, and as it may be further
amended from time to time to the extent permitted under subsection 7.15.
"▇▇▇▇▇ Service Agreement" means the Service Agreement dated as of
December 1, 1984, by and between Resource Recovery Development Authority for the
City of Savannah and ▇▇▇▇▇, as such agreement has been amended by the First
Amendment thereto dated as of March 1, 1985 and as such agreement may be further
amended from time to time extent permitted under subsection 7.15.
"▇▇▇▇▇ Steam Agreement" means the Steam Agreement between ▇▇▇▇▇ and
American Cyanamid Company dated as of December 1, 1984 (as assigned to and
assumed by Keramida), as it may be amended from time to time to the extent
permitted under subsection 7.15.
"Settlement Date" has the meaning assigned to that term in subsection
2.1D(i).
"Settlement Notice" has the meaning assigned to that term in
subsection 2.1D(i).
"Solvent" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the
40
meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed as the amount
that, in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, (v)
performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry, and (vi) such other
purposes acceptable to the Issuing Lender and Agent in their sole discretion;
provided that except for the issuance of Standby Letters of Credit to support
--------
the letters of credit issued by Bank of America, N.A. and outstanding
immediately prior to the Closing Date, Standby Letters of Credit may not be
issued for the purpose of supporting (a) trade payables or (b) any Indebtedness
constituting "antecedent debt" (as that term is used in Section 547 of the
Bankruptcy Code).
"Stock Voting Agreement" means that certain Stock Voting Agreement by
and among Holdings and the shareholders named therein dated as of June 2, 2001
(which supercedes that certain Stock Voting and Tender Agreement by and among
Holdings and the shareholders named therein dated as of March 29, 2001), as such
agreement is in effect on the Closing Date and as such agreement may be amended
from time to time thereafter to the extent permitted under subsection 7.15.
"Subject Lender" has the meaning assigned to that term in subsection
2.9.
"Subordinated Indebtedness" means any Indebtedness of Company (other
than Indebtedness to any of its Subsidiaries) that is subordinated in right of
payment to the Obligations pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination provisions
and other material terms in form and substance satisfactory to Agent and
Requisite Lenders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, trust, limited liability company, association, Joint Venture or
other business entity of which more than 50% of the total voting power of shares
of stock or other ownership interests entitled (without regard to the occurrence
of any contingency) to vote in the election of the members of the Governing Body
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof.
"Subsidiary Guarantors" means the Guarantors (other than Holdings).
"Subsidiary Guaranty" means the Subsidiary Guaranty executed and
delivered by Company's existing Domestic Active Subsidiaries on the Closing Date
and to be executed
41
and delivered by Company's additional Domestic Subsidiaries from time to time
thereafter in accordance with subsection 6.9, substantially in the form of
Exhibit XVI annexed hereto, as such Subsidiary Guaranty may be amended,
-----------
supplemented or otherwise modified from time to time.
"Supplemental Collateral Agent" has the meaning assigned to that term
in subsection 9.1B.
"Tax" or "Taxes" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called,
imposed, levied, collected, withheld or assessed with respect to any sums
payable by Company under this Agreement or of the Loan Documents by or within
the United States of America or any political subdivision in or of the United
States of America or any other jurisdiction from or to which a payment is made
Company under this Agreement or of the Loan Documents by or on behalf of Company
or by any federation or organization of which the United States of America or
any such jurisdiction is a member at the time of payment, including interest,
penalties, additions to tax and any similar liabilities with respect thereto;
except that, in the case of a Lender or Agent, there shall be excluded (1)
taxes, including interest, penalties, additions to tax and any similar
liabilities with respect thereto, that are imposed on the overall net income or
net profits (including franchise taxes imposed in lieu thereof) (i) by the
United States, (ii) by any other Government Authority under the laws of which
the Lender or Agent is organized or has its principal office or maintains its
applicable lending office, or (iii) by any jurisdiction solely as a result of a
present or former connection between the Lender or Agent and such jurisdiction
(other than any such connection arising solely from the Lender or Agent having
executed, delivered or performed its obligations or received a payment under, or
enforced any of the Loan Documents), and (2) any branch profits or similar
taxes, including interest, penalties, additions to tax and any similar
liabilities with respect thereto, imposed by the United States or any other
jurisdiction in which the Lender or Agent is located.
"Term Borrowing Base" means, as at any date of determination, an
aggregate amount equal to:
(i) ninety percent (90%) of the orderly liquidation value of
Eligible M&E set forth in the appraisals delivered pursuant to
subsection 4.1T on or prior to the Closing Date plus
----
(ii) sixty percent (60%) of the appraised fair market value of
Eligible Real Property set forth in the appraisals delivered pursuant
to subsection 4.1T on or prior to the Closing Date (the "Real Property
Lendable Value") minus
-----
(iii) the aggregate amount of reserves, if any, established by
Agent in the exercise of its reasonable discretion against Eligible
M&E and Eligible Real Property.
"Term Loan Commitment" means the commitment of a Lender to make a Term
Loan to Company pursuant to subsection 2.1A(i), and "Term Loan Commitments"
means such commitments of all Lenders in the aggregate.
42
"Term Loan Exposure" means, with respect to any Lender as of any date
of determination (i) prior to the funding of the Term Loans, that Lender's Term
Loan Commitment and (ii) after the funding of the Term Loans, the outstanding
principal amount of the Term Loan of that Lender.
"Term Loans" means the Loans made by Lenders to Company pursuant to
subsection 2.1A(i).
"Term Notes" means (i) the promissory notes of Company issued pursuant
to subsection 2.1F on the Closing Date and (ii) any promissory notes issued by
Company pursuant to the last sentence of subsection 10.1B(i) in connection with
assignments of the Term Loan Commitments or Term Loans of any Lenders, in each
case substantially in the form of Exhibit V annexed hereto, as they may be
---------
amended, supplemented or otherwise modified from time to time.
"Title Company" means one or more title insurance companies reasonably
satisfactory to Agent.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans made to Company plus (ii) the Letter of Credit Usage
----
with respect to all Letters of Credit issued for the account of Company or any
Subsidiary Guarantor.
"Transaction Costs" means the fees, costs and expenses payable by any
Loan Party on or before the Closing Date in connection with the
Recapitalization, the related financings and other transactions contemplated by
the Loan Documents and the Related Agreements.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction, including on the date
hereof the Personal Property Security Act (Ontario) and Article 9 of the Uniform
Commercial Code in effect on the date hereof and, after the effective date of
Revised Article 9, Article 9 as set forth in the 1999 Official Text ("Revised
Article 9") promulgated by the American Law Institute and the National
Conference of Commissioners on Uniform Laws, but after the effective date of
Revised Article 9, only Revised Article 9.
"U.K. Reserves" means any reserves from time to time established by
Agent in its sole discretion against the Revolving Borrowing Base with respect
to any Eligible U.K. Inventory or Eligible U.K. Accounts Receivable (including
without limitation reserves for amounts owed by Contico to its preferential
creditors (including Inland Revenue and employees of Contico) who may have
priority over Agent and Lenders).
"U.K. Subsidiary Debenture" means the Debenture executed and delivered
by Contico on the Closing Date, substantially in the form of Exhibit XIX annexed
-----------
hereto, as such Debenture may be amended, supplemented or otherwise modified
from time to time.
"U.K. Subsidiary Mortgaged Property" has the meaning assigned to that
term in subsection 4.1R.
43
"Wholly-Owned Subsidiary" means any Subsidiary in which (other than
directors' qualifying shares required by law) 100% of the equity interests of
each class having ordinary voting power, and 100% of the equity interests of
every other class, in each case, at the time as of which any determination is
being made, is owned, beneficially and of record, by Company, or by one of the
other Wholly-Owned Subsidiaries, or both. Notwithstanding the foregoing, the
ownership by Newcastle or any other Person of the Contico Preferred Units shall
not cause Contico to not constitute a Wholly-Owned Subsidiary of Company.
"▇▇▇▇▇" means ▇▇▇▇▇ Industries (Canada), Inc., a Canadian corporation
and a Subsidiary of Company.
"▇▇▇▇▇ Industries" means ▇▇▇▇▇ Industries, Inc., a Delaware
corporation and a Subsidiary of Company.
"▇▇▇▇▇ Subsidiary Acknowledgement" means that certain acknowledgement
dated June 28, 2001 by and among ▇▇▇▇▇, Company and Agent, substantially in the
form of Exhibit XXIII-B annexed hereto, as such acknowledgement is in effect on
---------------
the Closing Date and as such acknowledgement may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
"▇▇▇▇▇ Subsidiary Documents" means the ▇▇▇▇▇ Subsidiary Note, ▇▇▇▇▇
Subsidiary Security Agreement and ▇▇▇▇▇ Subsidiary Acknowledgement.
"▇▇▇▇▇ Subsidiary Note" means that certain promissory note dated June
28, 2001 executed by ▇▇▇▇▇ in favor of Company, substantially in the form of
Exhibit XX-B annexed hereto, as such promissory note is in effect on the Closing
------------
Date and as such promissory note may be amended from time to time thereafter to
the extent permitted under subsection 7.15.
"▇▇▇▇▇ Subsidiary Security Agreement" means that certain security
agreement dated June 28, 2001 by and between ▇▇▇▇▇ and Company, substantially in
the form of Exhibit XXII annexed hereto, as such security agreement is in effect
------------
on the Closing Date and as such agreement may be amended from time to time
thereafter to the extent permitted under subsection 7.15.
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
------------------------------------------------------------------
Under Agreement.
---------------
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (ii), (iii)
and (xii) of subsection 6.1 shall be prepared in accordance with GAAP as in
effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize GAAP as in effect on the date of determination, applied
in a manner consistent with that used in preparing the financial statements
referred to in subsection 5.3. If at any time any change in GAAP would affect
the computation of any financial ratio or requirement set forth in any Loan
Document, and Company, Agent or Requisite Lenders shall so request, Agent,
Lenders and Company shall
44
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the approval
of Requisite Lenders), provided that, until so amended, such ratio or
--------
requirement shall continue to be computed in accordance with GAAP prior to such
change therein and Company shall provide to Agent and Lenders reconciliation
statements provided for in subsection 6.1(v).
1.3 Other Definitional Provisions.
-----------------------------
A. References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless otherwise
specifically provided.
B. Any of the terms defined in subsection 1.1 may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference.
C. An Event of Default once having occurred shall "continue" or
be "continuing" until such Event of Default has been waived in accordance with
subsection 10.6 hereof or remedied.
D. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Making of Loans; the Register; Notes.
-------------------------------------------------
A. Commitments. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, each Lender hereby severally agrees to make the Loans
described in subsections 2.1A(i) and 2.1A(ii).
(i) Term Loans. Each Lender that has a Term Loan
----------
Commitment severally agrees to lend to Company on the Closing
Date an amount not exceeding its Pro Rata Share of the aggregate
amount of the Term Loan Commitments to be used for the purposes
identified in subsection 2.5A. The amount of each Lender's Term
Loan Commitment is set forth opposite its name on Schedule 2.1
------------
annexed hereto and the aggregate amount of the Term Loan
Commitments is $30,000,000; provided that the Term Loan
--------
Commitments of Lenders shall be adjusted to give effect to any
assignments of the Term Loan Commitments pursuant to subsection
10.1B. Each Lender's Term Loan Commitment shall expire
immediately and without further action on June 30, 2001 if the
Term Loans are not made on or before that date. Company may make
only one borrowing under the Term Loan Commitments. Amounts
borrowed under this subsection 2.1A(i) and subsequently repaid or
prepaid may not be reborrowed. Anything contained in this
Agreement to the contrary
45
notwithstanding, in no event shall the aggregate amount of Term
Loans made on the Closing Date exceed the Term Borrowing Base in
effect on the Closing Date.
(ii) Revolving Loans. Each Revolving Lender severally
---------------
agrees, subject to the limitations set forth below with respect
to the maximum amount of Revolving Loans permitted to be
outstanding from time to time, to lend to Company from time to
time during the period from the Closing Date to but excluding the
Revolving Loan Commitment Termination Date an aggregate amount
not exceeding its Pro Rata Share of the aggregate amount of the
Revolving Loan Commitments to be used for the purposes identified
in subsection 2.5B. The original amount of each Revolving
Lender's Revolving Loan Commitment is set forth opposite its name
on Schedule 2.1 annexed hereto and the aggregate original amount
------------
of the Revolving Loan Commitments is $110,000,000; provided that
--------
the Revolving Loan Commitments of Revolving Lenders shall be
adjusted to give effect to any assignments of the Revolving Loan
Commitments pursuant to subsection 10.1B; and provided, further
-------- -------
that the amount of the Revolving Loan Commitments shall be
reduced from time to time by the amount of any reductions thereto
made pursuant to subsection 2.4. Each Revolving Lender's
Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Revolving Loans and all other
amounts owed hereunder with respect to the Revolving Loans and
the Revolving Loan Commitments shall be paid in full no later
than that date; provided that each Revolving Lender's Revolving
--------
Loan Commitment shall expire immediately and without further
action on June 30, 2001 if the Term Loans and the initial
Revolving Loans are not made on or before that date. Amounts
borrowed under this subsection 2.1A(ii) may be repaid and
reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan Commitments shall be
subject to the following limitations in the amounts indicated:
(a) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Revolving Loan
Commitments then in effect; and
(b) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the Revolving
Borrowing Base then in effect.
B. Borrowing Mechanics. Term Loans or Revolving Loans made on
any Funding Date (other than Revolving Loans made pursuant to subsection 3.3B)
shall be in an aggregate minimum amount of $500,000 and multiples of $250,000 in
excess of that amount; provided that Term Loans or Revolving Loans made on any
--------
Funding Date as Eurodollar Rate Loans with a particular Interest Period shall be
in an aggregate minimum amount of $1,000,000 and multiples of $500,000 in excess
of that amount. Whenever Company desires that Lenders make Term Loans or
Revolving Loans it shall deliver to Agent a Notice of Borrowing no later than
1:00 P.M. (New York City time) at least three Business Days in advance of the
proposed
46
Funding Date (in the case of a Eurodollar Rate Loan) or on the proposed Funding
Date (in the case of a Base Rate Loan). Term Loans and Revolving Loans may be
continued as or converted into Base Rate Loans and Eurodollar Rate Loans in the
manner provided in subsection 2.2D. In lieu of delivering a Notice of Borrowing,
Company may give Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice shall be
--------
promptly confirmed in writing by delivery of a Notice of Borrowing to Agent on
or before the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to Company in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to borrow on behalf of Company or for otherwise acting in good faith under this
subsection 2.1B or under subsection 2.2D, and upon funding of Loans by Daily
Funding Lender and/or Lenders, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans
pursuant to subsection 2.2D, in each case in accordance with this Agreement,
pursuant to any such telephonic notice Company shall have effected Loans or a
conversion or continuation, as the case may be, hereunder.
Company shall notify Agent prior to the funding of any Loans in the
event that any of the matters to which Company is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for, or a Notice of Conversion/Continuation for conversion
to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the date given, and Company shall be
bound to make a borrowing or to effect a conversion or continuation in
accordance therewith.
Notwithstanding the foregoing provisions of this subsection 2.1B, no
Eurodollar Rate Loans may be made and no Base Rate Loan may be converted into a
Eurodollar Rate Loan until the earlier of the ninetieth day after the Closing
Date and the date specified by Agent to Company on which the primary syndication
of the Commitments and the Loans has been completed.
C. Disbursement of Funds.
(i) Subject to this subsection 2.1C and subsection 2.1D, all
Loans under this Agreement shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being
understood that neither Agent nor any Lender shall be responsible for
any default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder nor shall the Commitment of any Lender
to make the particular type of Loan requested be increased or
decreased as a result of a default by any other Lender in that other
Lender's obligation to make a Loan requested hereunder.
47
(ii) Upon receipt by Agent of a Notice of Borrowing pursuant to
subsection 2.1B (or telephonic notice in lieu thereof) for Revolving
Loans that consist of Base Rate Loans and upon satisfaction or waiver
of the conditions precedent specified in subsection 4.1 (in the case
of Loans made on the Closing Date) and, subject to the provisions set
forth in the immediately succeeding paragraph, subsection 4.2 (in the
case of all Loans), Daily Funding Lender shall, without prior notice
to the other Lenders, make such Revolving Loans for its own account on
the applicable Funding Date (subject to settlement with the other
Lenders in accordance with subsection 2.1D) by making the proceeds of
such Revolving Loans available to Company on such Funding Date by
causing an amount of same day funds equal to the proceeds of such
Revolving Loans to be credited to the account of Company at the
Funding and Payment Office. Such Revolving Loans shall constitute
Revolving Loans by Daily Funding Lender for all purposes under the
Loan Documents, subject to settlement with the other Lenders pursuant
to subsection 2.1D. All interest accrued on any such Revolving Loans
from the date made by Daily Funding Lender to the Settlement Date with
respect thereto shall be for Daily Funding Lender's own account. Daily
Funding Lender shall make Revolving Loans for its own account pursuant
to this subsection 2.1C(ii) notwithstanding the fact that the
principal amount of such Revolving Loans, when added to the aggregate
principal amount of Daily Funding Lender's Revolving Loans then
outstanding, may exceed Daily Funding Lender's Revolving Loan
Commitment then in effect; provided that such Revolving Loans shall at
--------
all times be Obligations owed to Daily Funding Lender under this
Agreement; and provided further that in no event shall the aggregate
-------- -------
principal amount of all Revolving Loans, including such Revolving
Loans, outstanding at any time exceed the aggregate Revolving Loan
Commitments then in effect minus the Letter of Credit Usage as of such
-----
time.
Notwithstanding anything in this Agreement to the contrary, if
the conditions precedent specified in subsection 4.2 cannot be
fulfilled with respect to any proposed Revolving Loans that consist of
Base Rate Loans, Company shall, in its Notice of Borrowing or
otherwise, give immediate written notice thereof (specifying the
circumstances which prevent the conditions precedent from being
fulfilled) to Agent, with a copy to each Lender, and Daily Funding
Lender may (and each Lender hereby authorizes Daily Funding Lender
to), but is not obligated to, continue to make Revolving Loans that
are Base Rate Loans for 20 Business Days from the date Agent first
receives such notice, or until sooner instructed by Requisite Lenders
to cease making such Revolving Loans (the "Daily Funding Lender
Discretionary Period"). Once notice is given by Company that
circumstances exist which prevent the conditions precedent to
borrowing from being fulfilled, no additional notice with respect to
the same circumstances will be effective to commence a new Daily
Funding Lender Discretionary Period.
(iii) Promptly after receipt by Agent of a Notice of Borrowing
pursuant to subsection 2.1B (or telephonic notice in lieu thereof) for
any Loans (other than for Revolving Loans that consist of Base Rate
Loans), Agent shall notify each Lender of the proposed borrowing. Each
Lender shall make the amount of its
48
Loan available to Agent, in same day funds in Dollars, at the Funding
and Payment Office, not later than 12:00 Noon (New York City time) on
the applicable Funding Date, in each case in same day funds in
Dollars, at the Funding and Payment Office. Except as provided in
subsection 3.3B with respect to Revolving Loans used to reimburse any
Issuing Lender for the amount of a drawing under a Letter of Credit
issued by it, upon satisfaction or waiver of the conditions precedent
specified in subsections 4.1 (in the case of Loans made on the Closing
Date) and, subject to the provisions set forth in the immediately
preceding paragraph, 4.2 (in the case of all Loans), Agent shall make
the proceeds of such Loans available to Company on the applicable
Funding Date by causing an amount of same day funds in Dollars equal
to the proceeds of all such Loans received by Agent from Lenders to be
credited to the account of Company at the Funding and Payment Office.
Unless Agent shall have been notified by any Lender prior to the
Funding Date for any Loans pursuant to this subsection 2.1C that such
Lender does not intend to make available to Agent the amount of such
Lender's Loan requested on such Funding Date, Agent may assume that
such Lender has made such amount available to Agent on such Funding
Date and Agent may, in its sole discretion, but shall not be obligated
to, make available to Company a corresponding amount on such Funding
Date. If such corresponding amount is not in fact made available to
Agent by such Lender, Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
thereon, for each day from such Funding Date until the date such
amount is paid to Agent, at the customary rate set by Agent for the
correction of errors among banks for three Business Days and
thereafter at the Base Rate. If such Lender does not pay such
corresponding amount forthwith upon Agent's demand therefor, Agent
shall promptly notify Company and Company shall immediately pay such
corresponding amount to Agent together with interest thereon, for each
day from such Funding Date until the date such amount is paid to
Agent, at the rate payable under this Agreement for Base Rate Loans.
Nothing in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Company may have against any Lender as a
result of any default by such Lender hereunder.
D. Settlement Procedures.
(i) Daily Funding Lender will from time to time notify the other
Lenders, not later than 4:00 P.M. (New York time) (a) on at least one
Business Day during each seven calendar-day period, (b) on each date
on which payment of interest on any Revolving Loans is required to be
made pursuant to subsection 2.2C, (c) on the Revolving Loan Commitment
Termination Date, and (d) at such other times as Daily Funding Lender
in its discretion may determine (each such notice by Daily Funding
Lender being a "Settlement Notice" and the date which is one Business
Day after any Settlement Notice being a "Settlement Date") of the
aggregate principal amount of outstanding Revolving Loans made
49
by Daily Funding Lender and each other Lender as of the close of
business on the Business Day immediately preceding the applicable
Settlement Date.
(ii) If a Settlement Notice indicates that the aggregate
principal amount of outstanding Revolving Loans made by Daily Funding
Lender (including Revolving Loans made for its own account pursuant to
subsection 2.1C(ii)) is in excess of Daily Funding Lender's Pro Rata
Share of the aggregate principal amount of outstanding Revolving Loans
made by all Lenders (the amount of such excess being the "Excess
Funded Amount"), each other Lender will, not later than 1:00 P.M. (New
York time) on the applicable Settlement Date, pay to Daily Funding
Lender, by depositing same day funds in the account specified by Daily
Funding Lender at the Funding and Payment Office, an amount equal to
such Lender's Adjusted Pro Rata Share of the Excess Funded Amount,
upon which payment Daily Funding Lender shall be deemed to have sold,
and such Lender shall be deemed to have purchased, as of the
applicable Settlement Date, a portion of the outstanding Revolving
Loans made by Daily Funding Lender for its own account pursuant to
subsection 2.1C(ii) on or after the immediately preceding Settlement
Date equal to such Lender's Adjusted Pro Rata Share of the Excess
Funded Amount. The obligation of each Lender to purchase a portion of
any Revolving Loan made by Daily Funding Lender as provided in this
subsection 2.1D(ii) is subject to the condition that at the time such
Revolving Loan was made by Daily Funding Lender (a) the duly
authorized officer of Daily Funding Lender responsible for the
administration of Daily Funding Lender's credit relationship with
Company believed in good faith that either (X) no Event of Default had
occurred and was continuing or (Y) any Event of Default that had
occurred and was continuing had been waived by Requisite Lenders at
the time such Revolving Loan was made or (b) a Daily Funding Lender
Discretionary Period was in effect.
(iii) If a Settlement Notice indicates that the aggregate
principal amount of outstanding Revolving Loans made by Daily Funding
Lender is less than Daily Funding Lender's Pro Rata Share of the
aggregate principal amount of outstanding Revolving Loans made by all
Lenders (the amount of such difference being the "Excess Paydown
Amount"), Daily Funding Lender will, no later than 4:00 P.M. (New York
time) on the applicable Settlement Date, unconditionally pay to each
other Lender, by depositing same day funds in the account specified by
such Lender to Daily Funding Lender, an amount equal to such Lender's
Adjusted Pro Rata Share of the Excess Paydown Amount, upon which
payment such Lender shall be deemed to have sold, and Daily Funding
Lender shall be deemed to have purchased, as of the applicable
Settlement Date, a portion of the outstanding Revolving Loans of such
Lender equal to such Lender's Adjusted Pro Rata Share of the Excess
Paydown Amount.
(iv) Except as provided in subsection 2.1D(ii), the obligations
of Daily Funding Lender and each other Lender pursuant to subsections
2.1D(ii) and 2.1D(iii) shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation,
(a) any set-off, counterclaim,
50
recoupment, defense or other right which Agent or any Lender may have
against Agent, any other Lender, any Loan Party or any other Person
for any reason whatsoever; (b) the occurrence or continuance of an
Event of Default or a Potential Event of Default; (c) any adverse
change in the condition (financial or otherwise) of Holdings, Company
or any of its Subsidiaries; (d) any breach of this Agreement by
Company, Agent or any Lender; or (e) any other circumstance,
happening, or event whatsoever, whether or not similar to any of the
foregoing. In the event that any Person (the "Payor") obligated to
make a payment to any other Person (the "Payee") pursuant to this
subsection 2.1D fails to make available to the Payee the amount of
such payment required to be made by the Payor, the Payee shall be
entitled to recover such amount on demand from the Payor together with
interest at the customary rate set by BTCo for the correction of
errors among Lenders for three Business Days and thereafter at the sum
of the Base Rate plus 1.50% per annum.
(v) In the event that all or any portion of any repayment of
principal of the Revolving Loans is thereafter recovered by or on
behalf of Company from Daily Funding Lender (including any such
recovery in a proceeding under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect) in an amount that is
proportionately greater (based on the respective Pro Rata Shares of
Lenders) than any such recovery from the other Lenders, the loss of
the amount so recovered shall be ratably shared among all Lenders in
the manner contemplated by subsection 10.5.
E. The Register.
Agent, acting for these purposes solely as an agent of Company (it
being acknowledged that Agent, in such capacity, and its officers, directors,
employees, agent and affiliates shall constitute Indemnitees under subsection
10.3), shall maintain (and make available for inspection by Company and Lenders
upon reasonable prior notice at reasonable times) at its address referred to in
subsection 10.8 a register for the recordation of, and shall record, the names
and addresses of Lenders and the Term Loan Commitment, Revolving Loan
Commitment, Term Loan and Revolving Loans of each Lender from time to time (the
"Register"). Company, Agent and Lenders shall deem and treat the Persons listed
as Lenders in the Register as the holders and owners of the corresponding
Commitments and Loans listed therein for all purposes hereof; all amounts owed
with respect to any Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof; and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and binding
on any subsequent holder, assignee or transferee of the corresponding
Commitments or Loans. Each Lender shall record on its internal records the
amount of its Loans and Commitments and each payment in respect hereof, and any
such recordation shall be conclusive and binding on Company, absent manifest
error, subject to the entries in the Register, which shall, absent manifest
error, govern in the event of any inconsistency with any Lender's records.
Failure to make any recordation in the Register or in any Lender's records, or
any error in such recordation, shall not affect any Loans or Commitments or any
Obligations in respect of any Loans.
51
F. Notes. Company shall execute and deliver on the Closing Date (i)
to Lenders (or to Agent for Lenders) (a) a Term Note substantially in the form
of Exhibit V annexed hereto to evidence each Lender's Term Loan, in the
---------
principal amount of that Lender's Term Loan and with other appropriate
insertions, and (b) a Revolving Note substantially in the form of Exhibit IV
----------
annexed hereto to evidence each Revolving Lender's Revolving Loans, in the
principal amount of that Lender's Revolving Loan Commitment and with other
appropriate insertions.
2.2 Interest on the Loans.
---------------------
A. Rate of Interest. Subject to the provisions of subsections 2.6
and 2.7, each Term Loan and each Revolving Loan shall bear interest on the
unpaid principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to, in the case of
Loans, the Base Rate or the Adjusted Eurodollar Rate. The applicable basis for
determining the rate of interest with respect to any Term Loan or any Revolving
Loan shall be selected by Company initially at the time a Notice of Borrowing is
given with respect to such Loan pursuant to subsection 2.1B (subject to the last
sentence of subsection 2.1B), and the basis for determining the interest rate
with respect to any Term Loan or Revolving Loan may be changed from time to time
pursuant to subsection 2.2D (subject to the last sentence of subsection 2.1B).
If on any day a Term Loan or Revolving Loan is outstanding with respect to which
notice has not been delivered to Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by reference to the
Base Rate.
(i) Subject to the provisions of subsections 2.2E, 2.2G and
2.7, the Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate
plus the Base Rate Margin set forth in the table below opposite
the Consolidated Leverage Ratio for the four Fiscal Quarter
period for which the applicable Pricing Certificate has been
delivered pursuant to subsection 6.1(iv); or
(b) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Eurodollar Rate Margin set
forth in the table below opposite the Consolidated Leverage Ratio
for the four Fiscal Quarter period for which the applicable
Pricing Certificate has been delivered pursuant to subsection
6.1(iv):
--------------------------------------------------------------------------------
Consolidated Leverage Ratio Eurodollar Rate Base Rate
Margin Margin
--------------------------------------------------------------------------------
Greater than or equal to 3.00:1.0 3.00% 2.00%
--------------------------------------------------------------------------------
Greater than or equal to 2.50:1.0 but 2.75% 1.75%
less than 3.00:1.0
--------------------------------------------------------------------------------
Greater than or equal to 2.25:1.0 but 2.50% 1.50%
less than 2.50:1.0
--------------------------------------------------------------------------------
Less than 2.25:1.0 2.25% 1.25%
--------------------------------------------------------------------------------
52
provided that, until the delivery of the Pricing Certificate for the first
--------
Fiscal Quarter ending one year after the Closing Date, the applicable margin for
Loans that are Eurodollar Rate Loans shall be 2.75% per annum and Loans that are
Base Rate Loans shall be 1.75% per annum.
(ii) Upon delivery of the Pricing Certificate by Company to Agent
pursuant to subsection 6.1(iv), the Base Rate Margin and the
Eurodollar Rate Margin shall automatically be adjusted in accordance
with such Pricing Certificate, such adjustment to become effective on
the next succeeding Business Day following the receipt by Agent of
such Pricing Certificate (subject to the provisions of the foregoing
clause (i)); provided that, if at any time (a) a Pricing Certificate
--------
is not delivered at the time required pursuant to subsection 6.1(iv),
from the time such Pricing Certificate was required to be delivered
until delivery of such Pricing Certificate, or (b) an Event of Default
or a Potential Event of Default shall have occurred and is continuing,
such applicable margins shall be the maximum percentage amount for the
relevant Loan set forth above.
B. Interest Periods. In connection with each Eurodollar Rate
Loan, Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"Interest Period") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three, or, subject to all Lenders'
approval, six or twelve month period; provided that:
--------
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Loan, in the
case of a Loan initially made as a Eurodollar Rate Loan, or on the
date specified in the applicable Notice of Conversion/Continuation, in
the case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day that
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
--------
otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
53
(v) no Interest Period with respect to any portion of the Term
Loans shall extend beyond June 30, 2006, and no Interest Period with
respect to any portion of the Revolving Loans shall extend beyond the
Revolving Loan Commitment Termination Date;
(vi) no Interest Period with respect to any type of Term Loans
shall extend beyond a date on which Company is required to make a
scheduled payment of principal of such type of Term Loans, unless the
sum of (a) the aggregate principal amount of such type of Term Loans
that are Base Rate Loans plus (b) the aggregate principal amount of
such type of Term Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or exceeds the
principal amount required to be paid on such type of Term Loans on
such date;
(vii) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the date on which a permanent
reduction of the Revolving Loan Commitments is scheduled to occur
unless the sum of (a) the aggregate principal amount of Revolving
Loans that are Base Rate Loans plus (b) the aggregate principal amount
----
of Revolving Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date plus (c) the excess of the
----
Revolving Loan Commitments then in effect over the aggregate principal
amount of Revolving Loans then outstanding equals or exceeds the
permanent reduction of the Revolving Loan Commitments that is
scheduled to occur on such date;
(viii) there shall be no more than ten (10) Interest Periods
outstanding at any time; and
(ix) in the event Company fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Revolving Loans that are Base Rate
--------
Loans are prepaid pursuant to subsection 2.4B(i), interest accrued on such
Revolving Loans through the date of such prepayment shall be payable on the next
succeeding Interest Payment Date applicable to Base Rate Loans (or, if earlier,
at final maturity).
D. Conversion or Continuation. Subject to the provisions of
subsection 2.6, Company shall have the option (i) from and after the earlier to
occur of (a) the date which is 90 days after the Closing Date and (b) the date
on which Agent notifies Company that the primary syndication of the Commitments
and the Loans has been completed, to convert at any time all or any part of its
outstanding Term Loans or Revolving Loans equal to $500,000 and multiples of
$250,000 in excess of that amount from Loans bearing interest at a rate
determined by reference
54
to one basis to Loans bearing interest at a rate determined by reference to an
alternative basis, or (ii) upon the expiration of any Interest Period applicable
to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to
$1,000,000 and multiples of $500,000 in excess of that amount as a Eurodollar
Rate Loan; provided, however, that a Eurodollar Rate Loan may only be converted
-------- -------
into a Base Rate Loan on the expiration date of an Interest Period applicable
thereto unless Company pays on such conversion date all amounts owing to Lenders
under subsection 2.6D.
Company shall deliver a Notice of Conversion/Continuation to Agent no
later than 10:00 A.M. (New York City time) at least one Business Day in advance
of the proposed conversion date (in the case of a conversion to a Base Rate
Loan) and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan). In lieu of delivering a Notice of
Conversion/Continuation, Company may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this subsection
2.2D; provided that such notice shall be promptly confirmed in writing by
--------
delivery of a Notice of Conversion/Continuation to Agent on or before the
proposed conversion/continuation date. Upon receipt of written or telephonic
notice of any proposed conversion/continuation under this subsection 2.2D, Agent
shall promptly transmit such notice by telefacsimile or telephone to each Lender
of the Loan subject to the Notice of Conversion/Continuation.
E. Default Rate. Upon the occurrence and during the continuation of
any Event of Default, upon notice to Company by Agent, the outstanding principal
amount of all Loans and, to the extent permitted by applicable law, any interest
payments thereon not paid when due and any fees and other amounts then due and
payable hereunder, shall thereafter bear interest (including post-petition
interest in any proceeding under the Bankruptcy Code or other applicable
Insolvency Laws) payable upon demand at a rate that is 2% per annum in excess of
the interest rate otherwise payable under this Agreement with respect to the
applicable Loans (or, in the case of any such fees and other amounts, at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans); provided that, in the case of Eurodollar
--------
Rate Loans, upon the expiration of the Interest Period in effect at the time any
such increase in interest rate is effective such Eurodollar Rate Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable upon
demand at a rate which is 2% per annum in excess of the interest rate otherwise
payable under this Agreement for Base Rate Loans. Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of Agent
or any Lender.
F. Computation of Interest. Interest on the Loans shall be computed
on the basis of a 360-day year, in each case for the actual number of days
elapsed in the period during which it accrues. In computing interest on any
Loan, the date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted
from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan
to such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base
55
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day's
--------
interest shall be paid on that Loan.
G. Limitation on Interest. It is the intention of the parties hereto
to comply with all applicable usury laws, whether now existing or hereafter
enacted. Accordingly, notwithstanding any provision to the contrary in this
Agreement, the Notes, the other Loan Documents or any other document evidencing,
securing, guaranteeing or otherwise pertaining to the Obligations of Company to
Lenders, in no contingency or event whatsoever, whether by acceleration of the
maturity of indebtedness of Company to Lenders or otherwise, shall the interest
contracted for, charged or received by Lenders exceed the maximum amount
permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provisions of this Agreement, the Notes, the other Loan
Documents or of any other document evidencing, securing, guaranteeing or
otherwise pertaining to the Obligations of Company to Lenders, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any such
circumstances Lenders shall ever receive anything of value as interest or deemed
interest by applicable law under this Agreement, the Notes, the other Loan
Documents or any other document evidencing, securing, guaranteeing or otherwise
pertaining to the Obligations of Company to Lenders or otherwise an amount that
would exceed the highest lawful amount (the "Maximum Rate"), such amount that
would be excessive interest shall be applied to the reduction of the principal
amount owing in connection with this Agreement or on account of any other
indebtedness of Company to Lenders, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal owing in
connection with this Agreement and such other indebtedness, such excess shall be
refunded to Company. In determining whether or not the interest paid or payable
with respect to indebtedness of Company to Lenders, under any specific
contingency, exceeds the maximum nonusurious rate permitted under applicable
law, Lenders may, at their option (a) characterize any non-principal payment as
an expense, fee or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, (c) amortize, prorate, allocate and spread
the total amount of interest throughout the full term of such indebtedness so
that the actual rate of interest on account of such indebtedness does not exceed
the maximum amount permitted by applicable law, and/or (d) allocate interest
between portions of the Obligations, to the end that no such portion shall bear
interest at a rate greater than that permitted by law. Notwithstanding the
foregoing, if for any period of time interest on any Obligations is calculated
at the Maximum Rate rather than the applicable rate under this Agreement, and
thereafter such applicable rate becomes less than the Maximum Rate, the rate of
interest payable on such Obligations shall remain at the Maximum Rate until each
Lender shall have received the amount of interest which such Lender would have
received during such period on such Obligations had the rate of interest not
been limited to the Maximum Rate during such period.
2.3 Fees.
----
A. Commitment Fees. Company agrees to pay to Agent, for distribution
to each Revolving Lender in proportion to that Revolving Lender's Pro Rata
Share, commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the daily excess of the Revolving Loan Commitments over the Total Utilization of
Revolving Loan Commitments multiplied by 1/2 of
-------------
56
1% per annum, such commitment fees to be calculated on the basis of a 360-day
year and the actual number of days elapsed and to be payable monthly in arrears
on the first Business Day of each calendar month, commencing on the first such
date to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date.
B. Other Fees. Company hereby assumes liability for the payment to
BTCo and Agent of all fees payable by K&C as set forth in the fee letter dated
as of May 29, 2001 between K&C and BTCo, in the amounts and at the times set
forth in such fee letter. In connection with Company's assumption of such
liabilities, it is hereby acknowledged and agreed that K&C is hereby released
from all obligations under such fee letter.
2.4 Repayments, Prepayments and Reductions in Revolving Loan Commitments;
---------------------------------------------------------------------
General Provisions Regarding Payments; Application of Proceeds of Collateral and
--------------------------------------------------------------------------------
Payments Under Guaranties.
-------------------------
A. Scheduled Payments of Term Loans and Scheduled Reductions of
Revolving Loan Commitments.
(i) Scheduled Payments of Term Loans. Company shall make
--------------------------------
principal payments on the Term Loans in installments on the dates and
in the amounts set forth below:
---------------------------------------------------------
Date Scheduled Repayment
---------------------------------------------------------
September 30, 2001 $1,500,000
---------------------------------------------------------
December 31, 2001 1,500,000
---------------------------------------------------------
March 31, 2002 1,500,000
---------------------------------------------------------
June 30, 2002 1,500,000
---------------------------------------------------------
September 30, 2002 1,500,000
---------------------------------------------------------
December 31, 2002 1,500,000
---------------------------------------------------------
March 31, 2003 1,500,000
---------------------------------------------------------
June 30, 2003 1,500,000
---------------------------------------------------------
September 30, 2003 1,500,000
---------------------------------------------------------
December 31, 2003 1,500,000
---------------------------------------------------------
March 31, 2004 1,500,000
---------------------------------------------------------
June 30, 2004 1,500,000
---------------------------------------------------------
September 30, 2004 1,500,000
---------------------------------------------------------
December 31, 2004 1,500,000
---------------------------------------------------------
March 31, 2005 1,500,000
---------------------------------------------------------
June 30, 2005 1,500,000
---------------------------------------------------------
September 30, 2005 1,500,000
---------------------------------------------------------
December 31, 2005 1,500,000
---------------------------------------------------------
March 31, 2006 1,500,000
---------------------------------------------------------
June 30, 2006 1,500,000
---------------------------------------------------------
57
; provided that the scheduled installments of principal of the Term Loans set
--------
forth above shall be reduced in connection with any voluntary or mandatory
prepayments of the Term Loans in accordance with subsection 2.4B(iv); and
provided further that the Term Loans and all other amounts owed hereunder with
-------- -------
respect to the Term Loans shall be paid in full no later than June 30, 2006, and
the final installment payable by Company in respect of the Term Loans on such
date shall be in an amount, if such amount is different from that specified
above, sufficient to repay all amounts owing by Company under this Agreement
with respect to the Term Loans.
(ii) Scheduled Reductions of Revolving Loan Commitments. The
--------------------------------------------------
Revolving Loan Commitments shall be permanently reduced by $10,000,000
on December 31, 2002.
B. Prepayments and Unscheduled Reductions in Revolving Loan
Commitments.
(i) Voluntary Prepayments. Company may, upon not less than one
---------------------
Business Day's prior written or telephonic notice, in the case of Base
Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Agent by 12:00 Noon (New York City time) on the date required and, if
given by telephone, promptly confirmed in writing to Agent (which
original written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Lender for the Loans to be
prepaid), at any time and from time to time prepay any Term Loans or
Revolving Loans on any Business Day in whole or in part in an
aggregate minimum amount of $500,000 and multiples of $250,000 in
excess of that amount; provided, however, that a Eurodollar Rate Loan
-------- -------
may only be prepaid on the expiration of the Interest Period
applicable thereto. Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in such notice
shall become due and payable on the prepayment date specified therein.
Any such voluntary prepayment shall be applied as specified in
subsection 2.4B(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments. Company
--------------------------------------------------
may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Agent (which original
written or telephonic notice Agent will promptly transmit by
telefacsimile or telephone to each Revolving Lender), at any time and
from time to time terminate in whole or permanently reduce in part,
without premium or penalty, the Revolving Loan Commitments in an
amount up to the amount by which the Revolving Loan Commitments exceed
the Total Utilization of Revolving Loan Commitments at the time of
such proposed termination or reduction; provided that any such partial
--------
reduction of the Revolving Loan Commitments shall be in an aggregate
minimum amount of $1,000,000 and multiples of $500,000 in excess of
that amount; provided further that no refinancing of the Revolving
-------- -------
Loans and the Revolving Loan Commitments shall be permitted without
repayment in full of all of the Term Loans and all of the other
Obligations. Company's notice to Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or
58
reduction of the Revolving Loan Commitments shall be effective on the
date specified in Company's notice and shall reduce the Revolving Loan
Commitment of each Revolving Lender proportionately to its Pro Rata
Share.
(iii) Mandatory Prepayments. The Loans shall be prepaid in the
---------------------
amounts and under the circumstances set forth below, all such
prepayments to be applied as set forth below or as more specifically
provided in subsection 2.4B(iv):
(a) Prepayments From Net Asset Sale Proceeds. No later
----------------------------------------
than the first Business Day following the date of receipt by Holdings,
Company or any of its Subsidiaries of any Net Asset Sale Proceeds in
respect of any Asset Sale (other than Net Asset Sale Proceeds in
respect of a sale by Holdings of Convertible Preferred Stock or Common
Shares to the extent such sale does not result in a Change of Control
hereunder and is otherwise not prohibited hereunder), Company shall
prepay the Loans in an aggregate amount equal to such Net Asset Sale
Proceeds.
(b) Prepayments from Net Insurance/Condemnation Proceeds.
----------------------------------------------------
No later than the first Business Day following the date of receipt by
Agent or by Holdings, Company or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds that are required to be applied to
prepay the Loans pursuant to the provisions of subsection 6.4C,
Company shall prepay the Loans in an aggregate amount equal to the
amount of such Net Insurance/Condemnation Proceeds.
(c) Prepayments Due to Issuance of Equity Securities. No
------------------------------------------------
later than the first Business Day following the date of receipt of Net
Securities Proceeds from the issuance of any equity Securities of
Holdings, Company or any of its Subsidiaries (other than Net
Securities Proceeds received by a newly formed Wholly-Owned Subsidiary
of Company or any of its Wholly-Owned Subsidiaries from Company or any
of its Wholly-Owned Subsidiaries to the extent such Investment by
Company or any of its Wholly-Owned Subsidiaries in such newly formed
Wholly-Owned Subsidiary is permitted pursuant to the terms of this
Agreement) or from any capital contribution to Holdings or Company by
any holder of equity Securities thereof after the Closing Date (in
each case other than Net Securities Proceeds from the issuance of any
equity Securities of Holdings or from any capital contribution to
Holdings by any holder of equity Securities thereof, in each case to
the extent such Net Securities Proceeds are promptly used by Holdings
to purchase publicly held Common Shares), Company shall prepay the
Loans in an aggregate amount equal to such Net Securities Proceeds.
(d) Prepayments Due to Issuance of Indebtedness. No later
-------------------------------------------
than the first Business Day following the date of receipt of the Net
Securities Proceeds from the issuance of any Indebtedness of Holdings,
Company or any of its Subsidiaries after the Closing Date, other than
Indebtedness
59
permitted pursuant to subsection 7.1, Company shall prepay the Loans
in an aggregate amount equal to such Net Securities Proceeds.
(e) Prepayments from Consolidated Excess Cash Flow. In the
----------------------------------------------
event that there shall be Consolidated Excess Cash Flow for any Fiscal
Year (commencing with Fiscal Year ending December 31, 2001), Company
shall, no later than 90 days after the end of such Fiscal Year, prepay
the Loans in an aggregate amount equal to 75% of such Consolidated
Excess Cash Flow.
(f) Calculations of Net Proceeds Amounts; Additional
------------------------------------------------
Prepayments Based on Subsequent Calculations. Concurrently with any
--------------------------------------------
prepayment of the Loans pursuant to subsections 2.4B(iii)(a)-(e),
Company shall deliver to Agent an Officer's Certificate demonstrating
the calculation of the amount of the applicable Net Asset Sale
Proceeds, Net Insurance/Condemnation Proceeds, Net Securities
Proceeds, or Consolidated Excess Cash Flow, as the case may be, that
gave rise to such prepayment and, in the case of any prepayment
pursuant to subsection 2.4B(iii)(b), demonstrating what portion of the
Net Insurance/Condemnation Proceeds, if any, relates to Inventory. In
the event that Company shall subsequently determine that the actual
amount was greater than the amount set forth in such Officer's
Certificate, Company shall promptly make an additional prepayment of
the Loans in an amount equal to the amount of such excess, and Company
shall concurrently therewith deliver to Agent an Officer's Certificate
demonstrating the derivation of the additional amount resulting in
such excess.
(g) Prepayments Due to Reductions or Restrictions of
-------------------------------------------------
Revolving Loan Commitments or Due to Insufficient Revolving Borrowing
---------------------------------------------------------------------
Base. Company shall from time to time prepay the Revolving Loans to
----
the extent necessary (1) so that the Total Utilization of Revolving
Loan Commitments shall not at any time exceed the Revolving Loan
Commitments then in effect and (2) so that the Total Utilization of
Revolving Loan Commitments shall not exceed at any time the Revolving
Borrowing Base then in effect.
(h) Prepayments of Loans from Amounts Transferred to BTCo
-----------------------------------------------------
Account. If any amounts are transferred to the BTCo Account on any
-------
Business Day pursuant to the terms of any Blocked Account Agreement,
if any, then on such Business Day, if such amounts are transferred to
the BTCo Account prior to 1:00 P.M. (New York time) on such Business
Day, or on the next succeeding Business Day, if such amounts are
transferred to the BTCo Account on or after 1:00 P.M. (New York time)
on such Business Day, Company shall, subject to subsection
2.4B(iv)(b), prepay Company's Revolving Loans in an amount equal to
such amount transferred to the BTCo Account pursuant to the terms of
the applicable
60
Blocked Account Agreement on such Business Day (to the extent such amount
relates to payments received in respect of Accounts of Company or any of
its Subsidiaries) until all of Company's Revolving Loans shall have been
paid in full.
(i) Prepayments of Loans from Proceeds of Payment of ▇▇▇▇▇
------------------------------------------------------
Subsidiary Note and Glit Subsidiary Note. No later than the date of receipt
----------------------------------------
by Company of any payment of principal under the ▇▇▇▇▇ Subsidiary Note or
the Glit Subsidiary Note, Company shall prepay the Revolving Loans in an
amount not less than the amount of such payment.
(iv) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments by Type of Loans and Order
---------------------------------------------------------------
of Maturity. Any voluntary prepayments pursuant to subsection 2.4B(i) shall
-----------
be applied as specified by Company in the applicable notice of prepayment;
provided that in the event Company fails to specify the Loans to which any
--------
such prepayment shall be applied, such prepayment shall be applied first to
-----
repay outstanding Term Loans to the full extent thereof, and second to
------
repay outstanding Revolving Loans to the full extent thereof. Any voluntary
prepayments of the Term Loans pursuant to subsection 2.4B(i) shall be
applied to reduce the scheduled installments of principal of the Term Loans
set forth in subsection 2.4A in inverse chronological order.
(b) Application of Mandatory Prepayments by Type of Loans. Unless an
-----------------------------------------------------
Event of Default has occurred and is continuing, (1) any amount required to
be applied as a mandatory prepayment of the Loans pursuant to subsection
2.4B(iii)(a) (other than mandatory prepayments resulting from Asset Sales
pursuant to which all of the equity interests of a Subsidiary or operating
divisions is sold or substantially all of the assets of a Subsidiary is
sold) and subsections 2.4B(iii)(c), (d) and (e) and, to the extent the Net
Insurance/Condemnation Proceeds do not relate to Inventory, subsection
2.4B(iii)(b), shall be applied first to prepay the Term Loans to the full
-----
extent thereof, and second, to the extent of any remaining portion of such
------
amount, to prepay the Revolving Loans to the full extent thereof, (2) any
amount required to be applied as a mandatory prepayment of the Loans
pursuant to subsection 2.4B(iii)(b), to the extent the Net
Insurance/Condemnation Proceeds relate to Inventory, shall be applied first
-----
to prepay the Revolving Loans to the full extent thereof, and second, to
------
the extent of any remaining portion of such amount, to prepay the Term
Loans to the full extent thereof, and (3) any amount required to be applied
as a mandatory prepayment of the Loans pursuant to subsection 2.4B(iii)(a)
(to the extent such mandatory prepayment results from Asset Sales pursuant
to which all of the equity interests of a Subsidiary is sold or
substantially all of the assets of a Subsidiary or operating divisions is
sold) shall be applied first to prepay the Term Loans
-----
61
in an amount equal to the lesser of (x) the aggregate amount of Term Loans
then outstanding and (y) the aggregate amount of Term Borrowing Base
applicable to the assets so sold or the assets of the Subsidiary so sold,
in each case as of the date of such sale, second, to the extent of any
------
remaining portion of such amount, to prepay the Revolving Loans in an
amount equal to the lesser of (x) the aggregate amount of Revolving Loans
then outstanding and (y) the aggregate amount of Revolving Borrowing Base
applicable to the assets so sold or the assets of the Subsidiary or
operating divisions so sold, in each case as of the date of such sale,
third, to the extent of any remaining portion of such amount, to prepay the
-----
Term Loans to the full extent thereof, and fourth, to the extent of any
------
remaining portion of such amount, to prepay the Revolving Loans to the full
extent thereof. If an Event of Default has occurred and is continuing, any
amount required to be applied as a mandatory prepayment shall be applied as
set forth in subsection 2.4D.
(c) Application of Mandatory Prepayments of Term Loans to Scheduled
---------------------------------------------------------------
Installments of Principal Thereof. Any mandatory prepayments of the Term
---------------------------------
Loans pursuant to subsection 2.4B(iii), subject to the last sentence of
subsection 2.4B(iv)(b), shall be applied to reduce the scheduled
installments of principal of the Term Loans set forth in subsection 2.4A in
inverse chronological order.
(d) Application of Prepayments to Base Rate Loans and Eurodollar Rate
-----------------------------------------------------------------
Loans. Considering Term Loans and Revolving Loans being prepaid separately,
-----
any prepayment thereof shall be applied first to Base Rate Loans to the
full extent thereof before application to Eurodollar Rate Loans, in each
case in a manner which minimizes the amount of any payments required to be
made by Company pursuant to subsection 2.6D. To the extent that Company is
required to make a mandatory prepayment of the Loans which is required to
be applied to Eurodollar Rate Loans (following the operation of the
immediately preceding sentence) on a date other than the last day of an
Interest Period applicable to a Eurodollar Rate Loan, Company shall remit
to Agent an amount equal to such mandatory prepayment and instruct Agent to
(i) apply such amount to repay the Revolving Loans or (ii) hold such amount
in an interest bearing account in Agent's sole dominion and control. On the
last day of the Interest Period relating to the next-maturing Eurodollar
Rate Loan, (1) if such mandatory prepayment amount was applied to repay the
Revolving Loans pursuant to clause (i) above and if such amount would have
been required to be applied to prepay Term Loans, then Company shall be
deemed to have requested a Revolving Loan on such last day in an amount
equal to such mandatory prepayment amount and, so long as the conditions
set forth in subsection 4.2 have been satisfied, each Lender shall make its
Pro Rata Share of Revolving Loans in an aggregate amount equal to such
mandatory prepayment amount (which proceeds shall be made available to
Agent) and the proceeds of such Revolving Loans shall be applied by
62
Agent (and Company hereby irrevocably authorizes Agent to apply such
proceeds) to the prepayment of Term Loans in the same manner as the
mandatory prepayment amount would have been applied had such mandatory
prepayment amount been made without the operation of the immediately
preceding sentence, and (2) if such mandatory prepayment amount was
held in an interest bearing account pursuant to clause (ii) above,
then Agent shall apply the amounts held by it in such account to the
prepayment of such maturing Eurodollar Rate Loan and Agent shall
notify Company of the application of such amounts. Upon the direction
of Company, Agent may apply any earnings on amounts held in such
account to the payment of accrued interest on such Eurodollar Rate
Loan or shall release such earnings to Company.
C. General Provisions Regarding Payments.
(i) Manner and Time of Payment. Subject to any withholding of Taxes
--------------------------
permitted under subsection 2.7B, all payments by Company of principal,
interest, fees and other Obligations hereunder and under the Notes shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Agent not later than
1:00 P.M. (New York City time) on the date due at the Funding and Payment
Office for the account of Lenders. Funds received by Agent after that time
on such due date shall be deemed to have been paid by Company on the next
succeeding Business Day. In order to effect timely payment of any interest,
fees, commissions or other amounts due hereunder, Company hereby authorizes
Agent to request Daily Funding Lender to make Revolving Loans for its own
account (subject to settlement pursuant to subsection 2.1D) in a principal
amount equal to such interest, fees, commissions or other amounts; provided
--------
that Agent shall not have the right to request such Revolving Loans if,
after giving effect to such Revolving Loans, (a) the aggregate outstanding
principal amount of Revolving Loans would exceed the Revolving Loan
Commitments then in effect minus the Letter of Credit Usage, or (b) the
-----
Total Utilization of Revolving Loan Commitments would exceed the Revolving
Borrowing Base then in effect. Daily Funding Lender shall make the amount
of such Revolving Loans (which shall be made as Base Rate Loans) available
to Agent, in same day funds, at the Funding and Payment Office, not later
than 1:00 P.M. (New York time) on the date requested by Agent, and Company
and Lenders hereby authorize Agent, whether or not the conditions specified
in subsection 4.2 have been satisfied or waived, to apply the proceeds of
such Revolving Loans directly to the payment of such unpaid interest, fees,
commissions or other amounts. Company hereby agrees that, upon the funding
of any such Revolving Loans by Daily Funding Lender in accordance with the
provisions of this subsection 2.4C(i), Company shall have effected
Revolving Loans hereunder, which Revolving Loans shall for all purposes of
this Agreement be deemed to have been made by Daily Funding Lender pursuant
to and in accordance with the provisions of subsection 2.1C(ii). Agent
shall deliver prompt notice to Company of the amount of Revolving Loans
made pursuant to this subsection 2.4C together with copies of all invoices
or other statements
63
evidencing the fees, commissions or other amounts due hereunder (other than
interest) paid with the proceeds of such Revolving Loans; provided that
--------
Agent shall give notice to Company five days in advance of the making of
any such Revolving Loans for the payment of any amounts owed under
subsection 10.2 together with copies of all invoices or other statements
evidencing such amounts. In addition, Company hereby authorizes Agent to
charge its accounts with Agent in order to cause timely payment to be made
to Agent of all principal, interest, fees and expenses due hereunder
(subject to sufficient funds being available in its accounts for that
purpose).
(ii) Application of Payments to Principal and Interest. Except
-------------------------------------------------
as provided in subsection 2.2C, all payments in respect of the principal
amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in
any event, any payments in respect of any Loan on a date when interest is
due and payable with respect to such Loan) shall be applied to the payment
of interest before application to principal.
(iii) Apportionment of Payments. Aggregate principal and
-------------------------
interest payments in respect of Term Loans and Revolving Loans shall be
apportioned among all outstanding Loans to which such payments relate, in
each case proportionately to Lenders' respective Pro Rata Shares of such
Loans; provided that (i) payments of principal in respect of the Revolving
--------
Loans pursuant to subsection 2.4B(iii)(h) shall be applied to reduce the
outstanding Revolving Loans of Daily Funding Lender (subject to settlement
pursuant to subsection 2.1D) prior to application to the outstanding
Revolving Loans of any other Lender and (ii) payments of interest in
respect of Revolving Loans which are Base Rate Loans shall be apportioned
ratably among Lenders in proportion to the average daily amount of such
Base Rate Loans of each Lender outstanding during the period in which such
interest shall have accrued. Agent shall promptly distribute to each
Lender, at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Lender may request,
its Pro Rata Share of all such payments received by Agent in respect of
Loans and the commitment fees of such Lender when received by Agent
pursuant to subsection 2.3. Notwithstanding the foregoing provisions of
this subsection 2.4C(iii), if, pursuant to the provisions of subsection
2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected
Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro
Rata Share of any Eurodollar Rate Loans, Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
64
(v) Notation of Payment. Each Lender agrees that before
-------------------
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has
been paid; provided that the failure to make (or any error in the making
--------
of) a notation of any Loan made under such Note shall not limit or
otherwise affect the obligations of Company hereunder or under such Note
with respect to any Loan or any payments of principal or interest on such
Note.
D. Application of Proceeds of Collateral and Payments after Event of
Default.
Upon the occurrence and during the continuation of an Event of Default,
(a) all payments received on account of the Obligations, whether from Company,
from any Guarantor or otherwise, shall be applied by Agent against the
Obligations and (b) all proceeds received by Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
under any Collateral Document may, in the discretion of Agent, be held by Agent
as Collateral for, and/or (then or at any time thereafter) applied in full or in
part by Agent against, the applicable Secured Obligations (as defined in such
Collateral Document), in each case in the following order of priority:
(i) to the payment of all costs and expenses of such sale,
collection or other realization, all other expenses, liabilities and
advances made or incurred by Agent in connection therewith, and all
amounts for which Agent is entitled to compensation (including the fees
described in subsection 2.3), reimbursement and indemnification under any
Loan Document and all advances made by Agent thereunder for the account
of the applicable Loan Party, and to the payment of all costs and
expenses paid or incurred by Agent in connection with the Loan Documents,
all in accordance with subsections 9.4, 10.2 and 10.3 and the other terms
of this Agreement and the Loan Documents;
(ii) thereafter, to the extent of any excess such proceeds, to
the payment of all other Obligations for the ratable benefit of the
holders thereof (subject to the provisions of subsection 2.4C(ii)
hereof); and
(iii) thereafter, to the extent of any excess such proceeds, to
the payment to or upon the order of such Loan Party or to whosoever may
be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
2.5 Use of Proceeds.
---------------
A. Initial Loans. The proceeds of the Term Loans, together with up to
-------------
$63,500,000 in proceeds of the initial Revolving Loans and the proceeds of the
Equity Financing from the Preferred Stock Purchase, shall be applied by Company
to refinance the Existing Credit Agreement, to repurchase 165 units of the
Contico Preferred Units on the Closing Date pursuant to the Contico Preferred
Unit Repurchase Agreement, and to pay related Transaction Costs.
65
B. Other Revolving Loans. The proceeds of any other Revolving
---------------------
Loans shall be applied by Company for the issuance of Letters of Credit and
working capital and other general corporate purposes, which may include the
making of intercompany loans to any of Company's Wholly-Owned Subsidiaries, in
accordance with subsection 7.1(iv) for their own general corporate purposes.
C. Margin Regulations. No portion of the proceeds of any
------------------
borrowing under this Agreement shall be used by Company or any of its
Subsidiaries in any manner that might cause the borrowing or the application of
such proceeds to violate Regulation U, Regulation T or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
---------------------------------------------------
Notwithstanding any other provision of this Agreement to the
contrary, the following provisions shall govern with respect to Eurodollar Rate
Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As soon as
practicable after 10:00 A.M. (New York City time) on each Interest Rate
Determination Date, Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the interest
rate that shall apply to the Eurodollar Rate Loans for which an interest rate is
then being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. Inability to Determine Applicable Interest Rate. In the event
that Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, Agent shall on
such date give notice (by telefacsimile or by telephone confirmed in writing) to
Company and each Lender of such determination, whereupon (i) no Loans may be
made as, or converted to, Eurodollar Rate Loans until such time as Agent
notifies Company and such Lenders that the circumstances giving rise to such
notice no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to the Loans in respect of
which such determination was made shall be deemed to be for a Base Rate Loan.
C. Illegality or Impracticability of Eurodollar Rate Loans. In
the event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order not having the
force of law even though the failure to comply therewith would not be unlawful)
or (ii) has become impracticable, or would
66
cause such Lender material hardship, as a result of contingencies occurring
after the date of this Agreement which materially and adversely affect the
interbank Eurodollar market or the position of such Lender in that market, then,
and in any such event, such Lender shall be an "Affected Lender" and it shall on
that day give notice (by telefacsimile or by telephone confirmed in writing) to
Company and Agent of such determination (which notice Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of the Affected
Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be
suspended until such notice shall be withdrawn by the Affected Lender, (b) to
the extent such determination by the Affected Lender relates to a Eurodollar
Rate Loan then being requested by Company pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, the Affected Lender shall make such Loan as
(or convert such Loan to, as the case may be) a Base Rate Loan (c) the Affected
Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the
"Affected Loans"), shall be terminated at the earlier to occur of the expiration
of the Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Base Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a Eurodollar Rate Loan then being requested by Company pursuant to a Notice
of Borrowing or a Notice of Conversion/Continuation, Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telefacsimile or by telephone confirmed in writing) to Agent of such
rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Agent shall
promptly transmit to each other Lender). Except as provided in the immediately
preceding sentence, nothing in this subsection 2.6C shall affect the obligation
of any Lender other than an Affected Lender to make or maintain Loans as, or to
convert Loans to, Eurodollar Rate Loans in accordance with the terms of this
Agreement.
D. Compensation For Breakage or Non-Commencement of Interest Periods.
Company shall compensate each Lender, upon written request by that Lender
pursuant to subsection 2.8 (which request shall set forth the basis for
requesting such amounts), for all reasonable losses, expenses and liabilities
(including, without limitation, any interest paid by that Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans and, without
duplication, any loss, expense or liability sustained by that Lender in
connection with the liquidation or re-employment of such funds) which that
Lender may sustain: (i) if for any reason (other than a default by that Lender)
a borrowing of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Borrowing or a telephonic request for borrowing, or a
conversion to or continuation of any Eurodollar Rate Loan does not occur on a
date specified therefor in a Notice of Conversion/Continuation or a telephonic
request for conversion or continuation, (ii) if any prepayment (including any
prepayment or conversion occasioned by the circumstances described in subsection
2.6C) or other principal payment or any conversion of any of its Eurodollar Rate
Loans occurs on a date prior to the last day of an Interest Period applicable to
that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not
made on any date specified in a notice of prepayment given by Company, or (iv)
as a consequence of any other default by Company in the repayment of its
Eurodollar Rate Loans when required by the terms of this Agreement.
67
E. Booking of Eurodollar Rate Loans. Subject to subsection 2.8B,
any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the
account of any of its branch offices or the office of an Affiliate of that
Lender.
F. Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had funded each of its
Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period,
whether or not its Eurodollar Rate Loans had been funded in such manner.
G. Eurodollar Rate Loans After Default. After the occurrence of
and during the continuation of a Potential Event of Default or an Event of
Default, (i) Company may not elect to have a Loan be made or maintained as, or
converted to, a Eurodollar Rate Loan after the expiration of any Interest Period
then in effect for that Loan and (ii) subject to the provisions of subsection
2.6D, any Notice of Borrowing or Notice of Conversion/Continuation given by
Company with respect to a requested borrowing or conversion/continuation that
has not yet occurred shall be deemed for a Base Rate Loan or, if the conditions
to making a Loan set forth in subsection 4.2 cannot then be satisfied, to be
rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender (including any Issuing Lender)
shall determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or other Government Authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the date hereof by any
central bank or other Government Authority (whether or not having the force of
law):
(i) subjects such Lender to any additional Tax with
respect to this Agreement or any of its obligations hereunder
(including with respect to issuing or maintaining any Letters of
Credit or purchasing or maintaining any participations therein or
maintaining any Commitment hereunder) or any payments to such
Lender of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any
reserve, special deposit, compulsory loan, insurance charge or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by,
any office of such Lender (other than any such reserve or other
requirements with respect to
68
Eurodollar Rate Loans that are reflected in the definition of Adjusted
Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to
Taxes) on or affecting such Lender or its obligations hereunder or the
interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining its Loans or Commitments or agreeing to
issue, issuing or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce any amount
received or receivable by such Lender with respect thereto; then, in any such
case, Company shall promptly pay to such Lender, upon receipt of the statement
referred to in subsection 2.8A, such additional amount or amounts (in the form
of an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in
amounts received or receivable hereunder; provided that Company shall not be
--------
required to compensate a Lender pursuant to this subsection for any increased
cost or reduction in respect of a period occurring more than six months prior to
the date that such Lender notifies Company of such Lender's intention to claim
compensation therefor unless the circumstances giving rise to such increased
cost or reduction became applicable retroactively, in which case no such time
limitation shall apply so long as such Lender requests compensation within six
months from the date such circumstances become applicable.
B. Taxes.
(i) Payments to Be Free and Clear. Except as otherwise
-----------------------------
provided in this subsection 2.7B, all sums payable by Company under
this Agreement and the other Loan Documents shall be paid free and
clear of, and without any deduction or withholding on account of, any
Tax.
(ii) Grossing-up of Payments. If Company or any other Person
-----------------------
is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by Company to Agent or any
Lender under any of the Loan Documents:
(a) Company shall notify Agent of any such requirement
or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax when such Tax is
due, such payment to be made (if the liability to pay is
imposed on Company) for its own account or (if that
liability is imposed on Agent or such Lender, as the case
may be) on behalf of and in the name of Agent or such
Lender;
(c) the sum payable by Company in respect of which the
relevant deduction, withholding or payment on account of
such Tax is required shall be increased to the extent
necessary to ensure that, after the making of that
deduction, withholding or payment, Agent or such Lender, as
the case may be, receives on the due date a sum net of such
Tax equal to what
69
it would have received had no such deduction, withholding or
payment been required or made; and
(d) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax
which it is required by clause (b) above to pay, Company
shall deliver to Agent evidence satisfactory to the other
affected parties of such deduction, withholding or payment
and of the remittance thereof to the relevant taxing or
other authority;
provided that no such additional amount shall be required to be paid
--------
to any Lender or to Agent on behalf of Agent or any Lender under clause (c)
above (i) with respect to any Tax required to be deducted or withheld on the
basis of the information, certificates or statements of exemption a Non-US
Lender chooses to transmit with an Internal Revenue Service Form W-8IMY pursuant
to subsection 2.7B(iii)(b)(2) and (ii) except to the extent that any change
after the date on which such Lender became a Lender (other than a change under
the applicable law enacted or promulgated, but not in effect, as of such date,
as long as such change becomes effective within one year of such date) in any
such requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect on the date on which such Lender became a Lender, in
respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of
any jurisdiction other than the United States or any state
or other political subdivision thereof (for purposes of this
subsection 2.7B(iii), a "Non-US Lender") shall deliver to
Agent and to Company, on or prior to the Closing Date (in
the case of each Non-US Lender listed on the signature pages
hereof) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case
of each other Non-US Lender), and at such other times as may
be necessary in the determination of Company or Agent (each
in the reasonable exercise of its discretion), two original
copies of Internal Revenue Service Form W-8BEN or W-8ECI (or
any successor forms) properly completed and duly executed by
such Non-US Lender, or, in the case of a Non-US Lender
claiming exemption from United States federal withholding
tax under Section 871(h) or 881(c) of the Internal Revenue
Code with respect to payments of "portfolio interest", two
original copies of Internal Revenue Service Form W-8BEN (or
any successor form), properly completed and duly executed by
such Non-US Lender, together with a certificate of such Non-
US Lender certifying that such Non-US Lender is not (i) a
"bank" for purposes of Section 881(c) of the Internal
Revenue Code, (ii) a ten-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of Company or (iii) a controlled foreign corporation
related to Company (within the meaning of Section 864(d)(4)
of the Internal Revenue Code) in each case together with any
other certificate or
70
statement of exemption required under the Internal Revenue
Code or the regulations issued thereunder to establish that
such Non-US Lender is not subject to United States
withholding tax with respect to any payments to such Non-US
Lender of interest payable under any of the Loan Documents.
(b) Each Non-US Lender, to the extent it does not act
or ceases to act for its own account with respect to any
portion of any sums paid or payable to such Lender under any
of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to Agent and to
Company, on or prior to the Closing Date (in the case of
each Non-US Lender listed on the signatures pages hereof),
on or prior to the date of the Assignment Agreement pursuant
to which it becomes a Lender (in the case of each other Non-
US Lender), or on such later date when such Non-US Lender
ceases to act for its own account with respect to any
portion of any such sums paid or payable, and at such other
times as may be necessary in the determination of Company or
Agent (each in the reasonable exercise of its discretion),
(1) two original copies of the forms, certificates or
statements required to be provided by such Non-US Lender
under subsection 2.7B(iii)(a), properly completed and duly
executed by such Non-US Lender, to establish the portion of
any such sums paid or payable with respect to which such
Non-US Lender acts for its own account that is not subject
to United States withholding tax, and (2) two original
copies of Internal Revenue Service Form W-8IMY (or any
successor forms) properly completed and duly executed by
such Non-US Lender, together with any information, if any,
such Lender chooses to transmit with such form, and any
other certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued
thereunder, to establish that such Lender is not acting for
its own account with respect to a portion of any such sums
payable to such Non-US Lender.
(c) Each Non-US Lender hereby agrees, from time to
time after the initial delivery by such Lender of any forms,
certificates or other evidence under this subsection
2.7B(iii), whenever a lapse in time or change in
circumstances renders such forms, certificates or other
evidence so delivered obsolete or inaccurate in any material
respect, that such Non-US Lender shall promptly (1) deliver
to Agent and to Company two original copies of renewals,
amendments or additional or successor forms, properly
completed and duly executed by such Non-US Lender, together
with any other certificate or statement of exemption
required in order to confirm or establish that such Non-US
Lender is not subject to United States withholding tax with
respect to payments to such Non-US Lender under the Loan
Documents and, if applicable, that such Lender does not act
for its own account with respect to any portion of such
payment, or (2) notify Agent and Company of its inability to
deliver any such forms, certificates or other evidence.
71
(d) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Non-US Lender shall have failed
to satisfy the requirements of clause (a), (b) or (c)(1) of
this subsection 2.7B(iii); provided that if such Non-US
--------
Lender shall have satisfied the requirements of subsection
2.7B(iii)(a) on the date such Non-US Lender became a Lender,
nothing in this subsection 2.7B(iii)(d) shall relieve
Company of its obligation to pay any amounts pursuant to
subsection 2.7B(ii)(c) in the event that, as a result of any
change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation,
administration or application thereof, such Non-US Lender is
no longer properly entitled to deliver forms, certificates
or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described
in subsection 2.7B(iii)(a).
(iv) Tax Refund. If a Lender or Agent determines in good
----------
faith that a reasonable basis exists for contesting a Tax with
respect to which Company has paid an additional amount under this
subsection 2.7B or subsection 2.7A, such Lender or Agent, as
applicable, shall notify Company in writing of its determination
and, if requested in writing by Company, cooperate with Company
(but shall have no obligation to disclose any confidential
information, unless arrangements satisfactory to such Lender or
Agent, as applicable, have been made to preserve the confidential
nature of such information) in challenging such Tax at Company's
expense (it being understood and agreed that no Lender or Agent
shall have any obligation to contest, or any responsibility for
contesting, any Tax). If a Lender shall become aware that it is
entitled to receive a refund (whether by way of a direct payment
or by offset) in respect of a Tax paid by Company, it shall
promptly notify Company of the availability of such refund
(unless it was made aware of such refund by Company) and shall,
within 45 days after the receipt of a request from Company, apply
for such refund at Company's sole expense. If any Lender or
Agent, as applicable, receives a refund (whether by way of a
direct payment or by offset) of any Tax with respect to which
Company has paid an additional amount under this subsection 2.7B
or subsection 2.7A which, in the reasonable good faith judgment
of such Lender or Agent, as the case may be, is allocable to such
payment made under this subsection 2.7B or subsection 2.7A, the
amount of such refund (together with any interest thereon
received by such Lender or Agent from the Government Authority
that imposed the Tax being refunded, but net of all reasonable
out-of-pocket expenses of such Lender or Agent) shall be paid to
Company if (i) payment of the Tax being refunded has been made in
full as and when required pursuant to this subsection 2.7B or
subsection 2.7A and (ii) Company agrees in writing to repay the
amount of such Refund, together with interest thereon, to the
applicable Lender or Agent in the event such Lender or Agent is
required to repay such refund to such Government Authority.
C. Capital Adequacy Adjustment. If any Lender shall have
determined that the adoption, effectiveness, phase-in or applicability after the
date hereof of any law, rule or
72
regulation (or any provision thereof) regarding capital adequacy, or any change
therein or in the interpretation or administration thereof by any Government
Authority charged with the interpretation or administration thereof, or
compliance by any Lender with any guideline, request or directive regarding
capital adequacy (whether or not having the force of law) of any such Government
Authority, 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, or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other obligations hereunder with
respect to the Loans or the Letters of Credit to a level below that which such
Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business
Days after receipt by Company from such Lender of the statement referred to in
subsection 2.8A, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an
after-tax basis for such reduction; provided that Company shall not be required
--------
to compensate a Lender pursuant to this subsection for any reduction in respect
of a period occurring more than six months prior to the date that such Lender
notifies Company of such Lender's intention to claim compensation therefor
unless the circumstances giving rise to such reduction become applicable
retroactively, in which case no such time limitation shall apply so long as such
Lender requests compensation within six months from the date such circumstances
become applicable.
2.8 Statement of Lenders; Obligation of Lenders and Issuing Lenders to
------------------------------------------------------------------
Mitigate.
--------
A. Statements. Each Lender claiming compensation or
reimbursement pursuant to subsection 2.6D, 2.7 or 2.8B shall deliver to Company
(with a copy to Agent) a written statement, setting forth in reasonable detail
the basis of the calculation of such compensation or reimbursement, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.
B. Mitigation. Each Lender and Issuing Lender agrees that, as
promptly as practicable after the officer of such Lender or Issuing Lender
responsible for administering the Loans or Letters of Credit of such Lender or
Issuing Lender, as the case may be, becomes aware of the occurrence of an event
or the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to receive
payments under subsection 2.7, use reasonable effort to make, issue, fund or
maintain the Commitments of such Lender or the Affected Loans or Letters of
Credit of such Lender or Issuing Lender through another lending or letter of
credit office of such Lender or Issuing Lender, if (i) as a result thereof the
circumstances which would cause such Lender to be an Affected Lender would cease
to exist or the additional amounts which would otherwise be required to be paid
to such Lender or Issuing Lender pursuant to subsection 2.7 would be materially
reduced and (ii) as determined by such Lender or Issuing Lender in its sole
discretion, such action would not otherwise be disadvantageous to such Lender or
Issuing Lender; provided that such Lender or Issuing Lender will not be
--------
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8B unless Company agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described above.
73
2.9 Replacement of a Lender.
-----------------------
If Company receives a statement of amounts due pursuant to
subsection 2.8A from a Lender or a Lender becomes an Affected Lender (any such
Lender, a "Subject Lender"), so long as (i) no Potential Event of Default or
Event of Default shall have occurred and be continuing and Company has obtained
a commitment from another Lender or an Eligible Assignee to purchase at par the
Subject Lender's Loans and assume the Subject Lender's Commitments and all other
obligations of the Subject Lender hereunder, (ii) such Lender is not an Issuing
Lender with respect to any Letters of Credit outstanding (unless all such
Letters of Credit are terminated or arrangements acceptable to such Issuing
Lender (such as a "back-to-back" letter of credit) are made) and (iii), if
applicable, the Subject Lender is unwilling to withdraw the notice delivered to
Company pursuant to subsection 2.8 upon 10 days prior written notice to the
Subject Lender and Agent, Company may require the Subject Lender to assign all
of its Loans and Commitments to such other Lender, Lenders, Eligible Assignee or
Eligible Assignees pursuant to the provisions of subsection 10.1B; provided
--------
that, prior to or concurrently with such replacement, (1) the Subject Lender
shall have received payment in full of all principal, interest, fees and other
amounts, including all amounts under subsections 2.6D, 2.7 and/or 2.8B (if
applicable) through such date of replacement and a release from its obligations
under the Loan Documents, (2) the processing fee required to be paid by
subsection 10.1B(i) shall have been paid to Agent, and (3) all of the
requirements for such assignment contained in subsection 10.1B, including,
without limitation, the consent of Agent (if required) and the receipt by Agent
of an executed Assignment Agreement and other supporting documents, have been
fulfilled.
2.10 Collection, Deposit and Transfer of Payments in Respect of Accounts.
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Company shall, and shall cause each of its Subsidiaries to, maintain
in effect at all times a system of accounts and procedures reasonably
satisfactory to Agent for the collection and deposit of payments in respect of
such Person's Accounts and the transfer of amounts so deposited to the
applicable Concentration Account and BTCo Account. Without limiting the
generality of the foregoing:
A. Maintenance of Lock Boxes, Lock Box Accounts and Concentration
Accounts.
(i) Except as permitted under clauses (ii) and (iii) of
this subsection 2.10A and, with respect to ▇▇▇▇▇ and Glit, subsection
2.10B(i), Company shall, and shall cause each of its Domestic
Subsidiaries, ▇▇▇▇▇ and Glit to, at all times maintain all of their
respective lockboxes and Deposit Accounts as Lock Boxes, Lock Box
Accounts and Concentration Accounts established pursuant to the terms
of this Agreement, the Lock Box Agreements and the Blocked Account
Agreements.
(ii) Company shall not, and shall not permit any of its
Domestic Subsidiaries, ▇▇▇▇▇ or Glit to, close any Lock Box, Lock Box
Account, Concentration Account or any other Deposit Account or open a
new Lock Box, Lock Box Account, Concentration Account or any other
Deposit Account unless
74
it shall have (a) notified Agent in writing at least 30 days (or such
lesser number of days as may be agreed to by Agent) prior to the
proposed closing or opening, (b) in the case of a new Lock Box or Lock
Box Account, entered into a Lock Box Agreement with the applicable
Lock Box Account Bank and (c) in the case of a new Other Bank
Concentration Account or any other new Deposit Account, entered into a
Blocked Account Agreement with the applicable Concentration Bank or
the applicable financial institution.
(iii) Notwithstanding the foregoing, (a) with respect to
each of the zero-balance Deposit Accounts and other disbursement
Deposit Accounts listed in Part B of Schedule 1(d) to the Security
Agreement as in effect on the Closing Date, Company shall, or shall
cause its Subsidiaries to, enter into a Blocked Account Agreement
(which Blocked Account Agreements shall not require an automatic daily
transfer to the BTCo Account unless and until a notice is given by
Agent) with the applicable financial institution within 60 days of the
Closing Date, (b) with respect to each of the Deposit Accounts listed
in Part C of Schedule 1(d) to the Security Agreement as in effect on
the Closing Date, Company shall, or shall cause its Subsidiaries to,
(1) enter into a Blocked Account Agreement (which Blocked Account
Agreements shall require an automatic daily transfer to the BTCo
Account) with the applicable financial institution within 30 days of
the Closing Date and (2) transfer all amounts in each such Deposit
Account into the BTCo Account on each Business Day unless the
aggregate amount in such Deposit Account on such Business Day is less
than $10,000, (c) with respect to each of the three U.K. Deposit
Accounts of the U.K. division of Contico listed in Part D in Schedule
1(d) to the Security Agreement as in effect on the Closing Date, which
Company represents are the only U.K. Deposit Accounts of Contico,
Company and Contico shall not be required to enter into a Blocked
Account Agreement or a Lock Box Agreement so long as (1) (I) on or
prior to the Closing Date, Contico shall have granted a charge on each
such Deposit Account and the proceeds thereof pursuant to the U.K.
Subsidiary Debenture and (II) within 30 days of the Closing Date,
Company or Contico shall have caused each bank at which such Deposit
Account is maintained to execute an acknowledgement in form and
substance satisfactory to Agent, (2) Company shall cause Contico to at
all times immediately transfer to a Concentration Account or to BTCo
Account any amount in excess of (Pounds)100,000 in account number
▇▇▇▇▇▇▇▇ maintained at National Westminster Bank PLC or any amount in
excess of (Pounds)100,000 in the aggregate in the other four U.K.
Deposit Accounts of Contico (account numbers ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
56470177 and 6786847 maintained at National Westminster Bank) and any
other Deposit Account of any Loan Party in the U.K., and (3) Company
shall cause Contico and Contico Manufacturing Limited to completely
segregate their respective Deposit Accounts and their cash ledger
systems in the U.K. within 30 days of the Closing Date such that the
only funds in the U.K. Deposit Accounts of Contico are funds of
Contico and Company shall have delivered an Officer's Certificate to
Agent on or before such 30th day of the Closing Date certifying that
it has complied with the provisions of this clause (3), and (d) with
respect to the Canadian Deposit
75
Account(s) listed in Part E in Schedule 1(d) to the Security Agreement
as in effect on the Closing Date, Company shall cause its Subsidiaries
to, within 30 days of the Closing Date, to enter into a Blocked
Account Agreement in form and substance satisfactory to Agent.
B. Collection and Deposit of Payments in Respect of Accounts.
(i) Company shall, and shall cause each of its Domestic
Subsidiaries to, and, as soon as possible and in any event on and
after 90 days after the Closing Date, shall cause ▇▇▇▇▇ and Glit to,
deliver such notices to account debtors and take all such other
actions as may reasonably be necessary to cause all payments in
respect of such Person's Accounts to be made directly to a Lock Box
or, in the case of account debtors of Contico in the United Kingdom,
to a Deposit Account of Contico that is subject to a charge pursuant
to the U.K. Subsidiary Debenture. Company shall cause ▇▇▇▇▇ and Glit
to establish Lock Boxes and Lock Box Accounts and enter into Lock Box
Agreements within 90 days of the Closing Date and shall cause all
payments in respect of Accounts of ▇▇▇▇▇ and Glit on and after 180
days after the Closing Date to be made directly to a Lock Box.
(ii) Company shall, or shall cause each of its Domestic
Subsidiaries to, and, as soon as possible and in any event on and
after 90 days after the Closing Date, shall cause ▇▇▇▇▇ and Glit to,
direct the Lock Box Bank (or other authorized representatives
designated by Agent), at least once on each Business Day, to retrieve
all checks and other instruments delivered to a Lock Box and, as
promptly as possible on the same Business Day so retrieved, to endorse
for payment and deposit each such check or other instrument in the
Lock Box Account related to such Lock Box. Notwithstanding the
foregoing, from and after such time as Agent shall have notified
Company of its election to exercise its rights under this subsection
2.10B(ii), Company shall not, and shall not permit its Domestic
Subsidiaries, ▇▇▇▇▇ or Glit to, retrieve any items from any Lock Box
unless accompanied by a representative of Agent, and Company hereby
appoints Agent or any of its designees as Company' attorneys-in-fact
with powers, upon notification by Agent as aforesaid, to (a) access
all Lock Boxes and (b) endorse for payment any checks or other
instruments representing payment in respect of any Accounts of such
Persons that are delivered to any Lock Box. All acts of said attorneys
or designees are hereby ratified and approved, and said attorneys or
designees shall not be liable for any acts of omission or commission
(other than acts or omissions constituting gross negligence or willful
misconduct as determined in a final order by a court of competent
jurisdiction), nor for any error of judgment or mistake of fact or
law. The power of attorney set forth in this subsection 2.10B(ii) is
irrevocable until all Obligations shall have been paid in full and the
Commitments shall have terminated.
(iii) In the event that Company or any of its Domestic
Subsidiaries, ▇▇▇▇▇ or Glit receives any check, cash, note or other
instrument representing payment of an Account (other than any item
delivered to a Lock Box), Company shall, or shall cause such
Subsidiary to, hold such item in trust for Agent and
76
shall, as soon as practicable (and in any event within one Business
Day) after receipt thereof, cause such item to be deposited into a
Lock Box Account with any necessary endorsements.
(iv) Company hereby agrees, from and after such time, if any, as
Agent shall have notified Company in writing that the provisions of
this subsection 2.10B(iv) are to become effective until such later
time, if any, as Agent shall have notified Company in writing that
such provisions are no longer to be effective, not to deposit any
monies into the Lock Box Accounts or to Concentration Accounts or to
otherwise permit any monies to be deposited into any of such accounts,
except payments received in respect of Company's Accounts.
C. Transfer of Amounts Deposited in the Lock Box Accounts to the
Concentration Accounts. Company shall cause all amounts deposited in each Lock
Box Account to be automatically transferred on each Business Day to the
applicable Concentration Account in accordance with the terms of the applicable
Lock Box Agreement.
D. Transfer of Amounts Deposited in the Concentration Accounts and
Other Deposit Accounts to the BTCo Account. Company shall cause all amounts
deposited in each Deposit Account of Contico in the United Kingdom to be
automatically transferred to a Concentration Account or the BTCo Account upon
the giving of notice by Agent (which notice shall be given only upon the
occurrence and continuation of an Event of Default or a Potential Event of
Default) or if any such Deposit Account has amounts exceeding the levels set
forth in subsection 2.10A(iii)(c)(2). Company shall cause all amounts deposited
in each Deposit Account of ▇▇▇▇▇ and Glit (other than a Lock Box Account) to be
automatically transferred to a Concentration Account or the BTCo Account upon
the giving of notice by Agent (which notice shall be given only upon the
occurrence and continuation of an Event of Default or a Potential Event of
Default) or if all Deposit Accounts of Glit have an aggregate amount exceeding
$1,500,000 at any time (but only to the extent of such excess) or if all Deposit
Accounts of ▇▇▇▇▇ have an aggregate amount exceeding $3,000,000 at any time (but
only to the extent of such excess). Company shall cause all amounts deposited in
each Concentration Account to be automatically transferred to the BTCo Account
on each Business Day. Company shall cause all amounts deposited in any other
Deposit Account (including zero balance accounts and other disbursement accounts
which are subject to Blocked Account Agreements which do not require an
automatic daily transfer to the BTCo Account) to be transferred to the BTCo
Account on each Business Day upon giving of notice by Agent (which notice shall
be given only upon the occurrence and continuation of an Event of Default or a
Potential Event of Default). Any amounts so transferred to the BTCo Account
first shall be applied as provided in subsection 2.4B(iii)(h) to the extent
-----
therein provided and thereafter, so long as no Event of Default or Potential
----------
Event of Default shall have occurred and be continuing, shall be available for
disbursement to the applicable Loan Parties for working capital and other
general corporate purposes.
E. Treatment of Accounts. Company shall not, without Agent's prior
written consent, grant any extension of the time of payment of any Account,
compromise or settle any Account for less than the full amount thereof, release,
in whole or in part, any person or property
77
liable for the payment thereof, or allow any credit or discount whatsoever
thereon, except, prior to the occurrence of an Event of Default, in accordance
with their usual and customary business practices.
F. Company to Provide Information. Company shall, at such
intervals as Agent may reasonably request, furnish such statements, schedules
and/or information as Agent may request relating to Company's and its
Subsidiaries' Accounts and the collection, deposit and transfer of payments in
respect thereof, including, without limitation, all invoices evidencing such
Accounts.
SECTION 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
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Therein.
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A. Letters of Credit. In addition to Company requesting that
Lenders make Revolving Loans pursuant to subsection 2.1A(ii), Company may
request, in accordance with the provisions of this subsection 3.1, from time to
time during the period from the Closing Date to but excluding the 30th day prior
to the Revolving Loan Commitment Termination Date, that one or more Revolving
Lenders issue Letters of Credit payable on a sight basis for the account of
Company or a Subsidiary Guarantor for the purposes specified in the definitions
of Commercial Letters of Credit and Standby Letters of Credit. Subject to the
terms and conditions of this Agreement and in reliance upon the representations
and warranties of Company herein set forth, any one or more Lenders may, but
(except as provided in subsection 3.1B(ii)) shall not be obligated to, issue
such Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Revolving Lender issue (and no
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Revolving Lender shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments
would exceed the Revolving Loan Commitments then in effect;
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $15,000,000;
(iii) any Letter of Credit for the account of Company or a
Subsidiary Guarantor if, after giving effect to such issuance,
the Total Utilization of Revolving Loan Commitments would exceed
the Revolving Borrowing Base then in effect;
(iv) any Standby Letter of Credit having an expiration date
later than the earlier of (a) five Business Days prior to the
Revolving Loan Commitment Termination Date and (b) the date which
is one year from the date of issuance of such Standby Letter of
Credit; provided that the immediately preceding clause (b) shall
--------
not prevent any Issuing Lender from agreeing that a Standby
Letter of Credit will automatically be extended for one or more
successive periods not to exceed one year each unless such
Issuing Lender elects not to extend for any such additional
period; and provided, further that such Issuing Lender shall
-------- -------
elect not to extend such Standby Letter of Credit if it has
knowledge that an Event of Default
78
has occurred and is continuing (and has not been waived in accordance
with subsection 10.6) at the time such Issuing Lender must elect
whether or not to allow such extension; or
(v) any Commercial Letter of Credit having an expiration date
(a) later than the earlier of (1) the date which is 30 days prior to
the Revolving Loan Commitment Termination Date and (2) the date which
is 180 days from the date of issuance of such Commercial Letter of
Credit or (b) that is otherwise unacceptable to the applicable Issuing
Lender in its reasonable discretion.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires the issuance of
------------------
a Letter of Credit, it shall deliver to Agent a Request for Issuance
of Letter of Credit substantially in the form of Exhibit III annexed
-----------
hereto no later than 12:00 Noon (New York City time) at least three
Business Days (in the case of Standby Letters of Credit) or five
Business Days (in the case of Commercial Letters of Credit), or in
each case, such shorter period as may be agreed to by the Issuing
Lender in any particular instance, in advance of the proposed date of
issuance. The Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Letter of Credit or any
documents described in or attached to the Request for Issuance of
Letter of Credit. In furtherance of the provisions of subsection 10.8,
and not in limitation thereof, Company may submit Requests for
Issuance of Letter of Credit by telefacsimile and Agent and Issuing
Lenders may rely and act upon any such Request for Issuance of Letter
of Credit without receiving an original signed copy thereof.
Company shall notify the applicable Issuing Lender (and
Agent, if Agent is not such Issuing Lender) prior to the issuance of
any Letter of Credit in the event that any of the matters to which
Company is required to certify in the applicable Request for Issuance
of Letter of Credit is no longer true and correct as of the proposed
date of issuance of such Letter of Credit, and upon the issuance of
any Letter of Credit Company shall be deemed to have re-certified, as
of the date of such issuance, as to the matters to which Company is
required to certify in the applicable Request for Issuance of Letter
of Credit.
(ii) Determination of Issuing Lender. Upon receipt by Agent of a
-------------------------------
Request for Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, in the event
Agent elects to issue such Letter of Credit, Agent shall promptly so
notify Company, and Agent shall be the Issuing Lender with respect
thereto. In the event that Agent, in its sole discretion, elects not
to issue such Letter of Credit, Agent shall promptly so notify
Company, whereupon Company may request any other Revolving Lender to
issue such Letter of Credit by delivering to such Revolving Lender a
copy of the applicable Request for Issuance of Letter of Credit. Any
Revolving Lender so requested to issue such Letter of Credit shall
promptly, and in any event one Business Day prior to the issuance
thereof, notify Company and Agent whether or not, in its sole
79
discretion, it has elected to issue such Letter of Credit, and such
Revolving Lender shall promptly, and in any event one Business Day
prior to the effectiveness of any amendment to such Letter of Credit,
notify Company and Agent of any such amendment, and any such Revolving
Lender which so elects to issue such Letter of Credit shall be the
Issuing Lender with respect thereto. In the event that all other
Revolving Lenders shall have declined to issue such Letter of Credit,
notwithstanding the prior election of Agent not to issue such Letter
of Credit, Agent shall be obligated to issue such Letter of Credit and
shall be the Issuing Lender with respect thereto, notwithstanding the
fact that the Letter of Credit Usage with respect to such Letter of
Credit and with respect to all other Letters of Credit issued by
Agent, when aggregated with Agent's outstanding Revolving Loans, may
exceed Agent's Revolving Loan Commitment then in effect; provided that
--------
Agent shall not be obligated to issue any Letter of Credit denominated
in a foreign currency which in the judgment of Agent is not readily
and freely available.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver
----------------------------
(in accordance with subsection 10.6) of the conditions set forth in
subsection 4.3, the Issuing Lender shall issue the requested Letter of
Credit in accordance with the Issuing Lender's standard operating
procedures.
(iv) Notification to Lenders. Upon the issuance of or amendment
-----------------------
to any Standby Letter of Credit, the applicable Issuing Lender shall
promptly notify Company and Agent, in writing, of such issuance or
amendment and such notice must be accompanied by a copy of such
issuance or amendment. Promptly after receipt of such notice, Agent
shall notify each other Revolving Lender of such issuance or
amendment, and if requested by any Revolving Lender, Agent shall
furnish such Revolving Lender with a copy of such issuance or
amendment. With regard to Commercial Letters of Credit, on the first
Business Day of each week the applicable Issuing Lender shall provide
Agent, by facsimile, with a report detailing such Issuing Lender's
daily aggregate outstandings for the previous week.
C. Revolving Lenders' Purchase of Participations in Letters of
Credit. Immediately upon the issuance of each Letter of Credit, each Revolving
Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from
the Issuing Lender a participation in such Letter of Credit and any drawings
honored thereunder in an amount equal to such Revolving Lender's Pro Rata Share
of the maximum amount which is or at any time may become available to be drawn
thereunder.
3.2 Letter of Credit Fees.
---------------------
Company agrees to pay the following amounts with respect to
Letters of Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a
fronting fee, payable directly to the applicable Issuing Lender for
its own account, equal to the
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greater of (X) $500 and (Y) 0.25% per annum of the daily amount
available to be drawn under such Standby Letter of Credit and (b) a
letter of credit fee, payable to Agent for the account of Revolving
Lenders, equal to the applicable Eurodollar Rate Margin per annum for
Revolving Loans multiplied by the daily amount available to be drawn
-------------
under such Standby Letter of Credit, in each case payable in arrears
on and to (but excluding) the first Business Day of each March, June,
September and December of each year and computed on the basis of a
360-day year for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a) a
fronting fee, payable directly to the applicable Issuing Lender for
its own account, equal to the greater of (X) $500 and (Y) 0.25% per
annum of the daily amount available to be drawn under such Commercial
Letter of Credit and (b) a letter of credit fee, payable to Agent for
the account of Revolving Lenders, equal to the applicable Eurodollar
Rate Margin per annum for Revolving Loans multiplied by the daily
-------------
amount available to be drawn under such Commercial Letter of Credit,
in each case payable in arrears on and to (but excluding) the first
Business Day of each March, June, September and December of each year
and computed on the basis of a 360-day year for the actual number of
days elapsed; and
(iii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clause (i) above),
documentary and processing charges, payable directly to the applicable
Issuing Lender for its own account, in accordance with such Issuing
Lender's standard schedule for such charges in effect at the time of
such issuance, amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, (1) the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination and (2) any amount described in such clauses which is denominated
in a currency other than Dollars shall be valued based on the applicable
Exchange Rate for such currency as of the applicable date of determination.
Promptly upon receipt by Agent of any amount described in clauses (i)(b) and
(ii)(b) of this subsection 3.2, Agent shall distribute to each Revolving Lender
its Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of Credit.
-------------------------------------------------------------------
A. Responsibility of Issuing Lender With Respect to Drawings. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. Reimbursement by Company of Amounts Paid Under Letters of Credit.
In the event an Issuing Lender has determined to honor a drawing under a Letter
of Credit issued by it, such Issuing Lender shall immediately notify Company and
Agent, and Company shall
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reimburse such Issuing Lender (whether such Letter of Credit was issued for the
account of Company or a Subsidiary Guarantor) on or before the Business Day
immediately following the date on which such drawing is honored (the
"Reimbursement Date") in an amount in Dollars (which amount, in the case of a
payment under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate) and
in same day funds equal to the amount of such payment; provided that, anything
--------
contained in this Agreement to the contrary notwithstanding, (i) unless Company
shall have notified Agent and such Issuing Lender prior to 10:00 A.M. (New York
City time) on the date such drawing is honored that Company intends to reimburse
such Issuing Lender for the amount of such payment with funds other than the
proceeds of Revolving Loans, Company shall be deemed to have given a timely
Notice of Borrowing to Agent requesting Revolving Lenders to make Revolving
Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars
(which amount, in the case of a payment under a Letter of Credit which is
denominated in a currency other than Dollars, shall be calculated by reference
to the applicable Exchange Rate) equal to the amount of such payment and (ii)
subject to satisfaction or waiver of the conditions specified in subsection
4.2B, Revolving Lenders shall, on the Reimbursement Date, make Revolving Loans
that are Base Rate Loans in the amount of such payment, the proceeds of which
shall be applied directly by Agent to reimburse such Issuing Lender for the
amount of such payment; and provided, further that if for any reason proceeds of
-------- -------
Revolving Loans are not received by such Issuing Lender on the Reimbursement
Date in an amount equal to the amount of such payment, Company shall reimburse
such Issuing Lender, on demand, in an amount in same day funds equal to the
excess of the amount of such payment over the aggregate amount of such Revolving
Loans, if any, which are so received. Nothing in this subsection 3.3B shall be
deemed to relieve any Revolving Lender from its obligation to make Revolving
Loans on the terms and conditions set forth in this Agreement, and Company shall
retain any and all rights it may have against any Revolving Lender resulting
from the failure of such Revolving Lender to make such Revolving Loans under
this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of
Credit.
(i) Payment by Revolving Lenders. In the event that Company
----------------------------
shall fail for any reason to reimburse any Issuing Lender as provided
in subsection 3.3B in an amount (calculated, in the case of a payment
under a Letter of Credit denominated in a currency other than Dollars,
by reference to the applicable Exchange Rate) equal to the amount of
any payment by such Issuing Lender under a Letter of Credit issued by
it, such Issuing Lender shall promptly notify each other Lender of the
unreimbursed amount of such honored drawing and of such other
Revolving Lender's respective participation therein based on such
Revolving Lender's Pro Rata Share. Each Revolving Lender shall make
available to such Issuing Lender an amount equal to its respective
participation, in Dollars and in same day funds, at the office of such
Issuing Lender specified in such notice, not later than 12:00 Noon
(New York City time) on the first business day (under the laws of the
jurisdiction in which such office of such Issuing Lender is located)
after the date notified by such Issuing Lender. In the event that any
Revolving Lender fails to make available to such Issuing Lender on
such business day the amount of such Revolving Lender's participation
in such Letter of Credit
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as provided in this subsection 3.3C, such Issuing Lender shall be
entitled to recover such amount on demand from such Revolving Lender
together with interest thereon at the rate customarily used by such
Issuing Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. Nothing in this
subsection 3.3C shall be deemed to prejudice the right of any Lender
to recover from any Issuing Lender any amounts made available by such
Revolving Lender to such Issuing Lender pursuant to this subsection
3.3C in the event that it is determined by the final judgment of a
court of competent jurisdiction that the payment with respect to a
Letter of Credit by such Issuing Lender in respect of which payment
was made by such Revolving Lender constituted gross negligence or
willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
-------------------------------------------------------
Company. In the event any Issuing Lender shall have been reimbursed by
-------
other Revolving Lenders pursuant to subsection 3.3C(i) for all or any
portion of any payment by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall distribute to each other
Revolving Lender that has paid all amounts payable by it under
subsection 3.3C(i) with respect to such payment such other Revolving
Lender's Pro Rata Share of all payments subsequently received by such
Issuing Lender from Company in reimbursement of such payment under the
Letter of Credit when such payments are received. Any such
distribution shall be made to a Revolving Lender at its primary
address set forth below its name on the appropriate signature page
hereof or at such other address as such Revolving Lender may request.
D. Interest on Amounts Paid Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees to pay to
------------------------------
each Issuing Lender, with respect to payments under any Letters of
Credit issued by it, interest on the amount paid by such Issuing
Lender in respect of each such payment from the date a drawing is
honored to but excluding the date such amount is reimbursed by Company
(including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B) at a rate equal to (a) for the
period from the date such drawing is honored to but excluding the
Reimbursement Date, the rate then in effect under this Agreement with
respect to Revolving Loans that are Base Rate Loans and (b)
thereafter, upon notice to Company by Agent, a rate which is 2% per
annum in excess of the rate of interest otherwise payable under this
Agreement with respect to Revolving Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i) shall be computed
on the basis of a 360-day year for the actual number of days elapsed
in the period during which it accrues and shall be payable on demand
or, if no demand is made, on the date on which the related drawing
under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
---------------------------------------------------
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to
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subsection 3.3D(i) with respect to a payment under a Letter of Credit
issued by it, (a) such Issuing Lender shall distribute to each other
Revolving Lender, out of the interest received by such Issuing Lender
in respect of the period from the date such drawing is honored to but
excluding the date on which such Issuing Lender is reimbursed for the
amount of such payment (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B), the amount
that such other Revolving Lender would have been entitled to receive
in respect of the letter of credit fee that would have been payable in
respect of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been honored under such Letter of
Credit, and (b) in the event such Issuing Lender shall have been
reimbursed by other Revolving Lenders pursuant to subsection 3.3C(i)
for all or any portion of such payment, such Issuing Lender shall
distribute to each other Revolving Lender that has paid all amounts
payable by it under subsection 3.3C(i) with respect to such payment
such other Revolving Lender's Pro Rata Share of any interest received
by such Issuing Lender in respect of that portion of such payment so
reimbursed by other Revolving Lenders for the period from the date on
which such Issuing Lender was so reimbursed by other Revolving Lenders
to but excluding the date on which such portion of such payment is
reimbursed by Company. Any such distribution shall be made to a
Revolving Lender at its primary address set forth below its name on
the appropriate signature page hereof or at such other address as such
Revolving Lender may request.
3.4 Obligations Absolute.
--------------------
The obligation of Company to reimburse each Issuing Lender for
payments under the Letters of Credit issued by it and to repay any Revolving
Loans made by Revolving Lenders pursuant to subsection 3.3B and the obligations
of Revolving Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), any Issuing Lender or
other Revolving Lender or any other Person or, in the case of a
Revolving Lender, against Company, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or
one of its Subsidiaries and the beneficiary for which any Letter of
Credit was procured);
(iii) any draft or other document presented under any 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;
84
(iv) payment by the applicable Issuing Lender under any Letter
of Credit against presentation of a draft or other document which does
not substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document
by any party thereto;
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing;
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing; or
(ix) the fact that such Letter of Credit is issued for the
account of a Subsidiary Guarantor;
provided, in each case, that payment by the applicable Issuing Lender under the
--------
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lenders' Duties.
--------------------------------------------------
A. Indemnification. In addition to amounts payable as provided in
subsection 2.7, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses other than with
respect to taxes (including reasonable fees, expenses and disbursements of
outside counsel and allocated costs of internal counsel) which such Issuing
Lender may incur or be subject to as a consequence, direct or indirect, of (i)
the issuance of any Letter of Credit by such Issuing Lender, other than as a
result of (a) the gross negligence or willful misconduct of such Issuing Lender
as determined by a final judgment of a court of competent jurisdiction or (b)
subject to the following clause (ii), the wrongful dishonor by such Issuing
Lender of a proper demand for payment made under any Letter of Credit issued by
it or (ii) the failure of such Issuing Lender to honor a drawing under any such
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Government Authority.
B. Nature of Issuing Lenders' Duties. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate,
85
fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (iii) failure
of the beneficiary of any such Letter of Credit to comply fully with any
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the control of such Issuing Lender, including any act or
omission by a Government Authority specified in subsection 3.5A, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions set forth in the first paragraph of this subsection 3.5B,
any action taken or omitted by any Issuing Lender under or in connection with
the Letters of Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put such Issuing Lender
under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 3.5, Company shall retain any and all rights it may have against any
Issuing Lender for any liability to the extent arising out of the gross
negligence or willful misconduct of such Issuing Lender, as determined by a
final judgment of a court of competent jurisdiction.
3.6 Subsidiary Guarantors as Account Parties.
----------------------------------------
A. As agreed from time to time between Company and the
applicable Issuing Lender, any applications for, or reimbursement agreements or
other documents or certificates executed by Company or any Subsidiary Guarantor
in favor of an Issuing Lender relating to the Letters of Credit (collectively,
the "L/C Related Documents") for any Letter of Credit, and other communications
required of Company with respect thereto under this Section 3 (in each case
other than the Request for Issuance of Letter of Credit), may be executed by a
Subsidiary Guarantor of Company (an "L/C Subsidiary") rather than Company. The
parties hereto acknowledge and agree that a letter of credit issued pursuant to
such L/C-Related Documents shall be a Letter of Credit for all purposes
hereunder, and Company, the applicable Issuing Lender, and the Lenders shall be
obligated with respect thereto hereunder, and Company shall be obligated under
the related L/C-Related Documents, as though Company were the signatory to such
L/C Related Documents. Without limiting the foregoing, Company hereby guarantees
the payment when due, upon maturity, acceleration or otherwise, of any and all
indebtedness of any L/C Subsidiary to the applicable Issuing Lender, Agent or
any Lender arising under any L/C-Related Document. If any or all of such
indebtedness becomes due and payable, Company unconditionally promises to pay
such indebtedness to Agent, or order, on demand, in lawful money of the United
States. The word "indebtedness" as used in this subsection 3.6 shall mean any
and all advances, debts, obligations and liabilities of an L/C Subsidiary, or
any one or more of them, heretofore, now, or hereafter made, incurred or
created, under any L/C-Related
86
Document, and any and all renewals, extensions or modifications thereof, whether
or not recovery upon such indebtedness may be or hereafter becomes barred by any
statute of limitations, and whether or not such indebtedness may be or hereafter
becomes otherwise unenforceable.
B. Company guarantees the payment of any and all indebtedness of
each L/C Subsidiary whether or not due or payable by such L/C Subsidiary upon
(a) the death, dissolution, insolvency or business failure of, or any assignment
for benefit of creditors by, or commencement of any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceedings by or against, such
L/C Subsidiary or Company, or (b) the appointment of a receiver for, or the
attachment, restraint or making or levying of any order of court or legal
process affecting, the property of such L/C Subsidiary or Company, and
unconditionally promises to pay such indebtedness to Agent, on demand, in lawful
money of the United States.
C. The liability of Company under this subsection 3.6 is
exclusive and independent of any security for or other guaranty of the
indebtedness of any L/C Subsidiary, whether executed by Company or by any other
party, and the liability of Company hereunder is not affected or impaired by (a)
any direction of application of payment by any L/C Subsidiary or by any other
party, or (b) any other guaranty or undertaking of Company or of any other party
as to the indebtedness of any L/C Subsidiary, or (c) any payment on or in
reduction of any such other guaranty or undertaking, or (d) any dissolution,
termination or increase, decrease or change in personnel of any L/C Subsidiary
or Company. To the extent any L/C Subsidiary or Company make any payment to the
applicable Issuing Lender or Agent in connection with the indebtedness, and all
or any part of such payment is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid or paid over to a
trustee, receiver or any other entity, whether in connection with an insolvency
proceeding or otherwise (any such payment is hereinafter referred to as a
"Preferential Payment"), then this guaranty shall continue to be effective or
shall be reinstated, as the case may be, and, to the extent of such payment or
repayment, the indebtedness or part thereof intended to be satisfied by such
Preferential Payment shall be revived and continued in full force and effect as
if said Preferential Payment had not been made.
D. The obligations of Company under this subsection 3.6 are
independent of the obligations of the L/C Subsidiaries, and a separate action or
actions may be brought and prosecuted against Company whether or not action is
brought against any L/C Subsidiary and whether or not any L/C Subsidiary be
joined in any such action or actions.
E. Company authorizes the applicable Issuing Lenders, without
notice or demand (except as shall be required by applicable statute and cannot
be waived), and without affecting or impairing their liability hereunder, from
time to time to (a) renew, compromise, extend, accelerate or otherwise change
the time for payment of, or otherwise change the terms of the indebtedness or
any part thereof, including increase or decrease of the rate of interest
therein; (b) take and hold security for the payment of the indebtedness and
exchange, enforce, waive and release any such security; (c) apply such security
and direct the order or manner of sale thereof as the applicable Issuing Lender
in its discretion may determine; and (d) release or substitute any one or more
endorsers, guarantors, L/C Subsidiaries or other obligors.
87
F. It is not necessary for the applicable Issuing Lender to
inquire into the capacity or powers of any L/C Subsidiary or the officers,
directors, partners or agents acting or purporting to act on their behalf, and
any indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder, and if any L/C Subsidiary is a
partnership, the word "L/C Subsidiary" and "indebtedness" as used herein include
all successor partnerships and liabilities thereof to the applicable Issuing
Lender, Agent, and the Lenders.
G. Absent a waiver of such right, Company may have the right to
assert a defense to an action to enforce this guaranty if (a) the applicable
Issuing Lender, Agent, or the Lenders do not proceed against any L/C Subsidiary,
or any security for the indebtedness of any L/C Subsidiary, or pursue any other
remedy in their power that Company cannot pursue, before enforcing this
guaranty, (b) the applicable Issuing Lender, Agent, or the Lenders take any
action, without Company's consent, of the type specified in subsection 3.6C, or
any other action by which the indebtedness of any L/C Subsidiary is altered in
any respect, or the remedies or rights of Company against any L/C Subsidiary or
any other person or any security are impaired, suspended or extinguished, (c)
any L/C Subsidiary is under a legal disability or any L/C Subsidiary has any
other defense to payment of the indebtedness, (d) there is no liability on the
part of any L/C Subsidiary or such liability is limited or ceases for any reason
other than payment of the indebtedness in full, (e) the applicable Lender,
Agent, or any Lender fails to notify Company of information known to them as to
any L/C Subsidiary's financial condition, assets or other circumstances bearing
on repayment of the indebtedness or the nature, scope and extent of the risks
that Company assumes and incurs hereunder (and Company agree that neither the
applicable Issuing Lender, Agent, nor any Lender shall have any duty to advise
Company of any such information), (f) the statute of limitations applicable to
an action to enforce this guaranty has run (and Company agrees that any payment
by any L/C Subsidiary or other circumstance that operates to toll any statute of
limitations as to any L/C Subsidiary shall operate to toll the statute of
limitations as to Company), (g) the applicable Issuing Lender, Agent, or any
Lender fails to make or provide any presentment, demand for performance, or
notice of nonperformance, dishonor, the acceptance of this guaranty, or other
notice, or (h) any election of remedies by the applicable Issuing Lender, Agent,
or any Lender, including any election to proceed by nonjudicial foreclosure on
any security, or any act or omission of the applicable Issuing Lender, Agent, or
any Lender relating to such foreclosure, operates to impair, suspend or
extinguish any right of contribution, subrogation or reimbursement that Company
would otherwise have against any L/C Subsidiary. Company hereby expressly waives
the right to assert any defense described in this subsection 3.6G.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Term Loans and Revolving Loans
and the issuance of Letters of Credit hereunder are subject to the satisfaction
of the following conditions.
4.1 Conditions to Term Loans and Initial Revolving Loans.
----------------------------------------------------
The obligations of Lenders to make the Term Loans and any
Revolving Loans to be made on the Closing Date are, in addition to the
conditions precedent specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
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A. Loan Party Documents. On or before the Closing Date, Company shall,
and shall cause each other Loan Party to, deliver to Lenders (or to Agent with
sufficient originally executed copies, where appropriate, for each Lender) the
following with respect to Company or such Loan Party, as the case may be, each,
unless otherwise noted, dated the Closing Date:
(i) Copies of the Organizational Documents of Company and
Contico, certified by the Secretary of State of its jurisdiction of
organization and dated a recent date prior to the Closing Date or, if
such document is of a type that may not be so certified, certified by
the secretary or similar officer of Company or Contico and dated the
Closing Date and copies of the Organizational Documents of each Loan
Party other than Company and Contico, certified by the Secretary of
State of its jurisdiction of organization and dated no more than one
year prior to the Closing Date, together with a certification by the
secretary or similar officer of the applicable Loan Party and dated
the Closing Date certifying that such Organizational Documents of such
Loan Party have not been amended or otherwise modified since the date
of certification by the applicable Secretary of State, in each case
together with a good standing certificate from the Secretary of State
of its jurisdiction of organization and each other state in which such
Person is qualified to do business and, to the extent generally
available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such jurisdictions, each dated
a recent date prior to the Closing Date;
(ii) Resolutions of the Governing Body of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as
of the Closing Date by the secretary or similar officer of such Person
as being in full force and effect without modification or amendment;
(iii) Signature and incumbency certificates of the officers of
such Person executing the Loan Documents to which it is a party;
(iv) Executed originals of the Loan Documents to which such
Person is a party; and
(v) Such other documents as Agent may reasonably request.
B. Fees. Company shall have paid to Agent, for distribution (as
appropriate) to Agent and Lenders, the fees payable on the Closing Date referred
to in subsection 2.3.
C. Corporate and Capital Structure, Ownership, Management and
Shareholder and Member Arrangements.
(i) Corporate Structure. The corporate organizational
--------------------
structure of Holdings, Company and its Subsidiaries shall be
consistent with the provisions of the Loan Documents and the Related
Agreements, including Schedule 4.1C annexed hereto and the other
-------------
Schedules annexed hereto and thereto.
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(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Holdings, Company and its Subsidiaries shall be
consistent with the provisions of the Loan Documents and the Related
Agreements, including Schedule 4.1C annexed hereto and the other
-------------
Schedules annexed hereto and thereto.
(iii) Management; Employment Contracts; Shareholder and Member
--------------------------------------------------------
Agreements. The management structure of Holdings and Company after
----------
giving effect to the Equity Financing and the Recapitalization shall
be consistent with the provisions of the Loan Documents and the
Related Agreements, including the Schedules annexed hereto and
thereto, and Agent shall have received, upon Agent's request, copies
of any and all employment contracts with senior management of any Loan
Party and any and all shareholder and member agreements among Holdings
and its members and Company and its shareholders.
D. Equity Financing. On or before the Closing Date, Holdings shall
have received from the Investors not less than $70,000,000 in cash proceeds from
the issuance of common equity (provided that Holdings shall have received from
K&C Funds no less than $35,000,000 in cash proceeds from such issuance and
Holdings shall have received from the Investors other than K&C Funds no more
than $35,000,000 in cash proceeds from such issuance), all of which cash
proceeds shall be applied to the purchase of 700,000 newly issued shares of
Convertible Preferred Stock, which Convertible Preferred Stock shall be
convertible based on a price of $6.00 per Common Share, into an aggregate of
11,666,666 Common Shares (equivalent to a conversion ratio of approximately
16.67 Common Shares per share of Convertible Preferred Stock), for a purchase
price of $100.00 per share (or an aggregate purchase price of $70,000,000). All
equity Securities of Holdings and Company shall have terms and conditions
satisfactory to Agent and Lenders. Upon consummation of the Recapitalization,
the Investors shall indirectly own not less than 51% of the outstanding capital
stock of Company on a fully diluted basis (after giving effect to conversion of
the Convertible Preferred Stock, whether or not such Convertible Preferred Stock
is convertible at such time).
E. Recapitalization Matters.
(i) Proxy Materials. Agent shall have received copies of all
---------------
Proxy Materials and other documents in connection therewith filed with
the Securities and Exchange Commission, and no material term or
condition of such Proxy Materials or other documents shall have been
amended, supplemented, waived or otherwise modified in any material
respect without the consent of Agent.
(ii) Recapitalization Agreement, Preferred Stock Certificate of
----------------------------------------------------------
Designation and Other Related Agreements in Full Force and Effect.
-----------------------------------------------------------------
Agent shall have received copies of the Recapitalization Agreement,
the Preferred Stock Certificate of Designation, the Third Amendment
and the Fourth Amendment to the Rights Agreement, Third Amendment to
the Contico LLC Agreement and the other Related Agreements and any
documents executed in connection therewith, and the Recapitalization
Agreement, the Preferred Stock Certificate of Designation, the Third
Amendment and Fourth Amendment to the Rights
90
Agreement, the Third Amendment to the Contico LLC Agreement and the
other Related Agreements shall be in full force and effect and no
provision thereof shall have been modified or waived in any material
respect, in each case without the consent of Agent.
(iii) Consummation of Recapitalization and Other Transactions.
-------------------------------------------------------
Immediately prior to the application of the proceeds of the initial
Loans to be made on the Closing Date and contemporaneously with the
application of the proceeds of the equity contributions described in
subsection 4.1D, (a) the Recapitalization shall have been consummated
in all material respects in accordance with the Proxy Materials, the
Recapitalization Agreement and the other Related Agreements and no
material term or condition of the Recapitalization (including without
limitation the material terms and conditions set forth in the
Recapitalization Agreement) shall have been amended, supplemented,
waived or otherwise modified in any material respect without the
consent of Agent, (b) the Contico Preferred Unit Repurchase shall have
been consummated for an aggregate repurchase price not exceeding
$9,900,000 and in all other material respects in accordance with the
Contico Preferred Unit Repurchase Agreement and no material term or
condition thereof shall have been amended, supplemented, waived or
otherwise modified in any material respect without the consent of
Agent, and (c) the evidencing of the existing intercompany loans by
Company to ▇▇▇▇▇ and Glit by execution and delivery of the ▇▇▇▇▇
Subsidiary Note and Glit Subsidiary Note, in principal amounts of
$7,500,000 and $3,500,000, respectively, shall have been consummated
in all material respects in accordance with the Canadian Subsidiary
Documents and no term or condition thereof shall have been amended,
supplemented, waived or otherwise modified in any material respect
without the consent of Agent.
(iv) No Material Litigation. There shall be no material
----------------------
litigation pending which challenges the Recapitalization or any of the
other transactions contemplated by the Loan Documents or the Related
Agreements in any respect.
(v) Compliance with Laws. The making of the Loans requested on
--------------------
the Closing Date shall not violate Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System.
(vi) Officer's Certificates. Agent shall have received an
----------------------
Officer's Certificate from Company to the effect that the
representations and warranties of Holdings, Company and its
Subsidiaries in the Recapitalization Agreement and the other Related
Agreements are true, correct and complete in all material respects on
and as of the date thereof. Agent shall have received an Officer's
Certificate from Company (a) to the effect that the Recapitalization
Agreement and the other Related Agreements are in full force and
effect and no material provision thereof has been amended,
supplemented, waived or otherwise modified in any material respect
without the consent of Agent, (b) to the effect that each of the
parties to the Recapitalization Agreement and the other Related
Agreements has complied with all agreements, terms and conditions
contained in the
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Recapitalization Agreement, the other Related Agreements and any
agreements or documents referred to therein required to be performed
or complied with by each of them on or before the Closing Date and
none of such Persons are in default in their performance or compliance
with any of the terms or provisions thereof, and (c) to the effect set
forth in Section 4.1D and clauses (i)-(v) above.
F. Representations and Warranties; Performance of Agreements. Company
shall have delivered to Agent an Officer's Certificate, in form and substance
satisfactory to Agent, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that the
Loan Parties shall have performed in all material respects all agreements and
satisfied all conditions which the Loan Documents provide shall be performed or
satisfied by the Loan Parties on or before the Closing Date except as otherwise
disclosed to and agreed to in writing by Agent; provided that where a
--------
representation and warranty, covenant or condition is qualified as to
materiality, such materiality qualifier shall be disregarded for purposes of
this condition.
G. Financial Statements; Pro Forma Balance Sheet. On or before the
Closing Date, Lenders shall have received from Company (i) audited financial
statements of Company and its Subsidiaries for Fiscal Year ended December 31,
2000, consisting of consolidated and consolidating balance sheets and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows for such Fiscal Year, and (ii) unaudited financial
statements of Company and its Subsidiaries as at the most recently ended Fiscal
Quarter, consisting of consolidated and consolidating balance sheets and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flows for the three-month period ending on such date, all in
reasonable detail and certified by the chief financial officer of Company that
they fairly present the financial condition of Company and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and normal
year-end adjustments, all of the foregoing in clauses (i) and (ii) to be
substantially consistent with any financial statements previously delivered to
Agent and, in the case of any such financial statements for subsequent periods,
substantially consistent with any projected financial results for such periods
previously delivered to Agent and otherwise in form and substance satisfactory
to Agent and Lenders.
H. Borrowing Base Certificate. On or before the Closing Date, Company
shall have delivered to Agent and Lenders a Borrowing Base Certificate relating
to the Revolving Borrowing Base (which shall demonstrate a Revolving Borrowing
Base availability of at least $15,000,000 as of the Closing Date after giving
effect to the Revolving Loans made and the Letters of Credit issued on the
Closing Date) and the Term Borrowing Base substantially in the form of Exhibit
-------
VIII annexed hereto, prepared as of a recent date prior to the Closing Date
----
based on information no earlier than May 25, 2001.
I. Opinions of Counsel to Loan Parties. Lenders shall have
received (i) originally executed copies of one or more favorable written
opinions of Hunton & ▇▇▇▇▇▇▇▇, counsel for Loan Parties in form and substance
reasonably satisfactory to Agent and its counsel,
92
dated as of the Closing Date and setting forth substantially the matters in the
opinions designated in Exhibit IX-A annexed hereto and as to such other matters
------------
as Agent acting on behalf of Lenders may reasonably request (this Credit
Agreement constituting a written request by Company to such counsel to deliver
such opinions to Lenders) and (ii) copies of all opinions issued by counsel to
any Loan Party or issued to any Loan Party relating to any transactions
occurring on or about the Closing Date pursuant to any of the Loan Documents or
any of the Related Agreements, each of which opinions shall be accompanied by a
written authorization from counsel issuing such opinion stating that Agent and
Lenders may rely on such opinions as though such opinions were addressed to
Agent and Lenders.
J. Opinions of Agent's Counsel. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & ▇▇▇▇▇ LLP, counsel to Agent, dated as of the Closing Date,
substantially in the form of Exhibit X annexed hereto.
---------
K. Solvency Assurances. On the Closing Date, Agent and Lenders
shall have received a Solvency Certificate of Holdings, Company and Contico
dated the Closing Date, substantially in the form of Exhibit VII annexed hereto
-----------
and with appropriate attachments, in each case demonstrating that, after giving
effect to the Recapitalization, the related financings and the other
transactions contemplated by the Loan Documents and the Related Agreements,
Holdings, Company and Contico will be Solvent.
L. Evidence of Insurance. Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Agent on behalf of Lenders has been named as
additional insured and/or loss payee thereunder to the extent required under
subsection 6.4.
M. Necessary Governmental Authorizations and Consents;
Expiration of Waiting Periods, Etc. Holdings and Company shall have obtained all
Governmental Authorizations and all consents of other Persons, in each case that
are necessary or advisable in connection with the Recapitalization, the related
financings and the other transactions contemplated by the Loan Documents and the
Related Agreements and the continued operation of the business conducted by
Company and its Subsidiaries in substantially the same manner as conducted prior
to the consummation of the Recapitalization, the related financings and the
other transactions contemplated by the Loan Documents and the Related
Agreements. Each such Governmental Authorization or consent shall be in full
force and effect, except in a case where the failure to obtain or maintain a
Governmental Authorization or consent, either individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. All
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority that would restrain, prevent or otherwise
impose adverse conditions on the Recapitalization, the related financings and
the other transactions contemplated by the Loan Documents or the Related
Agreements. No action, request for stay, petition for review or rehearing,
reconsideration, or appeal with respect to any of the foregoing shall be
pending, and the time for any applicable Government Authority to take action to
set aside its consent on its own motion shall have expired.
93
N. Environmental Reports. Agent shall have received all Phase I
environmental assessment reports, Phase II environmental assessment reports and
compliance audits, in each case listed on Schedule 4.1N concerning the Closing
-------------
Date Mortgaged Properties, and Company hereby represents and warrants that such
reports are the only such reports and audits in Company's possession as of the
date hereof concerning the Closing Date Mortgaged Properties.
O. Security Interests in Personal and Mixed Property. To the
extent not otherwise satisfied pursuant to subsections 4.1P or 4.1R, Agent shall
have received evidence satisfactory to it that Holdings, Company, Subsidiary
Guarantors, Glit and ▇▇▇▇▇ shall have taken or caused to be taken all such
actions, executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings (other than the filing or recording of items described in
clauses (iii), (iv) and (v) below) that may be necessary or, in the opinion of
Agent, desirable in order to create in favor of Agent, for the benefit of
Lenders, a valid and (upon such filing and recording) perfected First Priority
security interest in the entire personal and mixed property Collateral. Such
actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Agent
---------------------------------
of accurate and complete schedules to all of the applicable Collateral
Documents;
(ii) Stock Certificates and Instruments. Simultaneous with
----------------------------------
the closing hereunder, delivery to Agent of (a) certificates (which
certificates shall be accompanied by irrevocable undated stock powers,
duly endorsed in blank and otherwise satisfactory in form and
substance to Agent) representing all capital stock and other ownership
interests pledged pursuant to the Security Agreement and any Foreign
Pledge Agreement and (b) all promissory notes or other instruments
(duly endorsed, where appropriate, in a manner satisfactory to Agent)
evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements.
--------------------------------------------
Simultaneous with the closing hereunder, delivery to Agent of (a) the
results of a recent search, by a Person satisfactory to Agent, of all
effective UCC financing statements and fixture filings and
registrations (and any similar or equivalent documents in the United
Kingdom or Canada) and all judgment and tax lien filings and
registrations which may have been made with respect to any personal or
mixed property of any Loan Party, together with copies of all such
filings and registrations disclosed by such search, and (b) UCC
termination statements (and any similar or equivalent documents in the
United Kingdom or Canada) duly executed by all applicable Persons for
filing or registration in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or
fixture filings or registrations (or any similar or equivalent
documents in the United Kingdom or Canada) disclosed in such search
(other than any such financing statements or fixture filings or
registrations or any similar or equivalent documents in the United
Kingdom or Canada in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement) and a duly executed payoff
letter in
94
which the Persons holding such security interests agree to terminate
them upon the payment of a specific sum;
(iv) UCC Financing Statements and Fixture Filings. Delivery to
--------------------------------------------
Agent of UCC financing statements and fixture filings and
registrations (or any similar or equivalent documents in the United
Kingdom or Canada) (which term includes notices of security interest)
with respect to all Collateral of such Loan Party as may be necessary
or, in the opinion of Agent, desirable to perfect the security
interests created in such Collateral pursuant to the Collateral
Documents, which fixture filings and registrations (or similar or
equivalent documents in the United Kingdom or Canada) shall contain a
description of the applicable real estate and recite such other
information, in each case where relevant to the extent required for
fixture filings (or similar or equivalent documents in the United
Kingdom or Canada) by the UCC or by any other applicable law in the
applicable jurisdictions;
(v) PTO Cover Sheets, Etc. Delivery to Agent of all cover
---------------------
sheets or other documents or instruments required to be filed with the
PTO in order to create or perfect Liens in respect of any IP
Collateral;
(vi) Certificates of Title, Etc. Delivery to Agent of
--------------------------
certificates of title with respect to all motor vehicles and other
rolling stock of Loan Parties in the United States and the taking of
all actions necessary to permit Agent to be noted as lienholder
thereon or otherwise necessary to permit the perfection of the First
Priority Lien granted to Agent on behalf of Lenders in such rolling
stock;
(vii) Foreign Pledge Agreements. Execution and delivery to
-------------------------
Agent of Foreign Pledge Agreements with respect to 65% of the capital
stock and other ownership interests owned by Company or a Domestic
Subsidiary of all Foreign Active Subsidiaries with respect to which
Agent deems a Foreign Pledge Agreement necessary or advisable to
perfect or otherwise protect the First Priority Liens granted to Agent
on behalf of Lenders in such capital stock or other ownership
interests, and the taking of all such other actions under the laws of
such jurisdictions as Agent may deem necessary or advisable to perfect
or otherwise protect such Liens;
(viii) U.K. Subsidiary Debenture. Execution and delivery to
-------------------------
Agent of the U.K. Subsidiary Debenture, and the taking of all such
other actions under the laws of the United Kingdom as Agent may deem
necessary or advisable to perfect or otherwise protect the First
Priority of the Liens granted therein;
(ix) Canadian Subsidiary Security Agreements - Execution and
---------------------------------------
delivery to Agent of the Glit Subsidiary Security Agreement and ▇▇▇▇▇
Subsidiary Security Agreement, the filing of the Glit Subsidiary
Security Agreement and ▇▇▇▇▇ Subsidiary Security Agreement in the
Trademarks Office and the Patents Office in Ottawa and the taking of
all such other actions under the UCC (including without limitation the
Personal Property Security Act (Ontario))
95
and any other laws of Canada as Agent may deem necessary or advisable
to perfect or otherwise protect the Liens granted therein;
(x) Opinions of Local and Foreign Counsel. Delivery to Agent
-------------------------------------
of (x) an opinion of counsel (which counsel shall be reasonably
satisfactory to Agent) under the laws of the United Kingdom
(substantially in the form of Exhibit IX-B annexed hereto), Canada
------------
(substantially in the form of Exhibit IX-C annexed hereto),
------------
California, Georgia, Illinois, North Carolina, Texas, Pennsylvania and
New York and each other jurisdiction in which any Loan Party is
incorporated or organized or in which any Loan Party or any personal
or mixed property Collateral is located with respect to the creation
and perfection of the security interests in favor of Agent in such
Collateral and such other matters governed by the laws of such
jurisdictions regarding such security interests as Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to Agent and (y) copies of opinions issued by counsel to
▇▇▇▇▇ and Glit issued to Company under the laws of Canada relating to
any transactions occurring on or about the Closing Date pursuant to
the Canadian Subsidiary Documents, each of which opinions shall be in
form and substance satisfactory to Agent and accompanied by a written
authorization from counsel issuing such opinion stating that Agent and
Lenders may rely on such opinions as though such opinions were
addressed to Agent and Lenders; and
(xi) Perfection Certificate. Delivery to Agent of a Perfection
----------------------
Certificate from each Loan Party duly executed by an Officer of such
Loan Party.
P. Closing Date Mortgages; Closing Date Mortgage Policies; Etc. Agent
shall have received from Company and each applicable Subsidiary Guarantor:
(i) Closing Date Mortgages. Fully executed and notarized
----------------------
Mortgages (each a "Closing Date Mortgage" and, collectively, the
"Closing Date Mortgages"), in form for due recordation in all
appropriate places in all applicable jurisdictions, encumbering each
Real Property Asset listed in Part A of Schedule 4.1P annexed hereto
-------------
(each a "Closing Date Mortgaged Property" and, collectively, the
"Closing Date Mortgaged Properties");
(ii) Opinions of Local Counsel. An opinion of counsel (which
-------------------------
counsel shall be reasonably satisfactory to Agent) in each state in
which a Closing Date Mortgaged Property is located with respect to the
enforceability of the form(s) of Closing Date Mortgages to be recorded
in such state and such other matters as Agent may reasonably request,
in each case in form and substance reasonably satisfactory to Agent;
(iii) Title Insurance. (a) ALTA mortgagee title insurance
---------------
policies or unconditional commitments therefor (the "Closing Date
Mortgage Policies") issued by the Title Company with respect to the
Closing Date Mortgaged Properties listed in Part B of Schedule 4.1P
-------------
annexed hereto, in amounts not less than the respective amounts
designated therein with respect to any particular
96
Closing Date Mortgaged Properties, insuring fee simple title to each
such Closing Date Mortgaged Property vested in such Loan Party and
assuring Agent that the applicable Closing Date Mortgages create valid
and enforceable First Priority mortgage Liens on the respective
Closing Date Mortgaged Properties encumbered thereby, subject only to
a standard survey exception, which Closing Date Mortgage Policies (1)
shall include an endorsement for mechanics' liens, for future advances
under this Agreement and for any other matters reasonably requested by
Agent and (2) shall provide for affirmative insurance and such
reinsurance as Agent may reasonably request, all of the foregoing in
form and substance reasonably satisfactory to Agent; and (b) evidence
satisfactory to Agent that such Loan Party has (i) delivered to the
Title Company all certificates and affidavits required by the Title
Company in connection with the issuance of the Closing Date Mortgage
Policies and (ii) paid to the Title Company or to the appropriate
Government Authorities all expenses and premiums of the Title Company
in connection with the issuance of the Closing Date Mortgage Policies
and all recording and stamp taxes (including mortgage recording and
intangible taxes) payable in connection with recording the Closing
Date Mortgages in the appropriate real estate records;
(iv) Title Reports. With respect to each Closing Date Mortgaged
-------------
Property listed in Part B of Schedule 4.1P annexed hereto, a title
-------------
report issued by the Title Company with respect thereto, dated not
more than 30 days prior to the Closing Date (or such longer period as
may be acceptable to Agent) and satisfactory in form and substance to
Agent;
(v) Copies of Documents Relating to Title Exceptions. Copies
------------------------------------------------
of all recorded documents listed as exceptions to title or otherwise
referred to in the Closing Date Mortgage Policies or in the title
reports delivered pursuant to subsection 4.1P(iv);
(vi) Matters Relating to Flood Hazard Properties. (a) Evidence,
-------------------------------------------
which may be in the form of a letter from an insurance broker, a
municipal engineer or surveyor, as to whether (1) any Closing Date
Mortgaged Property is a Flood Hazard Property and (2) the community in
which any such Flood Hazard Property is located is participating in
the National Flood Insurance Program, (b) if there are any such Flood
Hazard Properties, such Loan Party's written acknowledgement of
receipt of written notification from Agent (1) as to the existence of
each such Flood Hazard Property and (2) as to whether the community in
which each such Flood Hazard Property is located is participating in
the National Flood Insurance Program, and (c) in the event any such
Flood Hazard Property is located in a community that participates in
the National Flood Insurance Program, evidence that Company has
obtained flood insurance in respect of such Flood Hazard Property to
the extent required under the applicable regulations of the Board of
Governors of the Federal Reserve System; and
(vii) Environmental Indemnity. An environmental indemnity
-----------------------
agreement, satisfactory in form and substance to Agent and its
counsel, with
97
respect to the indemnification of Agent and Lenders for any
liabilities that may be imposed on or incurred by any of them as a
result of any Hazardous Materials Activity.
Q. Cash Management Documentation. The cash management system of
Company and its Subsidiaries shall be in form and substance reasonably
satisfactory to Agent. Except as otherwise provided in subsection 2.10A(iii),
Company, each Domestic Subsidiary, ▇▇▇▇▇ and Glit shall have delivered to Agent
a Lock Box Agreement and Blocked Account Agreement executed by each Person that
is a party thereto with respect to each Lock Box and Deposit Account of Company,
each Domestic Subsidiary, ▇▇▇▇▇ and Glit (including without limitation each
Deposit Account (as defined in the ▇▇▇▇▇ Subsidiary Security Agreement and the
Glit Subsidiary Security Agreement), and each Lock Box and Deposit Account
listed on Schedule 1(d) of the Security Agreement (other than the BT
-------------
Concentration Account) but excluding the U.K. Deposit Accounts of Contico, each
of which shall be subject to a charge pursuant to the U.K. Subsidiary
Debenture).
R. U.K. Subsidiary Debenture; Etc. Agent shall have received from
Contico:
(i) U.K. Subsidiary Debenture. A fully executed U.K.
-------------------------
Subsidiary Debenture, duly recorded in all appropriate places in all
applicable jurisdictions, encumbering the Real Property Assets located
at ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "U.K.
Subsidiary Mortgaged Property");
(ii) Opinions of Local Counsel. An opinion of counsel
-------------------------
(which counsel shall be reasonably satisfactory to Agent) in the
jurisdictions in which the U.K. Subsidiary Mortgaged Property is
located with respect to the enforceability of the form of U.K.
Subsidiary Debenture to be recorded in such jurisdictions and such
other matters as Agent may reasonably request, in each case in form
and substance reasonably satisfactory to Agent;
(iii) Title Reports. With respect to the U.K. Subsidiary
-------------
Mortgaged Property, a title report issued by the Title Company and a
certificate on title issued by the lawyer for Company in favor of
Agent with respect thereto, dated not more than 30 days prior to the
Closing Date and satisfactory in form and substance to Agent;
(iv) Copies of Documents Relating to Title Exceptions.
------------------------------------------------
Copies of all recorded documents listed as exceptions to title or
otherwise referred to in the title reports delivered pursuant to
subsection 4.1R(iii); and
(v) Environmental Indemnity. An environmental indemnity
-----------------------
agreement, satisfactory in form and substance to Agent and its
counsel, with respect to the indemnification of Agent and Lenders for
any liabilities that may be imposed on or incurred by any of them as a
result of any Hazardous Materials Activity.
98
S. Matters Relating to Existing Indebtedness of Holdings, Company
and its Subsidiaries.
(i) Termination of Existing Credit Agreement and Related
----------------------------------------------------
Liens. On the Closing Date, Holdings, Company and its Subsidiaries
-----
shall (a) concurrently repay in full all Indebtedness outstanding
under the Existing Credit Agreement (the aggregate principal
amount of which Indebtedness shall not exceed $144,300,000, (b)
have terminated any commitments to lend or make other extensions
of credit thereunder, and (c) have delivered to Agent all
documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Holdings, Company and its
Subsidiaries thereunder, including without limitation payoff
letters executed by the lenders under the Existing Credit
Agreement.
(ii) Existing Indebtedness to Remain Outstanding. Agent
-------------------------------------------
shall have received an Officer's Certificate of Company stating
that, after giving effect to the transactions described in this
subsection 4.1S, the Indebtedness of Holdings, Company and its
Subsidiaries (other than Indebtedness under the Loan Documents)
shall consist of (a) Indebtedness not exceeding the aggregate
principal amounts of outstanding Indebtedness described in Part A
of Schedule 7.1 annexed hereto and (b) Indebtedness in an
------------
aggregate amount not to exceed $0 in respect of Capital Leases
described in Part B of Schedule 7.1 annexed hereto. The terms and
------------
conditions of all such Indebtedness shall be in form and in
substance satisfactory to Agent.
T. No Material Adverse Change. Since December 31, 2000, Company
and each of its Subsidiaries shall have conducted its business in the ordinary
course of business and consistent with past practice and there shall not have
been any Material Adverse Effect.
U. Related Agreements.
(i) Approval of Related Agreements. The Recapitalization
------------------------------
Agreement and the other Related Agreements shall not have been amended
after the execution and delivery thereof (except as approved by Agent and
Requisite Lenders), and the Related Agreements shall each be satisfactory
in form and substance to Agent and Requisite Lenders.
(ii) Related Agreements in Full Force and Effect. Agent and
-------------------------------------------
Requisite Lenders shall have received a fully executed or conformed copy of
each Related Agreement and any documents executed in connection therewith,
and each Related Agreement shall be in full force and effect and no
provision thereof shall have been modified or waived in any respect
determined by Agent or Requisite Lenders to be material, in each case
without the consent of Agent and Requisite Lenders, and Agent shall have
received an Officer's Certificate of Company to that effect and attaching
thereto a copy of each Related Agreement (including all amendments,
schedules and exhibits thereto).
99
V. No Disruption of Financial and Capital Markets. Since March
31, 2001, there shall have been no material adverse change in the syndication
markets for credit facilities similar in nature to the credit facilities
provided under this Agreement and the other Loan Documents, and there shall not
have occurred and be continuing a material disruption of or material adverse
change in the financial, banking or capital markets that would have an adverse
effect on such syndication markets, in each case as determined by Agent in its
sole discretion.
W. Completion of Proceedings. All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Agent and such counsel, and Agent and such
counsel shall have received all such counterpart originals or certified copies
of such documents as Agent may reasonably request.
4.2 Conditions to All Loans.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in
accordance with the provisions of subsection 2.1B, an originally executed Notice
of Borrowing, in each case signed by a duly authorized Officer of Company.
B. As of that Funding Date:
(i) The representations and warranties contained herein
and in the other Loan Documents shall be true, correct and
complete in all material respects on and as of that Funding Date
to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all
material respects on and as of such earlier date; provided, that
--------
where a representation and warranty is already qualified as to
materiality, such materiality qualifier shall be disregarded for
purposes of this condition;
(ii) No event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated
by such Notice of Borrowing that would constitute an Event of
Default or a Potential Event of Default;
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or
before that Funding Date;
(iv) No order, judgment or decree of any arbitrator or
Government Authority shall purport to enjoin or restrain any
Lender from making the Loans to be made by it on that Funding
Date; and
100
(v) Company shall have delivered such other certificates
or documents that Agent shall reasonably request, in form and
substance satisfactory to Agent.
4.3 Conditions to Letters of Credit.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not
the applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Agent shall have received, in accordance with the provisions of subsection
3.1B(i), an originally executed Request for Issuance of Letter of Credit in each
case signed by a duly authorized Officer of Company, together with all other
information specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to the same
extent as if the issuance of such Letter of Credit were the making of a Loan and
the date of issuance of such Letter of Credit were a Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to
make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce Revolving Lenders to purchase participations therein, Company represents
and warrants to each Lender, on the date of this Agreement, on each Funding Date
and on the date of issuance of each Letter of Credit, that the following
statements are true, correct and complete:
5.1 Organization, Powers, Qualification, Good Standing, Business and
----------------------------------------------------------------
Subsidiaries.
------------
A. Organization and Powers. Each of Holdings, Company and each
of its Subsidiaries is a corporation, partnership, trust or limited liability
company duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization as specified in Schedule 5.1 annexed hereto.
------------
Each of Holdings, Company and each of its Active Subsidiaries has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents and Related Agreements to which it is a party and to carry out the
transactions contemplated thereby. As of the Closing Date, none of the Domestic
Subsidiaries that are not Subsidiary Guarantors owns assets with an aggregate
fair market value (without netting such fair market value against any liability
of such Subsidiary) exceeding $10,000. None of (i) CRL Export, Inc., (ii)
Sterling-Salem Corp. or (iii) Process Metals Company owns assets with an
aggregate fair market value (without netting such fair market value against any
liability of such Subsidiary) exceeding $500,000, $75,000 and $10,000,
respectively. The fair market value of the capital stock of Sinecure, Inc. owned
by Loan Parties does not exceed $10,000.
101
B. Qualification and Good Standing. Each of Holdings, Company
and each of its Subsidiaries is qualified to do business and in good standing in
every jurisdiction where its assets are located and wherever necessary to carry
out its business and operations, except in jurisdictions where the failure to be
so qualified or in good standing has not had and will not have a Material
Adverse Effect.
C. Conduct of Business. Holdings, Company and its Subsidiaries
are engaged only in the businesses permitted to be engaged in pursuant to
subsections 7.14 and 8.14.
D. Subsidiaries. Holdings, Company and all of the Subsidiaries
of Holdings and Company and their jurisdictions or organizations are identified
in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from
------------ ------------
time to time pursuant to the provisions of subsection 6.1(xvi). The capital
stock or similar equity interests of Holdings, Company and each of the
Subsidiaries of Holdings and Company identified in Schedule 5.1 annexed hereto
------------
(as so supplemented) are duly authorized, validly issued, fully paid and
nonassessable and, except for the capital stock of Company, none of such capital
stock or similar equity interests constitutes Margin Stock. Each of the
Subsidiaries of Holdings and Company identified in Schedule 5.1 annexed hereto
------------
(as so supplemented) is a corporation, partnership, trust or limited liability
company duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of organization set forth therein, has all requisite
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, in each
case except where failure to be so qualified or in good standing or a lack of
such power and authority has not had and will not have a Material Adverse
Effect. Schedule 5.1 annexed hereto (as so supplemented) correctly sets forth
------------
the ownership interest of Holdings and Company and each of its Subsidiaries in
each of the Subsidiaries of Holdings and Company identified therein and
correctly sets forth the ownership interest of members of Holdings in Holdings
and the ownership interest of Holdings in Company.
5.2 Authorization of Borrowing, etc.
--------------------------------
A. Authorization of Borrowing. The execution, delivery and
performance of the Loan Documents and the Related Agreements have been duly
authorized by all necessary action on the part of each of Holdings, Company and
each of its Subsidiaries that is a party thereto.
B. No Conflict. The execution, delivery and performance by
Holdings, Company or any of its Subsidiaries of the Loan Documents and the
Related Agreements to which they are parties and the consummation of the
transactions contemplated by the Loan Documents and the Related Agreements do
not and will not (i) violate any provision of any law or any governmental rule
or regulation applicable to Holdings, Company or any of its Subsidiaries, the
Organizational Documents of Holdings, Company or any of its Subsidiaries or any
order, judgment or decree of any court or other Government Authority binding on
Holdings, Company or any of its Subsidiaries, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Holdings, Company or any of its
Subsidiaries, (iii) result in or require the creation or imposition of any
102
Lien upon any of the properties or assets of Holdings, Company or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Agent on behalf of Lenders), or (iv) require any approval of members or
stockholders or any approval or consent of any Person under any Contractual
Obligation of Holdings, Company or any of its Subsidiaries, except for such
approvals or consents which are set forth on Schedule 5.2B or which will be
-------------
obtained on or before the Closing Date and disclosed in writing to Lenders.
C. Governmental Consents. Except as set forth on Schedule 5.2C,
-------------
the execution, delivery and performance by Holdings, Company or any of its
Subsidiaries of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and the Related Agreements do not and will not require any
Governmental Authorization.
D. Binding Obligation. Each of the Loan Documents and the
Related Agreements has been duly executed and delivered by each of Holdings,
Company or any of its Subsidiaries that is a party thereto, as applicable and is
the legally valid and binding obligation of Holdings, Company or any such
Subsidiary, as applicable, enforceable against Holdings, Company or such
Subsidiary, as applicable, in accordance with its respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
E. Valid Issuance of Equity Securities. The Convertible
Preferred Stock and other capital stock of Holdings and Company to be sold on or
before the Closing Date, when issued and delivered, will be duly and validly
issued, fully paid and nonassessable. No member or stockholder of Holdings or
Company, respectively, has or will have any preemptive rights to subscribe for
any additional equity Securities of Holdings or Company, respectively, except
pursuant to the Rights Agreement. The issuance of sale of such Convertible
Preferred Stock and such other equity Securities of Holdings and Company, upon
such issuance and sale, will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
F. Ownership of Contico. The outstanding equity Securities of
Contico consist only of the Contico Common Units owned by Company and, after
giving effect to the transactions contemplated by the Loan Documents and the
Related Agreements, the 164 Contico Preferred Units owned by the holders
identified on Schedule 5.2F annexed hereto.
-------------
5.3 Financial Condition.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request,
the financial statements and information described in subsection 4.1G. All such
statements other than pro forma financial statements were prepared in conformity
--- -----
with GAAP and fairly present, in all material respects, the financial position
(on a consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
None of Holdings, Company or any of its Subsidiaries have (and none of Holdings,
103
Company or any of its Subsidiaries will have following the funding of the
initial Loans) any Contingent Obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment that, as of
the Closing Date, is not reflected in the foregoing financial statements or the
notes thereto, if any, to the extent required by GAAP and, as of any Funding
Date subsequent to the Closing Date, is not reflected in the most recent
financial statements delivered to Lenders pursuant to subsection 6.1 or the
notes thereto, if any, to the extent required by GAAP and that, in any such
case, is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Holdings, Company or any of
its Subsidiaries, except for such as have arisen in the ordinary course of
business since the date of the most recent such financial statements.
5.4 No Material Adverse Change; No Restricted Junior Payments.
---------------------------------------------------------
Other than the financial performance of Company and its
Subsidiaries for the three-month period ended on March 31, 2001 as reflected in
the consolidated financial statements of Company and its Subsidiaries as at
March 31, 2001 and for the three-month period then ended as set forth in
Company's Quarterly Report on Form 10-Q for Fiscal Quarter ended March 31, 2001,
since December 31, 2000, no event or change has occurred that has resulted in,
caused or evidences (after giving effect to the financial performance of Company
and its Subsidiaries for such three-month period ended on March 31, 2001 as
reflected in such financial statements), either in any case or in the aggregate,
a Material Adverse Effect. Neither Holdings nor Company nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made, or set
apart any sum or property for, any Restricted Junior Payment or agreed to do so
except as permitted by subsection 7.5. There are no Kohlberg Agreements other
than the Management Agreement.
5.5 Title to Properties; Liens; Real Property.
-----------------------------------------
A. Title to Properties; Liens. Holdings, Company and its
Subsidiaries have (i) good, sufficient and legal title to (in the case of fee or
freehold interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), or (iii) good title
to (in the case of all other personal property), all of their respective
properties and assets reflected in the financial statements referred to in
subsection 5.3 or in the most recent financial statements delivered pursuant to
subsection 6.1, in each case except for assets disposed of since the date of
such financial statements in the ordinary course of business or as otherwise
permitted under subsection 7.7. Except as permitted by the Loan Documents, all
such properties and assets are free and clear of Liens other than Permitted
Encumbrances.
B. Real Property. As of the Closing Date, Schedule 5.5B annexed
-------------
hereto contains a true, accurate and complete list of (i) all fee interests and,
in the United Kingdom, all freehold and leasehold interests, in any Real
Property Assets and (ii) all leases, subleases or assignments of leases
(together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting each Real Property Asset of Holdings,
Company or any of its Subsidiaries, regardless of whether such Person is the
landlord or tenant (whether directly or as an assignee or successor in interest)
under such lease, sublease or assignment. Except as specified in Schedule 5.5B
-------------
annexed hereto, each agreement listed in clause (ii) of the immediately
preceding sentence is in full force and effect and no Officer of Company has
104
knowledge of any default that has occurred and is continuing thereunder, in each
case or in the aggregate which could not reasonably be expected to result in a
Material Adverse Effect, and each such agreement constitutes the legally valid
and binding obligation of Holdings, Company or any of its Subsidiaries, as
applicable, enforceable against such Person in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles.
C. Intellectual Property. As of the Closing Date, Company and
its Subsidiaries own or have the right to use, all Intellectual Property used in
the conduct of their business, except where the failure to own or have such
right to use in the aggregate could not reasonably be expected to result in a
Material Adverse Effect. No claim has been asserted and is pending by any Person
challenging or questioning the use of any such Intellectual Property or the
validity or effectiveness of any such Intellectual Property, nor does Company
know of any valid basis for any such claim except for such claims that in the
aggregate could not reasonably be expected to result in a Material Adverse
Effect. The use of such Intellectual Property by Company and its Subsidiaries
does not infringe on the rights of any Person, except for such claims and
infringements that, in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect. All federal and state and all foreign
registrations of and applications for Intellectual Property, and all
unregistered Intellectual Property, that are owned or licensed by Company or any
of its Subsidiaries on the Closing Date are described on Schedule 5.5C annexed
-------------
hereto.
5.6 Litigation; Adverse Facts.
-------------------------
Except for the Proceedings set forth in Schedule 5.6 annexed
------------
hereto (with respect to which Proceedings Company hereby represents and warrants
that such Proceedings would not reasonably be expected to result in a Material
Adverse Effect), there are no Proceedings (whether or not purportedly on behalf
of Holdings, Company or any of its Subsidiaries) at law or in equity, or before
or by any court or other Government Authority (including any Environmental
Claims) that are pending or, to the knowledge of Company, threatened against or
affecting Holdings, Company or any of its Subsidiaries or any property of
Holdings, Company or any of its Subsidiaries and that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
Neither Holdings nor Company nor any of its Subsidiaries (i) is in violation of
any applicable laws (including Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or (ii) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or other Government
Authority, that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
5.7 Payment of Taxes.
----------------
Except to the extent permitted by subsection 6.3, all tax returns
and reports of Holdings, Company and its Subsidiaries required to be filed by
any of them have been timely filed (taking into account reasonable extensions of
the time for filing such returns or reports provided for under applicable law),
and all taxes shown on such tax returns to be due and payable and all
assessments, fees and other governmental charges upon Holdings, Company and
105
its Subsidiaries and upon their respective properties, assets, income,
businesses and franchises that are due and payable have been paid prior to the
time they became delinquent. Company knows of no proposed tax assessment against
Holdings, Company or any of its Subsidiaries that is not being actively
contested by Holdings, Company or such Subsidiary in good faith and by
appropriate proceedings; provided that such reserves or other appropriate
--------
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements; Material
------------------------------------------------------------------
Contracts.
---------
A. Neither Holdings nor Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any of its Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not reasonably be expected
to result in a Material Adverse Effect.
B. Neither Holdings nor Company nor any of its Subsidiaries is a
party to or is otherwise subject to any agreements or instruments or any charter
or other internal restrictions which, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all
------------
the Material Contracts in effect on the Closing Date. Except as described in
Schedule 5.8, all such Material Contracts of Holdings, Company and its
------------
Subsidiaries are in full force and effect and no material defaults currently
exist thereunder.
5.9 Governmental Regulation.
-----------------------
Neither Holdings nor Company nor any of its Subsidiaries is subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.
5.10 Securities Activities.
---------------------
A. Neither Holdings nor Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than
25% of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) subject to the provisions of subsection
7.2 or 7.7 or subject to any restriction contained in any agreement or
instrument, between Company and any Lender or any Affiliate of any Lender,
relating to Indebtedness and within the scope of subsection 8.2, will be Margin
Stock.
106
5.11 Employee Benefit Plans.
----------------------
A. Company, each of its Subsidiaries and each of their respective
ERISA Affiliates are in compliance in all material respects with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and have
performed all their obligations under each Employee Benefit Plan. Each Employee
Benefit Plan that is intended to qualify under Section 401(a) of the Internal
Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as set forth in Schedule 5.11 annexed hereto, no Employee
-------------
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of Company, any of
its Subsidiaries or any of their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), does not exceed $500,000 individually or $1,500,000 in the aggregate for
all Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities).
E. As of the most recent valuation date for each Multiemployer Plan
for which the actuarial report is available, the potential liability of Company,
its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $1,000,000.
5.12 Certain Fees.
------------
Except as set forth on Schedule 5.12, no broker's or finder's fee or
-------------
commission will be payable with respect to this Agreement or any of the
transactions contemplated hereby, and Company hereby indemnifies Lenders
against, and agrees that it will hold Lenders harmless from, any claim, demand
or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.13 Environmental Protection.
------------------------
Except as set forth in Schedule 5.13 annexed hereto:
-------------
(i) neither Holdings nor Company nor any of its Subsidiaries nor
any of their respective current Facilities or operations nor, to Company's
knowledge, any of their respective Facilities that are no longer owned or
leased, are subject to any outstanding written order, consent decree or
settlement agreement with any
107
Person relating to (a) any Environmental Law, (b) any Environmental Claim,
or (c) any Hazardous Materials Activity that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect;
(ii) neither Holdings nor Company nor any of its Subsidiaries
has received within ten years prior to the date hereof any letter or
request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S)
9604) or any comparable state law that, individually or in the
aggregate, could reasonably be expected to result in a Material
Adverse Effect;
(iii) there are and have been no conditions, occurrences, or
Hazardous Materials Activities that could reasonably be expected to
form the basis of an Environmental Claim against Holdings, Company or
any of its Subsidiaries that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect; and
(iv) compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws would not,
individually or in the aggregate, be reasonably expected to result in
a Material Adverse Effect.
5.14 Employee Matters.
----------------
There is no strike or work stoppage in existence or threatened
involving Holdings, Company or any of its Subsidiaries that could reasonably be
expected to result in a Material Adverse Effect.
5.15 Solvency.
--------
Each Loan Party is and, after giving effect to the Recapitalization,
the related financings and the other transactions contemplated by the Loan
Documents and the Related Agreements, and upon the incurrence of any Obligations
by such Loan Party on any date on which this representation is made, will be,
Solvent.
5.16 Matters Relating to Collateral.
------------------------------
A. Creation, Perfection and Priority of Liens. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1O, 4.1P,
4.1R, 6.9 and 6.10 and (ii) the delivery to Agent of any Pledged Collateral not
delivered to Agent at the time of execution and delivery of the applicable
Collateral Document (all of which Pledged Collateral has been so delivered) are
effective to create in favor of Agent for the benefit of Lenders, as security
for the respective Secured Obligations (as defined in the applicable Collateral
Document in respect of any Collateral), a valid and perfected First Priority
Lien on all of the Collateral, and all filings, registrations and other actions
necessary or desirable to perfect and maintain the perfection and First Priority
status of such Liens have been duly made or taken and remain in full force and
effect, other than the filing of any UCC financing statements delivered to Agent
for filing (but
108
not yet filed) and the periodic filing of UCC continuation statements in respect
of UCC financing statements filed by or on behalf of Agent.
B. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any Government Authority is required
for either (i) the pledge or grant by any Loan Party of the Liens purported to
be created in favor of Agent pursuant to any of the Collateral Documents or (ii)
the exercise by Agent of any rights or remedies in respect of any Collateral
(whether specifically granted or created pursuant to any of the Collateral
Documents or created or provided for by applicable law), except for filings,
registrations or recordings contemplated by subsection 5.16A and except as may
be required, in connection with the disposition of any Pledged Collateral, by
laws generally affecting the offering and sale of securities.
C. Absence of Third-Party Filings. Except such as may have been
filed or registered in favor of Agent as contemplated by subsection 5.16A and to
evidence permitted lease obligations and other Liens permitted pursuant to
subsection 7.2, (i) no effective UCC financing statement, fixture filing or
other instrument similar in effect covering all or any part of the Collateral is
on file in any filing or recording office, (ii) no effective filing covering all
or any part of the IP Collateral is on file in the PTO and (iii) no
registrations relating to Liens over all or any part of the Collateral are in
effect in any other registries, offices or Government Authorities in any
jurisdiction.
D. Margin Regulations. The pledge of the Pledged Collateral pursuant
to the Collateral Documents does not violate Regulation T, U or X of the Board
of Governors of the Federal Reserve System.
E. Information Regarding Collateral. All information supplied to
Agent by or on behalf of any Holdings, Company or any of its Subsidiaries with
respect to any of the Collateral (in each case taken as a whole with respect to
any particular Collateral) is accurate and complete in all material respects.
5.17 Disclosure.
----------
No representation or warranty of Holdings, Company or any of its
Subsidiaries contained in any Loan Document, any Related Agreement, the
Confidential Information Memorandum or in any other document, certificate or
written statement furnished to Lenders by or on behalf of Holdings, Company or
any of its Subsidiaries for use in connection with the transactions contemplated
by this Agreement contains any untrue statement of a material fact or omits to
state a material fact (known to Company, in the case of any document not
furnished by it) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made. Any projections and pro forma financial information provided by Holdings,
Company or any of their respective Affiliates are based upon good faith
estimates and assumptions believed by Company to be reasonable at the time made,
it being recognized by Lenders that such projections as to future events are not
to be viewed as facts and that actual results during the period or periods
covered by any such projections may differ from the projected results. There are
no facts known (or which should upon the reasonable exercise of diligence be
known) to Company (other than matters of a general economic nature)
109
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect and that have not been disclosed herein or in such
other documents, certificates and statements furnished to Lenders for use in
connection with the transactions contemplated hereby.
5.18 Related Agreements.
------------------
A. Company has delivered to Lenders complete and correct copies of
the Related Agreements, in each case as in effect as of the Closing Date, and of
all exhibits and schedules thereto. The representations and warranties made by
Company, Holdings and their respective Affiliates contained in the Related
Agreements are true, correct and complete in all material respects on and as of
the date made or deemed made and Holdings, Company and their respective
Affiliates have performed in all material respects all agreements and satisfied
all conditions which the Related Agreements provide shall be performed or
satisfied by Holdings, Company and their respective Affiliates on or before the
Closing Date.
B. As of the Closing Date, both before and after giving effect to
the transactions contemplated hereby, each of the Third Amendment to the Rights
Agreement and the Fourth Amendment to the Rights Agreement is in full force and
effect and no provision thereof has been modified or waived in any material
respect, and as a result thereof, no "Distribution Date", "Section 11(a)(ii)
Event" or "Section 13 Event", in each case as defined in the Rights Agreement,
has occurred or will result from the consummation of the transactions
contemplated by the Loan Documents and the Related Agreements.
C. As of the Closing Date, both before and after giving effect to
the transactions contemplated hereby, the Third Amendment to the Contico LLC
Agreement is in full force and effect and no provision thereof has been modified
or waived in any material respect.
D. As of the Closing Date, both before and after giving effect to
the transactions contemplated hereby, each of Amendment No. 1 and Amendment No.
2 to the Contico Members Agreement is in full force and effect and no provision
thereof has been modified or waived in any material respect, and no "Change in
Control" or "Trigger Event", in each case as defined in the Contico Members
Agreement, has occurred or will result from the consummation of the transactions
contemplated by the Loan Documents and the Related Agreements, and no holder of
the Contico Preferred Units has any right to exercise any "Put Right", "Control
Put Right" or "Trigger Event Right", in each case as defined in the Contico
Members Agreement, in connection with or as a result of any of the transactions
contemplated by the Loan Documents and the Related Agreements.
5.19 Permits.
-------
Each of Holdings, Company and its Subsidiaries, prior to and after
giving effect to the transactions contemplated by the Loan Documents and the
Related Agreements, has such certificates, permits, licenses (including without
limitation trademark and other Intellectual Property licenses), franchises,
consents, approvals, authorizations and clearances that are material to the
condition (financial or otherwise), business or operations of Holdings, Company
and its Subsidiaries ("Permits") and is (and will be immediately after the
consummation of such
110
transactions) in compliance in all respects with all applicable laws as are
necessary to own, lease or operate its properties and to conduct its businesses
in the manner as presently conducted and to be conducted immediately after the
consummation of such transactions, except where failure to have such Permits or
to be in compliance could not reasonably be expected to result in a Material
Adverse Effect; and all such Permits are valid and in full force and effect and
will be valid and in full force and effect immediately upon consummation of such
transactions, except for those where the failure to be valid or in effect could
not reasonably be expected to result in a Material Adverse Effect. Each of
Holdings, Company and its Subsidiaries, prior to and after giving effect to such
transactions, is and will be in compliance in all respects with its obligations
under such Permits, except where failure to be in compliance could not
reasonably be expected to result in a Material Adverse Effect, and no event has
occurred that allows, or after notice or lapse of time would allow, revocation
or termination of such Permits, except where such revocation or termination
could not reasonably be expected to result in a Material Adverse Effect.
5.20 Fiscal Periods.
--------------
The Fiscal Year-end of Holdings, Company and its Subsidiaries is
December 31 and the Fiscal Quarter-ends of Holdings, Company and its
Subsidiaries are March 31, June 30, September 30 and December 31.
5.21 ▇▇▇▇▇.
-----
Company does not guaranty (pursuant to the ▇▇▇▇▇ Guaranty or
otherwise) any of ▇▇▇▇▇'▇ obligations under the ▇▇▇▇▇ Loan Agreement or any
repayment obligations in respect of the principal and interest on the bonds
issued in 1984 or 1992, the proceeds of which were loaned to ▇▇▇▇▇ pursuant to
the ▇▇▇▇▇ Loan Agreement. ▇▇▇▇▇ is in full compliance under the ▇▇▇▇▇ Service
Agreement and the ▇▇▇▇▇ Steam Agreement and there has not occurred any "Event of
Default" as defined in the ▇▇▇▇▇ Service Agreement by ▇▇▇▇▇ or Company. Company
and its Subsidiaries are not aware of any Environmental Claims relating to
▇▇▇▇▇, the facilities on which ▇▇▇▇▇ operates or ▇▇▇▇▇'▇ business operations.
Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Commitments
hereunder shall remain in effect and until payment in full of all of the Loans
and other Obligations and the cancellation or expiration of all Letters of
Credit, unless Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.
6.1 Financial Statements and Other Reports.
--------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Agent and, except with respect to the
requirements of subsection 6.1(iv)(c), Lenders:
111
(i) Events of Default, etc.: promptly upon any Officer of Company
-----------------------
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, or becoming aware that any Lender
has given any notice (other than to Agent) or taken any other action with
respect to a claimed Event of Default or Potential Event of Default, (b)
that any Person has given any notice to Company or any of its Subsidiaries
or taken any other action with respect to a claimed default or event or
condition of the type referred to in subsection 8.2, or (c) of the
occurrence of any event or change that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect, an Officer's
Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action taken
by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action
Company has taken, is taking and proposes to take with respect thereto;
(ii) Monthly and Quarterly Financials: (x) as soon as available and in
--------------------------------
any event within 30 days after the end of each month ending after the
Closing Date and prior to the six-month anniversary of the Closing Date (it
being understood that the end of any month for the Loan Parties is, in the
case of January, February, April, May, July, August, October and November,
the fourth Friday of such month, in the case of March, June and September,
the thirteenth Friday of the Fiscal Quarter in which such month falls, and
in the case of December, December 31), the balance sheets of each of
Company's Subsidiaries as at the end of such month and the related
statements of income of each of Company's Subsidiaries for such month, all
in reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the financial
condition of each of Company's Subsidiaries as at the dates indicated and
the results of their operations for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments and (y) as
soon as available and in any event within 30 days after the end of each
month ending on or after the six-month anniversary of the Closing Date (it
being understood that the end of any month for the Loan Parties is, in the
case of January, February, April, May, July, August, October and November,
the fourth Friday of such month, in the case of March, June and September,
the thirteenth Friday of the Fiscal Quarter in which such month falls, and
in the case of December, December 31), and within 45 days after the end of
each Fiscal Quarter (or, with respect to the fourth Fiscal Quarter, 90
days), for Fiscal Quarters ending after the Closing Date, (a) the
consolidated and consolidating balance sheets of Company and its
Subsidiaries as at the end of such fiscal period and the related
consolidated and consolidating statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for such fiscal period and
for the period from the beginning of the then current Fiscal Year to the
end of such fiscal period, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous
Fiscal Year and the corresponding figures from the Financial Plan for the
current Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries as at
112
the dates indicated and the results of their operations and their cash
flows for the periods indicated, subject to changes resulting from audit
and normal year-end adjustments, (b) copies of reports describing the
operations of Company and its Subsidiaries in the form prepared for
presentation to the executive committee of the board of directors of
Company, and (c) an accounts receivable aging report for each Loan Party
sorted by selling terms and other criteria reasonably requested by Agent;
(iii) Year-End Financials: as soon as available and in any event
-------------------
within 90 days after the end of each Fiscal Year, (a) the consolidated and
consolidating balance sheets of Company and its Subsidiaries as at the end
of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders' equity and cash flows of Company and
its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the Financial Plan for the Fiscal Year
covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) copies of
reports describing the operations of Company and its Subsidiaries in the
form prepared for presentation to the executive committee of the board of
directors of Company, and (c) in the case of such consolidated financial
statements, a report thereon of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent
certified public accountants of recognized national standing selected by
Company and satisfactory to Agent, which report shall be unqualified, shall
express no doubts about the ability of Company and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise disclosed in such
financial statements) and that the examination by such accountants in
connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(iv) Pricing and Compliance Certificates: together with each delivery
-----------------------------------
of quarterly and annual financial statements of Company and its
Subsidiaries pursuant to subdivisions (ii) and (iii) above, (a) an
Officer's Certificate of Company stating that the signers have reviewed the
terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not disclosed
the existence during or at the end of such accounting period, and that the
signers do not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event that constitutes an Event
of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action
113
Company has taken, is taking and proposes to take with respect thereto; (b)
a Compliance Certificate demonstrating in reasonable detail compliance
during and at the end of the applicable accounting periods with the
restrictions contained in Section 7; in addition, on or before the 45th day
following the end of each Fiscal Quarter (or, with respect to the fourth
Fiscal Quarter, 90 days) (commencing with the first Fiscal Quarter ending
after the first anniversary of the Closing Date), a Pricing Certificate
demonstrating in reasonable detail the calculation of the Consolidated
Leverage Ratio as of the end of the four Fiscal Quarter period then ended;
and (c) an accounts receivable aging report for each Loan Party which sets
forth for each customer of such Loan Party during the immediately preceding
Fiscal Quarter, the full name, address, telephone number and contact
information of such customer;
(v) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Company and its Subsidiaries delivered
pursuant to subdivisions (ii), (iii) or (xii) of this subsection 6.1 will
differ in any material respect from the consolidated financial statements
that would have been delivered pursuant to such subdivisions had no such
change in accounting principles and policies been made, then (a) together
with the first delivery of financial statements pursuant to subdivision
(ii), (iii) or (xii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xii) of this subsection 6.1 following such change, if required pursuant to
subsection 1.2, a written statement of the chief accounting officer or
chief financial officer of Company setting forth the differences (including
any differences that would affect any calculations relating to the
financial covenants set forth in subsection 7.6) which would have resulted
if such financial statements had been prepared without giving effect to
such change;
(vi) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting
matters, (b) stating whether, in connection with their audit examination,
any condition or event that constitutes an Event of Default or Potential
Event of Default has come to their attention and, if such a condition or
event has come to their attention, specifying the nature and period of
existence thereof; provided that such accountants shall not be liable by
--------
reason of any failure to obtain knowledge of any such Event of Default or
Potential Event of Default that would not be disclosed in the course of
their audit examination, and
114
(c) stating that based on their audit examination nothing has come to
their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant to
subdivision (iv) above is not correct or that the matters set forth in the
Compliance Certificates delivered therewith pursuant to clause (b) of
subdivision (iv) above for the applicable Fiscal Year are not stated in
accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Holdings or Company by independent certified public
accountants in connection with each annual, interim or special audit of the
financial statements of Holdings, Company and its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants to
management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Holdings or Company to
its security holders or by any Subsidiary of Company to its security
holders other than Company or another Subsidiary of Company, (b) all
regular and periodic reports and all registration statements (other than on
Form S-8 or a similar form) and prospectuses, if any, filed by Holdings or
Company or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental or private
regulatory authority, and (c) all press releases and other statements made
available generally by Holdings or Company or any of its Subsidiaries to
the public concerning material developments in the business of Holdings or
Company or any of its Subsidiaries;
(ix) Litigation or Other Proceedings: (a) promptly upon any Officer
-------------------------------
of Company obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any Proceeding against or affecting Holdings, Company or any of
its Subsidiaries or any property of Holdings, Company or any of its
Subsidiaries not previously disclosed in writing by Company to Lenders or
(Y) any material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility
after giving effect to the coverage and policy limits of insurance
policies issued to Holdings, Company and its Subsidiaries of giving
rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a
115
schedule of all Proceedings involving an alleged liability of, or claims
against or affecting, Holdings, Company or any of its Subsidiaries equal to
or greater than $500,000, and promptly after request by Agent such other
information as may be reasonably requested by Agent to enable Agent and its
counsel to evaluate any of such Proceedings;
(x) ERISA Events: promptly upon becoming aware of the occurrence of
------------
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company, any of its Subsidiaries or any of
their respective ERISA Affiliates 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;
(xi) ERISA Notices: with reasonable promptness, copies of (a) all
-------------
notices received by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an
ERISA Event; and (b) copies of such other documents or governmental reports
or filings relating to any Employee Benefit Plan as Agent shall reasonably
request;
(xii) Financial Plans: as soon as practicable and in any event no
---------------
later than 30 days prior to the beginning of each Fiscal Year, a
consolidated and consolidating plan and financial forecast for such Fiscal
Year and the next four succeeding Fiscal Years (the "Financial Plan" for
such Fiscal Years), including (a) forecasted consolidated and consolidating
balance sheets and forecasted consolidated and consolidating statements of
income and cash flows of Company and its Subsidiaries for each month of
each such Fiscal Year, together with pro forma Compliance Certificates for
--- -----
each Fiscal Quarter of each such Fiscal Year and an explanation of the
assumptions on which such forecasts are based, (b) forecasted consolidated
and consolidating statements of income and cash flows of Company and its
Subsidiaries for each month of the first such Fiscal Year and, if requested
by Agent, the next four succeeding Fiscal Years, together with an
explanation of the assumptions on which such forecasts are based, (c) the
amount of forecasted unallocated overhead for each month of the first such
Fiscal Year and, if requested by Agent, the next four succeeding Fiscal
Years, and (d) such other information and projections as any Lender through
Agent may reasonably request;
(xiii) Governing Body: with reasonable promptness, written notice of
--------------
any change in the Governing Body of Holdings, Company or any of its
Subsidiaries;
(xiv) Insurance: as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance satisfactory to
Agent outlining all material insurance coverage maintained as of the date
of such report by Holdings, Company and its Active Subsidiaries and all
material insurance coverage planned to be maintained by Holdings, Company
and its Active Subsidiaries in the immediately succeeding Fiscal Year and
confirming the status
116
of Agent as additional insured and/or loss payee under all such insurance
to the extent required by subsection 6.4;
(xv) Environmental Audits and Reports: as soon as practicable
--------------------------------
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Holdings, Company or any of its
Subsidiaries or by independent consultants, with respect to significant
environmental matters at any Facility or which relate to an Environmental
Claim in either case which could reasonably be expected to result in a
Material Adverse Effect;
(xvi) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Holdings or Company, or any Subsidiary of Company which is
not an Active Subsidiary becoming an Active Subsidiary, a written notice
setting forth with respect to such Person (a) the date on which such Person
became a Subsidiary of Holdings or Company or an Active Subsidiary, as the
case may be, and (b) all of the data required to be set forth in Schedule
--------
5.1 annexed hereto with respect to all Subsidiaries of Holdings or Company
---
(it being understood that such written notice shall be deemed to supplement
Schedule 5.1 annexed hereto for all purposes of this Agreement;
------------
(xvii) Material Contracts: promptly, and in any event within 10
------------------
Business Days after any Material Contract of Holdings or Company or any of
its Subsidiaries is terminated or amended in a manner that is materially
adverse to Holdings or Company or such Subsidiary, as the case may be, or
any new Material Contract is entered into, a written statement describing
such event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto;
(xviii) Borrowing Base Certificates: as soon as available and in any
---------------------------
event within five Business Days after the last Business Day of each month
ending after the Closing Date or, within ten Business Days after the last
Business Day of any month ending prior to the six-month anniversary of the
Closing Date so long as Company shall have a Revolving Borrowing Base
availability of at least $20,000,000 as of the last Business Day of such
month, a Borrowing Base Certificate dated as of the last Business Day of
such month, together with any additional schedules and other information as
Agent may reasonably request (it being understood that (a) Company, in
addition to such monthly Borrowing Base Certificates, may from time to time
deliver to Agent and Lenders on any Business Day after the Closing Date a
Borrowing Base Certificate dated as of such Business Day, together with any
additional schedules and other information as Agent may reasonably request,
and (b) the most recent Borrowing Base Certificate described in this clause
(xviii) that is delivered to Agent shall be used in calculating the
Revolving Borrowing Base as of any date of determination);
(xix) Termination of Leases, Etc.: (a) promptly upon receipt
---------------------------
thereof, copies of any notice of termination of any lease under which any
Loan Party has a leasehold interest or copies of any notice of foreclosure
proceedings relating to
117
any fee interest on any real property with respect to which any Loan
Party has a leasehold interest, in each case if any Eligible Inventory
or any Eligible M&E is located on the real property with respect to
which such Loan Party has a leasehold interest, and (b) at least 30
days prior to the expiration of any lease under which any Loan Party
has a leasehold interest and on which any Eligible Inventory or any
Eligible M&E is located, a written notice of such expiration; and
(xx) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Holdings, Company or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 Existence, etc.
--------------
Except as permitted under subsection 7.7, Company will, and will cause
each of its Active Subsidiaries to, at all times preserve and keep in full force
and effect its existence and all rights and franchises material to its business;
provided, however, that neither Company nor any of its Active Subsidiaries shall
-------- -------
be required to preserve any such right or franchise if the Governing Body of
Company or such Active Subsidiary shall determine that the preservation thereof
is no longer desirable in the conduct of the business of Company or such Active
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Active Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax.
--------------------------------
A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such tax, assessment, other governmental
--------
charge or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long as
(1) such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (2) in the case of a tax,
assessment, other governmental charge or claim which has or may become a Lien
against any of the Collateral, such proceedings conclusively operate to stay the
sale of any portion of the Collateral to satisfy such tax, assessment, other
governmental charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance; Application of Net Insurance/
------------------------------------------------------------------
Condemnation Proceeds.
---------------------
A. Maintenance of Properties. Company will, and will cause each of
its Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of
118
Company and its Subsidiaries (including all Intellectual Property) and from time
to time will make or cause to be made all appropriate repairs, renewals and
replacements thereof.
B. Insurance. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the generality
of the foregoing, Company will maintain or cause to be maintained (i) flood
insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
satisfactory to Agent in its commercially reasonable judgment. Each such policy
of insurance shall (a) name Agent for the benefit of Lenders as an additional
insured thereunder as its interests may appear and (b) in the case of each
business interruption and casualty insurance policy (other than such policies of
▇▇▇▇▇), contain a loss payable clause or endorsement, satisfactory in form and
substance to Agent, that names Agent for the benefit of Lenders as the loss
payee thereunder for any covered loss in excess of $50,000 so long as the Term
Loan remains outstanding (and in excess of $1,000,000 after the Term Loan has
been repaid in full) and provides for at least 30 days prior written notice to
Agent of any modification or cancellation of such policy.
C. Application of Net Insurance/Condemnation Proceeds.
(i) Business Interruption Insurance. Upon receipt by Holdings,
-------------------------------
Company or any of its Subsidiaries of any business interruption
insurance proceeds constituting Net Insurance/Condemnation Proceeds,
(a) so long as no Event of Default or Potential Event of Default shall
have occurred and be continuing, Company or such Subsidiary may retain
and apply such Net Insurance/Condemnation Proceeds for working capital
purposes, and (b) if an Event of Default or Potential Event of Default
shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay the Loans
as provided in subsection 2.4B or, with the consent of Agent and
Requisite Lenders, to prepay the Revolving Loans;
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
----------------------------------------
Holdings, Company or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds other than from business interruption
insurance, (a) so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, Company shall, or shall
cause one or more of its Subsidiaries to, promptly and diligently
apply such Net Insurance/Condemnation Proceeds to pay or reimburse the
costs of repairing, restoring or replacing the assets in respect of
which such Net Insurance/Condemnation
119
Proceeds were received or, to the extent not so applied, to prepay the
Loans as provided in subsection 2.4B, and (b) if an Event of Default
or Potential Event of Default shall have occurred and be continuing,
Company shall apply an amount equal to such Net Insurance/Condemnation
Proceeds to prepay the Loans as provided in subsection 2.4B.
(iii) Net Insurance/Condemnation Proceeds Received by Agent.
-----------------------------------------------------
Upon receipt by Agent of any Net Insurance/Condemnation Proceeds as
loss payee (a) if and to the extent Company would have been required
to apply such Net Insurance/Condemnation Proceeds (if it had received
them directly) to prepay the Loans, Agent shall, and Company hereby
authorizes Agent to, apply such Net Insurance/Condemnation Proceeds to
prepay the Loans as provided in subsection 2.4B, and (b) to the extent
the foregoing clause (a) does not apply and (1) the aggregate amount
of such Net Insurance/Condemnation Proceeds received (and reasonably
expected to be received) by Agent in respect of any covered loss does
not exceed $50,000, Agent shall deliver such Net
Insurance/Condemnation Proceeds to Company, and Company shall, or
shall cause one or more of its Subsidiaries to, promptly apply such
Net Insurance/Condemnation Proceeds to the costs of repairing,
restoring, or replacing the assets in respect of which such Net
Insurance/Condemnation Proceeds were received, and (2) if the
aggregate amount of Net Insurance/Condemnation Proceeds received (and
reasonably expected to be received) by Agent in respect of any covered
loss exceeds $50,000, Agent shall hold such Net Insurance/Condemnation
Proceeds pursuant to the terms of the Security Agreement or, at the
request of Company, apply such Net Insurance/Condemnation Proceeds to
repay Revolving Loans, and, so long as Company or any of its
Subsidiaries proceeds diligently to repair, restore or replace the
assets of Company or such Subsidiary in respect of which such Net
Insurance/Condemnation Proceeds were received, Agent shall from time
to time disburse to Company or such Subsidiary from the Collateral
Account or Lenders shall from time to time make as Revolving Loans an
amount not exceeding the amount of Net Insurance/Condemnation Proceeds
so applied to repay Revolving Loans (provided that notwithstanding the
foregoing, Lenders shall not be obligated to make such Revolving Loans
unless the conditions specified in subsection 4.2 have been satisfied
or waived), to the extent of any such Net Insurance/Condemnation
Proceeds remaining therein in respect of the applicable covered loss,
amounts necessary to pay the cost of such repair, restoration or
replacement after the receipt by Agent of invoices or other
documentation reasonably satisfactory to Agent relating to the amount
of costs so incurred and the work performed (including, if required by
Agent, lien releases and architects' certificates); provided, however
-------- -------
that if at any time Agent reasonably determines (A) that Company or
such Subsidiary is not proceeding diligently with such repair,
restoration or replacement or (B) that such repair, restoration or
replacement cannot be completed with the Net Insurance/Condemnation
Proceeds then held by Agent for such purpose, together with funds
otherwise available to Company for such purpose, Agent shall, and
Company hereby authorizes Agent
120
to, apply such Net Insurance/Condemnation Proceeds to prepay the
Loans as provided in subsection 2.4B and Lenders shall not be
required to make the Revolving Loans described above.
6.5 Inspection; Lender Meeting.
--------------------------
Company shall, and shall cause each of its Subsidiaries to, permit
(i) any authorized representatives designated by any Lender through Agent to
visit and inspect any of the properties of Company or any of its Subsidiaries,
including its and their financial and accounting records, and to make copies and
take extracts therefrom, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), and (ii) any authorized representatives designated by
Agent to conduct at least one audit of all Collateral during each Fiscal Quarter
after the Closing Date (exclusive of the audit of Inventory and Accounts
conducted by Agent prior to the Closing Date (the "Base Audit")), each such
audit to be substantially similar in scope and substance to the Base Audit, all
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested. Without in any way limiting the
foregoing, Company will, upon the request of Agent or Requisite Lenders,
participate in a meeting of Agent and Lenders at least once during each Fiscal
Year to be held at Company's corporate offices (or such other location as may be
agreed to by Company and Agent) at such time as may be agreed to by Company and
Agent.
6.6 Compliance with Laws, etc.
--------------------------
Company shall, and shall cause each of its Subsidiaries to, comply
with the requirements of all applicable laws, rules, regulations and orders of
any Government Authority (other than Environmental Laws), in each case
noncompliance with which could reasonably be expected to result in, individually
or in the aggregate, a Material Adverse Effect.
6.7 Environmental Disclosure and Inspection.
---------------------------------------
A. Company shall, and shall cause each of its Subsidiaries to,
exercise all due diligence in order to comply in all material respects and cause
(i) all tenants under any leases or occupancy agreements affecting any portion
of the Facilities and (ii) all other Persons on or occupying such property, to
comply in all material respects with all Environmental Laws.
B. Company agrees that Agent may, from time to time and in its
reasonable discretion, retain, at Company's expense, an independent professional
consultant to review any report relating to Hazardous Materials prepared by or
for Company and, upon a reasonable belief that Company has breached any covenant
or representation with respect to environmental matters or that there has been a
material violation of Environmental Laws at any Facility or by Company, to
conduct its own reasonable investigation of such matter at any Facility
currently owned, leased, operated or used by Company or any of its Subsidiaries,
and Company agrees to use its best efforts to obtain permission for Agent's
professional consultant to conduct its own investigation of any such matter at
any Facility previously owned, leased, operated or used by Company or any of its
Subsidiaries. Company hereby grants to Agent and its agents, employees,
121
consultants and contractors the right to enter into or on to the Facilities
currently owned, leased, operated or used by Company or any of its Subsidiaries
upon reasonable notice to Company to perform such assessments on such property
as are reasonably necessary to conduct such a review and/or investigation. Any
such investigation of any Facility shall be conducted, unless otherwise agreed
to by Company and Agent, during normal business hours and, to the extent
reasonably practicable, shall be conducted so as not to interfere with the
ongoing operations at any such Facility or to cause any damage or loss to any
property at such Facility. Company and Agent hereby acknowledge and agree that
any report of any investigation conducted at the request of Agent pursuant to
this subsection 6.7B will be obtained and shall be used by Agent and Lenders for
the purposes of Lenders' internal credit decisions, to monitor and police the
Loans and to protect Lenders' security interests, if any, created by the Loan
Documents. Agent agrees to deliver a copy of any such report to Company at the
Company's request or if the information in the report describes a condition that
could reasonably be expected to materially impair the value of a Facility if not
addressed with the understanding that Company acknowledges and agrees that (i)
it will indemnify and hold harmless Agent and each Lender from any costs, losses
or liabilities relating to Company's use of or reliance on such report, (ii)
neither Agent nor any Lender makes any representation or warranty with respect
to such report, and (iii) by delivering such report to Company, neither Agent
nor any Lender is requiring or recommending the implementation of any
suggestions or recommendations contained in such report.
C. Company shall promptly advise Lenders in writing and in
reasonable detail of (i) any material Release of any Hazardous Materials
required to be reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to any Environmental Claims that have a
reasonable possibility of giving rise to a Material Adverse Effect or with
respect to any material Release of Hazardous Materials required to be reported
to any federal, state or local governmental or regulatory agency, (iii) any
remedial action taken by Company or any other Person in response to (x) any
Hazardous Materials on, under or about any Facility, the existence of which has
a reasonable possibility of resulting in an Environmental Claim having a
Material Adverse Effect, or (y) any Environmental Claim that could have a
Material Adverse Effect, (iv) Company's discovery of any occurrence or condition
on any real property adjoining or in the vicinity of any Facility that could
cause such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use thereof under
any Environmental Laws, and (v) any request for information from any
governmental agency that suggests such agency is investigating whether Company
or any of its Subsidiaries may be potentially responsible for an aggregate
amount in excess of $100,000 for a material Release of Hazardous Materials.
D. Company shall promptly notify Lenders of (i) any proposed
acquisition of stock, assets, or property by Company or any of its Subsidiaries
that could reasonably be expected to expose Company or any of its Subsidiaries
to, or result in, Environmental Claims that could reasonably be expected to have
a Material Adverse Effect or that could reasonably be expected to have a
Material Adverse Effect on any Governmental Authorization then held by Company
or any of its Subsidiaries and (ii) any proposed action to be taken by Company
or any of its Subsidiaries to modifying current operations that could reasonably
be expected to subject Company or any of its Subsidiaries to material additional
obligations or requirements under Environmental Laws.
122
E. Company shall, at its own expense, provide copies of such
documents or information as Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 6.7.
F. Company shall maintain policies and procedures for monitoring
compliance with Environmental Laws for its and each of its Subsidiaries'
operations that demonstrates a commitment to environmental compliance and
includes procedures for (a) preparing and updating written compliance manuals
covering pertinent regulatory areas, (b) tracking changes in applicable
Environmental Laws and modifying operations to comply with new requirements
thereunder, and (c) training employees to comply with applicable environmental
requirements and updating such training as necessary.
6.8 Company's Remedial Action Regarding Hazardous Materials.
-------------------------------------------------------
Company shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and all remedial action in connection with
the presence, storage, use, disposal, transportation or Release of any Hazardous
Materials on, under or about any Facility in order to comply in all material
respects with all applicable Environmental Laws and Governmental Authorizations.
Company shall cause all other Persons occupying the Facilities currently owned
or leased by Company or its Subsidiaries to comply in all material respects with
all applicable Environmental Laws. In the event Company or any of its
Subsidiaries undertakes any remedial action with respect to any Hazardous
Materials on, under or about any Facility, Company or such Subsidiary shall
conduct and complete such remedial action in compliance in all material respects
with all applicable Environmental Laws, and in accordance with the policies,
orders and directives of all federal, state and local Government Authorities
except when, and only to the extent that, Company's or such Subsidiary's
liability for such presence, storage, use, disposal, transportation or discharge
of any Hazardous Materials or legal obligations with respect to the extent of
such remedial action is being contested in good faith by Company or such
Subsidiary.
6.9 Execution of Subsidiary Guaranty and Personal Property Collateral
-----------------------------------------------------------------
Documents After the Closing Date.
--------------------------------
A. Execution of Subsidiary Guaranty, Personal Property Collateral
Documents and Master Intercompany Note. In the event that any Domestic
Subsidiary of Company existing on the Closing Date that has not previously
executed the Subsidiary Guaranty hereafter owns or acquires assets with an
aggregate fair market value (without netting such fair market value against any
liability of such Subsidiary) exceeding $10,000, or in the event that any Person
becomes a Domestic Subsidiary of Company after the date hereof, Company will
promptly notify Agent of that fact and cause such Subsidiary to execute and
deliver to Agent a counterpart of the Subsidiary Guaranty, Security Agreement,
Environmental Indemnity Agreement and Master Intercompany Note and to take all
such further actions and execute all such further documents and instruments
(including actions, documents and instruments comparable to those described in
subsection 4.1O) as may be necessary or, in the opinion of Agent, desirable to
create in favor of Agent, for the benefit of Lenders, a valid and perfected
First Priority Lien on all of the personal and mixed property assets of such
Domestic Subsidiary described in the applicable forms of Collateral Documents.
123
B. Foreign Subsidiaries. In the event that any Foreign Subsidiary of
Company existing on the Closing Date that has not previously had 65% of its
capital stock pledged as Collateral hereafter owns or acquires assets with an
aggregate fair market value (without netting such fair market value against any
liability of such Subsidiary) exceeding $10,000, or in the event that any Person
becomes a Foreign Subsidiary of Company after the date hereof, Company will
promptly notify Agent of that fact and, if such Subsidiary is directly owned by
Company or a Domestic Subsidiary, cause such Subsidiary to execute and deliver
to Agent a counterpart of the Master Intercompany Note and such other documents
and instruments and take such further actions (including actions, documents and
instruments comparable to those described in subsection 4.1O) as may be
necessary, or in the reasonable opinion of Agent, desirable to create in favor
of Agent, for the benefit of Lenders, a valid and perfected First Priority Lien
on 65% of the capital stock of such Foreign Subsidiary.
C. Subsidiary Organizational Documents, Legal Opinions, Etc. Company
shall deliver to Agent, together with such Loan Documents, (i) certified copies
of such Subsidiary's Organizational Documents, together with, if such Subsidiary
is a Domestic Subsidiary, a good standing certificate from the Secretary of
State of the jurisdiction of its organization and each other state in which such
Person is qualified to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to Agent,
(ii) a certificate executed by the secretary or similar officer of such
Subsidiary as to (a) the fact that the attached resolutions of the Governing
Body of such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, and (iii) a favorable opinion
of counsel to such Subsidiary, in form and substance satisfactory to Agent and
its counsel, as to (a) the due organization and good standing of such
Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary
of such Loan Documents, (c) the enforceability of such Loan Documents against
such Subsidiary and (d) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Agent and its counsel.
6.10 Matters Relating to Real Property Collateral.
--------------------------------------------
A. Post-Closing Date Mortgages; Post-Closing Date Mortgage Policies,
Etc. Within 90 days after the Closing Date (or, within 120 days after the
Closing Date if Agent decides to grant such extension in its reasonable
discretion at the written request of Company (which extension each Lender hereby
authorizes Agent to grant)), Company shall, and shall cause each applicable
Subsidiary to, deliver to Agent:
(i) Post-Closing Mortgages. Fully executed and notarized
----------------------
Mortgages (each a "Post-Closing Date Mortgage" and, collectively, the
"Post-Closing Date Mortgages"), in proper form for recording in all
appropriate places in all applicable jurisdictions, encumbering each
Real Property Asset listed in Schedule 6.10A annexed hereto (each a
--------------
"Post-Closing Date Mortgaged Property" and, collectively, the "Post-
Closing Date Mortgaged Properties");
124
(ii) Opinions of Local Counsel. An opinion of counsel (which
-------------------------
counsel shall be reasonably satisfactory to Agent) in each state in
which a Post-Closing Date Mortgaged Property is located with respect
to the enforceability of the form(s) of Post-Closing Date Mortgages to
be recorded in such state and such other matters as Agent may
reasonably request, in each case in form and substance reasonably
satisfactory to Agent;
(iii) Landlord Consents and Estoppels; Recorded Leasehold
---------------------------------------------------
Interests. In the case of each Post-Closing Date Mortgaged Property
---------
consisting of a Material Leasehold Property, (a) a Landlord Consent
and Estoppel with respect thereto and (b) evidence that such Material
Leasehold Property is a Recorded Leasehold Interest;
(iv) Title Insurance. (a) ALTA mortgagee title insurance
---------------
policies or unconditional commitments therefor (the "Post-Closing Date
Mortgage Policies") issued by the Title Company with respect to the
Post-Closing Date Mortgaged Properties listed in Schedule 6.10A
--------------
annexed hereto, in amounts not less than the respective amounts
designated therein with respect to any particular Post-Closing Date
Mortgaged Properties, insuring fee simple title to, or a valid
leasehold interest in, each such Post-Closing Date Mortgaged Property
vested in such Loan Party and assuring Agent that the applicable Post-
Closing Date Mortgages create valid and enforceable First Priority
mortgage Liens on the respective Post-Closing Date Mortgaged
Properties encumbered thereby, subject only to a standard survey
exception, which Post-Closing Date Mortgage Policies (1) shall include
an endorsement for mechanics' liens, for future advances under this
Agreement and for any other matters reasonably requested by Agent and
(2) shall provide for affirmative insurance and such reinsurance as
Agent may reasonably request, all of the foregoing in form and
substance reasonably satisfactory to Agent; and (b) evidence
reasonably satisfactory to Agent that such Loan Party has (i)
delivered to the Title Company all certificates and affidavits
required by the Title Company in connection with the issuance of the
Post-Closing Date Mortgage Policies and (ii) paid to the Title Company
or to the appropriate Government Authorities all expenses and premiums
of the Title Company in connection with the issuance of the Post-
Closing Date Mortgage Policies and all recording and stamp taxes
(including mortgage recording and intangible taxes) payable in
connection with recording the Post-Closing Date Mortgages in the
appropriate real estate records;
(v) Title Reports. With respect to each Post-Closing Date
-------------
Mortgaged Property listed in Schedule 6.10A annexed hereto, a title
--------------
report issued by the Title Company with respect thereto, dated not
more than 30 days prior to the Closing Date and satisfactory in form
and substance to Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies
------------------------------------------------
of all recorded documents listed as exceptions to title or otherwise
referred to in the Post-Closing Date Mortgage Policies or in the title
reports delivered pursuant to subsection 6.10A(v);
125
(vii) Matters Relating to Flood Hazard Properties. (a) Evidence,
-------------------------------------------
which may be in the form of a letter from an insurance broker or a
municipal engineer, as to whether (1) any Post-Closing Date Mortgaged
Property is a Flood Hazard Property and (2) the community in which any
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, (b) if there are any such Flood Hazard
Properties, such Loan Party's written acknowledgement of receipt of
written notification from Agent (1) as to the existence of each such
Flood Hazard Property and (2) as to whether the community in which
each such Flood Hazard Property is located is participating in the
National Flood Insurance Program, and (c) in the event any such Flood
Hazard Property is located in a community that participates in the
National Flood Insurance Program, evidence that Company has obtained
flood insurance in respect of such Flood Hazard Property to the extent
required under the applicable regulations of the Board of Governors of
the Federal Reserve System; and
(viii) Environmental Indemnity. An environmental indemnity
-----------------------
agreement, satisfactory in form and substance to Agent and its
counsel, with respect to the indemnification of Agent and Lenders for
any liabilities that may be imposed on or incurred by any of them as a
result of any Hazardous Materials Activity.
B. Conforming Leasehold Interests. If Company or any of its Domestic
Subsidiaries acquires any Material Leasehold Property, Company shall, or shall
cause such Subsidiary to, cause such Material Leasehold Property to be a
Conforming Leasehold Interest.
C. Additional Mortgages, Etc. From and after the Closing Date, in the
event that (i) Company or any Subsidiary Guarantor acquires any fee interest or
freehold interest in real property or any Material Leasehold Property or (ii) at
the time any Person becomes a Subsidiary Guarantor, such Person owns or holds
any fee interest or freehold interest in real property or any Material Leasehold
Property, in the case of clause (ii) above, excluding any such Real Property
Asset the encumbrancing of which requires the consent of any applicable lessor
or then-existing senior lienholder, where Company and its Subsidiaries are
unable to obtain such lessor's or senior lienholder's consent (any such non-
excluded Real Property Asset described in the foregoing clause (i) or (ii) being
an "Additional Mortgaged Property"), Company or such Subsidiary Guarantor shall
deliver to Agent, as soon as practicable after such Person acquires such
Additional Mortgaged Property or becomes a Subsidiary Guarantor, as the case may
be, a fully executed and, where applicable, notarized Mortgage (an "Additional
Mortgage"), duly recorded or registered in all appropriate places in all
applicable jurisdictions, encumbering the interest of such Loan Party in such
Additional Mortgaged Property; and such opinions, appraisals, documents, title
insurance, environmental reports that would have been delivered if such
Additional Mortgaged Property were (y) a Post-Closing Date Mortgaged Property in
the case of an Additional Mortgaged Property located in any jurisdiction other
than the United Kingdom and (z) the U.K. Subsidiary Mortgaged Property in the
case of an Additional Mortgaged Property located in the United Kingdom, or in
each case that may be reasonably required by Agent. Company will, and will cause
each applicable Subsidiary to cause any Additional Mortgaged Property located in
Canada not to be designated or listed for regulation by any conservation
authority under the Conservation Authorities Act (Ontario) (or, if designated or
126
listed, Company will, and will cause each applicable Subsidiary to cause such
Additional Mortgaged Property to comply with such regulations).
D. Real Estate Appraisals. Company shall, and shall cause each of
its Subsidiaries to, permit an independent real estate appraiser satisfactory to
Agent, upon reasonable notice, to visit and inspect any Post-Closing Date
Mortgaged Property or any Additional Mortgaged Property for the purpose of
preparing an appraisal of such Post-Closing Date Mortgaged Property or
Additional Mortgaged Property satisfying the requirements of any applicable laws
and regulations (in each case to the extent required under such laws and
regulations as determined by Agent in its discretion).
E. Collateral Appraisals. At least once each Fiscal Year and at the
request of Agent upon the occurrence of an Event of Default or a Potential Event
of Default, Company shall deliver to Agent appraisals of machinery and equipment
and Real Property Assets described in Schedules 1.1A and 1.1B annexed hereto,
-----------------------
Inventory and other Collateral in form, scope and substance satisfactory to
Agent.
F. U.K. Appraisal and Examination Report. Within 60 days of the
Closing Date, Company shall deliver to Agent an appraisal of the Inventory of
the U.K. division of Contico and, within 30 days of the Closing Date, a
collateral examination report of the Inventory and Accounts of the U.K. division
of Contico, in each case in form and substance satisfactory to Agent; provided
that Agent is hereby authorized by Lenders to grant a 30 day extension with
respect to the above requirements in its sole discretion at the written request
of Company.
6.11 Revised Article 9.
-----------------
After the effective date of Revised Article 9 and no later than July
31, 2001, the Loan Parties shall deliver to Agent opinions of counsel (which
opinions shall be reasonably satisfactory in form and substance to Agent) for
the states of California, Georgia, Illinois, North Carolina, Texas and
Pennsylvania and each of the other states with respect to which Hunton &
▇▇▇▇▇▇▇▇ opines in its opinion delivered pursuant to subsection 4.1I (including
the "Specified States" as defined therein), to the effect that, after the
effective date of Revised Article 9, the security interests of Agent securing
the Obligations of the Loan Parties hereunder and under the other Loan Documents
(including without limitation the security interests relating to certain Deposit
Accounts) are perfected security interests under applicable law.
6.12 Deposit Accounts and Cash Management Systems.
--------------------------------------------
Company shall, and shall cause each of its Subsidiaries to, comply
with each of the requirements of subsection 2.10, including the requirements of
subsection 2.10A(iii)(a) within 60 days of the Closing Date, the requirements of
subsection 2.10A(iii)(b), (c) and (d) within 30 days of the Closing Date, and
the requirements of subsection 2.10B(i) within 90 days or 180 days, as the case
may be, of the Closing Date; provided that if Company or such Subsidiary is
--------
unable to obtain the necessary agreement or acknowledgement from any financial
institution to comply with such requirements, Company shall, or shall cause such
Subsidiary to, prior to such 30/th/, 60/th/, 90/th/ or 180/th/ day after the
Closing Date, as applicable, transfer all amounts in the applicable Deposit
Account to a Deposit Account maintained at a financial
127
institution from which Company or such Subsidiary has obtained such an agreement
or acknowledgement; provided that Agent is hereby authorized by Lenders to grant
--------
a 30 day extension with respect to the above requirements in its reasonable
discretion at the written request of Company.
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 7.
7.1 Indebtedness.
------------
Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or guaranty, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(i) Company may become and remain liable with respect to
the Obligations;
(ii) Company and its Active Subsidiaries may become and
remain liable with respect to Contingent Obligations permitted by
subsection 7.4 and, upon any matured obligations actually arising
pursuant thereto, the Indebtedness corresponding to the
Contingent Obligations so extinguished;
(iii) Company and its Active Subsidiaries may become and
remain liable with respect to Indebtedness in respect of Capital
Leases; provided that such Capital Leases are permitted under the
--------
terms of subsection 7.9;
(iv) Company may become and remain liable with respect to
Indebtedness to any of its Wholly-Owned Subsidiaries that are
Active Subsidiaries other than ▇▇▇▇▇, and any Wholly-Owned
Subsidiary of Company that is an Active Subsidiary other than
▇▇▇▇▇ may become and remain liable with respect to Indebtedness
to Company or any other Wholly-Owned Subsidiary of Company that
is an Active Subsidiary other than ▇▇▇▇▇; provided that (a) all
--------
such intercompany Indebtedness shall be evidenced by promissory
notes that are pledged to Agent pursuant to the terms of the
applicable Collateral Document, (b) all such intercompany
Indebtedness owed by Company to any of its Active Subsidiaries
shall be subordinated in right of payment to the payment in full
of the Obligations pursuant to the terms of the applicable
promissory notes or an intercompany subordination agreement, (c)
any payment by any Subsidiary Guarantor under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount
--- -----
of any intercompany Indebtedness owed by such Subsidiary
Guarantor to Company or to any of its Subsidiaries for whose
benefit such payment is made, (d) all such intercompany
Indebtedness of Glit to Company shall be incurred pursuant to the
Glit Subsidiary Note and such Indebtedness under the Glit
Subsidiary Note shall be secured by the Glit Subsidiary Security
Agreement, (e) all such intercompany Indebtedness of ▇▇▇▇▇ to
Company shall be incurred pursuant to the Glit Subsidiary Note
and such
128
Indebtedness under the Glit Subsidiary Note shall be secured by the
Glit Subsidiary Security Agreement, (e) all such intercompany
Indebtedness of ▇▇▇▇▇ to Company shall be incurred pursuant to the
▇▇▇▇▇ Subsidiary Note and such Indebtedness under the ▇▇▇▇▇ Subsidiary
Note shall be secured by the ▇▇▇▇▇ Subsidiary Security Agreement, and
(f) the aggregate principal amount of all Indebtedness of all Foreign
Active Subsidiaries of Company to Company and its Domestic Active
Subsidiaries (other than up to $11,000,000 of intercompany
Indebtedness under the Glit Subsidiary Note and the ▇▇▇▇▇ Subsidiary
Note) shall not exceed $100,000 at any time outstanding;
(v) Company and its Active Subsidiaries, as applicable, may
remain liable with respect to Indebtedness described in Schedule 7.1
------------
annexed hereto;
(vi) Non-recourse Indebtedness of ▇▇▇▇▇ Industries to La Salle
National Bank in an aggregate principal amount not to exceed $900,000,
as such amount is reduced due to repayment thereof from time to time;
and
(vii) Company and its Active Subsidiaries may become and remain
liable with respect to other Indebtedness in an aggregate principal
amount not to exceed $1,000,000.
7.2 Liens and Related Matters.
-------------------------
A. Prohibition on Liens. Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC or under any similar recording or notice statute or any
registration under any other applicable law in any jurisdiction, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
------------
(iv) Liens evidencing Capital Leases permitted by subsection
7.1;
(v) Liens in favor of Company created by Glit pursuant to the
Glit Subsidiary Documents to secure Glit's Indebtedness to Company
under the Glit Subsidiary Note;
(vi) Liens in favor of Company created by ▇▇▇▇▇ pursuant to the
▇▇▇▇▇ Subsidiary Documents to secure ▇▇▇▇▇' Indebtedness to Company
under the ▇▇▇▇▇ Subsidiary Note;
129
(vii) Liens on the Real Property Assets of ▇▇▇▇▇ Industries
comprising the ▇▇▇▇▇ Industries manufacturing facility located in
Mooresville, Indiana to secure Indebtedness permitted by subsection
7.1(vi) so long as such Liens shall apply only to such Real Property
Assets and the aggregate of all amounts secured by such Liens does not
exceed $900,000, as such amount is reduced due to repayment thereof
from time to time; and
(viii) Liens on equipment, fixtures and other similar property
of Company and any of its Subsidiaries, securing Indebtedness
described in subsection 7.1(vii) which was incurred to finance the
purchase price of equipment, fixtures and any other similar property;
provided that the aggregate principal amount of such Indebtedness when
incurred shall not be less than 60% or more than 100% of the fair
market value of the equipment, fixtures and any other similar property
acquired plus the reasonable installation and delivery charges
associated therewith; provided further that such Lien shall extend
only to the equipment, fixtures and other similar property so financed
and provided further that with respect to any such Lien (1) no Event
-------- -------
of Default or Potential Event of Default shall have occurred and be
continuing at the time of incurrence of such Lien and (2) the
aggregate principal amount of all Indebtedness secured by all such
Liens shall not at any time exceed $1,000,000.
B. Equitable Lien in Favor of Lenders. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
--------
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. No Further Negative Pledges. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, none of Company
or any of its Subsidiaries shall enter into any agreement prohibiting the
creation or assumption of any Lien upon any of its properties or assets, whether
now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to Company or Other
Subsidiaries. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock or other ownership
interests owned by Company or any other Subsidiary of Company, (ii) repay or
prepay any Indebtedness owed by such Subsidiary to Company or any other
Subsidiary of Company, (iii) make loans or advances to Company or any other
Subsidiary of Company, or (iv) transfer any of its property or assets to Company
or any other Subsidiary of Company.
130
7.3 Investments; Acquisitions.
-------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, or acquire, by purchase or otherwise, all or substantially all
the business, property or fixed assets of, or capital stock or other ownership
interests of any Person, or any division or line of business of any Person
except:
(i) Company and its Active Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) (a) Company and its Wholly-Owned Subsidiary Guarantors may
make and own additional equity Investments in their respective Wholly-
Owned Subsidiary Guarantors other than ▇▇▇▇▇ and (b) Company and its
Wholly-Owned Subsidiary Guarantors (other than ▇▇▇▇▇) may make and own
additional equity Investments in ▇▇▇▇▇ so long as the aggregate amount
of all such additional equity Investments by Company and its Wholly-
Owned Subsidiary Guarantors (other than ▇▇▇▇▇) shall not exceed
$750,000 in any Fiscal Year;
(iii) Company and its Active Subsidiaries may make intercompany
loans to the extent permitted under subsection 7.1(iv);
(iv) Company and its Active Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(v) Company and its Active Subsidiaries may continue to own
the Investments owned by them and described in Schedule 7.3 annexed
------------
hereto;
(vi) Company and the Subsidiary Guarantors may acquire assets
(including capital stock or other ownership interests in a Person that
will become a Subsidiary as a result of such acquisition) having a
fair market value not in excess of $5,000,000 in the aggregate over
the term of this Agreement and continue to own such assets after the
acquisition thereof; provided that (a) no Event of Default or
--------
Potential Event of Default shall have occurred and be continuing or
would result therefrom and (b) Company shall have a Revolving
Borrowing Base availability of at least $15,000,000 as of the date of
any such acquisition after giving effect to such acquisition and
Company shall have delivered an Officer's Certificate certifying to
the requirements of this subsection 7.3(vi); and provided further that
-------- -------
Company shall, and shall cause the Subsidiary Guarantors to, comply
with the requirements of subsections 6.9 and 6.10 with respect to each
such acquisition that results in a Person becoming a Subsidiary (each
a "Permitted Acquisition");
(vii) Company may make and maintain Investments in intercompany
loans to Glit pursuant to the Glit Subsidiary Note in a principal
amount not to exceed $3,500,000; provided that Company shall obtain
--------
and pledge to Agent for the benefit of Lenders the Glit Subsidiary
Note with respect to such loans and the
131
Glit Subsidiary Note shall be secured pursuant to the Glit Subsidiary
Security Agreement by a duly perfected first priority security
interest in all of the personal and mixed property of Glit described
in the Glit Subsidiary Security Agreement and all such security
interests shall be assigned and pledged to Agent for the benefit of
Lenders pursuant to the Security Agreement;
(viii) Company may make and maintain Investments in intercompany
loans to ▇▇▇▇▇ pursuant to the ▇▇▇▇▇ Subsidiary Note in a principal
amount not to exceed $7,500,000; provided that (a) Company shall
--------
obtain and pledge to Agent for the benefit of Lenders the ▇▇▇▇▇
Subsidiary Note with respect to such loans, (b) the ▇▇▇▇▇ Subsidiary
Note shall be secured pursuant to the ▇▇▇▇▇ Subsidiary Security
Agreement by a duly perfected first priority security interest in all
of the real, mixed and personal property of ▇▇▇▇▇ described in the
▇▇▇▇▇ Subsidiary Security Agreement, and (c) all such security
interests shall be assigned and pledged to Agent for the benefit of
Lenders pursuant to the Security Agreement;
(ix) Company and its Wholly-Owned Subsidiary Guarantors may
make additional Investments (including Investments constituting loans
or advances permitted under subsection 7.1(iv)) in their respective
Wholly-Owned Subsidiaries that are Foreign Active Subsidiaries;
provided that (a) the amount of all such additional Investments
--------
(excluding the Investments described in subsections 7.3(vii) and
(viii)) in each such Wholly-Owned Subsidiary that is a Foreign Active
Subsidiary shall not exceed at any time 10% of the net worth (as
determined in accordance with GAAP) of such Wholly-Owned Subsidiary
that is a Foreign Active Subsidiary, (b) the amount of all such
Investments (excluding the Investments described in subsections
7.3(vii) and (viii)) by Company and its Wholly-Owned Subsidiary
Guarantors in all such Wholly-Owned Subsidiaries that are Foreign
Active Subsidiaries shall not exceed at any time an aggregate amount
equal to $500,000 and (c) no Potential Event of Default or Event of
Default shall exist or would result from such Investment;
(x) Company or any of its Subsidiaries may make and own
Investments in respect of Securities of another Person received by
Company or such Subsidiary in connection with a plan of reorganization
of such Person; and
(xi) Company and its Active Subsidiaries may make and own
other Investments in an aggregate amount not to exceed at any time
$1,000,000.
7.4 Contingent Obligations.
----------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiary Guarantors may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary
Guaranty;
132
(ii) Company and Subsidiary Guarantors may become and remain
liable with respect to Contingent Obligations in respect of Letters of
Credit;
(iii) Company may become and remain liable with respect to
Contingent Obligations under Interest Rate Agreements in an aggregate
notional principal amount not exceeding 50% of the Term Loans
outstanding on the Closing Date;
(iv) Company and its Active Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with Asset Sales or other sales of assets;
(v) Company and its Active Subsidiaries may become and remain
liable with respect to Contingent Obligations under guarantees in the
ordinary course of business of the obligations of suppliers,
customers, franchisees and licensees of Company and its Active
Subsidiaries in an aggregate amount not to exceed at any time
$500,000;
(vi) Company and its Active Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of any
Indebtedness of Company or any of its Active Subsidiaries permitted by
subsection 7.1;
(vii) Company and its Active Subsidiaries, as applicable, may
remain liable with respect to Contingent Obligations described in
Schedule 7.4 annexed hereto;
------------
(viii) Company may become and remain liable with respect to
Contingent Obligations under unsecured guarantees in the ordinary
course of the obligations of Company's Wholly-Owned Subsidiary
Guarantors under Operating Leases (other than ▇▇▇▇▇) and ▇▇▇▇▇ may
become and remain liable with respect to Contingent Obligations under
unsecured guarantees in the ordinary course of the obligations of Glit
so long as the Consolidated Rental Payments at any time during the
then current or any future period of 12 consecutive months for all
such guaranteed Operating Leases do not exceed $8,000,000; and
(ix) Company and its Active Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the
--------
maximum aggregate liability, contingent or otherwise, of Company and
its Active Subsidiaries in respect of all such Contingent Obligations
shall at no time exceed $500,000.
7.5 Restricted Junior Payments.
--------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that (i) so long as no Event of Default or
--------
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby, Company may make Restricted Junior Payments to
133
Holdings in an aggregate amount not to exceed $50,000 in any Fiscal Year, to the
extent necessary to permit Holdings to pay general administrative costs and
expenses, (ii) Contico may make dividends and distributions to Company on
account of the Contico Common Units and, so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing or shall be
caused thereby and so long as such payments are permitted under the Contico LLC
Agreement as in effect on the date hereof, Contico may make Priority Return
payments (as defined in the Contico LLC Agreement in effect on the date hereof)
on account of the Contico Preferred Units in an aggregate amount not to exceed
$1,350,000 in any Fiscal Year, (iii) Company may pay its obligations to K&C
under the Management Agreement, as in effect on the Closing Date and unamended,
in an aggregate amount not exceeding $500,000 in any Fiscal Year plus out-of-
pocket expenses, so long as (x) no Event of Default shall have occurred and be
continuing or is caused thereby or (y) an Event of Default (other than the type
referred to in subsection 8.1) shall have occurred and is continuing or is
caused thereby and there shall be at least $15,000,000 of Revolving Borrowing
Base availability after giving effect to such Restricted Junior Payment (and
Company shall have delivered an Officer's Certificate to such effect) (it being
understood that nothing in this subsection 7.5 shall prohibit the accrual of the
management fees under the Management Agreement during the period that such fees
or other amounts are prohibited from being paid pursuant to this subsection
7.5), and (iv) so long as no Event of Default or Potential Event of Default
shall have occurred and be continuing or shall be caused thereby, Company may
make Restricted Junior Payments to K&C or K&C's Affiliates to the extent
necessary to pay Company's obligations under any Kohlberg Agreement entered into
by Company after the Closing Date in accordance with subsection 7.12, as it may
be amended from time to time in accordance with subsection 7.12.
7.6 Financial Covenants.
-------------------
A. Maximum Consolidated Leverage Ratio. Company shall not permit the
Consolidated Leverage Ratio as at any date during any of the periods set forth
below to exceed the correlative ratio indicated:
Maximum
Period Consolidated Leverage Ratio
------ ---------------------------
Four FQs ending on or about December 31, 2001 4.25:1.00
Four FQs ending on or about March 31, 2002 4.25:1.00
Four FQs ending on or about June 30, 2002 4.25:1.00
Four FQs ending on or about September 30, 2002 3.75:1.00
Four FQs ending on or about December 31, 2002 3.75:1.00
Four FQs ending on or about March 31, 2003 3.75:1.00
Four FQs ending on or about June 30, 2003 3.75:1.00
Four FQs ending on or about September 30, 2003 3.00:1.00
and each four FQ period thereafter
134
B. Minimum Consolidated EBITDA. Company shall not permit Consolidated
EBITDA for any four Fiscal Quarter period ending as of the last day of any
Fiscal Quarter occurring during any of the periods set forth below to be less
than the correlative amount indicated:
Minimum
Period Consolidated EBITDA
------ -------------------
Four FQs ending on or about December 31, 2001 $26,000,000
Four FQs ending on or about March 31, 2002 $26,000,000
Four FQs ending on or about June 30, 2002 $26,000,000
Four FQs ending on or about September 30, 2002 $28,000,000
Four FQs ending on or about December 31, 2002 $28,000,000
Four FQs ending on or about March 31, 2003 $28,000,000
Four FQs ending on or about June 30, 2003 $30,000,000
Four FQs ending on or about September 30, 2003 $30,000,000
Four FQs ending on or about December 31, 2003 $32,000,000
and each four FQ period thereafter
C. Minimum Fixed Charge Coverage Ratio. Company shall not permit the
ratio of A(i) Consolidated EBITDA to (ii) Consolidated Fixed Charges, in each
case for the two-Fiscal Quarter period ending on December 31, 2001 to be less
than 1.00:1.00, (B)(i) Consolidated EBITDA to (ii) Consolidated Fixed Charges,
in each case for the three-Fiscal Quarter period ending on March 31, 2002 to be
less than 1.00:1.00, and (C)(i) Consolidated EBITDA to (ii) Consolidated Fixed
Charges, in each case for the four-Fiscal Quarter period ending on June 30, 2002
or any four-Fiscal Quarter period thereafter to be less than 1.00:1.00.
7.7 Restriction on Fundamental Changes; Asset Sales.
-----------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, so long as the Term Loan remains outstanding, all or any part of
its business, property or assets, and after the Term Loan has been repaid in
full, all or any substantial part of its business, property or assets (in each
case including its notes or receivables and stock or other ownership interests
of a Subsidiary, whether newly issued or outstanding), whether now owned or
hereafter acquired, except:
(i) any Subsidiary of Company may be merged with or into Company
or any Wholly-Owned Subsidiary Guarantor, or be liquidated, wound up
or dissolved, or all or any part of its business, property or assets
may be conveyed,
135
sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to Company or any Wholly-Owned Subsidiary
Guarantor; provided that, in the case of such a merger, Company or
--------
such Wholly-Owned Subsidiary Guarantor shall be the continuing or
surviving Person;
(ii) Company and its Subsidiaries may sell or otherwise dispose
of assets in transactions that do not constitute Asset Sales; provided
--------
that the consideration received for such assets shall be in an amount
at least equal to the fair market value thereof;
(iii) Company and its Subsidiaries may dispose of obsolete, worn
out or surplus property in the ordinary course of business;
(iv) Company and its Subsidiaries may make Asset Sales of
assets having a fair market value not in excess of $10,000,000 in any
single transaction (or a series of related transactions) or in excess
of $30,000,000 in the aggregate over the term of this Agreement;
provided that in any such Asset Sale, (x) the consideration received
--------
for such assets shall be in an amount at least equal to the greater of
(i) the fair market value thereof, and (ii)(A) in the case of Accounts
and Inventory, the aggregate value attributable to such Accounts and
Inventory in determining the Revolving Borrowing Base (but without
giving effect to any reduction due to advance rates or any reserves),
and (B) in the case of machinery and equipment and Real Property
Assets, the aggregate value attributable thereto in determining the
Term Borrowing Base (but without giving effect to any reduction due to
advance rates or any reserves), it being understood that in the case
of Asset Sales of capital stock or other equity interests (or any
options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock or other equity interests) of any
Person, the consideration received therefor shall be in an amount
equal to the greater of (i) the fair market value thereof and (ii) the
aggregate value attributable to such Person's Accounts, Inventory,
machinery and equipment and Real Property Assets in determining the
Borrowing Base (but without giving effect to any reduction due to
advance rates or any reserves), (y) the sole consideration received
shall be cash; and (z) the proceeds of such Asset Sales shall be
applied as required by subsection 2.4B(iii)(a) or subsection 2.4D
(each a "Permitted Disposition"); and provided further that in any
-------- -------
such Asset Sale in which the consideration received exceeds $20,000,
Agent shall have received an Officer's Certificate from Company to the
effect set forth in clauses (x) and (y) above and certifying that
Company and its Subsidiaries will comply with clause (z) above and
setting forth in reasonable detail the calculations relating thereto
and otherwise in form and substance satisfactory to Agent at least 5
Business Days prior to the consummation of the proposed Asset Sale;
(v) Company or a Subsidiary may sell or dispose of shares of
capital stock or other equity Securities of any of its Subsidiaries,
in order to qualify members of the Governing Body of the Subsidiary if
required by applicable law; and
136
(vi) a Subsidiary of Company that is not an Active Subsidiary
may liquidate, wind-up or dissolve itself.
7.8 Consolidated Capital Expenditures.
---------------------------------
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year (or in the case of
Fiscal Year 2001, the six-month period) indicated below, in an aggregate amount
in excess of the corresponding amount (the "Maximum Consolidated Capital
Expenditures Amount") set forth below opposite such Fiscal Year (or such six-
month period); provided that the Maximum Consolidated Capital Expenditures
--------
Amount for any Fiscal Year shall be increased by an amount equal to the excess,
if any, (but in no event more than $3,000,000) of the Maximum Consolidated
Capital Expenditures Amount for the previous Fiscal Year (or such six-month
period) over the actual amount of Consolidated Capital Expenditures for such
previous Fiscal Year (or such six-month period) ("Carryover Amount"); provided
--------
that (1) Consolidated Capital Expenditures in any Fiscal Year shall be applied
to the yearly limit set forth below before being applied to the Carryover Amount
for such Fiscal Year, and (2) any Carryover Amount which is not expended in a
Fiscal Year shall not be included in calculating the Carryover Amount for any
following Fiscal Year; and provided further that if any portion of Net Asset
-------- -------
Sale Proceeds in respect of any Asset Sale consisting of machinery or equipment
is applied to prepay the Term Loans under subsection 2.4B(iii)(a) and Company or
any of its Subsidiaries makes capital expenditures in other machinery or
equipment within 180 days of the date of such Asset Sale, then the amount of
such capital expenditures up to the amount of such prepayment of the Term Loans
shall not be included in the calculation of Consolidated Capital Expenditures
for purposes of this subsection 7.8 so long as the aggregate amount of all such
capital expenditures that are not so included in the calculation of Consolidated
Capital Expenditures shall not exceed $3,000,000 over the term of this
Agreement:
Maximum Consolidated
Period Capital Expenditures
------ --------------------
Six-Month Period ending December 31, 2001 $10,000,000
Fiscal Year ending December 31, 2002 and each $12,000,000
Fiscal Year thereafter
7.9 Restriction on Leases.
---------------------
Company shall not, and shall not permit any of its Subsidiaries to,
(i) become liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any lease,
whether an Operating Lease or a Capital Lease (other than intercompany leases
between or among Company and its Wholly-Owned Subsidiary Guarantors), or (ii)
cause or permit the liability of Company or Subsidiary under or in respect of
such lease to increase by any material amount, in each case unless, immediately
after giving effect to such incurrence of or increase in liability with respect
to such lease, the Consolidated Rental Payments at the time in effect during the
then current or any future period of 12 consecutive calendar months shall not
exceed $20,000,000.
137
7.10 Sales and Lease-Backs.
---------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiary Guarantors) or (ii) which Company or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by Company or any of its
Subsidiaries to any Person (other than Company or any of its Subsidiary
Guarantors) in connection with such lease; provided that Company and its
--------
Subsidiaries may become and remain liable as lessee, guarantor or other surety
with respect to any such lease if and to the extent that Company or any of its
Subsidiaries would be permitted to enter into, and remain liable under, such
lease under subsection 7.9.
7.11 Sale of Receivables.
-------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or factor or otherwise sell for less
than the face value thereof, any of its notes or accounts receivable.
7.12 Transactions with Shareholders and Affiliates.
---------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of Company or of any
such holder, on terms that are less favorable to Company or that Subsidiary, as
the case may be, than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
--------
shall not apply to (i) any transaction between Company and any of its Wholly-
Owned Subsidiary Guarantors or between any of its Wholly-Owned Subsidiary
Guarantors, (ii) reasonable and customary fees paid to members of the Governing
Bodies of Company and its Active Subsidiaries, (iii) any indemnification and
contribution agreement in favor of K&C, its Affiliates and each person who
becomes a director, officer, agent or employee of Holdings, Company or any of
their respective Subsidiaries, in respect of liabilities arising out of the
performance by K&C of management consulting or financial advisory services
provided to Company or any of its Subsidiaries in accordance with the Management
Agreement, as unamended, and (iv) payments of management fees to K&C and
reimbursement of expenses of K&C, each in accordance with the Management
Agreement, as unamended.
7.13 Disposal of Subsidiary Stock.
----------------------------
Except pursuant to the Collateral Documents and except for any sale
of 100% of the capital stock or other equity Securities of any of its
Subsidiaries in compliance with the provisions of subsection 7.7(iv) or 7.7(v),
Company shall not:
138
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another Wholly-Owned
Subsidiary Guarantor, or to qualify directors if required by
applicable law.
7.14 Conduct of Business.
-------------------
From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company and its Subsidiaries on the Closing Date and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.
7.15 Amendments or Waivers of Certain Agreements; Amendments of Documents
--------------------------------------------------------------------
Relating to Subordinated Indebtedness.
-------------------------------------
A. Amendments or Waivers of Certain Agreements. Neither Company nor
any of its Subsidiaries will agree to any material amendment to, or waive any of
its material rights under, or terminate or agree to terminate any Related
Agreements or any Canadian Subsidiary Documents or the ▇▇▇▇▇ Loan Agreement or
the ▇▇▇▇▇ Service Agreement or the ▇▇▇▇▇ Steam Agreement or the ▇▇▇▇▇ Guaranty
after the Closing Date, in each case in a manner that could adversely affect
Agent or Lenders without in each case obtaining the prior written consent of
Requisite Lenders to such amendment, waiver or termination.
B. Amendments of Documents Relating to Subordinated Indebtedness.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be adverse to any
Loan Party or Lenders.
7.16 Fiscal Periods.
--------------
Company shall not and shall not permit any of its Subsidiaries to (i)
change their respective Fiscal Year-end from December 31 or (ii) change their
respective Fiscal Quarter-ends from March 31, June 30, September 30 and December
31.
139
7.17 Deposit Accounts.
----------------
Except as permitted in subsection 2.10A(iii), Company shall not, and
shall not permit any of its Domestic Subsidiaries to, maintain any Deposit
Account which is not a Lock Box Account or a Concentration Account or a
disbursement account under the exclusive dominion and control of Agent. Except
as permitted in subsection 2.10A(iii), Company shall not permit ▇▇▇▇▇ or Glit to
maintain any Deposit Account which is not a Lock Box Account or which is not
subject to a Blocked Account Agreement.
7.18 Canadian Subsidiary Documents.
-----------------------------
Company shall not, and shall not permit Glit or ▇▇▇▇▇ to (i) permit
the principal amounts outstanding at any time under the Glit Subsidiary Note and
the ▇▇▇▇▇ Subsidiary Note to be repaid or prepaid without the prior written
consent of Agent (which consent shall be given by Agent (and each Lender hereby
authorizes Agent to give such consent) upon receipt of an Officer's Certificate
from Company to the effect that (a) no Event of Default has occurred and is
continuing and (b) all of the proceeds of such repayment or prepayment will be
deposited in a Concentration Account of Company and all such proceeds will be
transferred from such Concentration Account to BTCo Account on the same Business
Day and applied to repay the Revolving Loans), (ii) permit the principal amounts
outstanding at any time under the Glit Subsidiary Note and the ▇▇▇▇▇ Subsidiary
Note to be less than $50,000 and $50,000, respectively, and (iii) at any time
permit any of the Canadian Subsidiary Documents to cease to be in full force and
effect or to cease to grant to Company a valid and perfected First Priority Lien
in any of the Collateral purported to be covered thereby.
7.19 Inactive Subsidiaries.
---------------------
Company shall not at any time permit any of its Domestic Subsidiaries
which is not a Subsidiary Guarantor to own any assets with an aggregate fair
market value (without netting such fair market value against any liability of
such Subsidiary) exceeding $10,000 unless such Subsidiary shall have first
complied with the requirements of subsections 6.9 and 6.10.
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 Failure to Make Payments When Due.
---------------------------------
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee or any other amount due under this Agreement within five days after
the date due; or
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8.2 Default in Other Agreements.
---------------------------
(i) Failure of Holdings, Company or any of its Subsidiaries to
pay when due any principal of or interest on or any other amount
payable in respect of one or more items of Indebtedness (other than
Indebtedness referred to in subsection 8.1) or Contingent Obligations
in an individual principal amount of $1,000,000 or more or with an
aggregate principal amount of $2,000,000 or more, in each case beyond
the end of any grace period provided therefor; or
(ii) breach or default by Holdings, Company or any of its
Subsidiaries with respect to any other material term of (a) one or
more items of Indebtedness or Contingent Obligations in the individual
or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement, mortgage, indenture or other agreement relating to
such item(s) of Indebtedness or Contingent Obligation(s), if the
effect of such breach or default is to cause, or to permit the holder
or holders of that Indebtedness or Contingent Obligation(s) (or a
trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due
and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or
receiving of notice, lapse of time, both, or otherwise); or
8.3 Breach of Certain Covenants.
---------------------------
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement or failure of
Holdings to perform or comply with any term or condition contained in subsection
10(a) or Section 11 of the Holdings Guaranty; or
8.4 Breach of Warranty.
------------------
Any representation, warranty, certification or other statement made by
Holdings, Company or any of its Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Company or any of its Subsidiaries
in writing pursuant hereto or thereto or in connection herewith or therewith
shall be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
-----------------------------------
Holdings, Company or any of its Subsidiaries shall default in the
performance of or compliance with any term contained in this Agreement or any of
the other Loan Documents, other than any such term referred to in any other
subsection of this Section 8, and such default shall not have been remedied or
waived within 30 days after the earlier of (i) an Officer of Holdings, Company
or such Subsidiary becoming aware of such default or (ii) receipt by Holdings,
Company or such Subsidiary of notice from Agent or any Lender of such default;
or
141
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Holdings, Company or any of
its Active Subsidiaries in an involuntary case under the Bankruptcy
Code or under any other Insolvency Laws which decree or order is not
stayed; or any other similar relief shall be granted under any
applicable Insolvency Laws; or
(ii) an involuntary case shall be commenced against Holdings,
Company or any of its Active Subsidiaries under the Bankruptcy Code or
under any other Insolvency Laws; or a decree or order of a court
having jurisdiction in the premises for the appointment of an
administrator, administrative receiver, a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over Holdings, Company or any of its Active Subsidiaries, or
over all or a substantial part of its property, shall have been
entered; or there shall have occurred the involuntary appointment of
an administrator, administrative receiver, interim receiver, a trustee
or other custodian of Holdings, Company or any of its Active
Subsidiaries for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been
issued against any substantial part of the property of Holdings,
Company or any of its Active Subsidiaries, and any such event
described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
--------------------------------------------------
(i) Holdings, Company or any of its Active Subsidiaries shall
have an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or under any other Insolvency
Laws, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the
appointment of or taking possession by an administrator,
administrative receiver, a receiver, trustee or other custodian for
all or a substantial part of its property; or Holdings, Company or any
of its Active Subsidiaries shall make any assignment for the benefit
of creditors; or
(ii) Holdings, Company or any of its Active Subsidiaries shall be
unable, or shall fail generally, or shall admit in writing its
inability, to pay its debts as such debts become due; or the Governing
Body of Holdings, Company or any of its Active Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize
any action to approve any of the actions referred to in clause (i)
above or this clause (ii); or
8.8 Judgments and Attachments.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $1,000,000 or (ii)
in the aggregate at any time an amount in excess of $2,000,000 (in either case
not adequately covered by insurance as to
142
which a solvent and unaffiliated insurance company has acknowledged coverage)
shall be entered or filed against Holdings, Company or any of its Subsidiaries
or any of their respective assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of 60 days (or in any event later than five
days prior to the date of any proposed sale thereunder); or
8.9 Dissolution.
-----------
Any order, judgment or decree shall be entered against Holdings,
Company or any of its Active Subsidiaries decreeing the dissolution or split up
of Holdings, Company or that Active Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or
8.10 Employee Benefit Plans.
----------------------
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company, any of its Subsidiaries or any of their respective ERISA Affiliates
in excess of $1,000,000 during the term of this Agreement; or there shall exist
an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $1,500,000.
8.11 Change in Control.
-----------------
A Change in Control shall have occurred; or
8.12 Invalidity of Any Guaranty.
--------------------------
Any Guaranty for any reason, other than the satisfaction in full of
all Obligations, ceases to be in full force and effect (other than in accordance
with its terms) or is declared to be null and void, or any Loan Party contests
the validity or enforceability of any Loan Document in writing or denies in
writing that it has any further liability, including without limitation with
respect to future advances by Lenders, under any Loan Document to which it is a
party, or gives notice to such effect; or
8.13 Failure of Security.
-------------------
Any Collateral Document shall, at any time, cease to be in full force
and effect (other than by reason of a release of Collateral in accordance with
the terms thereof) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by any Loan Party, or Agent shall not
have or cease to have a valid and perfected First Priority Lien in any portion
of the Collateral purported to be covered thereby exceeding $1,000,000 in the
aggregate; or
8.14 Conduct of Business By Holdings.
-------------------------------
Holdings shall (i) engage in any business other than entering into and
performing its obligations under and in accordance with the Loan Documents and
Related Agreements to
143
which it is a party and making additional equity contributions to Company or
purchasing publicly held Common Shares or (ii) own any assets other than (a) the
capital stock of Company and (b) Cash and Cash Equivalents in an amount not to
exceed $50,000 at any one time for the purpose of paying general operating
expenses of Holdings or amounts in excess thereof to be used for additional
equity contributions to Company to the extent such amounts are immediately
contributed to Company as equity or promptly used to purchase publicly held
Common Shares; or
8.15 Failure to Consummate Recapitalization and Other Transactions.
-------------------------------------------------------------
The Recapitalization, or any of the other transactions to be
consummated on or prior to the Closing Date pursuant to the Loan Documents or
the Related Agreements shall not be consummated in accordance with this
Agreement and the applicable Related Agreements on or prior to the Closing Date;
or the Recapitalization or any of the other such transactions shall be unwound,
reversed or otherwise rescinded in whole or in material part for any reason; or
8.16 Contico Purchase Agreement.
--------------------------
Newcastle fails to make indemnity payments to or on behalf of Company
pursuant to the terms of the Contico Purchase Agreement, in an aggregate amount
of more than $1,000,000 when due and such failure continues after the applicable
grace or notice period, if any, specified in the Contico Purchase Agreement; or
8.17 ▇▇▇▇▇.
-----
(i) The occurrence and continuance of an "Event of Default" as defined
in the ▇▇▇▇▇ Service Agreement by ▇▇▇▇▇ or Company that would entitle (upon the
granting of any necessary consents) the Resource Recovery Development Authority
for the City of Savannah or the Trustee (as defined in the ▇▇▇▇▇ Service
Agreement) to terminate the ▇▇▇▇▇ Service Agreement, (ii) the payment by Company
of an aggregate amount exceeding $1,000,000 under the ▇▇▇▇▇ Guaranty (whether in
one payment or in multiple payments) or the occurrence of any event (including a
call on the ▇▇▇▇▇ Guaranty) which would obligate Company to make a payment or
payments in an aggregate amount exceeding $1,000,000 under the ▇▇▇▇▇ Guaranty or
(iii) the termination of the ▇▇▇▇▇ Steam Agreement:
THEN (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued
interest on the Loans, (b) an amount equal to the maximum amount that may at any
time be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of each Lender to make any Loan,
the obligation of Agent to issue any Letter of Credit and the right of any
Lender to issue any Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Agent shall, upon the written request or with the written consent of
Requisite
144
Lenders, by written notice to Company, declare all or any portion of the amounts
described in clauses (a) through (c) above to be, and the same shall forthwith
become, immediately due and payable, and the obligation of each Lender to make
any Loan, the obligation of Agent to issue any Letter of Credit and the right of
any Lender to issue any Letter of Credit hereunder shall thereupon terminate;
provided that the foregoing shall not affect in any way the obligations of
--------
Lenders under subsection 3.3C(i).
Any amounts described in clause (b) above, when received by Agent,
shall be held by Agent pursuant to the terms of the Security Agreement and shall
be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than non-
payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Agent or Lenders from
exercising any of the rights or remedies available to them under any of the Loan
Documents, even if the conditions set forth in this paragraph are met.
Section 9. AGENT
9.1 Appointment.
-----------
A. Appointment of Agent. BTCo is hereby appointed Agent
hereunder and under the other Loan Documents. Each Lender hereby authorizes
Agent to act as its agent in accordance with the terms of this Agreement and the
other Loan Documents. Agent agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as applicable. The provisions of
this Section 9 are solely for the benefit of Agent and Lenders and none of
Holdings, Company or any of its Subsidiaries shall have rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, Agent (other than as provided in subsection 2.1E)
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for Holdings, Company or any of its Subsidiaries.
B. Appointment of Supplemental Collateral Agents. It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact
145
business as agent or trustee in such jurisdiction. It is recognized that in case
of litigation under this Agreement or any of the other Loan Documents, and in
particular in case of the enforcement of any of the Loan Documents, or in case
Agent deems that by reason of any present or future law of any jurisdiction it
may not exercise any of the rights, powers or remedies granted herein or in any
of the other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Agent appoint an
additional individual or institution as a separate trustee, co-trustee,
collateral agent or collateral co-agent (any such additional individual or
institution being referred to herein individually as a "Supplemental Collateral
Agent" and collectively as "Supplemental Collateral Agents").
In the event that Agent appoints a Supplemental Collateral Agent with
respect to any Collateral, (i) each and every right, power, privilege or duty
expressed or intended by this Agreement or any of the other Loan Documents to be
exercised by or vested in or conveyed to Agent with respect to such Collateral
shall be exercisable by and vest in such Supplemental Collateral Agent to the
extent, and only to the extent, necessary to enable such Supplemental Collateral
Agent to exercise such rights, powers and privileges with respect to such
Collateral and to perform such duties with respect to such Collateral, and every
covenant and obligation contained in the Loan Documents and necessary to the
exercise or performance thereof by such Supplemental Collateral Agent shall run
to and be enforceable by either Agent or such Supplemental Collateral Agent, and
(ii) the provisions of this Section 9 and of subsections 10.2 and 10.3 that
refer to Agent shall inure to the benefit of such Supplemental Collateral Agent
and all references therein to Agent shall be deemed to be references to Agent
and/or such Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Holdings, Company or any of its
Subsidiaries be required by any Supplemental Collateral Agent so appointed by
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause Holdings or
Company's Subsidiaries to, execute, acknowledge and deliver any and all such
instruments promptly upon request by Agent. In case any Supplemental Collateral
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Agent until the appointment of a new Supplemental Collateral Agent.
9.2 Powers and Duties; General Immunity.
-----------------------------------
▇. ▇▇▇▇▇▇; Duties Specified. Each Lender irrevocably authorizes
Agent take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees. Agent shall not have, by reason of this Agreement or
any of the other Loan Documents, a fiduciary relationship in respect of any
Lender or Company; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose
146
upon Agent any obligations in respect of this Agreement or any of the other Loan
Documents except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Agent to Lenders or by or on behalf of
Company to Agent or any Lender in connection with the Loan Documents and the
transactions contemplated thereby or for the financial condition or business
affairs of Company or any other Person liable for the payment of any
Obligations, nor shall Agent be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or as to the existence
or possible existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary notwithstanding, Agent
shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts
thereof.
C. Exculpatory Provisions. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted by Agent under or in connection with any of the Loan
Documents except to the extent caused by Agent's gross negligence or willful
misconduct. Agent shall be entitled to refrain from any act or the taking of any
action (including the failure to take an action) in connection with this
Agreement or any of the other Loan Documents or from the exercise of any power,
discretion or authority vested in it hereunder or thereunder unless and until
Agent shall have received instructions in respect thereof from Requisite Lenders
(or such other Lenders as may be required to give such instructions under
subsection 10.6) and, upon receipt of such instructions from Requisite Lenders
(or such other Lenders, as the case may be), Agent shall be entitled to act or
(where so instructed) refrain from acting, or to exercise such power, discretion
or authority, in accordance with such instructions. Without prejudice to the
generality of the foregoing, (i) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons, and shall be entitled to rely and shall be protected
in relying on opinions and judgments of attorneys (who may be attorneys for
Holdings, Company and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other Loan
Documents in accordance with the instructions of Requisite Lenders (or such
other Lenders as may be required to give such instructions under subsection
10.6).
D. Agent Entitled to Act as Lender. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and the Letters of
Credit, Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless
147
the context clearly otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may accept deposits from, lend money to,
acquire equity interests in and generally engage in any kind of banking,
investment banking, trust, financial advisory or other business with Company or
any of its Affiliates as if it were not performing the duties specified herein,
and may accept fees and other consideration from Company for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
9.3 Independent Investigation by Lenders; No Responsibility For Appraisal
---------------------------------------------------------------------
of Creditworthiness.
-------------------
Each Lender agrees that it has made its own independent investigation
of the financial condition and affairs of Holdings, Company and its Subsidiaries
in connection with the making of the Loans and the issuance of Letters of Credit
hereunder and that it has made and shall continue to make its own appraisal of
the creditworthiness of Holdings, Company and its Subsidiaries. Agent shall not
have any duty or responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans or at any time
or times thereafter, and Agent shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Lenders.
9.4 Right to Indemnity.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Agent and the officers, directors, employees, agents, attorneys,
professional advisors and affiliates of Agent to the extent that any such Person
shall not have been reimbursed by Company, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses other than with respect to taxes (including counsel fees and
disbursements and fees and disbursements of any financial advisor engaged by
Agent) or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against Agent or and other such Persons in
exercising the powers, rights and remedies of Agent or performing duties of
Agent hereunder or under the other Loan Documents or otherwise in its capacity
as Agent in any way relating to or arising out of this Agreement or the other
Loan Documents; provided that no Lender shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent or any other such
Person for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against until such additional indemnity is furnished.
9.5 Successor Agent.
---------------
Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company. Upon any such notice of resignation, Requisite
Lenders shall have the right, upon five Business Days' notice to Company, to
appoint a successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of
148
the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 9 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
9.6 Collateral Documents and Guaranties.
-----------------------------------
Each Lender hereby further authorizes Agent, on behalf of and for the
benefit of Lenders, to enter into each Collateral Document as secured party and
to be the agent for and representative of Lenders under each Guaranty, and each
Lender agrees to be bound by the terms of each Collateral Document and Guaranty;
provided that Agent shall not (i) enter into or consent to any material
--------
amendment, modification, termination or waiver of any provision contained in any
Collateral Document or the Guaranty or (ii) release any Collateral (except as
otherwise expressly permitted or required pursuant to the terms of this
Agreement or the applicable Collateral Document), in each case without the prior
consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all
Lenders); provided further, however, that, without further written consent or
-------- ------- -------
authorization from Lenders, Agent may execute any documents or instruments
necessary to (a) release any Lien encumbering any item of Collateral that is the
subject of a sale or other disposition of assets permitted by this Agreement or
to which Requisite Lenders have otherwise consented, (b) release any Subsidiary
Guarantor from the Subsidiary Guaranty if all of the capital stock or other
ownership interests of such Subsidiary Guarantor is sold to any Person (other
than an Affiliate of Company) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented or (c)
subordinate the Liens of Agent, on behalf of Lenders, to any Liens permitted by
subsection 7.2. Anything contained in any of the Loan Documents to the contrary
notwithstanding, Company, Agent and each Lender hereby agree that (X) no Lender
shall have any right individually to realize upon any of the Collateral under
any Collateral Document or to enforce any Guaranty, it being understood and
agreed that all powers, rights and remedies under the Collateral Documents and
the Guaranties may be exercised solely by Agent for the benefit of Lenders in
accordance with the terms thereof, and (Y) in the event of a foreclosure by
Agent on any of the Collateral pursuant to a public or private sale, Agent or
any Lender may be the purchaser of any or all of such Collateral at any such
sale and Agent, as agent for and representative of Lenders (but not any Lender
or Lenders in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing) shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Obligations as a credit on account of the purchase price for any collateral
payable by Agent at such sale.
9.7 Agent May File Proofs of Claim.
------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to Holdings, Company or any of the Subsidiaries of
Holdings or Company, Agent (irrespective of whether the principal of any Loan
shall then be due and payable as herein expressed or by declaration or otherwise
and irrespective of whether Agent shall have made any demand on Company) shall
be entitled and empowered, by intervention in such proceeding or otherwise
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(i) to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Loans and any other
Obligations that are owing and unpaid and to file such other papers or
documents as may be necessary or advisable in order to have the claims
of Lenders and Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of Lenders and
Agent and their agents and counsel and all other amounts due Lenders
and Agent under subsections 2.3 and 10.2) allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to Agent and, in the event that Agent shall
consent to the making of such payments directly to Lenders, to pay to Agent any
amount due for the reasonable compensation, expenses, disbursements and advances
of Agent and its agents and counsel, and any other amounts due Agent under
subsections 2.3 and 10.2 hereof.
Nothing herein contained shall be deemed to authorize Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
or the rights of any Lenders or to authorize Agent to vote in respect of the
claim of any Lender in any such proceeding.
Section 10. MISCELLANEOUS
10.1 Successors and Assigns; Assignments and Participations in Loans and
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Letters of Credit.
-----------------
A. General. This Agreement shall be binding upon the parties hereto
and their respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of Lenders (it being
understood that Lenders' rights of assignment are subject to the further
provisions of this subsection 10.1). Neither Company's rights or obligations
hereunder nor any interest therein may be assigned or delegated by Company
without the prior written consent of all Lenders (and any attempted assignment
or transfer by Company without such consent shall be null and void). No sale,
assignment or transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Revolving Loan Commitment
and the Revolving Loans of the Revolving Lender effecting such sale, assignment,
transfer or participation. Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby and, to the extent
expressly contemplated hereby, the Affiliates of each of Agent and Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
B. Assignments.
(i) Amounts and Terms of Assignments. Any Lender may assign to
--------------------------------
one or more Eligible Assignees all or any portion of its rights and
obligations
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under this Agreement; provided that (a), except (1) in the case of an
--------
assignment of the entire remaining amount of the assigning Lender's rights
and obligations under this Agreement or (2) in the case of an assignment to
a Lender or an Affiliate of a Lender or an Affiliated Fund of a Lender, the
aggregate amount of the Revolving Loan Exposure or Term Loan Exposure, as
the case may be, of the assigning Lender and the assignee subject to each
such assignment shall not be less than $3,500,000 in the case of any
assignment of a Revolving Loan and/or a Term Loan, unless Agent otherwise
consents, such consent not to be unreasonably withheld or delayed), (b)
each partial assignment shall be made as an assignment of a proportionate
part of all the assigning Lender's rights and obligations under this
Agreement with respect to the Loan or the Commitment assigned, (c) the
parties to each assignment shall execute and deliver to Agent an Assignment
Agreement, together with a processing and recordation fee of $3,500 (unless
the assignee is an Affiliate or an Affiliated Fund of the assignor, in
which case no fee shall be required), and the Eligible Assignee, if it
shall not be a Lender, shall deliver to Agent information reasonably
requested by Agent, including such forms, certificates or other evidence,
if any, with respect to United States federal income tax withholding
matters as the assignee under such Assignment Agreement may be required to
deliver to Agent pursuant to subsection 2.7B(iii), and (d) except in the
case of an assignment to another Lender, an Affiliate of a Lender or an
Affiliated Fund of a Lender, Agent shall have consented thereto. Upon such
execution, delivery and consent, from and after the effective date
specified in such Assignment Agreement, (y) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights which survive the termination
of this Agreement under subsection 10.9B) and be released from its
obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto; provided that, anything contained in any of the Loan
--------
Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender with
respect to such Letters of Credit until the cancellation or expiration of
such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its Notes to
Agent for cancellation, and thereupon new Notes shall be issued to the
assignee and/or to the assigning Lender, substantially in the form of
Exhibit IV or Exhibit V annexed hereto, as the case may be, with
---------- ---------
appropriate insertions, to reflect the new Commitments and/or outstanding
Revolving Loans and/or outstanding Term Loans, as the case may be, of the
assignee and/or the assigning Lender. Other than as provided in subsection
10.5, any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not
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comply with this subsection 10.1B shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection 10.1C.
(ii) Acceptance by Agent; Recordation in Register. Upon its
--------------------------------------------
receipt of an Assignment Agreement executed by an assigning Lender and an
assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any
forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Agent pursuant to subsection 2.7B(iii), Agent shall, if Agent
has consented to the assignment evidenced thereby (to the extent such
consent is required pursuant to subsection 10.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of Agent to such
assignment), (b) record the information contained therein in the Register,
and (c) give prompt notice thereof to Company. Agent shall maintain a copy
of each Assignment Agreement delivered to and accepted by it as provided in
this subsection 10.1B(ii).
C. Participations. Any Lender may, without the consent of, or notice to,
Company or Agent, sell participations to one or more banks or other entities in
all or a portion of such Lender's rights and/or obligations under this
Agreement; provided that (i) such Lender's obligations under this Agreement
--------
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) Company,
Agent and Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(iv) the aggregate amount of the Revolving Loan Exposure and Term Loan Exposure
with respect to which such participation relates shall not be less than
$2,500,000, unless Agent otherwise consents. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
--------
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
directly affecting (i) the extension of the scheduled final maturity date of any
Loan allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan allocated to such participation.
Subject to the further provisions of this subsection 10.1C, Company agrees that
each Participant shall be entitled to the benefits of subsections 2.6D and 2.7
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection 10.1B. To the extent permitted by law, each
Participant also shall be entitled to the benefits of subsection 10.4 as though
it were a Lender, provided such Participant agrees to be subject to subsection
--------
10.5 as though it were a Lender. A Participant shall not be entitled to receive
any greater payment under subsections 2.6D and 2.7 than the applicable Lender
would have been entitled to receive with respect to the participation sold to
such Participant unless the sale of the participation to such Participant is
made with Company's prior informed written consent. A Participant that would be
a Non-US Lender if it were a Lender shall not be entitled to the benefits of
subsection 2.7 unless Company is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of Company, to comply
and actually complies with subsections 2.7B(iii), 2.8A and
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2.8B as though it were a Lender; provided that such Participant shall in no
--------
event be entitled to greater benefits under subsection 2.7 than it would be
entitled to if it were a Lender hereunder.
D. Pledges and Assignments. Any Lender may at any time pledge or
assign a security interest in all or any portion of its Loans, and the other
Obligations owed to such Lender, to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to any Federal
Reserve Bank; provided that (i) no Lender shall be relieved of any of its
--------
obligations hereunder as a result of any such assignment or pledge and (ii) in
no event shall any assignee or pledgee be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take any action
hereunder.
E. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. Agreements of Lenders. Each Lender listed on the signature pages
hereof hereby agrees (i) that it is an Eligible Assignee described in clause (A)
of the definition thereof; (ii) that it has experience and expertise in the
making of loans such as the Loans; and (iii) that it will make its Loans for its
own account in the ordinary course of its business and without a view to
distribution of such Loans within the meaning of the Securities Act or the
Exchange Act or other federal securities laws (it being understood that, subject
to the provisions of this subsection 10.1, the disposition of such Loans or any
interests therein shall at all times remain within its exclusive control). Each
Lender that becomes a party hereto pursuant to an Assignment Agreement shall be
deemed to agree that the agreements of such Lender contained in Section 2(c) of
such Assignment Agreement are incorporated herein by this reference.
10.2 Expenses.
--------
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of negotiation, preparation and execution of the Loan
Documents and any consents, amendments, waivers or other modifications thereto
(which shall not include the fees of counsel to Lenders (other than counsel to
Agent and BTCo) other than as specified in clause (viii) below); (ii) all the
costs of furnishing all opinions by counsel for Company (including any opinions
requested by Agent or Lenders as to any legal matters arising hereunder) and of
Company's performance of and compliance with all agreements and conditions on
its part to be performed or complied with under this Agreement and the other
Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable fees,
expenses and disbursements of counsel to Agent (including allocated costs of
internal counsel) in connection with the negotiation, preparation, execution and
administration of the Loan Documents and any consents, amendments, waivers or
other modifications thereto and any other documents or matters requested by
Company; (iv) all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Agent on behalf of Lenders pursuant to any Loan
Document, including filing, recording and registration fees, expenses and taxes,
stamp or documentary taxes, search fees, costs of examining Collateral, opening
bank accounts and lockboxes, depositing checks, receiving and transferring funds
(including charges for checks for which there are insufficient funds), costs of
title insurance premiums, real estate survey costs,
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and fees and taxes in connection with the filing of financing statements, costs
of preparing and recording Loan Documents, other fees, expenses and
disbursements of counsel to Agent and of other counsel providing any opinions
that Agent or Requisite Lenders may request in respect of the Loan Documents or
the Liens created pursuant thereto, and fees and expenses of legal counsel to
Agent; (v) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any auditors, accountants or
appraisers and any environmental or other consultants, advisors and agents
employed or retained by Agent or its counsel) of obtaining and reviewing any
appraisals provided for under this Agreement and any environmental audits or
reports provided for under this Agreement; (vi) the costs incurred by Agent in
connection with the custody or preservation of any of the Collateral; (vii) all
other actual and reasonable costs and expenses incurred by Agent in connection
with the syndication of the Commitments and the negotiation, preparation and
execution of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (viii) all
costs and expenses, including reasonable attorneys' fees (including allocated
costs of internal counsel) and costs of settlement, incurred by Agent and
Lenders in enforcing any Obligations of or in collecting any payments due from
any Loan Party hereunder or under the other Loan Documents (including in
connection with the sale of, collection from, or other realization upon any of
the Collateral or the enforcement of the Guaranties) or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.
10.3 Indemnity.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agent and Lenders, and the officers, directors,
employees, agents and affiliates of Agent and Lenders (collectively called the
"Indemnitees"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Company shall not have any obligation to any
--------
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "Indemnified Liabilities" means, collectively, any
and all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
154
arising out of (i) this Agreement or the other Loan Documents or any Related
Agreement or the transactions contemplated hereby or thereby (including Lenders'
agreement to make the Loans hereunder or the use or intended use of the proceeds
thereof or the issuance of Letters of Credit hereunder or the use or intended
use of any thereof, or any enforcement of any of the Loan Documents (including
any sale of, collection from, or other realization upon any of the Collateral or
the enforcement of the Guaranties)), (ii) the statements contained in the
commitment letter delivered by any Lender to Company with respect thereto, or
(iii) any Environmental Claim or any Hazardous Materials Activity relating to or
arising from, directly or indirectly, any past or present activity, operation,
land ownership, or practice of Holdings, Company or any of its Subsidiaries;
provided that taxes shall not be "Indemnified Liabilities."
--------
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 Set-Off; Security Interest in Deposit Accounts.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default and consultation with Agent each Lender is hereby authorized by
Company at any time or from time to time, without notice to Company or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender or any Affiliate of such Lender to or for the credit or the
account of Company and each other Loan Party against and on account of the
obligations and liabilities of Company or any other Loan Party to that Lender
(or any Affiliate of such Lender) or to any other Lender (or any Affiliate of
any other Lender) under this Agreement, the Letters of Credit and participations
therein and the other Loan Documents, including all claims of any nature or
description arising out of or connected with this Agreement, the Letters of
Credit and participations therein or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have become due and
payable pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. Company hereby further grants to
Agent and each Lender a security interest in all deposits and accounts
maintained with Agent or such Lender as security for the Obligations.
10.5 Ratable Sharing.
---------------
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
155
collateral under the Bankruptcy Code or under any other Insolvency Laws, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to that Lender hereunder or under the other Loan
Documents (collectively, the "Aggregate Amounts Due" to such Lender) that is
greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Agent and each other Lender of
the receipt of such payment and (ii) apply a portion of such payment to purchase
assignments (which it shall be deemed to have purchased from each seller of an
assignment simultaneously upon the receipt by such seller of its portion of such
payment) of the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion
to the Aggregate Amounts Due to them; provided that if all or part of such
--------
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such assignments shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Company expressly consents to
the foregoing arrangement and agrees that any purchaser of an assignment so
purchased may exercise any and all rights of a Lender as to such assignment as
fully as if that Lender had complied with the provisions of subsection 10.1B
with respect to such assignment. In order to further evidence such assignment
(and without prejudice to the effectiveness of the assignment provisions set
forth above), each purchasing Lender and each selling Lender agree to enter into
an Assignment Agreement at the request of a selling Lender or a purchasing
Lender, as the case may be, in form and substance reasonably satisfactory to
each such Lender.
10.6 Amendments and Waivers.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that no such amendment, modification, termination,
--------
waiver or consent shall, without the consent of (a) each Lender with Obligations
directly affected (whose consent shall be required for any such amendment,
modification, termination or waiver in addition to that of Requisite Lenders)
(1) reduce the principal amount of any Loan, (2) increase the maximum aggregate
amount of Letters of Credit, (3) postpone the scheduled final maturity date (but
not the date of any scheduled installment of principal) of any Loan, (4)
postpone the date or reduce the amount of any scheduled reduction of the
Revolving Loan Commitments, (5) postpone the date on which any interest or any
fees are payable, (6) decrease the interest rate borne by any Loan (other than
any waiver of any increase in the interest rate applicable to any of the Loans
pursuant to subsection 2.2E) or the amount of any fees payable hereunder, (7)
reduce the amount or postpone the due date of any amount payable in respect of
any Letter of Credit, (8) extend the expiration date of any Letter of Credit
beyond the Revolving Loan Commitment Termination Date or (9) change in any
manner the obligations of Revolving Lenders relating to the purchase of
participations in Letters of Credit; (b) each Lender, (1) change in any manner
the definition of "Requisite Lenders" (except for any changes resulting solely
from an increase in Commitments approved by Requisite Lenders), (2) change in
any manner any provision of this Agreement that, by its terms, expressly
requires the approval or concurrence of all Lenders, (3) increase the maximum
duration of Interest Periods permitted hereunder, (4) release any Lien granted
in favor
156
of Agent with respect to all or substantially all of the Collateral or release
Holdings from its obligations under the Holdings Guaranty or release any
Subsidiary Guarantor from its obligations under the Subsidiary Guaranty, in each
case other than in accordance with the terms of the Loan Documents, (5) increase
the amount of any of the Commitments; (6) change in any manner or waive the
provisions contained in subsection 8.1 or this subsection 10.6; (7) change in
any manner the provisions contained in the second paragraph of subsection
2.1C(ii); or (8) increase the advance rate with respect to the Revolving Loans
(except for the restoration by Agent of an advance rate in whole or in part to
its original level after the prior reduction thereof by Agent). In addition, (i)
any amendment, modification, termination or waiver of any of the provisions
contained in Section 4 shall be effective only if evidenced by a writing signed
by or on behalf of Agent and Requisite Lenders, (ii) no amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the Lender which is the holder of that Note, (iii) no
amendment, modification, termination or waiver of any provision of Section 3
shall be effective without the written concurrence of Agent and, with respect to
the purchase of participations in Letters of Credit, without the written
concurrence of each Issuing Lender that has issued an outstanding Letter of
Credit or has not been reimbursed for a payment under a Letter of Credit, and
(iv) no amendment, modification, termination or waiver of any provision of
Section 9 or of any other provision of this Agreement which, by its terms,
expressly requires the approval or concurrence of Agent shall be effective
without the written concurrence of Agent. Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Company in any case
shall entitle Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Company, on
Company.
10.7 Independence of Covenants.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Notices; Effectiveness of Signatures.
------------------------------------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telefacsimile in complete and legible
form, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices to Agent shall not
--------
be effective until received. For the purposes hereof, the address of each party
hereto shall be as set forth under such party's name on the signature pages
hereof or (i) as to Company and Agent, such other address as shall be designated
by such Person in a written notice delivered to the other parties
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hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent. Electronic mail
may be used to distribute routine communications, such as financial statements
and other information; provided, however, that no signature with respect to any
-------- -------
notice, request, agreement, waiver, amendment or other document or any notice
that is intended to have binding effect may be sent by electronic mail.
Loan Documents and notices under the Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable law, have the same force and effect
as an original copy with manual signatures and shall be binding on all Loan
Parties, Agent and Lenders. Agent may also require that any such documents and
signature be confirmed by a manually-signed copy thereof; provided, however,
-------- -------
that the failure to request or deliver any such manually-signed copy shall not
affect the effectiveness of any facsimile document or signature.
10.9 Survival of Representations, Warranties and Agreements.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 10.2, 10.3, 10.4, 10.17 and 10.18 and the agreements of Lenders set forth
in subsections 9.2C, 9.4, 10.5 and 10.18 shall survive the payment of the Loans,
the cancellation or expiration of the Letters of Credit and the reimbursement of
any amounts drawn thereunder, and the termination of this Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of an Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
-------------------------------
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that Company makes a payment or
payments to Agent or Lenders (or to Agent for the benefit of Lenders), or Agent
or Lenders enforce any security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights
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and remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights.
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The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders, or
Lenders and Company, as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14 Headings.
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Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 Applicable Law.
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THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.
10.16 Construction of Agreement; Nature of Relationship.
-------------------------------------------------
Each of the parties hereto acknowledges that (i) it has been
represented by counsel in the negotiation and documentation of the terms of this
Agreement, (ii) it has had full and fair opportunity to review and revise the
terms of this Agreement, (iii) this Agreement has been drafted jointly by all of
the parties hereto, and (iv) neither Agent nor any Lender or other Agent has any
fiduciary relationship with or duty to Company arising out of or in connection
with this Agreement or any of the other Loan Documents, and the relationship
between Agent and Lenders, on one hand, and Company, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor.
Accordingly, each of the parties hereto acknowledges and
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agrees that the terms of this Agreement shall not be construed against or in
favor of another party.
10.17 Consent to Jurisdiction and Service of Process.
---------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN
ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
10.18 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any
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court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims and all other common law and
statutory claims. Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on this waiver in entering into this Agreement, and that each will continue to
rely on this waiver in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN
WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the court.
10.19 Confidentiality.
---------------
Each Lender shall hold all financial information delivered by Company
pursuant to subsection 6.1 and all non-public information obtained pursuant to
the requirements of this Agreement that has been identified in writing as
confidential by Company in accordance with such Lender's customary procedures
for handling confidential information of this nature and in accordance with safe
and sound banking practices, it being understood and agreed by Company that in
any event a Lender may make disclosures (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such information and
instructed to keep such information confidential), (b) to the extent requested
by any Government Authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, as long as such Lender
provides Company prompt notice of such subpoena or similar legal process so that
Company may consider seeking a protective order or other appropriate remedy, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this subsection 10.19, to (i) any
Eligible Assignee of or participant in, or any prospective Eligible Assignee of
or Participant in, any of its rights or obligations under this Agreement or (ii)
any direct or indirect contractual counterparty or prospective counterparty (or
such contractual counterparty's or prospective counterparty's professional
advisor) to any credit derivative transaction relating to obligations of
Company, (g) with the consent of Company, (h) to the extent such information (i)
becomes publicly available other than as a result of a breach of this subsection
10.19 or (ii) becomes available to Agent or any Lender on a non-confidential
basis from a source other than Company or (i) to the National Association of
Insurance Commissioners or any other similar organization or any nationally
recognized rating agency that requires access to information about a Lender's or
its Affiliates' investment portfolio in connection with ratings issued with
respect to such Lender or its Affiliates and that no written or oral
communications from counsel to Agent and no information that is or is designated
as privileged or as attorney work product may be disclosed to any Person unless
such Person is a Lender or a participant
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hereunder; provided that, unless specifically prohibited by applicable law or
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court order, each Lender shall notify Company of any request by any Government
Authority or representative thereof (other than any such request in connection
with any examination of the financial condition of such Lender by such
Government Authority) for disclosure of any such non-public information prior to
disclosure of such information; and provided, further that in no event shall any
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Lender be obligated or required to return any materials furnished by Company or
any of its Subsidiaries.
10.20 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.
10.21 Judgment.
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A. If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder or under any Loan Document in any
currency (the "Original Currency") into another currency (the "Other Currency")
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate or exchange used shall be that at which, in accordance with normal
banking procedures, Agent could purchase the Original Currency with the Other
Currency at London, England or Toronto, Canada, as applicable, on the second
Business Day preceding that on which final judgment is given.
B. The obligation of a Loan Party in respect of any sum due in the
Original Currency from it to any Lender or Agent hereunder shall,
notwithstanding any judgment in any Other Currency, be discharged only to the
extent that on the Business Day following receipt by such Lender or Agent (as
the case may be) of any sum adjudged to be so due in such Other Currency such
Lender or Agent (as the case may be) may, in accordance with normal banking
procedures, purchase Original Currency with such Other Currency; if the amount
of the Original Currency so purchased is less than the sum originally due to
such Lender or Agent (as the case may be) in the Original Currency, such Loan
Party agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify such Lender or Agent (as the case may be) against such loss, and if
the amount of the Original Currency so purchased exceeds the sum originally due
to any Lender or Agent (as the case may be) in the Original Currency, such
Lender or Agent (as the case may be) agrees to remit to such Loan Party such
excess.
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