Exhibit 4.36
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CREDIT AGREEMENT
BY AND AMONG
BAIRNCO CORPORATION
AS PARENT
CERTAIN OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
AS BORROWERS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
▇▇▇▇▇ FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF JULY 17, 2007
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "AGREEMENT"), is entered into as of July
17, 2007, by and among the lenders identified on the signature pages hereof
(such lenders, together with their respective successors and permitted assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "LENDERS"), ▇▇▇▇▇ FARGO FOOTHILL, INC., a California corporation, as the
arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "AGENT"), BAIRNCO CORPORATION,
a Delaware corporation ("PARENT"), and each of Parent's Subsidiaries identified
on the signature pages hereof as a Borrower (such Subsidiaries are referred to
hereinafter each individually as a "BORROWER", and individually and
collectively, jointly and severally, as the "BORROWERS").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Capitalized terms used in this Agreement shall have the
meanings specified therefor on SCHEDULE 1.1.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis, unless the context clearly requires
otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; PROVIDED, HOWEVER, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 of the Code shall
govern.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms "includes"
and "including" are not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). References to statutes or
regulations are to be construed as including all statutory and regulatory
provisions consolidating, amending, supplementing, interpreting, or replacing
the statute or regulation referred to, and, to the extent the context so
requires, any equivalent, similar or comparable statute or regulation in any
applicable jurisdiction. Any reference herein or in any other Loan Document to
the satisfaction or repayment in full of the Obligations shall mean the
repayment in full in cash (or, in the case of Letters of Credit or Bank
Products, the cash collateralization or support by a standby letter of credit in
accordance with the terms hereof) of all Obligations other than unasserted
contingent indemnification Obligations and other than any Bank Product
Obligations that, at such time, are allowed by the applicable Bank Product
Provider to remain outstanding and that are not required by the provisions of
this Agreement to be repaid or cash collateralized. Any reference herein to any
Person shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record and any Record transmitted shall be
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treated and have the same effect as if such Record was furnished in writing. An
Event of Default, if one occurs, shall "exist", "continue" or "be continuing"
until such Event of Default has been waived in writing in accordance with
SECTION 14.1.
1.5 PROVINCE OF QUEBEC. With respect to real or tangible personal
property located in the Province of Quebec, (a) the terms "real property",
"personal property" and "real and personal property" and words of similar import
shall be deemed to also refer to "immovable property", "movable property" and
"immovable and movable property". The terms "tangible" and "intangible" and
words of similar import shall be deemed to also refer to "corporeal" and
"incorporeal".
1.6 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("ADVANCES")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal TO THE LESSER OF (i) the Maximum
Revolver Amount LESS the Letter of Credit Usage at such time, and (ii) the
Borrowing Base at such time LESS the Letter of Credit Usage at such time.
(b) Anything to the contrary in this SECTION 2.1 notwithstanding,
Agent shall have the right to establish reserves against the Borrowing Base in
such amounts, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, including reserves with respect
to (i) sums that Borrowers or their Subsidiaries are required to pay under any
Section of this Agreement or any other Loan Document (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and have failed to pay when due, and
(ii) amounts owing by Borrowers or their Subsidiaries to any Person to the
extent secured by a Lien on, or trust over, any of the Collateral (other than a
Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent
likely would have a priority superior to the Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for AD VALOREM, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral. The amount of the reserve established by Agent shall bear a
reasonable relationship to the events which are the basis for such reserve.
Agent shall give Borrowers notice of any reserves established pursuant to this
Section 2.1(b), setting forth the basis and amount of such reserves.
(c) Amounts borrowed pursuant to this SECTION 2.1 may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement. The outstanding principal amount of the
Advances, together with interest accrued thereon, shall be due and payable on
the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.
2.2 TERM LOAN. Subject to the terms and conditions of this Agreement, on
the Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "TERM
LOAN") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
Term Loan Amount. The principal of the Term Loan shall be repaid on the
following dates and in the following amounts:
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Date Installment Amount
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September 1, 2007 $233,333
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October 1, 2007 $233,333
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November 1, 2007 $233,333
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December 1, 2007 $233,333
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January 1, 2008 $233,333
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February 1, 2008 $233,333
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March 1, 2008 $233,333
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April 1, 2008 $233,333
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May 1, 2008 $233,333
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June 1, 2008 $233,333
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July 1, 2008 $233,333
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August 1, 2008 $233,333
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September 1, 2008 $233,333
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October 1, 2008 $233,333
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November 1, 2008 $233,333
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December 1, 2008 $233,333
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January 1, 2009 $233,333
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February 1, 2009 $233,333
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March 1, 2009 $233,333
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April 1, 2009 $233,333
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May 1, 2009 $233,333
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June 1, 2009 $233,333
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July 1, 2009 $233,333
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August 1, 2009 $233,333
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September 1, 2009 $233,333
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October 1, 2009 $233,333
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November 1, 2009 $233,333
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December 1, 2009 $233,333
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January 1, 2010 $233,333
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February 1, 2010 $233,333
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March 1, 2010 $233,333
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April 1, 2010 $233,333
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May 1, 2010 $233,333
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June 1, 2010 $233,333
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July 1, 2010 $233,333
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August 1, 2010 $233,333
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September 1, 2010 $233,333
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October 1, 2010 $233,333
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November 1, 2010 $233,333
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December 1, 2010 $233,333
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January 1, 2011 $233,333
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February 1, 2011 $233,333
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March 1, 2011 $233,333
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April 1, 2011 $233,333
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May 1, 2011 $233,333
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June 1, 2011 $233,333
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July 1, 2011 $233,333
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August 1, 2011 $233,333
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September 1, 2011 $233,333
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October 1, 2011 $233,333
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November 1, 2011 $233,333
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December 1, 2011 $233,333
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January 1, 2012 $233,333
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February 1, 2012 $233,333
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March 1, 2012 $233,333
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April 1, 2012 $233,333
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May 1, 2012 $233,333
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June 1, 2012 $233,333
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July 1, 2012 $233,333
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The outstanding unpaid principal balance and all accrued and unpaid interest on
the Term Loan shall be due and payable on the earliest of (i) the Maturity Date,
(ii) the date of the acceleration of the Term Loan in accordance with the terms
hereof, and (iii) the date of termination of this Agreement pursuant to SECTION
8.1(C). All principal of, interest on, and other amounts payable in respect of
the Term Loan shall constitute Obligations.
2.3 BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent. To the
extent a Swing Loan is being made pursuant to SECTION 2.3(B) below, such notice
must be received by Agent no later than 10:00 a.m. (California time) on the
Business Day that is the requested Funding Date specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; PROVIDED, HOWEVER, that if Swing Lender is not obligated to make a Swing
Loan as to a requested Borrowing, such notice must be received by Agent no later
than 10:00 a.m. (California time) on the Business Day prior to the date that is
the requested Funding Date. At Agent's election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.
(b) MAKING OF SWING LOANS. In the case of a request for an Advance
and so long as either (i) the aggregate amount of Swing Loans made since the
last Settlement Date, minus the amount of Collections or payments applied to
Swing Loans since the last Settlement Date, plus the amount of the requested
Advance does not exceed $3,500,000, or (ii) Swing Lender, in its sole
discretion, shall agree to make a Swing Loan notwithstanding the foregoing
limitation, Swing Lender shall make an Advance in the amount of such Borrowing
(any such Advance made solely by Swing Lender pursuant to this SECTION 2.3(B)
being referred to as a "SWING LOAN" and such Advances being referred to
collectively as "SWING LOANS") available to Borrowers on the Funding Date
applicable thereto by transferring immediately available funds to Borrowers'
Designated Account. Each Swing Loan shall be deemed to be an Advance hereunder
and shall be subject to all the terms and conditions applicable to other
Advances, except that all payments on any Swing Loan shall be payable to Swing
Lender solely for its own account. Subject to the provisions of SECTION
2.3(D)(II), Swing Lender shall not make and shall not be obligated to make any
Swing Loan if Swing Lender has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in SECTION 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing, or (ii) the requested
Borrowing would exceed the Availability on such Funding Date. Swing Lender shall
not otherwise be required to determine whether the applicable conditions
precedent set forth in SECTION 3 have been satisfied on the Funding Date
applicable thereto prior to making any Swing Loan. The Swing Loans shall be
secured by the Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base Rate
Loans.
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(c) MAKING OF LOANS.
(i) In the event that Swing Lender is not obligated to make
a Swing Loan, then promptly after receipt of a request for a Borrowing pursuant
to SECTION 2.3(A), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's receipt
of the proceeds of such Advances, Agent shall make the proceeds thereof
available to Administrative Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds received by
Agent to Administrative Borrower's Designated Account; PROVIDED, HOWEVER, that,
subject to the provisions of SECTION 2.3(D)(II), Agent shall not request any
Lender to make, and no Lender shall have the obligation to make, any Advance if
Agent shall have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in SECTION 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such condition has
been waived, or (2) the requested Borrowing would exceed the Availability on
such Funding Date.
(ii) Unless Agent receives notice from a Lender prior to 9:00
a.m. (California time) on the date of a Borrowing, that such Lender will not
make available as and when required hereunder to Agent for the account of
Borrowers the amount of that Lender's Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrowers on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount available
to Agent, together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Administrative Borrower of such failure to fund
and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting Lender's
benefit, and, in the absence of such transfer to the Defaulting Lender, Agent
shall transfer any such payments to each other non-Defaulting Lender member of
the Lender Group ratably in accordance with their Commitments (but only to the
extent that such Defaulting Lender's Advance was funded by the other members of
the Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance was not funded by the Lender Group), retain
same to be re-advanced to Borrowers as if such Defaulting Lender had made
Advances to Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such Defaulting
Lender the amount of all such payments received and retained by Agent for the
account of such Defaulting Lender. Solely for the purposes of voting or
consenting to matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero. This Section shall remain effective with respect to such
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Lender until (x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such Defaulting
Lender's default in writing, or (z) the Defaulting Lender makes its Pro Rata
Share of the applicable Advance and pays to Agent all amounts owing by
Defaulting Lender in respect thereof. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance
by Borrowers of their duties and obligations hereunder to Agent or to the
Lenders other than such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting Lender
of this Agreement and shall entitle Administrative Borrower at its option, upon
written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be acceptable to
Agent. In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced hereunder, and
agrees to execute and deliver a completed form of Assignment and Acceptance in
favor of the substitute Lender (and agrees that it shall be deemed to have
executed and delivered such document if it fails to do so) subject only to being
repaid its share of the outstanding Obligations (other than Bank Product
Obligations, but including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever;
provided however, that any such assumption of the Commitment of such Defaulting
Lender shall not be deemed to constitute a waiver of any of the Lender Groups'
or Borrowers' rights or remedies against any such Defaulting Lender arising out
of or in relation to such failure to fund.
(d) PROTECTIVE ADVANCES AND OPTIONAL OVERADVANCES.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (A) after the occurrence and
during the continuance of a Default or an Event of Default, or (B) at any time
that any of the other applicable conditions precedent set forth in SECTION 3 are
not satisfied, to make Advances to Borrowers on behalf of the Lenders that
Agent, in its Permitted Discretion deems necessary or desirable (1) to preserve
or protect the Collateral, or any portion thereof, (2) to enhance the likelihood
of repayment of the Obligations (other than the Bank Product Obligations), or
(3) to pay any other amount chargeable to Borrowers pursuant to the terms of
this Agreement, including Lender Group Expenses and the costs, fees, and
expenses described in SECTION 9 (any of the Advances described in this SECTION
2.3(D)(I) shall be referred to as "PROTECTIVE ADVANCES").
(ii) Any contrary provision of this Agreement
notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as
applicable, and either Agent or Swing Lender, as applicable, may, but is not
obligated to, knowingly and intentionally, continue to make Advances (including
Swing Loans) to Borrowers notwithstanding that an Overadvance exists or thereby
would be created, so long as (A) after giving effect to such Advances, the
outstanding Revolver Usage does not exceed the Borrowing Base by more than
$5,000,000, and (B) after giving effect to such Advances, the outstanding
Revolver Usage (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver
Amount. In the event Agent obtains actual knowledge that the Revolver Usage
exceeds the amounts permitted by the immediately foregoing provisions,
regardless of the amount of, or reason for, such excess, Agent shall notify the
Lenders as soon as practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) unless Agent determines
that prior notice would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver Commitments thereupon shall, together with Agent,
jointly determine the terms of arrangements that shall be implemented with
Borrowers intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrowers to an amount permitted by the
preceding sentence. In such circumstances, if any Lender with a Revolver
Commitment objects to the proposed terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders. Each Lender with a
Revolver Commitment shall be obligated to settle with Agent as provided in
SECTION 2.3(E) for the amount of such Lender's Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this SECTION 2.3(D)(II), and any
Overadvances resulting from the charging to the Loan Account of interest, fees,
or Lender Group Expenses.
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(iii) Each Protective Advance and each Overadvance shall be
deemed to be an Advance hereunder, except that no Protective Advance or
Overadvance shall be eligible to be a LIBOR Rate Loan and, prior to Settlement
therefor, all payments on the Protective Advances shall be payable to Agent
solely for its own account. The Protective Advances and Overadvances shall be
repayable on demand, secured by the Agent's Liens, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans. The provisions of this SECTION 2.3(D) are for
the exclusive benefit of Agent, Swing Lender, and the Lenders and are not
intended to benefit any Borrower in any way.
(e) SETTLEMENT. It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of any Borrower) that in order to facilitate the administration
of this Agreement and the other Loan Documents, settlement among the Lenders as
to the Advances, the Swing Loans, and the Protective Advances shall take place
on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("SETTLEMENT") with the
Lenders on a weekly basis, or on a more frequent basis if so determined by Agent
(1) on behalf of Swing Lender, with respect to the outstanding Swing Loans, (2)
for itself, with respect to the outstanding Protective Advances, and (3) with
respect to Borrowers' or their Subsidiaries' Collections or payments received,
as to each by notifying the Lenders by telecopy, telephone, or other similar
form of transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
"SETTLEMENT DATE"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Protective
Advances for the period since the prior Settlement Date. Subject to the terms
and conditions contained herein (including SECTION 2.3(C)(III)): (y) if a
Lender's balance of the Advances (including Swing Loans and Protective Advances)
exceeds such Lender's Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, then Agent shall, by no later than
12:00 p.m. (California time) on the Settlement Date, transfer in immediately
available funds to a Deposit Account of such Lender (as such Lender may
designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances), and (z) if a Lender's balance
of the Advances (including Swing Loans and Protective Advances) is less than
such Lender's Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, such Lender shall no later than
12:00 p.m. (California time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such Lender
shall, upon transfer of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances (including Swing Loans and Protective Advances). Such
amounts made available to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable Swing Loans or
Protective Advances and, together with the portion of such Swing Loans or
Protective Advances representing Swing Lender's Pro Rata Share thereof, shall
constitute Advances of such Lenders. If any such amount is not made available to
Agent by any Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for its account
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the
Advances, Swing Loans, and Protective Advances is less than, equal to, or
greater than such Lender's Pro Rata Share of the Advances, Swing Loans, and
Protective Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments actually
received in good funds by Agent with respect to principal, interest, fees
payable by Borrowers and allocable to the Lenders hereunder, and proceeds of
Collateral. To the extent that a net amount is owed to any such Lender after
such application, such net amount shall be distributed by Agent to that Lender
as part of such next Settlement.
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(iii) Between Settlement Dates, Agent, to the extent
Protective Advances or Swing Loans are outstanding, may pay over to Agent or
Swing Lender, as applicable, any Collections or payments received by Agent, that
in accordance with the terms of this Agreement would be applied to the reduction
of the Advances, for application to the Protective Advances or Swing Loans.
Between Settlement Dates, Agent, to the extent no Protective Advances or Swing
Loans are outstanding, may pay over to Swing Lender any payments received by
Agent, that in accordance with the terms of this Agreement would be applied to
the reduction of the Advances, for application to Swing Lender's Pro Rata Share
of the Advances. If, as of any Settlement Date, Collections or payments of
Borrowers or their Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share of the
Advances other than to Swing Loans, as provided for in the previous sentence,
Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall
pay to the Lenders, to be applied to the outstanding Advances of such Lenders,
an amount such that each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Protective Advances, and each Lender (subject to the effect of
agreements between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Protective Advances, shall be entitled to interest at
the applicable rate or rates payable under this Agreement on the daily amount of
funds employed by Swing Lender, Agent, or the Lenders, as applicable.
(f) NOTATION. Agent shall record on its books the principal amount
of the Advances (or portion of the Term Loan, as applicable) owing to each
Lender, including the Swing Loans owing to Swing Lender, and Protective Advances
owing to Agent, and the interests therein of each Lender, from time to time and
such records shall, absent manifest error, conclusively be presumed to be
correct and accurate.
(g) LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
Loans and Protective Advances) shall be made by the Lenders contemporaneously
and in accordance with their Pro Rata Shares. It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.
2.4 PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided herein, all
payments by (or on behalf of) Borrowers shall be made to Agent's Account for the
account of the Lender Group and shall be made in immediately available funds, no
later than 11:00 a.m. (California time) on the date specified herein. Any
payment received by Agent later than 11:00 a.m. (California time), shall be
deemed to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from Administrative
Borrower prior to the date on which any payment is due to the Lenders that
Borrowers will not make such payment in full as and when required, Agent may
assume that Borrowers have made (or will make) such payment in full to Agent on
such date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent Borrowers do not make such payment in full to Agent on the date when due,
each Lender severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.
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(b) APPORTIONMENT AND APPLICATION.
(i) So long as no Application Event has occurred and is
continuing and except as otherwise provided with respect to Defaulting Lenders,
all principal and interest payments shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
(other than fees or expenses that are for Agent's separate account) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the type of
Commitment or Obligation to which a particular fee or expense relates. All
payments to be made hereunder by Borrowers shall be remitted to Agent and all
(subject to Section 2.4(b)(iv) hereof) such payments, and all proceeds of
Collateral received by Agent, shall be applied, so long as no Application Event
has occurred and is continuing, to reduce the balance of the Advances
outstanding and, thereafter, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
(ii) At any time that an Application Event has occurred and
is continuing and except as otherwise provided with respect to Defaulting
Lenders, all payments remitted to Agent and all proceeds of Collateral received
by Agent shall be applied as follows:
(A) FIRST, to pay any Lender Group Expenses (including
cost or expense reimbursements) or indemnities then due to Agent under the Loan
Documents, until paid in full,
(B) SECOND, to pay any fees or premiums then due to
Agent under the Loan Documents until paid in full,
(C) THIRD, to pay interest due in respect of all
Protective Advances until paid in full,
(D) FOURTH, to pay the principal of all Protective
Advances until paid in full,
(E) FIFTH, ratably to pay any Lender Group Expenses
(including cost or expense reimbursements) or indemnities then due to any of the
Lenders under the Loan Documents, until paid in full,
(F) SIXTH, ratably to pay any fees or premiums then
due to any of the Lenders under the Loan Documents until paid in full,
(G) SEVENTH, ratably to pay interest due in respect of
the Advances (other than Protective Advances), the Swing Loans, and the Term
Loan until paid in full,
(H) EIGHTH, ratably (i) to pay the principal of all
Swing Loans until paid in full, (ii) to pay the principal of all Advances until
paid in full, (iii) to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the Letter of Credit Usage, (iv) to Agent,
to be held by Agent, for the benefit of the Bank Product Providers, as cash
collateral in an amount up to the amount of the Bank Product Reserve established
prior to the occurrence of, and not in contemplation of, the subject Application
Event, and (v) to pay the outstanding principal balance of the Term Loan (in the
inverse order of the maturity of the installments due thereunder) until the Term
Loan is paid in full,
(I) NINTH, to pay any other Obligations (including the
provision of amounts to Agent, to be held by Agent, for the benefit of the Bank
Product Providers, as cash collateral in an amount up to the amount determined
by Agent in its Permitted Discretion as the amount necessary to secure
Borrowers' and their Subsidiaries' obligations in respect of Bank Products), and
9
(J) TENTH, to Borrowers (to be wired to the Designated
Account) or such other Person entitled thereto under applicable law.
(iii) Agent promptly shall distribute to each Lender, pursuant
to the applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in SECTION 2.3(E).
(iv) In each instance, so long as no Application Event has
occurred and is continuing, SECTION 2.4(B)(I) shall not apply to any payment
made by Borrowers to Agent and specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.
(v) For purposes of SECTION 2.4(B)(II), "paid in full" means
payment of all amounts owing under the Loan Documents according to the terms
thereof, including loan fees, service fees, professional fees, interest (and
specifically including interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and expense reimbursements,
whether or not any of the foregoing would be or is allowed or disallowed in
whole or in part in any Insolvency Proceeding.
(vi) In the event of a direct conflict between the priority
provisions of this SECTION 2.4 and any other provision contained in any other
Loan Document, it is the intention of the parties hereto that such provisions be
read together and construed, to the fullest extent possible, to be in concert
with each other. In the event of any actual, irreconcilable conflict that cannot
be resolved as aforesaid, the terms and provisions of this SECTION 2.4 shall
control and govern.
(c) OPTIONAL PREPAYMENTS. Borrowers may voluntarily prepay,
without penalty or premium, the Term Loan in full or in part at any time and
from time to time upon at least three (3) Business Days prior written notice to
Agent so long as any such payment is in an amount equal to or greater than
$1,000,000 and an integral multiple of $500,000. Any prepayments of the Term
Loan made pursuant to this SECTION 2.3(C) shall be accompanied by all accrued
interest and applicable fees (as set forth herein or in the Fee Letter) on the
principal amount being prepaid to the date of prepayment and be applied to the
remaining installments due with respect to the Term Loan in inverse order of
maturity; PROVIDED, HOWEVER, if an Event of Default then exists, such prepayment
shall be applied to the Obligations pursuant to SECTION 2.4(B)(II).
(d) MANDATORY PREPAYMENTS.
(i) Immediately upon the receipt by Parent or any of its
Subsidiaries of the proceeds of any Permitted Kasco Sale Transaction, Borrowers
shall prepay the outstanding principal amount of the Obligations, the Second
Lien Indebtedness and the Subordinated Indebtedness, as the case may be, in
accordance with SECTION 2.4(E)(I) in an aggregate amount equal to 100% of the
Net Cash Proceeds received by Parent or its Subsidiaries in connection with such
sale. Nothing contained in this SECTION 2.4(D)(I) shall permit Parent or any of
its Subsidiaries to sell or otherwise dispose of any property or assets other
than in accordance the requirements of the definition of Permitted Kasco Sale
Transaction or as otherwise permitted hereunder.
(ii) Immediately upon the receipt by Parent or any of its
Subsidiaries of the proceeds of any voluntary or involuntary sale or disposition
by Parent or any of its Subsidiaries of property or assets (including casualty
losses or condemnations but excluding sales or dispositions which qualify as
Permitted Dispositions under clauses (a), (b), (c), or (d) of the definition of
Permitted Dispositions or any Permitted Kasco Sale Transaction), Borrowers shall
prepay the outstanding principal amount of the Obligations in accordance with
SECTION 2.4(E)(II) in an amount equal to 100% of the Net Cash Proceeds
(including condemnation awards and payments in lieu thereof) received by Parent
or its Subsidiaries in connection with such sales or dispositions; PROVIDED
that, so long as (A) no Default or Event of Default shall have occurred and is
continuing, (B) Administrative Borrower shall have given Agent prior written
notice of Borrowers' intention to apply such monies to the costs of replacement
of the properties or assets that are the subject of such sale or disposition,
10
casualty loss or condemnation, or the cost of purchase or construction of other
assets useful in the business of Borrowers or their Subsidiaries, (C) the monies
are held in a cash collateral account in which Agent has a perfected
first-priority security interest, and (D) Borrowers or their Subsidiaries, as
applicable, complete such replacement, purchase, or construction within 180 days
after the initial receipt of such monies, Borrowers and their Subsidiaries shall
have the option to apply such monies to the costs of replacement of the property
or assets that are the subject of such sale or disposition or the costs of
purchase or construction of other assets useful in the business of Borrowers and
their Subsidiaries unless and to the extent that such applicable period shall
have expired without such replacement, purchase or construction being made or
completed, in which case, any amounts remaining in the cash collateral account
shall be paid to Agent and applied in accordance with SECTION 2.4(E)(II).
Nothing contained in this SECTION 2.4(D)(II) shall permit Parent or any of its
Subsidiaries to sell or otherwise dispose of any property or assets other than
in accordance with SECTION 6.4.
(iii) Immediately upon the receipt by Parent or any of its
Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay the
outstanding principal amount of the Obligations in accordance with SECTION
2.4(E)(II) in an amount equal to 100% of such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary Receipts.
(iv) Immediately upon the issuance or incurrence by Parent or
any of its Subsidiaries of any Indebtedness (other than Indebtedness permitted
under SECTION 6.1(A), (B), (C), (D), or (E)) or the issuance by Parent or any of
its Subsidiaries of any shares of Parent's or its Subsidiaries' Stock (other
than (A) the issuance of Stock under an employee stock option or incentive plan
of any Loan Party to the extent permitted hereunder or (B) in the event that
Parent or any Subsidiary of Parent forms a Subsidiary in accordance with the
terms hereof, the issuance by such Subsidiary of Stock to Parent or such
Subsidiary, as applicable), Borrowers shall prepay the outstanding principal
amount of the Obligations in accordance with SECTION 2.4(E)(II) in an amount
equal to 100% of the Net Cash Proceeds received by Parent or its Subsidiaries in
connection with such issuance or incurrence. The provisions of this SECTION
2.4(D)(IV) shall not be deemed to be implied consent to any such issuance or
incurrence otherwise prohibited by the terms and conditions of this Agreement.
(v) Within 10 days of delivery to Agent and the Lenders of
audited annual financial statements pursuant to SECTION 5.3, commencing with the
delivery to Agent and the Lenders of the financial statements for Parent's
fiscal year ended December 31, 2008 or, if such financial statements are not
delivered to Agent and the Lenders on the date such statements are required to
be delivered pursuant to SECTION 5.3, 10 days after the date such statements are
required to be delivered to Agent and the Lenders pursuant to SECTION 5.3,
Borrowers shall prepay the outstanding principal amount of the Obligations in
accordance with SECTION 2.4(E)(II) in an amount equal to 50% of the Excess Cash
Flow of Parent and its Subsidiaries for such fiscal year.
(e) APPLICATION OF PAYMENTS.
(i) Each prepayment pursuant to SECTION 2.4(D)(I) above
shall (A) so long as no Application Event shall have occurred and be continuing,
be applied, FIRST, to the outstanding principal amount of the Advances, or to
cash collateralize the Letters of Credit in an amount equal to 105% of the then
extant Letter of Credit Usage, in an amount equal to the book value of Eligible
Accounts, Eligible Inventory, Eligible Canadian Inventory, Eligible Foreign
Inventory and Eligible Kasco Inventory sold in a Permitted Kasco Sale
Transaction multiplied by the advance rate for such item of Collateral as
contained in the definition of Borrowing Base; SECOND, to the outstanding
principal amount of the Term Loan in an amount up to $15,000,000, less any
principal payments made with respect to the Term Loan prior to such date; THIRD,
to prepay any Advances, or to cash collateralize the Letters of Credit in an
amount equal to 105% of the then extant Letter of Credit Usage, such that after
giving effect to such prepayment the Availability is not less than $5,000,000;
FOURTH, to prepay the Second Lien Indebtedness such that, following such
prepayment, the pro forma Senior Leverage Ratio (but excluding any outstanding
letters of credit) is less than 4.4 to 1.00 for the four fiscal quarters then
11
ended (measured as if the Permitted Kasco Sale Transaction and such prepayment
had occurred on the first day of such four fiscal quarter period); FIFTH, to
prepay the Subordinated Indebtedness in an amount up to $4,000,000; and SIXTH,
the balance of such Net Cash Proceeds shall used to prepay the Second Lien
Indebtedness and the Subordinated Indebtedness in the ratio of 1:2,
respectively, and (B) if an Application Event shall have occurred and be
continuing, be applied in the manner set forth in SECTION 2.4(B)(II). Each such
prepayment of the Term Loan shall be applied pro rata against all remaining
installments of principal of the Term Loan.
(ii) Each prepayment pursuant to SECTION 2.4(D)(II),
2.4(D)(III), 2.4(D)(IV), or 2.4(D)(V) above shall (A) so long as no Application
Event shall have occurred and be continuing, be applied, FIRST, to the
outstanding principal amount of the Term Loan until paid in full, SECOND, to the
outstanding principal amount of the Advances (with a corresponding permanent
reduction in the Maximum Revolver Amount), until paid in full, and THIRD, to
cash collateralize the Letters of Credit in an amount equal to 105% of the then
extant Letter of Credit Usage (with a corresponding permanent reduction in the
Maximum Revolver Amount), and (B) if an Application Event shall have occurred
and be continuing, be applied in the manner set forth in SECTION 2.4(B)(II).
Each such prepayment of the Term Loan shall be applied against the remaining
installments of principal of the Term Loan in the inverse order of maturity.
Notwithstanding the foregoing or anything to the contrary herein, any required
prepayment resulting from tax refunds related to the tax year ended December 31,
2006 and the stub period ended April 13, 2007 received by the Parent or any
Subsidiary up to $2,000,000 shall be applied first to repay any Advances.
2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to SECTION 2.1 or
SECTION 2.12 is greater than any of the limitations set forth in SECTION 2.1 or
SECTION 2.12, as applicable (an "OVERADVANCE"), Borrowers immediately (or in the
case of an Overadvance resulting from Agent's establishment of reserves pursuant
to Section 2.3, within 3 Business Days) shall pay to Agent, in cash, the amount
of such excess, which amount shall be used by Agent to reduce the Obligations in
accordance with the priorities set forth in SECTION 2.4(B). Borrowers promise to
pay the Obligations (including principal, interest, fees, costs, and expenses)
in Dollars in full on the Maturity Date or, if earlier, on the date on which the
Obligations are declared due and payable pursuant to the terms of this
Agreement.
2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.
(a) INTEREST RATES. Except as provided in SECTION 2.6(C), all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows:
(i) if the relevant Obligation is a LIBOR Rate Loan, at a
per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin,
(ii) with respect any portion of the Term Loan that is a Base
Rate Loan, at a per annum rate equal to the Base Rate plus the Base Rate Margin,
and
(iii) otherwise, at a per annum rate equal to the Base Rate
minus the Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
ratable benefit of the Lenders with a Revolver Commitment, subject to any
agreements between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in SECTION
2.12(E)) which shall accrue at a rate equal to 1.375% per annum times the Daily
Balance of the undrawn amount of all outstanding Letters of Credit.
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(c) DEFAULT RATE. Upon the occurrence and during the continuation
of an Event of Default (and at the election of Agent or the Required Lenders),
(i) all Obligations (except for undrawn Letters of Credit
and except for Bank Product Obligations) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof at a per annum rate equal to 2 percentage points above the per annum
rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for in SECTION 2.6(B)
shall be increased to 2 percentage points above the per annum rate otherwise
applicable hereunder.
(d) PAYMENT. Except as provided to the contrary in SECTION 2.11 or
SECTION 2.13(A), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrowers hereby
authorize Agent, from time to time, without prior notice to Borrowers, to charge
all interest and fees (when due and payable), all Lender Group Expenses (as and
when due and payable to Agent or any member of the Lender Group), all charges,
commissions, fees, and costs provided for in SECTION 2.12(E) (as and when due
and payable to Agent or any member of the Lender Group), all fees and costs
provided for in SECTION 2.11 (as and when due and payable to Agent or any member
of the Lender Group), and all other payments as and when due and payable under
any Loan Document (including the amounts due and payable with respect to the
Term Loan and including any amounts due and payable to the Bank Product
Providers in respect of Bank Products up to the amount of the Bank Product
Reserve) to Borrowers' Loan Account, which amounts thereafter shall constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances that are Base Rate Loans. Any interest not paid when due shall be
compounded by being charged to the Loan Account and shall thereafter constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances that are Base Rate Loans.
(e) COMPUTATION. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; PROVIDED, HOWEVER, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, IPSO
FACTO, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 CASH MANAGEMENT.
(a) Parent and Borrowers shall and shall cause each of their
Subsidiaries to (i) establish and maintain cash management services of a type
and on terms satisfactory to Agent at one or more of the banks set forth on
SCHEDULE 2.7(A) (each a "CASH MANAGEMENT BANK"), and shall request in writing
and otherwise take such reasonable steps to ensure that all of their and their
Subsidiaries' Account Debtors forward payment of the amounts owed by them
directly to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day (or, with
respect to Collections not to exceed $100,000 in the aggregate, the second
Business Day) after the date of receipt thereof, all of their Collections
(including those sent directly by their Account Debtors to Parent, Borrowers or
their respective Subsidiaries) into a bank account in Agent's name (a "CASH
MANAGEMENT ACCOUNT") at one of the Cash Management Banks.
13
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent, Second Lien Agent and Loan Parties. Each such
Cash Management Agreement shall provide, among other things, that (i) the Cash
Management Bank will comply with any instructions originated by Agent or Second
Lien Agent directing the disposition of the funds in such Cash Management
Account without further consent by Loan Parties or their Subsidiaries, as
applicable, (ii) the Cash Management Bank has no rights of setoff or recoupment
or any other claim against the applicable Cash Management Account, other than
for payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other
items of payment, and (iii) upon the instruction of Agent (an "ACTIVATION
INSTRUCTION"), it will forward by daily sweep all amounts in the applicable Cash
Management Account to the Agent's Account. Agent agrees not to issue an
Activation Instruction with respect to the Cash Management Accounts unless a
Triggering Event has occurred and is continuing at the time such Activation
Instruction is issued. Agent agrees to use commercially reasonable efforts to
rescind an Activation Instruction (the "RESCISSION") if: (x) the Triggering
Event upon which such Activation Instruction was issued has been waived in
writing in accordance with the terms of this Agreement, (y) no additional
Triggering Event has occurred and is continuing prior to the date of the
Rescission or is reasonably expected to occur on or immediately after the date
of the Rescission.
(c) So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend SCHEDULE 2.7(A) to add or replace
a Cash Management Bank or Cash Management Account; PROVIDED, HOWEVER, that (i)
such prospective Cash Management Bank shall be reasonably satisfactory to Agent,
and (ii) prior to the time of the opening of such Cash Management Account, a
Loan Party (or its Subsidiary, as applicable) and such prospective Cash
Management Bank shall have executed and delivered to Agent a Cash Management
Agreement. Loan Parties (or their Subsidiaries, as applicable) shall close any
of their Cash Management Accounts (and establish replacement cash management
accounts in accordance with the foregoing sentence) promptly and in any event
within 30 days of notice from Agent that the creditworthiness of any Cash
Management Bank is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within 60 days of notice from Agent
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Agent's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Agent's reasonable judgment.
(d) Each Cash Management Account shall be a cash collateral
account subject to a Control Agreement.
2.8 CREDITING PAYMENTS . The receipt of any payment item by Agent
(whether from transfers to Agent by the Cash Management Banks pursuant to the
Cash Management Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.
2.9 DESIGNATED ACCOUNT. Agent is authorized to make the Advances and the
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person or, without instructions, if
pursuant to SECTION 2.6(D). Administrative Borrower agrees to establish and
maintain the Designated Account with the Designated Account Bank for the purpose
14
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. Unless otherwise agreed by Agent and
Administrative Borrower, any Advance, Protective Advance, or Swing Loan
requested by Borrowers and made by Agent or the Lenders hereunder shall be made
to the Designated Account.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent shall
maintain an account on its books in the name of Borrowers (the "LOAN ACCOUNT")
on which Borrowers will be charged with the Term Loan, all Advances (including
Protective Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders
to Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Bank Product Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with SECTION 2.8, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers' account, including all
amounts received in the Agent's Account from any Cash Management Bank. Agent
shall render statements regarding the Loan Account to Administrative Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and such statements,
absent manifest error, shall be conclusively presumed to be correct and accurate
and constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.
2.11 FEES. Borrowers shall pay to Agent, as and when due and payable
under the terms of the Fee Letter, the fees set forth in the Fee Letter.
2.12 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C UNDERTAKING") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be ▇▇▇▇▇ Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit or the amendment,
renewal, or extension of any outstanding Letter of Credit, shall be made in
writing by an Authorized Person and delivered to the Issuing Lender and Agent
via hand delivery, telefacsimile, or other electronic method of transmission
reasonably in advance of the requested date of issuance, amendment, renewal, or
extension. Each such request shall be in form and substance satisfactory to the
Issuing Lender in its Permitted Discretion and shall specify (i) the amount of
such Letter of Credit, (ii) the date of issuance, amendment, renewal, or
extension of such Letter of Credit, (iii) the expiration date of such Letter of
Credit, (iv) the name and address of the beneficiary thereof (or the beneficiary
of the Underlying Letter of Credit, as applicable), and (v) such other
information (including, in the case of an amendment, renewal, or extension,
identification of the outstanding Letter of Credit to be so amended, renewed, or
extended) as shall be necessary to prepare, amend, renew, or extend such Letter
of Credit. If requested by the Issuing Lender, Borrowers also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. The Issuing Lender shall have
no obligation to issue a Letter of Credit if any of the following would result
after giving effect to the issuance of such requested Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing
Base LESS the outstanding amount of Advances, or
(ii) the Letter of Credit Usage would exceed $11,000,000, or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount LESS the outstanding amount of Advances LESS the Bank Product
Reserve, and LESS the aggregate amount of reserves, if any, established by Agent
under SECTION 2.1(B).
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Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, initially, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans.
To the extent an L/C Disbursement is deemed to be an Advance hereunder,
Borrowers' obligation to reimburse such L/C Disbursement shall be discharged and
replaced by the resulting Advance. Promptly following receipt by Agent of any
payment from Borrowers pursuant to this paragraph, Agent shall distribute such
payment to the Issuing Lender or, to the extent that Lenders have made payments
pursuant to SECTION 2.12(B) to reimburse the Issuing Lender, then to such
Lenders and the Issuing Lender as their interests may appear.
(b) Promptly following receipt of a notice of L/C
Disbursement pursuant to SECTION 2.12(A), each Lender with a Revolver Commitment
agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the
foregoing subsection on the same terms and conditions as if Borrowers had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders with
Revolver Commitments, the Issuing Lender shall be deemed to have granted to each
Lender with a Revolver Commitment, and each Lender with a Revolver Commitment
shall be deemed to have purchased, a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of the Risk Participation Liability of
such Letter of Credit, and each such Lender agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of any payments made
by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Revolver Commitment hereby
absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrowers on the date due as provided
in SECTION 2.12(A), or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share of each L/C
Disbursement made by the Issuing Lender pursuant to this SECTION 2.12(B) shall
be absolute and unconditional and such remittance shall be made notwithstanding
the occurrence or continuation of an Event of Default or Default or the failure
to satisfy any condition set forth in SECTION 3. If any such Lender fails to
make available to Agent the amount of such Lender's Pro Rata Share of each L/C
Disbursement made by the Issuing Lender in respect of such Letter of Credit as
provided in this Section, such Lender shall be deemed to be a Defaulting Lender
and Agent (for the account of the Issuing Lender) shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Defaulting Lender Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify, save, defend,
and hold the Lender Group harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; PROVIDED, HOWEVER, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability to
the extent that it is caused by the gross negligence or willful misconduct of
the Issuing Lender or any other member of the Lender Group, or for Issuing
Lender's breach of its material obligations under the Letter of Credit. Each
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for such Borrower's
account, even though this interpretation may be different from such Borrower's
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own, and each Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or commission,
in following Borrowers' instructions or those contained in the Letter of Credit
or any modifications, amendments, or supplements thereto. Each Borrower
understands that the L/C Undertakings may require Issuing Lender to indemnify
the Underlying Issuer for certain costs or liabilities arising out of claims by
Borrowers against such Underlying Issuer. Each Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred
by the Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; PROVIDED, HOWEVER, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group, or for
Issuing Lender's breach of its material obligations under the Letter of Credit.
Each Borrower hereby acknowledges and agrees that neither the Lender Group nor
the Issuing Lender shall be responsible for delays, errors, or omissions
resulting from the malfunction of equipment in connection with any Letter of
Credit.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all issuance charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .825% per annum
times the undrawn amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):
(i) any reserve, deposit, or similar requirement is or shall
be imposed or modified in respect of any Letter of Credit issued hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of Credit or
any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
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2.13 LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR OPTION") to have interest on all or a portion of the Advances
or the Term Loan be charged (whether at the time when made (unless otherwise
provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or
upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of
interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be
payable on the earliest of (i) the last day of the Interest Period applicable
thereto, (ii) the date on which all or any portion of the Obligations are
accelerated pursuant to the terms hereof, or (iii) the date on which this
Agreement is terminated pursuant to the terms hereof. On the last day of each
applicable Interest Period, unless Administrative Borrower properly has
exercised the LIBOR Option with respect thereto, the interest rate applicable to
such LIBOR Rate Loan automatically shall convert to the rate of interest then
applicable to Base Rate Loans of the same type hereunder. At any time that an
Event of Default has occurred and is continuing, Borrowers no longer shall have
the option to request that Advances or the Term Loan bear interest at a rate
based upon the LIBOR Rate and Agent shall have the right at the end of the
applicable Interest Period for each LIBOR Rate Loan to convert the interest rate
on such LIBOR Rate Loan to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and from time
to time, so long as no Event of Default has occurred and is continuing, elect to
exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. (California
time) at least 3 Business Days prior to the commencement of the proposed
Interest Period (the "LIBOR DEADLINE"). Notice of Administrative Borrower's
election of the LIBOR Option for a permitted portion of the Advances or the Term
Loan and an Interest Period pursuant to this Section shall be made by delivery
to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline, or by
telephonic notice received by Agent before the LIBOR Deadline (to be confirmed
by delivery to Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California time) on the same day). Promptly upon its receipt of each such LIBOR
Notice, Agent shall provide a copy thereof to each of the affected Lenders.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall
indemnify, defend, and hold Agent and the Lenders harmless against any loss,
cost, or expense incurred by Agent or any Lender as a result of (A) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses,
"FUNDING LOSSES"). Funding Losses shall, with respect to Agent or any Lender, be
deemed to equal the amount determined by Agent or such Lender to be the excess,
if any, of (1) the amount of interest that would have accrued on the principal
amount of such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate
that would have been applicable thereto, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert, or continue, for the period that would
have been the Interest Period therefor), MINUS (2) the amount of interest that
would accrue on such principal amount for such period at the interest rate which
Agent or such Lender would be offered were it to be offered, at the commencement
of such period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to Administrative
Borrower setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this SECTION 2.13 shall be conclusive absent
manifest error.
(iii) Borrowers shall have not more than 7 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option for LIBOR
Rate Loans of at least $1,000,000.
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(c) CONVERSION. Borrowers may convert LIBOR Rate Loans to Base
Rate Loans at any time; PROVIDED, HOWEVER, that in the event that LIBOR Rate
Loans are converted or prepaid on any date that is not the last day of the
Interest Period applicable thereto, including as a result of any automatic
prepayment through the required application by Agent of proceeds of Loan
Parties' and their Subsidiaries' Collections in accordance with SECTION 2.4(b)
or for any other reason, including early termination of the term of this
Agreement or acceleration of all or any portion of the Obligations pursuant to
the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the
Lenders and their Participants harmless against any and all Funding Losses in
accordance with SECTION 2.13 (B)(II) above.
(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with respect to
any Lender on a prospective basis to take into account any additional or
increased costs to such Lender of maintaining or obtaining any eurodollar
deposits or increased costs, in each case, due to changes in applicable law
occurring subsequent to the commencement of the then applicable Interest Period,
including changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve requirements imposed by
the Board of Governors of the Federal Reserve System (or any successor),
excluding the Reserve Percentage, which additional or increased costs would
increase the cost of funding or maintaining loans bearing interest at the LIBOR
Rate. In any such event, the affected Lender shall give Administrative Borrower
and Agent notice of such a determination and adjustment and Agent promptly shall
transmit the notice to each other Lender and, upon its receipt of the notice
from the affected Lender, Administrative Borrower may, by notice to such
affected Lender (y) require such Lender to furnish to Administrative Borrower a
statement setting forth the basis for adjusting such LIBOR Rate and the method
for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under SECTION 2.13(B)(II)).
(ii) In the event that any change in market conditions or any
law, regulation, treaty, or directive, or any change therein or in the
interpretation of application thereof, shall at any time after the date hereof,
in the reasonable opinion of any Lender, make it unlawful or impractical for
such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
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consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender Group under this Agreement, for the
mutual benefit, directly and indirectly, of each Borrower and in consideration
of the undertakings of the other Borrowers to accept joint and several liability
for the Obligations. Each Borrower hereby further irrevocably and
unconditionally guaranties as and for its own debt, until final payment in full
thereof has been made, (a) the payment of the Obligations, when and as the same
shall become due and payable, whether at maturity, pursuant to a mandatory
prepayment requirement, by acceleration, or otherwise; it being the intent of
each Borrower that the guaranty set forth herein shall be a guaranty of payment
and not a guaranty of collection; and (b) the punctual and faithful performance,
keeping, observance, and fulfillment by each Borrower of all of the agreements,
conditions, covenants, and obligations of such Borrower contained in this
Agreement and under each of the other Loan Documents.
(b) Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including any Obligations arising under
this SECTION 2.15), it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.
(c) If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation.
(d) The Obligations of each Borrower under the provisions of this
SECTION 2.15 constitute the absolute and unconditional, full recourse
Obligations of each Borrower enforceable against each Borrower to the full
extent of its properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and several liability,
notice of any Advances or Letters of Credit issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
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the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might, but for the provisions of this
SECTION 2.15 afford grounds for terminating, discharging or relieving any
Borrower, in whole or in part, from any of its Obligations under this SECTION
2.15, it being the intention of each Borrower that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of each Borrower under
this SECTION 2.15 shall not be discharged except by performance and then only to
the extent of such performance. The Obligations of each Borrower under this
SECTION 2.15 shall not be diminished or rendered unenforceable by any
unenforceability of this Agreement or any other Loan Document against one or
more of the other Borrowers or any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Borrower
or any Agent or Lender.
(f) Each Borrower represents and warrants to Agent and Lenders
that such Borrower is currently informed of the financial condition of Borrowers
and of all other circumstances which a diligent inquiry would reveal and which
bear upon the risk of nonpayment of the Obligations. Each Borrower further
represents and warrants to Agent and Lenders that such Borrower has read and
understands the terms and conditions of the Loan Documents. Each Borrower hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) Each Borrower waives all rights and defenses arising out of an
election of remedies by Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Agent's or such Lender's rights of
subrogation and reimbursement against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise:
(h) Each Borrower waives all rights and defenses that such
Borrower may have because the Obligations are secured by Real Property. This
means, among other things:
(i) Agent and Lenders may collect from such Borrower without
first foreclosing on any Real or Personal Property Collateral pledged by
Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:
(A) The amount of the Obligations may be reduced only
by the price for which that collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price.
(B) Agent and Lenders may collect from such Borrower
even if Agent or Lenders, by foreclosing on the Real Property Collateral, has
destroyed any right such Borrower may have to collect from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this SECTION 2.15 are made for the benefit
of Agent, Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all Borrowers as often
as occasion therefor may arise and without requirement on the part of Agent,
Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to
elect any other remedy. The provisions of this SECTION 2.15 shall remain in
21
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this SECTION
2.15 will forthwith be reinstated in effect, as though such payment had not been
made.
(j) Until the Obligations have been paid in full and each of the
Commitments terminated, each Borrower hereby agrees that it will not enforce any
of its rights of contribution or subrogation against any other Borrower with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to Agent or Lenders with respect to any of
the Obligations or any collateral security therefor. Any claim which any
Borrower may have against any other Borrower with respect to any payments to any
Agent or Lender hereunder or under any other Loan Documents are hereby expressly
made subordinate and junior in right of payment to the prior payment in full in
cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.
(k) Each Borrower hereby agrees that, after the occurrence and
during the continuance of any Default or Event of Default, the payment of any
amounts due with respect to the indebtedness owing by any Borrower to any other
Borrower is hereby subordinated to the prior payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, such Borrower will not
demand, ▇▇▇ for or otherwise attempt to collect any indebtedness of any other
Borrower owing to such Borrower until the Obligations shall have been paid in
full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Agent, and such Borrower shall deliver any such amounts to Agent for
application to the Obligations in accordance with SECTION 2.4(B).
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of each Lender to make its initial extension of credit provided for
hereunder, is subject to the fulfillment, to the satisfaction of Agent and each
Lender of each of the conditions precedent set forth on SCHEDULE 3.1 (the making
of such initial extension of credit by a Lender being conclusively deemed to be
its satisfaction or waiver of the conditions precedent).
3.2 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:
(a) the representations and warranties of the Loan Parties and
their Subsidiaries contained in this Agreement or in the other Loan Documents
shall be true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) on and as
of the date of such extension of credit, as though made on and as of such date
(except to the extent that such representations and warranties relate solely to
an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
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(c) no injunction, writ, restraining order, or other order, or any
law, rule or regulation of any nature restricting or prohibiting, directly or
indirectly, the extending of such credit shall have been issued and remain in
force by any Governmental Authority against any Loan Party, Agent, or any
Lender; and
(d) no Material Adverse Change shall have occurred since December
31, 2006, provided that the transactions contemplated by this Agreement and the
transactions made in connection with the Permitted Merger shall not constitute a
Material Adverse Change.
3.3 TERM. This Agreement shall continue in full force and effect for a
term ending on July 17, 2012 (the "MATURITY DATE"). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.
3.4 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit and including all Bank Product
Obligations) immediately shall become due and payable without notice or demand
(including the requirement that Borrower provide (a) Letter of Credit
Collateralization, and (b) Bank Product Collateralization). No termination of
this Agreement, however, shall relieve or discharge Loan Parties or their
Subsidiaries of their duties, Obligations, or covenants hereunder or under any
other Loan Document and the Agent's Liens in the Collateral shall remain in
effect until all Obligations have been paid in full and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been paid in
full and the Lender Group's obligations to provide additional credit under the
Loan Documents have been terminated irrevocably, Agent will, at Borrowers' sole
expense, execute and deliver any termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent's Liens
and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.
3.5 EARLY TERMINATION BY BORROWERS. Borrowers have the option, at any
time upon 30 days prior written notice to Agent, to terminate this Agreement and
terminate the Commitments hereunder, without penalty or premium, by paying to
Agent, in cash, the Obligations (including (a) providing Letter of Credit
Collateralization with respect to the then existing Letter of Credit Usage, and
(b) providing Bank Product Collateralization with respect to the then existing
Bank Products), in full. If Borrowers have sent a notice of termination pursuant
to the provisions of this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations (including (a) providing
Letter of Credit Collateralization with respect to the then existing Letter of
Credit Usage, and (b) providing Bank Product Collateralization with respect to
the then existing Bank Products), in full, on the date set forth as the date of
termination of this Agreement in such notice.
4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
Parent and each Borrower make the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date or any Schedule or Projection referred to herein has been
updated or amended in accordance herewith) and such representations and
warranties shall survive the execution and delivery of this Agreement:
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4.1 NO ENCUMBRANCES. Each Loan Party and its Subsidiaries has good and
indefeasible title to, or a valid leasehold interest in, their personal property
assets and good and marketable title to, or a valid leasehold interest in, their
Real Property, in each case, free and clear of Liens except for Permitted Liens.
4.2 ELIGIBLE ACCOUNTS. As to each Account that is identified by
Administrative Borrower as an Eligible Account in a borrowing base report
submitted to Agent, such Account is (a) a bona fide existing payment obligation
of the applicable Account Debtor created by the sale and delivery of Inventory
or the rendition of services to such Account Debtor in the ordinary course of
Borrowers' business, (b) owed to Borrowers without any known defenses, disputes,
offsets, counterclaims, or rights of return or cancellation, and (c) not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth in the definition of Eligible Accounts.
4.3 ELIGIBLE INVENTORY. As to each item of Inventory that is identified
by Administrative Borrower as Eligible Inventory in a borrowing base report
submitted to Agent, such Inventory is (a) of good and merchantable quality, free
from known defects, and (b) not excluded as ineligible by virtue of one or more
of the excluding criteria set forth in the definition of Eligible Inventory.
4.4 EQUIPMENT. Each material item of Equipment of Loan Parties and their
Subsidiaries is used or held for use in their business and is in good working
order, ordinary wear and tear and damage by casualty excepted.
4.5 LOCATION OF INVENTORY AND EQUIPMENT. The Collateral (other than
vehicles, Inventory maintained on vehicles and Equipment out for repair) of Loan
Parties and their Subsidiaries is not stored with a bailee, warehouseman, or
similar party (except with respect to Inventory in the ordinary course of
business), and is located only at, or in-transit between, the locations
identified on SCHEDULE 4.5 (as such Schedule may be updated pursuant to SECTION
5.9).
4.6 INVENTORY RECORDS. Each Loan Party keeps correct and accurate
records in all material respects itemizing and describing the type, quality, and
quantity of its and its Subsidiaries' Inventory and the book value thereof.
4.7 JURISDICTION OF ORGANIZATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.
(a) The name of (within the meaning of Section 9-503 of the Code)
and jurisdiction of organization of each Loan Party and each of its Subsidiaries
is set forth on SCHEDULE 4.7(A) (as such Schedule may be updated from time to
time to reflect changes permitted to be made under SECTION 6.5).
(b) The chief executive office of each Loan Party is located at
the address indicated on SCHEDULE 4.7(B) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under SECTION 5.9).
(c) Each Loan Party's tax identification numbers and
organizational identification numbers, if any, are identified on SCHEDULE 4.7(C)
(as such Schedule may be updated from time to time to reflect changes permitted
to be made under SECTION 6.5).
(d) As of the Closing Date, the Loan Parties and their
Subsidiaries do not hold any commercial tort claims, except as set forth on
SCHEDULE 4.7(D).
4.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party (i) is duly organized and existing and in good
standing (or the non-U.S. equivalent thereof) under the laws of the jurisdiction
of its organization and qualified to do business in each jurisdiction where the
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failure to be so qualified reasonably could be expected to result in a Material
Adverse Change, and (ii) has all requisite power and authority to conduct its
business as now conducted and as currently contemplated, to make the borrowings
hereunder (in the case of Borrowers), and to execute and deliver each Loan
Document to which it is a party, and to consummate the transactions contemplated
thereby.
(b) Set forth on SCHEDULE 4.8(B) (as such Schedule may be updated
from time to time to reflect changes permitted to be made under SECTION 5.16),
is a complete and accurate description of the authorized capital Stock of each
Loan Party, by class, and, as of the Closing Date, a description of the number
of shares of each such class that are issued and outstanding. Other than as
described on SCHEDULE 4.8(B), there are no subscriptions, options, warrants, or
calls relating to any shares (or other equity interest) of each Loan Party's
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. No Loan Party is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on SCHEDULE 4.8(C) (as such Schedule may be updated
from time to time to reflect changes permitted to be made under SECTION 5.16),
is a complete and accurate list of each Loan Party's direct and indirect
Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the
number of shares of each class of common and preferred Stock authorized for each
of such Subsidiaries, and (iii) the number and the percentage of the outstanding
shares of each such class owned directly or indirectly by the applicable Loan
Party. All of the outstanding capital Stock of each such Subsidiary has been
validly issued and is fully paid and non-assessable.
(d) Except as set forth on SCHEDULE 4.8(C), there are no
subscriptions, options, warrants, or calls relating to any shares of any Loan
Party's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Loan Party or
any of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any Loan
Party's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
4.9 DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the other Loan Documents to which it is a
party do not and will not (i) violate any provision of federal, state, or local
law or regulation applicable to such Borrower, the Governing Documents of such
Borrower, or any order, judgment, or decree of any court or other Governmental
Authority binding on such Borrower, (ii) conflict with, result in a breach of,
or constitute (with due notice or lapse of time or both) a default under any
Material Contract of such Borrower, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
such Borrower, other than Permitted Liens, (iv) do not and will not result in
any default, noncompliance, suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to its
operations or any of its properties, or (v) require any approval of such
Borrower's interestholders or any approval or consent of any Person under any
Material Contract of such Borrower, other than consents or approvals that have
been obtained and that are still in force and effect.
(c) Other than the filing of financing statements, the recordation
of the Mortgages, and other filings or actions necessary to perfect Liens
granted to Agent in the Collateral, the execution, delivery, and performance by
each Borrower of this Agreement and the other Loan Documents to which such
Borrower is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any Governmental
Authority, other than consents or approvals that have been obtained and that are
still in force and effect.
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(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected (other than
(i) in respect of motor vehicles and (ii) any Deposit Accounts and Securities
Accounts not subject to a Control Agreement as permitted by SECTION 6.12, and
subject only to the filing of financing statements and the recordation of the
Mortgages, and (ii) to the extent such Liens are not validly created or
perfected solely as a result of the gross negligence of Agent), and first
priority Liens (subject only to Permitted Priority Liens).
(f) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party have been duly authorized by all
necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by each Guarantor of
the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation applicable to such
Guarantor, the Governing Documents of such Guarantor, or any order, judgment, or
decree of any court or other Governmental Authority binding on such Guarantor,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of such Guarantor,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens, (iv) do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to its operations or any of its
properties, or (v) require any approval of such Guarantor's interestholders or
any approval or consent of any Person under any Material Contract of such
Guarantor, other than consents or approvals that have been obtained and that are
still in force and effect.
(h) Other than the filing of financing statements and the
recordation of the Mortgages, and other filings or actions necessary to perfect
Liens granted to Agent in the Collateral, the execution, delivery, and
performance by each Guarantor of the Loan Documents to which such Guarantor is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority, other
than consents or approvals that have been obtained and that are still in force
and effect.
(i) The Loan Documents to which each Guarantor is a party, and all
other documents contemplated hereby and thereby, when executed and delivered by
such Guarantor will be the legally valid and binding obligations of such
Guarantor, enforceable against such Guarantor in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
4.10 LITIGATION. Other than those matters disclosed on SCHEDULE 4.10 and
other than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the knowledge of Parent and each Borrower, threatened
against any Loan Party or any of its Subsidiaries. As of the Closing Date, none
of the Loan Parties holds any commercial tort claims in respect of which a claim
has been filed in a court of law or a written notice by an attorney has been
given to a potential defendant.
4.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating to
Parent and its Subsidiaries that have been delivered by any Loan Party to the
Lender Group have been prepared in accordance with GAAP (except, in the case of
26
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Parent's and its Subsidiaries' financial condition as of the date thereof and
results of operations for the period then ended. There has not been a Material
Adverse Change with respect to Parent and its Subsidiaries since December 31,
2006. Notwithstanding anything to the contrary herein, for purposes of this
Agreement, no Material Adverse Change shall be deemed to have occurred on the
Closing Date as a direct result (i) of the making of the initial Advances, the
Term Loan or issuance of Letters of Credit or (ii) from transactions completed
prior to the Closing Date directly related to the consummation of the Permitted
Merger.
4.12 FRAUDULENT TRANSFER.
(a) Each Loan Party and each Subsidiary of a Loan Party is
Solvent.
(b) No transfer of property is being made by any Loan Party or any
Subsidiary of a Loan Party and no obligation is being incurred by any Loan Party
or any Subsidiary of a Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of the Loan Parties
or their Subsidiaries.
4.13 EMPLOYEE BENEFITS. (a) Except as set forth on Schedule 4.13, (i)
each Employee Plan is in substantial compliance with ERISA and the IRC, (ii) no
Termination Event has occurred nor is reasonably expected to occur with respect
to any Employee Plan, (iii) the most recent annual report (Form 5500 Series)
with respect to each Employee Plan, including any required Schedule B (Actuarial
Information) thereto, copies of which have been filed with the Internal Revenue
Service and delivered to Agent, is to the knowledge of Borrower complete and
correct, and since the date of such report there has been no Material Adverse
Change in such funding status, (iv) copies of each agreement entered into with
the PBGC, the U.S. Department of Labor or the Internal Revenue Service with
respect to any Employee Plan have been delivered to Agent, (v) no Employee Plan
had an accumulated or waived funding deficiency or permitted decrease which
would create a deficiency in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
IRC at any time during the previous 60 months, and (vi) no Lien imposed under
the IRC or ERISA exists or is likely to arise on account of any Employee Plan
within the meaning of Section 412 of the IRC. Except as set forth on Schedule
4.13, no Loan Party or any of its ERISA Affiliates has incurred any withdrawal
liability under ERISA with respect to any Multiemployer Plan, or is aware of any
facts indicating that it or any of its ERISA Affiliates may in the future
reasonably be expected to incur any such withdrawal liability. Except as set
forth on Schedule 4.13, no Loan Party or any of its ERISA Affiliates nor any
fiduciary of any Employee Plan has (A) engaged in a nonexempt prohibited
transaction described in Sections 406 of ERISA or 4975 of the IRC that could
reasonably be expected to result in a Material Adverse Change, (B) failed to pay
any required installment or other payment required under Section 412 of the IRC
on or before the due date for such required installment or payment if such
failure is not cured within 3 Business Days, (C) engaged in a transaction within
the meaning of Section 4069 of ERISA or (D) incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there are no
premium payments which have become due which are unpaid. There are no pending
or, to the knowledge of any Loan Party, threatened claims, actions, proceedings
or lawsuits (other than claims for benefits in the normal course) asserted or
instituted against (1) any Employee Plan or its assets, (2) any fiduciary with
respect to any Employee Plan, or (3) any Loan Party or any of its ERISA
Affiliates with respect to any Employee Plan. Except as required by Section
4980B of the IRC, no Loan Party or any of its ERISA Affiliates maintains an
employee welfare benefit plan (as defined in Section 3(1) of ERISA) which
provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of any Loan Party or any of its
ERISA Affiliates or coverage after a participant's termination of employment.
(b) Except as set forth on SCHEDULE 4.13, there is (a) no unfair
labor practice complaint pending or, to Parent's and each Borrower's knowledge,
threatened against any Loan Party before any Governmental Authority and no
grievance or arbitration proceeding pending or threatened against any Loan Party
which arises out of or under any collective bargaining agreement, (b) no strike,
labor dispute, slowdown, stoppage or similar action or grievance pending or, to
27
the best knowledge of Parent and each Borrower, threatened against any Loan
Party and (c) no union representation question existing with respect to the
employees of any Loan Party and no union organizing activity taking place with
respect to any of the employees of any of them. No Loan Party, nor any ERISA
Affiliate of any Loan Party has incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state law, which
remains unpaid or unsatisfied. The hours worked and payments made to employees
of Loan Parties have not been in violation of the Fair Labor Standards Act or
any other applicable legal requirements. All material payments due from any Loan
Party on account of workers compensation, wages and employee health and welfare
insurance and other benefits have been paid or accrued as a liability on the
books of such Loan Party.
4.14 ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 4.14, (a)
to Parent's and each Borrower's knowledge, none of the Loan Parties' or their
Subsidiaries' properties or assets has ever been used by the Loan Parties or
their Subsidiaries, or, to their knowledge, by previous owners or operators in
the disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such use, production, storage, handling, treatment,
release or transport was in violation, in any material respect, of any
applicable material Environmental Law, (b) to Parent's and each Borrower's
knowledge, none of the Loan Parties' nor their Subsidiaries' properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site, (c)
none of the Loan Parties nor any of their Subsidiaries have received written
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by the Loan Parties or their
Subsidiaries, and (d) none of the Loan Parties nor any of their Subsidiaries
have received a summons, citation, written notice, or directive from the United
States Environmental Protection Agency or any other federal or state
governmental agency concerning any material action or omission by any Loan Party
or any Subsidiary of a Loan Party resulting in the releasing or disposing of
Hazardous Materials into the environment.
4.15 INTELLECTUAL PROPERTY. Each Loan Party and each Subsidiary of a Loan
Party owns, or holds licenses in, all trademarks, trade names, copyrights,
patents, patent rights, and licenses that are necessary to the conduct of its
business as currently conducted, and attached hereto as SCHEDULE 4.15 (as
updated from time to time) is a true, correct, and complete listing of all
material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Loan Party or one of
its Subsidiaries is the owner or is an exclusive licensee; PROVIDED, HOWEVER,
that Administrative Borrower may amend SCHEDULE 4.15 to add additional property
so long as such amendment occurs by written notice to Agent not less than 10
days before the date on which a Loan Party or any Subsidiary of a Loan Party
acquires any such property after the Closing Date.
4.16 LEASES. (a) Loan Parties and their Subsidiaries enjoy peaceful and
undisturbed possession in all material respects, under all leases material to
their business and to which they are parties or under which they are operating
and all of such material leases are valid and subsisting and no material default
by Loan Parties or their Subsidiaries exists under any of them.
(b) SCHEDULE 4.16 sets forth a complete and accurate list, as of
the Closing Date, of the location, by street address, of all real property owned
or leased by each Loan Party. No consent or approval of any landlord or other
third party in connection with any such lease is necessary for any Loan Party to
enter into and execute the Loan Documents to which it is a party, except as set
forth on SCHEDULE 4.16. To the best knowledge of any Loan Party, no other party
to any such lease is in default of its obligations thereunder, and no Loan Party
(or any other party to any such lease) has at any time delivered or received any
notice of default which remains uncured under any such lease and, as of the
Closing Date, no event has occurred which, with the giving of notice or the
passage of time or both, would constitute a material default under any such
lease.
4.17 DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on SCHEDULE 4.17
is a listing of all of the Loan Parties' and their Subsidiaries' Deposit
Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.
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4.18 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of the Loan Parties or their Subsidiaries in writing
to Agent or any Lender (including all information contained in the Schedules
hereto or in the other Loan Documents) for purposes of or in connection with
this Agreement, the other Loan Documents, or any transaction contemplated herein
or therein is, and will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided. On the Closing Date,
the Closing Date Projections represent, and as of the date on which any other
Projections are delivered to Agent, such additional Projections represent
Parent's and each Borrower's good faith estimate of their and their
Subsidiaries' future performance for the periods covered thereby based upon
assumptions believed by Parent and each of the Borrowers to be reasonable at the
time of the delivery thereof to Agent (it being understood that such projections
and forecasts are subject to uncertainties and contingencies, many of which are
beyond the control of the Loan Parties and their Subsidiaries and no assurances
can be given that such projections or forecasts will be realized).
4.19 INDEBTEDNESS. Set forth on SCHEDULE 4.19 is a true and complete list
of all Indebtedness of each Loan Party and each Subsidiary of a Loan Party
outstanding immediately prior to the Closing Date that is to remain outstanding
after the Closing Date and such Schedule accurately sets forth the aggregate
principal amount of such Indebtedness and the principal terms thereof.
4.20 MATERIAL CONTRACTS. Set forth on SCHEDULE 4.20 is a description of
all Material Contracts of Parent and its Subsidiaries, showing the parties and
principal subject matter thereof and amendments and modifications thereto;
PROVIDED, HOWEVER, that Administrative Borrower may amend SCHEDULE 4.20 to add
additional Material Contracts so long as such amendment occurs by written notice
to Agent not less than 5 days after the date on which Parent or its Subsidiary
enters into such Material Contract after the Closing Date. Except for matters
which, either individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Change, each Material Contract (other than those
that have expired at the end of their normal terms) (a) is in full force and
effect and is binding upon and enforceable against Parent or its Subsidiary and,
to the best of Parent's and each Borrower's knowledge, each other Person that is
a party thereto in accordance with its terms, (b) has not been otherwise amended
or modified (other than amendments or modifications permitted by SECTION
6.7(C)), and (c) is not in default due to the action or inaction of Parent or
any of its Subsidiaries.
4.21 PERMITS, LICENSES, ETC. Parent and its Subsidiaries are in
compliance in all respects with all governmental permits, licenses,
authorizations, approvals, entitlements and accreditations required and material
for such Person lawfully to own, lease, manage or operate, or to acquire, each
business currently owned, leased, managed or operated, or previously acquired,
by such Person. No condition exists or event has occurred which could reasonably
be expected to result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such permit, license, authorization, approval, entitlement or
accreditation, and there is no outstanding claim by any Governmental Authority
that any such permit, license, authorization, approval, entitlement or
accreditation is not in full force and effect.
4.22 SUPPLIERS. There exists no actual or, to the best knowledge of
Parent and each Borrower, threatened termination, cancellation or limitation of,
or modification to or change in, the business relationship between Parent and
any Subsidiary of Parent, on the one hand, and any material supplier thereof, on
the other hand which could reasonably be expected to result in a Material
Adverse Change; and, to the best knowledge of Parent and each Borrower, there
exists no present state of facts or circumstances that could give rise to or
result in any such termination, cancellation, limitation, modification or
change.
4.23 MARGIN STOCK. None of Loan Parties or any of their respective
Subsidiaries is nor will be engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System),
and no proceeds of the Advances or the Term Loan will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
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4.24 INSURANCE. Parent and each of its Subsidiaries keeps its property
adequately insured and maintains (a) insurance to such extent and against such
risks, including fire, as is customary with companies in the same or similar
businesses, (b) workers' compensation insurance in the amount required by
applicable law, (c) public liability insurance in the amount customary with
companies in the same or similar business against claims for personal injury or
death on properties owned, occupied or controlled by it, and (d) such other
insurance as may be required by law or as may be reasonably required by Agent
(including, without limitation, against larceny, embezzlement or other criminal
misappropriation). SCHEDULE 4.24 sets forth a list of all insurance maintained
by Parent and its Subsidiaries on the Closing Date.
4.25 INVESTMENT COMPANY ACT, ETC. No Loan Party is (a) an "investment
company" or an "affiliated person" or "promoter" of, or "principal underwriter"
of or for, an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended, or (b) subject to regulation under any ▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, local or foreign statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.
4.26 TAXES, ETC. All federal, state, provincial, territorial,
supranational, local and foreign tax returns and other reports required by
applicable law to be filed by any Loan Party have been filed, or extensions have
been obtained, and all taxes, assessments and other governmental charges imposed
upon any Loan Party or any property of any Loan Party and which have become due
and payable on or prior to the date hereof have been paid, except as otherwise
permitted under SECTION 5.7.
4.27 NATURE OF BUSINESS. No Loan Party is engaged in any business other
than (a) designing, manufacturing, and selling engineered materials and
components for the electronic, industrial and commercial markets, (b)
manufacturing and distributing meat-room products and maintenance services for
the meat and deli departments of supermarkets; restaurants; meat, poultry and
fish processing plants; and (c) distributing electrical saws and food processing
equipment.
4.28 RELATED TRANSACTION DOCUMENTS. The Parent has delivered to Agent a
complete and correct copy of each Related Transaction Document, including all
schedules and exhibits thereto. The Related Transaction Documents set forth the
entire agreement and understanding of the parties thereto relating to the
subject matter thereof, and there are no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby. The
execution, delivery and performance of the Related Transaction Documents have
been duly authorized by all necessary action (including, without limitation, the
obtaining of any consent of stockholders or other holders of Capital Stock
required by law or by any applicable corporate or other organizational
documents) on the part of each such Person. No authorization or approval or
other action by, and no notice to filing with or license from, any Governmental
Authority is required for such sale other than such as have been obtained on or
prior to the Closing Date. The Related Transaction Documents are the legal,
valid and binding obligation of the parties thereto, enforceable against such
parties in accordance with their terms.
4.29 NO IMMUNITY. No Loan Party nor any Subsidiary of any Loan Party or
any of their respective property has any immunity from jurisdiction of any court
or from any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise) under the
laws of the United States or its jurisdiction of organization.
4.30 NO TAXES. Except for any withholding tax imposed on interest payable
by any Loan Party hereunder, there is no tax, levy, impost, duty, fee,
assessment or other governmental charge, or any deduction or withholding,
imposed by any Governmental Authority either (i) on or by virtue of the
execution or delivery of the Loan Documents or (ii) on any payment to be made by
any Loan Party pursuant to the Loan Documents.
30
5. AFFIRMATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, until
termination of all of the Commitments and payment in full of the Obligations,
Parent and each of the Borrowers shall and shall cause each of their respective
Subsidiaries to do all of the following:
5.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables Loan
Parties to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Loan Parties also shall keep a
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to their and their Subsidiaries' sales. Loan Parties
shall also maintain their billing systems/practices as approved by Agent prior
to the Closing Date and shall only make material modifications thereto with
notice to, and consent of, Agent.
5.2 COLLATERAL REPORTING. Provide Agent (and if so requested by Agent,
with copies for each Lender) with each of the reports set forth on SCHEDULE 5.2
at the times specified therein. In addition, each Borrower agrees to cooperate
fully with Agent to facilitate and implement a system of electronic collateral
reporting in order to provide electronic reporting of each of the items set
forth above.
5.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent, with
copies to each Lender, each of the financial statements, reports, or other items
set forth on SCHEDULE 5.3 at the times specified therein. In addition, Parent
agrees that no Subsidiary of Parent will have a fiscal year different from that
of Parent.
5.4 GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements.
5.5 INSPECTION. Permit Agent, each Lender, and each of their duly
authorized representatives or agents to visit any of its properties and inspect
any of its assets or books and records, to examine and make copies of its books
and records, and to discuss its affairs, finances, and accounts with, and to be
advised as to the same by, its officers and employees at such reasonable times
and intervals as Agent or any such Lender may designate and, so long as no
Default or Event of Default exists, with reasonable prior notice to
Administrative Borrower. In furtherance of the foregoing, during the continuance
of an Event of Default, Parent and each Borrower hereby authorizes its
independent accountants, and the independent accountants of each of its
Subsidiaries, to discuss the affairs, finances and accounts of such Person
(independently or together with representatives of such Person) with the agents
and representatives of Agent in accordance with this SECTION 5.5.
5.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
properties which are necessary or useful in the proper conduct of their business
in good working order and condition, ordinary wear, tear, and casualty excepted
(and except where the failure to do so could not be expected to result in a
Material Adverse Change), and comply at all times with the provisions of all
material leases to which it is a party as lessee, so as to prevent any material
loss or forfeiture thereof or thereunder.
5.7 TAXES. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Loan
Parties, their Subsidiaries, or any of their respective assets to be paid in
full, before delinquency or before the expiration of any extension period,
except to the extent that the validity of such assessment or tax shall be the
subject of a Permitted Protest and except for assessments and taxes not
exceeding $100,000 in the aggregate. Loan Parties will and will cause their
Subsidiaries to make timely payment or deposit of all tax payments and
withholding taxes required of them by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Loan Party or Subsidiary of a Loan Party
has made such payments or deposits.
31
5.8 INSURANCE.
(a) At Parent's or Borrowers' expense, maintain insurance (with
responsible and reputable insurance companies) respecting their and their
Subsidiaries' assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Parent or Borrowers
also shall maintain business interruption, public liability, and product
liability insurance, as well as insurance against larceny, embezzlement, and
criminal misappropriation. All such policies of insurance shall be in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Administrative Borrower shall deliver copies of all such policies to
Agent with an endorsement naming Agent as the loss payee (under a satisfactory
lender's loss payable endorsement) or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 30 days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of any
loss exceeding $250,000 covered by such insurance. So long as no Event of
Default has occurred and is continuing, Borrowers shall have the exclusive right
to adjust any losses payable under any such insurance policies which are less
than $500,000. Following the occurrence and during the continuation of an Event
of Default, or in the case of any losses payable under such insurance exceeding
$500,000, Agent shall have the exclusive right to adjust any losses payable
under any such insurance policies, without any liability to Loan Parties or
their Subsidiaries whatsoever in respect of such adjustments; provided, however,
that if no Event of Default exists, Borrowers and Agent shall use commercially
reasonable efforts to adjust any losses by agreement of the parties.
5.9 LOCATION OF COLLATERAL. Keep each Loan Party's and its Subsidiaries'
Inventory and Equipment (other than vehicles, Inventory maintained on vehicles
and Equipment out for repair) only at the locations identified on SCHEDULE 4.5
and their chief executive offices only at the locations identified on SCHEDULE
4.7(B); PROVIDED, HOWEVER, that Administrative Borrower may amend SCHEDULE 4.5
or SCHEDULE 4.7 so long as such amendment occurs by written notice to Agent not
less than 30 days after the date on which such Inventory or Equipment is moved
to such new location or such chief executive office is relocated, so long as
such new location is within the continental United States or Canada, and so long
as, at the time of such written notification, the Loan Party provides Agent a
Collateral Access Agreement with respect thereto.
5.10 COMPLIANCE WITH LAWS. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change, such compliance to include, without limitation, (a) paying
before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or upon any of
its properties, (b) paying all lawful claims which if unpaid might become a Lien
or charge upon any of its properties, except to the extent contested in good
faith by proper proceedings which stay the imposition of any penalty, fine or
Lien resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof in accordance with GAAP,
(c) withholding from each payment made to any of its past or present employees,
officers or directors, and to any non resident of the country in which it is
resident, the amount of all Taxes and other deductions required to be withheld
therefrom and paying the same to the proper tax or other receiving officers
within the time required under any applicable laws, and (d) collect from all
Persons the amount of all Taxes required to be collected from them and remit the
same to the proper tax or other receiving officers within the time required
under any applicable laws.
5.11 LEASES. Pay when due all rents and other amounts payable under any
material leases to which any Loan Party or any Subsidiary of a Loan Party is a
party or by which any Loan Party's or any of its Subsidiaries' properties and
assets are bound, unless such payments are the subject of a Permitted Protest.
32
5.12 EXISTENCE. At all times preserve and keep in full force and effect
each Loan Party's and each of its Subsidiaries', valid existence, good standing
in its jurisdiction of organization and qualifications to do business as a
foreign entity in each jurisdiction in which it is required to be so qualified
and, except as could not reasonably be expected to result in a Material Adverse
Change, any rights, franchises, permits, licenses, accreditations,
authorizations, or other approvals material to their businesses.
5.13 ENVIRONMENTAL.
(a) Keep any property either owned or operated by any Loan Party
or any Subsidiary of a Loan Party free of any Environmental Liens or post bonds
or other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by any Loan Party or any Subsidiary of a Loan Party and take any
Remedial Actions required to ▇▇▇▇▇ said release or otherwise to come into
compliance with applicable Environmental Law, and (d) promptly, but in any event
within 5 days of its receipt thereof, provide Agent with written notice of any
of the following: (i) actual knowledge or written notice that an Environmental
Lien has been filed against any of the real or personal property of any Loan
Party or any Subsidiary of a Loan Party, (ii) actual knowledge or written notice
of the commencement of any Environmental Action or written notice that an
Environmental Action will be filed against any Loan Party or any Subsidiary of a
Loan Party, and (iii) written notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.
5.14 DISCLOSURE UPDATES. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.
5.15 CONTROL AGREEMENTS. Take all reasonable steps in order for Agent to
obtain control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107
of the Code with respect to (subject to the proviso contained in SECTION 6.12)
all of its Securities Accounts, Deposit Accounts, electronic chattel paper,
investment property, and letter-of-credit rights.
5.16 FORMATION OF SUBSIDIARIES. At the time that any Loan Party forms any
direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, such Loan Party shall (a) cause such new Subsidiary to
provide to Agent a joinder to the Guaranty and the Security Agreement, together
with such other security documents (including Mortgages with respect to any Real
Property of such new Subsidiary), as well as appropriate financing statements
(and with respect to all property subject to a Mortgage, fixture filings), all
in form and substance satisfactory to Agent (including being sufficient to grant
Agent a first priority Lien (subject to Permitted Priority Liens) in and to the
assets of such newly formed or acquired Subsidiary), (b) provide to Agent a
pledge agreement and appropriate certificates and powers or financing
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance satisfactory to Agent, and (c)
provide to Agent all other documentation, including one or more opinions of
counsel satisfactory to Agent, which in its opinion is appropriate with respect
to the execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this SECTION 5.16 shall be a Loan Document.
33
5.17 FURTHER ASSURANCES. At any time upon the request of Agent, the Loan
Parties shall execute or deliver to Agent, and shall cause their Subsidiaries to
execute or deliver to Agent, any and all financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, mortgages, deeds of trust, opinions of counsel, and all other documents
(collectively, the "ADDITIONAL DOCUMENTS") that Agent may request in form and
substance reasonably satisfactory to Agent, to create, perfect, and continue
perfected or to better perfect the Agent's Liens in all of the properties and
assets of the Loan Parties and their Subsidiaries (whether now owned or
hereafter arising or acquired, tangible or intangible, real or personal), to
create and perfect Liens in favor of Agent in any Real Property acquired by the
Loan Parties or their Subsidiaries after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, Parent and each
Borrower authorize Agent to execute any such Additional Documents in the Loan
Party's or their Subsidiaries' names, as applicable, and authorizes Agent to
file such executed Additional Documents in any appropriate filing office.
5.18 MATERIAL CONTRACTS. Contemporaneously with the delivery of each
Compliance Certificate pursuant hereto, provide Agent with copies of (a) each
Material Contract entered into since the delivery of the previous Compliance
Certificate, and (b) each amendment or modification of any Material Contract
entered into since the delivery of the previous Compliance Certificate.
5.19 SUBORDINATION. Cause all Indebtedness and other obligations now or
hereafter owed by it to any of its Affiliates, to be subordinated in right of
payment and security to the Indebtedness and other Obligations owing to Agent
and the Lenders in accordance with a subordination agreement in form and
substance satisfactory to Agent.
5.20 AFTER ACQUIRED REAL PROPERTY. Upon the acquisition by it or any of
its Subsidiaries after the date hereof of any interest (whether fee or
leasehold) in any Real Property (wherever located) (each such interest being an
"AFTER ACQUIRED PROPERTY") (x) with a Current Value (as defined below) in excess
of $150,000 in the case of a fee interest, or (y) requiring the payment of
annual rent exceeding in the aggregate $250,000 in the case of leasehold
interest, immediately so notify Agent, setting forth with specificity a
description of the interest acquired, the location of the real property, any
structures or improvements thereon and either an appraisal or such Loan Party's
good-faith estimate of the current value of such real property (for purposes of
this Section, the "CURRENT VALUE"). Agent shall notify such Loan Party in
writing whether it intends to require a Mortgage and the other documents
referred to below or in the case of leasehold, a leasehold Mortgage or a
Collateral Access Agreement. Upon receipt of such notice requesting a Mortgage,
the Person which has acquired such After Acquired Property shall furnish to
Agent within a reasonable time thereafter the following, each in form and
substance reasonably satisfactory to Agent: (a) in the case of a fee interest, a
Mortgage with respect to such real property and related assets located at the
After Acquired Property, each duly executed by such Person and in recordable
form; (b) in the case of a fee interest, evidence of the recording of the
Mortgage referred to in clause (a) above in such office or offices as may be
necessary or, in the reasonable opinion of Agent, desirable to create and
perfect a valid and enforceable first priority lien on the property purported to
be covered thereby or to otherwise protect the rights of Agent and the Lenders
thereunder, (c) in the case of a fee interest, a title insurance policy
satisfactory to Agent, (d) in the case of a fee interest, a survey of such real
property, certified to Agent and to the issuer of the title insurance policy
referred to in clause (c) above by a licensed professional surveyor reasonably
satisfactory to Agent, (v) in the case of a fee interest, Phase I environmental
site assessments with respect to such real property, certified to Agent by a
company reasonably satisfactory to Agent, or such other evidence or description
of the environmental status of the property reasonably acceptable to Agent, (e)
in the case of a leasehold interest, a certified copy of the lease between the
landlord and such Person with respect to such Real Property in which such Person
has a leasehold interest, and the certificate of occupancy, if any, with respect
thereto, and (f) such other documents or instruments (including opinions of
counsel) as Agent may reasonably require. In the case of a leasehold interest,
the Person which has acquired such After Acquired property shall request of the
landlord an attornment and nondisturbance agreement between the landlord (and
any fee mortgagee) with respect to such real property and Agent. Borrowers shall
34
pay all reasonable fees and expenses, including reasonable attorneys' fees and
expenses, and all title insurance charges and premiums, in connection with each
Loan Party's obligations under this SECTION 5.20.
6. NEGATIVE COVENANTS.
Parent and each Borrower covenants and agrees that, until
termination of all of the Commitments and payment in full of the Obligations,
Parent and each of the Borrowers will not and will not permit any of their
respective Subsidiaries to do any of the following:
6.1 INDEBTEDNESS. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit,
(b) Indebtedness set forth on SCHEDULE 4.19 and any Refinancing
Indebtedness in respect of such Indebtedness,
(c) Permitted Purchase Money Indebtedness and any Refinancing
Indebtedness in respect of such Indebtedness,
(d) endorsement of instruments or other payment items for deposit,
(e) Indebtedness composing Permitted Investments,
(f) the Second Lien Indebtedness and, subject to the execution and
delivery of a joinder to the terms of the Intercreditor Agreement, any
Refinancing Indebtedness of such Indebtedness,
(g) the Subordinated Indebtedness and the obligations under the
WHX Guaranty Documents and, subject to the execution and delivery of a joinder
to the terms of the Subordination Agreement, any Refinancing Indebtedness of
such Indebtedness,
(h) Indebtedness incurred by Parent's Subsidiaries organized
outside of the United States and Canada (other than Indebtedness described on
SCHEDULE 4.19), provided that (i) the aggregate principal amount of such
Indebtedness shall not exceed $3,000,000 outstanding at any time and (ii) such
Indebtedness is supported by one or more issued and outstanding Letters of
Credit (for the avoidance of doubt, Indebtedness shall not include any
contingent obligations arising under undrawn letters of credit that provide
credit support for Indebtedness permitted under this clause (h)); and
(i) Other Subordinated Indebtedness.
6.2 LIENS. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.
6.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation, amalgamation,
reorganization, or recapitalization, or reclassify its Stock except that so long
as no Default or Event of Default exists or would result therefrom, (i) a
Borrower or any Domestic Subsidiary thereof may merge with a Borrower, provided
such Borrower is the continuing or surviving Person, (ii) the Loan Parties may
consummate a merger or similar transaction in connection with a Permitted Kasco
Sale Transaction and (iii) Loan Parties may effectuate a restructuring for tax
purposes with the prior written consent of Agent, such consent to be granted or
35
withheld by Agent in its sole and absolute discretion (provided that so long as
such tax restructuring is not adverse to the interests of the Lender Group, as
determined by Agent in its sole discretion, Agent's consent shall not be
unreasonably withheld).
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution),
(c) Suspend or go out of a substantial portion of its or their
business.
6.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions or a Permitted
Kasco Sale Transaction, convey, sell, lease, license, assign, transfer, or
otherwise dispose of (or enter into an agreement to convey, sell, lease,
license, assign, transfer, or otherwise dispose of) any of the assets of any
Loan Party or any Subsidiary of a Loan Party.
6.5 CHANGE NAME. Change any Loan Party's or any of its Subsidiaries'
name, organizational identification number, state of organization or
organizational identity; PROVIDED, HOWEVER, that a Loan Party or a Subsidiary of
a Loan Party may change its name upon at least 30 days prior written notice by
Administrative Borrower to Agent of such change and so long as, at the time of
such written notification, such Loan Party or such Subsidiary provides any
financing statements necessary to perfect and continue perfected the Agent's
Liens.
6.6 NATURE OF BUSINESS. Make any change in the nature of their business
as described in SCHEDULE 6.6 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities.
6.7 PREPAYMENTS AND AMENDMENTS. Except in connection with Refinancing
Indebtedness permitted by SECTION 6.1,
(a) optionally prepay, redeem, defease, purchase, or otherwise
acquire any Indebtedness of any Loan Party or any Subsidiary of a Loan Party,
other than the Obligations in accordance with this Agreement,
(b) make any payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or
(c) directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of (i) the Second Lien Loan Documents
(except as specifically permitted by the Intercreditor Agreement), (ii) any
other agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under SECTION 6.1, (iii) except to the extent
that such amendment, modification, alteration, increase, or change could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Change, any other Material Contract, or (iv) its certificate of
incorporation or bylaws (or other similar organizational documents), including,
without limitation, by the filing or modification of any certificate of
designation, or any agreement or arrangement entered into by it, with respect to
any of its Stock (including any shareholders' agreement), or enter into any new
agreement with respect to any of its Stock, without the prior written consent of
Agent, except as to such amendments, modifications or changes or any such new
agreements or arrangements pursuant to this clause (iv) that are not adverse to
the interests of any member of the Lender Group, or
(d) amend, modify or otherwise change its name, jurisdiction of
organization, organizational identification number or FEIN, without at least
twenty (20) days prior written notice to Agent.
6.8 CHANGE OF CONTROL. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
36
6.9 CONSIGNMENTS. Consign any of their Inventory or sell any of their
Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or other
conditional terms of sale, in an aggregate amount at any time outstanding
exceeding $1,000,000.
6.10 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or other property, other than common Stock of the Parent) on, or
purchase, acquire, redeem, or retire any of Parent's Stock, of any class,
whether now or hereafter outstanding.
6.11 ACCOUNTING METHODS. Modify or change their fiscal year, method of
accounting (other than as may be required to conform to GAAP) or auditors, or
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into, with any third party accounting firm or service
bureau for the preparation or storage of Loan Parties' or their Subsidiaries'
accounting records without said accounting firm or service bureau agreeing to
provide Agent information regarding Loan Parties' and their Subsidiaries'
financial condition.
6.12 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; PROVIDED,
HOWEVER, that the Loan Parties shall not have Permitted Investments (other than
in the Cash Management Accounts) in Deposit Accounts or Securities Accounts in
an aggregate amount in excess of $100,000 at any one time unless the applicable
Loan Party and the applicable securities intermediary or bank have entered into
Control Agreements governing such Permitted Investments in order to perfect (and
further establish) the Agent's Liens in such Permitted Investments; PROVIDED,
HOWEVER, the applicable Loan Party shall transfer any such Investment with
account balance in excess of $25,000 to a Deposit Account or Securities Account
that is subject to a Control Agreement within one (1) Business Day of such
account balance exceeding $25,000. Subject to the foregoing proviso, Loan
Parties shall not and shall not permit their Domestic Subsidiaries to establish
or maintain any Deposit Account or Securities Account unless Agent shall have
received a Control Agreement in respect of such Deposit Account or Securities
Account.
6.13 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate (which is not a Loan Party)
of any Loan Party or any Subsidiary (which is not a Loan Party) of a Loan Party
except for:
(a) transactions (other the payment of management, consulting,
monitoring, or advisory fees) between the Loan Parties or their Subsidiaries, on
the one hand, and any Affiliate of the Loan Parties or their Subsidiaries, on
the other hand, so long as such transactions (i) are in the ordinary course of
business and desirable for the prudent operation of its business, upon fair and
reasonable terms, (ii) are fully disclosed to Agent if they involve one or more
payments by any Loan Party or any of Subsidiary of a Loan Party in excess of
$250,000 for any single transaction or series of transactions, and (iii) are no
less favorable to Loan Parties or their Subsidiaries, as applicable, than would
be obtained in an arm's length transaction with a non-Affiliate; and
(b) the payment of reasonable fees, compensation, or employee
benefit arrangements to, and any indemnity provided for the benefit of, outside
directors of Parent in the ordinary course of business and consistent with
industry practice.
6.14 USE OF PROCEEDS. Use the proceeds of the Advances for any purpose
other than (a) on the Closing Date, (i) to repay, in full, the outstanding
principal, accrued interest, and accrued fees and expenses owing to Existing
Lender, (ii) to partially repay the outstanding obligations under the Bridge
Facility in an amount equal to $56,659,776.38, and (iii) to pay transactional
fees, costs, and expenses incurred in connection with this Agreement, the other
Loan Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes.
37
6.15 INVENTORY AND EQUIPMENT WITH BAILEES. Except in the ordinary course
of business, store any Inventory or Equipment of Loan Parties or their
Subsidiaries at any time now or hereafter with a bailee, warehouseman, or
similar party.
6.16 FINANCIAL COVENANTS.
(a) MINIMUM TTM EBITDA. Permit TTM EBITDA to be less than the
required amount set forth in the following table for the applicable period set
forth opposite thereto:
-------------------------------------------------------------------------------
Applicable Amount Applicable Period
-------------------------------------------------------------------------------
$17,250,000 For the 12- month period
ending September 30, 2007
-------------------------------------------------------------------------------
$17,250,000 For the 12- month period
ending December 31, 2007
--------------------------------------------------------------------------------
$18,500,000 For the 12- month period
ending March 31, 2008
-------------------------------------------------------------------------------
$19,500,000 For the 12- month period
ending June 30, 2008
-------------------------------------------------------------------------------
$20,250,000 For the 12- month period
ending September 30, 2008
-------------------------------------------------------------------------------
$20,750,000 For the 12- month period ending
December 31, 2008 and ending each
fiscal quarter thereafter
-------------------------------------------------------------------------------
(b) FIXED CHARGE COVERAGE RATIO. Have a Fixed Charge Coverage
Ratio, measured on a quarterly basis, less than the required amount set forth in
the following table for the applicable period set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Ratio Applicable Period
--------------------------------------------------------------------------------
0.81:1.0 For the 12- month period
ending September 30, 2007
--------------------------------------------------------------------------------
0.83:1.0 For the 12- month period
ending December 31, 2007
--------------------------------------------------------------------------------
0.90:1.0 For the 12- month period
ending March 31, 2008
--------------------------------------------------------------------------------
1.02:1.0 For the 12- month period
ending June 30, 2008
--------------------------------------------------------------------------------
1.10:1.0 For the 12- month period
ending September 30, 2008
--------------------------------------------------------------------------------
38
--------------------------------------------------------------------------------
1.15:1.0 For the 12- month period ending
December 31, 2008 and ending each
fiscal quarter thereafter
--------------------------------------------------------------------------------
(c) LEVERAGE RATIO. Have a Leverage Ratio, measured on a quarterly
basis, more than the applicable ratio set forth in the following table for the
applicable date set forth opposite thereto:
--------------------------------------------------------------------------------
Applicable Ratio Applicable Date
--------------------------------------------------------------------------------
5.22:1.0 September 30, 2007
--------------------------------------------------------------------------------
5.00:1.0 December 31, 2007
--------------------------------------------------------------------------------
4.90:1.0 March 31, 2008
--------------------------------------------------------------------------------
4.54:1.0 June 30, 2008
--------------------------------------------------------------------------------
4.12:1.0 September 30, 2008
--------------------------------------------------------------------------------
4.00:1.0 December 31, 2008 and the last day of
each fiscal quarter thereafter
--------------------------------------------------------------------------------
(d) CAPITAL EXPENDITURES. Make Capital Expenditures in any fiscal
year in excess of the amount set forth in the following table for the applicable
period:
--------------------------------------------------------------------------------
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2007 2008 2009 2010 2011 2011
--------------------------------------------------------------------------------
$9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000 $9,000,000
--------------------------------------------------------------------------------
; PROVIDED, HOWEVER, that if during any fiscal year the amount of Capital
Expenditures permitted for that fiscal year is not utilized, 50% of such
unutilized amount (exclusive of any amounts carried over from the prior fiscal
year) may be utilized in the immediately succeeding fiscal year.
6.17 PARENT AS HOLDING COMPANY. Permit Parent to incur any liabilities
(other than liabilities arising under the Loan Documents, the Second Lien Loan
Documents, the Subordinated Debt Loan Documents or the WHX Guaranty Documents),
own or acquire any assets (other than the Stock of its Subsidiaries) or engage
itself in any operations or business except as set forth on SCHEDULE 6.17.
6.18 EMPLOYEE BENEFITS. (i) Engage, or permit any ERISA Affiliate to
engage, in any transaction described in Section 4069 of ERISA; (ii) engage, or
permit any ERISA Affiliate to engage, in any prohibited transaction described in
Section 406 of ERISA or 4975 of the IRC for which a statutory or class exemption
is not available or a private exemption has not previously been obtained from
the U.S. Department of Labor; (iii) adopt or permit any ERISA Affiliate to adopt
any employee welfare benefit plan within the meaning of Section 3(1) of ERISA
which provides benefits to employees after termination of employment other than
as required by Section 601 of ERISA or applicable law; (iv) fail to make any
contribution or payment to any Multiemployer Plan which it or any ERISA
Affiliate may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto; (v) fail, or permit any ERISA
Affiliate to fail, to pay any required installment or any other payment required
under Section 412 of the IRC on or before the due date for such installment or
39
other payment; or (vi) merge or otherwise consolidate any Employee Plan of any
Loan Party with any other Employee Plan without the prior written consent of
Agent, such consent to be granted or withheld by Agent in its sole and absolute
discretion (provided that so long as such merger or consolidation is not adverse
to the interests of the Lender Group, as determined by Agent in its sole
discretion, Agent's consent shall not be unreasonably withheld).
6.19 LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. Create or otherwise cause, incur, assume, suffer or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary of any Loan Party (i) to pay dividends or to
make any other distribution on any shares of Stock of such Subsidiary owned by
any Loan Party or any of its Subsidiaries, (ii) to pay or prepay or to
subordinate any Indebtedness owed to any Loan Party or any of its Subsidiaries,
(iii) to make loans or advances to any Loan Party or any of its Subsidiaries or
(iv) to transfer any of its property or assets to any Loan Party or any of its
Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing;
PROVIDED, HOWEVER, that nothing in any of clauses (i) through (iv) of this
SECTION 6.19 shall prohibit or restrict compliance with:
(a) this Agreement, the other Loan Documents, and the Second Lien
Loan Documents;
(b) any applicable law, rule or regulation (including applicable
currency control laws and applicable state corporate statutes
restricting the payment of dividends in certain circumstances);
(c) in the case of clause (iv), any agreement setting forth
customary restrictions on the subletting, assignment or transfer of
any property or asset that is leased or licensed; or
(d) in the case of clause (iv), any agreement, instrument or other
document evidencing a Permitted Lien that restricts, on customary
terms, the transfer of any property or assets subject thereto.
6.20 LEASE OBLIGATIONS. Create, incur or suffer to exist, or permit any
of its Subsidiaries to create, incur or suffer to exist, any obligations as
lessee (i) for the payment of rent for any real or personal property in
connection with any sale and leaseback transaction, or (ii) for the payment of
rent for any real or personal property under leases or agreements to lease other
than (A) Capital Lease Obligations which would not cause the aggregate amount of
all obligations under Capital Leases entered into after the Closing Date owing
by all Loan Parties and their Subsidiaries in any fiscal year to exceed the
amounts SECTION 6.16(D), and (B) Operating Lease Obligations which would not
cause the aggregate amount of all Operating Lease Obligations owing by all Loan
Parties and their Subsidiaries in any fiscal year to exceed $5,000,000.
6.21 FEDERAL RESERVE REGULATIONS. Permit the Advances or the Term Loan,
or the proceeds thereof, to be used for any purpose that would cause the
Advances or the Term Loan to be a margin loan under the provisions of Regulation
T, U or X of the Board of Governors of the Federal Reserve System.
6.22 INVESTMENT COMPANY ACT OF 1940. Engage in any business, enter into
any transaction, use any securities or take any other action or permit any of
its Subsidiaries to do any of the foregoing, that would cause it or any of its
Subsidiaries to become subject to the registration requirements of the
Investment Company Act of 1940, as amended, by virtue of being an "investment
company" or a company "controlled" by an "investment company" not entitled to an
exemption within the meaning of such Act.
7. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:
40
7.1 If any Loan Party fail to pay when due and payable, or when declared
due and payable, (a) all or any portion of the Obligations consisting of
interest, fees, or charges due the Lender Group, reimbursement of Lender Group
Expenses, or other amounts (other than any portion thereof constituting
principal) constituting Obligations (including any portion thereof that accrues
after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any such Insolvency
Proceeding), and such failure continues for a period of 3 Business Days, or (b)
all or any portion of the principal of the Obligations;
7.2 If any Loan Party or any Subsidiary of any Loan Party:
(a) fails to perform or observe any covenant or other agreement
contained in any of SECTIONS 2.7, 5.2, 5.3, 5.4, 5.5, 5.8, 5.12, 5.14, 5.16,
5.17 and 6.1 through 6.22 of this Agreement or Section 6 of the Security
Agreement; provided, that no more than two (2) times during any fiscal year of
Parent, any Loan Party may fail to deliver in a timely manner a delivery
required under SECTIONS 5.2, 5.3 or 5.4, if such delivery shall occur no later
than two (2) Business Days following notice by Agent;
(b) fails to perform or observe any covenant or other agreement
contained in any of SECTIONS 5.6, 5.7, 5.9, 5.10, 5.11 and 5.15 of this
Agreement and such failure continues for a period of 10 days after the earlier
of (i) the date on which such failure shall first become known to any officer of
any Loan Party, or (ii) written notice thereof is given to Administrative
Borrower by Agent;
(c) fails to perform or observe any covenant or other agreement
contained in this Agreement, or in any of the other Loan Documents, in each
case, other than any such covenant or agreement that is the subject of another
provision of this SECTION 7 (in which event such other provision of this SECTION
7 shall govern), and such failure continues for a period of 20 days after the
earlier of (i) the date on which such failure shall first become known to any
officer of any Loan Party, or (ii) written notice thereof is given to
Administrative Borrower by Agent;
7.3 If any material portion of any Loan Party's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, or is levied upon, or comes into the possession of any third Person and
the same is not discharged before the earlier of 30 days after the date it first
arises or 5 days prior to the date on which such property or asset is subject to
forfeiture by such Loan Party or the applicable Subsidiary;
7.4 If an Insolvency Proceeding is commenced by any Loan Party or any
Subsidiary of a Loan Party;
7.5 If an Insolvency Proceeding is commenced against any Loan Party or
any Subsidiary of a Loan Party, and any of the following events occur: (a) the
applicable Loan Party or Subsidiary consents to the institution of such
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof, (d) an interim trustee is appointed to take possession of
all or any substantial portion of the properties or assets of, or to operate all
or any substantial portion of the business of, any Loan Party or any Subsidiary
of a Loan Party, or (e) an order for relief shall have been issued or entered
therein;
7.6 If any Loan Party or any Subsidiary of a Loan Party is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
7.7 If one or more judgments, orders, or awards involving an aggregate
amount of $250,000, or more (except to the extent fully covered by insurance
pursuant to which the insurer has accepted liability therefor in writing) shall
be entered or filed against any Loan Party or any Subsidiary of any Loan Party
or with respect to any of their respective assets, and the same is not released,
discharged, bonded against, or stayed pending appeal before the earlier of 30
41
days after the date it first arises or 5 days prior to the date on which such
asset is subject to being forfeited by the applicable Loan Party or the
applicable Subsidiary;
7.8 If there is a default in one or more agreements to which any Loan
Party or any Subsidiary of a Loan Party is a party with one or more third
Persons relative to Indebtedness of any Loan Party or any Subsidiary of any Loan
Party involving an aggregate amount of $250,000, or more, and such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by such third Person(s), irrespective of whether exercised, to accelerate
the maturity of the applicable Loan Party's or Subsidiary's obligations
thereunder;
7.9 If any warranty, representation, material written statement, or
material Record made herein or in any other Loan Document or delivered to Agent
or any Lender in connection with this Agreement or any other Loan Document
proves to be untrue in any material respect (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof) as of the
date of issuance or making or deemed making thereof;
7.10 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor, or any such Guarantor
becomes the subject of an Insolvency Proceeding;
7.11 If the Security Agreement, the Canadian Security Agreement, any
Mortgage or any other Loan Document that purports to create a Lien, shall, for
any reason, fail or cease to create a valid and perfected and, except to the
extent permitted by the terms hereof or thereof, first priority Lien (subject to
Permitted Priority Liens) on or security interest in the Collateral covered
hereby or thereby, except (a) as a result of a disposition of the applicable
Collateral in a transaction permitted under this Agreement or (b) solely as a
result of the gross negligence of Agent;
7.12 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void (except solely as a result of the gross
negligence of Agent), or the validity or enforceability thereof shall be
contested by any Loan Party or any Subsidiary of a Loan Party, or a proceeding
shall be commenced by any Loan Party or any Subsidiary of a Loan Party, or by
any Governmental Authority having jurisdiction over any Loan Party or any
Subsidiary of a Loan Party, seeking to establish the invalidity or
unenforceability thereof, or any Loan Party or any Subsidiary of a Loan Party
shall deny that it has any liability or obligation purported to be created under
any Loan Document;
7.13 Any material damage to, or loss, theft or destruction of, any
Collateral, whether or not insured, or any strike, lockout, labor dispute,
embargo, condemnation, act of God or public enemy, or other casualty which
causes, for more than thirty (30) consecutive days and which is not reasonably
capable of remedy within such period, the cessation or substantial curtailment
of revenue producing activities at any facility of any Loan Party, if any such
event or circumstance could reasonably be expected to have a Material Adverse
Effect;
7.14 Any cessation of a substantial part of the business of the Parent or
any of its Subsidiaries, taken as a whole, for a period which materially and
adversely affects the ability of such business to be continued on a profitable
basis;
7.15 Any Loan Party or any of its ERISA Affiliates shall have made a
complete or partial withdrawal from a Multiemployer Plan, and, as a result of
such complete or partial withdrawal, any Loan Party or any of its ERISA
Affiliates incurs a withdrawal liability in an annual amount exceeding $250,000;
or a Multiemployer Plan enters reorganization status under Section 4241 of
ERISA, and, as a result thereof any Loan Party's or any of its ERISA Affiliates'
annual contribution requirements with respect to such Multiemployer Plan
increases in an annual amount exceeding $250,000; or
42
7.16 Any Termination Event with respect to any Employee Plan shall have
occurred, and, 30 days after notice thereof shall have been given to any Loan
Party by any Agent, (i) such Termination Event (if correctable) shall not have
been corrected, and (ii) the then current value of such Employee Plan's vested
benefits exceeds the then current value of assets allocable to such benefits in
such Employee Plan by more than $250,000 (or, in the case of a Termination Event
involving liability under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 4971 of the IRC, which liabilities
will not be aggregated, the liability is in excess of such amount).
8. THE LENDER GROUP'S RIGHTS AND REMEDIES.
8.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by Parent
and each of the Borrowers:
(a) Declare all or any portion of the Obligations, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable;
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement, under any of the Loan Documents, or
under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents
as to any future liability or obligation of the Lender Group, but without
affecting any of the Agent's Liens in the Collateral and without affecting the
Obligations; and
(d) The Lender Group shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document.
The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in SECTION 7.4 or SECTION 7.5, in addition to the remedies
set forth above, without any notice to Loan Parties or any other Person or any
act by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Parent and each of the Borrowers.
8.2 REMEDIES CUMULATIVE. The rights and remedies of the Lender Group
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
9. TAXES AND EXPENSES.
If any Loan Party or its Subsidiaries fail to pay any monies
(whether taxes, assessments, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under such leases) due to
third Persons, or fails to make any deposits or furnish any required proof of
payment or deposit, all as required under the terms of this Agreement, then,
Agent, in its sole discretion and without prior notice to any Loan Party, may do
any or all of the following: (a) make payment of the same or any part thereof,
(b) set up such reserves against the Borrowing Base or the Maximum Revolver
Amount as Agent deems necessary to protect the Lender Group from the exposure
43
created by such failure, or (c) in the case of the failure to comply with
SECTION 5.8 hereof, obtain and maintain insurance policies of the type described
in SECTION 5.8 and take any action with respect to such policies as Agent deems
prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses
and any such payments shall not constitute an agreement by the Lender Group to
make similar payments in the future or a waiver by the Lender Group of any Event
of Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
10. WAIVERS; INDEMNIFICATION.
10.1 DEMAND; PROTEST; ETC. Except to the extent expressly provided
herein, Parent and each Borrower waives (on behalf of themselves and their
respective Subsidiaries) demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of documents, instruments, chattel
paper, and guarantees at any time held by the Lender Group on which Parent, such
Borrower or any Subsidiary may in any way be liable.
10.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Parent and each
Borrower hereby agrees (on behalf of themselves and their respective
Subsidiaries) that: (a) so long as Agent complies with its obligations, if any,
under the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Loan Parties.
10.3 INDEMNIFICATION. Parent and each Borrower, jointly and severally,
shall pay, indemnify, defend, and hold the Agent-Related Persons, the
Lender-Related Persons, and each Participant (each, an "INDEMNIFIED Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, liabilities,
fines, costs, penalties, and damages, and all reasonable fees and disbursements
of attorneys, experts, or consultants and all other costs and expenses actually
incurred in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of the Loan Parties' and their Subsidiaries' compliance with the
terms of the Loan Documents, (b) with respect to any investigation, litigation,
or proceeding related to this Agreement, any other Loan Document, or the use of
the proceeds of the credit provided hereunder (irrespective of whether any
Indemnified Person is a party thereto), or any act, omission, event, or
circumstance in any manner related thereto, and (c) in connection with or
arising out of any presence or release of Hazardous Materials at, on, under, to
or from any assets or properties owned, leased or operated by Parent or any of
its Subsidiaries or any Environmental Actions, Environmental Liabilities and
Costs or Remedial Actions related in any way to any such assets or properties of
Parent or any of its Subsidiaries (each and all of the foregoing, the
"INDEMNIFIED LIABILITIES"). The foregoing to the contrary notwithstanding,
Parent and Borrowers shall have no obligation to any Indemnified Person under
this SECTION 10.3 with respect to any Indemnified Liability that a court of
competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person or from such
Indemnified Person's breach of its material obligations under the Loan
Documents. This provision shall survive the termination of this Agreement and
the repayment of the Obligations. If any Indemnified Person makes any payment to
any other Indemnified Person with respect to an Indemnified Liability as to
which Parent or Borrowers were required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Parent and Borrowers with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
44
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE
CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED
PERSON OR OF ANY OTHER PERSON.
11. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by Parent, Borrowers or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative BAIRNCO CORPORATION
Borrower: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FROME ▇▇▇▇▇▇▇▇▇▇ &
WOLOSKY LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ , ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Agent: ▇▇▇▇▇ FARGO FOOTHILL, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to: PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ Hilson, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Agent and Parent and Borrowers may change the address at which they
are to receive notices hereunder, by notice in writing in the foregoing manner
given to the other party. All notices or demands sent in accordance with this
SECTION 11, other than notices by Agent in connection with enforcement rights
against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Parent and each Borrower acknowledges and
agrees (on behalf of themselves and their Subsidiaries) that notices sent by the
Lender Group in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when deposited
in the mail or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
45
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH OF THE PARTIES HERETO WAIVE, TO THE EXTENT PERMITTED
UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 12(B).
(c) EACH OF THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH OF THE PARTIES HERETO REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
13.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or more assignees
(each an "ASSIGNEE") that are Eligible Transferees all or any portion, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount (unless waived
by Agent) of $5,000,000 (except such minimum amount shall not apply to (x) an
assignment or delegation by any Lender to any other Lender or an Affiliate of
any Lender or (y) a group of new Lenders, each of whom is an Affiliate of each
other or a fund or account managed by any such new Lender or an Affiliate of
such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $5,000,000); PROVIDED, however, that Borrowers and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance and Agent has notified the assigning Lender of its receipt thereof in
accordance with SECTION 13.1(B), and (iii) unless waived by Agent, the assigning
Lender or Assignee has paid to Agent for Agent's separate account a processing
46
fee in the amount of $3,500. Anything contained herein to the contrary
notwithstanding, the payment of any fees shall not be required and the Assignee
need not be an Eligible Transferee if such assignment is in connection with any
merger, consolidation, sale, transfer, or other disposition of all or any
substantial portion of the business or loan portfolio of the assigning Lender.
(b) From and after the date that Agent notifies the assigning
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and, if applicable, payment of the required processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assigning Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights (except with respect to SECTION 10.3 hereof) and be released from any
future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation among Parent, Borrowers, the assigning Lender, and the Assignee;
PROVIDED, HOWEVER, that nothing contained herein shall release any assigning
Lender from obligations that survive the termination of this Agreement,
including such assigning Lender's obligations under SECTION 15 and SECTION
17.9(A) of this Agreement.
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Loan Parties or the performance or observance by Loan Parties of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (vi) such Assignee agrees that it will perform all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(d) Immediately upon Agent's receipt of the required processing
fee, if applicable, and delivery of notice to the assigning Lender pursuant to
SECTION 13.1(B), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
PRO TANTO.
(e) From and after the date that Agent notifies the assigning
Lender (with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and, if applicable, payment of the required processing
fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assigning Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights (except with respect to SECTION 10.3 hereof) and be released from any
future obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
47
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall effect
a novation among Parent, Borrowers, the assigning Lender, and the Assignee;
PROVIDED, HOWEVER, that nothing contained herein shall release any assigning
Lender from obligations that survive the termination of this Agreement,
including such assigning Lender's obligations under SECTION 15 and SECTION
17.9(A) of this Agreement.
(f) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Loan Parties or the performance or observance by Loan Parties of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (vi) such Assignee agrees that it will perform all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(g) Immediately upon Agent's receipt of the required processing
fee, if applicable, and delivery of notice to the assigning Lender pursuant to
SECTION 13.1(B), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
PRO TANTO.
(h) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons (a "PARTICIPANT") participating
interests in all or any portion of its Obligations, its Commitment, and the
other rights and interests of that Lender (the "ORIGINATING LENDER") hereunder
and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the Originating
Lender shall remain a "Lender" for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Parent,
Borrowers, Agent, and the Lenders shall continue to deal solely and directly
with the Originating Lender in connection with the Originating Lender's rights
and obligations under this Agreement and the other Loan Documents, (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has the right to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
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premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
the Loan Parties, the Collections of the Loan Parties or their Subsidiaries, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.
(i) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may, subject to the provisions of
SECTION 17.9, disclose all documents and information which it now or hereafter
may have relating to Loan Parties and their Subsidiaries and their respective
businesses.
(j) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR ss. 203.24, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
(k) Within five (5) Business Days of receipt of a written request
from the Administrative Borrower, Agent shall provide Administrative Borrower
with a listing of the Lenders and their respective Commitments, based on Agent's
current books and records.
13.2 SUCCESSORS. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; PROVIDED, HOWEVER,
that no Loan Party may assign this Agreement or any Loan Document or any rights
or duties hereunder or thereunder without the Lenders' prior written consent and
any prohibited assignment shall be absolutely void AB INITIO. No consent to
assignment by the Lenders shall release any Loan Party from its Obligations. A
Lender may assign this Agreement and the other Loan Documents and its rights and
duties hereunder and thereunder pursuant to SECTION 13.1 hereof and no consent
or approval by any Loan Party is required in connection with any such
assignment.
14. AMENDMENTS; WAIVERS.
14.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document (other than Bank Product Agreements or
the Fee Letter), and no consent with respect to any departure by any Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Administrative Borrower (on behalf of all Loan Parties) and then
any such waiver or consent shall be effective, but only in the specific instance
and for the specific purpose for which given; PROVIDED, HOWEVER, that no such
waiver, amendment, or consent shall do any of the following:
(a) increase the amount or extend the expiration date of any
Commitment of any Lender without the written consent of each Lender directly
affected thereby,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby,
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(c) forgive the principal of, or reduce the rate of interest on,
any loan or other extension of credit hereunder, or reduce any fees or other
amounts payable hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby,
(d) amend or modify the Pro Rata Share that is required to take
any action hereunder without the written consent of each Lender,
(e) amend or modify this Section or any provision of this
Agreement providing for consent or other action by all Lenders without the
written consent of each Lender,
(f) other than as permitted by SECTION 15.11, release Agent's Lien
in and to any of the Collateral without the written consent of each Lender,
(g) amend or modify the definition of "Required Lenders" or "Pro
Rata Share" without the written consent of each Lender,
(h) contractually subordinate any of the Agent's Liens without the
written consent of each Lender,
(i) other than in connection with a merger, liquidation,
dissolution or sale of such Person expressly permitted by the terms hereof or
the other Loan Documents, release (A) a Borrower or (B) all or substantially all
of the Guarantors from any obligation for the payment of money under the Loan
Documents, in each case without the written consent of each Lender,
(j) amend any of the provisions of SECTION 2.4(B)(I) OR (II)
without the written consent of each Lender,
(k) amend or modify the definitions of Maximum Revolver Amount or
Term Loan Amount, or amend or modify SECTION 2.1(B) without the written consent
of each Lender, or
(l) amend, modify, or waive any provision of SECTION 15 pertaining
to Agent, the definition of, or the terms or provisions of, the Fee Letter, or
any other rights or duties of Agent under this Agreement or the other Loan
Documents, without the written consent of Agent.
and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
the Loan Parties, shall not require consent by or the agreement of Parent or any
Borrower.
14.2 REPLACEMENT OF HOLDOUT LENDER.
(a) If any action to be taken by the Lender Group or Agent
hereunder requires the unanimous consent, authorization, or agreement of all
Lenders, and a Lender ("HOLDOUT LENDER") fails to give its consent,
authorization, or agreement, then Agent, upon at least 5 Business Days prior
irrevocable notice to the Holdout Lender, may permanently replace the Holdout
Lender with one or more substitute Lenders (each, a "REPLACEMENT LENDER"), and
the Holdout Lender shall have no right to refuse to be replaced hereunder. Such
notice to replace the Holdout Lender shall specify an effective date for such
replacement, which date shall not be later than 15 Business Days after the date
such notice is given.
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(b) Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of SECTION 13.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
14.3 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent's and each
Lender's rights thereafter to require strict performance by Parent and each of
the Borrowers of any provision of this Agreement. Agent's and each Lender's
rights under this Agreement and the other Loan Documents will be cumulative and
not exclusive of any other right or remedy that Agent or any Lender may have.
15. AGENT; THE LENDER GROUP.
15.1 APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
designates and appoints WFF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this SECTION 15.
The provisions of this SECTION 15 are solely for the benefit of Agent and the
Lenders, and Parent and each of the Borrowers and their Subsidiaries shall have
no rights as a third party beneficiary of any of the provisions contained
herein. Any provision to the contrary contained elsewhere in this Agreement or
in any other Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent; it being expressly understood and agreed that the use of the word
"Agent" is for convenience only, that WFF is merely the representative of the
Lenders, and only has the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, Agent shall have and may use its
sole discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of the Loan Parties and
their Subsidiaries, and related matters, (b) execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents, (c) make Advances, for itself or on behalf
of Lenders as provided in the Loan Documents, (d) exclusively receive, apply,
and distribute the Collections of the Loan Parties and their Subsidiaries as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management arrangements as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes with respect to
the Collateral and the Collections of the Loan Parties and their Subsidiaries,
51
(f) perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to the Loan Parties or their Subsidiaries, the
Obligations, the Collateral, the Collections of the Loan Parties and their
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.
15.2 DELEGATION OF DUTIES. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
15.3 LIABILITY OF AGENT. None of the Agent Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Loan Party or any of its
Subsidiaries or Affiliates, or any officer or director thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Loan Party or
its Subsidiaries or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the books and records or
properties of any of the Loan Parties or their Subsidiaries.
15.4 RELIANCE BY AGENT. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Loan Parties or counsel to
any Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.
15.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
SECTION 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
SECTION 8; PROVIDED, HOWEVER, that unless and until Agent has received any such
52
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
15.6 CREDIT DECISION. Each Lender acknowledges that none of the Agent
Related Persons has made any representation or warranty to it, and that no act
by Agent hereinafter taken, including any review of the affairs of the Loan
Parties and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties or any other Person party to a Loan
Document, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Borrowers. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties or any other Person party to a Loan
Document. Except for notices, reports, and other documents expressly herein
required to be furnished to the Lenders by Agent, Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Loan Parties or any other Person party to a
Loan Document that may come into the possession of any of the Agent Related
Persons.
15.7 COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not any Loan Party is obligated to reimburse
Agent or Lenders for such expenses pursuant to this Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
the Collections of the Loan Parties and their Subsidiaries received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders. In the event Agent is not reimbursed for
such costs and expenses by the Loan Parties or their Subsidiaries, each Lender
hereby agrees that it is and shall be obligated to pay to Agent such Lender's
Pro Rata Share thereof. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Loan Parties and without
limiting the obligation of the Loan Parties to do so), according to their Pro
Rata Shares, from and against any and all Indemnified Liabilities; PROVIDED,
HOWEVER, that no Lender shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Liabilities resulting solely from such
Person's gross negligence or willful misconduct nor shall any Lender be liable
for the obligations of any Defaulting Lender in failing to make an Advance or
other extension of credit hereunder. Without limitation of the foregoing, each
Lender shall reimburse Agent upon demand for such Lender's Pro Rata Share of any
costs or out of pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
the Loan Parties. The undertaking in this Section shall survive the payment of
all Obligations hereunder and the resignation or replacement of Agent.
15.8 AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make loans
to, issue letters of credit for the account of, accept deposits from, acquire
equity interests in, and generally engage in any kind of banking, trust,
53
financial advisory, underwriting, or other business with the Loan Parties and
their Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though WFF were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding the Loan Parties or their
Affiliates or any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of the Loan Parties or such other Person
and that prohibit the disclosure of such information to the Lenders, and the
Lenders acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations, which waiver Agent will use its reasonable
best efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include WFF in its
individual capacity.
15.9 SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice to
the Lenders (unless such notice is waived by the Required Lenders). If Agent
resigns under this Agreement, the Required Lenders shall appoint a successor
Agent for the Lenders. If no successor Agent is appointed prior to the effective
date of the resignation of Agent, Agent may appoint, after consulting with the
Lenders, a successor Agent. If Agent has materially breached or failed to
perform any material provision of this Agreement or of applicable law, the
Required Lenders may agree in writing to remove and replace Agent with a
successor Agent from among the Lenders. In any such event, upon the acceptance
of its appointment as successor Agent hereunder, such successor Agent shall
succeed to all the rights, powers, and duties of the retiring Agent and the term
"Agent" shall mean such successor Agent and the retiring Agent's appointment,
powers, and duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this SECTION 15 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment as
Agent by the date which is 45 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Lenders appoint a successor Agent as
provided for above.
15.10 LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting, or other business with the
Loan Parties and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though such Lender were not a Lender hereunder without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, such Lender
and its respective Affiliates may receive information regarding the Loan Parties
or their Affiliates or any other Person party to any Loan Documents that is
subject to confidentiality obligations in favor of the Loan Parties or such
other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver such
Lender will use its reasonable best efforts to obtain), such Lender shall not be
under any obligation to provide such information to them.
15.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Agent, at its option
and in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Loan
Parties of all Obligations, (ii) constituting property being sold or disposed of
if a release is required or desirable in connection therewith and if
Administrative Borrower certifies to Agent that the sale or disposition is
permitted under SECTION 6.4 of this Agreement or the other Loan Documents (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Loan Party or its Subsidiaries owned any
interest at the time the Agent's Lien was granted nor at any time thereafter, or
(iv) constituting property leased to a Loan Party or its Subsidiaries under a
lease that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
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Administrative Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this SECTION 15.11; PROVIDED, HOWEVER, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Loan Parties in respect
of) all interests retained by Loan Parties, including, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Loan Parties or
their Subsidiaries or is cared for, protected, or insured or has been
encumbered, or that the Agent's Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent pursuant to any of
the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission, or event related thereto, subject to the terms
and conditions contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent's own interest in the Collateral
in its capacity as one of the Lenders and that Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing, except as
otherwise provided herein.
15.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not, without the
express written consent of Agent, and that it shall, to the extent it is
lawfully entitled to do so, upon the written request of Agent, set off against
the Obligations, any amounts owing by such Lender to any Loan Party or its
Subsidiaries or any deposit accounts of any Loan Party or its Subsidiaries now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings to enforce any Loan Document against the Loan Parties
or Guarantors or to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations, except for any such proceeds or
payments received by such Lender from Agent pursuant to the terms of this
Agreement, or (ii) payments from Agent in excess of such Lender's Pro Rata Share
of all such distributions by Agent, such Lender promptly shall (A) turn the same
over to Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (B) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that to the extent that such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
15.13 AGENCY FOR PERFECTION. Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent's instructions.
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15.14 PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by Agent
to the Lenders shall be made by bank wire transfer of immediately available
funds pursuant to such wire transfer instructions as each party may designate
for itself by written notice to Agent. Concurrently with each such payment,
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.
15.15 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
15.16 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY; DISCLAIMERS
BY LENDERS; OTHER REPORTS AND INFORMATION. By becoming a party to this
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report respecting Loan Parties or their Subsidiaries (each a "REPORT" and
collectively, "REPORTS") prepared by or at the request of Agent, and Agent shall
so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i) make
any representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Loan
Parties or their Subsidiaries and will rely significantly upon the Loan Parties'
and their Subsidiaries' books and records, as well as on representations of the
Loan Parties' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Loan Parties and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner in
accordance with SECTION 17.9, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or fail to take or any conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to Loan Parties, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of Loan Parties; and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Loan Parties or their Subsidiaries to Agent that has not
been contemporaneously provided by Loan Parties or their Subsidiaries to such
Lender, and, upon receipt of such request, Agent promptly shall provide a copy
of same to such Lender, (y) to the extent that Agent is entitled, under any
provision of the Loan Documents, to request additional reports or information
from Loan Parties or their Subsidiaries, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
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Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
15.17 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that certain of
the Loan Documents now or hereafter may have been or will be executed only by or
in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in SECTION 15.7, no member of the Lender Group shall
have any liability for the acts of any other member of the Lender Group. No
Lender shall be responsible to any Loan Party or any other Person for any
failure by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
15.18 QUEBEC SECURITY DOCUMENTS.
For greater certainty, and without limiting the powers of Agent, or any
other Person acting as an agent or mandatary for Agent hereunder or under any
other Loan Documents, each Loan Party hereby acknowledges that, for purposes of
holding any hypothecs and security granted by a Loan Party on property pursuant
to the laws of the Province of Quebec to secure obligations of a Loan Party
under any debenture or bond issued by a Loan Party, Agent shall be the holder of
an irrevocable power of attorney (FONDE DE POUVOIR) (within the meaning of the
CIVIL CODE OF QUEBEC) for the Lender Group (which includes each Lender, the
Issuing Lender and Agent), the Bank Product Providers and the Swing Lenders,
including without limitation, all present and future Lenders and any Affiliate
of a Lender, and in particular for all present and future holders of any such
debenture or bond. The Lender Group, the Bank Product Providers and the Swing
Lenders hereby: (i) irrevocably constitute, to the extent necessary, Agent as
the holder of an irrevocable power of attorney (FONDE DE POUVOIR) (within the
meaning of Article 2692 of the CIVIL CODE OF QUEBEC) in order to hold hypothecs
and security granted by a Loan Party on property pursuant to the laws of the
Province of Quebec to secure the obligations of a Loan Party under any debenture
or bond issued by a Loan Party; and (ii) appoint and agree that Agent may act as
the bondholder and mandatary (i.e. agent) with respect to any debenture or bond
that may be issued by a Loan Party and pledged in its favour from time to time.
The execution by Agent, acting as FONDE DE POUVOIR and mandatary, prior to this
Agreement, of any deeds of hypothec or other security documents is hereby
ratified and confirmed.
Notwithstanding the provisions of Section 32 of AN ACT RESPECTING THE SPECIAL
POWERS OF LEGAL PERSONS (Quebec), Agent may acquire and be the holder of any
debenture or bond issued by a Loan Party (i.e. the FONDE DE POUVOIR may acquire
and hold the first debenture or bond issued under any deed of hypothec by a Loan
Party). Each Loan Party hereby acknowledges that such debenture or bond
constitutes a title of indebtedness, as such term is used in Article 2692 of the
CIVIL CODE OF QUEBEC.
The constitution of Agent as FONDE DE POUVOIR and as bondholder and mandatary
with respect to any bond that may be issued and pledged from time to time to
Agent for the benefit of the Lender Group, the Bank Product Providers and the
Swing Lenders, shall be deemed to have been ratified and confirmed by each
Person accepting an assignment of, a participation in or an arrangement in
respect of, all or any portion of an assignor's rights and obligations under
this Agreement by the execution of an assignment agreement, including an
Assignment and Acceptance or other agreement pursuant to which it becomes such
assignee or participant, and by each successor Agent by the execution of an
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Assignment and Acceptance or other agreement, or by the compliance with other
formalities, as the case may be, pursuant to which it becomes a successor Agent
under this Agreement.
Agent, acting as FONDE DE POUVOIR, shall have the same rights, powers and
immunities as Agent as stipulated herein, including under this Section 15, which
shall apply MUTATIS MUTANDIS. Without limitation, the provisions of Section 15
shall apply MUTATIS MUTANDIS to the resignation and appointment of a successor
Agent acting as FONDE DE POUVOIR.
Agent, acting as bondholder, shall have the same rights, powers and immunities
as Agent as stipulated herein, including under this Section 15, which shall
apply MUTATIS MUTANDIS. Without limitation, the provisions of Section 15 shall
apply MUTATIS MUTANDIS to the resignation and appointment of a successor Agent
acting as bondholder and mandatary.
16. WITHHOLDING TAXES.
(a) All payments made by any Loan Party hereunder or under any
note or other Loan Document will be made without setoff, counterclaim, or other
defense. In addition, all such payments will be made free and clear of, and
without deduction or withholding for, any present or future Taxes, and in the
event any deduction or withholding of Taxes is required, each Borrower shall
comply with the penultimate sentence of this SECTION 16(A). "TAXES" shall mean,
any taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein measured by or based on the
net income or net profits of any Lender) and all interest, penalties or similar
liabilities with respect thereto. If any Taxes are so levied or imposed, each
Borrower agrees to pay the full amount of such Taxes and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this SECTION 16(A) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; PROVIDED, HOWEVER,
that Borrowers shall not be required to increase any such amounts if the
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence (as finally determined by a court of
competent jurisdiction). Each Borrower will furnish to Agent as promptly as
possible after the date the payment of any Tax is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by any Borrower.
(b) If a Lender claims an exemption from United States withholding
tax, such Lender agrees with and in favor of Agent and Borrowers, to deliver to
Agent:
(i) if such Lender claims an exemption from United States
withholding tax pursuant to its portfolio interest exception, (A) a statement of
the Lender, signed under penalty of perjury, that it is not a (I) a "bank" as
described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Parent
or any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or
(III) a controlled foreign corporation related to Parent or any Borrower within
the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and
executed IRS Form W-8BEN, before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent or any Borrower;
(ii)if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly completed and
executed IRS Form W-8BEN before receiving its first payment under this Agreement
and at any other time reasonably requested by Agent or any Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Lender, two properly
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completed and executed copies of IRS Form W-8ECI before receiving its first
payment under this Agreement and at any other time reasonably requested by Agent
or any Borrower; or
(iv)such other form or forms, including IRS Form W-9, as may
be required under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding or backup withholding
tax before receiving its first payment under this Agreement and at any other
time reasonably requested by Agent or any Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(c) If a Lender claims an exemption from withholding tax in a
jurisdiction other than the United States, Lender agrees with and in favor of
Agent and Borrowers, to deliver to Agent any such form or forms, as may be
required under the laws of such jurisdiction as a condition to exemption from,
or reduction of, foreign withholding or backup withholding tax before receiving
its first payment under this Agreement and at any other time reasonably
requested by Agent or Administrative Borrower.
Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(d) If any Lender claims exemption from, or reduction of,
withholding tax and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrowers to such Lender,
such Lender agrees to notify Agent and Administrative Borrower of the percentage
amount in which it is no longer the beneficial owner of Obligations of Borrowers
to such Lender. To the extent of such percentage amount, Agent and Borrowers
will treat such Lender's documentation provided pursuant to SECTIONS 16(B) or
16(C) as no longer valid. With respect to such percentage amount, Lender may
provide new documentation, pursuant to SECTIONS 16(B) or 16(C), if applicable.
(e) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (b)
or (c) of this SECTION 16 are not delivered to Agent, then Agent may withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(f) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts paid to or for the account of any Lender due to a
failure on the part of the Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent, as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this SECTION 16, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
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17. GENERAL PROVISIONS.
17.1 EFFECTIVENESS. This Agreement shall be binding and deemed effective
when executed by Parent, Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
17.2 SECTION HEADINGS. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against the Lender Group, Parent, or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
17.5 BANK PRODUCT PROVIDERS. Each Bank Product Provider shall be deemed a
party hereto for purposes of any reference in a Loan Document to the parties for
whom Agent is acting; it being understood and agreed that the rights and
benefits of such Bank Product Provider under the Loan Documents consist
exclusively of such Bank Product Provider's right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Bank Product Provider unless such Bank
Product Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.
17.6 DEBTOR-CREDITOR RELATIONSHIP. The relationship between the Lenders
and Agent, on the one hand, and Parent and Borrowers, on the other hand, is
solely that of creditor and debtor. No member of the Lender Group has (or shall
be deemed to have) any fiduciary relationship or duty to Parent or Borrowers
arising out of or in connection with, and there is no agency or joint venture
relationship between the members of the Lender Group, on the one hand, and
Parent and Borrowers, on the other hand, by virtue of any Loan Document or any
transaction contemplated therein.
17.7 COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document MUTATIS
MUTANDIS.
17.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by any Borrower or any Guarantor or the transfer to
the Lender Group of any property should for any reason subsequently be declared
to be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (each, a "VOIDABLE TRANSFER"), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
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attorneys fees of the Lender Group related thereto, the liability of Loan
Parties automatically shall be revived, reinstated, and restored and shall exist
as though such Voidable Transfer had never been made.
17.9 CONFIDENTIALITY.
(a) Agent and Lenders each individually (and not jointly or
jointly and severally) agree that material, non-public information regarding
Loan Parties and their Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (i) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (ii) to Subsidiaries and Affiliates of any member of the Lender
Group (including the Bank Product Providers), provided that any such Subsidiary
or Affiliate shall have agreed to receive such information hereunder subject to
the terms of this SECTION 17.9, (iii) as may be required by statute, decision,
or judicial or administrative order, rule, or regulation, (iv) as may be agreed
to in advance by Administrative Borrower or its Subsidiaries or as requested or
required by any Governmental Authority pursuant to any subpoena or other legal
process, (v) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by Agent or the
Lenders), (vi) in connection with any assignment, participation or pledge of any
Lender's interest under this Agreement, provided that any such assignee,
participant, or pledgee shall have agreed in writing to receive such information
hereunder subject to the terms of this Section, and (vii) in connection with any
litigation or other adversary proceeding involving parties hereto which such
litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents,
provided that Agent or applicable Lender, as the case may be, shall give the
Loan Parties five (5) Business Days notice of the production of any such
information in such litigation or other adversary proceeding to the extent
practicable under the circumstances. The provisions of this SECTION 17.9(A)
shall survive for 2 years after the payment in full of the Obligations.
(b) Anything in this Agreement to the contrary notwithstanding,
Agent may provide information concerning the terms and conditions of this
Agreement and the other Loan Documents to loan syndication and pricing reporting
services.
17.10 LENDER GROUP EXPENSES. Parent and Borrowers, jointly and severally,
agree to pay any and all Lender Group Expenses promptly after demand therefor by
Agent and agrees that their obligations contained in this SECTION 17.10 shall
survive payment or satisfaction in full of all other Obligations.
17.11 USA PATRIOT ACT. Each Lender that is subject to the requirements of
the USA Patriot Act (Title 111 of Pub. L. 107-56 (signed into law October 26,
2001)) (the "ACT") hereby notifies Parent and Borrowers that pursuant to the
requirements of the Act, it is required to obtain, verify and record information
that identifies Parent and Borrowers, which information includes the name and
address of Parent and each of the Borrowers and other information that will
allow such Lender to identify Parent and each of the Borrowers in accordance
with the Act.
17.12 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
17.13 PARENT AS AGENT FOR BORROWERS. Each Borrower hereby irrevocably
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "ADMINISTRATIVE BORROWER") which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
61
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this SECTION 17.13 with respect to any liability that has been finally
determined by a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, or from such members breach of its material obligations
under the Loan Documents, as the case may be.
17.14 JUDGMENT CURRENCY. (a) This is an international financial
transaction in which the specification of a currency and payment in California
is of the essence. Dollars shall be the currency of account in the case of all
payments pursuant to or arising under this Agreement or under any other Loan
Document, and all such payments shall be made to the Agent's Account in
immediately available funds. To the fullest extent permitted by applicable law,
the Obligations of each Loan Party to Agent and the Lenders under this Agreement
and under the other Loan Documents shall not be discharged by any amount paid in
any other currency or in any other manner than to the Agent's Account to the
extent that the amount so paid after conversion under this Agreement and
transfer to the Agent's Account does not yield the amount of Dollars in
California due under this Agreement and under the other Loan Documents.
(b) If, for the purposes of obtaining or enforcing judgment
against the Loan Parties in any court in any jurisdiction in connection with
this Agreement or any other Loan Document, it becomes necessary to convert into
any other currency (such other currency being referred to as the "JUDGMENT
CURRENCY") an amount due under this Agreement or any Loan Document in Dollars
other than Judgment Currency, the conversion shall be made at the rate of
exchange prevailing on the Business Day immediately preceding (a) the date of
actual payment of the amount due, in the case of any proceeding in the courts of
any jurisdiction that would give effect to such conversion being made on such
date, or (b) the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this SECTION 17.14 being hereinafter
referred to as the "JUDGMENT CONVERSION DATE").
(c) If, in the case of any proceeding in the court of any
jurisdiction referred to in subsection (a) above, there is a change in the rate
of exchange prevailing between the Judgment Conversion Date and the date of
actual receipt for value of the amount due, the Loan Parties shall pay such
additional amount (if any, and in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of Dollars which could have been purchased with the amount of
the Judgment Currency stipulated in the judgment or judicial order at the rate
of exchange prevailing on the Judgment Conversion Date. The term "rate of
exchange" in this Section means the Spot Rate at which Agent would be prepared
to sell Dollars against the Judgment Currency.
(d) Any amount due from the Loan Parties under this SECTION 17.14
shall not be affected by judgment being obtained for any other amounts due under
or in respect of this Agreement or any other Loan Document.
62
17.15 IMMUNITY. To the extent that any Loan Party or any of its
Subsidiaries has or hereafter may acquire any immunity (sovereign or otherwise)
from jurisdiction of any court or from set-off or from any legal process,
action, suit or proceeding (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution of judgment or otherwise)
with respect to itself or any of its property, the Parent and each Borrower
hereby irrevocably waives (on behalf of itself and its Subsidiaries) and agrees
not to plead or claim such immunity in respect of its Obligations hereunder and
under the other Loan Documents to which it is a party to the extent permitted by
applicable law and, without limiting the generality of the foregoing, agrees
that the waivers set forth in this SECTION 17.15 shall be to the fullest extent
permitted under the Foreign Sovereign Immunities Act of 1976 of the United
States and are intended to be irrevocable for purposes of such Act.
[Signature pages to follow.]
63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
BORROWERS: ▇▇▇▇▇, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
▇▇▇▇▇ VISCOR LTD.,
a Texas limited partnership
By: ▇▇▇▇▇ Partners, Inc.,
Its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
▇▇▇▇▇ SIGNTECH, LTD.,
a Texas limited partnership
By: ▇▇▇▇▇ Partners, Inc.,
Its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
KASCO CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
SOUTHERN SAW ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
PARENT: BAIRNCO CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
AGENT: ▇▇▇▇▇ FARGO FOOTHILL, INC.,
a California corporation, as Agent and
as a Lender
By: ___________________________
Name:
Title:
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND CONSTRUCTION...........................................1
1.1 Definitions......................................................1
1.2 Accounting Terms.................................................1
1.3 Code.............................................................1
1.4 Construction.....................................................1
1.5 Province of Quebec...............................................2
1.6 Schedules and Exhibits...........................................2
2. LOAN AND TERMS OF PAYMENT..............................................2
2.1 Revolver Advances................................................2
2.2 Term Loan........................................................2
2.3 Borrowing Procedures and Settlements.............................4
2.4 Payments.........................................................8
2.5 Overadvances....................................................12
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments,
and Calculations................................................12
2.7 Cash Management.................................................13
2.8 Crediting Payments .............................................14
2.9 Designated Account..............................................14
2.10 Maintenance of Loan Account; Statements of Obligations..........15
2.11 Fees............................................................15
2.12 Letters of Credit...............................................15
2.13 LIBOR Option....................................................18
2.14 Capital Requirements............................................19
2.15 Joint and Several Liability of Borrowers........................20
3. CONDITIONS; TERM OF AGREEMENT.........................................22
3.1 Conditions Precedent to the Initial Extension of Credit.........22
3.2 Conditions Precedent to all Extensions of Credit................22
3.3 Term............................................................23
3.4 Effect of Termination...........................................23
3.5 Early Termination by Borrowers..................................23
4. REPRESENTATIONS AND WARRANTIES........................................23
4.1 No Encumbrances.................................................24
4.2 Eligible Accounts...............................................24
4.3 Eligible Inventory..............................................24
i
TABLE OF CONTENTS
(continued)
PAGE
4.4 Equipment.......................................................24
4.5 Location of Inventory and Equipment.............................24
4.6 Inventory Records...............................................24
4.7 Jurisdiction of Organization; Location of Chief Executive
Office; Organizational Identification Number; Commercial
Tort Claims.....................................................24
4.8 Due Organization and Qualification; Subsidiaries................24
4.9 Due Authorization; No Conflict..................................25
4.10 Litigation......................................................26
4.11 No Material Adverse Change......................................26
4.12 Fraudulent Transfer.............................................27
4.13 Employee Benefits...............................................27
4.14 Environmental Condition.........................................28
4.15 Intellectual Property...........................................28
4.16 Leases..........................................................28
4.17 Deposit Accounts and Securities Accounts........................28
4.18 Complete Disclosure.............................................29
4.19 Indebtedness....................................................29
4.20 Material Contracts..............................................29
4.21 Permits, Licenses, Etc..........................................29
4.22 Suppliers.......................................................29
4.23 Margin Stock....................................................29
4.24 Insurance.......................................................30
4.25 Investment Company Act, Etc.....................................30
4.26 Taxes, Etc......................................................30
4.27 Nature of Business..............................................30
4.28 Related Transaction Documents...................................30
4.29 No Immunity.....................................................30
4.30 No Taxes........................................................30
5. AFFIRMATIVE COVENANTS.................................................31
5.1 Accounting System...............................................31
5.2 Collateral Reporting............................................31
5.3 Financial Statements, Reports, Certificates.....................31
5.4 Guarantor Reports...............................................31
5.5 Inspection......................................................31
-ii-
TABLE OF CONTENTS
(continued)
PAGE
5.6 Maintenance of Properties.......................................31
5.7 Taxes...........................................................31
5.8 Insurance.......................................................32
5.9 Location of Collateral..........................................32
5.10 Compliance with Laws............................................32
5.11 Leases..........................................................32
5.12 Existence.......................................................33
5.13 Environmental...................................................33
5.14 Disclosure Updates..............................................33
5.15 Control Agreements..............................................33
5.16 Formation of Subsidiaries.......................................33
5.17 Further Assurances..............................................34
5.18 Material Contracts..............................................34
5.19 Subordination...................................................34
5.20 After Acquired Real Property....................................34
6. NEGATIVE COVENANTS....................................................35
6.1 Indebtedness....................................................35
6.2 Liens...........................................................35
6.3 Restrictions on Fundamental Changes.............................35
6.4 Disposal of Assets..............................................36
6.5 Change Name.....................................................36
6.6 Nature of Business..............................................36
6.7 Prepayments and Amendments......................................36
6.8 Change of Control...............................................36
6.9 Consignments....................................................37
6.10 Distributions...................................................37
6.11 Accounting Methods..............................................37
6.12 Investments.....................................................37
6.13 Transactions with Affiliates....................................37
6.14 Use of Proceeds.................................................37
6.15 Inventory and Equipment with Bailees............................38
6.16 Financial Covenants.............................................38
6.17 Parent as Holding Company.......................................39
-iii-
TABLE OF CONTENTS
(continued)
PAGE
6.18 Employee Benefits...............................................39
6.19 Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries..........................................40
6.20 Lease Obligations...............................................40
6.21 Federal Reserve Regulations.....................................40
6.22 Investment Company Act of 1940..................................40
7. EVENTS OF DEFAULT.....................................................40
8. THE LENDER GROUP'S RIGHTS AND REMEDIES................................43
8.1 Rights and Remedies.............................................43
8.2 Remedies Cumulative.............................................43
9. TAXES AND EXPENSES....................................................43
10. WAIVERS; INDEMNIFICATION..............................................44
10.1 Demand; Protest; etc............................................44
10.2 The Lender Group's Liability for Collateral.....................44
10.3 Indemnification.................................................44
11. NOTICES...............................................................45
12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER............................46
13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS............................46
13.1 Assignments and Participations..................................46
13.2 Successors......................................................49
14. AMENDMENTS; WAIVERS...................................................49
14.1 Amendments and Waivers..........................................49
14.2 Replacement of Holdout Lender...................................50
14.3 No Waivers; Cumulative Remedies.................................51
15. AGENT; THE LENDER GROUP...............................................51
15.1 Appointment and Authorization of Agent..........................51
15.2 Delegation of Duties............................................52
15.3 Liability of Agent..............................................52
15.4 Reliance by Agent...............................................52
15.5 Notice of Default or Event of Default...........................52
15.6 Credit Decision.................................................53
15.7 Costs and Expenses; Indemnification.............................53
15.8 Agent in Individual Capacity....................................53
15.9 Successor Agent.................................................54
-iv-
TABLE OF CONTENTS
(continued)
PAGE
15.10 Lender in Individual Capacity...................................54
15.11 Collateral Matters..............................................54
15.12 Restrictions on Actions by Lenders; Sharing of Payments.........55
15.13 Agency for Perfection...........................................55
15.14 Payments by Agent to the Lenders................................56
15.15 Concerning the Collateral and Related Loan Documents............56
15.16 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information...........56
15.17 Several Obligations; No Liability...............................57
15.18 Quebec Security Documents.......................................57
16. WITHHOLDING TAXES.....................................................58
17. GENERAL PROVISIONS....................................................60
17.1 Effectiveness...................................................60
17.2 Section Headings................................................60
17.3 Interpretation..................................................60
17.4 Severability of Provisions......................................60
17.5 Bank Product Providers..........................................60
17.6 Debtor-Creditor Relationship....................................60
17.7 Counterparts; Electronic Execution..............................60
17.8 Revival and Reinstatement of Obligations........................60
17.9 Confidentiality.................................................61
17.10 Lender Group Expenses...........................................61
17.11 USA PATRIOT Act.................................................61
17.12 Integration.....................................................61
17.13 Parent as Agent for Borrowers...................................61
17.14 Judgment Currency...............................................62
17.15 Immunity........................................................63
-v-
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit B-1 Form of Borrowing Base Certificate
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Schedule A-1 Agent's Account
Schedule A-2 Authorized Persons
Schedule A-3 Approved Add-Back Expenses
Schedule C-1 Commitments
Schedule D-1 Designated Account
Schedule E-1 U.S. Eligible Inventory Locations
Schedule E-2 Canadian Eligible Inventory Locations
Schedule K-1 Kasco Non-recurring Expenses
Schedule P-2 Permitted Liens
Schedule P-3 Survey Exceptions
Schedule R-1 Real Property Collateral
Schedule 1.1 Definitions
Schedule 2.7(a) Cash Management Banks
Schedule 3.1 Conditions Precedent
Schedule 4.5 Locations of Collateral
Schedule 4.7(a) States of Organization
Schedule 4.7(b) Chief Executive Offices
Schedule 4.7(c) Organizational Identification Numbers
Schedule 4.7(d) Commercial Tort Claims
Schedule 4.8(b) Capitalization of Borrowers
Schedule 4.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 4.10 Litigation
Schedule 4.13 Employee Benefits
Schedule 4.14 Environmental Matters
Schedule 4.15 Intellectual Property
Schedule 4.16 Owned and Leased Properties
Schedule 4.17 Deposit Accounts and Securities Accounts
Schedule 4.19 Permitted Indebtedness
Schedule 4.20 Material Contracts
Schedule 4.24 Insurance
Schedule 5.2 Collateral Reporting
Schedule 5.3 Financial Statements, Reports, Certificates
Schedule 6.6 Description of Business
Schedule 6.17 Holding Company Operations