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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 8, 2003
among
ROLLER BEARING COMPANY OF AMERICA, INC.
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender,
and
GECC CAPITAL MARKETS GROUP, INC.
as Lead Arranger
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TABLE OF CONTENTS
Page
----
1. AMOUNT AND TERMS OF CREDIT...............................................................................1
1.1 Credit Facilities...............................................................................1
1.2 Letters of Credit...............................................................................5
1.3 Prepayments.....................................................................................5
1.4 Use of Proceeds.................................................................................8
1.5 Interest and Applicable Margins.................................................................8
1.6 Eligible Accounts..............................................................................10
1.7 Eligible Inventory.............................................................................12
1.8 Cash Management Systems........................................................................14
1.9 Fees...........................................................................................14
1.10 Receipt of Payments............................................................................14
1.11 Application and Allocation of Payments.........................................................15
1.12 Loan Account and Accounting....................................................................15
1.13 Indemnity......................................................................................16
1.14 Access.........................................................................................17
1.15 Taxes..........................................................................................18
1.16 Capital Adequacy; Increased Costs; Illegality..................................................18
1.17 Single Loan....................................................................................20
2. CONDITIONS PRECEDENT....................................................................................20
2.1 Conditions to the Initial Loans................................................................20
2.2 Further Conditions to Each Loan................................................................21
2.3 Conditions to Revolving Credit Advances Funding Permitted Acquisitions.........................22
3. REPRESENTATIONS AND WARRANTIES..........................................................................22
3.1 Corporate Existence; Compliance with Law.......................................................22
3.2 Executive Offices, Collateral Locations, FEIN..................................................23
3.3 Corporate Power, Authorization, Enforceable Obligations........................................23
3.4 Financial Statements and Projections...........................................................23
3.5 Material Adverse Effect........................................................................24
3.6 Ownership of Property; Liens...................................................................24
3.7 Labor Matters..................................................................................25
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness......................25
3.9 Government Regulation..........................................................................26
3.10 Margin Regulations.............................................................................26
3.11 Taxes..........................................................................................26
3.12 ERISA..........................................................................................27
3.13 No Litigation..................................................................................28
3.14 Brokers........................................................................................28
3.15 Intellectual Property..........................................................................28
3.16 Full Disclosure................................................................................28
3.17 Common Enterprise..............................................................................29
3.18 Insurance......................................................................................29
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3.19 Deposit and Disbursement Accounts..............................................................29
3.20 Government Contracts...........................................................................29
3.21 Customer and Trade Relations...................................................................29
3.22 Agreements and Other Documents.................................................................29
3.23 Solvency.......................................................................................30
3.24 Status of Holdings.............................................................................30
3.25 Subordinated Debt; other Indebtedness..........................................................30
3.26 Motor Vehicles.................................................................................30
4. FINANCIAL STATEMENTS AND INFORMATION....................................................................30
4.1 Reports and Notices............................................................................30
4.2 Communication with Accountants.................................................................31
5. AFFIRMATIVE COVENANTS...................................................................................31
5.1 Maintenance of Existence and Conduct of Business...............................................31
5.2 Payment of Charges.............................................................................31
5.3 Books and Records..............................................................................32
5.4 Insurance; Damage to or Destruction of Collateral..............................................32
5.5 Compliance with Laws...........................................................................33
5.6 Supplemental Disclosure........................................................................34
5.7 Intellectual Property..........................................................................34
5.8 [Intentionally Omitted]........................................................................34
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases..........34
5.10 Motor Vehicles.................................................................................35
5.11 Further Assurances.............................................................................35
6. NEGATIVE COVENANTS......................................................................................35
6.1 Mergers, Subsidiaries, Etc.....................................................................35
6.2 Investments; Loans and Advances................................................................39
6.3 Indebtedness...................................................................................40
6.4 Employee Loans and Affiliate Transactions......................................................42
6.5 Capital Structure and Business.................................................................42
6.6 Guaranteed Indebtedness........................................................................42
6.7 Liens..........................................................................................42
6.8 Sale of Stock and Assets.......................................................................43
6.9 ERISA..........................................................................................43
6.10 Financial Covenants............................................................................43
6.11 [RESERVED].....................................................................................43
6.12 Sale-Leasebacks................................................................................44
6.13 Cancellation of Indebtedness...................................................................44
6.14 Restricted Payments............................................................................44
6.15 Change of Corporate Name or Location; Change of Fiscal Year....................................46
6.16 No Impairment of Intercompany Transfers........................................................46
6.17 No Speculative Transactions....................................................................46
6.18 Changes Relating to Subordinated Debt; Material Contracts......................................46
6.19 Redemptions....................................................................................47
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7. TERM....................................................................................................47
7.1 Termination....................................................................................47
7.2 Survival of Obligations Upon Termination of Financing Arrangements.............................47
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES..................................................................47
8.1 Events of Default..............................................................................47
8.2 Remedies.......................................................................................50
8.3 Waivers by Credit Parties......................................................................50
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.....................................................51
9.1 Assignment and Participations..................................................................51
9.2 Appointment of Agent...........................................................................53
9.3 Agent's Reliance, Etc..........................................................................54
9.4 GE Capital and Affiliates......................................................................54
9.5 Lender Credit Decision.........................................................................54
9.6 Indemnification................................................................................55
9.7 Successor Agent................................................................................55
9.8 Setoff and Sharing of Payments.................................................................56
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.......................56
10. SUCCESSORS AND ASSIGNS..................................................................................59
10.1 Successors and Assigns.........................................................................59
11. MISCELLANEOUS...........................................................................................59
11.1 Complete Agreement; Modification of Agreement..................................................59
11.2 Amendments and Waivers.........................................................................59
11.3 Fees and Expenses..............................................................................61
11.4 No Waiver......................................................................................62
11.5 Remedies.......................................................................................63
11.6 Severability...................................................................................63
11.7 Conflict of Terms..............................................................................63
11.8 Confidentiality................................................................................63
11.9 GOVERNING LAW..................................................................................63
11.10 Notices 64
11.11 Section Titles.................................................................................65
11.12 Counterparts...................................................................................65
11.13 WAIVER OF JURY TRIAL...........................................................................65
11.14 Press Releases and Related Matters.............................................................65
11.15 Reinstatement..................................................................................65
11.16 Advice of Counsel..............................................................................66
11.17 No Strict Construction.........................................................................66
12. RESTATEMENT OF Prior CREDIT AGREEMENT...................................................................66
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INDEX OF APPENDICES
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Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
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Annex C (Section 1.8) - Cash Management System
-----------
Annex D (Section 2.1(a)) - Closing Checklist
--------------
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
--------------
Annex F (Section 4.1(b)) - Collateral Reports
--------------
Annex G (Section 6.10) - Financial Covenants
------------
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
--------------
Annex I (Section 11.10) - Notice AddressesAnnex J (from Annex A-
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Commitments definition) - Commitments as of Effective Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b) - Form of Term Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 6.1 Form of Acquisition Compliance Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B-1 - Application for Standby Letter of Credit
Exhibit B-2 - Application for Documentary Letter of Credit
Exhibit E-1 Form of Compliance Certificate
Schedule 1.1 - Agent's Representatives
Disclosure Schedule 2.1(f) - Capital Structure
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a) - Financial Statements
Disclosure Schedule 3.4(b) - Pro Forma
Disclosure Schedule 3.4(c) - Projections
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.22 - Material Agreements
Disclosure Schedule 5.1 - Trade Names
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Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.4(b) - Transactions with Employees
Disclosure Schedule 6.7 - Existing Liens
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This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"Agreement"), dated as of December 8, 2003, among ROLLER BEARING COMPANY OF
AMERICA, INC., a Delaware corporation ("Borrower"); the other Credit Parties
signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(in its individual capacity, "GE Capital"), for itself, as Lender, and as Agent
for Lenders, and the other Lenders signatory hereto from time to time.
RECITALS
--------
WHEREAS, certain parties hereto are parties to an Amended and
Restated Credit Agreement dated as of June 19, 2003 (the "Prior Credit
Agreement"), pursuant to which the Lenders extended revolving and term credit
facilities to Borrower of up to Ninety-Four Million Dollars ($94,000,000) in the
aggregate for the purpose of refinancing certain Indebtedness of Borrower and
the other Credit Parties and to provide (a) working capital financing for
Borrower and the other Credit Parties, (b) funds for other general corporate
purposes of Borrower and the other Credit Parties and (c) funds for other
purposes not prohibited hereunder, including Redemptions and financing of
Permitted Acquisitions; and for these purposes, Lenders are willing to make
certain loans and other extensions of credit to Borrower of up to such amount
upon the terms and conditions set forth herein;
WHEREAS, the parties hereto desire to amend and restate the
Prior Credit Agreement on the terms set forth herein; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in Annex A and, for purposes of this Agreement and
the other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving Lender
agrees to make available to Borrower from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each,
a "Revolving Credit Advance"). The Pro Rata Share of the
Revolving Loan of any Revolving Lender shall not at any time
exceed its separate Revolving Loan Commitment. The obligations of
each Revolving Lender hereunder shall be several and not joint.
Until the Commitment Termination Date, Borrower may from time to
time borrow, repay (without notice) and reborrow under this
Section 1.1(a); provided, that the amount of any Revolving Credit
Advance to be made at any time shall not exceed Borrowing
Availability at
such time. Borrowing Availability may be further
reduced by Reserves imposed by Agent in accordance with this
Agreement. Each Revolving Credit Advance shall be made on notice
by Borrower to one of the representatives of Agent identified in
Schedule 1.1 at the address specified therein. Any such notice
must be given no later than (1) 11:00 a.m. (Chicago time) on the
Business Day of the proposed Revolving Credit Advance, in the
case of an Index Rate Loan, or (2) 11:00 a.m. (Chicago time) on
the date which is three (3) Business Days prior to the proposed
Revolving Credit Advance, in the case of a LIBOR Loan. Each such
notice (a "Notice of Revolving Credit Advance") must be given in
writing (by telecopy or overnight courier) substantially in the
form of Exhibit 1.1(a)(i), and shall include the information
required in such Exhibit. If Borrower desires to have the
Revolving Credit Advances bear interest by reference to a LIBOR
Rate, it must comply with Section 1.5(e).
(ii) Except as provided in Section 1.12, Borrower shall execute and
deliver to each Revolving Lender a note to evidence the Revolving
Loan Commitment of that Revolving Lender. Each note shall be in
the principal amount of the Revolving Loan Commitment of the
applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each a
"Revolving Note" and, collectively, the "Revolving Notes"). Each
Revolving Note shall represent the obligation of Borrower to pay
the amount of the relevant Revolving Lender's Revolving Loan
Commitment or, if less, such Revolving Lender's Pro Rata Share of
the aggregate unpaid principal amount of all Revolving Credit
Advances to Borrower together with interest thereon as prescribed
in Section 1.5. The entire unpaid balance of the Revolving Loan
and all other non-contingent monetary Obligations shall be
immediately due and payable in full in immediately available
funds on the Commitment Termination Date.
(iii) Any provision of this Agreement to the contrary notwithstanding,
at the request of Borrower, in its discretion Agent may (but
shall have absolutely no obligation to), make Revolving Credit
Advances to Borrower on behalf of Revolving Lenders in amounts
that cause Borrowing Availability to be less than $5,000,000 (any
such excess Revolving Credit Advances are herein referred to
collectively as "Overadvances"); provided, that (A) no such event
or occurrence shall cause or constitute a waiver of Agent's, the
Swing Line Lender's or Revolving Lenders' right to refuse to make
any further Overadvances, Swing Line Advances or Revolving Credit
Advances, or incur any Letter of Credit Obligations, as the case
may be, at any time that an Overadvance exists, and (B) no
Overadvance shall result in a Default or Event of Default due to
Borrower's failure to comply with Section 1.3(b)(i) for so long
as Agent permits such Overadvance to remain outstanding, but
solely with respect to the amount of such Overadvance. In
addition, Overadvances may be made even if the conditions to
lending set forth in Section 2 have not been met. All
Overadvances shall constitute Index Rate Loans, shall bear
interest at the Default Rate and shall be payable within three
(3) Business Days after demand. Except as otherwise provided in
Section 1.11(b), the authority of Agent to make Overadvances is
limited to an aggregate amount not to exceed $2,000,000 at any
time and shall not cause the Revolving Loan to exceed the Maximum
Amount. No Overadvance shall be outstanding for more than sixty
(60) consecutive days, and not more than two Overadvances shall
be made in any period of one hundred eighty (180) consecutive
days, in each case without the consent of Requisite Revolving
Lenders.
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(b) Term Loan.
(i) Subject to the terms and conditions hereof, each Term Lender
agrees to make a term loan (collectively, the "Term Loan")
on the Closing Date to Borrower in the original principal
amount of its Term Loan Commitment. The obligations of each
Term Lender hereunder shall be several and not joint. The
Term Loan shall be evidenced by promissory notes
substantially in the form of Exhibit 1.1(b) (each a "Term
Note" and collectively the "Term Notes"), and, except as
provided in Section 1.12, Borrower shall execute and deliver
each Term Note to the applicable Term Lender. Each Term Note
shall represent the obligation of Borrower to pay the amount
of the applicable Term Lender's Term Loan Commitment,
together with interest thereon as prescribed in Section 1.5.
(ii) Borrower shall repay the principal amount of the Term Loan
in nineteen (19) consecutive quarterly installments on the
last day of September, December, March and June of each
year, commencing September 30, 2002, as follows:
Payment Dates Installment Amounts
------------- -------------------
September 30, 2002 through and $1,428,570 each
including March 31, 2007
and by making the final payment, which shall be due on May 30, 2007 and shall be
in the amount of $12,857,170 or, if different, the remaining principal balance
of the Term Loan.
(iii) Notwithstanding Section 1.1(b)(ii), the aggregate
outstanding principal balance of the Term Loan shall be due
and payable in full in immediately available funds on the
Commitment Termination Date, if not sooner paid in full. No
payment with respect to the Term Loan may be reborrowed.
(iv) Each payment of principal with respect to the Term Loan
shall be paid to Agent for the ratable benefit of each Term
Lender, ratably in proportion to each such Term Lender's
respective Term Loan Commitment.
(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's
receipt of any Notice of Revolving Credit Advance. Subject
to the terms and conditions hereof, the Swing Line Lender
may, in its discretion, make available from time to time
until the Commitment Termination Date advances (each, a
"Swing Line Advance") in accordance with any such notice.
The provisions of this Section 1.1(c) shall not relieve
Revolving Lenders of their obligations to make Revolving
Credit Advances under Section 1.1(a); provided, that if the
Swing Line Lender makes a Swing Line Advance pursuant to any
such notice, such Swing Line Advance shall be in lieu of any
Revolving Credit Advance that otherwise may be made by
Revolving Credit Lenders pursuant to such notice. The
aggregate amount of Swing Line Advances outstanding shall
not exceed at any time the lesser of (A) the Swing Line
Commitment and (B) the lesser of the Maximum Amount and
(except for Overadvances) the Borrowing Base, in each case,
less the outstanding balance of the Revolving Loan at such
time ("Swing Line Availability"). Until the Commitment
Termination Date, Borrower may from time to time borrow,
3
repay and reborrow under this Section 1.1(c). Each Swing
Line Advance shall be made pursuant to a Notice of Revolving
Credit Advance delivered by Borrower to Agent in accordance
with Section 1.1(a). Any such notice must be given no later
than 11:00 a.m. (Chicago time) on the Business Day of the
proposed Swing Line Advance. Unless the Swing Line Lender
has received at least one (1) Business Day's prior written
notice from Requisite Revolving Lenders instructing it not
to make a Swing Line Advance, the Swing Line Lender shall,
notwithstanding the failure of any condition precedent set
forth in Sections 2.2, be entitled to fund that Swing Line
Advance, and to have such Revolving Lender make Revolving
Credit Advances in accordance with Section 1.1(c)(iii) or
purchase participating interests in accordance with Section
1.1(c)(iv). Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan
shall constitute an Index Rate Loan. Borrower shall repay
the aggregate outstanding principal amount of the Swing Line
Loan upon demand therefor by Agent.
(ii) Borrower shall execute and deliver to the Swing Line Lender
a promissory note to evidence the Swing Line Commitment.
Such note shall be in the principal amount of the Swing Line
Commitment of the Swing Line Lender, dated the Closing Date
and substantially in the form of Exhibit 1.1(c)(ii) (the
"Swing Line Note"). The Swing Line Note shall represent the
obligation of Borrower to pay the amount of the Swing Line
Commitment or, if less, the aggregate unpaid principal
amount of all Swing Line Advances made to Borrower together
with interest thereon as prescribed in Section 1.5. The
entire unpaid balance of the Swing Line Loan and all other
non-contingent Obligations shall be immediately due and
payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(iii) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion, but not less frequently
than once each week, shall on behalf of Borrower (and
Borrower hereby irrevocably authorizes the Swing Line Lender
to so act on its behalf) request each Revolving Lender
(including the Swing Line Lender) to make a Revolving Credit
Advance to Borrower (which shall be an Index Rate Loan) in
an amount equal to that Revolving Lender's Pro Rata Share of
the principal amount of the Swing Line Loan (the "Refunded
Swing Line Loan") outstanding on the date such notice is
given. Unless any of the events described in Sections 8.1(h)
or 8.1(i) has occurred (in which event the procedures of
Section 1.1(c)(iv) shall apply) and regardless of whether
the conditions precedent set forth in this Agreement to the
making of a Revolving Credit Advance are then satisfied,
each Revolving Lender shall disburse directly to Agent, its
Pro Rata Share of a Revolving Credit Advance on behalf of
the Swing Line Lender, prior to 2:00 p.m. (Chicago time), in
immediately available funds on the Business Day next
succeeding the date that notice is given. The proceeds of
those Revolving Credit Advances shall be immediately paid to
the Swing Line Lender and applied to repay the Refunded
Swing Line Loan.
(iv) If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(c)(iii), one of the
events described in Sections 8.1(h) or 8.1(i) has occurred,
then, subject to the provisions of Section 1.1(c)(v) below,
each Revolving Lender shall, on the date such Revolving
Credit Advance was to have been made for the benefit of
Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan in an amount
equal to its Pro Rata Share of such Swing Line Loan. Upon
4
request, each Revolving Lender shall promptly transfer to
the Swing Line Lender, in immediately available funds, the
amount of its participation interest.
(v) Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(c)(iii) and to
purchase participation interests in accordance with Section
1.1(c)(iv) shall be absolute and unconditional and shall not
be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right that such
Revolving Lender may have against the Swing Line Lender,
Borrower or any other Person for any reason whatsoever; (B)
the occurrence or continuance of any Default or Event of
Default; (C) any inability of Borrower to satisfy the
conditions precedent to borrowing set forth in this
Agreement at any time or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any
of the foregoing. If any Revolving Lender does not make
available to Agent or the Swing Line Lender, as applicable,
the amount required pursuant to Sections 1.1(c)(iii) or
1.1(c)(iv), as the case may be, the Swing Line Lender shall
be entitled to recover such amount on demand from such
Revolving Lender, together with interest thereon for each
day from the date of non-payment until such amount is paid
in full at the Federal Funds Rate for the first two (2)
Business Days and at the Index Rate thereafter.
(d) Reliance on Notices. Agent shall be entitled to rely upon, and shall be
fully protected in relying upon, any Notice of Revolving Credit Advance,
Notice of Conversion/Continuation or similar notice reasonably believed by
Agent to be genuine. Agent may assume that each Person executing and
delivering any notice in accordance herewith was duly authorized, unless
the responsible individual acting thereon for Agent has actual knowledge to
the contrary.
1.2 Letters of Credit. Subject to and in accordance with the
terms and conditions contained herein and in Annex B, Borrower shall have the
right to request, and Revolving Lenders agree to incur, or purchase
participations in, Letter of Credit Obligations in respect of Borrower or any
Secured Guarantor.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan
Commitments. Borrower may at any time on at least three (3) days' prior written
notice to Agent (i) voluntarily prepay all or part of the Term Loan and/or (ii)
permanently reduce (but not terminate) the Revolving Loan Commitment; provided
that (A) any such prepayments or reductions shall be in a minimum amount of
$500,000 and integral multiples of $100,000 in excess of such amount, (B) the
Revolving Loan Commitment shall not be reduced to an amount less than the
greater of the amount of the Revolving Loan outstanding or $30,000,000; and (C)
after giving effect to such reductions, Borrower shall comply with Section
1.3(b)(i). In addition, Borrower may at any time on at least ten (10) days'
prior written notice to Agent terminate the Revolving Loan Commitment, provided,
that upon such termination all Loans and other Obligations shall be immediately
due and payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B hereto. Any
such voluntary prepayment and any reduction or termination of the Revolving Loan
5
Commitment must be accompanied by the payment of any applicable LIBOR funding
breakage costs in accordance with Section 1.13(b). Upon any such reduction or
termination of the Revolving Loan Commitment, Borrower's right to request
Revolving Credit Advances, or request that Letter of Credit Obligations be
incurred on its behalf, or request Swing Line Advances, shall simultaneously be
permanently reduced or terminated, as the case may be. Each notice of partial
prepayment shall designate the Loan or other Obligations to which such
prepayment is to be applied; provided, that any partial prepayments of the Term
Loan made by Borrower shall be applied to prepay the scheduled installments of
the Term Loan in inverse order of maturity.
(b) Mandatory Prepayments.
(i) If at any time Borrowing Availability is less than $5,000,000,
Borrower shall immediately repay the aggregate outstanding Revolving
Credit Advances to the extent required to eliminate such deficiency.
If any such deficiency remains after repayment in full of the
aggregate outstanding Revolving Credit Advances, Borrower shall
provide cash collateral for the Letter of Credit Obligations in the
manner set forth in Annex B to the extent required to eliminate such
excess or deficiency. Notwithstanding the foregoing, any Overadvance
made pursuant to Section 1.1(a)(iii) shall be repaid only on demand in
accordance with such Section.
(ii) Immediately upon receipt by Borrower or any Secured Guarantor of any
proceeds of any cash asset disposition (excluding proceeds of asset
dispositions permitted by Section 6.8(a)) to the extent the net
proceeds of such asset dispositions exceed $250,000 in the aggregate
in any Fiscal Year, Borrower shall prepay the Obligations in an amount
equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower or any
Secured Guarantor in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of
senior Liens (to the extent such Liens constitute Permitted
Encumbrances hereunder), if any, and (D) an appropriate reserve for
income taxes payable in cash in connection therewith; provided, that
if Borrower or the applicable Secured Guarantor intends to reinvest
all or any portion of the net proceeds of any asset disposition within
270 days thereafter in fixed assets and Borrower promptly notifies
Agent of that intention in writing, and if (x) no Event of Default
shall have occurred and be continuing at the date of such written
notification, and (y) Borrower or such Secured Guarantor, as the case
may be, grants a first security interest to Agent in such replacement
assets when acquired, then the amount of any such mandatory prepayment
shall be reduced by the amount to be reinvested; provided, further
that if and to the extent that Borrower or such Secured Guarantor, as
the case may be, does not reinvest such net proceeds within that
270-day period, Borrower shall then repay the Loans with net proceeds
that have not been reinvested on the last day of such 270-day period.
Any such prepayment shall be applied in accordance with Section
1.3(c).
(iii) If Borrower or any Secured Guarantor shall suffer any Event of Loss,
then such Person shall (A) promptly notify the Agent of such Event of
Loss with anticipated net proceeds in excess of $1,000,000 (including
the amount of the estimated net insurance proceeds net of amounts
payable to holders of senior Liens (to the extent such Liens
constitute Permitted Encumbrances hereunder, if any,) or other awards
payable in connection with such Event of Loss) and (B) promptly upon
receipt of such proceeds by such Person, Borrower shall prepay the
Obligations in an amount equal to such proceeds net of (x) all money
actually applied (or held in reserve pending such application) to
repair or reconstruct the damaged property or property affected by
6
condemnation or taking but subject to the terms of Section 5.4(c) and
(y) all out-of-pocket transaction costs and (z) related cash taxes.
Any such prepayment shall be applied in accordance with Section
1.3(d).
(iv) Proceeds of Keyman Life Insurance pledged to the Agent shall be
immediately used to prepay the Obligations in an amount equal to such
proceeds, which shall be applied in accordance with Section 1.3(c).
(v) If Holdings or Borrower issues Stock, no later than the Business Day
following the date of receipt of any cash proceeds thereof net of
underwriting discounts and commissions and other reasonable costs paid
to non-Affiliates in connection therewith, Borrower shall prepay the
Obligations in an amount equal to 50% of such net proceeds. Any such
prepayment shall be applied in accordance with Section 1.3(c).
Notwithstanding the foregoing two sentences, Borrower need not prepay
the Obligations in accordance with this Section 1.3(b)(v) in
connection with (A) issuances of Stock of Holdings to the extent (but
only to the extent) the proceeds thereof are used to purchase, retire,
redeem or otherwise acquire for value all or any portion of the Zero
Coupon Debt, (B) issuances of Stock of Holdings to the existing
Stockholders of Holdings or to seller(s) involved in a Permitted
Acquisition, in each case to the extent (but only to the extent) that
such Stock or the proceeds thereof are immediately used as a
consideration for all or a portion of the purchase price of a
Permitted Acquisition, so long as no Change of Control results after
giving effect to such issuance or series of related issuances, (C)
issuance of directors' qualifying shares, (D) issuances of Stock of
Holdings issued to any holder of Indebtedness of Holdings or Borrower
to the extent (but only to the extent) issued in connection with an
issuance, refinancing or restructuring of Indebtedness permitted
hereunder, so long as no Change of Control results after giving effect
to such issuance or a series of related issuances, and (E) sales or
issuances of common Stock to officers, directors or employees of
Holdings, Borrower or any Subsidiary, as the case may be, pursuant to
a management or employee benefit plan, to the extent the aggregate
proceeds of all common Stock so issued in excess of the redemptions of
common Stock of employees shall not exceed $2,000,000 in any Fiscal
Year.
(c) Application of Certain Mandatory Prepayments. Any
prepayments made by Borrower pursuant to Sections 1.3(b)(ii), 1.3(b)(iv) or
1.3(b)(v) above shall be applied as follows: first, to Fees and reimbursable
expenses of Agent then due and payable pursuant to any of the Loan Documents;
second, to interest then due and payable on the Term Loan; third, to prepay the
scheduled principal installments of the Term Loan in inverse order of maturity,
until such Term Loan shall have been prepaid in full; fourth, to interest then
due and payable on the Swing Line Loan; fifth, to the principal balance of the
Swing Line Loan until the same has been repaid in full; sixth, to interest then
due and payable on the Revolving Credit Advances; seventh, to the outstanding
principal balance of Revolving Credit Advances until the same has been paid in
full; and eighth, to any Letter of Credit Obligations, to provide cash
collateral therefor in the manner set forth in Annex B, until all such Letter of
Credit Obligations have been fully cash collateralized in the manner set forth
in Annex B. Neither the Revolving Loan Commitment nor the Swing Line Commitment
shall be permanently reduced by the amount of any such prepayments.
7
(d) Application of Prepayments from Insurance Proceeds and
Condemnation Proceeds. Prepayments from insurance or condemnation proceeds in
connection with an Event of Loss in accordance with Sections 1.3(b)(iii) and
5.4(c) and the Mortgage(s), respectively, shall be applied as follows: insurance
proceeds from casualties or losses to cash or Inventory shall be applied first,
to the Swing Line Loans and, second, to the Revolving Credit Advances; insurance
or condemnation proceeds from casualties or losses to Equipment, Fixtures and
Real Estate shall be applied to scheduled installments of the Term Loan in
inverse order of maturity. Neither the Revolving Loan Commitment nor the Swing
Line Loan Commitment shall be permanently reduced by the amount of any such
prepayments. If the precise amount of insurance or condemnation proceeds
allocable to Inventory as compared to Equipment, Fixtures and Real Estate are
not otherwise determined, the allocation and application of those proceeds shall
be jointly determined by Agent and Borrower.
(e) No Implied Consent. Nothing in this Section 1.3 shall be
construed to constitute Agent's or any Lender's consent to any transaction that
is not permitted by other provisions of this Agreement or the other Loan
Documents.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of
the Term Loan, the Revolving Loan and the Swing Line Loan for the Refinancing,
Redemptions (including Recapitalization) and any related transaction expenses,
for the financing of Borrower's ordinary working capital and general corporate
needs and for any other purpose not prohibited hereunder, and Borrower may use
the proceeds of the Revolving Loan to finance Permitted Acquisitions, subject to
the terms and conditions set forth herein.
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable
benefit of Lenders in accordance with the various Loans being made by each
Lender, in arrears on each applicable Interest Payment Date, at the following
rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus
the Applicable Revolver Index Margin per annum or, at the election of Borrower,
the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum,
based on the aggregate Revolving Credit Advances outstanding from time to time;
(ii) with respect to the Term Loan, the Index Rate plus the Applicable Term Loan
Index Margin per annum or, at the election of Borrower, the applicable LIBOR
Rate plus the Applicable Term Loan LIBOR Margin per annum; and (iii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver
Index Margin per annum.
The Applicable Margins are as follows:
Applicable Revolver Index Margin 1.25%
Applicable Revolver LIBOR Margin 2.25%
Applicable Term Loan Index Margin 1.25%
Applicable Term Loan LIBOR Margin 2.25%
8
(b) If any payment on any Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis
and interest shall be made by Agent on the basis of a 360-day year, in each case
for the actual number of days occurring in the period for which such interest
and Fees are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
presumed to be correct.
(d) So long as an Event of Default has occurred and is
continuing under Section 8.1(a), (h) or (i), or so long as any other Default or
Event of Default has occurred and is continuing and at the election of Agent (or
upon the written request of Requisite Lenders) confirmed by written notice from
Agent to Borrower, the interest rates applicable to the Loans and the Letter of
Credit Fees shall be increased by two percentage points (2%) per annum above the
rates of interest or the rate of such Fees otherwise applicable hereunder
("Default Rate"). Interest and Letter of Credit Fees at the Default Rate shall
accrue from the initial date of such Event of Default if such Event of Default
arose under Section 8.1(a), (h) or (i) or from the date of the delivery of the
written notice from Agent to Borrower for all other Events of Default, until
that Event of Default is cured or waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section
2.2, Borrower shall have the option to (i) request that any Revolving Credit
Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of
outstanding Loans (other than the Swing Line Loan) from Index Rate Loans to
LIBOR Loans, (iii) convert any LIBOR Loan to an Index Rate Loan, subject to
payment of LIBOR breakage costs in accordance with Section 1.13(b) if such
conversion is made prior to the expiration of the LIBOR Period applicable
thereto, or (iv) continue all or any portion of any Loan (other than the Swing
Line Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period
and the succeeding LIBOR Period of that continued Loan shall commence on the
first day after the last day of the LIBOR Period of the Loan to be continued.
Any Loan or group of Loans having the same proposed LIBOR Period to be made or
continued as, or converted into, a LIBOR Loan must be in a minimum amount of
$1,000,000 and integral multiples of $250,000 in excess of such amount. Any such
election must be made by 11:00 a.m. (Chicago time) on the 3rd Business Day prior
to (1) the date of any proposed Advance which is to bear interest at the LIBOR
Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be
continued as such, or (3) the date on which Borrower wishes to convert any Index
Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in such
election. If no election is received with respect to a LIBOR Loan by 11:00 a.m.
(Chicago time) on the 3rd Business Day prior to the end of the LIBOR Period with
respect thereto (or if a Default or an Event of Default has occurred and is
continuing or if the additional conditions precedent set forth in Section 2.2
shall not have been satisfied), that LIBOR Loan shall be converted to an Index
Rate Loan at the end of its LIBOR Period. Borrower must make such election by
notice to Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e).
9
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. All of the Accounts owned by Borrower
or any Secured Guarantor and reflected in the most recent Borrowing Base
Certificate delivered by Borrower to Agent shall be "Eligible Accounts" for
purposes of this Agreement, except any Account to which any of the exclusionary
criteria set forth below applies. Agent shall have the right to establish or
modify or eliminate Reserves against Eligible Accounts from time to time in its
reasonable credit judgment to reflect issues with respect to the collectability
of Accounts arising or discovered by Agent after the Closing Date. In addition,
Agent reserves the right, at any time and from time to time after the Closing
Date, to adjust any of the criteria set forth below or to establish new criteria
in its reasonable credit judgment to reflect changes in the Borrower's or the
applicable Secured Guarantor's business operations or the collectability of
Accounts, subject to the approval of Requisite Revolving Lenders in the case of
adjustments or new criteria which have the effect of making more credit
available. Eligible Accounts shall not include any Account of Borrower or a
Secured Guarantor:
(a) that does not arise from the sale of goods or the
performance of services by Borrower or a Secured Guarantor in the ordinary
course of its business;
(b) (i) upon which Borrower's or the applicable Secured
Guarantor's right to receive payment is not absolute or is contingent upon the
fulfillment of any condition whatsoever or (ii) as to which Borrower or the
applicable Secured Guarantor is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process, or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice
10
is subject to Borrower's or the applicable Secured Guarantors' completion of
further performance under such contract or is subject to the equitable lien of a
surety bond issuer;
(c) to the extent that any defense, counterclaim, setoff or
dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice has not been sent to the
applicable Account Debtor;
(f) that (i) is not owned by Borrower or a Secured Guarantor
or (ii) is subject to any right, claim, security interest or other interest of
any other Person, other than Liens described in clauses (a) and (g) of the
definition of Permitted Encumbrances and Liens in favor of Agent, on behalf of
itself and Lenders but only to the extent of such right, claim, security
interest or other interest;
(g) that arises from a sale to any director, officer, other
employee or Affiliate of any Credit Party, or to any entity that has any common
officer with any Credit Party;
(h) that is the obligation of an Account Debtor that is the
United States government or a political subdivision thereof, or any state,
county or municipality or department, agency or instrumentality thereof, unless
Borrower or the applicable Secured Guarantor has complied with respect to such
obligation with the Federal Assignment of Claims Act of 1940, or any applicable
state, county or municipal law restricting assignment thereof, provided, that
the Borrowing Availability based on such obligations shall not in any event
exceed $5,000,000 in the aggregate;
(i) that is the obligation of an Account Debtor located in a
foreign country other than (A) Canada (excluding the province of Newfoundland,
the Northwest Territories and the Territory of Nunavut) or (B) the United
Kingdom, unless payment thereof is assured by a letter of credit or credit
insurance assigned and delivered to Agent, satisfactory to Agent as to form,
amount and issuer;
(j) to the extent Borrower or any Secured Guarantor or any
Subsidiary thereof is liable for goods sold or services rendered by the
applicable Account Debtor to Borrower or any Secured Guarantor or any Subsidiary
thereof but only to the extent of the potential offset;
(k) that arises with respect to goods that are delivered on a
▇▇▇▇-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, an Account shall be
deemed in default upon the occurrence of any of the following:
11
(i) the Account is not paid within the earlier of: sixty (60) days
following its due date or one hundred twenty (120) days following its
original invoice date unless payment thereof is secured by a letter of
credit satisfactory to Agent as to form, substance and issuer;
(ii) the Account Debtor obligated upon such Account suspends business,
makes a general assignment for the benefit of creditors or fails to
pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account Debtor obligated upon
such Account under any bankruptcy law or any other federal, state or
foreign (including any provincial) receivership, insolvency relief or
other law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or more
of the Dollar amount of all Accounts owing by that Account Debtor are ineligible
under the criteria set forth in clause (l) above;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties in
the Loan Documents are untrue in any material respect;
(p) to the extent such Account is evidenced by a judgment,
Instrument or Chattel Paper;
(q) to the extent that such Account, together with all other
Accounts owing by such Account Debtor and its Affiliates (excluding the United
States government as Account Debtor) as of any date of determination exceed 15%
of all Eligible Accounts; or
(r) that is payable in any currency other than Dollars,
Canadian Dollars, Pounds Sterling or Euros.
It is understood and agreed that any Account excluded from eligibility under
clause (l) above shall be excluded in its entirety, meaning that any past due
credits with respect thereto shall also be excluded thereunder.
1.7 Eligible Inventory. All of the Inventory owned by the
Borrower or any Secured Guarantor and reflected in the most recent Borrowing
Base Certificate delivered by Borrower to Agent shall be "Eligible Inventory"
for purposes of this Agreement, except any Inventory to which any of the
exclusionary criteria set forth below applies. Agent shall have the right to
establish, modify, or eliminate Reserves against Eligible Inventory from time to
time in its reasonable credit judgment to reflect issues with respect to the
salability of Inventory arising or discovered by Agent after the Effective Date.
In addition, Agent reserves the right, at any time and from time to time after
the Effective Date, to adjust any of the criteria set forth below or to
establish new criteria in its reasonable credit judgment to reflect changes in
the Borrower's or the applicable Secured Guarantor's business operations or
salability of Inventory, subject to the approval of Requisite Revolving Lenders
in the case of adjustments or new criteria which have
12
the effect of making more credit available. Eligible Inventory shall not
include any Inventory of Borrower or any Secured Guarantor that:
(a) is not owned by Borrower or any Secured Guarantor free and
clear of all Liens and rights of any other Person (including the rights of a
purchaser that has made progress payments and the rights of a surety that has
issued a bond to assure Borrower's or a Secured Guarantor's performance with
respect to that Inventory), except Liens described in clauses (a), (d), (e) and
(g) of the definition of Permitted Encumbrances and the Liens in favor of Agent,
on behalf of itself and Lenders;
(b) (i) is not located on premises owned, leased or rented by
Borrower or any Secured Guarantor and set forth in Disclosure Schedule (3.2),
(ii) is not located on premises acquired or leased by Borrower or any Secured
Guarantor in connection with any Permitted Acquisition, or (iii) is stored at a
leased location, unless Agent has given its prior consent thereto and unless
either (x) a reasonably satisfactory landlord waiver has been delivered to
Agent, or (y) Reserves reasonably satisfactory to Agent have been established
with respect thereto, or (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been received by Agent
and Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at a location owned by Borrower or any Secured
Guarantor subject to a mortgage in favor of a lender other than Agent, unless a
reasonably satisfactory mortgagee waiver has been delivered to Agent, or (v) is
located at any site if the aggregate book value of Inventory at any such
location is less than $50,000;
(c) is placed on consignment or is in transit, except for
Inventory in transit between domestic locations of Credit Parties as to which
Agent's Liens have been perfected at origin and destination;
(d) is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(e) is excess, obsolete, slow moving (in excess of 2-years'
supply), unsalable, shopworn, seconds, damaged or unfit for sale;
(f) consists of display items or packing or shipping
materials, manufacturing supplies, custom-made Inventory which is not subject to
an outstanding purchase order that is not revocable by its terms or is not sold
in the ordinary course of business, work-in-process Inventory or replacement
parts (excluding Component Parts and Purchased Parts);
(g) is not of a type held for sale in the ordinary course of
Borrower's or the applicable Secured Guarantor's business;
(h) is not subject to a first priority lien in favor of Agent
on behalf of itself and Lenders subject to Permitted Encumbrances;
(i) breaches in any material respect any of the
representations or warranties pertaining to Inventory set forth in the Loan
Documents;
13
(j) consists of any costs associated with "freight-in"
charges;
(k) consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily available; or
(l) is not covered by casualty insurance in accordance with
Section 5.4.
1.8 Cash Management Systems. On or prior to the Closing Date,
Borrower will establish and will maintain until the Termination Date, the cash
management systems described in Annex C (the "Cash Management Systems").
1.9 Fees.
(a) Borrower has paid and shall pay to GE Capital,
individually, the Fees specified in the GE Capital Fee Letter, at the times
specified for payment therein.
(b) As additional compensation for the Revolving Lenders,
Borrower shall pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a Fee for Borrower's
non-use of available funds in an amount equal to:
(i) one-half of one percent (0.50%) per annum, if the amount
of the Revolving Loan, including the Swing Line Loan, is equal to or greater
than 50% of the Maximum Amount, or
(ii) three-fourths of one percent (0.75%) per annum, if the amount of the
Revolving Loan, including the Swing Line Loan, is less than 50% of the
Maximum Amount,
(in each case, calculated on the basis of a 360 day year for actual days
elapsed) multiplied by the difference between (x) the Maximum Amount (as it may
be reduced from time to time) and (y) the average for the period of the daily
closing balances of the Revolving Loan and the Swing Line Loan outstanding
during the period for which such Fee is due.
(c) Borrower shall pay to Agent, for the ratable benefit of
Revolving Lenders, the Letter of Credit Fee as provided in Annex B.
1.10 Receipt of Payments. Borrower shall make each payment
under this Agreement not later than 1:00 p.m. (Chicago time) on the day when due
in immediately available funds in Dollars to the Collection Account. For
purposes of computing interest and Fees and determining Borrowing Availability
as of any date, all payments shall be deemed received on the Business Day on
which immediately available funds therefor are received in the Collection
Account prior to 1:00 p.m. (Chicago time). Payments received after 1:00 p.m.
(Chicago time) on any Business Day or on a day that is not a Business Day shall
be deemed to have been received on the following Business Day.
14
1.11 Application and Allocation of Payments.
(a) So long as no Event of Default has occurred and is
continuing, (i) payments received in the ordinary course of business and not
subject to clauses (ii), (iii) and (iv) below shall be applied, first, to the
Swing Line Loan and, second, to the Revolving Loan; (ii) payments matching
specific scheduled payments then due shall be applied to those scheduled
payments; (iii) voluntary prepayments shall be applied as determined by
Borrower, subject to the provisions of Section 1.3(a); and (iv) mandatory
prepayments shall be applied as set forth in Sections 1.3(c) and 1.3(d). All
payments and prepayments applied to a particular Loan shall be applied ratably
to the portion thereof held by each Lender as determined by its Pro Rata Share.
As to any other payment, and as to all payments made when an Event of Default
has occurred and is continuing or following the Commitment Termination Date,
Borrower hereby irrevocably waives the right to direct the application of any
and all payments received from or on behalf of Borrower, and Borrower hereby
irrevocably agrees that Agent shall have the continuing exclusive right to apply
any and all such payments against the Obligations as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or any other
books and records. In the absence of a specific determination by Agent with
respect thereto, payments made when an Event of Default has occurred and is
continuing or following the Commitment Termination Date shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the other Loans,
ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; and (6) to all other Obligations including expenses of Lenders to
the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may,
charge to the Revolving Loan balance on behalf of Borrower and cause to be paid
all Fees, Charges, reimbursable expenses (including insurance premiums in
accordance with Section 5.4(a)) and interest and principal, other than principal
of the Revolving Loan, owing by Borrower under this Agreement or any of the
other Loan Documents if and to the extent Borrower fails to pay promptly any
such amounts as and when due, even if the amount of such charges would exceed
Borrowing Availability at such time. At Agent's option and to the extent
permitted by law, any charges so made shall constitute part of the Revolving
Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan Account") on its books to record all Advances and the Term
Loan, all payments made by or on behalf of Borrower, and all other debits and
credits as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance with
Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided that any failure to so record
or any error in so recording shall not limit or otherwise affect Borrower's duty
to pay the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Loans setting forth the balance of the Loan
Account for the immediately preceding month. Unless Borrower notifies Agent in
15
writing of any objection to any such accounting (specifically describing the
basis for such objection), within ninety (90) days after the date thereof, each
and every such accounting shall, absent manifest error, be deemed conclusive.
Only those items expressly objected to in such notice shall be deemed to be
disputed by Borrower. Notwithstanding any provision herein contained to the
contrary, any Lender may elect (which election may be revoked) to dispense with
the issuance of Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly
and severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (other than disputes between and among Agent/or the Lenders
arising when no Event of Default has occurred and is continuing) (collectively,
"Indemnified Liabilities"); provided, that no such Credit Party shall be liable
for any indemnification to an Indemnified Person to the extent that any such
suit, action, proceeding, claim, damage, loss, liability or expense results from
that Indemnified Person's gross negligence or willful misconduct; and, provided
further, that any obligations of the Credit Parties to the Indemnified Persons
with respect to Environmental Liabilities and Hazardous Materials shall be
governed exclusively by the terms and provisions of the Environmental Indemnity
Agreement and not by the terms and provisions of this Section 1.13 or any other
term and provision of this Agreement or any other Loan Document other than the
Environmental Indemnity Agreement. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the
terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
occurs as a result of acceleration, by operation of law or otherwise); (ii)
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing
of, or shall request a termination of any borrowing, conversion into or
continuation of LIBOR Loans
16
after Borrower has given notice requesting the same in accordance herewith; or
(iv) Borrower shall fail to make any prepayment of a LIBOR Loan after Borrower
has given a notice thereof in accordance herewith, then Borrower shall indemnify
and hold harmless each Lender from and against all losses, costs and expenses
resulting from or arising from any of the foregoing. Such indemnification shall
include any loss (including loss of margin) or expense arising from the
reemployment of funds obtained by it or from fees payable to terminate deposits
from which such funds were obtained. For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be deemed to have
actually funded its relevant LIBOR Loan through the purchase of a deposit
bearing interest at the LIBOR Rate in an amount equal to the amount of that
LIBOR Loan and having a maturity comparable to the relevant LIBOR Period;
provided, that each Lender may fund each of its LIBOR Loans in any manner it
sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.13(b), and such calculation
shall be presumed to be correct unless Borrower shall object in writing within
twenty (20) Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.14 Access. Each Credit Party that is a party hereto shall,
during normal business hours, from time to time upon three (3) Business Days'
prior notice as frequently as Agent determines to be appropriate: (a) provide
Agent and any of its officers, employees and agents access to its properties,
facilities, advisors, officers, employees of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party. If an Event of Default has occurred and is
continuing or if access is necessary to preserve or protect the Collateral as
determined by the Agent, each such Credit Party shall provide such access to
Agent and to each Lender at all times and without advance notice. Furthermore,
so long as any Event of Default has occurred and is continuing, Borrower shall
provide Agent and each Lender with access to its suppliers and customers. Each
Credit Party shall make available to Agent and its counsel, as quickly as is
possible under the circumstances, originals or copies of all books and records
of the Credit Parties that Agent may reasonably request. Each Credit Party shall
deliver any document or instrument necessary for Agent, as it may from time to
time reasonably request, to obtain records from any service bureau or other
Person that maintains records for such Credit Party. Agent and Lenders agree
that Agent shall conduct three field Collateral audits of Borrower and the
Secured Guarantors (approximately every six months) during the first eighteen
months following the Closing Date and, as long as a Trigger Event has occurred
and is continuing thereafter, Agent and Lenders agree that Agent shall conduct a
field Collateral audit of Borrower, the Secured Guarantors and Schaublin every
six months from the date of the last field Collateral audit. Agent will give
Lenders at least five (5) days' prior written notice of regularly scheduled
audits. Representatives of other Lenders may accompany Agent's representatives
on regularly scheduled audits at no charge to Borrower.
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1.15 Taxes.
(a) Any and all payments by Borrower hereunder or under the
Notes shall be made, in accordance with this Section 1.15, free and clear of and
without deduction for any and all present or future Taxes. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Notes, (i) the sum payable shall be increased as much as
shall be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 1.15) Agent
or Lenders, as applicable, receive an amount equal to the sum they would have
received had no such deductions been made, (ii) Borrower shall make such
deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within
thirty (30) days after the date of any payment of any such Taxes, Borrower shall
furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof.
(b) Each Credit Party that is a signatory hereto shall
indemnify and, within thirty (30) days of demand therefor, pay Agent and each
Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to
Borrower and Agent a properly completed and executed IRS Form W-8ECI or Form
W-8BEN or other applicable form, certificate or document prescribed by the IRS
or the United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent prior to becoming a Lender hereunder. No foreign Person may
become a Lender hereunder if such Person fails to deliver a Certificate of
Exemption in advance of becoming a Lender.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender issued within ninety (90)
days after adoption thereof and setting forth a calculation of the reduction
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
18
basis of the computation thereof submitted by such Lender to Borrower and to
Agent shall, absent manifest error, be presumptive evidence of the matters set
forth therein.
(b) If, due to either (i) the introduction of or any change in
any law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrower shall from time to time, upon demand by such Lender issued within
ninety (90) days after the introduction thereof or compliance therewith and
setting forth a calculation of such increased costs (with a copy of such demand
to Agent), pay to Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to Borrower and to Agent by such
Lender, shall be presumptive evidence of the matters set forth therein, absent
manifest error. Each Lender agrees that, as promptly as practicable after it
becomes aware of any circumstances referred to above which would result in any
such increased cost, the affected Lender shall, to the extent not inconsistent
with such Lender's internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to
it by Borrower pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein,
if the introduction of or any change in any law or regulation (or any change in
the interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower through Agent,
(i) the obligation of such Lender to agree to make or to make or to continue to
fund or maintain LIBOR Loans shall terminate and (ii) Borrower shall forthwith
prepay in full all outstanding LIBOR Loans owing to such Lender, together with
interest accrued thereon, unless Borrower, within five (5) Business Days after
the delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.
(d) Within fifteen (15) days after receipt by Borrower of
written notice and demand from any Lender (an "Affected Lender") as provided in
Sections 1.15(a), 1.15(b), 1.16(a) or 1.16(b), Borrower may, at its option,
notify Agent and such Affected Lender of its intention to replace the Affected
Lender. So long as no Default or Event of Default has occurred and is
continuing, Borrower, with the consent of Agent, may obtain, at Borrower's
expense, a replacement Lender ("Replacement Lender") for the Affected Lender,
which Replacement Lender must be reasonably satisfactory to Agent. If Borrower
obtains a Replacement Lender within one hundred eighty (180) days following
notice of its intention to do so, the Affected Lender must sell and assign its
Loans and Commitments to such Replacement Lender for an amount equal to the
principal balance of all Loans held by the Affected Lender and all accrued
interest and Fees with respect thereto through the date of such sale; provided,
that Borrower shall have reimbursed such Affected Lender for the additional
amounts or increased costs that it is entitled to receive under Sections
1.15(a), 1.15(b), 1.16(a) or 1.16(b) through the date of such sale and
assignment. Notwithstanding the foregoing, Borrower shall not have the right to
obtain
19
a Replacement Lender if the Affected Lender rescinds its demand for increased
costs or additional amounts within fifteen (15) days following its receipt of
Borrower's notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within one hundred eighty (180) days thereafter, Borrower's
rights under this Section 1.16(d) shall terminate with respect to the increased
costs or additional amounts of such Affected Lender giving rise to such notice
to replace such Affected Lender and Borrower shall promptly pay all increased
costs and or additional amounts demanded by such Affected Lender pursuant to
Sections 1.15(a), 1.15(b), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be
obligated to make any Loan or incur any Letter of Credit Obligations on the
Effective Date, or to take, fulfill, or perform any other action hereunder,
until the following conditions have been satisfied or provided for in a manner
satisfactory to Agent, or waived in writing by Agent and Requisite Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance reasonably satisfactory to Agent.
(b) [Intentionally Omitted].
(c) Approvals. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons (including all requisite Governmental Authorities) to
the execution, delivery and performance of this Agreement and the other Loan
Documents or (ii) an officer's certificate in form and substance reasonably
satisfactory to Agent affirming that no such consents or approvals are required.
In addition, Agent shall have received an officer's certificate in form and
substance reasonably satisfactory to Agent affirming that execution, delivery
and performance of this Agreement and the other Loan Documents do not violate
any term or provision of any of (i) the Subordinated Debt Documents and (ii) the
Discount Debentures Documents, including, without limitation, a representation
and warranty that the extension of Loans and the Obligations under and in
accordance with this Agreement and the other Loan Documents are permitted by the
terms and provisions of (x) the Subordinated Debt Documents and (y) the Discount
Debentures Documents.
(d) Payment of Fees. Borrower shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified in
Section 1.9 (including the Fees
20
specified in the GE Capital Fee Letter), and shall have reimbursed Agent for all
reimbursable fees, costs and expenses of closing presented as of the Effective
Date.
(e) Capital Structure: Other Indebtedness. Except as described
on Disclosure Schedule 2.1(f) the capital structure of each Credit Party has not
materially changed since March 30, 2002 and the terms and conditions of all
Indebtedness of each Credit Party shall be acceptable to Agent in its sole
discretion.
(f) Consummation of Schaublin Financing. The Schaublin
Financing shall have been or shall be consummated concurrent with the Effective
Date, ▇▇▇▇▇▇▇▇▇ ▇.▇. shall have received the net proceeds of the CHF 10,000,000
(Swiss Francs) loan to be funded to ▇▇▇▇▇▇▇▇▇ ▇.▇. pursuant to the Schaublin
Financing (after deducting therefrom all fees, costs and expenses payable to
Credit Suisse in connection therewith) and the Agent shall have received fully
executed copies of all documents pertaining to Shaublin Financing, each of which
shall be in form and substance reasonably satisfactory to Agent and its counsel.
(g) Subordinated Liens. Agent shall have received duly
executed originals of the security agreements and other Collateral Documents and
other evidence satisfactory to Agent that Agent has a valid and perfected
subordinated security interest in the collateral securing the IRB Loans, or, in
the alternative, evidence that the granting of such security interest is not
permitted by applicable law or loan documents.
(h) Financial Covenant Compliance. Agent shall have received
(i) a Compliance Certificate for the 12-month period ended at the end of the
Fiscal Quarter ended on or most recently ended prior to the Effective Date which
shows compliance with the Fixed Charge Coverage Ratio Financial Covenant set
forth on Annex G.
2.2 Further Conditions to Each Loan. Except as otherwise
expressly provided herein, no Lender shall be obligated to fund any Advance or
incur any Letter of Credit Obligation, if, as of the date thereof:
(a) any representation or warranty by any Credit Party
contained herein or in any other Loan Document is untrue or incorrect as of such
date in any material respect, except to the extent that such representation or
warranty expressly relates to an earlier date and except for changes therein
expressly permitted or expressly contemplated by this Agreement, and Agent or
Requisite Revolving Lenders have determined not to make such Advance or incur
such Letter of Credit Obligation as a result of the fact that such warranty or
representation is untrue or incorrect;
(b) any event or circumstance (i) having a Material Adverse
Effect as set forth in clauses (c) or (d) of the definition thereof or (ii)
which could reasonably be expected to result in costs, liabilities or damages,
individually or in the aggregate, to any Credit Party or Credit Parties in an
amount that would have caused the Fixed Charge Covenant Ratio Financial Covenant
to have been breached if such event or occurrence had occurred and such costs,
liabilities or damages had been paid on the first day of the Fiscal Quarter most
recently ended or (iii) which results in an uninsured loss of tangible assets
with a value in excess of $4,000,000 has occurred since the date hereof as
determined by the Requisite Revolving Lenders, and Agent or Requisite Revolving
21
Lenders have determined not to make such Advance or incur such Letter of Credit
Obligation as a result of the fact that such event or circumstance has occurred;
(c) any Event of Default has occurred and is continuing or
would result after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligation), and Agent or Requisite Revolving Lenders shall have
determined not to make any Advance or incur any Letter of Credit Obligation as a
result of that Event of Default; or
(d) after giving effect to any Advance (or the incurrence of
any Letter of Credit Obligations (other than the Overadvances)), Borrowing
Availability shall be less than $5,000,000;
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrower that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
2.3 Conditions to Revolving Credit Advances Funding Permitted
Acquisitions. In addition to the conditions set forth in Section 2.2 with
respect to all Advances, no Lender shall be obligated to advance its Pro Rata
Share of any Revolving Credit Advance used for the purpose of funding all or
part of the purchase price of any acquisition of Stock, any purchase of all or
substantially all of the assets of any Person, or any business or division of
any Person or any acquisition of a Person by a merger, consolidation or any
other combination unless the conditions set forth in Section 6.1 hereof have
been satisfied or provided for in a manner satisfactory to Agent or waived in
writing by Agent and Lenders.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of
Credit Obligations, the Credit Parties executing this Agreement, jointly and
severally, make the following representations and warranties to Agent and each
Lender with respect to all Credit Parties, each and all of which shall survive
the execution and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit
Party (a) is a corporation, limited liability company or limited partnership
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization set forth in Disclosure
Schedule (3.1); (b) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect; (c) has the
requisite power and authority and the legal right to own, pledge, mortgage or
otherwise encumber and operate its properties, to lease the property it operates
under lease and to conduct its business as now conducted; (d) subject to
specific representations regarding Environmental Laws contained in the
Environmental Indemnity Agreement, has all material licenses, permits, consents
or approvals from or by, and has made all material filings with, and has given
all material notices to, all Governmental Authorities having jurisdiction, to
22
the extent required for such ownership, operation and conduct, except as could
not reasonably be expected to have a Material Adverse Effect; (e) is in
compliance with its charter and bylaws or partnership or operating agreement, as
applicable; and (f) subject to specific representations set forth herein
regarding ERISA, tax and other laws, or specific representations regarding
Environmental Laws set forth in the Environmental Indemnity Agreement, is in
compliance with all applicable provisions of law, except where the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the
Effective Date, each Credit Party's name as it appears in official filings in
its state of incorporation or organization, state of incorporation or
organization, organization type, organization number, if any, issued by its
state incorporation or organization, and the location of each Credit Party's
chief executive office and the warehouses and premises at which any Collateral
is located on the Effective Date are set forth in Disclosure Schedule (3.2), and
each Credit Party has only one state of incorporation or organization. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each domestic Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations.
The execution, delivery and performance by each Credit Party of the Loan
Documents to which it is a party and the creation of all Liens provided for
therein: (a) are within such Person's power; (b) have been duly authorized by
all necessary corporate, limited liability company or limited partnership
action; (c) do not contravene any provision of such Person's charter, bylaws or
partnership or operating agreement as applicable; (d) do not violate any
applicable law or regulation, or any order or decree of any court or
Governmental Authority; (e) do not conflict with or result in the breach or
termination of, constitute a default under or accelerate or permit the
acceleration of any performance required by, any indenture, mortgage, deed of
trust, lease, or other material agreement or instrument to which such Person is
a party or by which such Person or any of its property is bound; (f) do not
result in the creation or imposition of any Lien upon any of the property of
such Person other than those in favor of Agent, on behalf of itself and Lenders,
pursuant to the Loan Documents; and (g) do not require the consent or approval
of any Governmental Authority or any other Person, except those referred to in
Section 2.1(c), all of which will have been duly obtained, made or complied with
prior to or on the Effective Date. As of the Effective Date, each of the Loan
Documents shall be duly executed and delivered by each Credit Party that is a
party thereto and each such Loan Document shall constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in accordance
with its terms, except as the enforceability thereof may be limited by
applicable bankruptcy laws or similar laws affecting creditors' rights in
general.
3.4 Financial Statements and Projections. Except for the
Projections, all Financial Statements concerning Holdings, Borrower and its
Subsidiaries that are referred to in this Section 3.4 have been prepared in
accordance with GAAP consistently applied throughout the periods covered (except
as disclosed therein and except, with respect to unaudited Financial Statements,
for the absence of footnotes and normal year-end audit adjustments) and present
fairly in all material respects the financial position of the Persons covered
thereby as at the dates thereof and the results of their operations and cash
flows for the periods then ended.
23
(a) Financial Statements. The following Financial Statements
attached hereto as Disclosure Schedule (3.4(a)) have been delivered to Agent on
or before the Effective Date:
(i) The audited consolidated and consolidating balance sheets at
March 31, 2003 and the related statements of income and cash
flows of Holdings, Borrower and its Subsidiaries for the Fiscal
Year then ended, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
(ii) The unaudited balance sheet(s) at September 30, 2003 and the
related statement(s) of income and cash flows of Holdings,
Borrower and its Subsidiaries for the four Fiscal Quarters then
ended.
(b) Pro Forma. The Pro Forma delivered to Agent on or before
the Closing Date and attached hereto as Disclosure Schedule (3.4(b)) was based
on the unaudited consolidated and consolidating balance sheets of Borrower and
its Subsidiaries dated March 30, 2002, and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with GAAP.
(c) Projections. The Projections delivered to Agent on or
before the Closing Date and attached hereto as Disclosure Schedule (3.4(c)) have
been prepared by Borrower in light of the past operations of its and its
Subsidiaries' businesses, but including future payments of known contingent
liabilities, and reflect projections for the three year period beginning on
March 30, 2002, on a month-by-month basis for the first year and on a
year-by-year basis thereafter. The Projections are based upon estimates and
assumptions stated therein, all of which Borrower believes to be reasonable and
fair in light of current conditions and current facts known to Borrower and, as
of the Closing Date, reflect Borrower's good faith and reasonable estimates of
the future financial performance of Borrower and of the other information
projected therein for the period set forth therein.
3.5 Material Adverse Effect. Between March 31, 2003 and the
Effective Date, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has been
entered into by any Credit Party or has become binding upon any Credit Party's
assets and no law or regulation applicable to any Credit Party has been adopted,
in each case, that has had or could reasonably be expected to have a Material
Adverse Effect, and (c) no Credit Party is in default and to the best of
Borrower's knowledge no third party is in default under any material contract,
lease or other agreement or instrument, in any case which default alone or in
the aggregate could reasonably be expected to have a Material Adverse Effect.
Between March 31, 2003 and the Effective Date no event has occurred, that alone
or together with other events, could reasonably be expected to have a Material
Adverse Effect.
3.6 Ownership of Property; Liens. As of the Effective Date,
the real estate ("Real Estate") listed in Disclosure Schedule (3.6) includes all
of the real property owned, leased, subleased, or used by any Credit Party. As
of the Effective Date, each Credit Party owns good and marketable fee simple
title to all of its owned Real Estate, and valid leasehold interests in all of
its leased Real Estate, all as described on Disclosure Schedule (3.6), and
copies of all
24
such leases have been delivered to Agent. Disclosure Schedule (3.6) further
describes any Real Estate with respect to which any Credit Party is a lessor,
sublessor or assignor as of the Effective Date. Each Credit Party also has good
and marketable title to, or valid leasehold interests in, all of its personal
property and assets. As of the Effective Date, none of the properties and assets
of any Credit Party are subject to any Liens other than Permitted Encumbrances,
and no Credit Party has received written notice of any facts, circumstances or
conditions that are likely to result in any Liens (including Liens arising under
Environmental Laws) on any Collateral other than Permitted Encumbrances. As of
the Effective Date, the Liens granted to Agent pursuant to the Loan Documents
are first priority perfected Liens, subject only to Permitted Encumbrances. As
of the Effective Date, each Credit Party has to its knowledge received all
deeds, assignments, waivers, consents, nondisturbance and attornment or similar
agreements, bills of sale and other documents, and has duly effected all
recordings, filings and other actions reasonably necessary to establish, protect
and perfect such Credit Party's right, title and interest in and to all such
Real Estate and other properties and assets. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. During the period from March
31, 2003 through the Effective Date, no portion of any Credit Party's Real
Estate has suffered any material damage by fire or other casualty loss that has
not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. As of the Effective Date, all material
permits required to have been issued or appropriate to enable the Real Estate to
be lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect,
except as could not reasonably be expected to have a Material Adverse Effect.
3.7 Labor Matters. As of the Effective Date (a) no strikes or
other material labor disputes against any Credit Party are pending or, to any
Credit Party's knowledge, threatened; (b) hours worked by and payment made to
employees of each Credit Party comply with the Fair Labor Standards Act and each
other federal, state, local or foreign law applicable to such matters; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement (and true and complete copies of any agreements described on
Disclosure Schedule (3.7) have been delivered to Agent); (e) to any Credit
Party's knowledge, there is no organizing activity involving any Credit Party
pending or threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual; in each case except as could not reasonably be expected
to have a Material Adverse Effect.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock
and Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Effective Date, no
25
Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other Person. As of
the Effective Date, all of the issued and outstanding Stock of each Credit Party
is owned by each of the Stockholders and in the amounts set forth in Disclosure
Schedule (3.8). Except as set forth in Disclosure Schedule (3.8), as of the
Effective Date there are no outstanding rights to purchase, options, warrants or
similar rights or agreements pursuant to which any Credit Party may be required
to issue, sell, repurchase or redeem any of its Stock or other equity securities
or any Stock or other equity securities of its Subsidiaries. All outstanding
Indebtedness and Guaranteed Indebtedness of each Credit Party as of the
Effective Date (except for the Obligations) is described in Section 6.3
(including Disclosure Schedule (6.3)).
3.9 Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Loans by Lenders to
Borrower, the incurrence of the Letter of Credit Obligations on behalf of
Borrower, the application of the proceeds thereof and repayment thereof will not
violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will
it engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. As of the Effective Date, all tax returns, reports
and statements, including information returns, required by any Governmental
Authority to be filed by any Credit Party have been filed with the appropriate
Governmental Authority and all Charges have been paid prior to the date on which
any fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding Charges or other amounts being contested in accordance with the
terms described in Section 5.2(b). As of the Effective Date, proper and accurate
amounts have been withheld by each Credit Party from its respective employees
for all periods in full and complete compliance with all applicable federal,
state, local and foreign laws and such withholdings have been timely paid to the
respective Governmental Authorities. Disclosure Schedule (3.11) sets forth as of
the Effective Date those taxable years for which any Credit Party's tax returns
are currently being audited by the IRS or any other applicable Governmental
Authority and any assessments
26
or threatened assessments in connection with such audit, or that are otherwise
currently outstanding. Except as described in Disclosure Schedule (3.11), as of
the Effective Date, no Credit Party has executed or filed with the IRS or any
other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Charges. As of the Effective Date, none of the Credit Parties and their
respective predecessors are liable for any Charges: (a) under any agreement
(including any tax sharing agreements), except as described in Disclosure
Schedule (3.11) or (b) to each Credit Party's knowledge, as a transferee. As of
the Effective Date, no Credit Party has agreed or been requested to make any
adjustment under IRC Section 481(a), by reason of a change in accounting method
or otherwise, which would have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists (i) all ERISA Affiliates
and (ii) all Plans and separately identifies all Pension Plans, including Title
IV Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans. Copies of all such listed Plans (other than Multiemployer Plans),
together with a copy of the latest form IRS/DOL 5500-series form for each such
Plan and the most recent actuarial report for any Title IV Plans and Welfare
Plans have been delivered to Agent. Except with respect to Multiemployer Plans,
each Qualified Plan has been determined by the IRS to qualify under Section 401
of the IRC, the trusts created thereunder have been determined to be exempt from
tax under the provisions of Section 501 of the IRC, and nothing has occurred
that would cause the loss of such qualification or tax-exempt status. Except as
could not reasonably be expected to have a Material Adverse Effect, each Plan is
in compliance with the applicable provisions of ERISA and the IRC, including the
timely filing of all reports required under the IRC or ERISA, including the
statement required by 29 CFR Section 2520.104-23. Neither any Credit Party nor
ERISA Affiliate has failed to make any contribution or pay any amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the terms
of any such Plan. Except as could not be reasonably be expected to have a
Material Adverse Effect, no "prohibited transaction," as defined in Section 406
of ERISA and Section 4975 of the IRC, in connection with any Plan has occurred
that would subject any Credit Party to a material tax on prohibited transactions
imposed by Section 502(l) of ERISA or Section 4975 of the IRC, and no event has
occurred with respect to a Plan which would subject any Credit Party to any
material liability under Section 502(l) of ERISA.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no
Title IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or ERISA Affiliate (determined at any
27
time within the past five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time); (vi) except in the case of any ESOP, Stock of all Credit Parties and
their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair
market value of the assets of any Plan measured on the basis of fair market
value as of the latest valuation date of any Plan; and (vii) no liability under
any Title IV Plan has been satisfied with the purchase of a contract from an
insurance company that is not rated AAA by the Standard & Poor's Corporation or
an equivalent rating by another nationally recognized rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand,
investigation or proceeding is now pending or, to the knowledge of any Credit
Party, threatened in writing against any Credit Party, before any Governmental
Authority or before any arbitrator or panel of arbitrators (collectively,
"Litigation"), (a) that challenges any Credit Party's right or power to enter
into or perform any of its obligations under the Loan Documents to which it is a
party, or the validity or enforceability of any Loan Document or any action
taken thereunder, or (b) that is reasonably likely to be determined adversely to
any Credit Party and that, if so determined, would have a Material Adverse
Effect. Except as set forth on Disclosure Schedule (3.13), as of the Closing
Date there is no Litigation pending or, to any Credit Party's knowledge,
threatened that seeks damages in excess of $250,000 or injunctive relief
against, or alleges criminal misconduct of, any Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any
Credit Party or Affiliate thereof brought about the obtaining, making or closing
of the Loans or the Related Transactions, and no Credit Party or Affiliate
thereof has any obligation to any Person in respect of any finder's or brokerage
fees in connection therewith.
3.15 Intellectual Property. As of the Effective Date, each
Credit Party owns or has rights to use all Intellectual Property necessary to
continue to conduct its business as now or heretofore conducted by it or
proposed to be conducted by it, and each Patent, Trademark, Copyright and
License is listed, together with application or registration numbers, as
applicable, in Disclosure Schedule (3.15). To the knowledge of each Credit
Party, as of the Effective Date, each Credit Party conducts its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person in any material respect. Except as set forth in Disclosure
Schedule (3.15), as of the Effective Date, no Credit Party is aware of any
infringement claim by any other Person with respect to any Intellectual
Property.
3.16 Full Disclosure. No information contained in this
Agreement, any of the other Loan Documents, any Projections, Financial
Statements or Collateral Reports or other written reports from time to time
delivered hereunder or any written statement furnished by or on behalf of any
Credit Party to Agent or any Lender pursuant to the terms of this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made. Projections from time to time delivered hereunder are or will be
based upon the estimates and assumptions stated therein, all of which Borrower
believed at the time of delivery to be reasonable and fair in light of current
conditions and current facts known to Borrower as of such delivery date, and
reflect Borrower's good faith and reasonable estimates of the future financial
performance of Borrower and of the other information projected therein for the
period set forth therein. Each Credit Party will use its best efforts to ensure
that the Liens granted to Agent, on behalf of itself and Lenders, pursuant to
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the Collateral Documents will at all times be fully perfected first priority
Liens in and to the Collateral described therein, subject, as to priority, only
to Permitted Encumbrances.
3.17 Common Enterprise. Borrower is the direct and beneficial
owner and holder of all of the issued and outstanding shares of Stock of each
Secured Guarantor. Borrower and Secured Guarantors make up a related
organization of various entities constituting a single economic and business
enterprise so that Borrower and Secured Guarantors share a substantial identity
of interests such that any benefit received by any one of them benefits the
others. Borrower and certain of the Secured Guarantors render services to or for
the benefit of the Borrower and/or other Secured Guarantors, as the case may be,
purchase or sell and supply goods to or from or for the benefit of the others,
make loans, advances and provide other financial accommodations to or for the
benefit of Borrower and Secured Guarantors (including inter alia, the payment by
Borrower and Guarantors of creditors of the Borrower or Secured Guarantors and
guarantees by Borrower and Secured Guarantors of indebtedness of the Borrower
and Secured Guarantors and provide administrative, marketing, payroll and
management services to or for the benefit of the Borrower and other Secured
Guarantors). Borrower and Secured Guarantors have centralized accounting, common
officers and directors and are in certain circumstances, identified to creditors
as a single economic and business enterprise.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Effective Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule
(3.19) lists all banks and other financial institutions at which any Credit
Party maintains deposit or other accounts as of the Effective Date, including
any Disbursement Accounts, and such Schedule correctly identifies the name,
address and telephone number of each depository, the name in which the account
is held, a description of the purpose of the account, and the complete account
number therefor.
3.20 Government Contracts. Except as set forth in Disclosure
Schedule (3.20), as of the Effective Date, no Credit Party is a party to any
contract or agreement with any Governmental Authority and no Credit Party's
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section
3727) or any similar state or local law.
3.21 Customer and Trade Relations. During the twelve months
preceding the Effective Date, there was no termination or cancellation of: the
business relationship of any Credit Party with any customer or group of related
customers whose purchases during the most recent Fiscal Year caused it to be
ranked among the ten largest customers of such Credit Party; or the business
relationship of any Credit Party with any supplier that cannot be easily
replaced.
3.22 Agreements and Other Documents. As of the Effective Date,
each Credit Party has provided to Agent or its counsel, on behalf of Lenders,
complete copies (or accurate summaries) of all of the following agreements or
documents to which it is subject and each of which is listed in Disclosure
Schedule (3.22) without duplication of the agreements or documents provided as
of the Closing Date: supply agreements and purchase agreements not terminable by
such Credit Party
29
within sixty (60) days following written notice issued by such Credit Party and
involving transactions in excess of $1,000,000 per annum; leases of Equipment
having a remaining term of one year or longer and requiring aggregate rental and
other payments in excess of $500,000 per annum; licenses and permits held by the
Credit Parties, the absence of which could be reasonably likely to have a
Material Adverse Effect; instruments and documents evidencing any Indebtedness
or Guaranteed Indebtedness of such Credit Party in excess of $500,000 and any
Lien granted by such Credit Party with respect thereto; and instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the
Loans and Letter of Credit Obligations to be made or incurred on or prior to the
Effective Date, if any, or such other date as Loans and Letter of Credit
Obligations requested hereunder are made or incurred, (b) the disbursement of
the proceeds of such Loans pursuant to the instructions of Borrower, the payment
and accrual of all transaction costs in connection with the foregoing, each
Credit Party is and will be Solvent.
3.24 Status of Holdings. As of the Effective Date, Holdings
has not engaged in any trade or business and is not obligated to pay any
Indebtedness other than the Zero Coupon Debt.
3.25 Subordinated Debt; other Indebtedness. As of the
Effective Date, Borrower has delivered to Agent a complete and correct copy of
the Subordinated Documents, the Discount Debentures Documents and any other debt
instrument of any Credit Party evidencing Indebtedness in excess of $500,000
(including, in each case, all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith and without duplication of the debt instruments
delivered as of the Closing Date). As of the relevant dates, Holdings and
Borrower had the corporate power and authority to incur the Indebtedness
evidenced by the Discount Debentures Documents and the Subordinated Debt
Documents, respectively. All Obligations, including the Letter of Credit
Obligations, constitute senior Indebtedness entitled to the benefits of the
subordination provisions contained in the Senior Subordinated Notes. Borrower
acknowledges that Agent and each Lender are entering into this Agreement and are
extending the Commitments in reliance upon the subordination provisions of the
Senior Subordinated Notes and this Section 3.25.
3.26 Motor Vehicles. As of the Effective Date, the value of
all motor vehicles owned by Credit Parties does not exceed $100,000 in the
aggregate.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) From and after the Effective Date and until the
Termination Date, Borrower shall deliver to Agent or to Agent and Lenders, as
required, the Financial Statements, notices, Projections and other information
at the times, to the Persons and in the manner set forth in Annex E.
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(b) From and after the Effective Date and until the
Termination Date, Borrower shall deliver to Agent or to Agent and Lenders, as
required, the various Collateral Reports (including Borrowing Base Certificates
in the form of Exhibit 4.1(b)) at the times, to the Persons and in the manner
set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party
executing this Agreement authorizes (a) Agent and (b) so long as an Event of
Default has occurred and is continuing, each Lender, to communicate directly
with its independent certified public accountants, including Ernst & Young, and
authorizes and shall instruct those accountants and advisors to disclose and
make available to Agent and each Lender any reasonably requested information in
its possession or under its control relating to any Credit Party with respect to
the business, results of operations and financial condition of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Except
as otherwise permitted by the Loan Documents, each Credit Party shall: (i) do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and its rights and franchises; (ii) continue to
conduct its business substantially as now conducted or as otherwise permitted
hereunder; and (iii) at all times maintain, preserve and protect all of its
assets and properties used or useful in the conduct of its business, and keep
the same in good repair, working order and condition in all material respects
(taking into consideration ordinary wear and tear) and from time to time make,
or cause to be made, all necessary or appropriate repairs, replacements and
improvements thereto consistent with industry practices, except in each case
where the failure to do so would result in a Material Adverse Effect. Each
Credit Party shall transact business only in such corporate and trade names as
are set forth in Disclosure Schedule (5.1) or such other names as such Credit
Party may provide to Agent on at least thirty (30) days' prior written notice.
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
storage or rental charges payable to warehousemen and bailees, in each case,
before any thereof shall become thirty (30) days past due.
(b) Each Credit Party may in good faith contest, by
appropriate proceedings, the validity or amount of any Charges, Taxes or claims
described in Section 5.2(a); provided, that (i) adequate reserves with respect
to such contest are maintained on the books of such Credit Party, in accordance
with GAAP; (ii) no Lien shall be imposed to secure payment of such Charges
(other than payments to warehousemen and/or bailees) that is superior to any of
31
the Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) no tangible asset of any Credit Party becomes
subject to forfeiture or loss during the pendency of such contest, and (iv) such
Credit Party shall promptly pay or discharge such contested Charges, Taxes or
claims and all additional charges, interest, penalties and expenses, if any, and
shall deliver to Agent evidence reasonably acceptable to Agent of such
compliance, payment or discharge, if such contest is terminated or discontinued
adversely to such Credit Party or the conditions set forth in this Section
5.2(b) are no longer met.
5.3 Books and Records. The Credit Parties shall keep adequate
books and records with respect to their business activities in which proper
entries, reflecting all material financial transactions, are made in accordance
with GAAP and on a basis consistent with the Financial Statements attached as
Disclosure Schedule (3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral.
-------------------------------------------------
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and amounts determined by the
Credit Parties and reasonably acceptable to Agent and with insurers selected by
the Credit Parties and reasonably acceptable to Agent. Such policies of
insurance (or the loss payable and additional insured endorsements delivered to
Agent) shall contain provisions pursuant to which the insurer agrees to provide
thirty (30) days' prior written notice to Agent in the event of any non-renewal,
cancellation or amendment of any such insurance policy. If any Credit Party at
any time or times hereafter shall fail to obtain or maintain any of the policies
of insurance required above or to pay all premiums relating thereto, Agent may
at any time or times thereafter obtain and maintain such policies of insurance
and pay such premiums and take any other action with respect thereto that Agent
deems reasonably advisable. Agent shall have no obligation to obtain insurance
for any Credit Party or pay any premiums therefor. By doing so, Agent shall not
be deemed to have waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including reasonable attorneys' fees, court costs and other
charges related thereto, shall be payable on demand by Borrower to Agent and
shall be additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in
any Credit Party's risk profile (including any material change in the product
mix maintained by any Credit Party or any laws affecting the potential liability
of such Credit Party) to require additional forms and limits of insurance
customary in the industry for such changed risk profile. If reasonably requested
by Agent, each Credit Party shall deliver to Agent from time to time a report of
a reputable insurance broker, reasonably satisfactory to Agent, with respect to
its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and
substance reasonably satisfactory to Agent, endorsements to (i) all "All Risk"
and business interruption insurance naming Agent, on behalf of itself and
Lenders, as loss payee, and (ii) all general liability and other liability
policies maintained by such Credit Party naming Agent, on behalf of itself and
Lenders, as additional insured. Each Credit Party irrevocably makes, constitutes
and appoints
32
Agent (and all officers, employees or agents designated by Agent), so long as
any Event of Default has occurred and is continuing, as each Credit Party's true
and lawful agent and attorney-in-fact for the purpose of making, settling and
adjusting claims under such "All Risk" policies of insurance, endorsing the name
of each Credit Party on any check or other item of payment for the proceeds of
such "All Risk" policies of insurance and for making all determinations and
decisions with respect to such "All Risk" policies of insurance. Agent shall
have no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney. Borrower shall promptly notify Agent of any Event
of Loss and of any loss, damage, or destruction to the Collateral in the amount
of $250,000 or more, whether or not covered by insurance. After deducting from
the insurance proceeds received in connection with such Event of Loss the
expenses, if any, incurred by Agent in the collection or handling thereof, Agent
shall either, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(d) or permit or require each Credit
Party to use such money, or any part thereof, to replace, repair, restore or
rebuild the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss, damage
or destruction. Notwithstanding the foregoing, if an Event of Loss giving rise
to insurance proceeds could not reasonably be expected to have a Material
Adverse Effect (after giving effect to the application of the insurance proceeds
to repair and restoration) and such insurance proceeds do not exceed $2,000,000
in the aggregate, the applicable Credit Party may elect, in its discretion, to
replace, restore, repair or rebuild the property; provided that if such Credit
Party has not completed or entered into binding agreements to complete such
replacement, restoration, repair or rebuilding within 270 days of such casualty,
Agent may apply such insurance proceeds to the Obligations in accordance with
Section 1.3(d). All insurance proceeds that are to be made available to Borrower
to replace, repair, restore or rebuild the Collateral shall be applied by Agent
to reduce the outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the Revolving Loan
Commitment) and upon such application, Agent shall establish a Reserve against
the Borrowing Base in an amount equal to the amount of such proceeds so applied.
Thereafter, such funds shall be made available to such Credit Party to provide
funds to replace, repair, restore or rebuild the Collateral as follows: (i)
Borrower shall request a Revolving Credit Advance be made to such Credit Party
in the amount requested to be released; (ii) so long as the conditions set forth
in Section 2.2 have been met and subject to the provisions of any Mortgage
encumbering such Collateral, Revolving Lenders shall make such Revolving Credit
Advance; and (iii) in the case of insurance proceeds applied against the
Revolving Loan, the Reserve established with respect to such insurance proceeds
shall be reduced by the amount of such Revolving Credit Advance. To the extent
not used to replace, repair, restore or rebuild the Collateral, such insurance
proceeds shall be applied in accordance with Section 1.3(d); provided, that in
the case of insurance proceeds pertaining to any Credit Party other than
Borrower, such insurance proceeds shall be applied to the Loans owing by
Borrower.
5.5 Compliance with Laws. Each Credit Party shall comply with
all federal, state, local and foreign laws and regulations applicable to it,
including those relating to FAA, ERISA and labor matters and Environmental Laws
and Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
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5.6 Supplemental Disclosure. From time to time as may be
reasonably requested by Agent (which request will not be made more frequently
than once each year absent the occurrence and continuance of an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any other Loan Document, with respect to any
matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
or be deemed a waiver of any Event of Default resulting from the matters
disclosed therein, except as consented to by Agent and Requisite Lenders in
writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date or the
Effective Date, as applicable.
5.7 Intellectual Property. Each Credit Party will conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect, except as
could not reasonably be expected to have a Material Adverse Effect.
5.8 [Intentionally Omitted]
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee
Letters and Real Estate Purchases. Unless Agent shall otherwise agree in
writing, each Credit Party shall use commercially reasonable efforts to obtain a
landlord's agreement, mortgagee agreement or bailee letter, as applicable, from
the lessor of each leased property, mortgagee of owned property or bailee with
respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be satisfactory in form and substance to Agent. With respect to such locations
or warehouse space leased or owned as of the Effective Date and thereafter, if
Agent has not received a landlord or mortgagee agreement or bailee letter as of
the Effective Date (or, if later, as of the date such location is acquired or
leased), Borrower's Eligible Inventory at that location shall be subject to such
Reserves as may be established by Agent in its reasonable credit judgment. After
the Effective Date, no real property or warehouse space shall be leased by any
Credit Party, and no material amount of Inventory shall be shipped to a
processor or converter under arrangements established after the Effective Date
without the prior written consent of Agent (which consent, in Agent's
discretion, may be conditioned upon the exclusion from the Borrowing Base of
Eligible Inventory at that location or the establishment of Reserves reasonably
acceptable to Agent) or, unless and until a reasonably satisfactory landlord
agreement or bailee letter, as appropriate, shall first or simultaneously have
been obtained with respect to such location. Each Credit Party shall timely and
fully pay and perform its obligations in all material respects under all leases
and other agreements with respect to each leased location or public warehouse
where any Collateral is or may be located. Except to the extent otherwise
permitted hereunder, if any Credit Party proposes to acquire a fee ownership
interest in Real Estate after the Effective Date, it shall first provide to
Agent a mortgage or deed of trust granting
34
Agent a first priority Lien on such Real Estate, together with environmental
audits, mortgage title insurance commitment, real property survey, local counsel
opinion(s), and, if required by Agent, casualty insurance and flood insurance,
and such other documents, instruments or agreements reasonably requested by
Agent, in each case, in form and substance reasonably satisfactory to Agent.
5.10 Motor Vehicles. In the event the value of all motor
vehicles owned by Credit Parties shall exceed $100,000 in the aggregate, each
Credit Party will grant to Agent perfected Liens on all motor vehicles owned by
such Credit Party and deliver all title certificate for each motor vehicle owned
by such Credit Party noting Agent's security interest therein, signed by the
relevant Credit Party, in a manner satisfactory to Agent.
5.11 Further Assurances. Each Credit Party shall, at such
Credit Party's expense, execute any and all further documents, financing
statements, agreements and instruments, and take all further action (including
filing Code and other financing statements, mortgages and deeds of trust) as may
be required under applicable law, or that the Agent may reasonably request, in
order to effectuate the transactions contemplated by the Loan Documents and in
order to grant, preserve, protect and perfect the validity and priority of the
security interests created or intended to be created by the Loan Documents.
5.12 Post-Closing Matters.
(a) Not later than five (5) days after the Effective Date,
Borrower shall cause to be delivered to the Agent a share certificate
representing 66% of the outstanding capital stock of Schaublin Holdings together
with all necessary endorsements to provide Agent with a first priority perfected
Lien upon such shares under Swiss law and shall have taken such other actions
and shall have delivered such other documents as Agent and its counsel may
reasonably request to confirm and assure the validity and enforceability of such
first priority Lien.
(b) Not later than two (2) Business Days after the Effective
Date, Borrower shall have (x) received from Schaublin Holding a repayment of
Schaublin Intercompany Loans in an amount equal to the United States Dollar
equivalent of the net proceeds of the CHF 10,000,000 (Swiss Francs) loan
received by ▇▇▇▇▇▇▇▇▇ ▇.▇. pursuant to the Schaublin Financing after deducting
therefrom all fees, costs and expenses payable to Credit Suisse in connection
therewith, (y) delivered to Agent a certificate of an officer of Borrower
certifying that the condition described in clause (x) of this Section 5.12(b)
has been satisfied and (z) caused to be paid to Agent for application to the
Obligations a portion of such repayment of Schaublin Intercompany Loans in an
amount not less than $500,000.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and
severally agrees as to all Credit Parties that from and after the Effective Date
hereof until the Termination Date:
6.1 Mergers, Subsidiaries, Etc.
35
(a) No Credit Party shall directly or indirectly, by operation
of law or otherwise, (i) form or acquire any Subsidiary, or (ii) merge with,
consolidate with, acquire all or substantially all of the assets or Stock of, or
otherwise combine with or acquire, any Person, except (A) any Credit Party may
merge with another Credit Party, provided that Borrower shall be the survivor of
any such merger to which it is a party and (B) Borrower or any Secured Guarantor
may consummate a Permitted Acquisition as defined in and in accordance with
Section 6.1(b) below or form one or more Acquisition Companies for the sole
purpose of completing a Permitted Acquisition.
(b) Any Credit Party or an Acquisition Company (or Holdings,
so long as contemporaneously therewith, all assets so acquired are transferred
to Borrower or any other Credit Party), may (i) acquire all or substantially all
of the assets of a Qualified Target or assets that constitute all or
substantially all of the assets of a division or operating unit of a Qualified
Target, (ii) purchase 100% of the outstanding Stock of a Qualified Target, (iii)
purchase not less than 80% of each class of outstanding Stock of a Qualified
Target as long as, without limitation to conditions required for Permitted
Acquisition set forth below, Agent will be granted a first priority perfected
Lien (subject to Permitted Encumbrances and except as contemplated by clauses
(A) and (C) of Section 6.1(b)(iv)) in all in the assets and Stock of the
Qualified Target, and Agent shall have received lien search results (and in the
case of a Qualified Target incorporated in England full search reports from
Companies House), financing statements and supplemental security agreements, a
Guaranty, environmental indemnity agreements, blocked account agreements and
other collateral documents in connection therewith as requested by Agent, or
(iv) participate in a merger of a Qualified Target with and into Borrower or a
Secured Guarantor or the merger of an Acquisition Company into a Qualified
Target (with Borrower as the sole Stockholder of Qualified Target after giving
effect thereto) or the merger of a Qualified Target into an Acquisition Company
(each such acquisition, purchase or merger being an "Acquisition"), subject to
satisfaction of each of the following conditions (and each such Acquisition
shall be a "Permitted Acquisition" only upon satisfaction of each of the
following conditions):
(i) Agent shall receive at least thirty (30) days' prior
written notice of such Acquisition, which notice shall include a reasonably
detailed description of such Acquisition, which may be subject to further
negotiation, and a copy of any executed letter of intent relating thereto;
(ii) such Acquisition shall only involve a Qualified Target
which business would not subject Agent or any Lender to regulatory or third
party approvals in connection with the exercise of its rights and remedies under
this Agreement or any other Loan Documents other than approvals applicable to
the exercise of such rights and remedies with respect to Borrower prior to such
Acquisition;
(iii) such Acquisition shall be consensual and shall have been
approved by the Qualified Target's board of directors or, in the case of a
Qualified Target in bankruptcy, a court of competent jurisdiction;
(iv) no additional Indebtedness, Guaranteed Indebtedness or
other liabilities shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet
36
of Borrower and Qualified Target after giving effect to such Acquisition, except
(A) Revolving Credit Advances made hereunder that are made in accordance with
the terms of Section 2.3, (B) trade payables and accrued expenses, each in
existence at the time of the Acquisition and not created in anticipation thereof
and each arising in ordinary course, (C) Industrial Revenue Bond Financing,
Capital Leases and purchase money Indebtedness, not to exceed in the aggregate
25% of total consideration paid for such Permitted Acquisition (including the
book value of assumed liabilities), each in existence at the time of Acquisition
and not created in anticipation thereof and each arising in the ordinary course
of business, and (D) unsecured Acquisition Subordinated Debt (1) with a maturity
date after the maturity of the Obligations in an amount not to exceed $5,000,000
in the aggregate or (2) with an earlier maturity but subject to Reserve against
the Borrowing Base in an amount equal to the maximum aggregate payments payable
thereunder;
(v) the assets acquired in such Acquisition shall be free and
clear of all Liens (other than Permitted Encumbrances and except as contemplated
by clauses (A) and (C) of Section 6.1(b)(iv));
(vi) at the closing of any Acquisition, Agent will be granted
a first priority perfected Lien (subject to Permitted Encumbrances and except as
contemplated by clauses (A) and (C) of Section 6.1(b)(iv)) in all assets
acquired pursuant thereto or, in the case of equity purchase, in the assets and
Stock of the Qualified Target, and Borrower shall have executed such documents
and taken such actions as may be reasonably required by Agent in connection
therewith, and Agent shall have received lien search results (and in the case of
a Qualified Target incorporated in England full search reports from Companies
House), financing statements and supplemental security agreements, a Guaranty,
environmental indemnity agreements, blocked account agreements and other
collateral documents and other documents reasonably requested by Agent;
(vii) at the time of such Acquisition and immediately after
giving effect thereto (including any Revolving Credit Advance in connection
therewith), no Default or Event of Default shall have occurred and be
continuing;
(viii) at least five (5) days before the closing date for the
Permitted Acquisition, Agent shall have received the following financial
statements consisting of balance sheets, statements of income and retained
earnings and cash flows with respect to the Qualified Target to the extent such
financial statements exist or are obtained by such date: (A) annual financial
statements for the most recent 3-year period preceding the Acquisition; (B)
monthly financial statements for the most recent 4-quarter period preceding the
Acquisition; and (C) monthly financial statements for year-to-date preceding the
Acquisition, setting forth in comparative form the figures for the two previous
years;
(ix) at least five (5) days before the closing date for the
Permitted Acquisition, Agent shall have received all pro forma financial
statements consisting of balance sheets, statements of income and retained
earnings and cash flows with respect to the Qualified Target prepared by
Borrower or a Secured Guarantor, as applicable, in connection with such
Acquisition;
37
(x) Agent shall have not less than seven (7) days to review
(without, however, the right to approve or disapprove), environmental audits
with respect to real estate acquired in connection with a Permitted Acquisition
and with respect to Qualified Targets acquired by merger or Stock purchase or
where contingent liabilities are to be assumed, litigation, actuarial studies
and similar contingent liability analyses with respect to the Qualified Target;
(xi) at least seven (7) days prior to the date of such
Acquisition, Agent shall have received copies of the draft acquisition agreement
(which may be subject to further negotiation) and related agreements,
instruments, and other documents reasonably requested by Agent and, promptly
following the closing date for such Permitted Acquisition, final drafts of the
foregoing;
(xii) at least five (5) days prior to the closing of an
Acquisition, Borrower shall have delivered to Agent:
(A) a pro forma consolidated balance sheet, income
statement and cash flow statement of Holdings and its Subsidiaries (the
"Acquisition Pro Forma"), based on recent financial statements, which shall
fairly present in all material respects the assets, liabilities, financial
condition and results of operations of Holdings and its Subsidiaries in
accordance with GAAP consistently applied, but taking into account such
Permitted Acquisition and the funding of the Revolving Loan in connection
therewith, including detailed acquisition adjustments acceptable to Agent, and
such Acquisition Pro Forma shall reflect that (x) average daily Borrowing
Availability for the 90-day period preceding the consummation of such Permitted
Acquisition would have exceeded $5,000,000 on a pro forma basis (after giving
effect to such Permitted Acquisition (including acquired Eligible Accounts and
Eligible Inventory as to which an audit has been completed) and the Revolving
Loan funded in connection therewith as if made on the first day of such period)
and the Acquisition Projections (as hereinafter defined) shall reflect that such
Borrowing Availability of $5,000,000 shall continue for at least two (2) years
after the consummation of such Acquisition, and (y) on a pro forma basis, no
Event of Default has occurred and is continuing or would result after giving
effect to such Acquisition and Borrower would have been in compliance with the
Fixed Charge Coverage Ratio Financial Covenant set forth in Annex G for the four
quarter period reflected in the Compliance Certificate most recently delivered
to Agent pursuant to Annex E prior to the consummation of such Acquisition
(after giving effect to such Permitted Acquisition and the Revolving Loan funded
in connection therewith as if made on the first day of such period);
(B) updated versions of the most recently delivered
Projections covering the 1-year period commencing on the date of such
Acquisition and otherwise prepared in accordance with the Projections (the
"Acquisition Projections") and based upon historical financial data of a recent
date reasonably satisfactory to Agent, taking into account such Permitted
Acquisition;
38
(C) a certificate of the Chief Financial Officer of
Holdings and Borrower to the effect that: (w) Holdings on a consolidated basis
(after taking into consideration all rights of contribution and indemnity
Borrower has against Holdings and each other Subsidiary of Holdings) will be
Solvent upon the consummation of the Permitted Acquisition; (x) the Acquisition
Pro Forma fairly presents the financial condition of Holdings (on a consolidated
basis) as of the date thereof after giving effect to the Acquisition; (y) the
Acquisition Projections are reasonable estimates of the future financial
performance of Holdings (on a consolidated basis) subsequent to the date thereof
based upon the historical performance of Holdings, Borrower and the Qualified
Target and show that Holdings (on a consolidated basis) shall continue to be in
compliance with the Fixed Charge Coverage Ratio set forth in Annex G for the
2-year ------- period thereafter; and (z) Holdings and Borrower have completed
their due diligence investigation with respect to the Qualified Target and such
Permitted Acquisition; and
(D) a certificate in the form of Exhibit 6.1 (the
"Acquisition Compliance Certificate") showing compliance with the terms and
provision of clauses (C) and (D) of Section 6.1(b)(iv), and a designation of
assets, if any, in accordance with Section 6.8(d) with respect to such
Acquisition.
Notwithstanding the foregoing, the Accounts and Inventory of the Qualified
Target shall not be included in Eligible Accounts and Eligible Inventory until a
field audit of Qualified Target has been satisfactorily completed, including the
establishment of Reserves required in Agent's reasonable credit judgment to
address the incrementally adverse effect of laws applicable to a Qualified
Target located outside of the United States of America.
6.2 Investments; Loans and Advances. Except as otherwise
expressly permitted by this Section 6, no Credit Party shall make or permit to
exist any investment in, or make, accrue or permit to exist loans or advances of
money to, any Person, through the direct or indirect lending of money, holding
of securities or otherwise, except that: (a) Borrower and Credit Parties may
hold investments comprised of notes payable, or stock or other securities issued
by Account Debtors to Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business;
(b) each Credit Party may maintain (but not increase) its existing investments
in its Subsidiaries as of the Effective Date which are not Credit Parties;
provided that the portion of Schaublin Intercompany Loans which must be repaid
on the in accordance with Section 5.12(b) hereof may not be readvanced by
Borrower nor form the basis for any other Investment in Schaublin Holdings or
any of its Subsidiaries under this clause (b); (c) so long as no Default or
Event of Default has occurred and is continuing, Credit Parties may make
investments, subject to a Control Letter in favor of Agent for the benefit of
Lenders or otherwise subject to a perfected security interest in favor of Agent
for the benefit of Lenders, in (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency thereof
maturing within one year from the date of acquisition thereof, (ii) commercial
paper maturing no more than one year from the date of creation thereof and
currently having the highest rating obtainable from either Standard & Poor's
Ratings Group or ▇▇▇▇▇'▇ Investors Service, Inc., (iii) certificates of deposit
maturing no more than one year from the date of creation thereof issued by
39
commercial banks incorporated under the laws of the United States of America,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits
maturing no more than thirty (30) days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above; (d) Borrower may make
investments in the capital Stock of any of the Secured Guarantors; (e) Borrower
and the Secured Guarantors may make investments in Borrower and Secured
Guarantors consisting of the intercompany loans in accordance with Section 6.3;
(f) Credit Parties may make loans and advances to employees permitted under
Section 6.4(b); (g) each Credit Party may form Acquisition Companies for the
purpose of making Permitted Acquisitions and make Permitted Acquisitions; (h)
each Credit Party may provide cash collateral to Agent in accordance with the
Loan Documents; (i) each Credit Party may enter into hedging arrangements in the
ordinary course of business, (j) Borrower may make additional investments after
the Closing Date in RBC de Mexico S De ▇.▇. de CV in an aggregate amount not to
exceed $1,000,000 in the aggregate (which may include transferred Equipment with
an appraised orderly liquidation value not to exceed $500,000 in the aggregate)
during the first two years following the Closing Date, which limitations shall
be increased to $1,500,000 and $750,000 respectively as of the second
anniversary of the Closing Date; and (k) Credit Parties may make other
investments not to exceed $1,000,000 in the aggregate.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to
exist any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases permitted in Section
6.7(c), (ii) the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to the extent they
are permitted to remain unfunded under applicable law, (iv) existing
Indebtedness described in Disclosure Schedule (6.3) (including earn-outs payable
to sellers of businesses, if any, constituting Indebtedness) and refinancings
thereof or amendments or modifications thereto that do not have the effect of
increasing the principal amount thereof or changing the amortization thereof
(other than to extend the same) and that are otherwise on terms and conditions
no less favorable to any Credit Party, Agent or any Lender, as reasonably
determined by Agent, than the terms of the Indebtedness being refinanced,
amended or modified, (v) Indebtedness specifically permitted under Section 6.1,
(vi) Indebtedness consisting of intercompany loans and advances made by Borrower
to any Secured Guarantor or by any Secured Guarantor to Borrower or another
Secured Guarantor; provided, that: (A) Borrower shall have executed and
delivered to each such Secured Guarantor, and each such Secured Guarantor shall
have executed and delivered to Borrower or another such Secured Guarantor, as
applicable, on the Closing Date, a demand note (collectively, the "Intercompany
Notes") to evidence any such intercompany Indebtedness owing at any time by
Borrower to such Secured Guarantor or by such Secured Guarantor to Borrower or
such other Guarantor, which Intercompany Notes shall be in form and substance
reasonably satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the applicable Pledge Agreement or Security Agreement as additional
collateral security for the Obligations; (B) Borrower and each Secured Guarantor
shall record all intercompany transactions on its books and records in a manner
reasonably satisfactory to Agent; (C) the obligations of Borrower and each
Secured Guarantor
40
under any such Intercompany Notes shall be subordinated to the Obligations of
Borrower and each Secured Guarantor hereunder in a manner reasonably
satisfactory to Agent; (D) no Event of Default shall be continuing after giving
effect to any such proposed intercompany loan; and (E) the aggregate balance of
all such intercompany loans owing by any Secured Guarantor incurred during the
time that the EBITDA of such Secured Guarantor has been negative for a trailing
twelve month period ending on the last day of any Fiscal Month shall not be
increased by more than $2,000,000 over the amount of such Secured Guarantor's
intercompany loan obligations as of the last day of such period; provided that a
Secured Guarantor shall no longer be subject to that $2,000,000 limitation if
that Secured Guarantor has had positive EBITDA for the trailing twelve-month
periods ending on the last day of six consecutive Fiscal Months; provided,
further, that if a Secured Guarantor has been subject to that $2,000,000
limitation, then became exempt from it and again has a negative EBITDA for a
trailing twelve-month period, not more than $2,000,000 of additional
intercompany loans may be received by it after the date when it again has a
negative EBITDA; (vii) unsecured Indebtedness of Borrower so long as such
unsecured Indebtedness is subordinated to the Obligations in a manner and form
satisfactory to Agent and Lenders in their sole discretion, as to right and time
of payment and as to any other terms, rights and remedies thereunder and so long
as (A) no Event of Default has occurred and is continuing or would result after
giving effect to such unsecured Indebtedness (B) Holdings was, on a pro forma
basis, in compliance with the Fixed Charge Coverage Ratio Financial Covenant set
forth on Annex G as of the last day of the Fiscal Quarter reflected in the
Compliance Certificate most recently delivered prior to the date such unsecured
Indebtedness is incurred (after giving effect to such unsecured Indebtedness and
the use thereof as if incurred on the first day of such period); and (c) the
proceeds of such Indebtedness have been wholly used, promptly upon receipt
thereof, to directly pay (by way of refinancing or exchange) the following
Indebtedness in the following order: first, the Senior Subordinated Debt, until
the same has been repaid in full; second, the Zero Coupon Debt, until the same
has been repaid in full; third, interest then due and payable on the Revolving
Credit Advances; fourth, the outstanding principal balance of the Revolving
Credit Advances until the same has been repaid in full; fifth, interest then due
and payable on the Term Loan; and sixth, the scheduled principal installments of
the Term Loan in inverse order of maturity; (viii) Indebtedness of a Qualified
Target assumed or incurred in a Permitted Acquisition described in Section
6.1(a)(iv) as long as such Indebtedness was not incurred in contemplation of
such Permitted Acquisition; (ix) Indebtedness resulting from endorsement of
negotiable instruments for collection in the ordinary course of business; (x)
Indebtedness arising with respect to customary indemnification and purchase
price adjustment obligations incurred in connection with Permitted Acquisitions;
(xii) Indebtedness incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other similar
obligations not exceeding at any time $250,000 in aggregate outstanding
liability; (xiii) Indebtedness incurred in connection with interest swap
agreements or arrangements designed to protect the Borrower or any Subsidiary
against fluctuation in interest rates, and not entered into for speculation,
entered into with any Lender (or any Affiliate thereof) with respect to the
Loans, in each case with the consent of Agent, which shall not be unreasonably
withheld; (xiv) currency hedging arrangements; and (xv) Indebtedness not
permitted by clauses (i) through (xiv) above, so long as much Indebtedness, in
the aggregate at any time outstanding, does not exceed $500,000.
(b) During the first two years following the Closing Date, no
Credit Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay: any principal of,
41
premium, if any, interest or other amount payable in respect of any
Indebtedness, other than (i) the Obligations; (ii) Indebtedness secured by a
Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Sections 6.8(b) or (c); (iii)
Indebtedness permitted by Section 6.3(a)(iv) upon any refinancing thereof in
accordance with Section 6.3(a)(iv) or Section 6.3(a)(vii); (iv) intercompany
Indebtedness; and (v) as otherwise permitted by Section 6.14; provided that
after the first two years following the Closing Date, if Borrower purchases,
prepays or redeems other Indebtedness, Borrower shall meet the minimum Borrowing
Availability set forth in Section 6.14(b) after giving effect thereto.
6.4 Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any
transaction with any other Credit Party or any Affiliate thereof except (i) in
the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party (ii) as
and to the extent permitted in Section 6.13(e) and (iii) as and to the extent
permitted by Section 6.3(a)(vi). All such transactions existing as of the date
hereof are described in Disclosure Schedule (6.4(a)).
(b) Excluding loans set forth in Disclosure Schedule (6.4(b)),
no Credit Party shall enter into any lending or borrowing transaction with any
employees of any Credit Party, except loans to its respective employees on an
arm's-length basis in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $250,000 to any employee and up to a maximum of
$1,000,000 in the aggregate at any one time outstanding and except for loans or
advances made in connection with a management or employee stock ownership
program, the proceeds of which are immediately invested in Holdings' Stock and
contributed to the capital of Borrower.
6.5 Capital Structure and Business. No Credit Party shall
amend its charter or bylaws in a manner that could reasonably be expected to
adversely affect Agent or Lenders or such Credit Party's duty or ability to
repay the Obligations. No Credit Party shall engage in any business other than
the ~businesses currently engaged in by the Credit Parties or any business
reasonably related thereto. No Credit Party other than Holdings and Borrower
shall issue any additional shares of Stock.
6.6 Guaranteed Indebtedness. No Credit Party shall create,
incur, assume or permit to exist any Guaranteed Indebtedness except (a) by
endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, and (b) for Guaranteed Indebtedness incurred for
the benefit of any other Credit Party if the primary obligation is expressly
permitted by this Agreement, provided that neither Borrower nor any of its
Domestic Subsidiaries shall create, incur, assume or permit to exist any
Guaranteed Indebtedness for the benefit of Holdings or any Foreign Subsidiary.
6.7 Liens. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts. No Credit Party
shall create, incur, assume or permit to exist any Lien on or with respect to
any of its other properties or assets (whether now owned or hereafter acquired)
except for (a) Permitted Encumbrances; (b) Liens in existence on the date hereof
42
(exclusive of Liens of the Prior Lenders, which will be discharged on the
Closing Date or the Effective Date) and summarized on Disclosure Schedule (6.7)
securing the Indebtedness described on Disclosure Schedule (6.3) and permitted
refinancings, extensions and renewals thereof, including extensions or renewals
of any such Liens; provided that the principal amount of the Indebtedness so
secured is not increased and the Lien does not attach to any other property; and
(c) Liens created after the date hereof by conditional sale or other title
retention agreements (including Capital Leases) or in connection with purchase
money Indebtedness with respect to real estate, improvements thereto, or
Equipment and Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $5,000,000
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within thirty (30) days following such purchase and does not exceed
100% of the purchase price of the subject assets), (d) Liens permitted in
accordance with Section 6.1 and (e) Liens securing other obligations not to
exceed $500,000 in the aggregate. In addition, no Credit Party shall become a
party to any agreement, note, indenture or instrument, or take any other action,
that would prohibit the creation of a Lien on any of its properties or other
assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell,
transfer, convey, assign or otherwise dispose of any of its properties or other
assets, including the Stock of any of its Subsidiaries (whether in a public or a
private offering or otherwise) or any of its Accounts, other than (a) the sale
of Inventory in the ordinary course of business, (b) the sale, transfer,
conveyance or other disposition by a Credit Party of Equipment, Fixtures and
Real Estate that are obsolete or no longer used or useful in such Credit Party's
business and having a book value not exceeding $500,000 in the aggregate in any
~Fiscal Year, (c) the sale, transfer, conveyance or other disposition of other
Equipment and Fixtures having a value not exceeding $500,000 in the aggregate in
any Fiscal Year, and (d) assets acquired as part of a Permitted Acquisition and
designated for disposition in a written notice to Agent when acquired. With
respect to any disposition of assets or other properties permitted pursuant to
clauses (b) and (c) above, subject to compliance with Section 1.3(b), Agent
agrees on reasonable prior written notice to release its Lien on such assets or
other properties in order to permit the applicable Credit Party to effect such
disposition and shall execute and promptly deliver to Borrower, at Borrower's
expense, appropriate UCC-3 termination statements and other releases as
reasonably requested by Borrower.
6.9 ERISA. No Credit Party shall, or shall cause or permit any
ERISA Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or fail to
comply with any of the Financial Covenants.
6.11 [RESERVED]
43
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall
cancel any claim or debt owing to it, except for reasonable consideration
negotiated on an arm's-length basis and in the ordinary course of its business
consistent with past practices.
6.14 Restricted Payments.
(a) No Credit Party shall make any Restricted Payment, except
(a) payments of interest and principal of intercompany loans and advances
between Borrower and Secured Guarantors to the extent permitted by Section 6.3,
(b) dividends and distributions by Subsidiaries of Borrower paid to Borrower or
to an intermediate Subsidiary of Borrower, as applicable, (c) transactions
permitted under Section 6.4(b), (d) payments of interest and principal of
Intercompany Notes as permitted and issued in accordance with Section 6.3, (e)
payments of management fees to Whitney & Co. in equal quarterly installments, as
long as such payments of management fees do not exceed $450,000 in the aggregate
during any Fiscal Year, (f) scheduled payments of interest with respect to the
Senior Subordinated Debt or any refinancing thereof permitted under Section
6.3(a)(vii) subject to the subordination provisions set forth in the applicable
note purchase agreement or indenture, (g) dividends or distributions payable to
Holdings solely in common Stock of Holdings, (h) payments to ▇▇. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ not to exceed those set forth in that certain Employment Agreement,
dated December 18, 2000, by and between Borrower and ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as
in effect on the Closing Date and (i) payments and distributions with respect to
Zero Coupon Debt and Senior Subordinated Notes permitted in accordance with
Section 6.3(a)(vii); and provided that no Event of Default has occurred and is
continuing or would result after giving effect to any Restricted Payment
pursuant to clause (e) above.
(b) Notwithstanding the foregoing Section 6.14(a), Borrower
may pay cash dividends to Holdings ("Dividends") as long as (A) promptly upon
receipt thereof, Holdings immediately uses all of the proceeds of such Dividends
solely for one or more of the following purposes: (i) payment of scheduled
interest as of the Closing Date on, and the redemption required as of the
Closing Date of, the Zero Coupon Debt, (ii) payment of dividends on the
preferred Stock of Holdings, (iii) payments at such times and in such amounts as
are sufficient to enable Holdings to pay the federal and state income taxes
attributable to the taxable income of Borrower and Subsidiaries pursuant to the
Tax Sharing Agreement, (iv) repurchase of Holdings' Stock from employees or
former employees an aggregate amount not to exceed $500,000 per year, it being
agreed that no more than $100,000 of such aggregate amount may consist of such
repurchases from employees whose employment continues, (v) dividends from
Borrower to Holdings not to exceed $100,000 in the aggregate in any Fiscal Year
to pay the operating expenses of Holdings, and (vi) funding Redemptions as long
as such Dividends paid for Redemptions do not exceed $30,000,000 in the
aggregate after the Closing Date; (B) no Default or Event of Default and no
default or an event of default under any Subordinated Debt Document, Discount
Debentures Documents or any other debt instrument of Holdings, Borrower or any
other Credit Party or in respect of charter of Holdings, Borrower or any other
Credit Party has occurred and is continuing or would result after giving effect
to any such Dividend, Redemption, and Revolving Credit Advances used to fund
such Dividend; (C) Borrower
44
and Holdings are in compliance with the Fixed Charge Coverage Ratio set forth in
Annex G for the four quarter period reflected in the Compliance Certificate most
recently delivered pursuant to Annex E prior to such proposed Dividend and all
Revolving Credit Advances used to fund such Dividend (after giving effect to
such proposed Redemption, Dividend and Revolving Credit Advances as if made on
the first day of such period); (D) Borrower has Borrowing Availability of at
least $10,000,000, after giving effect to the proposed Dividend and Revolving
Credit Advances used to fund such Dividend and without any manipulation of
working capital of Borrower, and (E) if the proceeds of the Revolving Credit
Advances used to fund Redemptions exceed $9,000,000 in the aggregate, then, in
addition to satisfying the conditions of the foregoing clauses (A) through (D)
of this Section 6.14(b), the Leverage Ratio at the end of the following Fiscal
Quarters and for the 12-month period then ended (calculated as if any proposed
Redemption, Dividends and all Revolving Credit Advances used to fund such
Dividends had been made on the first day of such period) shall not be greater
than the ratio set forth below for such Fiscal Quarter:
6.100 to 1.0 at the end of each Fiscal Quarter ending on or
before December 31, 2002
5.975 to 1.0 at the end of Fiscal Quarter ending March 31, 2003
5.850 to 1.0 at the end of Fiscal Quarter ending June 30, 2003
5.725 to 1.0 at the end of Fiscal Quarter ending September 30, 2003
5.600 to 1.0 at the end of Fiscal Quarter ending December 31, 2003
5.475 to 1.0 at the end of Fiscal Quarter ending March 31, 2004
5.350 to 1.0 at the end of Fiscal Quarter ending June 30, 2004
5.225 to 1.0 at the end of Fiscal Quarter ending September 30, 2004
5.100 to 1.0 at the end of Fiscal Quarter ending December 31, 2004
4.975 to 1.0 at the end of Fiscal Quarter ending March 31, 2005
4.850 to 1.0 at the end of Fiscal Quarter ending June 30, 2005
4.725 to 1.0 at the end of Fiscal Quarter ending September 30, 2005
4.600 to 1.0 at the end of Fiscal Quarter ending December 31, 2005;
4.475 to 1.0 at the end of Fiscal Quarter ending March 31, 2006;
4.350 to 1.0 at the end of Fiscal Quarter ending June 30, 2006;
4.225 to 1.0 at the end of Fiscal Quarter ending September 30, 2006;
4.100 to 1.0 at the end of Fiscal Quarter ending December 31, 2006.
3.975 to 1.0 at the end of Fiscal Quarter ending March 31, 2007;
3.850 to 1.0 thereafter.
(c) In addition, Borrower may pay Dividends to Holdings for
Redemptions that occur after the total Dividends paid for Redemptions exceed or
will exceed, after giving effect to such Dividend, $30,000,000 in the aggregate,
so long as (x) the Leverage Ratio set forth in Section 6.14(b) above shall be
complied with; (y) no Default or Event of Default or a default
45
or an event of default under any Subordinated Debt Documents, Discount
Debentures Documents or any other debt instrument of Holdings, Borrower or any
other Credit Party or in respect of charter of Holdings, Borrower or any other
Credit Party has occurred and is continuing or would result after giving effect
to any such Dividend, Redemption or the Revolving Credit Advance used to fund
such Dividend; and (z) Borrower and Holdings are in compliance with the Fixed
Charge Coverage Ratio set forth in Annex G for the four quarter period reflected
in the Compliance Certificate most recently delivered pursuant to Annex E prior
to such proposed Dividends and all Revolving Credit Advances to be used to fund
such proposed Dividend (after giving effect to such proposed Dividend and as if
made on the first day of such period).
6.15 Change of Corporate Name or Location; Change of Fiscal
Year. No Credit Party shall (a) change its name as it appears in official
filings in the state of its incorporation or other organization, (b) change its
chief executive office, principal place of business, corporate offices or
warehouses or locations at which Collateral is held or stored, or the location
of its records concerning the Collateral, (c) change the type of entity that it
is, (d) cause to be changed its organization identification number, if any,
issued by its state of incorporation or other organization, or (e) change its
state of incorporation or organization or incorporate or organize in any
additional jurisdictions, in each case without at least thirty (30) days prior
written notice to Agent and after Agent's written acknowledgment that any
reasonable action ~requested by Agent in connection therewith, including to
continue the perfection of any Liens in favor of Agent, on behalf of Lenders, in
any Collateral, has been completed or taken, and provided that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party shall cause to be changed its name, identity or
corporate structure in any manner that might make any financing or continuation
statement filed in connection herewith seriously misleading as such term is
defined in and/or used in the Code or any other then applicable provision of the
Code except upon prior written notice to Agent and Lenders and after Agent's
written acknowledgment that any reasonable action requested by Agent in
connection therewith, including to continue the perfection of any Liens in favor
of Agent, on behalf of Lenders, in any Collateral, has been completed or taken.
No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party
shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than this Agreement and the
other Loan Documents) that could directly or indirectly restrict, prohibit or
require the consent of any Person with respect to the payment of dividends or
distributions or the making or repayment of intercompany loans by a Secured
Guarantor to Borrower.
6.17 No Speculative Transactions. No Credit Party shall engage
in any transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Changes Relating to Subordinated Debt; Material
Contracts. No Credit Party shall change or amend the terms of any Subordinated
Debt (or any indenture or agreement in connection therewith) if the effect of
such amendment is to: (a) increase the interest rate on such Subordinated Debt;
(b) change the dates upon which payments of principal or interest are due on
46
such Subordinated Debt other than to extend such dates; (c) change any default
or event of default other than to delete or make less restrictive any default
provision therein, or add any covenant with respect to such Subordinated Debt;
(d) change the redemption or prepayment provisions of such Subordinated Debt
other than to extend the dates therefor or to reduce the premiums payable in
connection therewith; (e) grant any security or collateral to secure payment of
such Subordinated Debt; or (f) change or amend any other term if such change or
amendment would materially increase the obligations of the Credit Party
thereunder or confer additional material rights on the holder of such
Subordinated Debt in a manner adverse to any Credit Party, Agent or any Lender.
6.19 Redemptions.
(a) Proceeds of Loans used by Borrower to fund the
Recapitalization on the Closing Date or at any time prior to December 16, 2002
shall not exceed $30,000,000 in the aggregate.
(b) Prior to any Recapitalization payment, Borrower shall
deliver to Agent evidence demonstrating Borrower's continued compliance with the
Financial Covenants after giving effect to such payment.
6.20 Holdings. Holdings shall not engage in any trade or
business or incur any Indebtedness other than the Zero Coupon Debt or any
refinancing thereof.
7. TERM
7.1 Termination. The financing arrangements contemplated
hereby shall be in effect until the Commitment Termination Date, and the Loans
and all other Obligations shall be automatically due and payable in full on such
date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents shall continue in full
force and effect until the Termination Date; provided, that the provisions of
Section 11, the payment obligations under Sections 1.15 and 1.16, and the
indemnities contained in the Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of
the following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
47
(a) Borrower (i) fails to make any payment of principal
hereunder when due; (ii) fails to make any payment of interest on, or Fees owing
in respect of, the Loans or any of the other Obligations within three (3) days
after such payment is due; or (iii) fails to pay or reimburse Agent or Lenders
for any expense reimbursable hereunder or under any other Loan Document within
ten (10) days following Agent's demand for such reimbursement or payment of
expenses.
(b) Any Credit Party fails or neglects to perform, keep or
observe any of the provisions of Sections 1.4, 1.8, 5.4(a), 5.12 or 6, any of
the provisions set forth in Annexes C or G, respectively, or any of the
provisions of Section 3.2 of the Environmental Indemnity Agreement.
(c) Borrower fails or neglects to perform, keep or observe any
of the provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for five (5) days or more.
(d) Any Credit Party fails or neglects to perform, keep or
observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for fifteen (15) days
or more after Agent's notice thereof to Borrower.
(e) A default or breach occurs under any other agreement,
document or instrument to which any Credit Party is a party that is not cured
within any applicable grace period therefor, and such default or breach (i)
involves the failure to make any payment when due in respect of any Indebtedness
or Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $3,000,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $3,000,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base
Certificate is untrue or incorrect in any respect resulting in the making of a
Revolving Credit Advance in excess of the actual Borrowing Availability less
$5,000,0000 (other than inadvertent, immaterial errors not exceeding $150,000 in
any Borrowing Base Certificate), or any representation or warranty herein or in
any Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of
$500,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.
48
(h) A case or proceeding is commenced against any Credit Party
or Holdings seeking a decree or order in respect of such Credit Party or
Holdings (i) under the Bankruptcy Code or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) appointing a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) for such
Credit Party or Holdings or for any substantial part of any such Credit Party's
assets or of assets of Holdings, or (iii) ordering the winding-up or liquidation
of the affairs of such Credit Party or Holdings, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or a decree or
order granting the relief sought in such case or proceeding by a court of
competent jurisdiction.
(i) Any Credit Party or Holdings (i) files a petition seeking
relief under the Bankruptcy Code or any other applicable federal, state or
foreign bankruptcy or other similar law, (ii) consents to or fails to contest in
a timely and appropriate manner to the institution of proceedings thereunder or
to the filing of any such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar ~official) for such Credit Party or Holdings or for any substantial part
of any such Credit Party's assets or of assets of Holdings, (iii) makes an
assignment for the benefit of creditors, or (iv) takes any action in furtherance
of any of the foregoing, or (v) admits in writing its inability to, or is
generally unable to, pay its debts as such debts become due.
(j) An uninsured final judgment or judgments for the payment
of money in excess of $500,000 in the aggregate at any time are outstanding
against one or more of the Credit Parties and the same are not, within thirty
(30) days after the entry thereof, discharged or execution thereof stayed or
bonded pending appeal, or such judgments are not discharged prior to the
expiration of any such stay.
(k) Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance with its terms (or any
Credit Party shall challenge the enforceability of any Loan Document or shall
assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or
otherwise is not valid, binding and enforceable in accordance with its terms),
or any Lien created under any Loan Document ceases to be a valid and perfected
first priority Lien (except as otherwise permitted herein or therein) in any of
the Collateral purported to be covered thereby, and remains unremedied for a
period of ten (10) days after Borrower obtains knowledge thereof.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as
a result of which revenue-producing activities cease or are substantially
curtailed at any facility of Borrower or any Secured Guarantor generating more
than 5% of Borrower's consolidated revenues for the Fiscal Year preceding such
event and such cessation or curtailment continues for more than one hundred
eighty (180) days.
(n) Holdings shall fail to pledge all of the Stock of Borrower
as Collateral within ten (10) days after payment in full of the Zero Coupon
Debt.
49
(o) A default or breach under any agreement document or
instrument to which Schaublin Holding or any of its Subsidiaries is a party that
evidences the Schaublin Financing that is not cured within any applicable grace
period thereto and such default or breach (involves the failure to make any
payment when due in respect of any Indebtedness or Guaranteed indebtedness, or
(ii) causes, or permits any holder of such Indebtedness or Guaranteed
Indebtedness or a trustee to cause, Indebtedness or Guaranteed Indebtedness or a
portion thereof in the aggregate to become due prior to its stated maturity or
prior to its regularly scheduled dates of payment, or cash collateral to be
demanded in respect thereof, in each case, regardless of whether such default is
waived, or such right is exercised, by such holder or trustee.
8.2 Remedies.
(a) If any Default or Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Revolving
Lenders shall), without notice, suspend the Revolving Loan facility with respect
to additional Advances and/or the incurrence of additional Letter of Credit
Obligations, whereupon any additional Advances and additional Letter of Credit
Obligations shall be made or incurred in Agent's sole discretion (or in the sole
discretion of the Requisite Revolving Lenders, if such suspension occurred at
their direction) so long as such Default or Event of Default is continuing. If
any Default or Event of Default has occurred and is continuing, Agent may (and
at the written request of Requisite Lenders shall), without notice except as
otherwise expressly provided herein, increase the rate of interest applicable to
the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
notice: (i) terminate the Revolving Loan facility with respect to further
Advances or the incurrence of further Letter of Credit ~Obligations; (ii) reduce
the Revolving Loan Commitments from time to time upon written notice to
Borrower; (iii) declare all or any portion of the Obligations, including all or
any portion of any Loan to be forthwith due and payable, and require that the
Letter of Credit Obligations be cash collateralized as provided in Annex B, all
without presentment, demand, protest or further notice of any kind, all of which
are expressly waived by Borrower and each other Credit Party; and (iv) exercise
any rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(h) or (i), the
Commitments shall be immediately terminated and all of the Obligations,
including the Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided
for in this Agreement or by applicable law, each Credit Party waives: (a)
presentment, demand and protest and notice of presentment, dishonor, notice of
intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Agent on which any Credit Party may in
any way be liable, and hereby ratifies and confirms whatever Agent may do in
this regard, (b) all rights to notice and a hearing prior to Agent's taking
possession or control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security that might be required by any court prior to
50
allowing Agent to exercise any of its remedies, and (c) the benefit of all
valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may
make an assignment to a Qualified Assignee of, or sell participations in, at any
time or times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder; provided,
however, that each such assignment must be of a fixed percentage of all of such
Lender's rights and obligations hereunder. Any assignment by a Lender shall: (i)
require the consent of Agent (which consent shall not be unreasonably withheld
or delayed with respect to a Qualified Assignee) and the execution of an
assignment agreement (an "Assignment Agreement" substantially in the form
attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Loans to be assigned to it for its own account, for
investment purposes and not with a view to the distribution thereof; (iii) after
giving effect to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $5,000,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $5,000,000; (iv)
include a payment to Agent of an assignment fee of $3,500; and (v) so long as no
Event of Default shall have occurred or be continuing, require the consent of
Borrower (which consent shall not be unreasonably withheld or delayed with
respect to a Qualified Assignee). In the case of an assignment by a Lender under
this Section 9.1, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as all other Lenders hereunder. The
assigning Lender shall be relieved of its ~obligations hereunder with respect to
its Commitments or assigned portion thereof from and after the date of such
assignment. Borrower hereby acknowledges and agrees that any assignment shall
give rise to a direct obligation of Borrower to the assignee and that the
assignee shall be considered to be a "Lender". In all instances, each Lender's
liability to make Loans hereunder shall be several and not joint and shall be
limited to such Lender's Pro Rata Share of the applicable Commitment. In the
event Agent or any Lender assigns or otherwise transfers all or any part of the
Obligations, Agent or any such Lender shall so notify Borrower and Borrower
shall, upon the request of Agent or such Lender, execute new Notes in exchange
for the Notes, if any, being assigned. Notwithstanding the foregoing provisions
of this Section 9.1(a), any Lender may at any time pledge the Obligations held
by it and such Lender's rights under this Agreement and the other Loan Documents
to a Federal Reserve Bank; provided that no such pledge to a Federal Reserve
Bank shall release such Lender from such Lender's obligations hereunder or under
any other Loan Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any
51
extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Neither Borrower nor any other Credit
Party shall have any obligation or duty to any participant. Neither Agent nor
any Lender (other than the Lender selling a participation) shall have any duty
to any participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrower and that Lender, or Agent and that Lender, be
relieved of any of its obligations hereunder as a result of any sale,
assignment, transfer or negotiation of, or granting of participation in, all or
any part of the Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist
any Lender permitted to sell assignments or participations under this Section
9.1 as reasonably required to enable the assigning or selling Lender to effect
any such assignment or participation, including the preparation of informational
materials for, and the participation of management in meetings with, potential
assignees or participants. Each Credit Party executing this Agreement shall
certify the correctness, completeness and accuracy of all descriptions of the
Credit Parties and their respective affairs contained in any selling materials
provided by it and all other information provided by it and included in such
materials, except that any Projections delivered by Borrower shall only be
certified by Borrower as having been prepared by Borrower in compliance with the
representations contained in Section 3.4(c).
(e) A Lender may furnish any information concerning Credit
Parties in the possession of such Lender from time to time to assignees and
participants (including prospective ~assignees and participants); provided that
such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 11.8.
(f) No Lender shall assign or sell participations in any
portion of its Loan or Commitments to a potential Lender or participant, if, as
of the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy or similar requirements under
Section 1.16(a), increased costs under Section 1.16(b), an inability to fund
LIBOR Loans under Section 1.16(c), or taxes in accordance with Section 1.15(a)
or Section 1.15(b).
(g) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender"), may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing by the Granting Lender to Agent and
Borrower, the option to provide to Borrower all or any part of any Loans that
such Granting Lender would otherwise be obligated to make to Borrower pursuant
to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
52
Granting Lender). Any SPC may (i) with notice to, but without the prior written
consent of, Borrower and Agent and assign all or a portion of its interests in
any Loans to the Granting Lender or to any financial institutions (consented to
by Borrower and Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guaranty or credit or liquidity enhancement to such SPC. This Section 9.1(g) may
not be amended without the prior written consent of each Granting Lender, all or
any of whose Loans are being funded by an SPC at the time of such amendment. For
the avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of
any Loan Document or the obligation to pay any amount otherwise payable by the
Granting Lender under the Loan Documents, continue to be the Lender of record
hereunder.
9.2 Appointment of Agent. GE Capital is hereby appointed to
act on behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set ~forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders,
Requisite Revolving Lenders or all affected Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Loan Document, then Agent shall be entitled to refrain from such act or taking
such action unless and until Agent shall have received instructions from
Requisite Lenders, Requisite Revolving Lenders or all affected Lenders, as the
case may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
53
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Revolving Lenders or all affected Lenders, as
applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except for
damages caused by its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, Agent: (a) may treat the payee
of any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form reasonably
satisfactory to Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of any
Credit Party or to inspect the Collateral (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or ~writing (which may be
by telecopy, telegram, cable or telex) believed by it to be genuine and signed
or sent by the proper party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital or one or more of Affiliates may also
purchase certain equity interests in Holdings, which is a corporation that
currently owns 100% of the outstanding Stock of Borrower. GE Capital and its
Affiliates may accept fees and other consideration from any Credit Party for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders. Each Lender acknowledges the potential conflict
of interest between GE Capital as a Lender holding disproportionate interests in
the Loans, GE Capital or its Affiliates as a Stockholder and GE Capital as
Agent; provided that any equity investment by GE Capital shall not exceed 7.5%
in the aggregate of the Stock of Holdings outstanding on a fully diluted basis,
and shall not exceed $7,500,000 of investments in the aggregate.
9.5 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and based
on the Financial Statements referred to in Section 3.4(a) and such other
documents and information as it has deemed appropriate, made its own credit and
54
financial analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Credit Parties and without limiting the obligations of
Borrower hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. ~Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) 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 and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving
not less than thirty (30) days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation, the Requisite Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
by the Requisite Lenders and shall have accepted such appointment within thirty
(30) days after the resigning Agent's giving notice of resignation, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within thirty (30) days after the date such notice of resignation was
given by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Agent or Requisite Lenders
hereunder shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default has occurred and is continuing.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent's resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other
55
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights
now or hereafter granted under applicable law and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any Event of
Default and subject to Section 9.9(f), each Lender is hereby authorized at any
time or from time to time, without notice to any Credit Party or to any other
Person, any such notice being hereby expressly waived, to offset and to
appropriate and to apply any and all balances held by it at any of its offices
for the account of Borrower or any Guarantor (regardless of whether such
balances are then due to Borrower or any Guarantor) and any other properties or
assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of Borrower or any Guarantor against and on account of
any of the Obligations that are ~not paid when due. Any Lender exercising the
foregoing right of setoff or otherwise receiving any payment on account of the
Obligations in excess of its Pro Rata Share thereof shall purchase for cash (and
the other Lenders or holders shall sell) such participations in each such other
Lender's or holder's Pro Rata Share of the Obligations as would be necessary to
cause such Lender to share the amount so offset or otherwise received with each
other Lender or holder in accordance with their respective Pro Rata Shares,
(other than offset rights exercised by any Lender with respect to Sections 1.13,
1.15 or 1.16). Each Credit Party agrees, to the fullest extent permitted by law,
that (a) any Lender may exercise the foregoing right to offset with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amounts so offset to other Lenders and holders and (b)
any Lender so purchasing a participation in the Loans made or other Obligations
held by other Lenders or holders may exercise all rights of offset, bankers'
lien, counterclaim or similar rights with respect to such participation as fully
as if such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the
purchase of participations by that Lender shall be rescinded and the purchase
price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information;
Actions in Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in
the Swing Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(c).
If the Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (Chicago time) on the date such Notice of Revolving Advance is received, by
telecopy, telephone or other similar form of transmission. Each Revolving Lender
shall make the amount of such Lender's Pro Rata Share of such Revolving Credit
Advance available to Agent in same day funds by wire transfer to Agent's account
as set forth in Annex H not later than 3:00 p.m. (Chicago time) on the requested
56
funding date, in the case of an Index Rate Loan and not later than 11:00 a.m.
(Chicago time) on the requested funding date in the case of a LIBOR Loan. After
receipt of such wire transfers (or, in the Agent's sole discretion, before
receipt of such wire transfers), subject to the terms hereof, Agent shall make
the requested Revolving Credit Advance to Borrower. All payments by each
Revolving Lender shall be made without setoff, counterclaim or deduction of any
kind.
(ii) On the 2nd Business Day of each calendar week or
more frequently at Agent's election (each, a "Settlement Date"), Agent shall
advise each Lender by telephone, or telecopy of the amount of such Lender's Pro
Rata Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded all
payments and Advances required to be made by it and purchased all participations
required to be purchased by it under this Agreement and the other Loan Documents
as of such Settlement Date, Agent shall pay to each Lender such Lender's Pro
Rata Share of principal, interest and Fees paid by Borrower since the previous
Settlement Date for the benefit of such Lender on the Loans held by it. To the
extent that any Lender (a "Non-Funding Lender") has failed to fund all such
payments and Advances or failed to fund the purchase of all such participations,
Agent shall be entitled to set off the funding short-fall against that
Non-Funding Lender's Pro Rata Share of all payments received from Borrower. Such
payments shall be made by wire transfer to such Lender's account (as specified
by such Lender in Annex H or the applicable Assignment Agreement) not later than
1:00 p.m. (Chicago time) on the next Business Day following each Settlement
Date.
(b) Availability of Lender's Pro Rata Share. Agent may
assume that each Revolving Lender will make its Pro Rata Share of each Revolving
Credit Advance available to Agent on each funding date. If such Pro Rata Share
is not, in fact, paid to Agent by such Revolving Lender when due, Agent will be
entitled to recover such amount on demand from such Revolving Lender without
setoff, counterclaim or deduction of any kind. If any Revolving Lender fails to
pay the amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall
promptly notify Borrower and Borrower shall immediately repay such amount to
Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrower
may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to Borrower
on behalf of any Revolving Lender and is not reimbursed therefor on the same
Business Day as such Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by the applicable
Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any
57
insolvency law or otherwise, then, notwithstanding any other term or condition
of this Agreement or any other Loan Document, Agent will not be required to
distribute any portion thereof to any Lender. In addition, each Lender will
repay to Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent is
required to pay to Borrower or such other Person, without setoff, counterclaim
or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender
to make any Revolving Credit Advance or any payment required by it hereunder, or
to purchase any participation in any Swing Line Loan to be made or purchased by
it on the date specified therefor shall not relieve any other Lender (each such
other Revolving Lender, an "Other Lender") of its obligations to make such
Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, purchase a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have ~any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" or a "Revolving Lender"
(or be included in the calculation of "Requisite Lenders" or "Requisite
Revolving Lenders" hereunder) for any voting or consent rights under or with
respect to any Loan Document. At Borrower's request, Agent or a Person
acceptable to Agent shall have the right with Agent's consent and in Agent's
sole discretion (but shall have no obligation) to purchase from any Non-Funding
Lender, and each Non-Funding Lender agrees that it shall, at Agent's request,
sell and assign to Agent or such Person, all of the Commitments of that
Non-Funding Lender for an amount equal to the principal balance of all Loans
held by such Non-Funding Lender and all accrued interest and fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.
(e) Dissemination of Information. Agent shall use reasonable
efforts to provide Lenders with any notice of Default or Event of Default
received by Agent from, or delivered by Agent to, any Credit Party, with notice
of any Event of Default of which Agent has actually become aware and with notice
of any action taken by Agent following any Event of Default; provided that Agent
shall not be liable to any Lender for any failure to do so, except to the extent
that such failure is attributable to Agent's gross negligence or willful
misconduct. Lenders acknowledge that Borrower is required to provide Financial
Statements and Collateral Reports to Lenders in accordance with Annexes E and F
hereto and agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of setoff) without
first obtaining the prior written consent of Agent and Requisite Lenders, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent or Requisite Lenders. With respect to any
action by Agent to enforce the rights and remedies of Agent and the Lenders
under this Agreement and the other Loan Documents, each Lender hereby consents
to the jurisdiction of the court in which such action is maintained, and agrees
to deliver its Notes to Agent to the extent necessary to enforce the rights and
remedies of Agent for the benefit of the Lenders under the Mortgages in
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accordance with the provisions hereof.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and ~obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2. Any letter of interest, commitment letter, or fee
letter (other than the GE Capital Fee Letter or any confidentiality agreement),
if any, between any Credit Party and Agent or any Lender or any of their
respective Affiliates, predating this Agreement and relating to a financing of
substantially similar form, purpose or effect shall be superseded by this
Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by
Agent, no amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrower, and by Requisite Lenders,
Requisite Revolving Lenders or all affected Lenders, as applicable. Except as
set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Borrowing Base, or
that makes less restrictive the nondiscretionary criteria for exclusion from
Eligible Accounts and Eligible Inventory set forth in Sections 1.6 and 1.7,
shall be effective unless the same shall be in writing and signed by Agent,
Requisite Revolving Lenders and Borrower. No amendment, modification,
termination or waiver of or consent with respect to any provision of this
Agreement that waives compliance with the conditions precedent set forth in
Section 2.2 to the making of any Loan or the incurrence of any Letter of Credit
59
Obligations shall be effective unless the same shall be in writing and signed by
Agent, Requisite Revolving Lenders and Borrower. Notwithstanding anything
contained in this Agreement to the contrary, no waiver or consent with respect
to any Default or any Event of Default shall be effective for purposes of the
conditions precedent to the making of Loans or the incurrence of Letter of
Credit Obligations set forth in Section 2.2 and Section 2.3 unless the same
shall be in writing and signed by Agent, Requisite Revolving Lenders and
Borrower.
(c) No amendment, modification, termination or waiver shall,
unless in writing and signed by Agent and each Lender directly affected thereby:
(i) increase the principal amount of any Lender's Commitment (which action shall
be deemed only to affect those Lenders whose Commitments are increased and must
be approved by Requisite Lenders, including those lenders whose Commitments are
increased); (ii) reduce the principal of, rate of interest on or Fees payable
with respect to any Loan or Letter of Credit Obligations of any affected Lender;
~(iii) waive or extend any scheduled payment date (other than payment dates of
mandatory prepayments under Section 1.3(b)(ii)-(iv)) or final maturity date of
the principal amount of any Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected
Lender; (v) release any Guaranty or except as otherwise permitted herein or in
the other Loan Documents, release, or permit any Credit Party to sell or
otherwise dispose of, any Collateral with a value exceeding $3,000,000 in the
aggregate (which action shall be deemed to directly affect all Lenders); (vi)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Loans that shall be required for Lenders or any of them to take
any action hereunder (which action shall be deemed to directly affect all
Lenders); and (vii) amend or waive this Section 11.2 or the definitions of the
terms "Requisite Lenders" or "Requisite Revolving Lenders" insofar as such
definitions affect the substance of this Section 11.2 (which action shall be
deemed to directly affect all Lenders). Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or L/C Issuer
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent or L/C Issuer, as the case may be, in addition to
Lenders required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for Agent to take additional Collateral
pursuant to any Loan Document. No amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the holder of that Note. No notice to or demand on any Credit Party in any
case shall entitle such Credit Party or any other Credit Party to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
Section 11.2 shall be binding upon each holder of the Notes at the time
outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose
consent is required is not obtained (any such Lender whose consent is
not obtained as described in this clause (i) and in clauses (ii) and
(iii) below being referred to as a "Non-Consenting Lender"),
60
(ii) requiring the consent of Requisite Revolving Lenders, the consent of
Revolving Lenders holding 51% or more of the aggregate Revolving Loan
Commitments is obtained, but the consent of Requisite Revolving
Lenders is not obtained, or
(iii) requiring the consent of Requisite Lenders, the consent of Lenders
holding 51% or more of the aggregate Commitments is obtained, but the
consent of Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower's request
Agent, or a Person reasonably acceptable to Agent, shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non-Consenting Lenders for an amount ~equal to
the principal balance of all Loans held by the Non-Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions proceedings, or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements,
mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for
all reasonable out-of-pocket fees, costs and expenses (including the reasonable
fees and expenses of all of its counsel, advisors, consultants and auditors) and
(ii) Agent (and, with respect to clauses (c) and (d) below, all Lenders) for all
reasonable out-of-pocket fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors (including environmental
and management consultants and appraisers) incurred in connection with the
negotiation, preparation and filing and/or recordation of the Loan Documents and
incurred in connection with:
(a) the forwarding to Borrower or any other Person on behalf
of Borrower by Agent of the proceeds of any Loan (including a wire transfer fee
of $25 per wire transfer);
(b) any amendment, modification or waiver of, or consent with
respect to, or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and administration of the
Loans made pursuant hereto or its rights hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Credit Party or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
61
Credit Parties or any other Person that may be obligated to Agent by virtue of
the Loan Documents, including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided that in
the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; provided,
further, that no Person shall be entitled to reimbursement under this clause (c)
in respect of any litigation, contest, dispute, suit, proceeding or action to
the extent any of the foregoing results from such Person's gross negligence or
willful misconduct;
(d) any attempt to enforce any remedies of Agent or any Lender
against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the pendency of one or more Events
of Default; provided that in the case of reimbursement of counsel for Lenders
other than Agent, such reimbursement shall be limited to one counsel for all
such Lenders;
(e) any workout or restructuring of the Loans during the
pendency of one or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other
Obligations, and (ii) verify, protect, evaluate, assess, appraise, collect,
sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time
or times, to require strict performance by the Credit Parties of any provision
of this Agreement or any other Loan Document shall not waive, affect or diminish
any right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
62
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrower specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under
this Agreement shall be cumulative and nonexclusive of any other rights and
remedies that Agent or any Lender may have under any other agreement, including
the other Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 Severability. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement or any other Loan Document shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement conflicts with any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender
applies to maintain the confidentiality of its own confidential information) to
maintain as confidential all confidential information provided to them by the
Credit Parties and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and any Lender may disclose such
information (a) to Persons employed or engaged by Agent or such Lender,
including any agents that have been granted access pursuant to Section 1.14; (b)
to any bona fide assignee or participant or potential assignee or participant
that has agreed to comply with the covenant contained in this Section 11.8 (and
any such bona fide assignee or participant or potential assignee or participant
may disclose such information to Persons employed or engaged by them as
described in clause (a) above); (c) as required or requested by any Governmental
Authority or reasonably believed by Agent or such Lender to be compelled by any
court decree, subpoena or legal or administrative order or process; (d) as, on
the advice of Agent's or such Lender's counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or
in connection with any Litigation to which Agent or such Lender is a party; or
(f) that ceases to be confidential through no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT
PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE ~OTHER
LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND THE CREDIT
PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK COUNTY AND; PROVIDED, FURTHER THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT
OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE
63
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT
PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT
PARTY AT THE ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS,
PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated in Annex I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated in Annex I
64
to receive copies shall in no ~way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE TO THE FULLEST EXTENT
PERMITTED BY LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE,
AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party
executing this Agreement agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure using the name of GE
Capital or its affiliates or referring to this Agreement, the other Loan
Documents or the Related Transactions Documents without at least two (2)
Business Days' prior notice to GE Capital and without the prior written consent
of GE Capital unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law and then, in any event, such Credit
Party or Affiliate will consult with GE Capital before issuing any press
release. Each Credit Party consents to the publication by Agent or any Lender of
a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement. Agent or such Lender shall provide
a draft of any such tombstone or similar advertising material to each Credit
Party for review and comment prior to the publication thereof. Agent reserves
the right to provide to industry trade organizations information necessary and
customary for inclusion in league table measurements.
11.15 Reinstatement. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Credit Party for liquidation or reorganization, should any Credit
Party become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Credit Party's assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part
65
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to
each other party hereto that it has discussed this Agreement and, specifically,
the provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
12. RESTATEMENT OF Prior CREDIT AGREEMENT.
The parties hereto agree that, on the Effective Date, the
following transactions shall be deemed to occur automatically, without further
action by any party hereto:
(a) the Prior Credit Agreement shall be deemed to be amended
and restated in its entirety in the form of this Agreement;
(b) all Existing Obligations outstanding on the Effective Date
shall, to the extent not paid on the Effective Date, be deemed to be Obligations
outstanding hereunder, and all Schaublin Revolving Loans outstanding on the
Effective Date shall, to the extent not paid on the Effective Date, be deemed to
be Revolving Loans outstanding hereunder;
(c) the guaranties and Collateral Documents, including the
Liens created thereunder in favor of Agent for the benefit of Agent and Lenders
or in favor of Agent and Lenders, as applicable, and securing payment of the
Existing Obligations, as amended and restated on the Effective Date, shall
remain in full force and effect with respect to the Obligations and are hereby
reaffirmed; and
(d) all references in the other Loan Documents to the Prior
Credit Agreement shall be deemed to refer without further amendment to this
Agreement.
The parties acknowledge and agree that this Agreement and the
other Loan Documents do not constitute a novation, payment and reborrowing or
termination of the Existing Obligations and that all such Existing Obligations
are in all respects continued and outstanding as Obligations under this
Agreement and the Notes with only the terms being modified from and after the
Effective Date of this Agreement as provided in this Agreement, the Notes and
the other Loan Documents.
[Signature Page Follows]
66
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
BORROWER:
ROLLER BEARING COMPANY OF AMERICA,
INC., a Delaware corporation
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By:
----------------------------------------------------------
Duly Authorized Signatory
Congress Financial Corporation (CENTRAL), as Lender
By:
----------------------------------------------------------
Duly Authorized Signatory
[Signature Page to the Credit Agreement]
S-1
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrowers.
CREDIT PARTIES:
INDUSTRIAL TECTONICS BEARINGS CORPORATION, a Delaware
corporation
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
RBC NICE BEARINGS INC., a Delaware corporation
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
BREMEN BEARINGS, INC., a Delaware corporation
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
TYSON BEARING COMPANY, INC., a Delaware corporation
By:
----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
-------------------------------------------------------
[Signature Page to the Credit Agreement]
S-2
RBC LINEAR PRECISION PRODUCTS, INC., a Delaware corporation
By:
----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
-------------------------------------------------------
▇▇▇▇▇▇ BEARING COMPANY, INC., a Delaware corporation
By:
----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
-------------------------------------------------------
RBC OKLAHOMA, INC., a Delaware corporation
By:
----------------------------------------------------------
Name:
---------------------------------------------------------
Title:
-------------------------------------------------------
[Signature Page to the Credit Agreement]
S-3
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:
"A Rated Bank" has the meaning ascribed to it in Section 6.2.
"Account Debtor" means any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account, Chattel
Paper or General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed thereto in Annex
G.
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all healthcare insurance receivables, and (f) all
collateral security of any kind, now or hereafter in existence, given by any
Account Debtor or other Person with respect to any of the foregoing.
"Acquisition" has the meaning ascribed thereto in Section 6.1.
"Acquisition Company" means a Delaware corporation, limited
liability company or limited partnership that is a direct or indirect
wholly-owned Subsidiary of Borrower formed for the sole purpose of completing a
Permitted Acquisition of a Qualified Target.
"Acquisition Compliance Certificate" has the meaning ascribed
to it in Section 6.1(b)(xii).
"Acquisition Pro Forma" has the meaning ascribed to it in
Section 6.1(b)(xiv)(A).
A-1
"Acquisition Projections" has the meaning ascribed to it in
Section 6.1(b)(xiv)(B).
"Acquisition Subordinated Debt" means Indebtedness issued to
seller(s) as consideration for a Permitted Acquisition in an amount, on such
terms, and subordinated to the Obligations in a manner and form satisfactory to
Agent and Lenders in their reasonable discretion as to right and time of payment
and as to any other terms, rights and remedies thereunder, provided that
Borrower may determine the maturity date thereof and Agent's and Lenders'
discretion with respect to subordination provisions shall not preclude a
maturity date otherwise permitted under Section 6.1 of the Agreement.
"Activation Event" and "Activation Notice" have the meanings
ascribed thereto in Annex C.
"Advance" means any Revolving Credit Advance or Swing Line
Advance, as the context may require.
"Adjusted EBITDA" means for any period with respect to
Holdings, on a consolidated basis, an amount equal to (i) EBITDA of Holdings, on
a consolidated basis, for such period, plus (ii) to the extent that the
calculation thereof has been approved by the Agent (in consultation with
Requisite Lenders) and to the extent not included in such EBITDA, the aggregate
EBITDA for such period on pro forma basis of any Qualified Target of a Permitted
Acquisition which closed within such period (it being understood that any EBITDA
of such Qualified Target shall be included in the EBITDA of Holdings, on a
consolidated basis, only for those Fiscal Quarters in such period occurring
prior to the closing of such Permitted Acquisition, (iii) less the aggregate
EBITDA of any Person or assets, as the case may be, sold by the Holdings or any
Subsidiary thereof (if such EBITDA is positive), the sale of which closed during
such period.
"Adjusted Funded Debt" means with respect to Holdings, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness that by its terms matures more
than one year from the date of creation thereof, or is directly or indirectly
renewable or extendible at Holdings' option under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
more than one year from the date of creation thereof, and specifically including
Capital Lease Obligations, current maturities of long-term debt, and also
including Guaranteed Indebtedness consisting of guaranties of Adjusted Funded
Debt of other Person and Letter of Credit Obligations plus outstanding preferred
Stock of Holdings which by its terms (or by the terms of any security which is
convertible into it or exchangeable for it) or upon the happening of an event:
(i) entitled its holder to a dividend payable in cash or (ii) matures or is
mandatorily redeemable in whole or in part pursuant to a sinking funds
obligation or otherwise or is redeemable at the option of its holder, in whole
or in part, on or prior to the Termination Date less any unrestricted cash on
hand of Holdings and its Subsidiaries. For purposes of this definition, the
following Indebtedness shall be excluded: (1) the Indebtedness of any other
Person prior to the date it became a Subsidiary of, or was merged into, Holdings
or any Subsidiary of Holdings; and (2) the Indebtedness of any other Person
(other than a Subsidiary) in which Holdings has an ownership interest.
"Affected Lender" has the meaning ascribed to it in Section
1.16(d).
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 10% or more of the Stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that with respect to each Credit Party and its
Affiliates, the term "Affiliate" shall specifically exclude (i) Agent and each
Lender and their respective Affiliates and (ii) operating companies in which an
investment fund managed by Whitney & Co. or its Affiliates has an equity or debt
interest.
A-2
"Agent" means GE Capital in its capacity as Agent for Lenders
or its successor appointed pursuant to Section 9.7.
"Agreement" means the Credit Agreement by and among Borrower,
the other Credit Parties party thereto, GE Capital, as Agent and Lender and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Appendices" has the meaning ascribed to it in the recitals to
the Agreement.
"Applicable Margins" means collectively the Applicable
Revolver Index Margin, the Applicable Term Loan Index Margin, the Applicable
Revolver LIBOR Margin and the Applicable Term Loan LIBOR Margin.
"Applicable Revolver Index Margin" means the per annum
interest rate margin from time to time in effect and payable in addition to the
Index Rate applicable to the Revolving Loan, as determined by reference to
Section 1.5(a).
"Applicable Revolver LIBOR Margin" means the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Revolving Loan, as determined by reference to Section
1.5(a).
"Applicable Term Loan Index Margin" means the per annum
interest rate from time to time in effect and payable in addition to the Index
Rate applicable to the Term Loan, as determined by reference to Section 1.5(a).
"Applicable Term Loan LIBOR Margin" means the per annum
interest rate from time to time in effect and payable in addition to the LIBOR
Rate applicable to the Term Loan, as determined by reference to Section 1.5(a).
"Assignment Agreement" has the meaning ascribed to it in
Section 9.1(a).
A-3
"Bankruptcy Code" means the provisions of Title 11 of the
United States Code, 11 U.S.C. ▇▇.▇▇. 101 et seq.
"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Borrower" has the meaning ascribed thereto in the preamble to
the Agreement.
"Borrower Pledge Agreement" means the Pledge Agreement of even
date herewith executed by Borrower in favor of Agent, on behalf of itself and
Lenders, pledging (i) all Stock of its Domestic Subsidiaries and 66% of the
outstanding Stock of RBC Schaublin Holdings S.A. and RBC de Mexico S de ▇.▇. de
CV, and (ii) all Intercompany Notes owing to or held by it.
"Borrower Swiss Pledge Agreement" means the Pledge Agreement
executed by Borrower in favor of Agent, on behalf of itself and Lenders, dated
as of June 19, 2003, as amended, restated or otherwise modified from time to
time, pledging sixty-six (66%) percent of the outstanding Stock of Schaublin
Holding governed by Swiss law.
"Borrowing Availability" means as of any date of determination
the lesser of (i) the Maximum Amount and (ii) the Borrowing Base, in each case,
less the sum of the Revolving Loan and Swing Line Loan then outstanding;
provided that an Overadvance in accordance with Section 1.1(a)(iii) may cause
the Revolving Loan and Swing Line Loan to exceed the Borrowing Base by the
amount of such permitted Overadvance.
"Borrowing Base" means, as of any date of determination by
Agent, from time to time, an amount equal to the sum at
such time of:
(a) 85% of the book value of Eligible Accounts at such time;
(b) 65% of the book value of Eligible Inventory (other than
Component Parts and Purchased Parts) valued at the lower of cost
(determined on a first-in, first-out basis) or market; and
(c) 30% of the book value of Eligible Inventory consisting of
Component Parts and Purchased Parts valued at the lower of cost
(determined on a first-in, first-out basis) or market, provided that
the value of Component Parts and Purchased Parts included in the
Borrowing Base shall not exceed 25% of the total value of all Eligible
Inventory (including the Eligible Inventory consisting of Component
Parts and Purchased Parts);
in each case, less any Reserves established by Agent at such time.
----
"Borrowing Base Certificate" means a certificate to be
executed and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the States of
Illinois and/or New York and in reference to LIBOR Loans shall mean any such day
that is also a LIBOR Business Day.
A-4
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP, provided
that expenditures for Permitted Acquisitions and reinvestment in assets in
accordance with the proviso of Section 1.3(b)(ii) shall not constitute Capital
Expenditures.
"Capital Lease" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex
B.
"Cash Equivalents" has the meaning ascribed to it in Annex B.
"Cash Management Systems" has the meaning ascribed to it in
Section 1.8.
"Certificate of Exemption" has the meaning ascribed to it in
Section 1.15.
"Change of Control" shall be deemed to have occurred if (a)
(i) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and his Permitted Transferees shall cease to own
directly or indirectly, beneficially or of record (including indirectly through
▇▇▇▇▇▇▇▇ Family Investments, L.P.), those shares or rights to acquire those
shares of capital Stock of Holdings which entitle their holder to majority
number of votes (i.e., to that number of votes per share on all matters to be
voted upon by Holdings which entitle such holder, in the aggregate, to 51% of
the voting power of the issued and outstanding common Stock of Holdings), other
than as a result of the death or permanent disability of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or
the completion of a Qualified Public Offering or (ii) such shares of Capital
Stock cease to entitle the holder thereof to such majority number of votes
(either because a Voting Event as defined in the charter of Holdings has
occurred or otherwise); (b) following the completion of a Qualified Public
Offering, any person or group (within the meaning of Rule 13d-5 of the
Securities Exchange Act of 1934) other than ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and/or his
Permitted Transferees, funds managed by Affiliates of Whitney & Co. or one or
more equity sponsors with funds under management of at least $500,000,000, shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 30% or more of the issued and outstanding shares of capital Stock of
Holdings under ordinary circumstances; (c) during any period of twelve
consecutive calendar months, individuals who at the beginning of such period
constituted the board of directors of Holdings (together with any new directors
whose election by the board of directors of Holdings or whose nomination for
election by the Stockholders of Holdings was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to
constitute a
A-5
majority of the directors then in office; (d) funds managed by Affiliates of
Whitney & Co. and/or one or more equity sponsors with funds under management of
at least $500,000,000 ceases to own directly or indirectly, beneficially or of
record shares representing at least 50.1% of the Stock (on a fully diluted
basis) of Holdings other than as a result of Qualified Public Offering; (e)
Holdings ceases to own and control all of the economic and voting rights
associated with all of the outstanding capital Stock of Borrower; (f) Borrower
ceases to own, directly or indirectly, and control all of the economic and
voting rights associated with all of the outstanding capital Stock of any of its
Subsidiaries other than as a result of a dissolution of a Subsidiary resulting
in the distribution of its assets to Borrower or the merger of any Subsidiary
with Borrower or another Subsidiary of Borrower, or (g) any change of control
(or similar event, however denominated) with respect to Holdings, Borrower or
any Subsidiary shall occur under and as defined in any indenture or agreement to
which Holdings, the Borrower or any Subsidiary is a party in respect of
Indebtedness in an aggregate original principal amount in excess of $3,000,000
which results in a default or an event of default thereunder or an obligation to
prepay or redeem all or any material portion of such Indebtedness unless
irrevocably waived by the holders thereof.
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party, wherever located.
"Closing Checklist" means the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex D.
"Closing Date" means May 30, 2002.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided, further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
A-6
"Collateral" means the property covered by the Security
Agreement, the Mortgages and the other Collateral Documents and any other
property, real or personal, tangible or intangible, now existing or hereafter
acquired, that may at any time be or become subject to a security interest or
Lien in favor of Agent, on behalf of itself and Lenders, to secure the
Obligations.
"Collateral Documents" means the Security Agreement, the
Pledge Agreements, the Guaranties, the Mortgages, the Patent Security Agreement,
the Trademark Security Agreement, the Copyright Security Agreement and all
similar agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.
"Collateral Reports" means the reports with respect to the
Collateral referred to in Annex F.
"Collection Account" means that certain account of Agent,
account number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Bankers Trust Company in New
York, New York ABA No. 021 001 033, or such other account as may be specified in
writing by Agent as the "Collection Account."
"Collection Account (Government Receivables)" means that
certain account of Agent, account number ▇▇-▇▇▇-▇▇▇ in the name of Agent at
DeutscheBank Trust Company Americas, ABA No. 021 001 033 or such other account
as may be, specified by Agent as the "Collection Account (Government
Receivables)".
"Commitment Termination Date" means the earliest of (a) May
30, 2007, (b) the date of termination of Lenders' obligations to make Advances
and to incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Loans and the cancellation and return (or
stand-by guaranty) of all Letters of Credit or the cash collateralization of all
Letter of Credit Obligations pursuant to Annex B, and the permanent reduction of
the Commitments to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of
such Lender's Revolving Loan Commitment (including without duplication the Swing
Line Lender's Swing Line Commitment as a subset of its Revolving Loan
Commitment) and Term Loan Commitment as set forth on Annex J to the Agreement or
in the most recent Assignment Agreement executed by such Lender and (b) as to
all Lenders, the aggregate of all Lenders' Revolving Loan Commitments (including
without duplication the Swing Line Lender's Swing Line Commitment as a subset of
its Revolving Loan Commitment) and Term Loan Commitments, which aggregate
commitment shall be Ninety-Four Million Dollars ($94,000,000) on the Effective
Date, as to each of clauses (a) and (b), as such Commitments may be reduced,
amortized or adjusted from time to time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in
Annex E.
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"Component Parts" means parts machined at Borrower's or a
Secured Guarantor's facility which are placed in storage for later assembly.
"Concentration Account" has the meaning ascribed to it in
Annex C.
"Contracts" means all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house, as
applicable, with respect to commodity accounts and commodity contracts held by
any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.
"Copyright License" means any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyright Security Agreements" means the Copyright Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.
"Costing Reserve" means a reserve with respect to the variance
between the perpetual cost of Inventory and the invoice cost of Inventory.
"Credit Parties" means Borrower, and its domestic
Subsidiaries.
"Default" means any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section
1.5(d).
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"Deposit Accounts" means all "deposit accounts" as such term
in defined in the Code, now or hereafter held in the name of any Credit Party.
"Disbursement Accounts" has the meaning ascribed to it in
Annex C.
"Disclosure Schedules" means the Schedules prepared by
Borrower and denominated as Disclosure Schedules (1.4) through (6.7) in the
Index to the Agreement.
"Discount Debentures" means those certain 13% Senior Discount
Debentures Due 2009 issued by Holdings in an aggregate original principal amount
of $74,882,000 pursuant to that certain Indenture dated as of June 15, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust Company of New York, as
trustee (the "Discount Debentures Indenture").
"Discount Debentures Documents" means the Discount Debentures,
the Discount Debentures Indenture and any other instrument, document or
agreement delivered pursuant thereto or in connection therewith.
"Discount Debentures Indenture" has the meaning ascribed to it
in the definition of the Discount Debentures.
"Dividends" has the meaning ascribed to it in Section 6.14.
"Documents" means any "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"Domestic" means, as to any Person, a Person which is created
or organized under the laws of the United States of America, any of its states
or the District of Columbia.
"EBITDA" means, with respect to any Person for any fiscal
period, without duplication, an amount equal to (a) consolidated net income of
such Person for such period, determined in accordance with GAAP, minus (b) the
sum of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain during such
period arising from the sale, exchange or other disposition of capital assets of
such Person, and (v) any other non-cash gains that have been added in
determining consolidated net income, in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary
items for such period, (iv) depreciation and amortization for such period, (v)
amortized debt discount for such period, (vi) the amount of any deduction to
consolidated net income as the result of any grant of any Stock or equity rights
to any employee of such Person, in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication, (vii) any aggregate net loss
during such period arising from the sale, exchange or other disposition of
capital assets of such Person, (viii) with the consent of Agent, which shall not
be unreasonably withheld, any non-recurring losses or charges that have been
deducted from the consolidated net income of such Person in accordance with
GAAP, and (ix) the amount of any reduction to the consolidated net income of
Holdings as the result
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of the Restricted Payment described and permitted pursuant to Section 6.14(e).
For purposes of this definition, the following items shall be excluded in
determining consolidated net income of a Person: (1) the income (or deficit) of
any other Person accrued prior to the date it became a Subsidiary of, or was
merged or consolidated into, such Person or any of such Person's Subsidiaries;
(2) the income (or deficit) of any other Person (other than a Subsidiary) in
which such Person has an ownership interest, except to the extent any such
income has actually been received by such Person in the form of cash dividends
or distributions; (3) the undistributed earnings of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-down of assets (other than Accounts or Inventory) and any
write-down of goodwill (to the extent it is a write-down of goodwill only), or
write-up of any asset; (6) any net gain from the collection of the proceeds of
life insurance policies; (7) any net gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of such
Person, (8) in the case of a successor ~to such Person by consolidation or
merger or as a transferee of its assets, any earnings of such successor prior to
such consolidation, merger or transfer of assets, (9) any deferred credit
representing the excess of equity in any Subsidiary of such Person at the date
of acquisition of such Subsidiary over the cost to such Person of the investment
in such Subsidiary, and (10) any other non-cash expenses or deductions in
connection with the issuances or modifications of stock options or rights issued
to employees or directors.
"Effective Date" means the date on which each of the
conditions set forth in Section 2.1 shall have been satisfied except for such
conditions, if any that have been waived in writing by the Agent and the
Lenders.
"Eligible Accounts" has the meaning ascribed to it in Section
1.6 of the Agreement.
"Eligible Inventory" has the meaning ascribed to it in Section
1.7 of the Agreement.
"Environmental Indemnity Agreement" means that certain
Environmental Indemnity Agreement, dated the date hereof, by the Credit Parties
in favor of Agent on behalf of the Lenders.
"Environmental Laws" means all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. ▇▇.▇▇. 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. ▇▇.▇▇. 5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7
A-10
U.S.C. ▇▇.▇▇. 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. ▇▇.▇▇. 6901
et seq.); the Toxic Substance Control Act (15 U.S.C. ▇▇.▇▇. 2601 et seq.); the
Clean Air Act (42 U.S.C. ▇▇.▇▇. 7401 et seq.); the Federal Water Pollution
Control Act (33 U.S.C. ▇▇.▇▇. 1251 et seq.); the Occupational Safety and Health
Act (29 U.S.C. ▇▇.▇▇. 651 et seq.); and the Safe Drinking Water Act (42 U.S.C.
▇▇.▇▇. 300(f) et seq.), and any and all regulations promulgated thereunder, and
all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes relating to or stemming
from environmental matters.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law arising under or related to
any Environmental Laws, Environmental Permits, or in connection with any Release
or threatened Release or presence of a Hazardous Material whether on, at, in,
under, from or about or in the vicinity of any real or personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any
trade or business (whether or not incorporated) that, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043
A-11
(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of any Credit
Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (c) the complete or partial withdrawal of any Credit Party
or any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice
of intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of proceedings to
terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by
any Credit Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within thirty
(30) days; (g) any other event or condition that might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (h)
the termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status; or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section
8.1.
"Event of Loss" means, with respect to any property, any of
the following: (a) any loss, destruction or damage of such property; (b) any
condemnation or seizure of such property or for the exercise of any right of
eminent domain; or (c) any actual condemnation, seizure or taking, by exercise
of the power of eminent domain or otherwise, of such property, or confiscation
of such property or the requisition of the use of such property.
"Existing Credit Agreement" means the Credit Agreement dated
as of June 23, 1997 among Borrower, Prior Lenders and Credit Suisse First
Boston, as administrative agent for Prior Lenders, as amended.
"Existing Obligations" shall mean the "Obligations", as
defined in the Prior Credit Agreement.
"Fair Labor Standards Act" means the Fair Labor Standards Act,
29 U.S.C. ss.201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal
to the weighted average of the rates on overnight federal funds transactions
among members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fees" means any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth
in Annex G.
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"Financial Statements" means the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrower delivered in accordance with Section 3.4 and Annex E.
"Fiscal Month" means any of the monthly accounting periods of
Borrower.
"Fiscal Quarter" means any of the quarterly accounting periods
of Borrower, ending on the last Saturday of June, September, and December and on
the Saturday closest to March 31 of each year.
"Fiscal Year" means any of the annual accounting periods of
Borrower ending on the Saturday closest to March 31 of each year.
"Fixed Charges" means, with respect to Holdings, on a
consolidated basis, for any fiscal period, an amount equal to the sum of (a) the
aggregate of all cash Interest Expense paid or accrued during such period
(excluding original issue discount and interest paid by the issuance of any
payment-in-kind notes) plus (b) scheduled payments of principal with respect to
Indebtedness during such period other than Acquisition Subordinated Debt as to
which a Reserve has been established, plus (c) payments on earn-outs to sellers
in connection with a Permitted Acquisition, unless such earn-outs are deducted
in the calculation of EBITDA during the relevant period or a Reserve with
respect thereto has been established, including a Reserve with respect to
Acquisition Subordinated Debt, plus (d) the aggregate of all redemptions,
purchases, retirements, defeasances, sinking fund or similar payments or
~acquisitions for value with respect to Indebtedness (other than payments made
for Redemptions to the extent such payments for Redemptions after the Closing
Date are less than $30,000,000 in the aggregate) plus (d) dividends paid in
cash. For purposes of this definition, the following Fixed Charges shall be
excluded: (1) the Fixed Charges of any other Person prior to the date it became
a Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries, and (2) the Fixed Charges of any other Person (other than
a Subsidiary) in which such Person has an ownership interest. For purposes of
calculating Fixed Charges for measuring periods ending within 1 year after the
Closing Date, scheduled payments of principal shall be deemed to have been
$1,428,570 per Fiscal Quarter prior to September 30, 2002.
"Fixed Charge Coverage Ratio" means, with respect to any
Person for any fiscal period, the ratio of (a) EBITDA less Capital Expenditures
(other than that portion of Capital Expenditures financed by third party loans)
and income taxes paid in cash to (b) Fixed Charges.
"Fixtures" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Foreign" means, as to any Person, a Person which is not
created or organized under the laws of the United States of America, or any of
its states or the District of Columbia.
"Funded Debt" means, with respect to any Person, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness that by its terms matures more
than one year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement
A-13
obligating the lender or lenders to extend credit over a period of more than one
year from the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of Borrower, the Obligations and, without duplication,
Guaranteed Indebtedness consisting of guaranties of Funded Debt of other
Persons.
"GAAP" means generally accepted accounting principles in the
United States of America, consistently applied, as such term is further defined
in Annex G to the Agreement.
"GE Capital" means General Electric Capital Corporation, a
Delaware corporation.
"GE Capital Fee Letter" means that certain letter, dated as of
February 26, 2002, between GE Capital and Borrower with respect to certain Fees
to be paid from time to time by Borrower to GE Capital.
"General Intangibles" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Granting Lender" has the meaning ascribed to it in Section
9.1(g).
A-14
"Guaranteed Indebtedness" means, as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, each Subsidiary Guaranty and
any other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantors" means each Secured Guarantor and each other
Person, if any, that executes a guaranty or other similar agreement in favor of
Agent, for itself and the ratable benefit ~of Lenders, in connection with the
transactions contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" means any substance, material or waste
that is regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance that is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdings" means Roller Bearing Holding Company, Inc., a
Delaware corporation.
"Immediate Family" with respect to any individual, shall mean
his brothers, sisters, spouse, children (including adopted children), parents,
parents-in-law, grandchildren, great grandchildren and other lineal descendants
and spouses of any of the foregoing.
"Indebtedness" means, with respect to any Person, without
duplication (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred 12 months or
more, but excluding obligations to trade creditors incurred in the ordinary
course of business that are unsecured and not overdue by more than 6 months
unless being contested in good faith, (b) all reimbursement and other
obligations with
A-15
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Index Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in
Section 1.13.
"Indemnified Person" has the meaning ascribed to it in Section
1.13.
"Index Rate" means, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks" (or, if The Wall Street Journal ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
Each change in any interest rate provided for in the Agreement based upon the
Index Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Industrial Revenue Bond Financing" means financing of
acquisition of real estate and improvements thereto, Fixtures and Equipment
involved in industrial or commercial projects from proceeds of tax-exempt or
taxable bonds issues by state or local government agency.
"Instruments" means all "instruments," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
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"Intercompany Notes" has the meaning ascribed to it in Section
6.3.
"Interest Expense" means, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person less
any interest income of such Person determined in accordance with GAAP for the
relevant period ended on such date, including interest expense with respect to
any Funded Debt of such Person and interest expense for the relevant period that
has been capitalized on the balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Loan is outstanding,
and (b) as to any LIBOR Loan, the last day of the applicable LIBOR Period and,
in addition, in the case of a LIBOR Period in excess of three months, the last
day of the third month of such LIBOR Period, provided that, in addition to the
foregoing, each of (x) the date upon which all of the Commitments have been
terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with respect
to any interest that has then accrued under the Agreement.
"Inventory" means all "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods,
supplies or materials of any kind, nature or description used or consumed or to
be used or consumed in such ~Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies and embedded software.
"Investment Property" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (a) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (b) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (c) all securities accounts of any Credit Party;
(d) all commodity contracts of any Credit Party; and (e) all commodity accounts
held by any Credit Party.
"IRB Loan" shall mean Indebtedness evidenced by any of the
following: (a) the Loan Agreement dated as of September 1, 1994, between South
Carolina Jobs-Economic Development Authority (the "Authority") and Borrower
relating to $7,700,000 Variable Rate Demand Industrial Development Revenue Bonds
(Roller Bearing Company of America, Inc. Project) Series 1994A, (b) the Trust
Indenture dated as of September 1, 1994, by and between the Authority and ▇▇▇▇
▇▇▇▇▇ Bank, as trustee, with respect to the bonds described in clause (a) of
this definition, (c) the Loan Agreement dated as of September 1, 1994, between
the Authority and Borrower relating to $3,000,000 Variable Rate Demand
Industrial Development Revenue Bonds (Roller Bearing Company of America, Inc.
Project) Series 1994B, (d) the Trust Indenture dated as of September 1, 1994, by
and between the Authority and ▇▇▇▇ ▇▇▇▇▇ Bank, as trustee,
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with respect to the bonds described in clause (c) of this definition, (e) the
Loan Agreement dated as of September 1, 1998 between the Authority and RBC
Linear Precision Products, Inc. relating to $3,000,000 Tax Exempt Demand/Fixed
Rate Industrial Development Revenue Bonds (RBC Linear Precision Products, Inc.
Project) Series 1998, (f) the Trust Indenture dated as of September 1, 1998 with
respect to the bonds described in clause (e) of this definition, (g) the Loan
Agreement dated as of April 1, 1999 between California Infrastructure and
Economic Development Bank and Borrower relating to $4,800,000 Variable Rate
Demand Industrial Revenue Bonds Series 1999 (Roller Bearing Company of America,
Inc. - Santa ▇▇▇ Project) and (h) the Indenture of Trust dated as of April 1,
1999 with respect to the bonds described in clause (g) of this definition and,
in each case, the other documents executed in connection therewith.
"IRC" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"Keyman Life Insurance" means a keyman life insurance policy
on ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ from an insurance company and on terms and conditions
acceptable to the Agent, in an amount of at least $10,000,000.
"L/C Issuer" has the meaning ascribed to it in Annex B.
"L/C Sublimit" has the meaning ascribed to in it Annex B.
"Lenders" means GE Capital and the other Lenders named on the
signature pages of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include any assignee of
such Lender.
"Letter of Credit Fee" has the meaning ascribed to it in Annex
B.
"Letter of Credit Obligations" means all outstanding
obligations incurred by Agent and Lenders at the request of Borrower, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of Letters of Credit by Agent or another L/C Issuer or the purchase
of a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" means documentary or standby letters of
credit issued for the account of Borrower by any L/C Issuer, and bankers'
acceptances issued by Borrower, for which Agent and Lenders have incurred Letter
of Credit Obligations.
"Letter-of Credit Rights" means "letter-of-credit rights" as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including rights to payment or performance under a letter of credit,
whether or not such Credit Party, as beneficiary, has demanded or is entitled to
demand payment or performance.
"Leverage Ratio" means, with respect to Holdings, on a
consolidated basis after giving effect to any and all Redemption(s), the ratio
of (i) the Adjusted Funded Debt as of any
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date of determination, to (ii) the Adjusted EBITDA for the twelve months most
recently ended on or prior to the date of determination.
"LIBOR Business Day" means a Business Day on which banks in
the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing
interest by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two (2) LIBOR Business Days prior
to such date;
(c) any LIBOR Period that begins on the last LIBOR Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
and
(d) Borrower shall select LIBOR Periods so that there shall be
no more than 5 separate LIBOR Loans in existence at any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of
11:00 a.m. (London time), on the second full LIBOR Business Day next
preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two (2) LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of
the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as
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"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board
that are required to be maintained by a member bank of the Federal
Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower.
"License" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
"Loan Account" has the meaning ascribed to it in Section 1.12.
"Loan Documents" means the Agreement, the Notes, the
Collateral Documents, the Master Standby Agreement, the Master Documentary
Agreement, the Post Closing Matters Agreement, the Environmental Indemnity
Agreement, the GE Capital Fee Letter and all other agreements, instruments,
documents and certificates identified in the Closing Checklist executed and
delivered to, or in favor of, Agent or any Lenders and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Credit Party, or any employee of any Credit Party, and delivered
to Agent or any Lender in connection with the Agreement or the transactions
contemplated thereby. Any reference in the Agreement or any other Loan Document
to a Loan Document shall include all appendices, exhibits or schedules thereto,
and all amendments, restatements, supplements or other modifications thereto,
and shall refer to the Agreement or such Loan Document as the same may be in
effect at any and all times such reference becomes operative.
"Loans" means the Revolving Loan, the Swing Line Loan and the
Term Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Margin Stock" has the meaning ascribed to it in Section 3.10.
"Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit dated as of the Closing Date between Borrower, as
Applicant, and GE Capital, as Issuer.
"Master Standby Agreement" means the Master Agreement for
Standby Letters of Credit dated as of the Closing Date between Borrower, as
Applicant, and GE Capital, as Issuer.
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"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, prospects or financial or other condition
of the Credit Parties considered as a whole, (b) Borrower's ability to pay any
of the Loans or any of the other Obligations in accordance with the terms of the
Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and Lenders,
on the Collateral or the priority of such Liens, or (d) Agent's or any Lender's
rights and remedies under the Agreement and the other Loan Documents. Without
limiting the generality of the foregoing, any event or occurrence adverse to one
or more Credit Parties which results or could reasonably be expected to result
in costs, liabilities or damages, individually, or in the aggregate, to any
Credit Party or Credit Parties in an amount that would have caused the Fixed
Charge Covenant Ratio Financial Covenant to have been breached if such event or
occurrence had occurred and such costs, liabilities or damages had been paid on
the first day of the Fiscal Quarter most recently ended.
"Maximum Amount" means, as of any date of determination, an
amount equal to the Revolving Loan Commitment of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in
Section 1.5(f).
"Mortgaged Properties" has the meaning assigned to it in Annex
D.
"Mortgages" means each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral assignments of leases
or other real estate security documents delivered by any Credit Party to Agent
on behalf of itself and Lenders with respect to the Mortgaged Properties, all in
form and substance reasonably satisfactory to Agent.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 3(37) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them
with the last six years.
"Non-Consenting Lender" has the meaning ascribed to it in
Section 11.2(d)(i).
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes, the Swing
Line Note and the Term Notes.
"Notice of Conversion/Continuation" has the meaning ascribed
to it in Section 1.5(e).
"Notice of Revolving Credit Advance" has the meaning ascribed
to it in Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities
and obligations, including letter of credit obligations, for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated
or determinable) owing by any Credit Party to Agent or any Lender, and all
covenants and duties regarding such amounts, of any kind or nature, present or
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future, whether or not evidenced by any note, agreement or other instrument,
arising under the Agreement or any of the other Loan Documents. This term
includes all principal, interest (including all interest that accrues after the
commencement of any case or proceeding by or against any Credit Party in
bankruptcy, whether or not allowed in such case or proceeding), Fees, Charges,
expenses, attorneys' fees and any other sum chargeable to any Credit Party under
the Agreement or any of the other Loan Documents.
"Other Lender" has the meaning ascribed to it in Section
9.9(d).
"Overadvance" has the meaning ascribed to it in Section
1.1(a)(iii).
"Patent License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
"Patent Security Agreements" means the Patent Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"Patents" means all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Pension Plan" means a Plan described in Section 3(2) of
ERISA.
"Permitted Acquisition" has the meaning ascribed to it in
Section 6.1.
"Permitted Encumbrances" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities not yet due and payable or
which are being contested in accordance with Section 5.2(b), so long as such
Liens attach only to Inventory; (f) deposits securing, or in lieu of, surety,
appeal or customs bonds in proceedings to which any Credit Party is a party; (g)
any attachment or judgment lien not constituting an Event of Default under
Section 8.1(j); (h) zoning restrictions, easements, licenses, or other
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i) presently
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existing or hereafter created Liens in favor of Agent, on behalf of Lenders; (j)
Liens expressly permitted under clauses (b) and (c) of Section 6.7 of the
Agreement, (k) Liens securing the IRB Loans and the Swiss Loans, (l) Liens
securing Industrial Revenue Bond Financing incurred or assumed after the date
hereof permitted under the terms of the Agreement, (m) deposits made in the
ordinary course of business to secure liability to insurance carriers, (n)
leases or subleases granted to others not materially interfering with the
business of the Credit Parties, (o) any interest or title of a landlord or a
sublandlord under any lease, (o) Liens consisting of owner's rights to raw
materials held on consignment at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
that are segregated and clearly labeled, and (p) Liens arising from
precautionary Code financing statements with respect to assets leased by
Borrower or its Subsidiaries pursuant to operating leases.
"Permitted Transferee" means, with respect to any Person, if
such Person is an individual, (i) a member of the Immediate Family of such
Person, (ii) a trust or other similar legal entity for the primary benefit of
such Person and/or one or more members of his Immediate Family, or (iii) a
partnership, limited partnership, limited liability company, corporation or
other entity in which such Person alone or together with members of his
Immediate Family possess 100% of the outstanding voting securities.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" means, at any time, an "employee benefit plan," as
defined in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any Credit Party.
"Pledge Agreements" means the Borrower Pledge Agreement and
any other pledge agreement entered into after the Closing Date by any Credit
Party (as required by the Agreement or any other Loan Document).
"Post Closing Matters Agreement" means the Post Closing
Matters Agreement dated as of June 19, 2003 between Borrower and Agent.
"Prior Lenders" means Credit Suisse First Boston and various
other financial institutions from time to time party to the Existing Credit
Agreement.
"Prior Lender Obligations" means liabilities, obligations and
indebtedness of Borrower under and pursuant to the Existing Credit Agreement.
"Proceeds" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
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part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Pro Forma" means the unaudited consolidated and consolidating
balance sheet of Borrower and its Subsidiaries as of March 31, 2002 after giving
pro forma effect to the Related Transactions.
"Projections" means Borrower's forecasted consolidated: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and
(d) capitalization statements, which, in the case of profit and loss statements,
shall be prepared on a Subsidiary by Subsidiary or division-by-division basis,
if applicable, and all consistent with the historical Financial Statements of
Borrower, together with appropriate supporting details and a statement of
underlying assumptions.
"Pro Rata Share" means with respect to all matters relating to
any Lender (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders, (b) with respect to the Term Loan,
the percentage obtained by dividing (i) the Term Loan Commitment of that Lender
by (ii) the aggregate Term Loan Commitments of all Lenders, as any such
percentages may be adjusted by assignments permitted pursuant to Section 9.1,
(c) with respect to all Loans, the percentage obtained by dividing (i) the
aggregate Commitments of that Lender by (ii) the aggregate Commitments of all
Lenders, and (d) with respect to all Loans on and after the Commitment
Termination Date, the percentage obtained by dividing (i) the aggregate
outstanding principal balance of the Loans held by that Lender, by (ii) the
outstanding principal balance of the Loans held by all Lenders.
"Purchased Parts" means parts purchased by Borrower or a
Secured Guarantor from a third-party supplier or a Foreign Subsidiary which are
used for assembly.
"Qualified Assignee" means (a) any Lender, any Affiliate of
any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in
commercial loans and that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act or 1933) which extends credit or buys loans as one of its
businesses, including insurance companies, mutual funds, lease financing
companies and commercial finance companies, in each case, which has a rating of
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BBB or higher from S&P and a rating of Baa2 or higher from ▇▇▇▇▇'▇ at the date
that it becomes a Lender and which, through its applicable lending office, is
capable of lending to Borrower without the imposition of any withholding or
similar taxes; provided that no Person determined by Agent to be acting in the
capacity of a vulture fund or distressed debt purchaser shall be a Qualified
Assignee and no Person or Affiliate of such Person (other than a Person that is
already a Lender) holding Subordinated Debt or Stock issued by any Credit Party
shall be a Qualified Assignee.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Public Offering" means an initial public offering
of Stock of Holdings resulting in proceeds to Holdings of at least $20,000,000
and which qualifies Holdings for listing on NASDAQ National Markets.
"Qualified Target" means a corporation, limited partnership,
limited liability company or partnership or a similar Person that is
incorporated, formed or organized under the laws of one of the United States of
America, Canada or England, with substantially all of its assets located in the
United States of America, Canada or England and that is engaged in a business
engaged in by Borrower or any Credit Party or a business substantially similar
or related thereto.
"Ratable Share" has the meaning ascribed to it in Section
1.1(b).
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Recapitalization" means the Redemptions that take place prior
to December 16, 2002.
"Redemption" means any redemption, purchase, retirement,
defeasance, sinking fund or similar payment or acquisition for value with
respect to the Discount Debentures.
"Refinancing" means the repayment in full by Borrower of the
Prior Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" has the meaning ascribed to it in
Section 1.1(c)(iii).
"Related Transactions" means the initial borrowing under the
Revolving Loan and the Term Loan on the Closing Date, the Refinancing, the
payment of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents and
all other agreements or instruments executed in connection with the Related
Transactions.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment,
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including the movement of Hazardous Material through or in the air, soil,
surface water, ground water or property.
"Replacement Lender" has the meaning ascribed to it in Section
1.16(d).
"Requisite Lenders" means Lenders having (a) more than 66 2/3%
of the Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than 66 2/3% of the aggregate outstanding amount of the Loans,
provided that in the case of two Lenders, "Requisite Lenders" shall mean both
such Lenders.
"Requisite Revolving Lenders" means Lenders having (a) more
than 66 2/3% of the Revolving Loan Commitments of all Lenders, or (b) if the
Revolving Loan Commitments have been terminated, more than 66 2/3% of the
aggregate outstanding amount of the Revolving Loan, provided that if there are
only two Lenders, "Requisite Revolving Lenders" shall mean both such Lenders.
"Reserves" means, with respect to the Borrowing Base (a)
reserves established by Agent from time to time against Eligible Inventory
pursuant to Section 5.9, (b) reserves established pursuant to Section 5.4(c),
and (c) such other reserves against Eligible Accounts and Eligible Inventory
that Agent may, in its reasonable credit judgment, establish from time to time
in accordance with Sections 1.6 and 1.7. Without limiting the generality of the
foregoing, a Timing Reserve, an Unapplied Cash Reserve, a Costing Reserve, a
reserve for dilution with respect to Accounts to the extent dilution exceeds
five percent (5%) of Accounts, a reserve established in accordance with Section
6.1(b)(iv) and any other reserve expressly provided for under the Agreement
shall be deemed to be a reasonable exercise of Agent's credit judgment.
"Restricted Payment" means, with respect to any Credit Party
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of Stock; (b) any payment on account of the purchase,
redemption, defeasance, sinking fund or other retirement or acquisition for
value of such Credit Party's Stock or any other payment or distribution made in
respect thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, ~defeasance, sinking fund
or similar payment or acquisition for value with respect to, any Subordinated
Debt; (d) any payment made to redeem, purchase, repurchase or retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire Stock of such Credit Party now or hereafter outstanding; (e) any payment
of a claim for the rescission of the purchase or sale of, or for material
damages arising from the purchase or sale of, any shares of such Credit Party's
Stock or of a claim for reimbursement, indemnification or contribution arising
out of or related to any such claim for damages or rescission; (f) any payment,
loan, contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of compensation in the
ordinary course of business to Stockholders who are employees of such Credit
Party; and (g) any payment of management fees (or other fees of a similar
nature) by such Credit Party to any Stockholder of such Credit Party or its
Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such
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participant's termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary of the participant.
"Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a)(i).
"Revolving Lenders" means, as of any date of determination,
Lenders having a Revolving Loan Commitment.
"Revolving Loan" means, at any time, the sum of (i) the
aggregate amount of Revolving Credit Advances outstanding to Borrower plus (ii)
the aggregate Letter of Credit Obligations incurred on behalf of Borrower.
Unless the context otherwise requires, references to the outstanding principal
balance of the Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations.
"Revolving Loan Commitment" means (a) as to any Revolving
Lender, the aggregate commitment of such Revolving Lender to make Revolving
Credit Advances or incur Letter of Credit Obligations as set forth on Annex J to
the Agreement or in the most recent Assignment Agreement executed by such
Revolving Lender and (b) as to all Revolving Lenders, the aggregate commitment
of all Revolving Lenders to make Revolving Credit Advances or incur Letter of
Credit Obligations, which aggregate commitment shall be Fifty-Four Million
Dollars ($54,000,000) on the Closing Date, as such amount may be adjusted, if at
all, from time to time in accordance with the Agreement.
"Revolving Note" has the meaning ascribed to it in Section
1.1(a)(ii).
"Schaublin" means ▇▇▇▇▇▇▇▇▇ ▇.▇, a Swiss corporation and
wholly-owned Subsidiary of Schaublin Holding (excluding directors' qualifying
shares).
"Schaublin Financing" shall mean the credit facility provided
to Schaublin pursuant to that certain Credit Agreement dated on or about the
date hereof between Schaublin and Credit Suisse and all documents and agreements
executed and/or delivered in connection therewith, as the same may be amended,
restated, modified or supplemented from time to time.
"Schaublin Holding" means Schaublin Holding S.A., a Swiss
corporation and wholly-owned Subsidiary of Borrower (excluding directors'
qualifying shares).
"Schaublin Intercompany Loans" has the meaning ascribed to
such term in the Prior Credit Agreement.
"Schaublin Revolving Loan" has the meaning ascribed to such
term in the Prior Credit Agreement.
"Security Agreement" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto.
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"Secured Guarantor" means a Guarantor (i) that is a Domestic
Subsidiary of Borrower (other than ▇▇▇▇▇▇▇ Acquisition Corp., a Delaware
corporation), (ii) that has granted Agent a first priority perfected Lien on all
or substantially all of its assets to secure payments and performance of the
Obligations, (iii) with respect to which Agent has received all opinions,
certificates and other documents requested by Agent, and (iv) whose outstanding
equity interests have been pledged to Agent to secure payment and performance of
the Obligations.
"Senior Debt" means all Funded Debt of Borrower other than
Senior Subordinated Debt.
"Senior Subordinated Debt" means the Indebtedness of Borrower
evidenced by the Senior Subordinated Notes.
"Senior Subordinated Indenture" means to that certain
Indenture dated as of June 15, 1997 among Borrower, its Subsidiaries party
thereto and United States Trust Company of New York, as trustee.
"Senior Subordinated Notes" means those certain 9-5/8% Senior
Subordinated Notes due 2007 issued by Borrower in an aggregate original
principal amount of $110,000,000 pursuant the Senior Subordinated Indenture.
"Settlement Date" has the meaning ascribed to it in Section
9.9(a)(ii).
"Software" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
be reasonably be expected to become an actual or matured liability.
"SPC" has the meaning ascribed to it in Section 9.1(g).
"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other "equity security" (as such term is
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defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder
of Stock of such Person.
"Subordinated Debt" means the Senior Subordinated Debt and any
other Indebtedness of any Credit Party in an amount, on such terms, and
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion as to right and time of payment and as to any
other terms, rights and remedies thereunder.
"Subordinated Debt Documents" means the Senior Subordinated
Notes, the Senior Subordinated Indenture, and any other instrument, document or
agreement (including Subsidiary Guaranties delivered by applicable Subsidiaries
of Borrower) evidencing the Subordinated Debt, in each including all schedules,
exhibits, amendments, supplements, modifications, assignments and all other
documents delivered pursuant thereto or in connection therewith.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty of even
date herewith executed by each Secured Guarantor in favor of Agent, on behalf of
itself and Lenders.
"Supporting Obligations" means all "supporting obligations" as
such term is defined in the Code, including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Swing Line Advance" has the meaning ascribed to it in Section
1.1(c)(i).
"Swing Line Availability" has the meaning ascribed to it in
Section 1.1(c)(i).
"Swing Line Commitment" means, as to the Swing Line Lender,
the commitment of the Swing Line Lender to make Swing Line Advances as set forth
on Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
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"Swing Line Lender" means GE Capital.
"Swing Line Loan" means at any time, the aggregate amount of
Swing Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning ascribed to it in Section
1.1(c)(ii).
"Swiss Loan" means the Indebtedness of RBC ▇▇▇▇▇▇▇▇▇ ▇.▇.
Delemont to Credit Suisse pursuant to the terms of the Credit Agreement dated as
of December 27, 1999 not to exceed Swiss Francs 11,000,000 in the aggregate.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated
June 16, 1997, by and among Holdings, Borrower and Subsidiaries.
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"Term Lenders" means those Lenders having Term Loan
Commitments.
"Term Loan" has the meaning assigned to it in Section
1.1(b)(i).
"Term Loan Commitment" means (a) as to any Lender with a Term
Loan Commitment, the commitment of such Lender to make its Pro Rata Share of the
Term Loan as set forth on Annex J to the Agreement or in the most recent
Assignment Agreement executed by such Lender, and (b) as to all Lenders with a
Term Loan Commitment, the aggregate commitment of all Lenders to make the Term
Loan, which aggregate commitment shall be Forty Million Dollars ($40,000,000) on
the Closing Date. After advancing the Term Loan, each reference to a Lender's
Term Loan Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term Loan.
"Term Note" has the meaning assigned to it in Section
1.1(b)(i).
"Termination Date" means the date on which (a) the Loans have
been indefeasibly repaid in full, (b) all other Obligations under the Agreement
and the other Loan Documents have been completely discharged, (c) all Letter of
Credit Obligations have been cash collateralized, cancelled or backed by standby
letters of credit in accordance with Annex B, and (d) Borrower shall not have
any further right to borrow any monies under the Agreement.
"Timing Reserve" means a reserve equal to unreconciled
differences between the perpetual Inventory balance and general ledger Inventory
balance.
"Title IV Plan" means a Pension Plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA or subject to Section
412 of IRC, and that any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any of them.
A-30
"Trademark Security Agreements" means the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party.
"Trademark License" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"Trademarks" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"Trigger Event" means any time that the Borrowing Availability
for a period of two (2) consecutive months is less than $10,000,000. Once a
Trigger Event has occurred, it shall remain in effect until Agent has determined
that (i) Borrowing Availability has exceeded $10,000,000 for a period of one (1)
calendar month and (ii) no Event of Default has occurred and continues to exist
during such calendar month.
"Unapplied Cash Reserve" means a reserve equal to cash
received in payment of Accounts that has not been applied to payment thereof in
the general ledger.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Welfare Plan" means a Plan described in Section 3(1) of
ERISA.
"Zero Coupon Debt" means Indebtedness evidenced by Discount
Debentures.
Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
A-31
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance.
▇-▇▇
▇▇▇▇▇ ▇ (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the
Agreement, Agent and Revolving Lenders agree to incur, from time to time prior
to the Commitment Termination Date, upon the request of Borrower and for
Borrower's account, Letter of Credit Obligations by causing Letters of Credit to
be issued by GE Capital or a Subsidiary thereof or a bank or other legally
authorized Person selected by or acceptable to Agent in its sole discretion
(each, an "L/C Issuer") for Borrower's account and guaranteed by Agent; provided
that if the L/C Issuer is a Revolving Lender, then such Letters of Credit shall
not be guaranteed by Agent but rather each Revolving Lender shall, subject to
the terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with the
written consent of Agent, as more fully described in paragraph (b)(ii) below.
The aggregate amount of all such Letter of Credit Obligations shall not at any
time exceed the least of (i) Twenty-Five Million Dollars ($25,000,000) (the "L/C
Sublimit"), and (ii) the Maximum Amount less the aggregate outstanding principal
balance of the Revolving Credit Advances and the Swing Line Loan, and (iii) the
Borrowing Base less the aggregate outstanding principal balance of the Revolving
Credit Advances and the Swing Line Loan. No such Letter of Credit shall have an
expiry date that is more than one year following the date of issuance thereof,
unless otherwise determined by Agent in its sole discretion, and neither Agent
nor Revolving Lenders shall be under any obligation to incur Letter of Credit
Obligations in respect of, or purchase risk participations in, any Letter of
Credit having an expiry date that is later than the Commitment Termination Date.
(b)(i) Advances Automatic; Participations. In the event that
Agent or any Revolving Lender shall make any payment on or pursuant to any
Letter of Credit Obligation, such payment shall then be deemed automatically to
constitute a Revolving Credit Advance under Section 1.1(a) of the Agreement
regardless of whether a Default or Event of Default has occurred and is
continuing and notwithstanding Borrower's failure to satisfy the conditions
precedent set forth in Section 2, and each Revolving Lender shall be obligated
to pay its Pro Rata Share thereof in accordance with the Agreement. The failure
of any Revolving Lender to make available to Agent for Agent's own account its
Pro Rata Share of any such Revolving Credit Advance or payment by Agent under or
in respect of a Letter of Credit shall not relieve any other Revolving Lender of
its obligation hereunder to make available to Agent its Pro Rata Share thereof,
but no Revolving Lender shall be responsible for the failure of any other
Revolving Lender to make available such other Revolving Lender's Pro Rata Share
of any such payment.
(ii) If it shall be illegal or unlawful for Borrower
to incur Revolving Credit Advances as contemplated by
paragraph (b)(i) above because of an Event of Default described in Sections
8.1(h) or (i) or otherwise or if it shall be illegal or unlawful for any
Revolving Lender to be deemed to
B-1
have assumed a ratable share of the reimbursement obligations owed to an L/C
Issuer, or if the L/C Issuer is a Revolving Lender, then (A) immediately and
without further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation equal to such Revolving
Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the Letter
of Credit Obligations in respect of all Letters of Credit then outstanding and
(B) thereafter, immediately upon issuance of any Letter of Credit, each
Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation in such Revolving Lender's Pro Rata Share (based on
the Revolving Loan Commitments) of the Letter of Credit Obligations with respect
to such Letter of Credit on the date of such issuance. Each Revolving Lender
shall fund its participation in all payments or disbursements made under the
Letters of Credit in the same manner as provided in the Agreement with respect
to Revolving Credit Advances.
(c) Cash Collateral. (i) If Borrower is required to provide
cash collateral for any Letter of Credit Obligations pursuant to the
Agreement prior to the Commitment Termination Date, Borrower will pay
to Agent for the ratable benefit of itself and Revolving Lenders cash
or cash equivalents acceptable to Agent ("Cash Equivalents") in an
amount equal to 103% of the maximum amount then available to be drawn
under each applicable Letter of Credit outstanding, plus fees and
expenses reasonably expected to be incurred in connection with draws
thereunder. Such funds or Cash Equivalents shall be held by Agent in a
cash collateral account (the "Cash Collateral Account") maintained at a
bank or financial institution acceptable to Agent. The Cash Collateral
Account shall be in the name of Borrower and shall be pledged to, and
subject to the control of, Agent, for the benefit of Agent and Lenders,
in a manner satisfactory to Agent. Borrower hereby pledges and grants
to Agent, on behalf of itself and Lenders, a security interest in all
such funds and Cash Equivalents held in the Cash Collateral Account
from time to time and all proceeds thereof, as security for the payment
of all amounts due in respect of the Letter of Credit Obligations and
other Obligations, whether or not then due. The Agreement, including
this Annex B, shall constitute a security agreement under applicable
law.
(ii) If any Letter of Credit Obligations, whether or not then
due and payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower shall either (A) provide cash collateral
therefor in the manner described above, or (B) cause all such Letters
of Credit and guaranties thereof, if any, to be canceled and returned,
or (C) deliver a stand-by letter (or letters) of credit in guarantee of
such Letter of Credit Obligations, which stand-by letter (or letters)
of credit shall be of like tenor and duration (plus thirty (30)
additional days) as, and in an amount equal to 103% of the aggregate
maximum amount then available to be drawn under, the Letters of Credit
to which such outstanding Letter of Credit Obligations relate, plus
fees and expenses reasonably expected to be incurred in connection with
draws thereunder and shall be issued by a Person, and shall be subject
to such terms and conditions, as are be satisfactory to Agent in its
sole discretion.
(iii) From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then
held in the Cash Collateral Account to the payment of any amounts, and
in such order as Agent may elect, as shall be or shall become due and
payable by Borrower to Agent and Lenders with respect to such Letter of
Credit Obligations of Borrower
B-2
and, upon the satisfaction in full of all Letter of Credit Obligations
of Borrower, to any other Obligations then due and payable.
(iv) Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or
Cash Equivalents held in the Cash Collateral Account, except that upon
the termination of all Letter of Credit Obligations and the payment of
all amounts payable by Borrower to Agent and Lenders in respect
thereof, any funds remaining in the Cash Collateral Account shall be
applied to other Obligations then due and owing and upon payment in
full of such Obligations, any remaining amount shall be paid to
Borrower or as otherwise required by law. Interest earned on deposits
in the Cash Collateral Account shall be for the account of Agent.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for
Letter of Credit Obligations incurred hereunder, (i) all costs and
expenses incurred by Agent or any Lender on account of such Letter of
Credit Obligations, and (ii) for each month during which any Letter of
Credit Obligation shall remain outstanding, a fee (the "Letter of
Credit Fee") in an amount equal to two and one-quarter percent (2.25%)
per annum multiplied by the maximum amount available from time to time
to be drawn under the applicable Letter of Credit. Such fee shall be
paid to Agent for the benefit of the Revolving Lenders in arrears, on
the first day of each month and on the Commitment Termination Date. In
addition, Borrower shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer
in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such
Letter of Credit is issued.
(e) Request for Incurrence of Letter of Credit Obligations.
Borrower shall give Agent at least two (2) Business Days' prior written
notice requesting the incurrence of any Letter of Credit Obligation.
The notice shall be accompanied by the form of the Letter of Credit
(which shall be acceptable to the L/C Issuer) and a completed
Application for Standby Letter of Credit or Application for Documentary
Letter of Credit as applicable in the form Exhibit B-1 or B-2 attached
hereto. Notwithstanding anything contained herein to the contrary,
Letter of Credit applications by Borrower and approvals by Agent and
the L/C Issuer may be made and transmitted pursuant to electronic codes
and security measures mutually agreed upon and established by and among
Borrower, Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to
reimburse Agent and Revolving Lenders for payments made with respect to
any Letter of Credit Obligation shall be absolute, unconditional and
irrevocable, without necessity of presentment, demand, protest or other
formalities, and the obligations of each Revolving Lender to make
payments to Agent with respect to Letters of Credit shall be
unconditional and irrevocable. Such obligations of Borrower and
Revolving Lenders shall be paid strictly in accordance with the terms
hereof under all circumstances including the following:
(i) any lack of validity or enforceability of any Letter of
Credit or the Agreement or the other Loan Documents or any other
agreement;
B-3
(ii) the existence of any claim, setoff, defense or other
right that Borrower or any of its Affiliates or any Lender may at any
time have against a beneficiary or any transferee of any Letter of
Credit (or any Persons or entities for whom any such transferee may be
acting), Agent, any Lender, or any other Person, whether in connection
with the Agreement, the Letter of Credit, the transactions contemplated
herein or therein or any unrelated transaction (including any
underlying transaction between Borrower or any of its Affiliates and
the beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided
in paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of
such Letter of Credit or such guaranty;
(v) any other circumstance or event whatsoever, that is
similar to any of the foregoing; or
(vi) the fact that a Default or an Event of Default has
occurred and is continuing.
(g) Indemnification; Nature of Lenders' Duties. (i) In
addition to amounts payable as elsewhere provided in the Agreement,
Borrower hereby agrees to pay and to protect, indemnify, and save
harmless Agent and each Lender from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and allocated costs of internal
counsel) that Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or guaranty thereof, or (B) the failure of Agent or any Lender
seeking indemnification or of any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of
any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority, in
each case other than to the extent solely as a result of the gross
negligence or willful misconduct of Agent or such Lender (as finally
determined by a court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrower, Borrower
assumes all risks of the acts and omissions of, or misuse of any Letter
of Credit by beneficiaries of any Letter of Credit. In furtherance and
not in limitation of the foregoing, to the fullest extent permitted by
law neither Agent nor any Lender shall be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of
any document issued by any party in connection with the application for
and issuance of any Letter of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of any
Letter of Credit to comply fully with conditions required in order to
demand payment under such Letter of Credit;
B-4
provided that in the case of any payment by Agent under any Letter of
Credit or guaranty thereof, Agent shall be liable to the extent such
payment was made solely as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction)
in determining that the demand for payment under such Letter of Credit
or guaranty thereof complies on its face with any applicable
requirements for a demand for payment under such Letter of Credit or
guaranty thereof; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they may be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a
payment under any Letter of Credit or guaranty thereof or of the
proceeds thereof; (G) the credit of the proceeds of any drawing under
any Letter of Credit or guaranty thereof; and (H) any consequences
arising from causes beyond the control of Agent or any Lender. None of
the above shall affect, impair, or prevent the vesting of any of
Agent's or any Lender's rights or powers hereunder or under the
Agreement.
(iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrower in favor
of any L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between Borrower
and such L/C Issuer, including an Application and Agreement for
Documentary Letter of Credit or a Master Documentary Agreement and a
Master Standby Agreement entered into with Agent.
B-5
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Borrower shall, and shall cause the Secured Guarantors to,
establish and maintain the Cash Management Systems described below:
(a) Before the Effective Date and until the Termination Date,
Borrower shall (i) establish lock boxes ("Lock Boxes") or, at Agent's
discretion, blocked accounts ("Blocked Accounts") at one or more of the banks
set forth in Disclosure Schedule (3.18), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause the Secured
Guarantors to deposit or cause to be deposited promptly, and in any event no
later than the first Business Day after the date of receipt thereof, all cash,
checks, drafts or other similar items of payment relating to or constituting
payments made in respect of any and all Collateral (whether or not otherwise
delivered to a Lock Box) into one or more Blocked Accounts in Borrower's name or
any such Secured Guarantor's name and at a bank identified in Disclosure
Schedule (3.18) (each, a "Relationship Bank"). On or before the Closing Date,
Borrower shall have established a concentration account in its name (the
"Concentration Account") at the bank that shall be designated as the
Concentration Account bank for Borrower in Disclosure Schedule (3.18) (the
"Concentration Account Bank") which bank shall be reasonably satisfactory to
Agent.
(b) Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing Line Advances made to Borrower pursuant
to Section 1.1 for use by Borrower in accordance with the provisions of Section
1.4.
(c) On or before the Effective Date (or such later date as
Agent shall consent to in writing), the Concentration Account Bank, each bank
where a Disbursement Account is maintained and all other Relationship Banks,
shall have entered into tri-party blocked account agreements with Agent, for the
benefit of itself and Lenders, and Borrower and the Secured Guarantors, as
applicable, in form and substance reasonably acceptable to Agent, which shall
become operative on or prior to the Effective Date. Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on
behalf of itself and Lenders, (ii) the bank executing such agreement has no
rights of setoff or recoupment or any other claim against such account, as the
case may be, other than for payment of its service fees and other charges
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) from and after the Effective Date (A) with
respect to banks at which a Blocked Account is maintained, such bank agrees,
from and after the receipt of a notice (an "Activation Notice") from Agent
(which Activation Notice may be given by Agent at any time at which an Event of
Default described in Sections 8.1(a), 8.1(b) (as a result of a breach of any of
Sections 1.4, 1.8, 5.4(a), 6.1, 6.2, 6.5, 6.6, 6.7, 6.8, 6.10, 6.12, 6.14, and
C-1
6.19), 8.1(f), 8.1(h) or 8.1(i) has occurred and is continuing (any of the
foregoing being referred to herein as an "Activation Event"), to forward
immediately all amounts in each Blocked Account to the Concentration Account
Bank and to commence the process of daily sweeps from such Blocked Account into
the Concentration Account and (B) with respect to the Concentration Account
Bank, such bank agrees from and after the receipt of an Activation Notice from
Agent upon the occurrence of an Activation Event, to immediately forward all
amounts received in the Concentration Account to the Collection Account through
daily sweeps from such Concentration Account into the Collection Account. From
and after the date Agent has delivered an Activation Notice to any bank with
respect to any Blocked Account(s), Borrower shall not, and shall not cause or
permit any Secured Guarantor to, accumulate or maintain cash in Disbursement
Accounts or payroll accounts as of any date of determination in excess of checks
outstanding against such accounts as of that date and amounts necessary to meet
minimum balance requirements.
(d) So long as no Default or Event of Default has occurred and
is continuing, Borrower may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any Concentration
Account or any Disbursement Account; provided that prior to the time of the
opening of such account or Lock Box, Borrower or the Secured Guarantors, as
applicable, and such bank shall have executed and delivered to Agent a tri-party
blocked account agreement, in form and substance reasonably satisfactory to
Agent. Borrower shall close any of its depository, lock box or concentration
accounts (and establish replacement accounts in accordance with the foregoing
sentence) promptly and in any event within thirty (30) days following notice
from Agent that the creditworthiness of any bank holding an account is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within sixty (60) days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts or Lock Boxes of the bank holding such accounts or Agent's
liability under any tri-party blocked account agreement with such bank is no
longer acceptable in Agent's reasonable judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts
and the Concentration Account shall be cash collateral accounts, with all cash,
checks and other similar items of payment in such accounts securing payment of
the Loans and all other Obligations, and in which Borrower and each Secured
Guarantor shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with Section 1.10 and shall be applied
(and allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by Borrower or any such Related Person, and (ii) promptly after receipt
by Borrower or any such Related Person of any checks, cash or other items of
payment, deposit the same into a Blocked Account. Borrower and each Related
Person thereof acknowledges and
C-2
agrees that all cash, checks or other items of payment constituting proceeds of
Collateral are part of the Collateral. All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into Blocked
Accounts.
(h) Until the occurrence of an Activation Event, Agent shall
forward to Borrower at the end of each Business Day all amounts received by
Agent on such Business Day in the Collection Account (Government Receivables) in
good faith so long as no Revolving Credit Advances are outstanding and no sums
are then due and payable to Agent or Lenders under the Credit Agreement. All
such funds shall be sent by wire transfer to the following Borrower's depositors
account:
Bank: Wachovia/First Union National Bank
Charlotte, NC
ABA/Swift number: ▇▇▇▇▇▇▇▇▇
Bank Account #: 2014146817950
Account Name: Roller Bearing Company of America, Inc.
C-3
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions
described in Section 2.1 of the Agreement, pursuant to Section 2.1(a), the
following items must be received by Agent in form and substance satisfactory to
Agent on or prior to the Effective Date (each capitalized term used but not
otherwise defined herein shall have the meaning ascribed thereto in Annex A to
the Agreement):
A. Appendices. All Appendices to the Agreement, in form and
substance satisfactory to Agent.
B. Master Reaffirmation and Amendment to Loan Documents. A
certain Master Reaffirmation and Amendment to Loan Documents, dated as of the
Effective Date.
C. Amendment No.1 to Pledge Agreement. A first Amendment to
Pledge Agreement, dated as of the Effective Date together with all stock
certificates and endorsements thereto which are necessary or desirable to grant
a perfected lien upon 66% of the capital stock of Schaublin Holding.
D. Termination and Release of Assignment of Certain Foreign
Collateral. A certain Termination and Release of Assignment of Certain Foreign
Collateral, dated as of the Effective Date.
E. Charter and Good Standing. For each Credit Party, such
Person's (a) charter and all amendments thereto (or certification that the same
have not changed from the version last certified to Agent in connection with the
Prior Credit Agreement) and each dated a recent date prior to the Effective Date
and certified by the applicable Secretary of State or other authorized
Governmental Authority.
F. Bylaws and Resolutions. For each Credit Party, (a) such
Person's bylaws, together with all amendments thereto (or certification that the
same have not changed from the version last certified to Agent in connection
with the Prior Credit Agreement) and (b) resolutions of such Person's Board of
Directors, approving and authorizing the execution, delivery and performance of
the Loan Documents to which such Person is a party and the transactions to be
consummated in connection therewith, each certified as of the Effective Date by
such Person's corporate secretary or an assistant secretary as being in full
force and effect without any modification or amendment.
G. Incumbency Certificates. For each Credit Party, signature
and incumbency certificates of the officers of each such Person executing any of
the Loan Documents, certified as of the Effective Date by such Person's
corporate secretary or an assistant secretary as being true, accurate, correct
and complete.
D-1
H. Opinions of Counsel. Duly executed originals of opinions of
Day, ▇▇▇▇▇ & ▇▇▇▇▇▇, counsel for the Credit Parties, in form and substance
reasonably satisfactory to Agent and its counsel, dated the Effective Date, and
each accompanied by a letter addressed to such counsel from the Credit Parties,
authorizing and directing such counsel to address its opinion to Agent, on
behalf of Lenders, and to include in such opinion an express statement to the
effect that Agent and Lenders are authorized to rely on such opinion.
I. Officer's Certificate. Agent shall have received duly
executed originals of a certificate of the Chief Executive Officer and Chief
Financial Officer of Borrower, dated the Effective Date, stating that, since
March 31, 2003 (a) no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) there has been no
material adverse change in the industry in which Borrower operates; (c) no
Litigation has been commenced which, if successful, would have a Material
Adverse Effect or could challenge any of the transactions contemplated by the
Agreement and the other Loan Documents; (d) there have been no Restricted
Payments made by any Credit Party; and (e) there has been no material increase
in liabilities, liquidated or contingent, and no material decrease in assets of
Borrower or any of its Subsidiaries.
J. Officer's Closing Certificate. Agent shall have received
duly executed originals of a closing certificate of the Chief Executive Officer
and Chief Financial Officer of Borrower (solely in their capacity as officers
and not as individuals) dated the Effective Date, stating (1) that execution,
delivery and performance of the Credit Agreement and the other Loan Documents
and the documents evidencing the Schaublin Financing do not violate any term or
provision of any of (i) the Subordinated Debt Documents and (ii) the Discount
Debentures Documents, including, without limitation, a representation and
warranty that the extension of Loans and the Obligations under and in accordance
with the Credit Agreement and the other Loan Documents are permitted by the
terms and provisions of (x) the Subordinated Debt Documents and (y) the Discount
Debentures Documents.
K. Amendment No.1 to Patent Security Agreement. A first
Amendment to Patent Security Agreement, dated as of the Effective Date.
L. Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Agent may, in its sole discretion,
request.
D-2
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agent or to
Agent and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within
forty-five (45) days after the end of each Fiscal Month (other than a Fiscal
Month that is the last month of a Fiscal Quarter), financial information
regarding Holdings, Borrower and its Subsidiaries, certified by the Chief
Financial Officer of Borrower, consisting of consolidated and consolidating (i)
unaudited balance sheets as of the close of such Fiscal Month and the related
statements of income and cash flows for that portion of the Fiscal Year ending
as of the close of such Fiscal Month; (ii) unaudited statements of income and
cash flows for such Fiscal Month, setting forth in comparative form the figures
for the corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments); and (iii) a summary of the outstanding balance
of all Intercompany Notes as of the last day of that Fiscal Month. Such
financial information shall be accompanied by the certification of the Chief
Financial Officer of Borrower that (i) such financial information presents
fairly in accordance with GAAP (subject to normal year-end adjustments) the
financial position and results of operations of Holdings, Borrower and its
Subsidiaries, on a consolidated and consolidating basis, in each case as at the
end of such Fiscal Month and for that portion of the Fiscal Year then ended and
(ii) any other information presented is true, correct and complete in all
material respects and that there was no Default or Event of Default in existence
as of such time or, if a Default or Event of Default shall have occurred and be
continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default. In addition, Borrower shall deliver to Agent
and Lenders, within forty-five (45) days after the end of each Fiscal Month, a
management discussion and analysis of the financial performance of Holdings,
Borrower and its Subsidiaries prepared in accordance with Borrower's past
practices.
(b) Quarterly Financials. To Agent and Lenders, within
forty-five (45) days after the end of each Fiscal Quarter, consolidated and
consolidating financial information regarding Holdings, Borrower and its
Subsidiaries, certified by the Chief Financial Officer of Borrower, including
(i) unaudited balance sheets as of the close of such Fiscal Quarter and the
related statements of income and cash flow for that portion of the Fiscal Year
ending as of the close of such Fiscal Quarter and (ii) unaudited statements of
income and cash flows for such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding period in the prior year and
the figures contained in the Projections for such Fiscal Year, all prepared in
accordance with GAAP (subject to normal year-end adjustments). Such financial
information shall be accompanied by (A) a statement in reasonable detail in the
form of Exhibit E-1 (each, a "Compliance Certificate") in respect of the Fixed
Charge Coverage Ratio Financial Covenant that is tested on a quarterly basis and
(B) the certification of the Chief Financial Officer of Borrower that (i) such
financial information presents fairly in accordance with GAAP
E-1
(subject to normal year-end adjustments) the financial position, results of
operations and statements of cash flows of Holdings, Borrower and its
Subsidiaries, on both a consolidated and consolidating basis, as at the end of
such Fiscal Quarter and for that portion of the Fiscal Year then ended, (ii) any
other information presented is true, correct and complete in all material
respects and that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default.
(c) Operating Plan. To Agent and Lenders, as soon as
available, but not later than thirty (30) days after the end of each Fiscal
Year, an annual operating plan for Holdings and Borrower, approved by the Board
of Directors of Borrower, for the following Fiscal Year, which (i) includes a
statement of all of the material assumptions on which such plan is based, (ii)
includes monthly balance sheets and a quarterly budget for the following year
and (iii) integrates sales, gross profits, operating expenses, operating profit,
cash flow projections and Borrowing Availability projections, all prepared on
the same basis and in similar detail as that on which operating results are
reported (and in the case of cash flow projections, representing management's
good faith estimates of future financial performance based on historical
performance), and including plans for personnel, Capital Expenditures and
facilities.
(d) Annual Audited Financials. To Agent and Lenders, within
ninety (90) days after the end of each Fiscal Year, or on a later date on which
filing thereof is required with the Securities and Exchange Commission, audited
Financial Statements for Holdings, Borrower and its Subsidiaries on a
consolidated and (unaudited) consolidating basis, consisting of balance sheets
and statements of income and retained earnings and cash flows, setting forth in
comparative form in each case the figures for the previous Fiscal Year, which
Financial Statements shall be prepared in accordance with GAAP and certified
without qualification, by an independent certified public accounting firm of
national standing or otherwise acceptable to Agent. Such Financial Statements
shall be accompanied by (i) the Compliance Certificate showing the calculations
used in determining compliance with the Fixed Charge Coverage Ratio Financial
Covenant, (ii) a report from such accounting firm to the effect that, in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default has occurred with
respect to the Fixed Charge Coverage Ratio Financial Covenant (or specifying
those Defaults and Events of Default that they became aware of), it being
understood that such audit examination extended only to accounting matters and
that no special investigation was made with respect to the existence of Defaults
or Events of Default, (iii) the annual letters to such accountants in connection
with their audit examination detailing contingent liabilities and material
litigation matters, and (iv) the certification of the Chief Executive Officer or
Chief Financial Officer of Borrower that all such Financial Statements present
fairly in accordance with GAAP the financial position, results of operations and
statements of cash flows of Holdings, Borrower and its Subsidiaries on a
consolidated and consolidating basis, as at the end of such Fiscal Year and for
the period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.
(e) Management Letters. To Agent and Lenders, within five (5)
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception
E-2
reports or similar letters or reports received by such Credit Party from its
independent certified public accountants.
(f) Default Notices. To Agent and Lenders, as soon as
practicable, and in any event within five (5) Business Days after an executive
officer of Borrower has actual knowledge of the existence of any Default, Event
of Default or other event that has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Agent and Lenders,
promptly upon their becoming available, copies of: (i) all Financial Statements,
reports, notices and proxy statements made publicly available by any Credit
Party to its security holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any Credit Party with
any securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
(h) Subordinated Debt and Equity Notices. To Agent and
Lenders, as soon as practicable, copies of all material written notices given or
received by any Credit Party with respect to any Subordinated Debt or Stock of
such Person, and, within three (3) Business Days after any Credit Party obtains
knowledge of any matured or unmatured event of default with respect to any
Subordinated Debt, notice of such event of default.
(i) Supplemental Schedules. To Agent, supplemental
disclosures, if any, required by Section 5.6.
(j) Litigation. To Agent and Lenders in writing, promptly upon
learning thereof, notice of any Litigation commenced or threatened against any
Credit Party that (i) seeks damages in excess of $250,000, (ii) seeks injunctive
relief, (iii) is asserted or instituted against any Plan, its fiduciaries or its
assets or against any Credit Party or ERISA Affiliate in connection with any
Plan, (iv) alleges criminal misconduct by any Credit Party, (v) alleges the
violation of any law regarding, or seeks remedies in connection with, any
Environmental Liabilities; or (vi) involves any product recall.
(k) Insurance Notices. To Agent, disclosure of losses or
casualties required by Section 5.4.
(l) Lease Default Notices. To Agent, within five (5) Business
Days after receipt thereof, copies of (i) any and all default notices received
under or with respect to any leased location or public warehouse where
Collateral is located, and (ii) such other notices or documents as Agent may
reasonably request.
(m) Lease Amendments. To Agent, promptly after receipt
thereof, copies of all material amendments to real estate leases.
E-3
(n) Other Documents. To Agent and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as Agent or any Lender shall, from time to time, reasonably
request.
E-4
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To Agent, within ten (10) Business Days after the end of
each Fiscal Month (together with a copy of all or any part of the
following reports requested by any Lender in writing after the Closing
Date), each of the following reports, each of which shall be prepared
by the Borrower as of the last day of the immediately preceding Fiscal
Month:
(i) a Borrowing Base Certificate with respect to Borrower and
Secured Guarantors, accompanied by such supporting detail
and documentation as shall be requested by Agent in its
reasonable discretion;
(ii) with respect to Borrower and Secured Guarantors, a summary
of Inventory by location and type with a supporting
perpetual Inventory report, in each case accompanied by such
supporting detail and documentation as shall be requested by
Agent in its reasonable discretion; and
(iii) with respect to Borrower and Secured Guarantors, a monthly
trial balance showing Accounts outstanding aged from invoice
date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days
and 91 days or more, accompanied by such supporting detail
and documentation as shall be requested by Agent in its
reasonable discretion.
(b) As long as Borrowing Availability is less than $10,000,000
at the time of the delivery of the Borrowing Base Certificates in
accordance with clause (a) above, to Agent and each Lender, at the time
of such delivery, each of the following reports, each of which shall be
prepared by Borrower as of the last day of the immediately preceding
Fiscal Month:
(i) with respect to Borrower and Secured Guarantors, a summary
of Inventory by type with a supporting perpetual Inventory
report;
(ii) with respect to Borrower and Secured Guarantors, a monthly
trial balance showing Accounts outstanding aged from invoice
date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days
and 91 days or more;
(iii) with respect to Borrower and Secured Guarantors, agings of
accounts payable (and including information indicating the
amounts then owing to owners and lessors of leased premises,
warehouses, processors and other third parties from time to
time in possession of any Collateral);
(iv) schedules in a form satisfactory to Agent reflecting sales
made, credits issued, cash or other items of payment
received and other data relating to the collection of
Accounts; and
F-1
(v) the percentages of all Eligible Accounts owing to each of
the five (5) largest Account Debtors and their Affiliates (excluding
the United States government as Account Debtor).
(c) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E:
(i) a reconciliation of the most recent Borrowing Base, general
ledger and month-end Inventory reports of Borrower to
Borrower's general ledger and monthly Financial Statements
delivered pursuant to such Annex E, in each case accompanied
by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(ii) a reconciliation of the perpetual inventory by location to
Borrower's most recent Borrowing Base Certificate, general
ledger and monthly Financial Statements delivered pursuant
to Annex E, in each case accompanied by such supporting
detail and documentation as shall be requested by Agent in
its reasonable discretion;
(iii) an aging of accounts payable and a reconciliation of that
accounts payable aging to Borrower's general ledger and
monthly Financial Statements delivered pursuant to Annex E,
in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its
reasonable discretion;
(iv) a reconciliation of the outstanding Loans as set forth in
the monthly Loan Account statement provided by Agent to
Borrower's general ledger and monthly Financial Statements
delivered pursuant to Annex E, in each case accompanied by
such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the quarterly
or annual Financial Statements delivered pursuant to Annex E, (i) a
listing of government contracts of Borrower subject to the Federal
Assignment of Claims Act of 1940; and (ii) a list of any applications
for the registration of any Patent, Trademark or Copyright filed by any
Credit Party with the United States Patent and Trademark Office, the
United States Copyright Office or any similar office or agency in the
prior Fiscal Quarter;
(e) Borrower, at its own expense, shall deliver to Agent and
Lenders the results of each physical verification, if any, that
Borrower or any of its Subsidiaries may in their discretion have made,
or caused any other Person to have made on their behalf, of all or any
portion of their Inventory (and, if a Default or an Event of Default
has occurred and be continuing, Borrower shall, upon the request of
Agent, conduct, and deliver the results of, such physical verifications
as Agent may require);
(f) Borrower, at its own expense, shall deliver to Agent and
Lenders such appraisals of its assets as Agent may request at any time
after the occurrence and during the continuance of a Default or an
Event of Default, such appraisals to be conducted by an appraiser, and
in form and substance reasonably satisfactory to Agent;
F-2
(g) Such other reports, statements and reconciliations with
respect to the Borrowing Base or Collateral or Obligations of any or
all Credit Parties as Agent shall from time to time request in its
reasonable discretion, including additions and reductions of Accounts
on an intra-month basis; and
(h) Borrower shall cause to be delivered to Agent all
financial, compliance, collateral and other reports and notices
required to be furnished to any lender under the Schaublin Financing as
and when such items are delivered to such lender(s).
F-3
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with, and shall
not permit Holdings to breach or fail to comply with, any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Fixed Charge Coverage Ratio. Holdings, on a consolidated
basis shall have at the end of each Fiscal Quarter a Fixed Charge Coverage Ratio
for the 12-month period then ended of not less than 1.10 to 1.00.
(b) Minimum Borrowing Availability. Except for Overadvances
outstanding under Section 1.1(a)(iii) and the greater minimum Borrowing
Availability required at times and amounts set forth in Sections 2.1(d), 6.3(b)
and 6.14, Borrower shall, at all times, cause the Borrowing Availability to
exceed $5,000,000.
Unless otherwise specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
financial condition of Holdings, Borrower and its Subsidiaries shall be the same
after such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by Borrower's certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrower and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP,
G-1
consistently applied after giving effect to the implementation of such
Accounting Change. If Agent, Borrower and Requisite Lenders cannot agree upon
the required amendments within thirty (30) days following the date of
implementation of any Accounting Change, then all Financial Statements delivered
and all calculations of financial covenants and other standards and terms in
accordance with the Agreement and the other Loan Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change. For
purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.
G-2
ANNEX H (Section 9.9(a))
to
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA #: ▇▇▇▇▇▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇
Account Name: GECC/CAF Depository
Reference: CFN 4731
H-1
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
--------------
General Electric Capital Corporation
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
---
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
----
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel-Commercial Finance
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
I-1
(B) If to Borrower, at
Roller Bearing Company of America, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Day, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
City Place 1
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(C) If to Lenders, at
Congress Financial Corporation (Central)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Otterbourg, Steindler, Houston & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
I-2
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
PRO RATA SHARE
Commitments Lender(s) Pro Rata Share
----------- -------- ---------------
Revolving Loan Commitment (including a General Electric Capital Corporation
Swing Line Commitment of $5,000,0000):
$34,468,085.11
Term Loan Commitment: $25,531,914.89 General Electric Capital Corporation 63.8297%
Revolving Loan Commitment: Congress Financial Corporation (Central)
$19,531,914.89
Term Loan Commitment: $14,468,085.11 Congress Financial Corporation (Central) 36.1702%