EXHIBIT 10.2
================================================================================
CREDIT AGREEMENT
Dated as of May 20, 2004
among
REPUBLIC ENGINEERED PRODUCTS, INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
GECC CAPITAL MARKETS GROUP, INC.
and
UBS SECURITIES, LLC
as Lead Arrangers
UBS LOAN FINANCE LLC
as Syndication Agent
BANK ONE, NA (MAIN OFFICE CHICAGO)
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, A DIVISION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL
SERVICES INC.
as Documentation Agents
================================================================================
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.............................................................. 6
1.5 Interest and Applicable Margins.............................................. 6
1.6 Eligible Accounts............................................................ 8
1.7 Eligible Inventory........................................................... 10
1.8 Cash Management Systems...................................................... 12
1.9 Fees......................................................................... 12
1.10 Receipt of Payments.......................................................... 13
1.11 Application and Allocation of Payments....................................... 13
1.12 Loan Account and Accounting.................................................. 13
1.13 Indemnity.................................................................... 14
1.14 Access....................................................................... 15
1.15 Taxes........................................................................ 16
1.16 Capital Adequacy; Increased Costs; Illegality................................ 17
1.17 Single Loan.................................................................. 18
1.18 Increases in Aggregate Commitments........................................... 18
2. CONDITIONS PRECEDENT............................................................... 19
2.1 Conditions to the Initial Loans.............................................. 19
2.2 Further Conditions to Each Loan.............................................. 20
3. REPRESENTATIONS AND WARRANTIES..................................................... 20
3.1 Corporate Existence; Compliance with Law..................................... 21
3.2 Executive Offices, Collateral Locations, FEIN................................ 21
3.3 Corporate Power, Authorization, Enforceable Obligations...................... 21
3.4 Financial Statements and Projections......................................... 22
3.5 Material Adverse Effect...................................................... 22
3.6 Ownership of Property; Liens................................................. 23
3.7 Labor Matters................................................................ 23
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.... 24
3.9 Government Regulation........................................................ 24
3.10 Margin Regulations........................................................... 24
3.11 Taxes........................................................................ 24
3.12 ERISA........................................................................ 25
3.13 No Litigation................................................................ 25
3.14 Brokers...................................................................... 26
3.15 Intellectual Property........................................................ 26
3.16 Full Disclosure.............................................................. 26
3.17 Environmental Matters........................................................ 26
i
3.18 Insurance.................................................................... 27
3.19 Deposit and Disbursement Accounts............................................ 27
3.20 Government Contracts......................................................... 28
3.21 Customer and Trade Relations................................................. 28
3.22 Bonding; Licenses............................................................ 28
3.23 Solvency..................................................................... 28
3.24 Status of Holdings........................................................... 28
3.25 Subordinated Debt............................................................ 28
3.26 Operating Leases............................................................. 28
3.27 Acquisition Agreement........................................................ 28
4. FINANCIAL STATEMENTS AND INFORMATION............................................... 29
4.1 Reports and Notices.......................................................... 29
4.2 Communication with Accountants............................................... 29
5. AFFIRMATIVE COVENANTS.............................................................. 29
5.1 Maintenance of Existence and Conduct of Business............................. 29
5.2 Payment of Charges........................................................... 30
5.3 Books and Records............................................................ 30
5.4 Insurance; Damage to or Destruction of Collateral............................ 30
5.5 Compliance with Laws......................................................... 31
5.6 Supplemental Disclosure...................................................... 31
5.7 Intellectual Property........................................................ 32
5.8 Environmental Matters........................................................ 32
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases........................................................ 32
5.10 Further Assurances........................................................... 33
6. NEGATIVE COVENANTS................................................................. 33
6.1 Mergers, Subsidiaries, Etc................................................... 33
6.2 Investments; Loans and Advances.............................................. 34
6.3 Indebtedness................................................................. 34
6.4 Employee Loans and Affiliate Transactions.................................... 35
6.5 Capital Structure and Business............................................... 36
6.6 Guaranteed Indebtedness...................................................... 36
6.7 Liens. ..................................................................... 36
6.8 Sale of Stock and Assets..................................................... 37
6.9 ERISA........................................................................ 37
6.10 Financial Covenants.......................................................... 37
6.11 Hazardous Materials.......................................................... 37
6.12 Sale-Leasebacks.............................................................. 37
6.13 Restricted Payments.......................................................... 37
6.14 Change of Corporate Name or Location; Change of Fiscal Year.................. 38
6.15 No Impairment of Intercompany Transfers...................................... 38
6.16 Changes Relating to Subordinated Debt........................................ 38
6.17 Holdings..................................................................... 39
6.18 Foreign Subsidiaries......................................................... 39
ii
7. TERM............................................................................... 39
7.1 Termination.................................................................. 39
7.2 Survival of Obligations Upon Termination of Financing Arrangements........... 39
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES............................................. 39
8.1 Events of Default............................................................ 39
8.2 Remedies..................................................................... 42
8.3 Waivers by Credit Parties.................................................... 42
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT................................ 42
9.1 Assignment and Participations................................................ 42
9.2 Appointment of Agent......................................................... 45
9.3 Agent's Reliance, Etc........................................................ 46
9.4 GE Capital and Affiliates.................................................... 46
9.5 Lender Credit Decision....................................................... 47
9.6 Indemnification.............................................................. 47
9.7 Successor Agent.............................................................. 47
9.8 Setoff and Sharing of Payments............................................... 48
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions
in Concert................................................................... 48
10. SUCCESSORS AND ASSIGNS............................................................. 51
10.1 Successors and Assigns....................................................... 51
11. MISCELLANEOUS...................................................................... 51
11.1 Complete Agreement; Modification of Agreement................................ 51
11.2 Amendments and Waivers....................................................... 51
11.3 Fees and Expenses............................................................ 53
11.4 No Waiver.................................................................... 54
11.5 Remedies..................................................................... 55
11.6 Severability................................................................. 55
11.7 Conflict of Terms............................................................ 55
11.8 Confidentiality.............................................................. 55
11.9 GOVERNING LAW................................................................ 55
11.10 Notices...................................................................... 56
11.11 Section Titles............................................................... 57
11.12 Counterparts................................................................. 57
11.13 WAIVER OF JURY TRIAL......................................................... 57
11.14 Press Releases and Related Matters........................................... 57
11.15 Reinstatement................................................................ 57
11.16 Advice of Counsel............................................................ 58
11.17 No Strict Construction....................................................... 58
iii
INDEX OF APPENDICES
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
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 Addresses
Annex J (from Annex A-
Commitments definition) - Commitments as of Closing 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)(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 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
Schedule 1.1 - Agent's Representatives
Disclosure Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
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 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.21 - Customer and Trade Relations
Disclosure Schedule 3.22 - Bonds; Patent, Trademark Licenses
Disclosure Schedule 3.26 - Operating Leases
Disclosure Schedule 5.1 - Trade Names
iv
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.7 - Existing Liens
v
This CREDIT AGREEMENT (this "Agreement"), dated as of May 20, 2004
among REPUBLIC ENGINEERED PRODUCTS, 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, Borrower has requested that Lenders extend revolving and
term credit facilities to Borrower of up to Two Hundred Million Dollars
($200,000,000) in the aggregate for the purpose of refinancing certain
indebtedness of Borrower and to provide (a) working capital financing for
Borrower, (b) funds for other general corporate purposes of Borrower and (c)
funds for other purposes permitted hereunder; 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; and
WHEREAS, Borrower has agreed to secure all of its obligations under
the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon certain of its assets as more fully described
in the Security Agreement; and
WHEREAS, PAV Republic, Inc., a Delaware corporation ("Holdings") is
willing to guarantee all of the obligations of Borrower to Agent and Lenders
under the Loan Documents; 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 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 Lender shall not at
any time exceed its separate Revolving Loan Commitment. The obligations of each
Lender hereunder shall be several and not joint. Until the Commitment
Termination Date, Borrower may from time to time borrow, repay 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 its reasonable credit judgment. 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 and such other information as may be required by Agent. 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 Lender a note to evidence the Revolving Loan
Commitment of that Lender. Each note shall be in the principal amount of the
Revolving Loan Commitment of the applicable 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 Lender's Revolving Loan Commitment
or, if less, such 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 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 Lenders in amounts that cause the outstanding balance of
the aggregate Revolving Loan to exceed the Borrowing Base (less the Swing Line
Loan) (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
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 on the
earlier of demand or the Commitment Termination Date. 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 $10,000,000 at any time, shall not
cause the Revolving Loan to exceed the Maximum Amount, and may be
2
revoked prospectively by a written notice to Agent signed by Lenders holding
more than 40% of the Revolving Loan Commitments.
(b) 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(b) shall not relieve 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, repay and
reborrow under this Section 1.1(b). 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 Business Day's
prior written notice from Lenders holding more than 40% of the Revolving Loan
Commitments instructing it not to make a Swing Line Advance, the Swing Line
Lender shall, notwithstanding the failure of any condition precedent set forth
in Section 2.2, be entitled to fund that Swing Line Advance, and to have such
Lender make Revolving Credit Advances in accordance with Section 1.1(b)(iii) or
purchase participating interests in accordance with Section 1.1(b)(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(b)(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 noncontingent Obligations
shall be immediately due and payable in full in immediately available funds on
the Commitment Termination Date if not sooner paid in full.
3
(iii) The Swing Line Lender, at any time and from time to time
no less frequently than once weekly, shall on behalf of Borrower (and Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each 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 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(b)(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 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(b)(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(b)(v) below, each 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 request,
each Lender shall promptly transfer to the Swing Line Lender, in immediately
available funds, the amount of its participation interest.
(v) Each Lender's obligation to make Revolving Credit Advances
in accordance with Section 1.1(b)(iii) and to purchase participation interests
in accordance with Section 1.1(b)(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 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 Lender does not make available to Agent or the Swing Line Lender, as
applicable, the amount required pursuant to Sections 1.1(b)(iii) or 1.1(b)(iv),
as the case may be, the Swing Line Lender shall be entitled to recover such
amount on demand from such 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 Business Days and at the Index Rate thereafter.
(c) 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 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.
4
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 Lenders agree to incur, or purchase participations in, Letter of
Credit Obligations in respect of Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments.
Borrower may at any time on at least five (5) days' prior written notice to
Agent permanently reduce (but not terminate) the Revolving Loan Commitment;
provided that (A) any such prepayments or reductions shall be in a minimum
amount of $2,500,000 and integral multiples of $250,000 in excess of such
amount, (B) the Revolving Loan Commitment shall not be reduced to an amount less
than the amount of the Revolving Loan outstanding, and (C) after giving effect
to such reductions, Borrower shall comply with Section 1.3(b)(i). 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 voluntary prepayment and any reduction or
termination of the Revolving Loan Commitment must be accompanied by payment of
the Fee required by Section 1.9(c), if any, plus the payment of any 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; provided that a
permanent reduction of the Revolving Loan Commitment shall require a
corresponding pro rata reduction in the L/C Sublimit. Each notice of partial
prepayment shall designate the Loan or other Obligations to which such
prepayment is to be applied.
(b) Mandatory Prepayments.
(i) If on any date the outstanding balances of the Revolving
Loan and the Swing Line Loan exceed the lesser of (A) the Maximum Amount and (B)
the Borrowing Base, Borrower shall, on the earlier of (x) two (2) Business Days
following such date and (y) demand by Agent, repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such excess. If
any such excess 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. Notwithstanding the foregoing, any Overadvance made
pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section
1.1(a)(iii).
(ii) Immediately upon receipt by any Credit Party of any cash
proceeds of any asset disposition, Borrower shall prepay the Loans in an amount
equal to all such adjustment payments or proceeds, net of (A) commissions and
other reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower in connection therewith
(in each case, paid to non-Affiliates), (B) transfer taxes, (C) amounts payable
to holders of senior Liens on such
5
asset (to the extent such Liens constitute Permitted Encumbrances hereunder), if
any, and (D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith. Any such prepayment shall be applied in accordance with
Section 1.3(c). The following shall not be subject to mandatory prepayment under
this clause (ii): (1) proceeds of sales of Inventory in the ordinary course of
business; and (2) asset disposition proceeds of less than $1,000,000 in the
aggregate in any Fiscal Year.
(iii) If Borrower issues the Acceptable High Yield Notes, no
later than the Business Day following the date of receipt of the proceeds
thereof, Borrower shall prepay the Loans in an amount equal to all such
proceeds, net of underwriting discounts and commissions and other reasonable
costs paid to non-Affiliates in connection therewith and net of repayments of
the Term Notes and the Fleet Notes. Any such prepayment shall be applied in
accordance with Section 1.3(c).
(c) Application of Mandatory Prepayments. Any prepayments made by
Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) or Section 5.4(b) 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 Swing Line Loan; third, to the principal balance of the Swing
Line Loan until the same has been repaid in full; fourth, to interest then due
and payable on the Revolving Credit Advances; and fifth, to the outstanding
principal balance of Revolving Credit Advances until the same has been paid in
full. Neither the Revolving Loan Commitment nor the Swing Line Commitment shall
be permanently reduced by the amount of any such prepayments; provided, that in
the case of prepayments made pursuant to Section 1.3(b)(iii), the Revolving Loan
Commitment may, at Borrower's option, simultaneously be permanently reduced by
the lesser of (i) the amount of such prepayment and (ii) $50,000,000.
(d) 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
Loans solely for (i) the Refinancing (and to pay any related transaction
expenses), (ii) for the financing of Borrower's ordinary working capital and
general corporate needs and (iii) for Permitted Acquisitions. Disclosure
Schedule (1.4) contains a description of Borrower's sources and uses of funds as
of the Closing Date, including Loans and Letter of Credit Obligations to be made
or incurred on that date, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.
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 Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable LIBOR Margin per annum and (ii) with
respect to the Swing Line Loan, the Index Rate plus the Applicable Index Margin
per annum.
6
The Applicable Margins are as follows:
Applicable Index Margin 1.25%
Applicable LIBOR Margin 3.00%
So long as no Default or Event of Default exists, each of the Applicable Margins
shall be reduced by 25 basis points on the first day of the first calendar month
following the later to occur of (a) the repayment in full of the Term Notes and
the Fleet Notes and (b) either (i) the issuance of the Acceptable High Yield
Notes or (ii) the receipt by the Borrower of at least $125,000,000 in net
proceeds from an IPO.
(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 interest rates and Fees hereunder shall be
presumptive evidence of the correctness of such rates and Fees.
(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 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 unless Agent
or Requisite Lenders elect to impose a smaller increase (the "Default Rate"),
and all outstanding Obligations shall bear interest at the Default Rate
applicable to such Obligations. Interest and Letter of Credit Fees at the
Default Rate shall accrue from the initial date of such Event 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 $5,000,000 and integral
7
multiples of $500,000 in excess of such amount. Any such election must be made
by 11:00 a.m. (Chicago time) on the Third 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
Third 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 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). No Loan may be made
as or converted into a LIBOR Loan until the earlier of (i) ninety (90) days
after the Closing Date or (ii) completion of primary syndication as determined
by Agent.
(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. 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.
1.6 Eligible Accounts. All of the Accounts owned by Borrower 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, modify or eliminate Reserves against Eligible
Accounts from time to time in its reasonable credit judgment. 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 and to establish new criteria, and to
adjust advance rates with respect to Eligible Accounts, in its reasonable credit
judgment, subject to the approval of Supermajority Lenders in the case of
adjustments or new criteria or changes in advance rates which have the effect of
making more credit available. Eligible Accounts shall not include any Account of
Borrower:
(a) that does not arise from the sale of goods (including scrap and
raw materials) by Borrower in the ordinary course of its business;
(b) (i) upon which Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which Borrower is not
8
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 is
subject to Borrower's 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, dispute,
claim or rebate 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, reasonably acceptable to Agent
in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or (ii) is subject to any Lien
of any other Person, other than Liens in favor of Agent, on behalf of itself and
Lenders, Liens securing the Acceptable High Yield Notes and Liens securing the
Term Notes or any refinancings thereof permitted pursuant to Sections 6.3(a)(vi)
or (vii);
(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
or director 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 Agent, in
its sole discretion, has agreed to the contrary in writing and Borrower, if
necessary or desirable, 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 the assignment thereof with respect to such
obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country other than Canada (and Mexico, only in the case of up to $1,000,000 in
Accounts owed by American Axle & Manufacturing de Mexico S.A. de C.V.) unless
payment thereof is assured by a letter of credit assigned and delivered to
Agent, satisfactory to Agent as to form, amount and issuer;
(j) to the extent Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to Borrower 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, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
9
(i) the Account is not paid within the earlier of: sixty (60)
days following its due date or ninety (90) days following its original invoice
date;
(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 fifty percent
(50%) or more of the Dollar amount of all Accounts owing by that Account Debtor
are ineligible under the other criteria set forth in this Section 1.6;
(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;
(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 to such Account Debtor and its Affiliates as of any date of
determination exceed 15% of all Eligible Accounts;
(r) that is payable in any currency other than Dollars; or
(s) that arises in connection with a shared utility arrangement or
otherwise is a non-trade Account.
1.7 Eligible Inventory. All of the inventory owned by Borrower 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. 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 and to establish new
criteria and to adjust advance rates with respect to Eligible Inventory in its
reasonable credit judgment reflecting changes in the salability or realization
values of Inventory arising or discovered by Agent after the Closing Date,
subject to the approval of Supermajority Lenders in the case of adjustments or
new criteria or changes in advance rates which have the effect of making more
credit available. Eligible Inventory shall not include any Inventory of Borrower
that:
10
(a) is not owned by Borrower 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
performance with respect to that Inventory), except (i) the Liens in favor of
Agent, on behalf of itself and Lenders and (ii) Permitted Encumbrances;
(b) (i) is not located on premises owned, leased or rented by
Borrower and set forth in Disclosure Schedule (3.2) or (ii) is stored at a
leased location, unless Agent has given its prior consent thereto and unless (x)
a reasonably satisfactory landlord waiver has been delivered to Agent, or (y)
Reserves satisfactory to Agent have been established with respect thereto, (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 an owned location 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 $250,000;
(c) is placed on consignment or is in transit (except for up to
$2,000,000 in Inventory in transit between United States locations of Borrower);
(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 slow moving (in excess of one year's supply);
(f) consists of display items or packing or shipping materials,
stores and manufacturing supplies or replacement parts;
(g) is not of a type held for sale in the ordinary course of
Borrower's business;
(h) is subject to any Lien of any other Person, other than Liens in
favor of Agent, on behalf of itself and Lenders, Liens securing the Acceptable
High Yield Notes, Liens securing the Term Notes or any refinancings thereof
permitted pursuant to Section 6.3(a)(vi) or vii) and Permitted Encumbrances as
set forth in clause (e) of the definition thereof (subject to Reserves
satisfactory to Agent);
(i) breaches any of the representations or warranties pertaining to
Inventory set forth in the Loan Documents;
(j) consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;
(k) is not covered by casualty insurance reasonably acceptable to
Agent;
(l) is subject to any patent or trademark license requiring the
payment of royalties or fees or requiring the consent of the licensor for a sale
thereof by Agent, except for licensing fees owed to Kobe Steel, Ltd. in
connection with the licensing of UHS1900 equipment
11
or to Daido in connection with the licensing of certain patents; provided that
in no event shall any such license by its terms prevent Agent from producing or
selling Inventory; or
(m) which has been written up as a result of "fresh start"
accounting treatment, to the extent of such write up.
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 shall pay to GE Capital, individually, and UBS,
individually, the Fees specified in the Agents Fee Letter.
(b) As additional compensation for the 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 0.50% per annum (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 the such Fee is due.
(c) If Borrower pays after acceleration or prepays the Revolving
Loan and reduces or terminates the Revolving Loan Commitment, whether
voluntarily or involuntarily and whether before or after acceleration of the
Obligations or if the Commitments are otherwise terminated, Borrower shall pay
to Agent, for the benefit of Lenders as liquidated damages and compensation for
the costs of being prepared to make funds available hereunder an amount equal to
the Applicable Percentage (as defined below) multiplied the amount of the
reduction of the Revolving Loan Commitment. As used herein, the term "Applicable
Percentage" shall mean (x) one percent (1%), in the case of a prepayment on or
prior to the first anniversary of the Closing Date, and (y) one-half of one
percent (0.5%), in the case of a prepayment after the first anniversary of the
Closing Date but on or prior to the third anniversary thereof. The Credit
Parties agree that the Applicable Percentages are a reasonable calculation of
Lenders' lost profits in view of the difficulties and impracticality of
determining actual damages resulting from an early termination of the
Commitments. Notwithstanding the foregoing, no prepayment fee shall be payable
by Borrower upon a mandatory prepayment made pursuant to Sections 1.3(b) or
1.16(c) except that to the extent that all such prepayments made pursuant to
Section 1.3(b)(iii) result in an aggregate reduction in the Revolving Loan
Commitment in excess of $50,000,000, the applicable prepayment fee shall be
payable in relation to such excess; provided that, in the case of prepayments
made pursuant to Sections 1.3(b)(ii) or (b)(iii), the transaction giving rise to
the applicable prepayment is expressly permitted under Section 6.
(d) Borrower shall pay to Agent, for the ratable benefit of Lenders,
the Letter of Credit Fee as provided in Annex B.
12
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.
1.11 Application and Allocation of Payments.
(a) So long as no Event of Default has occurred and is continuing,
(i) payments consisting of proceeds of Accounts received in the ordinary course
of business 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 in accordance with 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 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,
expenses, Charges, costs (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.
(a) Agent, as agent for Borrower solely for the purposes of this
Section and Section 1.12(b), shall maintain a loan account (the "Loan Account")
on its books which shall show from time to time with respect to each Lender all
Advances, all payments made by Borrower, and all other debits and credits as
provided in this Agreement with respect to the
13
Loans or any other Obligations, in each case, including the principal thereof
and the interest thereon. 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, absent manifest error, 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 writing of any objection to
any such accounting (specifically describing the basis for such objection),
within thirty (30) days after the date thereof, each and every such accounting
shall be presumptive evidence of all matters reflected therein. 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.
(b) Failure to make the recording described in the first sentence of
Section 1.12(a), or any error in such recording, shall not affect Borrower's
obligations in respect of the Obligations. With respect to any Lender, the
assignment of all or part of the Commitments of such Lender and the rights to
all or part of the principal of, and interest on, any Obligation (i) shall not
be effective until such assignment is recorded on the Loan Account maintained by
Agent with respect to ownership of such Commitments and Obligations and until
the other requirements pursuant to Section 1.16(d) or 9.1 are met and (ii) prior
to such recordation and other requirements being met shall remain owing to the
transferor. The registration of assignment of all or part of any Commitments and
Obligations shall be recorded by Agent on the Loan Account only upon the receipt
by Agent of a properly executed and delivered Assignment Agreement pursuant to
Section 9.1. Borrower agrees to indemnify Agent from and against any and all
losses, damages and liabilities of whatsoever nature which may be imposed on,
asserted against or incurred by Agent in performing its duties under the first
sentence of Section 1.12(a) and this Section 1.12(b), unless such losses,
claims, damages and liabilities are caused by the gross negligence or willful
misconduct of Agent.
1.13 Indemnity.
(a) Except with regard to Taxes, which are governed by Section 1.15,
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, including any and all Environmental Liabilities
and legal costs and expenses arising
14
out of or incurred in connection with disputes between or among any parties to
any of the Loan Documents (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. 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 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 binding on the parties hereto unless Borrower shall object in writing
within ten (10) 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 two (2) Business Days' prior
notice as frequently as Agent reasonably determines to be appropriate: (a)
provide Agent and any of its officers, employees and agents access to its
properties, facilities, advisors, officers and 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
15
an Event of Default has occurred and is continuing, 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 with access to its suppliers and
customers; provided that Agent shall notify Borrower prior to contacting such
suppliers or customers. Each Credit Party shall make available to Agent and its
counsel reasonably promptly originals or copies of all books and records that
Agent may reasonably request. Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time request, to obtain
records from any service bureau or other Person that maintains records for such
Credit Party, and shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by such Credit Party.
1.15 Taxes.
(a) Notwithstanding anything to the contrary in the Loan Documents,
any and all payments by the Credit Parties 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, unless otherwise required by
law. Subject to the provisions of Section 1.15(c), if any Credit Party 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) such Credit Party shall make
such deductions, and (iii) such Credit Party 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 Taxes, such Credit
Party shall furnish to Agent the original or a certified copy of a receipt
evidencing payment thereof.
(b) Subject to the provisions of Section 1.15(c), each Credit Party
that is a signatory hereto shall indemnify and, within ten (10) 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 from the extension, suspension,
termination of any credit under this Agreement or any Loan Document, the
administration of such credit, the execution of this Agreement or any Loan
Document, the payments under the Notes or any Loan Documents, or as a result of
any other transactions contemplated by any Loan Document, 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 each Credit Party 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 each Credit
Party and Agent prior to becoming a Lender hereunder and when reasonably
requested by a Credit Party or Agent
16
thereafter. No foreign Person may become a Lender hereunder if such Person fails
to deliver a Certificate of Exemption in advance of becoming a Lender. No Credit
Party shall be obligated to make a payment for or in connection with Taxes to
any Foreign Lender under any Loan Document to the extent such Taxes would have
been avoided had the Foreign Lender provided a valid Certificate of Exemption
promptly upon the reasonable request by a Credit Party or Agent, unless the
Foreign Lender is unable to provide a Certificate of Exemption as a result of
the introduction of or change in law or regulation (or a change in the
interpretation thereof) or the compliance with any guideline or request from any
Governmental Authority (whether or not having the force of law), in each case,
adopted after the Foreign Lender became a party to this Agreement.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If 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
(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
basis of the computation thereof submitted by such Lender to Borrower and to
Agent shall be presumptive evidence of the matters set forth therein.
(b) Except with respect to Taxes, which are governed by Section
1.15, 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 (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 (or Taxes for which payments are required
under Section 1.15), submitted to Borrower and to Agent by such Lender, shall be
presumptive evidence of the matters set forth therein. 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 (or Taxes for which
payments are required under Section 1.15), the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts (including changing lending
offices) to minimize costs and expenses incurred by it and payable to it by
Borrower pursuant to this Section 1.16(b) or Section 1.15(a).
(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
17
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 reasonable
opinion, materially 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 thirty (30) days after receipt by Borrower of written
notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.15(a), 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 ninety
(90) days following notice of its intention to do so, the Loan Account shall be
updated in accordance with Section 1.12, and 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 and
such assignment shall not require the payment of an assignment fee to Agent;
provided, that Borrower shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within 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 ninety
(90) days thereafter, Borrower's rights under this Section 1.16(d) shall
terminate with respect to such Affected Lender and Borrower shall promptly pay
all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.15(a), 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.
1.18 Increases in Aggregate Commitments. Upon the prior written
consent of Agent, Borrower may, at its option, seek to increase the aggregate
Commitments by $10,000,000 on a one-time basis. After receiving such prior
written consent of Agent, Borrower may offer the increase in the aggregate
Commitments to any of the existing Lenders and/or to other banks, financial
institutions or other entities acceptable to Agent on a non pro-rata basis in
such amounts as determined by Borrower and Agent; provided, that neither Agent
nor any Lender shall have any obligation to extend such additional Commitment.
No increase in the aggregate
18
Commitments shall become effective until (i) Borrower and each existing or new
Lender extending such incremental commitment amount shall have executed and
delivered to Agent an agreement in writing in form and substance reasonably
acceptable to Agent pursuant to which such Lender states its Commitment amount
and agrees to assume and accept the obligations and rights of a Lender hereunder
and (ii) Borrower has provided Agent with such related certificates, opinions
and other documents as Agent may request. In conjunction with such increase, the
Lenders (new or existing) shall accept (and the existing Lenders shall make) an
assignment at par of an interest in the Loans and Letter of Credit Obligations
outstanding at the time of such aggregate Commitment increase such that, after
giving effect thereto, all Loans and Letter of Credit Obligations are held by
the Lenders on a pro-rata basis. Borrower shall make any payments under Section
1.13(b) resulting from such assignments.
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 Closing Date, or
to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner reasonably
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, each other
Credit Party, 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) Repayment of Prior Lender Obligations; Satisfaction of
Outstanding L/Cs. (i) Agent shall have received a fully executed original of a
pay-off letter reasonably satisfactory to Agent confirming that all of the Prior
Lender Obligations will be repaid in full from the proceeds of the initial
Revolving Credit Advance and all Liens upon any of the property of Borrower or
any of its Subsidiaries in favor of Prior Lender shall be terminated by Prior
Lender immediately upon such payment; and (ii) all letters of credit issued or
guaranteed by Prior Lender shall have been cash collateralized or supported by a
Letter of Credit issued pursuant to Annex B, as mutually agreed upon by Agent,
Borrower and Prior Lender.
(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 and the
consummation of the Related Transactions or (ii) an officer's certificate in
form and substance reasonably satisfactory to Agent affirming that no such
consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and Eligible
Inventory supporting the initial Revolving Credit Advance and the initial Letter
of Credit Obligations incurred and the amount of the Reserves to be established
on the Closing Date shall be sufficient in value, as determined by Agent, to
provide Borrower with Borrowing Availability, after giving
19
effect to the initial Revolving Credit Advance, the incurrence of any initial
Letter of Credit Obligations and the consummation of the Related Transactions
(on a pro forma basis, with trade payables being paid currently, and expenses
and liabilities being paid in the ordinary course of business and without
acceleration of sales) of at least $70,000,000.
(e) 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 specified in the Agents Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Closing Date.
(f) Capital Structure: Other Indebtedness. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan 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 as
determined by Agent or Requisite Lenders, 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 Lenders have determined not to make such Advance, convert
or continue any Loan as LIBOR Loan or incur such Letter of Credit Obligation as
a result of the fact that such warranty or representation is untrue or
incorrect;
(b) (i) any Default or 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 Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default; or
(c) after giving effect to any Advance (or the incurrence of any
Letter of Credit Obligations), the outstanding principal amount of the Revolving
Loan would exceed the lesser of the Borrowing Base and the Maximum Amount, in
each case, less the then outstanding principal amount of the Swing Line Loan.
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.
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
20
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 result in exposure to losses or liabilities
which could reasonably be expected to 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 or proposed to
be conducted; (d) subject to specific representations regarding Environmental
Laws, has all material licenses, permits, consents or approvals from or by, and
has made all material filings with, and has given all notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation and conduct; (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, Environmental Laws,
tax and other laws, 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 Closing
Date, each Credit Party's name as it appears in official filings in its state of
incorporation or organization, organization type, organization number, if any,
issued by its state incorporation or organization, and the current location of
each Credit Party's chief executive office and the warehouses and premises at
which any Collateral is located are set forth in Disclosure Schedule (3.2), and
none of such locations has changed within four (4) months preceding the Closing
Date. In addition, Disclosure Schedule (3.2) lists the federal employer
identification number of each 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 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, agreement or other 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 the Closing 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
21
Document shall constitute a legal, valid and binding obligation of such Credit
Party enforceable against it in accordance with its terms.
3.4 Financial Statements and Projections. Except for the
Projections, all Financial Statements concerning Borrower and its Subsidiaries
that are referred to below 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.
(a) Financial Statements. The following Financial Statements
attached hereto as Disclosure Schedule (3.4(a)) have been delivered on the date
hereof:
(i) The audited consolidated balance sheets at December 31,
2003 and the related statements of income and cash flows of Borrower and its
Subsidiaries for the Fiscal Years then ended, certified by KPMG.
(ii) The unaudited balance sheet at March 31, 2004 and the
related statement of income and cash flows Borrower and its Subsidiaries for the
three months then ended.
(b) Pro Forma. The Pro Forma delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(b)) was prepared by Borrower giving
pro forma effect to the Related Transactions, was based on the projected
consolidated balance sheets of Borrower and its Subsidiaries dated April 30,
2004, 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 on the date hereof and
attached hereto as Disclosure Schedule (3.4(c)) have been prepared by Borrower
in light of the past operations of its businesses, but including future payments
of known contingent liabilities, and reflect projections for the three (3) year
period beginning on January 1, 2004 on a month-by-month basis. The Projections
are based upon the same accounting principles as those used in the preparation
of the financial statements described above and the 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 for the period set forth therein. The
Projections are not a guaranty of future performance, and actual results may
differ from the Projections.
3.5 Material Adverse Effect. Between December 31, 2003 and the
Closing 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 that has had or could
22
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,
that alone or in the aggregate could reasonably be expected to have a Material
Adverse Effect. Since December 31, 2003 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 Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Except
where defects in such title or interest are not material, each Credit Party owns
good and marketable fee simple title to all of its owned Real Estate, and valid
and marketable leasehold interests in all of its leased Real Estate, all as
described on Disclosure Schedule (3.6), and copies of all such leases or a
summary of terms thereof reasonably satisfactory to Agent 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 Closing
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
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all documents, waivers and consents
and has duly effected all recordings, filings and other actions 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. As of the Closing
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.
3.7 Labor Matters. Except as set forth on Disclosure Schedule (3.7),
as of the Closing 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) 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) there is no
organizing activity involving any Credit Party pending or, to any Credit Party's
knowledge, 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) 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.
23
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no 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. 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), 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 Closing 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 and the
consummation of the Related Transactions 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. All Federal and other material 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 shown thereon to be due have been paid
prior to the date on which any fine, penalty, interest or late charge may be
added thereto for nonpayment thereof. Each Credit Party has established, in
accordance with GAAP, adequate reserves (excluding reserves established to
reflect the difference in timing between book and tax items) on its Financial
Statements for any unpaid Taxes. 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
24
Authorities. Disclosure Schedule (3.11) sets forth as of the Closing 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 or written threats of assessments in connection with such audit, or
otherwise currently outstanding. Except as described in Disclosure Schedule
(3.11), as of the Closing 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. None of the Credit Parties are liable for any Charges
of any other Person (other than another Credit Party) under any agreement the
primary purpose of which is the sharing of liabilities for Taxes.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists all Plans, Title IV Plans, and
Multiemployer Plans as of the Closing Date. Copies of all such listed Plans,
together with a copy of the latest form IRS/DOL 5500-series for each such Plan
have been delivered or made available 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. Each Plan and each Title IV Plan is in compliance in all
material respects 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 material contribution or pay any material
amount due as required by either Section 412 of the IRC or Section 302 of ERISA
or the terms of any Plan or Title IV Plan. Neither any Credit Party nor ERISA
Affiliate has engaged in a non-exempt "prohibited transaction," as defined in
Section 406 of ERISA and Section 4975 of the IRC, in connection with any Plan,
that would subject any Credit Party to a material tax on prohibited transactions
imposed by Section 502(i) of ERISA or Section 4975 of the IRC. Each Credit Party
and each ERISA Affiliate has complied in all material respects with Section
4980B of the IRC and Part 6 of Subtitle B of Title I of ERISA and of any similar
state law.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title
IV Plan has any material 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 material 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 or Title IV Plan; (iv) no Credit Party or ERISA Affiliate has incurred
or reasonably expects to incur any material liability as a result of a complete
or partial withdrawal from a Multiemployer Plan; and (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 of ERISA.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation
or proceeding is now pending or, to the knowledge of any Credit Party,
threatened 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
25
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 has a reasonable risk of being determined adversely to
any Credit Party and that, if so determined, could reasonably be expected to
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 threatened that
seeks damages in excess of $1,000,000 or injunctive relief against, or alleges
criminal misconduct of, any Credit Party.
3.14 Brokers. Except as set forth on Disclosure Schedule (3.14), 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 Closing Date, each Credit
Party owns or has rights to use all Intellectual Property necessary to conduct
its business as now conducted by it or presently proposed to be conducted by it,
and each Patent, registered Trademark, registered Copyright and material License
is listed, together with application or registration numbers, as applicable, in
Disclosure Schedule (3.15). 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), no Credit Party is aware of any material infringement claim by any other
Person with respect to any Intellectual Property owned or used by such Credit
Party.
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 prepared by any
Credit Party and delivered hereunder or any written statement prepared by any
Credit Party and 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.
Such Projections are not a guaranty of future performance and actual results may
differ from those set forth in such Projections. The Liens granted to Agent, on
behalf of itself and Lenders, pursuant to 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 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not result in Environmental
Liabilities that could reasonably be
26
expected to exceed $1,000,000; (ii) no Credit Party has caused or suffered to
occur any material Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate that could reasonably be expected to result
in Environmental Liabilities that could reasonably be expected to exceed
$1,000,000; (iii) the Credit Parties are and have been in compliance with all
Environmental Laws, except for such noncompliance that would not result in
Environmental Liabilities which could reasonably be expected to exceed
$1,000,000; (iv) the Credit Parties have obtained, and are in compliance with,
all Environmental Permits required by Environmental Laws for the operations of
their respective businesses as presently conducted or as proposed to be
conducted, except where the failure to so obtain or comply with such
Environmental Permits would not result in Environmental Liabilities that could
reasonably be expected to exceed $1,000,000, and all such Environmental Permits
are valid, uncontested and in good standing except where the failure of such
permits to be valid, uncontested or in good standing could not result in
Environmental Liabilities that could reasonably be expected to exceed
$1,000,000; (v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $1,000,000; (vi) there is no Litigation
arising under or related to any Environmental Laws, Environmental Permits or
Hazardous Material that seeks damages, penalties, fines, costs or expenses in
excess of $1,000,000 or injunctive relief against, or that alleges criminal
misconduct by, any Credit Party; (vii) no notice has been received by any Credit
Party identifying it as a "potentially responsible party" or requesting
information under CERCLA or analogous state statutes, and to the knowledge of
the Credit Parties, there are no facts, circumstances or conditions that could
reasonably be expected to result in any Credit Party being identified as a
"potentially responsible party" under CERCLA or analogous state statutes; and
(viii) the Credit Parties have provided or made available to Agent copies of all
existing environmental reports, reviews and audits and other material written
information pertaining to actual or potential material Environmental
Liabilities, in each case relating to any Credit Party, to the extent the
foregoing are in the possession, custody or control of any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i)
is not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing 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 Closing 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.
27
3.20 Government Contracts. Except as set forth in Disclosure
Schedule (3.20), as of the Closing 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. Except as set forth on Disclosure
Schedule (3.21), as of the Closing Date, there exists no actual or, to the
knowledge of any Credit Party, threatened termination or cancellation of, or any
material adverse modification or change in: the business relationship of any
Credit Party with any customer or group of customers whose purchases during the
preceding 12 months caused them to be ranked among the ten largest customers of
such Credit Party; or the business relationship of any Credit Party with any
supplier essential to its operations.
3.22 Bonding; Licenses. Except as set forth on Disclosure Schedule
(3.22), as of the Closing Date, no Credit Party is a party to or bound by any
surety bond agreement or bonding requirement with respect to products or
services sold by it or any material trademark or patent license agreement with
respect to products sold by it.
3.23 Solvency. Both before and after giving effect to (a) the Loans
and Letter of Credit Obligations to be made or incurred on the Closing Date 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, (c) the Refinancing and the
consummation of the other Related Transactions and (d) 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. Prior to the Closing Date, Holdings will
not have engaged in any business or incurred any Indebtedness or any other
liabilities (except in connection with its corporate formation, the Related
Transactions Documents and this Agreement).
3.25 Subordinated Debt. As of the Closing Date, Borrower has
delivered to Agent a complete and correct copy of the Term Notes and Fleet Notes
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith) certified by Borrower as such. All Obligations, including the Letter
of Credit Obligations, constitute Indebtedness entitled to the benefits of the
Term Notes Intercreditor Agreement and the Fleet Notes Intercreditor Agreement.
3.26 Operating Leases. Except as set forth in Disclosure Schedule
(3.26), as of the Closing Date, no Credit Party is a party to any operating
lease agreement requiring aggregate annual payments in excess of $500,000. The
aggregate annual payments under all operating lease agreements to which any
Credit Party is a party shall not exceed $3,000,000.
3.27 Acquisition Agreement. As of the Closing Date, Borrower has
delivered to Agent a complete and correct copy of the Acquisition Agreement
(including all schedules, exhibits, amendments, supplements, modifications,
assignments and all other documents delivered pursuant thereto or in connection
therewith). No Credit Party and no other Person party thereto is in default in
the performance or compliance with any provisions thereof. The
28
Acquisition Agreement complies with, and the acquisition contemplated thereunder
has been consummated in accordance with, all applicable laws. The Acquisition
Agreement is in full force and effect as of the Closing Date and has not been
terminated, rescinded or withdrawn. To the best of each Credit Party's
knowledge, none of the Seller's representations or warranties in the Acquisition
Agreement contain any untrue statement of a material fact or omit any fact
necessary to make the statements therein not misleading. Each of the
representations and warranties given by each applicable Credit Party in the
Acquisition Agreement is true and correct in all material respects.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it 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.
(b) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it 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 KPMG, and authorizes and
shall instruct those accountants and advisors to communicate to Agent and each
Lender information 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. Each Credit
Party shall: do or cause to be done all things reasonably necessary to preserve
and keep in full force and effect its corporate existence and its material
rights and franchises; continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; at all times maintain, preserve
and protect all of its material assets and properties used or useful in the
conduct of its business, and keep the same in reasonable 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 reasonably
necessary or appropriate repairs, replacements and improvements thereto
consistent with industry practices; and transact business only in such corporate
and trade names as are set forth in Disclosure Schedule (5.1); provided, that
any Credit Party may use a new trade name so long as Agent has been given 30
days prior written notice of the use of any new trade names.
29
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 past due, except in the case of clauses (ii) and
(iii) where the failure to pay or discharge such Charges would not result in
aggregate liabilities in excess of $500,000.
(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 the
Liens securing payment of the Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result 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. Each Credit Party shall keep adequate books
and records with respect to its business activities in which proper entries,
reflecting all 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 comparable coverage; provided, that such
coverage offers the same or better protection with respect to coverage amounts,
deductible amounts, types of risks covered and quality of insurance provider (it
being understood that a one-time change in the deductible period from five (5)
days to fifteen (15) days with respect to business interruption insurance shall
be permitted hereunder). 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 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
30
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) 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, to the extent related to the Collateral, and (ii) all general
liability and other liability policies naming Agent, on behalf of itself and
Lenders, as additional insured (it being understood that to the extent
practicable, such endorsements shall relate only to insured events which
occurred prior to the Closing Date). Each Credit Party irrevocably makes,
constitutes and appoints Agent (and all officers, employees or agents designated
by Agent), so long as any Default or Event of Default has occurred and is
continuing or the anticipated insurance proceeds exceed $1,000,000, 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 loss, damage, or destruction to the Collateral in the amount of
$1,500,000 or more, whether or not covered by insurance. After deducting from
such proceeds (i) the expenses incurred by Agent in the collection or handling
thereof, if any, and (ii) amounts required to be paid to creditors (other than
Lenders) having Permitted Encumbrances, Agent may, at its option, apply such
proceeds to the reduction of the Obligations in accordance with Section 1.3(c),
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 ERISA, labor laws, 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.
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) or at
Credit Parties' election, 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 Default or Event of Default resulting from the
matters disclosed therein, except as consented to
31
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.
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 and shall
comply in all material respects with the terms of its Licenses.
5.8 Environmental Matters. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate in all material respects except where the failure to do
so could not reasonably be expected to result in Environmental Liabilities in
excess of $1,000,000; (c) notify Agent promptly after such Credit Party becomes
aware of any violation of Environmental Laws or Environmental Permits or any
Release on, at, in, under, above, to, from or about any Real Estate that is
reasonably likely to result in Environmental Liabilities in excess of
$1,000,000; and (d) promptly forward to Agent a copy of any order, notice,
request for information or any communication or report received by such Credit
Party in connection with any such violation or Release or any other matter
relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in Environmental Liabilities in excess of
$1,000,000 in each case whether or not the Environmental Protection Agency or
any Governmental Authority has taken or threatened any action in connection with
any such violation, Release or other matter. If Agent at any time has a
reasonable basis to conclude that there may be a violation of any Environmental
Laws or Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, that, in each case, could
reasonably be expected to have a Material Adverse Effect, then each Credit Party
shall, upon Agent's written request (i) cause the performance of such
environmental audits to assess or investigate such violation or release
including, to the extent necessary to assess or investigate such violation or
release, subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrower's expense, as Agent may from time to time
consistent with the foregoing reasonably request, which shall be conducted by
reputable environmental consulting firms reasonably acceptable to Agent and
shall be in form and substance reasonably acceptable to Agent, and (ii) permit
Agent or its representatives to have access to all Real Estate for the purpose
of conducting such environmental audits and testing as Agent deems appropriate,
including subsurface sampling of soil and groundwater. Borrower shall reimburse
Agent for the costs of such audits and tests and the same will constitute a part
of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. 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
32
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 reasonably satisfactory in
form and substance to Agent. With respect to such locations or warehouse space
leased or owned as of the Closing Date and thereafter, if Agent has not received
a landlord or mortgagee agreement or bailee letter as of the Closing Date (or,
if later, as of the date such location is acquired or leased), Borrower's
Eligible Inventory at that location shall, in Agent's discretion, be excluded
from the Borrowing Base or be subject to such Reserves as may be established by
Agent in its reasonable credit judgment. After the Closing Date, no Inventory
shall be shipped to a warehouse, processor, converter, or any other third-party
location under arrangements established after the Closing 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 acceptable to Agent) or, unless
and until a reasonably satisfactory landlord agreement or bailee letter, as
appropriate, shall first have been obtained with respect to such location;
provided, that, at any time, up to $100,000 in the aggregate of Inventory may be
located at locations for which Agent's consent has not been obtained; provided,
further that such Inventory shall be excluded from the Borrowing Base. Each
Credit Party shall timely and fully pay and perform its obligations under all
leases and other agreements with respect to each leased location or public
warehouse where any Collateral is or may be located; provided that any Credit
Party may in good faith dispute the amount or validity of any such obligations
in an aggregate amount not to exceed $100,000 for all Credit Parties; provided
further that Borrower's Eligible Inventory at any location or warehouse as to
which any obligation is being disputed shall, in Agent's discretion, be excluded
from the Borrowing Base. To the extent permitted hereunder, if any Credit Party
proposes to acquire a fee ownership interest in Real Estate, it shall first
provide to Agent a mortgage or deed of trust granting Agent a 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,
supplemental 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 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon the reasonable request of Agent, duly execute and
deliver, or cause to be duly executed and delivered, to Agent such further
instruments and do and cause to be done such further acts as may be necessary or
proper in the reasonable opinion of Agent to carry out more effectively the
provisions and purposes of this Agreement and each Loan Document.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or
33
acquire, any Person. Notwithstanding the foregoing sentence, Borrower may enter
into Permitted Acquisitions.
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 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, consistent
with past priorities; (b) each Credit Party may maintain its existing
investments in its Subsidiaries as of the Closing Date; (c) Borrower may enter
into commodity purchase or option agreements, foreign exchange contracts,
currency swaps, interest rate swaps, cap or collar agreements or other commodity
price hedging arrangements or other similar agreements or arrangements; provided
that (i) Borrower's aggregate exposure under all such agreements does not exceed
$15,000,000 or such greater amount in accordance with a written strategy agreed
to by Agent and (ii) any and all such commodity purchase or option agreements,
foreign exchange contracts, currency swaps, interest rate swaps, cap or collar
agreements or other commodity price hedging arrangements or other similar
agreements or arrangements shall be entered into in the ordinary course of
business consistent with past practices of Borrower and for non-speculative
purposes; (d) so long as Agent has not delivered an Activation Notice and so
long as no Loans are outstanding, Borrower may make investments, subject to
Control Letters 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 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, and (e) other investments not exceeding $250,000 in the aggregate at any
time outstanding.
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) other existing
Indebtedness described in Disclosure Schedule (6.3) and refinancings thereof or
amendments or modifications thereof 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 determined by
34
Agent, than the terms of the Indebtedness being refinanced, amended or modified,
(v) the Acceptable High Yield Notes, (vi) the Term 1 Notes and refinancings
thereof or amendments or modifications thereof 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 determined by
Agent, than the terms of the Term 1 Notes, (vii) the Term 2 Notes and
refinancings thereof or amendments or modifications thereof 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
determined by Agent, than the terms of the Term 2 Notes and (viii) Indebtedness
incurred pursuant to agreements permitted pursuant to Section 6.2(c); provided
that Borrower's aggregate exposure under all such agreements does not exceed
$15,000,000 or such greater amount in accordance with a written strategy agreed
to by Agent pursuant to Section 6.2(c).
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness prior to its scheduled
maturity, 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); (iv) other Indebtedness (excluding
Subordinated Debt) not in excess of $500,000; (v) as otherwise permitted in
Section 6.13, (vi) the Term 2 Notes may be repaid in full in connection with a
refinancing thereof permitted by Section 6.3(a)(vii), (vii) the Term 2 Notes may
be repaid from (A) the direct proceeds of an IPO or Acceptable High Yield Notes,
and (B) insurance proceeds as permitted pursuant to the Term Notes Intercreditor
Agreement and (viii) the Term 2 Notes may be repaid on the first Business Day of
the third Fiscal Month of any Fiscal Quarter, beginning after receipt by Agent
of Borrower's audited Financial Statements for the Fiscal Year ending December
31, 2004 in accordance with paragraph (d) of Annex E; provided that (A) such
prepayments of the Term 2 Notes may not exceed $7,500,000 in the aggregate
during any Fiscal Quarter, (B) no Event of Default has occurred and is
continuing or would result after giving effect to such prepayment, (C) after
giving effect to such prepayment, Borrower shall have Borrowing Availability of
at least $100,000,000, (D) after giving effect to such payment, Borrower on a
consolidated basis with its Subsidiaries shall have a Fixed Charge Coverage
Ratio for the Fiscal Quarter most recently ended of not less than 1.1:1.0 and
(E) within forty-five days after the end of such recently ended Fiscal Quarter,
Borrower shall have delivered a Compliance Certificate showing the calculations
used in determining pro forma compliance with the requirements set forth in
provisos (C) and (D) above, in form and substance satisfactory to Agent.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section 6 with
respect to Affiliates, no Credit Party shall enter into or be a party to any
transaction with any other Credit Party or any Affiliate thereof except 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. In addition, if
any such transaction or series
35
of related transactions involves payments in excess of $500,000 in the
aggregate, the terms of these transactions must be disclosed in advance to Agent
and Lenders. All such transactions existing as of the date hereof are described
in Disclosure Schedule (6.4(a)).
(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 $500,000 in the aggregate at any one time outstanding.
6.5 Capital Structure and Business. If all or part of a Credit
Party's Stock is pledged to Agent, that Credit Party shall not issue additional
Stock. No Credit Party shall amend its charter or bylaws in a manner that would
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 it or businesses reasonably related
thereto.
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.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or 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 and summarized on
Disclosure Schedule (6.7) either (i) securing Indebtedness described on
Disclosure Schedule (6.3) or (ii) mechanics lien being contested in good faith
and not exceeding $250,000 in the aggregate, and permitted refinancings,
extensions and renewals of Liens described in Section 6.7(b)(i), including
extensions or renewals of such Liens; provided that the principal amount so
secured is not increased and the Lien does not attach to any other property; (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 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 $1,000,000 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 twenty (20) days following such purchase
and does not exceed 100% of the purchase price of the subject assets); (d) Liens
on property, plant and equipment securing the Fleet Notes to the extent in
existence on the date hereof, (e) Liens on the Collateral securing the Term
Notes or refinancings thereof permitted by Sections 6.3(a)(vi) or (vii);
provided that such Liens are subordinated to the extent required under the Term
Notes Intercreditor Agreement, and (f) Liens securing the Acceptable High Yield
Notes subject to the qualifications and limitations set forth in the definition
of "Acceptable High Yield Notes" contained in Annex A hereto. 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
36
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, and (b) the sale or other
disposition by a Credit Party of Equipment, Fixtures or Real Estate that are
obsolete or no longer used or useful in such Credit Party's business and having
a book value, not exceeding $7,500,000 in the aggregate in any Fiscal Year and
(c) the sale or other disposition of other Equipment and Fixtures having a book
value not exceeding $1,000,000 in the aggregate in any Fiscal Year.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur (i) 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 (ii) an ERISA Event to the extent such event, Lien or ERISA Event would
reasonably be expected to result in taxes, penalties and other liability in
excess of $250,000 in the aggregate.
6.10 Financial Covenants. Borrower shall not breach or fail to
comply with any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate or form the basis
for any Environmental Liabilities under, any Environmental Laws or Environmental
Permits or (b) otherwise adversely impact the value or marketability of any of
the Real Estate or any of the Collateral; other than such violations or
Environmental Liabilities that could not reasonably be expected to have a
Material Adverse Effect.
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 Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) dividends and distributions by Subsidiaries of Borrower paid
to Borrower, (b) employee loans permitted under Section 6.4(b), (c) scheduled
payments of interest on the Term 1 Notes; provided, that no Event of Default has
occurred and is continuing or would result after giving effect to each such
payment, (d) so long as no Event of Default has occurred and is continuing or
would result from such payments, payments of management fees to Perry in an
amount not to exceed in any Fiscal Year the greater of (i) $300,000 and (ii) one
percent (1%) of EBITDA of the Borrower and its Subsidiaries for the prior Fiscal
Year as reflected in the audited Financial Statements for the prior Fiscal Year
delivered pursuant to paragraph (d) of Annex E, and (e) prepayments of principal
on the Term 1 Notes; provided, that (i) no Event of Default has occurred and is
continuing or would result after giving effect to each such payment, (ii) after
giving effect to each such payment, Borrower shall have either (X) Borrowing
Availability of at least $50,000,000 and a Fixed Charge Coverage Ratio for the
12-month period most recently ended (or with respect to any test date ending on
or before December 31, 2004, the period commencing January 1, 2004 and ending on
the last day of the most recently ended month) of
37
not less than 1.25:1.0 on a consolidated basis with its Subsidiaries or (Y)
Borrowing Availability of at least $75,000,000 and a Fixed Charge Coverage Ratio
for the 12-month period most recently ended (or with respect to any test date
ending on or before December 31, 2004, the period commencing January 1, 2004 and
ending on the last day of the most recently ended month) of not less than
1.1:1.0 on a consolidated basis with its Subsidiaries, and (iii) each such
payment may only be made from the direct proceeds of (A) business interruption
insurance solely to the extent attributable to claims arising as a consequence
of events occurring prior to the Closing Date, (B) a percentage of excess cash
flow to the extent permitted by the Term Notes Intercreditor Agreement, or (C)
the release of Trust Moneys. Notwithstanding the foregoing, Borrower may repay
the Term 1 Notes from the proceeds of the issuance of the Acceptable High Yield
Notes, the issuance of Indebtedness permitted by Section 6.3(a)(vi) or an IPO
and Borrower and its Subsidiaries may make distributions in amounts sufficient
to pay their respective tax liabilities (including the consolidated, combined
and unitary group tax liability), provided that Borrower's and each of its
Subsidiaries' share of the taxes of any consolidated, combined or unitary group
shall not be greater than, and their share of the group's tax benefits shall not
be less than, their share of liabilities or benefits had Borrower and each of
its Subsidiaries filed a separate tax return in the relevant jurisdiction and
there is no Event of Default occurring or resulting from any such payments.
6.14 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) change
its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state of incorporation or
organization, 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. No Credit Party shall change its
Fiscal Year.
6.15 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 Subsidiary of Borrower to
Borrower.
6.16 Changes Relating to Debt. No Credit Party shall change or amend
the terms of any Subordinated Debt, Acceptable High Yield Notes, Fleet Notes or
Term Notes (or any indenture or agreement in connection therewith) if the effect
of such amendment is to: (a) increase the interest rate on such Indebtedness;
(b) change the dates upon which payments of principal or interest are due on
such Indebtedness 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 Indebtedness; (d)
change the redemption or prepayment provisions of such Indebtedness other than
to extend the dates therefor or to reduce
38
the premiums payable in connection therewith; (e) grant any security or
collateral to secure payment of such Indebtedness; 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 Indebtedness in a manner adverse to any Credit Party, Agent or
any Lender.
6.17 Holdings. Holdings shall not engage in any trade or business,
or own any assets (other than Stock of its Subsidiaries) or incur any
Indebtedness or Guaranteed Indebtedness (other than the Obligations).
6.18 Foreign Subsidiaries. Notwithstanding anything to the contrary
in the Loan Documents, (a) no amount due from or other obligation of Borrower
shall be (directly or indirectly) guaranteed by, or secured by an asset of, any
foreign Subsidiary and (b) to the extent not inconsistent with clause (a), any
(direct or indirect) pledge by a Credit Party of the ownership interest owned by
it in a foreign Subsidiary shall be limited to 65% of the voting ownership
interests in such foreign Subsidiary.
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 not terminate or
expire, but rather shall survive any such termination or cancellation and 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:
(a) Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii)
39
fails to pay or reimburse Agent or Lenders for any expense reimbursable
hereunder or under any other Loan Document within five (5) 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) or 6, or any of the
provisions set forth in Annexes C or G, respectively.
(c) Borrower fails or neglects to perform, keep or observe any of
the provisions of Section 4.1 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for three (3) Business 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 thirty (30) days or more.
(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 $500,000 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 $500,000 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 (other than inadvertent, immaterial errors
not exceeding $250,000 in the aggregate 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 after the date on which any Credit Party
receives notice thereof.
(h) A case or proceeding is commenced against any Credit Party
seeking a decree or order in respect of such Credit Party (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
40
for any substantial part of any such Credit Party's assets, or (iii) ordering
the winding-up or liquidation of the affairs of such Credit Party, 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 is
granted by a court of competent jurisdiction.
(i) Any Credit Party (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 for any substantial part of any such Credit
Party's assets, (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) A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate at any time are outstanding against one or more of
the Credit Parties (which judgments are not covered by insurance policies as to
which liability has been accepted by the insurance carrier), 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.
(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 facilities of Borrower generating more than 25% of Borrower's
revenues for the Fiscal Year preceding such event and such cessation or
curtailment continues for more than sixty (60) days.
(n) either (i) (x) any holder of a Term Note, (y) any holder of
Indebtedness secured by any of the Collateral or (z) any holder of at least
$10,000,000 in aggregate principal amount of Indebtedness of any Credit Party
shall commence (or have commenced on its behalf) judicial proceedings to
foreclose upon assets of any Credit Party having an aggregate fair market value,
individually or in the aggregate, in excess of $10,000,000 or shall have
exercised any right under applicable law or applicable security documents to
take ownership of any such assets in lieu of foreclosure; or (ii) any holder of
Government Assisted Indebtedness shall commence (or have commenced on its
behalf) judicial proceedings to foreclose upon any of the Collateral or
41
shall have exercised any right under applicable law or applicable security
documents to take ownership of any such Collateral in lieu of foreclosure
8.2 Remedies.
(a) If any Event of Default has occurred and is continuing, Agent
may (and at the written request of the Requisite 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
Lenders, if such suspension occurred at their direction) so long as such Default
or Event of Default is continuing. If any 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 Commitment from time to time; (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 in the manner set forth 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; or (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 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.
42
(a) Subject to the terms of this Section 9.1 and the establishment
of a Loan Account pursuant to Section 1.12(b), any Lender may make an assignment
to a Qualified Assignee of, or sale of 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. Any assignment by a Lender
shall: (i) require the consent of Agent (which consent shall not be required for
an assignment to a Lender or any Affiliate of a Lender and shall not be
unreasonably withheld or delayed with respect to any other 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 $20,000,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$20,000,000; (iv) include a payment to Agent of an assignment fee of $5,000 and
(v) so long as no Event of Default has occurred and is continuing, require the
consent of Borrower, which shall not be unreasonably withheld or delayed;
provided that no such consent shall be required for an assignment 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, and any lender that is an investment fund may assign the Obligations held
by it and such Lender's rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; 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 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). Solely for purposes of Sections 1.13,
1.15, 1.16 and
43
9.8, Borrower acknowledges and agrees that a participation shall give rise to a
direct obligation of Borrower to the participant and the participant shall be
considered to be a "Lender" and each participant shall be subject to such
Sections as if it is a Lender. Except as set forth in the preceding sentence
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 execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and
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) So long as no Event of Default has occurred and is continuing,
no Lender shall assign or sell participations in any portion of its Loans 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 withholding taxes in accordance with Section 1.15(a).
(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
44
payment obligation under this Agreement (all liability for which shall remain
with the 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, guarantee 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. The
appointment of Bank One, NA and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a Division of ▇▇▇▇▇▇▇
▇▇▇▇▇ Business Financial Services Inc., as a Documentation Agent and UBS
Securities, LLC, as Syndication Agent, is purely titular in nature. As of the
Closing Date, all the obligations of Bank One, NA, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a
Division of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc. and UBS Securities,
LLC in their respective capacities as a Documentation Agent or Syndication
Agent, shall terminate, and they shall have no duties, liabilities, obligations
or responsibilities in such capacity to any other Person under this Agreement,
any of the other Loan Documents or otherwise.
If Agent shall request instructions from Requisite Lenders,
Supermajority 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, Supermajority Lenders, or all affected Lenders, as the case may be, and
45
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 hereunder or under any other Loan
Document in accordance with the instructions of Requisite Lenders, Supermajority
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 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 and GE Capital as Agent.
46
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 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. GE Capital
is also a holder of a portion of the Fleet Notes. Each Lender acknowledges the
potential conflict of interest of each other Lender as a result of Lenders
holding disproportionate interests in the Loans and of GE Capital being a holder
of a portion of the Fleet Notes, 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 Credit
Parties 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 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
47
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 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 prior notice to any Credit Party or to any Person
other than Agent, 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; provided that the Lender
exercising such offset rights shall give notice thereof to the affected Credit
Party promptly after exercising such rights. Any Lender exercising a 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 Lender's obligation under this Section 9.8 shall be in addition
to and not in limitation of its obligations to purchase a participation in an
amount equal to its Pro Rata Share of the Swing Line Loans under Section 1.1.
Borrower and each Guarantor agrees, to the fullest extent permitted by law, that
(a) any Lender may exercise its 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.
48
(i) Lenders shall refund or participate in the Swing Line Loan
in accordance with clauses (iii) and (iv) of Section 1.1(b). If the Swing Line
Lender declines to make a Swing Line Loan or if Swing Line Availability is zero,
Agent shall notify Lenders, promptly after receipt of a Notice of Revolving
Advance and in any event prior to noon (Chicago time) on the date such Notice of
Revolving Advance is received, by telecopy, telephone or other similar form of
transmission. Each 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 2:00 p.m.
(Chicago time) on the requested 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 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 Lender shall be made without setoff, counterclaim or deduction
of any kind.
(ii) Not less than once during 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 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 Lender when due, Agent will be entitled to recover such
amount on demand from such Lender without setoff, counterclaim or deduction of
any kind. If any 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 Lender or to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Borrower may have against any Lender as a result of any default by
such Lender hereunder. To the extent that Agent advances funds to Borrower on
behalf of any 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 Lender.
(c) Return of Payments.
49
(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 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 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 be included in the calculation of
"Requisite Lenders" or "Supermajority 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
50
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.
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, fee letter
or 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. Notwithstanding the foregoing, the Agents Fee
Letter and any market flex provisions contained in the final commitment letter
between Agent and Borrower shall survive the execution and delivery of this
Agreement and shall continue to be binding obligations of the parties.
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,
Supermajority Lenders or all affected Lenders, as applicable. Except as set
forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders 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 "Borrowing Base" or otherwise
amends such definition, or that makes less restrictive the nondiscretionary
criteria for exclusion from Eligible Accounts and Eligible
51
Inventory set forth in Sections 1.6 and 1.7, shall be effective unless the same
shall be in writing and signed by Agent, Supermajority 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 Obligations shall be effective unless the same shall be in
writing and signed by Agent, Requisite 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 unless the same shall be in
writing and signed by Agent, Requisite 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)
except in accordance with Section 1.18, increase the principal amount of any
Lender's Commitment (which action shall be deemed to directly affect all
Lenders) or principal amount of the aggregate Commitments of all Lenders; (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) extend any
scheduled payment date (other than payment dates of mandatory prepayments under
Section 1.3(b)(ii) or (iii)) 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 $10,000,000 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; (vii)
amend or waive this Section 11.2 or the definitions of the terms "Requisite
Lenders" or "Supermajority Lenders" insofar as such definitions affect the
substance of this Section 11.2 and (viii) amend or waive the minimum Borrowing
Availability covenant set forth in paragraph (c) of Annex G. 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
52
is not obtained (any such Lender whose consent is not obtained as described in
this clause (i) and in clauses (ii), (iii) and (iv) below being referred to as
"Non Consenting Lender");
(ii) requiring the consent of Supermajority Lenders, the
consent of Requisite Lenders is obtained, but the consent of Supermajority
Lenders is not obtained; or
(iii) requiring the consent of Requisite Lenders, the consent
of Lenders holding 51% or more of the aggregate Revolving Loan 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
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 (b), (c) and (d) below, all Lenders) for all 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) 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;
(b) 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
Credit Parties or any other
53
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 (b) 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;
(c) 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;
(d) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and
(e) efforts to (i) monitor the Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (e) 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
54
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 each Lender may disclose such
information (a) to Affiliates of Agent or such Lender and Persons employed or
engaged by Agent or such Lender; (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
55
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 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
to
56
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 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 such press
release or other public disclosure. Each Credit Party consents to the
publication by Agent or any Lender of advertising material relating to the
financing transactions contemplated by this Agreement using Borrower's name,
product photographs, logo or trademark. Agent or such Lender shall provide a
draft of any 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
57
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.
[signature pages follow]
58
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
REPUBLIC ENGINEERED PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: /s/ Duly Authorized Signatory
--------------------------------
Duly Authorized Signatory
UBS LOAN FINANCE LLC, as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. Saint
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Saint
Title: Director Banking Products
Services, US
BANK ONE, NA (MAIN OFFICE CHICAGO), as a
Documentation Agent and as Lender
By: /s/ ▇▇▇▇ Weyhrecht
--------------------------------
Name: ▇▇▇▇ Weyhrecht
Title: Director
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL, A DIVISION OF
▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL
SERVICES INC., as a Documentation Agent
and as Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
Signature page to Credit Agreement
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers.
PAV REPUBLIC, INC.
By: /s/ ▇.▇. Antonio III
--------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇ III
Title: Vice President
REPUBLIC N&T RAILROAD, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
REPUBLIC MACHINE, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
Signature page to Credit Agreement
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:
"Acceptable High Yield Notes" means notes issued by Borrower on a
one-time basis which notes (a) have an aggregate principal amount of no less
than $125,000,000, (b) mature no earlier than the seventh anniversary of the
Closing Date, (c) have no amortization, (d) are secured by the same Liens, and
with the same priority with respect to the Liens securing the Obligations, as
the Liens presently securing the Term Notes, and (e) are on terms otherwise
reasonably acceptable to Agent, the proceeds of which notes must be used
immediately to repay the Term Notes and the Fleet Notes.
"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 Agreement" means that Amended and Restated Asset
Purchase Agreement dated as of December 16, 2003 by and among Holdings, as
purchaser, and Republic Engineered Products LLC, N&T Railway Company LLC, and
Blue Steel Capital Corp., as sellers.
A-1
"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.
"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, 5% 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 the term "Affiliate" shall specifically
exclude Agent and each Lender.
"Agent" means GE Capital in its capacity as Agent for Lenders or its
successor appointed pursuant to Section 9.7.
"Agents Fee Letter" means that certain letter, dated as of March 31,
2004, among GE Capital, UBS and Borrower with respect to certain Fees to be paid
from time to time by Borrower to GE Capital and UBS.
"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 Index Margin
and the Applicable LIBOR Margin.
"Applicable 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 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).
"Assignment Agreement" has the meaning ascribed to it in Section
9.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the United
States Code, 11 U.S.C. Sections 101 et seq.
"Blocked Accounts" has the meaning ascribed to it in Annex C.
A-2
"Borrower" has the meaning ascribed thereto in the preamble to the
Agreement.
"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.
"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 Borrower's Eligible Accounts at such
time; plus
(b) the least of (i) 65% of the book value of Borrower's Eligible
Inventory valued at the lower of cost (determined on a first-in, first-out
basis) or market, (ii) 85% of the Net Orderly Liquidation Percentage of
Eligible Inventory and (iii) $115,000,000;
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.
"Business Interruption Insurance Proceeds" means direct proceeds of
business interruption insurance solely to the extent attributable to claims
arising as a consequence of events occurring prior to the Closing Date.
"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.
"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.
A-3
"Change of Control" means (i) prior to an IPO, any event,
transaction or occurrence as a result of which (a) Perry ceases to own and
control (directly or indirectly) at least 51% of the economic and voting rights
associated with ownership of all of the outstanding capital Stock of Holdings on
a fully diluted basis, (b) Holdings ceases to own and control all of the
economic and voting rights associated with all of the outstanding capital Stock
of Borrower or (c) Borrower ceases to own and control all of the economic and
voting rights associated with all of the outstanding capital Stock of any of its
Subsidiaries and (ii) following the occurrence of an IPO, any event, transaction
or occurrence as a result of which Perry ceases to be the single largest
beneficial holder of the voting stock of Holdings; provided, that the net
proceeds from any such IPO shall be retained by the Borrower, except for up to
25% of such net proceeds, which may be distributed to Perry as consideration for
the sale of their Stock in connection with the IPO.
"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 Date" means May 20, 2004.
"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.
"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.
"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
A-4
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 Guaranties,
the Mortgages, the Patent Security Agreements, the Trademark Security
Agreements, the Copyright Security Agreements 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 in Jersey City, New
Jersey ABA No. ▇▇▇-▇▇▇-▇▇▇, or such other account as may be specified in writing
by Agent as the "Collection Account."
"Commitment Termination Date" means the earliest of (a) May 20,
2009, (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 guarantee) 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, 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) 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), which initial
aggregate commitment shall be Two Hundred Million Dollars ($200,000,000) on the
Closing Date, as to each of clauses (a) and (b), as such Commitments may be
reduced, increased, amortized or adjusted from time to time in accordance with
the Agreement.
"Compliance Certificate" has the meaning ascribed to it in Annex E.
"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
A-5
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 limits any security interest in the
applicable financial assets in a manner reasonably satisfactory to Agent,
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: 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.
"Credit Parties" means Holdings, Borrower, and each of their
respective 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).
"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.
"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.
"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 valuing Inventory on
a first in, first out basis, 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 (but not any aggregate net loss) during such period arising
A-6
from the sale, exchange or other disposition of capital assets by such Person
(including any fixed assets, whether tangible or intangible, all inventory sold
in conjunction with the disposition of fixed assets and all securities), 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) depreciation and amortization for such period, (iv)
amortized debt discount for such period, and (v) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, but without duplication. 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-up of any asset (other than Inventory); (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; and (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.
"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 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. Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. Sections 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42
U.S.C. Sections 7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. Sections 1251 et seq.); the Occupational
A-7
Safety and Health Act (29 U.S.C. Sections 651 et seq.); and the Safe Drinking
Water Act (42 U.S.C. Sections 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.
"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, and 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(c) of ERISA with respect to a
Title IV Plan, except for events for which notice is waived pursuant to
regulation; (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;
A-8
(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 would 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.
"Event of Default" has the meaning ascribed to it in Section 8.1.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C. Section 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.
"Financial Statements" means the consolidated 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 March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of Borrower
ending on December 31 of each year.
"Fixed Charges" means, with respect to any Person for any fiscal
period, without duplication, (a) the aggregate of all Interest Expense paid or
accrued during such period, plus (b) payments of principal with respect to
Indebtedness during such period (other than payments on the Fleet Notes or the
Term 1 Notes attributable to Net Business Interruption Insurance Proceeds or
Trust Moneys), plus (c) Unfinanced Capital Expenditures during such period plus
(d) income
A-9
taxes paid or payable in cash with respect to such fiscal period (but excluding
income taxes, if any, on insurance proceeds) plus (e) to the extent not
otherwise deducted in the determination of EBITDA, Restricted Payments made
during such period.
"Fixed Charge Coverage Ratio" means, with respect to any Person for
any fiscal period, the ratio of (a) EBITDA less Business Interruption Insurance
Proceeds 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.
"Fleet Notes" means those certain 10% Senior Notes due August 31,
2009 issued pursuant to that certain Note Purchase Agreement, dated as of
December 19, 2003, among Borrower, certain Guarantors and the holders of such
notes.
"Fleet Notes Intercreditor Agreement" means an Intercreditor
Agreement among Borrower, Agent, the holders of the Fleet Notes and the
collateral agent for the Fleet Notes with respect to, inter alia, PPE Access,
all in form and substance acceptable to Agent.
"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 and 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 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.
"General Intangibles" means "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,
A-10
all liability, life, key man and business interruption insurance, and all
unearned premiums), uncertificated securities, chooses 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 any "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.
"Government Assisted Indebtedness" means Indebtedness of any Credit
Party incurred from any federal, state or local Government Authority, or for
which any such Governmental Authority provides direct or indirect credit
support, including under any industrial revenue bonds.
"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.
"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, the Holdings Guaranty, each
Subsidiary Guaranty and any other guaranty executed by any Guarantor in favor of
Agent and Lenders in respect of the Obligations.
A-11
"Guarantors" means Holdings, each domestic Subsidiary of Borrower
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" has the meaning ascribed thereto in the recitals to the
Agreement.
"Holdings Guaranty" means the guaranty of even date herewith
executed by Holdings in favor of Agent and Lenders.
"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 6 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 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 "prime rate" (or, if
▇-▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Journal ceases quoting a prime rate, 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.
"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.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) 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; 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 any "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 all 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 (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) 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
A-13
securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all securities
accounts of any Credit Party; (iv) all commodity contracts of any Credit Party;
and (v) all commodity accounts held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"IPO" means any fully distributed public offering of Stock of
Holdings.
"IRS" means the Internal Revenue Service.
"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, 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 pursuant to the terms herein, such term shall
include any registered 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.
"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 or three months thereafter, as selected by
Borrower's irrevocable notice to Agent
A-14
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;
(d) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such
Loan; and
(e) 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 "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.
A-15
"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, 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, letter of credit agreements 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 and the Swing Line 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.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or financial or other condition of Borrower or the
Credit Parties taken 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.
"Maximum Amount" means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date, less any
Reserves.
A-16
"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 4001(a)(3) 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 within the
past six (6) years, contributions on behalf of participants who are or were
employed by any of them.
"Net Business Interruption Insurance Proceeds" means Business
Interruption Insurance Proceeds less taxes payable thereon.
"Net Orderly Liquidation Percentage" means the net recovery rate
most recently determined to apply to Inventory by an independent appraiser
acceptable to Agent.
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes and the Swing Line
Note.
"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, 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 future, whether or not evidenced by
any note, agreement, letter of credit 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, hedging obligations under
swaps, caps and collar arrangements provided by any Lender, expenses, attorneys'
fees and any other sum chargeable to any Credit Party under the Agreement or any
of the other Loan Documents.
"Ohio Director of Development Intercreditor Agreement" that certain
Intercreditor and Collateral Access Agreement, dated of even date herewith,
among Borrower, the Director of Development of the State of Ohio and Agent, in
form and substance acceptable to Agent.
"Overadvance" has the meaning ascribed to it in Section 1.1(a)(iii).
A-17
"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 ownership 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.
"Permitted Acquisition" means the acquisition by Borrower of all or
substantially all of the assets or Stock of another Person; provided, that (i)
the aggregate amount of all such acquisitions shall not exceed $10,000,000 and
(ii) in each case, the terms and conditions of any such acquisition are
satisfactory to Agent in its sole discretion,
"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; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $250,000 at any time, 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, covenants, conditions, rights of way, encroachments,
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 any Credit Party's use or operation of such
Real Estate; (i) presently existing or hereafter created Liens in favor of
Agent, on behalf of Lenders; and (j) Liens expressly permitted under clauses
(b), (c), (d), (e) and (f) of Section 6.7 of the Agreement.
"Perry" means Perry Partners L.P., a Delaware limited partnership
and any of its Affiliates.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company,
A-18
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 maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any Credit Party.
"PPE Access" means the right of Agent or any of its agents or
designees to use any and all property, plant or equipment of any Credit Party to
take possession of or fully process Inventory in any manner necessary or
desirable for Agent to realize the full value of such Inventory in connection
with the sale or other disposition thereof.
"Prior Credit Agreements" means, collectively, (a) that certain
Credit Agreement, dated as of December 19, 2003, as amended, among Borrower, the
lenders party thereto, and Perry as Agent for such lenders and (b) the U.S. Bank
Indenture.
"Prior Lenders" means the lenders and holders under the Prior Credit
Agreements.
"Prior Lender Obligations" means the obligations owed to the
respective Prior Lenders pursuant to the Prior Credit Agreements.
"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
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 balance sheet of
Borrower and its Subsidiaries as of May 1, 2004 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; (d)
capitalization statements, and (e) Borrowing Availability, all prepared on a
Subsidiary by Subsidiary or division-by-division basis,
A-19
if applicable, and otherwise 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) the percentage obtained by dividing (i) the Revolving Loan Commitment
of that Lender by (ii) the aggregate Revolving Loan Commitments of all Lenders,
(b) 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.
"Qualified Plan" means a Plan that is intended to be tax-qualified
under Section 401(a) of the IRC.
"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) 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 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 proposed
to become a Lender after the Closing Date and 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 proposed to become
a Lender after the Closing Date and that holds Subordinated Debt or Stock issued
by any Credit Party shall be a Qualified Assignee.
"Real Estate" has the meaning ascribed to it in Section 3.6.
"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(b)(iii).
"Related Transactions" means the initial borrowing under the
Revolving Loan on the Closing Date, the Refinancing, the issuance of the Term
Notes, 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 the
Term Notes, 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,
A-20
including the movement of Hazardous Material through or in the air, soil,
surface water, ground water or property.
"Requisite Lenders" means Lenders having (a) 66 2/3% or more of the
Commitments of all Lenders, or (b) if the Commitments have been terminated, 66
2/3% or more of the aggregate outstanding amount of the Loans.
"Reserves" means, with respect to the Borrowing Base of Borrower and
the Maximum Amount, (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(b), and (c) such other reserves against Eligible Accounts, Eligible
Inventory or Borrowing Availability of Borrower that Agent may, in its
reasonable credit judgment, establish from time to time. Without limiting the
generality of the foregoing, Reserves established to ensure the payment of
accrued Interest Expenses or Indebtedness 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 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 and any claim
for rescission 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 (i) payment of compensation in the ordinary course of business
to Stockholders who are employees of such Credit Party, (ii) payment to Perry as
reimbursement for costs and expenses incurred in the ordinary course of
business, not to exceed $200,000 in any Fiscal Year in the aggregate and (iii)
payments to Perry in respect of the Term 2 Notes; 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.
"Revolving Credit Advance" has the meaning ascribed to it in Section
1.1(a)(i).
"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.
A-21
"Revolving Loan Commitment" means (a) as to any Lender, the
aggregate commitment of such 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 Lender and (b) as to all
Lenders, the aggregate commitment of all Lenders to make Revolving Credit
Advances or incur Letter of Credit Obligations, which aggregate commitment shall
be Two Hundred Million Dollars ($200,000,000) 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).
"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.
"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.
"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 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 Indebtedness of Borrower evidenced by
the Term 1 Notes and any other Indebtedness of any Credit Party 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 rights and
remedies thereunder.
"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
A-22
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 Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty of even date
herewith executed by each Subsidiary of Borrower in favor of Agent, on behalf of
itself and Lenders.
"Supermajority Lenders" means Lenders having (a) 80% or more of the
Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan (with the Swing Line Loan being attributed to the
Lender making such Loan) and Letter of Credit Obligations.
"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(b)(i).
"Swing Line Availability" has the meaning ascribed to it in Section
1.1(b)(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.
"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(b)(ii).
"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 Notes" means, collectively, the Term 1 Notes and the Term 2
Notes.
A-23
"Term Notes Intercreditor Agreement" means that certain
Intercreditor Agreement, dated of even date herewith, among Borrower, Agent, the
holders of the Term 1 Notes and the holders of the Term 2 Notes, in form and
substance acceptable to Agent.
"Term 1 Notes" means those certain Senior Subordinated Promissory
Notes due 2009 issued by Borrower to Perry on the Closing Date in an aggregate
original principal amount of [$7,000,000].
"Term 2 Notes" means those Senior Secured Promissory Notes due 2009
issued by the Borrower to Perry on the Closing Date in an aggregate original
principal amount of $61,800,000.
"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.
"Title IV Plan" means an employee pension benefit plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA, 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.
"Trademark License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademark Security Agreements" means the Trademark Security
Agreements made in favor of Agent, on behalf of itself and Lenders, by each
applicable Credit Party.
"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.
"Trust Moneys" shall have the meaning ascribed to it in the U.S.
Bank Indenture.
"UBS" means UBS Securities, LLC.
"Unfinanced Capital Expenditures" means, with respect to any Person,
during any measuring period, Capital Expenditures less (a) casualty insurance
proceeds received during such period, less (b) Net Business Interruption
Insurance Proceeds received during such period to the
A-24
extent not used to pay the Term Notes or the Fleet Notes, less (c) Trust Moneys
released during such period to the extent not used to pay the Term Notes or the
Fleet Notes.
"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 five (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.
"U.S. Bank Indenture" means that certain Indenture, dated as of
December 19, 2003 among Borrower, certain Guarantors, U.S. Bank National
Association, as Trustee and Collateral Agent.
"U.S. Bank Notes" means those certain 10% Senior Notes due August
31, 2009 issued pursuant to the U.S. Bank Indenture.
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
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 or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
A-25
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the Agreement,
Agent and 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 Lender, then such Letters of Credit shall not be guaranteed by
Agent but rather each 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 (including with respect to
customary evergreen provisions), and neither Agent nor 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 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 Lender shall be obligated to pay its Pro Rata Share
thereof in accordance with the Agreement. The failure of any 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 Lender of its obligation hereunder to make
available to Agent its Pro Rata Share thereof, but no Lender shall be
responsible for the failure of any other Lender to make available such other
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 Lender to be deemed to have assumed a
ratable share of the reimbursement obligations owed to an L/C Issuer, or if the
L/C Issuer is a Lender, then (i) immediately and without further action
whatsoever, each Lender shall be deemed to have irrevocably and unconditionally
purchased
B-1
from Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation equal to such 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 (ii) thereafter, immediately upon issuance of any
Letter of Credit, each 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 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 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,
including Section 8.2 of the Agreement, prior to the Commitment Termination
Date, Borrower will pay to Agent for the ratable benefit of itself and Lenders
cash or cash equivalents acceptable to Agent ("Cash Equivalents") in an amount
equal to 105% of the maximum amount then available to be drawn under each
applicable Letter of Credit outstanding. 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 105% of the aggregate
maximum amount then available to be drawn under, the Letters of Credit to which
such outstanding Letter of Credit Obligations relate and shall be issued by a
Person, and shall be subject to such terms and conditions, as are 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
and, upon the satisfaction in full of all Letter of Credit Obligations of
Borrower, to any other Obligations then due and payable.
B-2
(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 held as additional collateral.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the
benefit of 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 2.50% 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 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 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 Lender to make payments to Agent with respect to Letters of Credit shall be
unconditional and irrevocable. Such obligations of Borrower and 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;
(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
B-3
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 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; 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
B-4
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 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 its Subsidiaries to, establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing 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 (3.19), 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 its Subsidiaries
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
Subsidiary's name and at a bank identified in Disclosure Schedule (3.19) (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 (3.19) (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 Closing 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 Subsidiaries thereof, as applicable, in
form and substance reasonably acceptable to Agent, which shall become operative
on or prior to the Closing 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 Closing 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 (1) an Event of Default has occurred
and is continuing, (2) an event or circumstance having a Material Adverse Effect
has
C-1
occurred or (3) Borrowing Availability on any day is less than $40,000,000 (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 Subsidiary thereof 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 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 (i) Agent shall have consented in writing
in advance to the opening of such account or Lock Box with the relevant bank and
(ii) prior to the time of the opening of such account or Lock Box, Borrower or
its Subsidiaries, 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 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 Subsidiary
thereof 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) within one (1)
Business Day after receipt by Borrower or any such Related Person of any checks,
cash or other items of
C-2
payment, deposit the same into a Blocked Account. Borrower on behalf of itself
and each Related Person acknowledges and 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) As soon as practicable and in any event no later than 60 days
following the Closing Date, Borrower shall close each of its Lock Boxes, Blocked
Accounts, Disbursement Accounts and other bank accounts with Fleet National Bank
and replace such accounts with such bank accounts, and enter into such
agreements, as may be required to comply with this Annex C.
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 Closing 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. Revolving Notes and Swing Line Note. Duly executed originals of
the Revolving Notes and Swing Line Note for each applicable Lender, dated the
Closing Date.
C. Security Agreement. Duly executed originals of the Security
Agreement, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto.
D. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as reasonably requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings. (a) Evidence satisfactory to
Agent that Agent (for the benefit of itself and Lenders) has a valid and
perfected first priority security interest in the Collateral to the extent
required under the Collateral Documents, including (i) such documents duly
executed by each Credit Party (including financing statements under the Code and
other applicable documents under the laws of any jurisdiction with respect to
the perfection of Liens) as Agent may request in order to perfect its security
interests in the Collateral to the extent required under the Collateral
Documents and (ii) copies of Code search reports listing all effective financing
statements that name any Credit Party as debtor, together with copies of such
financing statements, none of which shall cover the Collateral, except for those
relating to the Prior Lender Obligations (all of which shall be terminated on
the Closing Date) and Permitted Encumbrances.
(b) Evidence reasonably satisfactory to Agent, including copies, of
all UCC-1 and other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by Borrower, (ii) all securities
intermediaries with respect to all securities accounts
D-1
and securities entitlements of Borrower, and (iii) all futures commission agents
and clearing houses with respect to all commodities contracts and commodities
accounts held by Borrower.
F. Payoff Letter; Termination Statements. Copies of a duly executed
payoff letter, in form and substance reasonably satisfactory to Agent, by and
between all parties to the Prior Lender loan documents evidencing repayment in
full of all Prior Lender Obligations, together with (a) UCC-3 or other
appropriate termination statements, in form and substance satisfactory to Agent,
manually signed by the Prior Lender releasing all liens of Prior Lender upon any
of the personal property of each Credit Party, (b) termination of all blocked
account agreements, bank agency agreements or other similar agreements or
arrangements or arrangements in favor of Prior Lender or relating to the Prior
Lender Obligations and (c) evidence satisfactory to Agent that all of the U.S.
Bank Notes have been redeemed and that all conditions set forth in Section 8.1
of the U.S. Bank Indenture have been satisfied.
G. Intellectual Property Security Agreement. Duly executed originals
of Trademark Security Agreements, Copyright Security Agreements and Patent
Security Agreements, each dated the Closing Date and signed by each Credit Party
which owns Trademarks, Copyrights and/or Patents, as applicable, all in form and
substance reasonably satisfactory to Agent, together with all instruments,
documents and agreements executed pursuant thereto.
H. Holdings Guaranty. Duly executed originals of the Holdings
Guaranty, dated the Closing Date, and all documents, instruments and agreements
executed pursuant thereto.
I. Subsidiary Guaranties. Guaranties executed by and each direct and
indirect Subsidiary of Borrower in favor of Agent, for the benefit of Lenders.
J. Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate from Borrower, dated the Closing Date,
reflecting information concerning Eligible Accounts and Eligible Inventory of
Borrower as of a date not more than seven (7) days prior to the Closing Date.
K. Initial Notice of Revolving Credit Advance. Duly executed
originals of a Notice of Revolving Credit Advance, dated the Closing Date, with
respect to the initial Revolving Credit Advance to be requested by Borrower on
the Closing Date.
L. Letter of Direction. Duly executed originals of a letter of
direction from Borrower addressed to Agent, on behalf of itself and Lenders,
with respect to the disbursement on the Closing Date of the proceeds of the
initial Revolving Credit Advance.
M. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex C.
D-2
N. Charter and Good Standing. For each Credit Party, such Person's
(a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental Authority.
O. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto 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
Closing Date by such Person's corporate secretary or an assistant secretary as
being in full force and effect without any modification or amendment.
P. 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 Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
Q. Opinions of Counsel. Duly executed originals of opinions of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Credit Parties, together with any local
counsel opinions reasonably requested by Agent, each in form and substance
reasonably satisfactory to Agent and its counsel, dated the Closing 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.
R. Accountants' Letter. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2.
S. Appointment of Agent for Service. An appointment of CT
Corporation as each Credit Party's agent for service of process.
T. Fee Letter. Duly executed originals of the Agents Fee Letter.
U. 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 Closing Date, stating that, since December 31,
2002 (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) before and after giving effect to the
transactions contemplated by the Credit Agreement, each
D-3
Credit Party will be Solvent, and (f) there has been no material increase in
liabilities, liquidated or contingent, and no material decrease in assets of
Borrower or any of its Subsidiaries.
V. Waivers. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters and mortgagee agreements in form
and substance satisfactory to Agent, in each case as required pursuant to
Section 5.9.
W. Subordination and Intercreditor Agreements. Agent and Lenders
shall have received any and all subordination and/or intercreditor agreements,
including the Term Notes Intercreditor Agreement, the Fleet Notes Intercreditor
Agreement and the Ohio Director of Development Intercreditor Agreement, all in
form and substance reasonably satisfactory to Agent, in its sole discretion, as
Agent shall have deemed necessary or appropriate with respect to any
Indebtedness of any Credit Party.
X. Appraisals. Agent shall have received appraisals as to all
Inventory, each of which shall be in form and substance reasonably satisfactory
to Agent.
Y. Audited Financials; Financial Condition. Agent shall have
received the Financial Statements, Projections and other materials set forth in
Section 3.4, certified by Borrower's Chief Financial Officer, in each case in
form and substance satisfactory to Agent, and Agent shall be satisfied, in its
sole discretion, with all of the foregoing. Agent shall have further received a
certificate of the Chief Executive Officer and/or the Chief Financial Officer of
Borrower, based on such Pro Forma and Projections, to the effect that (a)
Borrower will be Solvent upon the consummation of the transactions contemplated
herein; (b) the Pro Forma fairly presents the financial condition of Borrower as
of the date thereof after giving effect to the transactions contemplated by the
Loan Documents; (c) 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 its
future financial performance and of the other information projected therein for
the period set forth therein; and (d) containing such other statements with
respect to the solvency of Borrower and matters related thereto as Agent shall
request.
Z. Master Standby Agreement. A Master Agreement for Standby Letters
of Credit between Borrower and GE Capital.
AA. Master Documentary Agreement. A Master Agreement for Documentary
Letters of Credit between Borrower and GE Capital.
BB. Equity Contribution. Agent shall have received satisfactory
evidence of the contribution of $20,000,000 of cash equity to Borrower by Perry.
CC. Background Checks. Agent shall have received background and
reference checks with results satisfactory to Agent, in its sole discretion, on
each Credit Party and any such Credit Party's Stockholders, officers and
directors as Agent may request.
DD. Mortgages. Mortgages covering all of the Real Estate (the
"Mortgaged Properties") together with: (a) title insurance policies and as-built
surveys, in each case
D-4
reasonably satisfactory in form and substance to Agent, in its sole discretion;
(b) evidence that counterparts of the Mortgages have been recorded in all places
to the extent necessary, in the reasonable judgment of Agent, to create a valid
and enforceable first priority lien (subject to Permitted Encumbrances) on each
Mortgaged Property in favor of Agent for the benefit of itself and Lenders (or
in favor of such other trustee as may be required or desired under local law);
and (c) an opinion of counsel in each state in which any Mortgaged Property is
located in form and substance and from counsel reasonably satisfactory to Agent.
EE. Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Agent may reasonably request.
D-5
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 thirty (30)
days after the end of each Fiscal Month, financial information regarding
Borrower and its Subsidiaries, certified by the Chief Financial Officer of
Borrower, consisting of consolidated (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;
and (ii) unaudited statements of income and cash flows for such Fiscal Month,
all prepared in accordance with GAAP valuing Inventory on a first in, first out
basis (subject to normal year-end adjustments). Such financial information shall
be accompanied by (A) a statement in reasonable detail (each, a "Compliance
Certificate") showing the calculations used in determining compliance with each
of the Financial Covenants that is tested on a monthly basis or which requires
compliance on a continual basis and (B) 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 Borrower and its Subsidiaries, on a
consolidated 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. For
avoidance of doubt, all Compliance Certificates delivered pursuant to this
paragraph (a) shall include the calculations with respect to the Fixed Charge
Coverage Ratio set forth in paragraph (b) of Annex G without regard to the level
of Borrowing Availability at the time any such Compliance Certificate is to be
delivered.
(b) Quarterly Financials. To Agent and Lenders, within forty-five
(45) days after the end of each Fiscal Quarter, consolidated financial
information regarding Borrower and its Subsidiaries, certified by the Chief
Financial Officer of Borrower, including 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, 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 Quarter, in each case in accordance with GAAP (subject to normal year end
adjustments). Such financial information shall be accompanied by (A) a
Compliance Certificate showing the calculations used in determining compliance
with each of the Financial Covenants 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 valuing Inventory
on a first in, first out basis (subject to normal year-end adjustments) the
financial position, results of operations and statements of cash flows of
E-1
Borrower and its Subsidiaries, on both a consolidated 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 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 monthly 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, audited Financial Statements for
Borrower and its Subsidiaries on a consolidated 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,
if applicable, which Financial Statements shall be prepared in accordance with
GAAP valuing Inventory on a first in, first out basis 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) a statement prepared in reasonable detail showing the
calculations used in determining compliance with each of the Financial
Covenants, (ii) the annual letters to such accountants in connection with their
audit examination detailing contingent liabilities and material litigation
matters, and (iii) 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 Borrower and its Subsidiaries on a consolidated
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 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.
E-2
(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, 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 two (2) 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. Notwithstanding the foregoing, each Credit
Party shall immediately deliver to Agent copies of all written communications
made or received by any Credit Party with respect to the U.S. Bank Notes.
(i) Supplemental Schedules. To Agent, supplemental disclosures, if
any, required by Section 5.6.
(j) Litigation. To Agent in writing, promptly upon learning thereof,
notice of any Litigation commenced or threatened against any Credit Party that
(i) seeks damages in excess of $3,000,000, (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, (i) within five (5) Business
Days after receipt thereof, copies of any and all default notices received under
or with respect to any leased location or public warehouse where Collateral is
located, (ii) monthly within three (3) Business Days after payment thereof,
evidence of payment of lease or rental payments as to each leased or rented
location for which a landlord or bailee waiver has not been obtained and (iii)
such other notices or documents as Agent may reasonably request.
(m) Hedging Agreements. To Agent within ten (10) Business Days after
entering into such agreement or amendment, copies of all interest rate,
commodity or currency hedging agreements or amendments thereto.
(n) Operating Leases. To Agent, at the time of delivery of the
quarterly or annual Financial Statements delivered pursuant to this Annex E, a
list of all operating lease agreements to which any Credit Party is a party
requiring aggregate annual payments in excess of $500,000.
E-3
(o) 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, upon its request, and in any event no less frequently
than 11:00 a.m. (Chicago time) ten (10) Business Days after the end of each
Fiscal Month (or (i) at any time after Borrowing Availability is less than
$50,000,000, noon (Chicago time) on Wednesday of each week or (ii) at any time
Borrowing Availability is less that $40,000,000, noon (Chicago time) daily)
(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 Borrower as of the last day of the
immediately preceding Fiscal Month (if monthly) or week (if weekly) or the
Business Day prior to the date of such delivery (if daily):
(i) a Borrowing Base Certificate with respect to Borrower,
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(ii) with respect to Borrower, as of the last day of the most
recently ended Fiscal Month, 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, 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) To Agent, on a weekly basis or at such more frequent intervals
as Agent may request from time to time (together with a copy of all or any part
of such delivery requested by any Lender in writing after the Closing Date),
collateral reports with respect to Borrower, including all additions and
reductions (cash and non-cash) with respect to Accounts of Borrower, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion each of which shall be prepared
by the applicable Borrower as of the last day of the immediately preceding week
or the date two (2) days prior to the date of any request;
(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
F-1
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 the results
of any annual 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 shall deliver to Agent such appraisals of the
Collateral or commercial financial examinations as Agent may request at any time
and from time to time, such appraisals to be conducted by an appraiser retained
by Agent and in form and substance reasonably satisfactory to Agent; provided
that Borrower shall be responsible for the costs of no more than four (4)
commercial financial examinations and two (2) inventory appraisals per Fiscal
Year unless an Event of Default has occurred and is continuing (in which case
the Borrower shall be responsible for the costs of all examinations and
appraisals); and
(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.
F-2
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not 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) Maximum Unfinanced Capital Expenditures. Borrower and its Subsidiaries
on a consolidated basis shall not make Unfinanced Capital Expenditures during
any Fiscal Year that exceed $25,000,000 in the aggregate; provided, however,
that the amount of permitted Unfinanced Capital Expenditures referenced above
will be increased in any period by the positive amount equal to the lesser of
(i) $7,500,000 and (ii) the amount (if any), equal to the difference obtained by
deducting the actual amount of any Unfinanced Capital Expenditures expended
during such prior period from $25,000,000.
(b) Minimum Fixed Charge Coverage Ratio. If at any time the Borrowing
Availability is less than $75,000,000, Borrower and its Subsidiaries shall have
on a consolidated basis, at such time, a Fixed Charge Coverage Ratio for the
12-month period most recently ended (or with respect to any test date ending on
or before December 31, 2004, the period commencing January 1, 2004 and ending on
the last day of the most recently ended month) of not less than 1.25:1.0.
(c) Minimum Borrowing Availability. At all times prior to the issuance of
the Acceptable High Yield Notes, Borrower shall maintain Borrowing Availability
of not less than an amount equal to the sum of (i) $25,700,000 and (ii) the
aggregate amount of all prepayments of (A) the Term 2 Notes and (B) any
refinancings thereof, in each case, other than prepayments permitted by Sections
6.3(b)(vi) and (vii) of the Agreement.
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
Borrower's and its Subsidiaries' financial condition 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
G-1
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, 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 1.1(d))
TO
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Bankers Trust
▇▇ ▇▇▇▇▇▇ ▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA #: ▇▇▇-▇▇▇-▇▇▇
Account #: ▇▇-▇▇▇-▇▇▇
Account Name: GECC/CAF Depository
Reference: Republic Engineered Products, Inc.
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: Republic Engineered Products, Inc. Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Winston & ▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Counsel-Commercial Finance
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower, at
Republic Engineered Products, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citigroup Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
I-1
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(C) If to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a Division of
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc., at
▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(D) If to Bank One, NA (Main Office Chicago), at
BankOne
Mail Code OH2-5167
▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(E) If to UBS Loan Finance LLC, at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
I-2
ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
TO
CREDIT AGREEMENT
Lender: Revolving Loan Commitment:
------ -------------------------
General Electric Capital Corporation $115,000,000
(including a Swing Line Commitment
of $25,000,000)
UBS Loan Finance LLC $ 25,000,000
Bank One, NA $ 35,000,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital, a Division
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Business Financial Services Inc. $ 25,000,000
============
Total: $200,000,000
J-1