Exhibit 99.1
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and among
DELCO REMY INTERNATIONAL, INC. AND
CERTAIN SUBSIDIARIES OF DELCO REMY INTERNATIONAL, INC.
NAMED HEREIN
as Borrowers
CONGRESS FINANCIAL CORPORATION (CENTRAL)
as Administrative Agent and US Collateral Agent
WACHOVIA BANK, NATIONAL ASSOCIATION
as Documentation Agent
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders
Dated: October 3, 2003
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS.........................................................................3
SECTION 2. CREDIT FACILITIES..................................................................40
2.1 Loans..............................................................................40
2.2 Letter of Credit Accommodations....................................................41
2.3 Term Loan..........................................................................45
2.4 Amortization of Fixed Asset Loan Value.............................................46
2.5 Commitments........................................................................47
SECTION 3. INTEREST, FEES AND TAXES...........................................................47
3.1 Interest...........................................................................47
3.2 Fees...............................................................................49
3.3 Changes in Laws and Increased Costs of Loans.......................................49
3.4 Taxes..............................................................................52
SECTION 4. CONDITIONS PRECEDENT...............................................................54
4.1 Conditions Precedent to Effectiveness..............................................54
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations..............55
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST; PRIORITIES..............................55
5.1 Grant of Security Interest.........................................................55
5.2 Perfection of Security Interests...................................................57
SECTION 6. COLLECTION AND ADMINISTRATION......................................................61
6.1 Borrowers' Loan Accounts...........................................................61
6.2 Statements.........................................................................61
6.3 Collection of Accounts.............................................................61
6.4 Payments...........................................................................62
6.5 Authorization to Make Loans........................................................65
6.6 Use of Proceeds....................................................................65
6.7 Appointment of Administrative Borrower for Requesting Loans and Receipts of
Loans and Statements............................................................66
6.8 Pro Rata Treatment.................................................................66
6.9 Sharing of Payments, Etc...........................................................66
6.10 Settlement Procedures..............................................................67
6.11 Obligations Several; Independent Nature of Lenders' Rights.........................70
SECTION 7. COLLATERAL REPORTING AND COVENANTS.................................................71
7.1 Collateral Reporting...............................................................71
7.2 Accounts Covenants.................................................................72
7.3 Inventory Covenants................................................................73
7.4 Equipment and Real Property Covenants..............................................73
7.5 In-Transit Inventory Covenants.....................................................74
7.6 Power of Attorney..................................................................74
7.7 Right to Cure......................................................................75
7.8 Access to Premises.................................................................75
SECTION 8. REPRESENTATIONS AND WARRANTIES.....................................................76
8.1 Legal Existence, Power and Authority...............................................76
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations..........77
8.3 Financial Statements; No Material Adverse Change...................................78
8.4 Priority of Liens; Title to Properties.............................................78
8.5 Tax Returns........................................................................78
8.6 Litigation.........................................................................79
8.7 Applicable Laws....................................................................79
8.8 Environmental Compliance...........................................................79
8.9 Employee Benefits..................................................................80
8.10 Bank Accounts......................................................................81
8.11 Intellectual Property..............................................................81
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.................................82
8.13 Labor Disputes.....................................................................83
8.14 Restrictions on Subsidiaries.......................................................83
8.15 Material Contracts.................................................................83
8.16 Payable Practices..................................................................83
8.17 Single Economic Enterprise.........................................................83
8.18 Restricted Subsidiaries............................................................84
8.19 Inactive Subsidiaries..............................................................84
8.20 Accuracy and Completeness of Information...........................................84
8.21 Survival of Warranties; Cumulative.................................................84
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.................................................84
9.1 Maintenance of Existence...........................................................84
9.2 New Collateral Locations...........................................................85
9.3 Compliance with Laws, Regulations, Etc.............................................85
9.4 Payment of Taxes and Claims........................................................87
9.5 Insurance..........................................................................87
9.6 Financial Statements and Other Information.........................................87
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc............................89
9.8 Encumbrances.......................................................................94
9.9 Indebtedness.......................................................................96
9.10 Loans, Investments, Etc...........................................................100
9.11 Dividends and Redemptions.........................................................105
9.12 Transactions with Affiliates......................................................106
9.13 Compliance with ERISA.............................................................106
(ii)
9.14 End of Fiscal Years...............................................................107
9.15 Change in Business................................................................107
9.16 Limitation of Restrictions Affecting Subsidiaries.................................107
9.17 EBITDA............................................................................107
9.18 Fixed Charge Coverage Ratio.......................................................108
9.19 License Agreements................................................................108
9.20 After Acquired Owned Real Property................................................109
9.21 Costs and Expenses................................................................110
9.22 Material Adverse Effect...........................................................110
9.23 Unrestricted Subsidiaries.........................................................111
9.24 Inactive Subsidiaries.............................................................111
9.25 Further Assurances................................................................111
SECTION 10. EVENTS OF DEFAULT AND REMEDIES....................................................112
10.1 Events of Default.................................................................112
10.2 Remedies..........................................................................114
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW......................118
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.............118
11.2 Waiver of Notices.................................................................119
11.3 Amendments and Waivers............................................................120
11.4 Waiver of Counterclaims...........................................................122
11.5 Indemnification...................................................................122
SECTION 12. THE AGENT.........................................................................123
12.1 Appointment, Powers and Immunities................................................123
12.2 Reliance by Agent.................................................................123
12.3 Events of Default.................................................................124
12.4 Congress in its Individual Capacity...............................................124
12.5 Indemnification...................................................................125
12.6 Non-Reliance on Agent and Other Lenders...........................................125
12.7 Failure to Act....................................................................125
12.8 Additional Loans..................................................................125
12.9 Concerning the Collateral and the Related Financing Agreements....................126
12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders.....126
12.11 Collateral Matters................................................................127
12.12 Agency for Perfection.............................................................128
12.13 Successor Agent...................................................................129
12.14 Duties of Other Parties...........................................................129
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS..................................................129
13.1 Term..............................................................................129
(iii)
13.2 Interpretative Provisions.........................................................132
13.3 Notices...........................................................................133
13.4 Partial Invalidity................................................................134
13.5 Successors........................................................................134
13.6 Assignments; Participations.......................................................134
13.7 Entire Agreement..................................................................137
13.8 Counterparts, Etc.................................................................137
13.9 Joint and Several Liability of Borrowers..........................................137
13.10 Confidentiality...................................................................138
13.11 Amendment and Restatement.........................................................139
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Information Certificate
Exhibit C Form of Compliance Certificate
Exhibit D Form of Borrowing Base Certificate
Exhibit E Form of Excess Cash Flow Certificate
Schedule I Commitments
Schedule 4.1 Closing Documents
(iv)
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement dated October 3,
2003 is entered into by and among Delco Remy International Inc., a Delaware
corporation, Delco Remy America, Inc., a Delaware corporation, DR Sales, Inc., a
Delaware corporation, Franklin Power Products, Inc., an Indiana corporation, HSG
I, Inc, a Delaware corporation, HSG II, Inc, a Delaware corporation,
International Fuel Systems, Inc., an Indiana corporation, JAX Reman, L.L.C., a
Delaware limited liability company, M. & ▇. ▇▇▇▇▇ Auto Parts, L.L.C., a Delaware
limited liability company, Nabco, Inc., a Michigan corporation, Powrbilt
Products, Inc., a Texas corporation, Remy Logistics, L.L.C., a Delaware limited
liability company, Remy Reman, L.L.C., a Delaware limited liability company,
▇▇▇▇▇▇▇▇ Technologies, Inc., a South Carolina corporation, World Wide
Automotive, Inc., a Virginia corporation (each individually a "Borrower" and
collectively, "Borrowers"), the financial institutions from time to time parties
hereto as lenders, whether by execution of this Agreement or an Assignment and
Acceptance (each individually, a "Lender" and collectively, "Lenders") and
Congress Financial Corporation (Central), an Illinois corporation, in its
capacities as administrative agent for Lenders and as US Collateral Agent for
the Lenders and the Foreign Lenders (in such capacities, the "Agent") and amends
and restates in its entirety that certain Loan and Security Agreement dated June
28, 2002 entered into by certain parties hereto (as amended or modified prior to
the date hereof, the "Original Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to the Original Agreement, Revolving Lenders have
provided a revolving credit facility of up to $250,000,000 in the aggregate to
Borrowers on a pro rata basis on the terms and conditions set forth therein;
WHEREAS, Borrowers desire to permanently reduce the revolving credit
facility provided by the Revolving Lenders to a revolving credit facility of up
to $190,000,000 in the aggregate and add a term loan facility in the principal
amount of $60,000,000 provided by the Term Lenders;
WHEREAS, each Revolving Lender is willing to agree (severally and not
jointly) to continue to make revolving loans and continue to provide financial
accommodations to Borrowers on a pro rata basis as determined herein on the
terms and conditions set forth herein, each Term Lender is willing to agree
(severally and not jointly) to make term loans to Borrowers on a pro rata basis
as determined herein on the terms and conditions set forth herein and Agent is
willing to continue to act as administrative agent for Revolving Lenders and
Term Lenders on the terms and conditions set forth herein and as US Collateral
Agent for Revolving Lenders, Term Lenders and Foreign Lenders on the terms and
conditions set forth herein and in the Agency Agreement;
WHEREAS, contemporaneously herewith, the European Borrowers, European
Collateral Agent and European Lender will enter into an amendment to the
European Financing Agreements pursuant to which the European Lender may make
loans and provide other financial accommodations to European Borrowers;
WHEREAS, certain of the domestic Subsidiaries of Parent (other than
the Borrowers) have guaranteed and will continue to guarantee the Borrowers'
Obligations hereunder;
WHEREAS, Borrowers and their domestic Subsidiaries have guaranteed and
will continue to guarantee the obligations of (a) the European Borrowers under
the European Financing Agreements and (b) any Approved Foreign Borrower under
any Approved Foreign Financing Agreements;
WHEREAS, subject to the terms of the Agency Agreement, Borrowers have
granted and will continue to ▇▇▇▇▇ ▇ ▇▇▇▇ to US Collateral Agent in
substantially all of their assets to secure (a) all the Borrowers' Obligations
hereunder (b) their guarantee of the European Borrowers' obligations under the
European Financing Agreements, and (c) their guarantee of any Approved Foreign
Borrower's Obligations under any Approved Foreign Financing Agreements;
WHEREAS, subject to the terms of the Agency Agreement, the domestic
Subsidiaries of Parent (other than Borrowers) have granted and will continue to
▇▇▇▇▇ ▇ ▇▇▇▇ to US Collateral Agent in substantially all of their assets to
secure all of their obligations arising under their guarantees of (a) the
Borrowers' Obligations hereunder (b) the European Borrowers' obligations under
the European Financing Agreements, and (c) any Approved Foreign Borrower's
obligations under any Approved Foreign Financing Agreements;
WHEREAS, the European Borrowers will guarantee the obligations under
the Foreign Loan Agreements;
WHEREAS, subject to the terms of the Agency Agreement, the European
Borrowers have granted and will continue to ▇▇▇▇▇ ▇ ▇▇▇▇ to the European
Collateral Agent in substantially all of their assets to secure all of the
European Borrowers' obligations under (a) the European Financing Agreements and
(b) their guarantee of any Approved Foreign Borrower's obligations under any
Approved Foreign Financing Agreements;
WHEREAS, subject to the terms of the Agency Agreement, the Canadian
Subsidiary has granted and will continue to ▇▇▇▇▇ ▇ ▇▇▇▇ to the Canadian
Collateral Agent in substantially all its assets to secure all of the Canadian
Subsidiary's obligations under (a) its guarantee of the European Borrowers'
obligations under the European Financing Agreements, and (b) its guarantee of
any Approved Foreign Borrower's obligations under any Approved Foreign Financing
Agreements;
WHEREAS, subject to the terms of the Agency Agreement, certain
Subsidiaries of Parent (as agreed to between Parent and Agent) organized outside
of the United States will guarantee the Foreign Obligations and will secure
their guarantee by granting liens to the appropriate Collateral Agent in
substantially all their assets; and
WHEREAS, Borrowers, Agent and Lenders have agreed, as more fully set
forth herein, to amend and restate the Original Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
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SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
"1996 Notes Indenture" shall mean the Indenture dated as of August 1,
1996 among Parent, certain of the Loan Parties and National City Bank of
Indiana, as Trustee, which indenture relates to Parent's 10-5/8% Senior
Subordinated Notes Due 2006, as such indenture may be amended from time to time.
"1997 Notes Indenture" shall mean the Indenture dated as of December
22, 1997 among Parent, certain of the Loan Parties and United States Trust
Company of New York, as Trustee, which indenture relates to Parent's 8-5/8%
Senior Notes Due 2007, as such indenture may be amended from time to time.
"2001 Notes Indenture" shall mean the Indenture dated as of April 26,
2001 among Parent, certain of the Loan Parties and First Union National Bank, as
Trustee, which indenture relates to Parent's 11% Senior Subordinated Notes Due
2009, as such indenture may be amended from time to time.
"Accounts" shall mean, as to any Person, all present and future rights
of such Person to payment of a monetary obligation, whether or not earned by
performance, which is not evidenced by chattel paper or an instrument, (a) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (b) for services rendered or to be rendered, (c) for a
secondary obligation incurred or to be incurred, or (d) arising out of the use
of a credit or charge card or information contained on or for use with the card.
"Acquisition" shall mean any transaction resulting in the acquisition
by a Loan Party or a Subsidiary of a Loan Party of (a) all or substantially all
of the assets of a Person or of any business or division of a Person or (b) more
than 50% of the Capital Stock of a Person.
"Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve Percentage.
"Adjusted Revolving Commitment Percentage" shall mean with respect to
any Revolving Lender without a Multi-Jurisdictional Commitment as of any date of
determination, the fraction (expressed as a percentage) the numerator of which
is such Revolving Lender's Revolving Commitment Percentage (expressed as an
integral number), and the denominator of
3
which is the sum of such Revolving Lender's Revolving Commitment Percentage
(expressed as an integral number) plus the Revolving Commitment Percentage
(expressed as an integral number) of each other Revolving Lender as of such date
that does not have a Multi-Jurisdictional Commitment.
"Administrative Borrower" shall mean the Parent in its capacity as
Administrative Borrower on behalf of itself and the other Borrowers pursuant to
Section 6.7 hereof and it successors and assigns in such capacity.
"Administrative Management Fee" shall mean that certain servicing fee
agreed to be paid by Borrowers in favor of the Agent pursuant to the Fee Letter
for the purpose of compensating Agent for its day-to-day in-house administrative
responsibilities in connection with the Advances and the Collateral.
"Advances" shall mean, collectively, all Loans, Letter of Credit
Accommodations and Special Agent Advances.
"Affected Lender" shall have the meaning set forth in Section 3.3(f)
hereof.
"Affiliate" shall mean, with respect to a specified Person, any other
Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (a) any Person which
beneficially owns or holds five (5%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (b) any Person of
which such Person beneficially owns or holds five (5%) percent or more of any
class of Voting Stock or in which such Person beneficially owns or holds five
(5%) percent or more of the equity interests and (c) any director or executive
officer of such Person. For the purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
"Agency Agreement" shall mean the Amended and Restated Agency
Agreement of even date herewith (as amended, restated or otherwise modified from
time to time) among the Collateral Agents, the Lenders and the Foreign Lenders.
"Agent" shall mean Congress Financial Corporation (Central), in its
capacities as (a) administrative agent on behalf of Lenders pursuant to the
terms hereof and any replacement or successor agent hereunder and (b) US
Collateral Agent.
"Agent Party" and "Agent Parties" shall mean, individually or
collectively, Agent, each Collateral Agent, each Lender and each Foreign Lender.
"Agent Payment Account" shall mean account No. 5000000030266 (RE:
Delco Remy) of Agent at Wachovia Bank, National Association in North Carolina,
or such other account of Agent as Agent may from time to time designate to
Administrative Borrower as the Agent Payment Account for purposes of this
Agreement and the other Financing Agreements.
4
"Applicable Margin" shall mean, at any time, as to the Interest Rate
for Prime Rate Loans (other than the Term Loan), Eurodollar Rate Loans and
Letter of Credit Accommodations, the applicable row of percentages set forth
below if the Monthly Excess Availability as of the last Business Day of the
immediately preceding calendar month is at or within the amounts indicated for
such row:
Applicable Margin
for Prime Applicable Margin
Monthly Rate Loans (other than for Eurodollar Letter of Credit
Excess Availability the Term Loan) Rate Loans Accommodations
------------------- ---------------------- --------------------- ----------------
(a) $50,000,000 or more 0.25% 2.75% 2.50%
(b) Greater than or equal to 0.50% 3.00% 2.75%
$25,000,000 and less than
$50,000,000
(c) Less than $25,000,000 0.75% 3.25% 3.00%
provided, that, the Applicable Margin shall be calculated and established on the
first Business Day following the end of each calendar month in accordance with
the definition of "Interest Rate".
"Approved Foreign Borrower" means any Affiliate of Parent organized
and doing business outside of the United States (other than the European
Borrowers) which has been approved by Agent in writing as qualified to receive,
through an affiliate of Agent (or another financial institution acceptable to
Agent), loans and other financial accommodations pursuant to a
Multi-Jurisdictional Commitment.
"Approved Foreign Collateral Agent" shall mean any Approved Foreign
Lender designated pursuant to the Agency Agreement that holds liens on assets of
any Approved Foreign Borrower (and any of its Subsidiaries as agreed to between
Parent and Agent) for the benefit of the Foreign Lenders, and, to the extent
agreed to by Parent and Agent, the Lenders and any replacement or successor
Approved Foreign Collateral Agent thereunder.
"Approved Foreign Financing Agreements" shall mean, collectively, the
Approved Foreign Loan Agreement and all notes, guarantees, security agreements
and other agreements, documents and instruments at any time executed and/or
delivered in connection therewith by any Approved Foreign Borrower or any
guarantor thereof in favor of such Approved Foreign Lender or Approved Foreign
Collateral Agent, in each case in form and substance satisfactory to Agent and
as the same may be amended, restated or otherwise modified from time to time.
"Approved Foreign Lender" shall mean, collectively, a financial
institution approved by Agent, which will act in its capacity as administrative
agent for the financial institutions from time to time party to the Approved
Foreign Loan Agreement as lenders, each of such lenders and their respective
successors and assigns
5
"Approved Foreign Loan Agreement" shall mean that certain loan
agreement, credit agreement, facility agreement or other similar agreement among
the Approved Foreign Collateral Agent, the Approved Foreign Borrowers and the
Approved Foreign Lender, as amended, restated or otherwise modified from time to
time.
"Approved Fund" shall mean with respect to any Lender that is a fund
or similar investment vehicle that makes or invests in commercial loans, any
other fund or similar investment vehicle that invests in commercial loans which
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"A/R Core Credit Add-Backs" shall mean, with respect to any Person, an
amount to be determined by Agent in good faith as a result of the
reclassification for lending purposes of accounts receivable of such Person
which may be subject to potential core returns as Inventory of such Person,
which amount shall be calculated as the product of (a) the Core Return Dilution
Percentage (defined below) for such Person multiplied by (b) the Average Monthly
Credits (defined below) for such Person. As used herein, the term "Core Return
Dilution Percentage" with respect to any Person means a percentage obtained by
dividing the total US Dollar Amount of core return credits issued by such Person
by the total US Dollar Amount of all dilutive credits issued by such Person for
the previous trailing three month period as of any date of determination. As
used herein, the term "Average Monthly Credits" with respect to any Person means
the total US Dollar Amount of all dilutive credits, excluding credits on
ineligible receivables that are in their entirety ineligible, issued by such
Person in the previous trailing three month period as of any date of
determination divided by three (3).
"Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender's interest hereunder in accordance with the provisions of Section 13.6
hereof.
"Authorized Officer" shall mean the president, any vice-president of
finance, chief financial officer, treasurer, controller or, if approved by Agent
in writing, other appropriate financial officer of Parent.
"Average Excess Availability" shall mean, as of any date of
determination, the sum of each Monthly Excess Availability amount for each of
the three calendar months ending prior to such date of determination divided by
three.
"Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
"Borrower" and "Borrowers" shall have the meaning set forth in the
preamble to this Agreement and shall include any other Subsidiary of Parent
designated by Agent as a "Borrower" hereunder pursuant to Section 9.10(j)
hereof.
"Borrowing Base" shall mean, at any time, as to the Borrowers the
amount equal to:
(a) eighty-five percent (85%) multiplied by the Net Amount of such
Borrowers' Eligible Accounts; plus
6
(b) the lesser of:
(i) the sum of:
(A) the lesser of (1) eighty-five percent (85%) multiplied
by the Value of Borrower's Eligible Inventory (excluding Eligible
Processor Inventory and Eligible In-Transit Inventory) held for sale
to OEMs or (2) ninety percent (90%) multiplied by the Net Orderly
Liquidation Value of such Eligible Inventory; plus
(B) the lesser of (1) sixty percent (60%) multiplied by the
Value of Borrowers' Eligible Inventory (excluding Eligible Processor
Inventory and Eligible In-Transit Inventory) held for sale to Persons
other than OEMs which consist of raw materials and raw materials cores
or (2) ninety percent (90%) multiplied by the Net Orderly Liquidation
Value of such Eligible Inventory; plus
(C) the lesser of (1) sixty-five percent (65%) multiplied by
the Value of Borrowers' Eligible Inventory (excluding Eligible
Processor Inventory and Eligible In-Transit Inventory) held for sale
to Persons other than OEMs which consist of finished goods and
finished cores or (2) ninety percent (90%) multiplied by the Net
Orderly Liquidation Value of such Eligible Inventory; plus
(D) the lesser of (1) fifty percent (50%) multiplied by the
Value of the sum of Borrowers' Eligible Processor Inventory plus
Borrowers' Eligible In-Transit Inventory or (2) ninety percent (90%)
multiplied by the Net Orderly Liquidation Value of such Eligible
Processor Inventory and Eligible In-Transit Inventory; or (3)
$12,500,000 less the US Dollar Amount of all outstanding Foreign
Advances based on "Eligible Processor Inventory" and "Eligible
In-Transit Inventory" (as such terms are defined in the Foreign Loan
Agreements); plus
(E) the lesser of (1) fifty percent (50%) multiplied by
Borrowers' A/R Core Credit Add-Backs or (2) $10,000,000 less the US
Dollar Amount of all outstanding Foreign Advances based on "A/R Core
Credit Add-Backs" (as such term is defined in the Foreign Loan
Agreements); or
(ii) $160,000,000 less the US Dollar Amount of all outstanding
Foreign Advances based on "Eligible Inventory", "Eligible Processor
Inventory", "Eligible In-Transit Inventory" and "A/R Core Credit Add-Backs"
(as such terms are defined in the Foreign Loan Agreements); plus
(c) the Fixed Asset Loan Value at such time; minus
(d) Reserves established by Agent.
For purposes only of applying the dollar sublimit set forth in clause (b)(ii)
above, Agent may treat the then undrawn amounts of outstanding Letter of Credit
Accommodations for the purpose of purchasing Eligible Inventory as Revolving
Loans to the extent Agent is in effect basing the issuance of the Letter of
Credit Accommodations on the Value of the Eligible Inventory being
7
purchased with such Letter of Credit Accommodations. In determining the actual
amounts of such Letter of Credit Accommodations to be so treated for purposes of
the sublimit, the outstanding Revolving Loans and Reserves shall be attributed
first to any components of the lending formulas set forth above that are not
subject to such sublimit, before being attributed to the components of the
lending formulas subject to such sublimit and then to categories with the
largest sublimits. The amounts of Eligible Inventory under any category in
clause (b) above for any Borrower shall, at Agent's option, be determined based
on the lesser of the amount of Inventory set forth in the general ledger of such
Borrower or the perpetual inventory record maintained by such Borrower. Eligible
Inventory purchased with Letter of Credit Accommodations shall be included in
the applicable clauses above, to the extent of the advance rates applicable
thereto. Agent shall determine which Eligible Inventory is held for sale to OEMs
or to other Persons in a manner consistent with the appraisal and categorization
procedures used in the performance of appraisals prepared by, or on behalf of,
Agent prior to the Original Closing Date.
"Borrowing Base Certificate" shall mean a certificate substantially in
the form of Exhibit D hereto, as such form may be modified by Agent from time to
time, which is duly completed (including all schedules thereto) in a manner
acceptable to Agent and executed by an appropriate financial officer of the
Borrowers.
"Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of Illinois, or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.
"Canadian Collateral Agent" shall mean Congress Financial Corporation
(Canada), in its capacity as Canadian Collateral Agent on behalf of the Foreign
Lenders pursuant to the Agency Agreement and any replacement or successor
Canadian Collateral Agent.
"Canadian Financing Agreements" shall mean, collectively, all
guarantees, security agreements and other agreements, documents and instruments
now or at any time hereafter executed and/or delivered by Canadian Subsidiary in
favor of Canadian Collateral Agent, in each case as the same may be amended,
restated or otherwise modified from time to time.
"Canadian Subsidiary" shall mean Central Precision Limited, an Alberta
corporation.
"Capital Leases" shall mean, as applied to any Person, any lease of
(or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
accounted for as a capital lease or a capital expenditure on the balance sheet
of such Person.
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's capital stock or partnership, limited liability company or other
equity interests at any time outstanding, and
8
any and all rights, warrants or options exchangeable for or convertible into
such capital stock or other interests (but excluding any debt security that is
exchangeable for or convertible into such capital stock).
"Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers' acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of any Borrower) organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by Standard
& Poor's Ratings Service, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or at
least P-1 by ▇▇▇▇▇'▇ Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution having
combined capital and surplus and undivided profits of not less than
$250,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America or issued by any governmental agency thereof and
backed by the full faith and credit of the United States of America, in each
case maturing within ninety (90) days or less from the date of acquisition;
provided, that, the terms of such agreements comply with the guidelines set
forth in the Federal Financial Agreements of Depository Institutions with
Securities Dealers and Others, as adopted by the Comptroller of the Currency on
October 31, 1985; and (f) investments in money market funds and mutual funds
which invest substantially all of their assets in securities of the types
described in clauses (a) through (e) above.
"Change of Control" shall mean the occurrence of any of the following:
(a) prior to the first public offering of common stock of Parent after
the Original Closing Date, the Permitted Holders cease to be the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Voting Stock of Parent, whether as a result of issuance of securities of Parent,
any merger, consolidation, liquidation or dissolution of Parent, any direct or
indirect transfer of securities by the Permitted Holders or otherwise (for
purposes of this clause (a) and clause (b) below, the Permitted Holders shall be
deemed to beneficially own any Voting Stock of any Person (the "specified
entity") held by any other Person (the "parent entity") so long as the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the parent
entity);
(b) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than one or more Permitted Holders, is or becomes the
beneficial owner (as defined in clause (a) above, except that for purposes of
this clause (b) such person shall be deemed to have "beneficial ownership" of
all shares that any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock of
Parent; provided, however, that the Permitted Holders beneficially own (as
defined in clause (a) above), directly or
9
indirectly, in the aggregate a lesser percentage of the total voting power of
the Voting Stock of Parent than such other person and do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors (for the purposes of this clause
(b), such other person shall be deemed to beneficially own any Voting Stock of a
specified entity held by a parent entity, if such other person is the beneficial
owner (as defined in this clause (b)), directly or indirectly, of more than 35%
of the voting power of the Voting Stock of such parent entity and the Permitted
Holders beneficially own (as defined in clause (1) above), directly or
indirectly, in the aggregate a lesser percentage of the voting power of the
Voting Stock of such parent entity and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of such parent entity);
(c) individuals who on the Original Closing Date constituted the Board
of Directors (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of Parent was
approved by a vote of a majority of the directors of Parent then still in office
who were either directors on the Original Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office;
(d) the liquidation or dissolution of Parent; or
(e) the adoption of a plan, or the resolution of the board of
directors, authorizing, permitting or requiring any of the actions described
above.
"Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
"Collateral" shall mean the aggregate of all Loan Parties' Collateral
(as such term is defined in Section 5 hereof).
"Collateral Access Agreement" shall mean an agreement in writing, in
form and substance satisfactory to Agent in its good faith determination, from
any lessor of premises to any Borrower or any other person to whom any
Collateral is consigned or who has custody, control or possession of any such
Collateral or is otherwise the owner or operator of any premises on which any of
such Collateral is located, pursuant to which such lessor, consignee or other
person, inter alia, acknowledges the first priority security interest of Agent
in such Collateral, agrees to waive or subordinate any and all claims such
lessor, consignee or other person may, at any time, have against such
Collateral, whether for processing, storage or otherwise, and agrees to permit
Agent access to, and the right to remain on, the premises of such lessor,
consignee or other person so as to exercise Agent's rights and remedies and
otherwise deal with such Collateral and in the case of any consignee or other
person who at any time has custody, control or possession of any Collateral,
acknowledges that it holds and will hold possession of the Collateral for the
benefit of Agent and agrees to follow all instructions of Agent with respect
thereto.
"Collateral Agents" shall mean, collectively the US Collateral Agent,
European Collateral Agent, Canadian Collateral Agent and any other Approved
Foreign Collateral Agent.
10
"Commitment" shall mean, at any time subject to the last sentence of
this definition, as to each Lender, the principal amount set forth next to such
Lender's name on Schedule I hereto designated as the Revolving Commitment and/or
Term Commitment or on Schedule I to the Assignment and Acceptance Agreement
pursuant to which such Lender became a Lender hereunder in accordance with the
provisions of Section 13.6 hereof, as the same may be adjusted from time to time
in accordance with the terms hereof; sometimes being collectively referred to
herein as "Commitments". The term Commitment (a) with respect to any Revolving
Lender, shall include such Lender's Multi-Jurisdictional Commitment, which
Multi-Jurisdictional Commitment shall be a sublimit within such Lender's
Commitment and (b) with respect to any Term Lender once the Term Loan is
advanced, shall mean the outstanding amount of such Term Lender's Term Loan.
"Congress" shall mean Congress Financial Corporation (Central), an
Illinois corporation, in its individual capacity, and its successors and
assigns.
"Credit Facility" shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of any Borrower pursuant to
Sections 2.1, 2.2 and 2.3 hereof.
"CVC" shall mean (a) any Subsidiary of Citigroup, Inc., a Delaware
corporation, including, so long as they are Subsidiaries of Citigroup, Inc.,
Citicorp Venture Capital Ltd., a New York corporation, and Court Square Capital
Limited, a Delaware corporation; or (b) any investment vehicle that (i) is
sponsored or managed (whether through ownership of securities having a majority
of the voting power or through the management of investments) by any Subsidiary
included in clause (a) hereof and (ii) contains, as a part of its name,
"Citigroup," "CVC" or any variant thereof; or (c) World Equity Partners, L.P., a
Delaware limited partnership.
"CVC Investor" shall mean (a) CVC; (b) any officer, employee, director
or general partner of CVC or the general partner of any investment vehicle
included in the definition of CVC; and (c) any trust, partnership or other
entity established solely for the benefit of the Persons included in clauses (a)
or (b) hereof.
"Default" shall mean an act, condition or event which with notice or
passage of time or both would constitute an Event of Default.
"Defaulting Lender" shall have the meaning set forth in Section 6.9
hereof.
"Delco UK" shall mean Delco Remy UK limited, a corporation organized
in England and Wales.
"Delphi Acquisition" shall have the meaning set forth in Section
9.10(h) hereof.
"Delphi Subsidiary" shall have the meaning set forth in Section
9.10(h) hereof.
"Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent in its good faith
determination, by and among Agent, a Loan Party with a deposit account at any
bank and the bank at which such deposit account is at any time maintained which
provides that during the existence of a Trigger Event such bank will comply with
instructions originated by Agent directing disposition of the funds in the
deposit
11
account without further consent by such Loan Party and such other terms and
conditions as Agent may require, including as to any such agreement with respect
to any Blocked Account, providing that all items received or deposited in the
Blocked Accounts are the property of Agent, that the bank has no lien upon, or
right to setoff against, the Blocked Accounts, the items received for deposit
therein, or the funds from time to time on deposit therein and that the bank
will wire, or otherwise transfer, in immediately available funds, on a daily
basis during the existence of a Trigger Event to the Agent Payment Account all
funds received or deposited into the Blocked Accounts.
"EBITDA" shall mean, in any period, the consolidated net income of the
Parent and its Subsidiaries for such period,
plus (a), to the extent deducted in the determination of such consolidated net
income for such period:
(i) Interest Expense;
(ii) Provision for Taxes;
(iii) depreciation;
(iv) amortization to the extent not included in Interest Expense;
(v) any net loss from an unconsolidated subsidiary or joint venture;
(vi) any net loss attributable to minority interests;
(vii) extraordinary or non-recurring non-cash items of expense or
loss;
(viii) any lump-sum write-offs, whether in whole or in part, of
deferred financing charges;
(ix) any lump sum write-offs, whether in whole or in part, of goodwill
due to a determination under GAAP that its value has been
impaired;
(x) any net loss on the sale of a business;
(xi) any net loss on the sale of fixed assets;
(xii) the one-time discontinued operations charge totaling $57,496,000
taken in calendar year 2002 related to the gas engine divisions
of Borrowers; and
(xiii) the one time restructuring charge totaling $56,378,000 (cash)
offset by $11,646,000 (non-cash) taken in calendar year 2003
related to the Global Capacity Initiative.
minus, (b) to the extent included in the determination of such consolidated net
income for such period:
(i) any net income from an unconsolidated subsidiary or joint
venture;
(ii) any net income attributable to minority interests;
(iii) any net income on the sale of a business;
(iv) any net income from the sale of fixed assets;
(v) extraordinary or non-recurring income or gains, and
(vi) any net income from operations of a Foreign Subsidiary to the
extent such Foreign Subsidiary is subject to any prohibition on,
or any condition, limitation, or other restriction having the
effect of prohibiting, repatriating or otherwise transferring
income (or repaying intercompany loans or advances), directly or
indirectly, to Parent or a Borrower (other than voluntary
restrictions imposed by Parent for tax planning purposes);
12
all of the above calculated in accordance with GAAP to the extent applicable.
"Effective Date" shall mean October 3, 2003.
"Eligible Accounts" shall mean Accounts created by a Borrower which
are and continue to be acceptable to Agent based on the criteria set forth below
as determined in Agent's good faith. In general, Accounts shall be Eligible
Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
(b) such Accounts are not unpaid more than (i) one hundred twenty
(120) days after the date of the original invoice for them or (ii) sixty (60)
days after the original due date for them; provided, that with respect to
Accounts of M. & ▇. ▇▇▇▇▇ owing by ▇▇▇▇ Products Company, ATSCO Products, Inc.,
Fenwick Automotive Products or HR&M Compressors, Inc., such Accounts shall not
be unpaid more than (x) two hundred forty (240) days after the date of the
original invoice for them or (y) thirty (30) days after the original due date
for them;
(c) such Accounts comply with the terms and conditions contained
in Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America, Canada, the United
Kingdom or, at Agent's election, the jurisdiction in which an Approved Foreign
Borrower is incorporated or otherwise organized (provided, that, at any time
promptly upon Agent's request, such Borrower shall execute and deliver, or cause
to be executed and delivered, such other agreements, documents and instruments
as may be required by Agent to perfect the security interests of Agent in those
Accounts of an account debtor with its chief executive office or principal place
of business in jurisdictions other than the United States of America in
accordance with the applicable laws of such jurisdictions in which such chief
executive office or principal place of business is located and take or cause to
be taken such other and further actions as Agent may request to enable Agent as
secured party with respect thereto to collect such Accounts under the applicable
laws of such jurisdictions) or, at Agent's option, if the chief executive office
and principal place of business of the account debtor with respect to such
Accounts is located other than in the United States of America, Canada, the
United Kingdom or, at Agent's election, the jurisdiction in which an Approved
Foreign Borrower is incorporated or otherwise organized, then if either: (i) the
account debtor has delivered to such Borrower an irrevocable letter of credit
issued or confirmed by a bank satisfactory to Agent and payable only in the
United States of America and in U.S. dollars, eurodollars, Canadian dollars,
British Pound Sterling or another currency acceptable to Agent, sufficient to
cover such Account, in form and substance satisfactory to Agent and if required
by Agent, the original of such letter of credit has been
13
delivered to Agent or Agent's agent and the issuer thereof, and such Borrower
has complied with the terms of Section 5.2(f) hereof with respect to the
assignment of the proceeds of such letter of credit to Agent or naming Agent as
transferee beneficiary thereunder, as Agent may specify, or (ii) such Account is
subject to credit insurance payable to Agent issued by an insurer and on terms
and in an amount acceptable to Agent, or (iii) such Account is otherwise
acceptable in all respects to Agent (subject to such lending formula with
respect thereto as Agent may determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇ (such that
the obligation of the account debtors with respect to such Accounts is
conditioned upon such Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto), ▇▇▇▇ and hold invoices or
retainage invoices, except as to ▇▇▇▇ and hold invoices, if Agent shall have
received an agreement in writing from the account debtor, in form and substance
satisfactory to Agent, confirming the unconditional obligation of the account
debtor to take the goods related thereto and pay such invoice;
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to any right of setoff or recoupment
(except for customary discounts for prompt payment) against such Accounts (but
the portion of the Accounts of such account debtor in excess of the amount at
any time and from time to time owed by such Borrower to such account debtor or
claimed owed by such account debtor may be deemed Eligible Accounts);
(h) there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder (but the portion of such Accounts not
otherwise impaired or reduced may be deemed Eligible Accounts);
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Agent and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of any Loan Party;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Agent's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which could
reasonably be likely to result in any material adverse change in any such
account debtor's financial condition (including, without limitation, any
bankruptcy, dissolution, liquidation, reorganization or similar proceeding);
14
(m) such Accounts are not evidenced by or arising under any
instrument or chattel paper;
(n) the aggregate amount of such Accounts owing by a single
account debtor (excluding General Motors Corporation) do not constitute more
than fifteen (15%) percent (or, in the case of each of Navistar International
Corporation, Advance Auto Parts, Inc., Ford Motor Corporation, AutoZone, Inc.,
▇'▇▇▇▇▇▇ Automotive, Inc., Freightliner LLC, Caterpillar Inc. and International
Truck and Engine Corporation, more than twenty-five (25%) percent) of the
aggregate amount of all otherwise Eligible Accounts (but the portion of the
Accounts not in excess of the applicable percentages may be deemed Eligible
Accounts);
(o) such Accounts are not owed by an account debtor who has
Accounts unpaid more than (i) one hundred twenty (120) days after the original
invoice date for them or (ii) sixty (60) days after the original due date for
them (or, in the case of Accounts of M. & ▇. ▇▇▇▇▇ owing by ▇▇▇▇ Products
Company, ATSCO Products, Inc., Fenwick Automotive Products or HR&M Compressors,
Inc., such account debtor does not have Accounts unpaid more than (x) two
hundred forty (240) days after the date of the original invoice for them or (y)
thirty (30) days after the original due date for them), which together
constitute more than fifty (50%) percent of the total Accounts of such account
debtor;
(p) the account debtor is not located in a state requiring the
filing of a Notice of Business Activities Report or similar report to permit
such Borrower to seek judicial enforcement in such State of payment of such
Account, unless such Borrower has qualified to do business in such state or has
filed a Notice of Business Activities Report or equivalent report for the then
current year or such failure to file and inability to seek judicial enforcement
is capable of being remedied without any material delay or material cost;
(q) such Accounts are owed by account debtors deemed creditworthy
at all times by Agent determined in its good faith.
The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the Original Closing Date, or (ii) an event, condition or other
circumstance existing on the Original Closing Date to the extent Agent has no
written notice thereof from a Borrower prior to the Original Closing Date, in
either case under clause (i) or (ii) which adversely affects or could reasonably
be expected to adversely affect the Accounts in the good faith determination of
Agent. Any Accounts which are not Eligible Accounts shall nevertheless be part
of the Collateral. Notwithstanding anything to the contrary above, Agent agrees
to consider treating Accounts due from AutoZone, Inc. or other account debtors
reasonably acceptable to Agent as being eligible, notwithstanding extended terms
beyond 120 days after the original invoice date for such Accounts with respect
thereto, to the extent that such Accounts are entitled to the benefit of an
irrevocable purchase commitment from SunTrust Bank or other financial
institutions reasonably acceptable to Agent on such terms, conditions and
procedures as may be acceptable to Agent (a "Purchase Commitment") (it being
agreed that all such Accounts which have not been sold and which are subject to
such Purchase Commitment shall be deemed eligible to the extent they otherwise
satisfy the eligibility criteria set forth above).
15
"Eligible In-Transit Inventory" shall mean, as to any Borrower,
Eligible Inventory of such Borrower which is in-transit to such Borrower from a
supplier thereof in the ordinary course of such Borrower's business which are
acceptable to Agent based on the criteria set forth below as determined in
Agent's good faith. In general, such Eligible Inventory shall be Eligible
In-Transit Inventory:
(a) if located outside the United States, are (i) being shipped F.O.B.
origin (or upon other similar terms approved in writing by Agent) and, during
the existence of a Trigger Event, either evidenced by a Qualifying ▇▇▇▇ of
Lading or to be acquired by such Borrower from a supplier to which a Letter of
Credit Accommodation has been issued for the full purchase price thereof which
contains as a condition to drawing thereunder the presentation of a Qualifying
▇▇▇▇ of Lading, (ii) fully insured in-transit against such risks (including war
risks to the extent commercially reasonable) and pursuant to such terms and
conditions and in such amounts as Agent may deem appropriate in its good faith
judgment which insurance shall name Agent loss payee thereunder and (iii) during
the existence of a Trigger Event, subject to agreements from such Borrower's
customs agents, freight forwarders and/or documentation agents as Agent shall
require, in form and substance satisfactory to Agent; or
(b) if located in the United States, are (i) during the existence of a
Trigger Event, under the control of a common carrier which has executed a
Collateral Access Agreement and (ii) fully insured in-transit against such risks
and pursuant to such terms and conditions and in such amounts as Agent may deem
appropriate in its good faith judgment which insurance shall name Agent loss
payee thereunder.
The criteria for Eligible In-Transit Inventory set forth above may
only be changed and any new criteria for Eligible In-Transit Inventory may only
be established by Agent in good faith based on either: (i) an event, condition
or other circumstance arising after the Original Closing Date, or (ii) an event,
condition or other circumstance existing on the Original Closing Date to the
extent Agent has no written notice thereof from a Borrower prior to the Original
Closing Date, in either case under clause (i) and (ii) which adversely affects
or could reasonably be expected to adversely affect the Inventory in the good
faith determination of Agent.
"Eligible Inventory" shall mean, as to a Borrower, Inventory of such
Borrower consisting of finished goods and finished cores held for resale in the
ordinary course of the business of such Borrower and raw materials and raw
materials cores for such finished goods, in each case which are acceptable to
Agent based on the criteria set forth below as determined in Agent's good faith.
In general, Eligible Inventory shall not include:
(a) work-in-process;
(b) spare parts for equipment;
(c) packaging and shipping materials;
(d) supplies used or consumed in such Borrower's business;
(e) Inventory (other than Eligible In-Transit Inventory) at premises
other than those owned and controlled by any Borrower, except any Inventory
which would otherwise be deemed Eligible Inventory that is not located at
premises owned and operated by any Borrower
16
may nevertheless be considered Eligible Inventory as to locations which are
leased by a Borrower if Agent shall have received a Collateral Access Agreement
from the owner and lessor of such location, duly authorized, executed and
delivered by such owner and lessor, or if Agent shall not have received such
Collateral Access Agreement (or Agent shall determine to accept a Collateral
Access Agreement that does not include all required provisions or provisions in
the form otherwise required by the Agent), Agent may, at its option,
nevertheless consider Inventory at such location to be Eligible Inventory to the
extent Agent shall have established such Reserves in respect of amounts at any
time payable by such Borrower to the owner and lessor thereof as Agent shall
determine in its good faith;
(f) Inventory subject to a security interest or lien in favor of any
Person other than Agent except those permitted in this Agreement (but without
limiting the right of Agent to establish any Reserves with respect to amounts
secured by such security interest or lien in favor of any Person even if
permitted herein);
(g) ▇▇▇▇ and hold goods; unserviceable or obsolete Inventory;
(h) Inventory which is not subject to the first priority, valid and
perfected security interest of Agent;
(i) returned, damaged and/or defective Inventory;
(j) Inventory purchased or sold on consignment; and
(k) Inventory located outside the United States of America (other than
Eligible In-Transit Inventory).
The criteria for Eligible Inventory set forth above may only be
changed and any new criteria for Eligible Inventory may only be established by
Agent in good faith based on either: (i) an event, condition or other
circumstance arising after the Original Closing Date, or (ii) an event,
condition or other circumstance existing on the Original Closing Date to the
extent Agent has no written notice thereof from a Borrower prior to the Original
Closing Date, in either case under clause (i) or (ii) which adversely affects or
could reasonably be expected to adversely affect the Inventory in the good faith
determination of Agent. Any Inventory which is not Eligible Inventory shall
nevertheless be part of the Collateral.
"Eligible Processor Inventory" shall mean, as to any Borrower,
Eligible Inventory of such Borrower which have been delivered to a third party
for processing in the ordinary course of such Borrower's business which are
acceptable to Agent based on the criteria set forth below as determined in
Agent's good faith. In general such Eligible Inventory shall be Eligible
Processor Inventory if:
(a) Agent has received a Collateral Access Agreement from the owner of
the processor where the Eligible Inventory is located;
(b) Agent has received, upon its request, UCC financing statements
between the owner of such location, as bailee, and such Borrower, as ▇▇▇▇▇▇, in
form and substance satisfactory to Agent, which are duly assigned to Agent; and
17
(c) Agent has received a written acknowledgement, in form and
substance satisfactory to Agent in its good faith determination, from any lender
to the owner of such location of the first priority security interest of Agent
in such Inventory.
The criteria for Eligible Processor Inventory set forth above may only
be changed and any new criteria for Eligible Processor Inventory may only be
established by Agent in good faith based on either: (i) an event, condition or
other circumstance arising after the Original Closing Date, or (ii) an event,
condition or other circumstance existing on the Original Closing Date to the
extent Agent has no written notice thereof from a Borrower prior to the Original
Closing Date, in either case under clause (i) or (ii) which adversely affects or
could reasonably be expected to adversely affect the Inventory in the good faith
determination of Agent.
"Eligible Transferee" shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or "accredited investor" (as defined in Regulation D
under the Securities Act of 1933), provided, that, (i) any Eligible Transferee
described in the clauses above shall be approved by Agent with respect to the
Revolving Loans; (ii) any Eligible Transferee described in the clauses above
shall be approved by the Required Term Lenders and Agent with respect to the
Term Loan; (iii) neither any Loan Party nor any Affiliate of any Loan Party
shall qualify as an Eligible Transferee and (iv) no Person to whom any
Indebtedness which is in any way subordinated in right of payment to any other
Indebtedness of any Loan Party or Affiliate of any Loan Party shall qualify as
an Eligible Transferee, except as Agent may otherwise specifically agree.
"Enforcement Action" shall mean the exercise by Agent (or any other
Collateral Agent at the direction of Agent) in good faith of any of its material
enforcement rights and remedies as a secured creditor hereunder or under the
other Financing Agreements, Foreign Financing Agreements, applicable law or
otherwise at any time following the occurrence and during the continuance of an
Event of Default (including, without limitation, the demand for the immediate
payment of all of the Obligations, the solicitation of bids from third parties
to conduct the liquidation of the Collateral, the engagement or retention of
sales brokers, marketing agents, investment bankers, accountants, appraisers,
auctioneers or other third parties for the purposes of valuing, marketing,
promoting and selling the Collateral, the commencement of any action to
foreclose on the security interests or liens of any Collateral Agent in all or
any material portion of the Collateral, notification of account debtors to make
payments to the applicable Collateral Agent, any action to take possession of
all or any material portion of the Collateral or commencement of any legal
proceedings or actions against or with respect to all or any portion of the
Collateral).
"Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions
18
imposed therein), authorizations, judicial or administrative decisions,
injunctions or agreements between any Loan Party or any Subsidiary of any Loan
Party and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), or to human health or safety, (b) relating to the exposure to, or the
use, storage, recycling, treatment, generation, manufacture, processing,
distribution, transportation, handling, labeling, production, release or
disposal, or threatened release, of Hazardous Materials, or (c) relating to all
laws with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials. The term "Environmental Laws"
includes (i) the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act,
the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act,
the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of
1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
"Equipment" shall mean, as to any Person, all of such Person's now
owned and hereafter acquired equipment, wherever located, including machinery,
data processing and computer equipment (whether owned or licensed and including
embedded software), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in connection
therewith, and substitutions and replacements thereof, wherever located.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.
"ERISA Affiliate" shall mean any person required to be aggregated with
any Loan Party or any Subsidiary of any Loan Party under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Loan Party or any Subsidiary of any Loan
Party is a "disqualified person" (within the meaning of Section 4975 of the
Code) or with respect to which any Loan Party or any Subsidiary of any Loan
Party could otherwise be liable; (f) a complete or partial withdrawal by any
Loan Party or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under
19
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
Pension Benefit Guaranty Corporation to terminate a Plan; (h) an event or
condition which might reasonably be expected to constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (i) the imposition of any liability under Title IV of
ERISA, other than for Pension Benefit Guaranty Corporation premiums due but not
delinquent under Section 4007 of ERISA, upon any Loan Party or any ERISA
Affiliate and (j) any other event or condition with respect to a Plan including
any Plan subject to Title IV of ERISA maintained, or contributed to, by any
ERISA Affiliate that could reasonably be expected to, individually or in the
aggregate for all such events or conditions, have a Material Adverse Effect.
"Eurodollar Rate" shall mean with respect to the Interest Period for a
Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower or Administrative Borrower
on behalf of such Borrower and approved by Agent) on or about 9:00 a.m. (New
York time) two (2) Business Days prior to the commencement of such Interest
Period in amounts substantially equal to the principal amount of the Eurodollar
Rate Loans requested by and available to such Borrower in accordance with this
Agreement, with a maturity of comparable duration to the Interest Period
selected by or on behalf of a Borrower.
"Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof. For the avoidance of doubt, the Term Loan shall not
constitute a Eurodollar Rate Loan at any time.
"European Borrowers" shall mean, Delco UK and any other Subsidiary of
Parent organized under the laws of the United Kingdom or Ireland and designed by
Agent as a "European Borrower" pursuant to the terms of Section 9.10(j) hereof.
"European Collateral Agent" shall mean Burdale Financial Limited, in
is capacity as European Collateral Agent on behalf of the Foreign Lenders
pursuant to the Agency Agreement and any replacement or successor European
Collateral Agent thereunder.
"European Financing Agreements" shall mean, collectively, the European
Loan Agreement, and all notes, debentures, guarantees, security agreements and
other agreements, charges, share pledges, debentures, documents and instruments
now or at any time hereafter executed and/or delivered by any European Borrower
or any guarantor thereof in favor of the European Lender or European Collateral
Agent, in each case as the same may be amended, restated or otherwise modified
from time to time.
"European Lender" shall mean, collectively, Burdale Financial Limited,
in its capacity as administrative agent for the financial institutions from time
to time party to the European Loan Agreement as lenders, each of such lenders
thereunder and their respective successors and assigns.
20
"European Loan Agreement" shall mean that certain Credit Agreement
dated as of the Original Closing Date hereof among the Parent, European Borrower
and the European Lender, as amended, restated or otherwise modified from time to
time.
"Event of Default" shall mean the occurrence or existence of any event
or condition described in Section 10.1 hereof.
"Excess Availability" shall mean the amount as of any date of
determination, as determined by Agent in good faith, equal to: (a) the lesser
of: (i) the Borrowing Base plus the sum of all Foreign Borrowing Bases or (ii)
the Maximum Revolving Credit, minus (b) the sum of (i) the amount of all then
outstanding and unpaid Obligations (other than Term Loan Obligations) and
Foreign Obligations plus (ii) the aggregate amount of all then outstanding and
unpaid trade payables and other obligations of Borrowers and Foreign Borrowers
which are outstanding more than sixty (60) days past due as of such time (other
than trade payables or other obligations being contested or disputed by such
Persons which have been approved by Agent in its good faith determination) plus
(iii) without duplication, the amount of checks issued by Borrowers and Foreign
Borrowers to pay trade payables and other obligations which are more than 60
days past due as of such time, but not yet sent.
"Excess Cash Flow" means, without duplication, with respect to each
twelve month period ending on September 30 of each year (commencing with the
twelve month period ending on September 30, 2004) of Parent and its
Subsidiaries, EBITDA minus (a) the cash portion of all capital expenditures made
by Parent and its Subsidiaries during such period (to the extent such capital
expenditures are permitted to be made hereunder), minus (b) Interest Expense
paid or accrued during such period, minus (c) scheduled principal payments paid
in respect of Funded Debt during such period (to the extent such Funded Debt is
permitted to be incurred, and such payments are permitted to be made,
hereunder), minus (d) all federal, state, local and foreign income taxes paid in
cash by Parent and its Subsidiaries during such period, minus (e) cash payments
made in connection with the Global Capacity Initiative during such period (less
net proceeds received in calendar year 2003 from the sale of Tractech, Inc. not
to exceed $13,770,000), minus (f) to the extent not deducted in clause (c)
above, cash payments made during such period with respect to (i) any
Indebtedness permitted under Sections 9.9(n), 9.9(q) and 9.9(r), (ii)
intercompany loans permitted under Section 9.10(g)(E), (iii) earn-out payments
made during such period pursuant to that certain Stock Purchase Agreement dated
as of March 10, 2002 by and among Reman Holdings, Inc., M. & ▇. ▇▇▇▇▇ and the
"Sellers" (as defined therein) and/or (iv) any repurchase of Capital Stock
permitted under Section 9.11(e), minus (g) the excess, if any, of Working
Capital at the end of such period over Working Capital at the beginning of such
period (or plus the excess, if any, of Working Capital at the beginning of such
period over Working Capital at the end of such period), and minus (h) to the
extent not deducted in calculating EBITDA, payments made during such period to
the defined benefit plans of the Parent and its Subsidiaries. Excess Cash Flow
shall not include Net Available Cash (as defined in the Indentures).
"Excess Prime Loan Tranche" shall have the meaning set forth in
Section 2.1(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with all rules, regulations and interpretations thereunder or
related thereto.
21
"Fee Letter" shall mean the letter agreement dated as of the date
hereof, amending and restating that letter agreement dated as of May 31, 2002,
by and between Parent, on behalf of itself and certain of its subsidiaries, and
Agent, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
"Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements, deposit account control agreements,
investment property control agreements, intercreditor agreements and all other
agreements, documents and instruments on the Original Closing Date or at any
time thereafter executed and delivered by any Borrower or Obligor in connection
with this Agreement or the Original Agreement.
"Fixed Asset Loan Value" shall mean the amount of $9,144,000 as of the
date hereof, as reduced from time to time pursuant to Section 2.4 hereof.
"Fixed Charge Coverage Ratio" shall mean, with respect to Parent and
its Subsidiaries on a consolidated basis for any fiscal period, the ratio of
EBITDA to Fixed Charges.
"Fixed Charges" shall mean, with respect to Parent and its
Subsidiaries on a consolidated basis for any fiscal period, (a) the aggregate of
all Interest Expense payable in cash for such period, plus (b) principal
payments, Capital Lease payments, deferred obligations to reimburse a letter of
credit issuing bank after a draw on such letter of credit and redemption
obligations of Indebtedness which, in each case, were originally scheduled to be
paid in cash during such period, and including any mandatory prepayments of such
Indebtedness plus (c) the cash portion of any capital expenditures determined in
accordance with GAAP to the extent applicable, made during such period (to the
extent not already included in clause (b) above), plus (d) to the extent not
deducted from consolidated net income, the cash portion of any and all payments
in respect of tax sharing agreements, management agreements and consulting
agreements made during such period, plus (e) the cash portion of dividends paid
by Parent during such period, plus (f) income taxes paid or payable (except to
the extent contested pursuant to Section 9.4 hereof) by Parent and its
Subsidiaries during such period, plus (g) payments made to any minority
shareholders of any Subsidiary of Parent (less, in the case of any payments made
to the minority shareholders of Delco Remy Mexico, S. de ▇.▇. de C.V., the
portion of proceeds received in calendar year 2003 from the sale and lease back
transaction described in Section 9.7(b)(ix) which have been used to make such
payments to the minority shareholders of Delco Remy Mexico, S. de ▇.▇. de C.V.
limited to the aggregate amount of $8,000,000), plus (h) cash payments made in
connection with the Global Capacity Initiative (less net proceeds received in
calendar year 2003 from the sale of Tractech, Inc.; provided that the aggregate
amount of such net proceeds shall not exceed $13,770,000), plus (i) earn-out
payments made during such period pursuant to that certain Stock Purchase
Agreement dated as of March 10, 2002 by and among Reman Holdings, Inc., M. & ▇.
▇▇▇▇▇ and the "Sellers" (as defined therein). Cash capital expenditures are
those capital expenditures that are not financed with new Indebtedness
(including Indebtedness incurred under this Agreement or the Foreign Loan
Agreements) or through Capital Leases.
"Foreign Advances" shall mean, collectively, as of any date of
determination the sum of (a) the aggregate outstanding amount of all loans and
advances made by the Foreign Lenders under the Foreign Loan Agreements as of
such date plus (b) the amount of all Foreign Letter of Credit Accommodations
outstanding as of such date.
22
"Foreign Borrowing Bases" shall mean each "Borrowing Base" as defined
in each of the Foreign Loan Agreements.
"Foreign Borrowers" shall mean, collectively, the European Borrowers
and the Approved Foreign Borrowers.
"Foreign Credit Lines" shall mean all credit lines and other
Indebtedness for borrowed money, however evidenced, and invoice, commercial
paper or draft discounting and other similar facilities and, without
duplication, the face amount of letters of credit and contingent obligations
with respect to guaranties and similar obligations issued in relation or
pursuant thereto, of Foreign Subsidiaries (other than facilities established
pursuant to Foreign Loan Agreements).
"Foreign Collateral" shall mean, collectively, all the assets of the
Foreign Borrowers for which a Collateral Agent (other than the US Collateral
Agent) has been granted a lien, security interest, charge or other encumbrance
pursuant to the Foreign Financing Agreements.
"Foreign Financing Agreements" shall mean, collectively, the European
Financing Agreements, the Canadian Financing Agreements and the Approved Foreign
Financing Agreements.
"Foreign Lenders" shall mean, collectively, the European Lender and
each Approved Foreign Lender.
"Foreign Letters of Credit Accommodations" shall mean, collectively,
the face amount of all letters of credit issued or guaranteed by the Foreign
Lenders under the terms of the Foreign Loan Agreements.
"Foreign Loan Agreements" shall mean, collectively, the European Loan
Agreement and any Approved Foreign Loan Agreement.
"Foreign Obligations" shall mean, collectively, the "Obligations" (as
such term is defined in the Foreign Loan Agreements) owing by Foreign Borrowers
under all the Foreign Loan Agreements.
"Foreign Obligor" shall mean any Subsidiary of the Parent organized
outside of the United States that is a guarantor of any Foreign Obligations
(other than the Foreign Borrowers).
"Foreign Subsidiary" shall mean any Subsidiary of Parent organized
outside of the United States that is not a Foreign Borrower or a Foreign
Obligor.
"Fortress" shall mean Fortress Credit Opportunities I LP, a Delaware
limited partnership.
"Fortress Fee Letter" shall mean that certain fee letter dated as of
the Effective Date by and between Parent, on behalf of itself and certain of its
subsidiaries, and Fortress.
23
"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 which 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 Leases, 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 Borrowers
and Foreign Borrowers, the Obligations and the Foreign Obligations,
respectively.
"Funding Bank" shall have the meaning set forth in Section 3.3.
hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the
basis of such principles in effect on the Original Closing Date and consistent
with those used in the preparation of the most recent audited financial
statements delivered to Agent prior to the Original Closing Date except for the
application of FASB 141, 142, 144 and 145 and all future accounting
pronouncements as adopted by Parent.
"GE Program" shall mean that certain Agreement dated as of October 22,
2002 between Delco Remy America, Inc. and General Electric Capital Corporation,
as attorney-in-fact for General Motors Corporation, pursuant to which General
Electric Capital Corporation may pay certain invoices owing from General Motors
to Delco Remy America, Inc. at a discount, subject to the terms and conditions
of such agreement.
"Global Capacity Initiative" shall mean the relocation in calendar
year 2003 of the manufacturing operations of Delco Remy America, Inc. to Korea,
Hungary and Mexico.
"Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives, friable
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), mold, sewage, sludge, industrial slag, solvents and/or
any other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
24
"Hedging Agreement" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency option,
or any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging any exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security or currency valuations or commodity
prices, in each case entered into by a Loan Party or any of its Subsidiaries as
a party and either (a) Wachovia Bank, National Association as a counterparty or
(b) upon Parent's request, and Agent's consent (not to be unreasonably withheld)
any other financial institution as a counterparty.
"Inactive Subsidiaries" shall mean, collectively, subject to Section
9.24 hereof, DR Reman, L.L.C., a Delaware limited liability company, Marine
Corporation of America, an Indiana corporation, Power Investments Marine, Inc.,
a New Jersey corporation, Publitech, Inc., a Virginia corporation, Remy India
Holdings, Inc., a Delaware corporation, Remy Powertrain, L.P., a Delaware
limited partnership, and World Wide Automotive Distributors, Inc., a Virginia
corporation.
"Indebtedness" shall mean, with respect to any Person, any liability,
whether or not contingent, without duplication (a) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
or accrual with respect to any other amount created, incurred, assumed or
guaranteed by such Person in the ordinary course of business of such Person in
connection with obtaining goods, materials or services that is not overdue by
more than ninety (90) days, unless the trade payable or accrual is being
contested in good faith); (c) all obligations as lessee under leases which have
been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any
contractual obligation, contingent or otherwise, of such Person to pay or be
liable for the payment of any indebtedness described in this definition of
another Person, including, without limitation, any such indebtedness, directly
or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof, or to maintain solvency,
assets, level of income, or other financial condition; (e) redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by such Person if such redemption or repurchase obligation is required to be
made prior to the repayment of all Obligations and Foreign Obligations; (f) all
reimbursement obligations and other liabilities of such Person with respect to
surety bonds (whether bid, performance or otherwise), letters of credit,
banker's acceptances, drafts or similar documents or instruments issued for such
Person's account; (g) all indebtedness of such Person in respect of indebtedness
of another Person for borrowed money or indebtedness of another Person otherwise
described in this definition which is secured by any consensual lien, security
interest, collateral assignment, conditional sale, mortgage, deed of trust, or
other encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; and (h) all obligations, liabilities and
indebtedness of such Person (marked to market) arising under swap agreements,
cap agreements and collar agreements and other agreements or arrangements
designed to protect such person against fluctuations in interest rates or
currency or commodity values.
25
"Indentures" shall mean, collectively, the 1996 Notes Indenture, the
1997 Notes Indenture and the 2001 Notes Indenture.
"Information Certificate" shall mean, collectively, the Information
Certificate of Parent constituting Exhibit B hereto containing material
information with respect to Parent and its Subsidiaries (to the extent required
herein and therein), their respective businesses and assets provided by or on
behalf of Parent to Agent in connection with the preparation of the Financing
Agreements and the Foreign Financing Agreements and the financing arrangements
provided for herein and therein.
"Insolvency Case" shall mean, as to any person, any of the following:
(i) any case or proceeding with respect to such person under the Bankruptcy
Code, or any other Federal, State or other bankruptcy, insolvency,
reorganization or other law affecting creditors' rights or any other or similar
proceedings seeking any stay, reorganization, arrangement, composition or
readjustment of all or substantially all of the obligations and indebtedness of
such person or (ii) any proceeding seeking the appointment of any receiver,
trustee, administrator, liquidator, custodian or other insolvency official with
similar powers with respect to such person or all or substantially all of its
assets or (iii) any proceeding for liquidation, dissolution or other winding up
of the business of such person or (iv) any general assignment for the benefit of
creditors or any general marshaling of all or substantially all of the assets of
such person.
"Insolvency Event" shall mean the commencement of an Insolvency Case
by or against any Borrower or any Obligor.
"Intellectual Property" shall mean, as to any Person, such Person's
now owned, or used under authority of another Person, and/or hereafter arising
or acquired, whether statutory or based on common law: patents, patent rights,
patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations and applications, trademarks, trademark
registrations, trade names, trade styles and trade dress, service marks, service
▇▇▇▇ registrations, trademark and service ▇▇▇▇ applications; all extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing; all rights to ▇▇▇ for past, present and future infringement
of, and collect damages related to, any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including without
limitation any goodwill associated with any trademark or the license of any
trademark); customer and other lists, business plans, and any proprietary
information of such Person, in whatever form maintained; trade secret rights,
copyright rights, rights in works of authorship, work-for-hire and other work
product, domain names and domain name registration; software and contract rights
relating to computer software programs, in whatever form created or maintained;
and licenses and rights to use any and all of the foregoing.
"Interest Expense" shall mean, with respect to Parent and its
Subsidiaries on a consolidated basis for any fiscal period, interest expense
(whether cash or non-cash) of such Persons determined in accordance with GAAP,
to the extent applicable, for such period.
"Interest Period" shall mean for any Eurodollar Rate Loan, a period of
approximately one (1), two (2), three (3) or six (6) months duration as any
Borrower (or Administrative Borrower on behalf of such Borrower) may elect, the
exact duration to be
26
determined in accordance with the customary practice in the applicable
Eurodollar Rate market; provided, that, such Borrower (or Administrative
Borrower on behalf of such Borrower) may not elect an Interest Period which will
end after the last day of the then-current term of this Agreement.
"Interest Rate" shall mean,
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans consisting of Revolving Loans, a rate equal
to the Applicable Margin for Prime Rate Loans on a per annum basis in excess of
the Prime Rate,
(ii) as to Prime Rate Loans consisting of the Term Loan, a rate equal
to four and one-half of one (4.50%) percent per annum in excess of the Prime
Rate, provided, that, the Interest Rate with respect to the Term Loan shall not
be less than eight and one-half of one (8.50%) percent per annum at any time,
(iii) as to Eurodollar Rate Loans, a rate equal to the Applicable
Margin for Eurodollar Rate Loans on a per annum basis in excess of the Adjusted
Eurodollar Rate (based on the Eurodollar Rate applicable for the Interest Period
selected by Borrower (or Administrative Borrower on behalf of such Borrower) as
in effect three (3) Business Days after the date of receipt by Agent of the
request for such Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate previously quoted), and
(iv) as to Letter of Credit Accommodations, a rate equal to the
Applicable Margin for Letter of Credit Accommodations on a per annum basis;
(b) Subject to clause (c) of this definition below, effective as of
the first Business Day of each month, the Interest Rate payable by Borrowers on
the Revolving Loans and Letter of Credit Accommodations shall be increased or
decreased, as the case may be, (i) as to Prime Rate Loans consisting of
Revolving Loans, to the rate equal to the Applicable Margin for Prime Rate Loans
on a per annum basis in excess of the Prime Rate, (ii) as to Eurodollar Rate
Loans, to the rate equal to the Applicable Margin for Eurodollar Rate Loans on a
per annum basis in excess of the Adjusted Eurodollar Rate and (iii) as to Letter
of Credit Accommodations, to the rate equal to the Applicable Margin for Letter
of Credit Accommodations on a per annum basis; and
(c) Notwithstanding anything to the contrary contained in clauses (a)
and (b) of this definition,
(x) with respect to Revolving Loans, the Applicable Margin
otherwise used to calculate the Interest Rate for Prime Rate Loans,
Eurodollar Rate Loans and Letter of Credit Accommodations shall be the
highest respective percentages set forth in the definition of the term
Applicable Margin for each such category (without regard to the amount
of Monthly Excess Availability) plus in each case two (2%) percent per
annum, at Agent's option without notice to any Borrower, (i) for the
period (A) from and after the effective date of termination or
non-renewal hereof until Agent and Revolving Lenders have received
full and final payment of all outstanding and unpaid Obligations owing
to them
27
(notwithstanding entry of a judgment against any Borrower) and (B)
from and after the date of the occurrence of an Event of Default for
so long as such Event of Default is continuing, and (ii) on Revolving
Loans to any Borrower at any time outstanding in excess of any limit
set forth in Section 2.1(a) hereof or in the definition of Borrowing
Base (whether or not such excess(es) arise or are made with or without
Agent's or any Lender's knowledge or consent and whether made before
or after an Event of Default);
(y) with respect to the Term Loan, the Interest Rate applicable
thereto shall be increased by two (2%) percent per annum, at Required
Term Lenders' option without notice to any Borrower, for the period
(A) from and after the effective date of termination or non-renewal
hereof until Agent and Term Lenders have received full and final
payment of all outstanding and unpaid Obligations owing to them
(notwithstanding entry of a judgment against any Borrower) and (B)
from and after the date of the occurrence of an Event of Default for
so long as such Event of Default is continuing.
"Inventory" shall mean, as to any Person, all of such Person's now
owned and hereafter existing or acquired goods, wherever located, which (a) are
leased by such Person as lessor; (b) are held by such Person for sale or lease
or to be furnished under a contract of service; (c) are furnished by such Person
under a contract of service; or (d) consist of raw materials, work in process,
finished goods or materials used or consumed in its business.
"Investment Property Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Agent in its good faith
determination, by and among Agent, any Loan Party and any securities
intermediary, commodity intermediary or other person who has custody, control or
possession of any investment property of such Loan Party acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that
during the existence of an Event of Default it will comply with entitlement
orders originated by Agent, with respect to such investment property, or other
instructions of Agent, or (as the case may be) apply any value distributed on
account of any commodity contract as directed by Agent, in each case, without
the further consent of such Loan Party and including such other terms and
conditions as Agent may require.
"Lenders" shall mean the financial institutions who are signatories
hereto as Lenders and other persons made a party to this Agreement as a Lender
in accordance with Section 13.6 hereof, and their respective successors and
assigns; each sometimes being referred to herein individually as a "Lender".
"Letter of Credit Accommodations" shall mean, collectively, (a) the
letters of credit, merchandise purchase or other guaranties which are from time
to time either issued or opened by Agent or any Lender for the account of any
Borrower or (b) with respect to which Agent or Lenders have agreed to indemnify
the issuer or guaranteed to the issuer the performance by any Borrower of its
obligations to such issuer; sometimes being referred to herein individually as
"Letter of Credit Accommodation".
"License Agreements" shall have the meaning set forth in Section 8.11
hereof.
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"Loan Party" and "Loan Parties" shall mean, individually or
collectively, each Borrower.
"Loans" shall mean the Revolving Loans and the Term Loan.
"M. & ▇. ▇▇▇▇▇" shall mean M. & ▇. ▇▇▇▇▇ Auto Parts, L.L.C., a
Delaware limited liability company (f/k/a M. & ▇. ▇▇▇▇▇ Auto Parts, Inc.).
"Management Investors" shall mean each of the officers, employees and
directors of Parent who own Voting Stock of Parent, in each case so long as such
person shall remain an officer, employee or director of Parent.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the financial condition, business, operations or prospects of Borrowers, taken
as a whole, or Parent and its Subsidiaries taken as a whole or the legality,
validity or enforceability of any of the Material Agreements; (b) the legality,
validity, enforceability, perfection or priority of the security interests and
liens of any Collateral Agent upon the Collateral, taken as a whole, or the
Foreign Collateral, taken as a whole; (c) Collateral which makes up at least
$5,000,000 of the Borrowing Base or Foreign Collateral which makes up at least
$1,500,000 of the Foreign Borrowing Bases (but excluding any loss in value to
such Collateral or Foreign Collateral to the extent such loss is covered by
insurance, the proceeds of which have been paid to Agent in accordance with
Section 9.5 hereof); provided, that, to the extent a Material Adverse Effect
exists solely as a result of a material adverse effect on Foreign Collateral
pursuant to this clause (c), such Material Adverse Effect, by itself, shall not
result in an Event of Default occurring under this Agreement, (d) the ability of
any Material Loan Party or any Foreign Borrower to perform its obligations under
any of the Material Agreements as and when to be performed; or (e) the ability
of the Obligors taken as a whole or the Foreign Obligors taken as a whole to
perform their obligations under any of the Material Agreements as and when to be
performed; or (f) the ability of any Agent Party to enforce the Obligations or
any Foreign Obligations or realize upon the Collateral or any Foreign Collateral
or otherwise with respect to the rights and remedies of such Agent Party under
any of the Material Agreements; provided, that, for purposes of Section 9.22
hereof, the term "Material Adverse Effect" shall have the meaning set forth in
Section 9.22 hereof.
"Material Agreements" shall mean, this Agreement, any Foreign Loan
Agreement, any subordination or intercreditor agreement in favor of an Agent
Party to which a Borrower, an Obligor, a Foreign Borrower or a Foreign Obligor
is a party and any guarantee, note, security agreement, debenture, pledge
agreement or other agreement which guarantees the payment of, or grants a lien
upon property as security for payment of, any of the Obligations or Foreign
Obligations.
"Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements and Foreign Financing Agreements), written
or oral, of any Loan Party or any Subsidiary of any Loan Party involving
Indebtedness for borrowed money in an amount in excess of $10,000,000, (b) any
contract or other agreement (other than the Financing Agreements, Foreign
Financing Agreements and any contracts or agreements covered by clause (a)
above), written or oral, of any Loan Party or any Subsidiary of any Loan Party
with annual commitments to purchase or sell goods or services involving monetary
liability of or to any Person in an amount in excess of $25,000,000 in any
fiscal year, (c) any Material License (to the
29
extent not covered in clause (b) above), and (d) any other contract or other
agreement, whether written or oral, to which any Loan Party or any Subsidiary of
any Loan Party is a party as to which the breach, nonperformance, cancellation
or failure to renew by any party thereto would have a Material Adverse Effect.
"Material License" shall mean a license, consent or other agreement or
understanding by which: (i) any Loan Party or any Subsidiary of any Loan Party
licenses from a third party Intellectual Property that if unavailable to such
Loan Party or Subsidiary would reasonably be expected to have a material adverse
effect upon such Loan Party's or Subsidiary's financial condition, results of
operation or business, including without limitation the inability to design,
develop, manufacture or have manufactured the products of such Loan Party or
Subsidiary; or (ii) any Loan Party or any Subsidiary of any Loan Party permits a
third party to use the Intellectual Property of such Loan Party or Subsidiary.
"Material Loan Party" as used above shall mean, as of any date of
determination, any Loan Party who has Collateral making up at least $5,000,000
of the Borrowing Base as of such date as determined by Agent.
"Maximum Credit" shall mean, at any time, the least of (a) the amount
of $250,000,000 or (b) the sum of (i) the Maximum Revolving Credit and (ii) the
aggregate principal amount of the Term Loan then outstanding or (c) the amount
as of such time equal to (i) sixty (60%) percent of the book value of the
inventory of the Parent and its "Restricted Subsidiaries" (as defined in the
Indentures) plus (ii) eighty-five (85%) percent of the book value of the
accounts receivable of the Parent and such Restricted Subsidiaries, in each case
determined in accordance with GAAP.
"Maximum Revolving Credit" shall mean, at any time, the amount of
$190,000,000 as reduced from time to time pursuant to Section 2.5 hereof.
"Maximum Term Credit" shall mean, at any time, with respect to Parent
and its Subsidiaries, the lesser of (a) the amount of $60,000,000 or (b) the
amount equal to two and three-quarters times (2.75 times) the EBITDA for the
twelve month period ending on or most recently prior to the date of
determination based on the financial statements of Borrower delivered in
accordance with Section 9.6 hereof minus the sum of (as reflected in such
financial statements) (i) the aggregate outstanding amount of Revolving Loans
and Letter of Credit Accommodations to all Borrowers at such time and the US
Dollar Amount of all Foreign Advances outstanding at such time, (ii) the US
Dollar Amount of the aggregate Indebtedness outstanding under the Foreign Credit
Lines at such time, (iii) without duplication, the US Dollar Amount of other
secured Indebtedness (including Capital Leases but excluding the Term B
Obligations) and any Indebtedness relating to or arising under any
sale/leaseback transaction and (iv) without duplication, for the month ending on
or most recently prior to the date of determination, the amount of collections
in excess of $20,000,000 arising from collections under the GE Program and the
SunTrust Letter Agreement. For purposes of this definition, (a) collections
under the SunTrust Letter Agreement will be calculated on an actual paid early
basis as of such month and using 97 day terms, testing invoice by invoice and
(b) collections under the GE Program will be based on actual receipts collected
in such month.
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"Monthly Excess Availability" shall mean, for any month, the Excess
Availability on the last Business Day of such month; provided, that, if a
Trigger Event exists, Monthly Excess Availability shall mean the weighted
average amount of Excess Availability for such month which shall equal the sum
of each "Periodic Availability Amount" (defined below) calculated for such
month. As used herein, the term "Periodic Availability Amount" shall mean with
respect to any period of days in a month for which a Borrowing Base Certificate
is in effect, (a) the Excess Availability amount determined by Agent based on
the information set forth in the Borrowing Base Certificate for such period of
days multiplied by (b) the fraction (expressed as a percentage), the numerator
of which is the number of days in such month for which such Borrowing Base
Certificate was in effect, and the denominator of which is the number of days in
such month.
"Mortgages" shall mean, individually and collectively, each of the
mortgages, deeds of trust or other similar agreements executed by any Borrower
in favor of Agent, pursuant to which such Borrower granted to Agent a lien and
security interest in Borrower's Real Property and related assets.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by any
Loan Party or any ERISA Affiliate.
"Multi-Jurisdictional Commitment" shall mean, as of any date of
determination with respect to any Revolving Lender, a commitment to make Foreign
Advances pursuant to the terms of any Foreign Loan Agreement, which aggregate
commitments for all Foreign Loan Agreements shall not exceed $10,000,000, as the
same may be adjusted from time to time in accordance with the terms hereof.
"Multi-Jurisdictional Lender" shall mean a Lender that has a Revolving
Commitment which includes, as a subcomponent thereof, a Multi-Jurisdictional
Commitment (which Multi-Jurisdictional Commitment may be maintained by an
Affiliate of such Lender).
"Net Amount" shall mean, as to Borrowers, the gross amount of the
Eligible Accounts of Borrowers less (a) sales, excise or similar taxes included
in the amount thereof and (b) returns, discounts, claims, credits and allowances
of any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto; provided, that, the amount deducted under clause
(a) shall not duplicate items for which Reserves have been established by Agent.
"Net Orderly Liquidation Value" shall mean, with respect to any
category of Eligible Inventory, the estimated net recovery value as determined
by Agent in good faith based on the most recent appraisal report for such
Eligible Inventory performed by an appraiser acceptable to Agent, applying an
approach to valuation which is consistent with the approach used in appraisals
prepared for Agent's use prior to the Original Closing Date, which reflects the
estimated net cash value expected by the appraiser to be derived from a sale or
disposition at a liquidation or going-out-of-business sale of such Eligible
Inventory after deducting all costs, expenses and fees attributable to such sale
or disposition, including, without limitation, all fees,
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costs and expenses of any liquidator(s) engaged to conduct such sale or
disposition and all costs and expenses of removing and delivering the same to a
purchaser.
"Non-Restricted Subsidiary" shall have the meaning set forth in the
definition of "Subsidiary".
"Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all Loan Parties to any Agent Party
and/or any of their Affiliates, including principal, interest, charges, fees,
costs and expenses, however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, arising under this Agreement, any of the other Financing
Agreements or any Foreign Financing Agreements, whether now existing or
hereafter arising, whether arising before, during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to any Loan Party under the United States Bankruptcy Code or any similar
statute (including the payment of interest and other amounts which would accrue
and become due but for the commencement of such case, whether or not such
amounts are allowed or allowable in whole or in part in such case), whether
direct or indirect, absolute or contingent, joint or several, due or not due,
primary or secondary, liquidated or unliquidated, or secured or unsecured.
"Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrowers.
"OEMs" shall mean, collectively, the original equipment manufacturers
that purchase Inventory from Borrowers.
"Original Closing Date" shall mean June 28, 2002.
"Other Taxes" shall mean any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any of the
other Financing Agreements.
"Parent" shall mean Delco Remy International, Inc., a Delaware
corporation, and its successors and assigns.
"Participant" shall mean any financial institution that acquires and
holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.6 of this Agreement governing participations.
"Permits" shall have the meaning set forth in Section 8.7(b) hereof.
"Permitted Acquisition" shall mean an Acquisition permitted under
Section 9.10(j) hereof.
"Permitted Holders" shall mean the CVC Investors, the Management
Investors and, in the case of any individual who is a Permitted Holder, any
Permitted Transferee (as
32
defined in the Stockholders Agreement except a Permitted Transferee by virtue of
Section 3.5(b)(iv) of the Stockholders Agreement) of such individual; provided,
however, that in no event shall any Persons (other than CVC), collectively, be
deemed "Permitted Holders" with respect to more than 30% of the total voting
power of all classes of Voting Stock of the Parent.
"Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including any corporation which elects subchapter S
status under the Code), limited liability company, limited liability
partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which any Loan Party, any Subsidiary of any Loan Party or any ERISA
Affiliate thereof sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the case of a Multiemployer Plan has made
contributions at any time during the immediately preceding six (6) plan years.
"Prime Rate" shall mean the rate from time to time publicly announced
by Wachovia Bank, National Association, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
"Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms
thereof.
"Priority Event" shall mean the occurrence of any one or more of the
following: (a) the occurrence and continuance of an Event of Default under
Section 10.1(a)(i) hereof with respect to any Borrower's failure to pay any of
the Obligations arising pursuant to the Revolving Loans (including principal,
interest, fees and expenses attributable thereto); (b) the occurrence and
continuance of an Event of Default under Sections 10.1(g) or 10.1(h) hereof; or
(c) the occurrence of any other Event of Default and the acceleration by Agent
of the payment of all or a material portion of the Obligations.
"Pro Rata Excess Advances" shall have the meaning set forth in Section
6.10(f)(ii).
"Pro Rata Share" shall mean:
(a) with respect to all Loans and any other matters, subject to clause
(e) below, as to any Lender as of any date of determination, the percentage
obtained by dividing (i) the Commitments of that Lender by (ii) the Commitments
of all Lenders, and (b) with respect to all Loans and Letter of Credit
Accommodations on and after the date on which the Commitments have been
terminated, the percentage obtained by dividing (i) the aggregate outstanding
principal balance of the Loans and Letter of Credit Accommodations held by that
Lender, by (ii) the outstanding principal balance of the Loans and Letter of
Credit Accommodations held by all Lenders;
(b) with respect to all matters relating to Revolving Loans, subject
to clause (e) below, as to any Multi-Jurisdictional Lender as of any date of
determination, the fraction (expressed as a percentage) the numerator of which
is the amount equal to (a)(i) such Lender's Revolving Commitment Percentage
multiplied by (ii) the amount of all outstanding Advances
33
(other than the Term Loan) and Foreign Advances after giving effect to any
Advances (other than the Term Loan) and Foreign Advances to be made or repaid on
such date less (b) all Foreign Advances of such Lender outstanding after giving
effect to any Foreign Advances to be made or repaid by such Lender on such date,
and the denominator of which is the aggregate amount of all outstanding Advances
(other than the Term Loan) after giving effect to any Advances (other than the
Term Loan) to be made or repaid on such date; and
(c) with respect to all matters relating to Revolving Loans, subject
to clause (e) below, as to any Revolving Lender without a Multi-Jurisdictional
Commitment as of any date of determination, the fraction (expressed as a
percentage) the numerator of which is the amount equal to (a)(i) the aggregate
amount of all outstanding Advances (other than the Term Loan) after giving
effect to any Advances (other than the Term Loan) to be made or repaid on such
date less (ii) with respect to all Multi-Jurisdictional Lenders, the sum of such
Lenders' Pro Rata Shares of all outstanding Advances (other than the Term Loan)
after giving effect to any Advances (other than the Term Loan) to be made or
repaid on such date multiplied by (b) such Lender's Adjusted Revolving
Commitment Percentage, and the denominator of which is the aggregate amount of
all outstanding Advances (other than the Term Loan) after giving effect to any
Advances (other than the Term Loan) to be made or repaid on such date.
(d) with respect to all matters relating to the Term Loan, subject to
clause (e) below, as to any Term Lender, as of any date of determination, the
percentage obtained by dividing (i) the Term Commitment of that Term Lender by
(ii) the Term Commitments of all Term Lenders; provided that upon the making of
the Term Loan, such percentage shall be obtained by dividing (A) the aggregate
outstanding principal balance of the Term Loan held by that Term Lender, by (B)
the outstanding principal balance of the Term Loan held by all Term Lenders;
(e) Notwithstanding clauses (a), (b), (c) and (d) above or any other
provision of this Agreement, (i) to the extent the term "Pro Rata Share" is used
in this Agreement to describe any funding on the part of a Revolving Lender,
then the term "Pro Rata Share" as defined herein shall include any adjustments
thereto made by Agent pursuant to Section 6.10(f)(ii) hereof and (ii) to the
extent the term "Pro Rata Share" is used in this Agreement to describe the
rights of a Lender to interest, repayments or other amounts hereunder, then,
subject to any priority in application of proceeds pursuant to Section 6.4(a)
hereof, the term "Pro Rata Share" shall mean, as of any date of determination,
the fraction (expressed as a percentage) the numerator of which is the amount
equal to the outstanding amount of all Advances owing to such Lender as of such
date, and the denominator of which is the outstanding amount of all Advances
owing to all Lenders as of such date.
"Provision for Taxes" shall mean an amount equal to all taxes imposed
on or measured by net income, whether Federal, State, Provincial, county or
local, and whether foreign or domestic, whether paid, currently payable or
deferred by any Person in respect of any period in accordance with GAAP to the
extent applicable.
"Purchase Commitment" shall have the meaning set forth in the last
paragraph of the definition of "Eligible Accounts".
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"Qualifying ▇▇▇▇(s) of Lading" means a negotiable ▇▇▇▇ of lading
issued by a common carrier in form and substance acceptable to Agent in its good
faith determination specifying as the consignee thereof (i) the issuer of the
applicable Letter of Credit Accommodation issued to facilitate the payment of
the goods represented by such negotiable ▇▇▇▇ of lading or (ii) Agent (or
Agent's duly appointed agent) if no Letter of Credit Accommodation was required
to be issued as a condition to the issuance of such negotiable ▇▇▇▇ of lading.
"Real Property" shall mean, with respect to any Person, all now owned
and hereafter acquired owned real property of such Person, including leasehold
interests (as a lessor), together with all buildings, structures, and other
improvements located thereon and all licenses, easements and appurtenances
relating thereto, wherever located, including the real property and related
assets more particularly described in the Mortgages.
"Receivables" shall mean, with respect to any Person, all of the
following now owned or hereafter arising or acquired property of such Person:
(a) all Accounts; (b) all interest, fees, late charges, penalties, collection
fees and other amounts due or to become due or otherwise payable in connection
with any Account; (c) all payment intangibles of such Person; (d) all letters of
credit, indemnities, guarantees, security or other deposits and proceeds thereof
issued payable to such Person or otherwise in favor of or delivered to such
Person in connection with any Account; or (e) all other accounts, contract
rights, chattel paper, instruments, notes, general intangibles and other forms
of obligations owing to any such Person, whether from the sale and lease of
goods or other property, licensing of any property (including Intellectual
Property or other general intangibles), rendition of services or from loans or
advances by such Person or to or for the benefit of any third person (including
loans or advances to any Affiliates or Subsidiaries of such Person) or otherwise
associated with any Accounts, Inventory or general intangibles of such Person
(including, without limitation, choses in action, causes of action, tax refunds,
tax refund claims, any funds which may become payable to such Person in
connection with the termination of any Plan or other employee benefit plan and
any other amounts payable to such Person from any Plan or other employee benefit
plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, casualty
or any similar types of insurance and any proceeds thereof and proceeds of
insurance covering the lives of employees on which such Person is a
beneficiary).
"Records" shall mean, as to any Person, all of such Person's present
and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
any Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of any
such Person with respect to the foregoing maintained with or by any other
Person).
"Reference Bank" shall mean Wachovia Bank, National Association, or
such other bank as Agent may from time to time designate.
"Renewal Date" shall the meaning set forth in Section 13.1 hereof.
"Register" shall have the meaning set forth in Section 13.6 hereof.
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"Required Lenders" shall mean, at any time, those Lenders whose
Commitments aggregate sixty-six and two-thirds (66 2/3%) percent or more of the
aggregate of the Commitments of all Lenders, or if the Commitments shall have
been terminated, Lenders to whom at least sixty-six and two-thirds (66 2/3%)
percent of the then outstanding Obligations and Foreign Obligations are owing.
"Required Revolving Lenders" shall mean, at any time, those Lenders
whose Revolving Commitments aggregate sixty-six and two-thirds (66 2/3%) percent
or more of the aggregate of the Revolving Commitments of all Revolving Lenders,
or if the Revolving Commitments shall have been terminated, Revolving Lenders to
whom at least sixty-six and two-thirds (66 2/3%) percent of the then outstanding
Obligations (other than Term Loan Obligations) and Foreign Obligations are
owing.
"Required Term Lenders" shall mean, at any time, those Term Lenders
whose Term Commitments aggregate at least fifty-one (51%) percent of the
aggregate of the Term Loan Commitments of all Term Lenders or, if the Term Loan
Commitments shall have been terminated, Term Lenders to whom at least fifty-one
(51%) percent of the then outstanding Term Loans are owing.
"Reserves" shall mean as of any date of determination, such amounts as
Agent may from time to time establish and revise in good faith reducing the
amount of Revolving Loans and Letter of Credit Accommodations which would
otherwise be available to any Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Agent in good faith (including pursuant to information disclosed
under Section 9.22 hereof), adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value or (ii) the assets,
business or prospects of any Borrower or Obligor or (iii) the security interests
and other rights of Agent or any Lender in the Collateral (including the
enforceability, perfection and priority thereof) or (b) to reflect Agent's good
faith belief that any collateral report or financial information furnished by or
on behalf of any Borrower or Obligor to Agent is or may have been incomplete,
inaccurate or misleading in any material respect or (c) to reflect outstanding
Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) to
reflect the estimated costs relating to unpaid freight charges, warehousing or
storage, charges, taxes, duties and other similar unpaid costs associated with
the acquisition or transportation of Eligible In-Transit Inventory or (e) to
reflect any estimated accrued and unpaid fees charged by any third party
processors in respect of Eligible Processor Inventory or (f) in respect of any
state of facts which Agent determines in good faith constitutes a Default or an
Event of Default or (g) to reflect the "Net Available Cash" portion of any
"Asset Disposition" as described in Section 9.7(b)(viii) hereof. Without
limiting the generality of the foregoing, Reserves may be established to reflect
that dilution with respect to the Borrowers' Accounts (based on the ratio of the
aggregate amount of non-cash reductions in Borrowers' Accounts for any period to
the aggregate dollar amount of the sales of Borrowers for such period) as
calculated by Agent for any period is greater than five (5%) percent or to
reflect that the orderly liquidation value of the Equipment or fair market value
of any of the Real Property as set forth in the most recent acceptable
appraisals received by Agent with respect thereto has declined so that the Fixed
Asset Loan Value as of such appraisal date is greater than such percentage with
respect to such appraised values as Agent used in establishing the original
Fixed Asset Loan Value multiplied by such appraised values. To the extent Agent
may revise the
36
lending formulas used to determine the Borrowing Base or establish new criteria
or revise existing criteria for Eligible Accounts or Eligible Inventory so as to
address any circumstances, condition, event or contingency in a manner
satisfactory to Agent in its good faith determination, Agent shall not establish
a Reserve for the same purpose. The amount of any Reserve established by Agent
shall have a reasonable relationship to the event, condition or other matter
which is the basis for such reserve as determined by Agent in good faith.
"Revolving Commitment" shall mean, at any time, as to each Revolving
Lender, the principal amount set forth next to such Revolving Lender's name on
Schedule I hereto designated as the Revolving Commitment or on Schedule 1 to the
Assignment and Acceptance Agreement pursuant to which such Revolving Lender
became a Revolving Lender hereunder in accordance with the provisions of Section
13.6 hereof, as the same may be adjusted from time to time in accordance with
the terms hereof; sometimes being collectively referred to herein as "Revolving
Commitments". The term Revolving Commitment, with respect to any Revolving
Lender, shall include such Revolving Lender's Multi-Jurisdictional Commitment,
which Multi-Jurisdictional Commitment shall be a sublimit within such Revolving
Lender's Revolving Commitment.
"Revolving Commitment Percentage" shall mean with respect to any
Revolving Lender as of any date of determination, the fraction (expressed as a
percentage) the numerator of which is such Revolving Lender's Revolving
Commitment and the denominator of which is the aggregate amount of all of the
Revolving Commitments of Revolving Lenders, as adjusted from time to time in
accordance with the provisions of Section 13.6 hereof; provided, that, if the
Revolving Commitments have been terminated, the numerator shall be the unpaid
amount of Obligations (other than Term Loan Obligations) and Foreign Obligations
owing to such Revolving Lender and the denominator shall be the aggregate amount
of all unpaid Obligations (other than Term Loan Obligations) and Foreign
Obligations.
"Revolving Lenders" shall mean those Lenders having a Revolving
Commitment.
"Revolving Loans" shall mean the loans now or hereafter made by or on
behalf of any Lender or by Agent for the account of any Lender on a revolving
basis pursuant to the Credit Facility (involving advances, repayments and
readvances) as set forth in Section 2.1 hereof.
"Solvent" shall mean, at any time with respect to any Person, that at
such time such Person (a) is able to pay its debts as they mature and has (and
has a reasonable basis to believe it will continue to have) sufficient capital
(and not unreasonably small capital) to carry on its business consistent with
its practices as of the Original Closing Date, and (b) the assets and properties
of such Person at a fair valuation (and including as assets for this purpose at
a fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability); provided, that,
"Solvent" under clause (b) above shall not be determined by GAAP.
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"Special Agent Advances" shall have the meaning set forth in Section
12.11 hereof.
"Specified Default" shall mean an Event of Default under Sections
10.1(a)(i), 10.1(g), 10.1(h), 10.1(m), 10.1(n) or 10.1(a)(ii) and 10.1(a)(iii)
(to the extent arising as a result of the failure to comply with Sections 9.7,
9.8, 9.9, 9.10, 9.11, 9.12, 9.17 or 9.18 hereof), in each case after giving
effect to all applicable cure periods.
"Spot Rate" shall mean the rate quoted in the "Exchange Rates" section
(or similar replacement section) of The Wall Street Journal as the spot rate for
the purchase of United States dollars with another currency on the date on which
the foreign exchange computation is to be made or, in the event that The Wall
Street Journal shall not provide such quoted rate, the parties hereto shall
refer to the applicable spot rate as quoted by the Reference Bank at
approximately 10:00 a.m. (Charlotte, North Carolina time) on the date on which
the foreign exchange computation is to be made.
"Standstill Period" shall mean the ninety (90) day period commencing
on the date that the Agent receives a written notice executed and delivered by
the Required Term Lenders of a Specified Default, demanding the accelerated
payment by the Borrowers of all Obligations and requesting that Agent commence
one or more Enforcement Actions.
"Stockholders Agreement" means the Securities Transfer,
Recapitalization and Holders Agreement among the stockholders of the Parent as
in effect on the Original Closing Date.
"Subsidiary" or "subsidiary" shall mean, with respect to any Person,
any corporation, limited liability company, limited liability partnership or
other limited or general partnership, trust, association or other business
entity of which an aggregate of at least a majority of the outstanding Capital
Stock or other interests entitled to vote in the election of the board of
directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person. As used in the Financing Agreements the
term "Subsidiary" shall exclude the Delphi Subsidiary and the term
"Non-Restricted Subsidiary" shall mean the Delphi Subsidiary.
"SunTrust Letter Agreement" has the meaning set forth in Section
9.7(b)(vii) hereof.
"Taxes" shall mean any and all present or future taxes, levies,
penalties, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of any Lender, such taxes
(including income taxes, franchise taxes or capital taxes) as are imposed on or
measured by such Lender's net income or capital (or other taxes imposed in lieu
thereof) by any jurisdiction (or any political subdivision thereof).
"Term Commitment" shall mean, at any time, as to each Term Lender, the
principal amount set forth next to such Term Lender's name on Schedule I hereto
designated as
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the Term Commitment or on Schedule 1 to the Assignment and Acceptance Agreement
pursuant to which such Term Lender became a Term Lender hereunder in accordance
with the provisions of Section 13.6 hereof, as the same may be adjusted from
time to time in accordance with the terms hereof; sometimes being collectively
referred to herein as "Term Commitments". Notwithstanding the foregoing, from
and after the date on which the Term Loan is made, the "Term Commitment" of each
Term Lender shall refer to the outstanding principal balance of the Term Loan
held by such Term Lender.
"Term Lenders" shall mean those Lenders having a Term Loan Commitment.
"Term Loan" shall have the meaning set forth in Section 2.3(a) hereof.
"Term Loan Availability Condition" shall mean, at any time that a
scheduled installment under Section 2.3(a), a mandatory prepayment under
Sections 2.3(c) or 2.3(d), a voluntary prepayment under Section 2.3(e) or a
catch-up payment under Section 2.3(f) is proposed to be made in respect of the
Term Loan (in each case, a "Proposed Payment"), the condition precedent that (a)
no Priority Event exists immediately before, and immediately after giving effect
to, the Proposed Payment and (b) Excess Availability is at least $10,000,000 (i)
as of the last day of the month, week or day, as applicable, ending immediately
prior to the date of the Proposed Payment based on the Borrowing Base
Certificate required to be delivered in accordance with Section 7.1(a)(i), (ii)
for each of the days between the last date covered by the most recent Borrowing
Base Certificate delivered under clause (i) above and the date of the Proposed
Payment and (iii) immediately before, and immediately after giving effect to,
the Proposed Payment. To the extent Agent has not received a Borrowing Base
Certificate for the applicable period ending immediately prior to the date of
the Proposed Payment as required by clause (b)(i) above and in accordance with
Section 7.1(a)(i), Agent shall determine whether the Excess Availability
requirement in clause (b) above has been satisfied by reference to the Borrowing
Base Certificate most recently delivered to Agent, as adjusted by Agent to
account for any Reserves, seasonal adjustments or other factors as Agent shall
determine in its reasonable credit judgment.
"Term Loan Obligations" shall mean all Obligations owing to the Term
Lenders under this Agreement or any other Financing Agreement.
"Trigger Event" shall mean at any time (a) an Event of Default shall
have occurred and/or (b) Average Excess Availability shall be less than
$25,000,000; provided, that, a Trigger Event shall remain in existence until
Agent has determined (which determination shall be made no more than once in any
360 day period) that (i) Average Excess Availability has exceeded $25,000,000
for three consecutive calendar months following the occurrence of a Trigger
Event and (ii) no Event of Default has occurred or continues to exist during
such three month period.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York, and any successor statute, as in effect from time to time (except
that terms used herein which are defined in the Uniform Commercial Code as in
effect in the State of New York on the Original Closing Date shall continue to
have the same meaning notwithstanding any replacement or amendment of such
statute except as Agent may otherwise determine).
39
"US Collateral Agent" shall mean Congress Financial Corporation
(Central), in its capacity as US Collateral Agent on behalf of the Lenders and
the Foreign Lenders pursuant to the Agency Agreement and any replacement or
successor US Collateral Agent thereunder.
"US Dollar Amount" shall mean as of any date of determination as to
any amount denominated in any currency other than United States dollars, the
equivalent amount in United States dollars as determined by Agent on such date
by reference to the Spot Rate for the purchase of United States dollars with
such currency.
"Value" shall mean, as determined by Agent in good faith, with respect
to Inventory, the lower of (a) cost computed on a first-in first-out basis in
accordance with GAAP or (b) market value, provided, that, for purposes of the
calculation of the Borrowing Base, (i) the Value of the Inventory shall not
include: (A) the portion of the value of Inventory equal to the profit earned by
any Affiliate on the sale thereof to any Borrower or (B) write-ups or
write-downs in value with respect to currency exchange rates and (ii)
notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be computed in the same manner and consistent with the
computation of cost in the most recent appraisal of the Inventory received and
accepted by Agent prior to the Original Closing Date, if any.
"Voting Stock" shall mean with respect to any Person, (a) one (1) or
more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
"Working Capital" shall mean, at any date of determination thereof,
for the Parent and its Subsidiaries determined on a consolidated basis in
accordance with GAAP, an amount equal to the sum of all current assets less the
sum of all current liabilities (other than the current portion of long-term debt
and accrued management fees).
Section 2. CREDIT FACILITIES
2.1 Loans.
(a) Subject to and upon the terms and conditions contained herein,
each Revolving Lender severally (and not jointly) agrees to fund its Pro Rata
Share of Revolving Loans to each Borrower from time to time in amounts requested
by such Borrower (or Administrative Borrower on behalf of such Borrower);
provided, that, the aggregate outstanding amount of Revolving Loans and Letter
of Credit Accommodations to all Borrowers at any time do not exceed the least
of: (i) the Borrowing Base at such time, (ii) the Maximum Revolving Credit less
the US Dollar Amount of all Foreign Advances outstanding at such time or (iii)
the Maximum Credit less the aggregate principal amount of the Term Loan
outstanding at such time less the US Dollar Amount of all Foreign Advances
outstanding at such time. For purposes of settling Pro Rata Shares of Revolving
Loans pursuant to Section 6.10(f)(i) hereof, the Borrowers agree that at all
times when Foreign Advances are outstanding, the Borrowers shall keep Prime Rate
Loans outstanding hereunder in an aggregate principal amount equal to at least
the US
40
Dollar Amount of all Foreign Advances outstanding as of such time (such Prime
Rate Loans referenced to herein as, the "Excess Prime Loan Tranche").
(b) Agent may, in its discretion, from time to time, upon not less
than five (5) Business Days prior written notice to Administrative Borrower,
reduce the lending formula(s) with respect to Eligible Inventory, Eligible
In-Transit Inventory and/or, Eligible Processor Inventory to the extent that
Agent determines in good faith that: (i) the number of days of the turnover of
any such Inventory, or any category thereof, for any period has materially
adversely changed or (ii) the liquidation value of any such Inventory, or any
category thereof, has materially decreased, including any decrease attributable
to a change in the nature, quality or mix of any such Inventory. The amount of
any decrease in the lending formulas shall have a reasonable relationship to the
event, condition or circumstance which is the basis for such decrease as
determined by Agent in good faith. In determining whether to reduce the lending
formula(s), Agent may consider events, conditions, contingencies or risks which
are also considered in determining Eligible Accounts, Eligible Inventory,
Eligible In-Transit Inventory, Eligible Processor Inventory or in establishing
Reserves.
(c) In the event that (i) the aggregate principal amount of the
Revolving Loans and Letter of Credit Accommodations outstanding exceed the
lesser of (A) the Borrowing Base or (B) the Maximum Revolving Credit less the US
Dollar Amount of all outstanding Foreign Advances, or (ii) the aggregate
principal amount of Revolving Loans and Letter of Credit Accommodations
outstanding based on the Eligible Inventory, Eligible Processor Inventory,
Eligible In-Transit Inventory and/or A/R Core Credit Add-Backs of all Borrowers
exceeds the $160,000,000 sublimit set forth in the definition of Borrowing Base,
or (iii) the aggregate principal amount of the Revolving Loans and Letter of
Credit Accommodations outstanding based on Eligible Processor Inventory,
Eligible In-Transit Inventory and/or A/R Core Credit Add-Backs exceeds any
sublimit for such category as set forth in the definition of Borrowing Base, or
(iv) the aggregate amount of the outstanding Letter of Credit Accommodations
exceed the sublimit for Letter of Credit Accommodations set forth in Section
2.2(e), such event shall not limit, waive or otherwise affect any rights of
Agent or Revolving Lenders in such circumstances or on any future occasions and
Borrowers shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such
excess(es) for which payment is demanded.
2.2 Letter of Credit Accommodations.
(a) Subject to and upon the terms and conditions contained herein, at
the request of a Borrower (or Administrative Borrower on behalf of such
Borrower), Agent agrees, for the ratable risk of each Revolving Lender according
to its Pro Rata Share of Revolving Loans to provide or arrange for Letter of
Credit Accommodations for the account of such Borrower containing terms and
conditions acceptable to Agent and the issuer thereof. Any payments made by or
on behalf of Agent or any Revolving Lender to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations provided to or
for the benefit of a Borrower shall constitute additional Revolving Loans to
such Borrower pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, Borrowers
shall pay to Agent, for the
41
benefit of Revolving Lenders, a letter of credit fee at a rate equal to the
Interest Rate, on the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month. Such letter of credit fee
shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed and the obligation of Borrowers to pay such fee shall
survive the termination of this Agreement.
(c) The Borrower requesting such Letter of Credit Accommodation (or
Administrative Borrower on behalf of such Borrower) shall give Agent two (2)
Business Days' prior written notice of such Borrower's request for the issuance
of a Letter of Credit Accommodation. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit Accommodation
requested, the effective date (which date shall be a Business Day) of issuance
of such requested Letter of Credit Accommodation, whether such Letter of Credit
Accommodations may be drawn in a single or in partial draws, the date on which
such requested Letter of Credit Accommodation is to expire (which date shall be
a Business Day), the purpose for which such Letter of Credit Accommodation is to
be issued, and the beneficiary of the requested Letter of Credit Accommodation.
The Borrower requesting the Letter of Credit Accommodation (or Administrative
Borrower on behalf of such Borrower) shall attach to such notice the proposed
form of the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the applicable
conditions precedent contained in Section 4 hereof and the other terms and
conditions contained herein, no Letter of Credit Accommodations shall be
available unless each of the following conditions precedent have been satisfied
in a manner satisfactory to Agent: (i) the Borrower requesting such Letter of
Credit Accommodation (or Administrative Borrower on behalf of such Borrower)
shall have delivered to the proposed issuer of such Letter of Credit
Accommodation at such times and in such manner as such proposed issuer may
require, an application, in form and substance satisfactory to such proposed
issuer and Agent, for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance,
no order of any court, arbitrator or other Governmental Authority shall purport
by its terms to enjoin or restrain money center banks generally from issuing
letters of credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter of
Credit Accommodation refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit Accommodation; and (iii) the Excess
Availability, prior to giving effect to any Reserves with respect to such Letter
of Credit Accommodations, on the date of the proposed issuance of any Letter of
Credit Accommodations, shall be equal to or greater than: (A) if the proposed
Letter of Credit Accommodation is for the purpose of purchasing Eligible
Inventory and the documents of title with respect thereto are consigned to the
issuer, the sum of (1) the percentage equal to one hundred (100%) percent minus
the then applicable percentage with respect to Eligible Inventory set forth in
the definition of the term Borrowing Base multiplied by the Value or Net Orderly
Liquidation Value, as applicable, of such Eligible Inventory (in either case
which shall include the cost of duty, freight, and transport to the extent the
same have been paid), plus (2) freight, taxes, duty and other amounts which
Agent estimates must be paid in connection with such
42
Inventory upon arrival and for delivery to one of such Borrower's locations for
Eligible Inventory within the United States of America unless Agent shall be
satisfied that such items have been paid and (B) if the proposed Letter of
Credit Accommodation is for any other purpose or the documents of title are not
consigned to the issuer in connection with a Letter of Credit Accommodation for
the purpose of purchasing Inventory, an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Agent with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, a Reserve shall be established in the
applicable amount set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Agent's discretion, with the consent of all Revolving
Lenders, the amount of all outstanding Letter of Credit Accommodations and all
other commitments and obligations made or incurred by Agent or any Revolving
Lender in connection therewith shall not at any time exceed $30,000,000 less the
US Dollar Amount of all Foreign Letter of Credit Accommodations outstanding at
such time.
(f) Borrowers shall indemnify and hold Agent and Revolving Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses (including reasonable legal expenses) which Agent or any
Revolving Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including any losses, claims, damages, liabilities, costs and expenses due to
any action taken by any issuer or correspondent with respect to any Letter of
Credit Accommodation, except for such losses, claims, damages, liabilities,
costs or expenses that are a direct result of the gross negligence or willful
misconduct of Agent or any Revolving Lender as determined pursuant to a final
non-appealable order of a court of competent jurisdiction. Each Borrower assumes
all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower
assumes all risks for, and agrees to pay, all foreign, Federal, State and local
taxes, duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Each Borrower
hereby releases and holds Agent and Revolving Lenders harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by any Borrower,
by any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation, except for the gross negligence or willful
misconduct of Agent or any Revolving Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of
this Section 2.2(f) shall survive the payment of Obligations and the termination
of this Agreement.
(g) In connection with Inventory purchased pursuant to a Letter of
Credit Accommodation and to the extent a Trigger Event exists or Agent has not
imposed a Reserve of one hundred percent (100%) of the face amount of such
Letter of Credit Accommodation, Borrowers shall, at Agent's request, instruct
all suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver them to Agent and/or subject to
Agent's order, and if they shall come into any Borrower's possession, to deliver
them, upon Agent's request, to Agent in their original form. Borrowers shall
also, at Agent's request during the existence of a Trigger Event, designate
Agent as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
43
(h) Each Borrower hereby irrevocably authorizes and directs any issuer
of a Letter of Credit Accommodation to name such Borrower as the account party
therein and to deliver to Agent all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations
and to accept and rely upon Agent's instructions and agreements with respect to
all matters arising in connection with the Letter of Credit Accommodations or
the applications therefor. Nothing contained herein shall be deemed or construed
to grant any Borrower any right or authority to pledge the credit of Agent or
any Revolving Lender in any manner. Agent and Revolving Lenders shall have no
liability of any kind with respect to any Letter of Credit Accommodation
provided by an issuer other than Agent or any Revolving Lender unless Agent has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrowers shall be bound by any reasonable interpretation made in good faith by
Agent, or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of any Borrower. Agent shall have the sole and exclusive right
and authority to, and Borrowers shall not: (i) at any time an Event of Default
exists or has occurred and is continuing, (A) approve or resolve any questions
of non-compliance of documents, (B) give any instructions as to acceptance or
rejection of any documents or goods or (C) execute any and all applications for
steamship or airway guaranties, indemnities or delivery orders, and (ii) at all
times (provided that if no Event of Default has occurred, Agent shall not
exercise any of the following unless agreed to by or on behalf of any Borrower),
(A) grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents, and (B) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Agent may take such actions either in its own
name or in any Borrower's name.
(i) Any rights, remedies, duties or obligations granted or undertaken
by any Borrower to any issuer or correspondent in any application for any Letter
of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by such Borrower to Agent for the ratable
benefit of Revolving Lenders. Any duties or obligations undertaken by Agent to
any issuer or correspondent in any application for any Letter of Credit
Accommodation, or any other agreement by Agent in favor of any issuer or
correspondent to the extent relating to any Letter of Credit Accommodation,
shall be deemed to have been undertaken by Borrowers to Agent for the ratable
benefit of Revolving Lenders and to apply in all respects to Borrowers.
(j) Immediately upon the issuance or amendment of any Letter of Credit
Accommodation, each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Revolving Lender's
Pro Rata Share with respect to Revolving Loans of the liability with respect to
such Letter of Credit Accommodation (including, without limitation, all
Obligations with respect thereto).
(k) Each Borrower is irrevocably and unconditionally obligated,
without presentment, demand or protest, to pay to Agent any amounts paid by an
issuer of a Letter of
44
Credit Accommodation with respect to such Letter of Credit Accommodation
(whether through the borrowing of Loans in accordance with Section 2.2(a) or
otherwise). In the event that any Borrower fails to pay Agent on the date of any
payment under a Letter of Credit Accommodation in an amount equal to the amount
of such payment, Agent (to the extent it has actual notice thereof) shall
promptly notify each Revolving Lender of the unreimbursed amount of such payment
and each Revolving Lender agrees, upon one (1) Business Day's notice, to fund to
Agent the purchase of its participation in such Letter of Credit Accommodation
in an amount equal to its Pro Rata Share with respect to Revolving Loans of the
unpaid amount. The obligation of each Revolving Lender to deliver to Agent an
amount equal to its respective participation pursuant to the foregoing sentence
is absolute and unconditional and such remittance shall be made notwithstanding
the occurrence or continuance of any Event of Default, the failure to satisfy
any other condition set forth in Section 4 or any other event or circumstance.
If such amount is not made available by a Revolving Lender when due, Agent shall
be entitled to recover such amount on demand from such Revolving Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by any Borrower
in respect of Revolving Loans that are Prime Rate Loans as set forth in Section
3.1(a) hereof.
2.3 Term Loan
(a) Subject to and upon the terms and conditions contained herein, in
addition to the Credit Facility under Sections 2.1 and 2.2 hereof, as a one-time
accommodation to the Borrowers, each Term Lender severally (and not jointly)
agrees to fund its Pro Rata Share of a term loan to Borrowers in the original
principal amount of $60,000,000 on the Effective Date (the "Term Loan"). The
Term Loan is (i) to be repaid, together with interest and other amounts, in
accordance with this Agreement and the other Financing Agreements and (ii)
secured by all of the Collateral. The principal amount of the Term Loan shall be
repaid in consecutive quarterly installments of $1,500,000 each, payable on the
fifteenth day of each calendar quarter commencing January 15, 2005; provided,
that, no such payment may be made, or be deemed to be due and payable, unless
and until the Term Loan Availability Condition has been satisfied.
Notwithstanding the foregoing, the entire unpaid principal amount of the Term
Loan and all accrued and unpaid interest thereon shall be due and payable on the
earlier of the effective date of termination or non-renewal of the Financing
Agreements or the acceleration of the Obligations. Except for the making of the
Term Loan as set forth in this Section 2.3, Borrowers shall have no right to
request and Term Lenders shall have no obligation to make any additional loans
or advances to Borrowers under this Section 2.3 and any repayments of the Term
Loan shall not be subject to any readvance to or reborrowing by Borrowers. The
parties hereto agree and acknowledge that proceeds from the making of the Term
Loan in the amount of $60,000,000 shall be applied to prepay the outstanding
amount of Revolving Loans on the Effective Date.
(b) The Term Loans shall bear interest based on the Prime Rate only
and may not be converted to Eurodollar Rate Loans.
(c) In the event that the aggregate principal amount of the Term Loan
outstanding exceeds the Maximum Term Credit, Borrowers shall, upon demand by
Agent or Required Term Lenders, which may be made at any time or from time to
time, immediately repay to Agent for the account of the Term Lenders the entire
amount of any such excess for which payment is demanded; provided, that, no such
payment may be made, or be deemed to be
45
due and payable, unless and until the Term Loan Availability Condition has been
satisfied. Any prepayments of the Term Loan pursuant to this Section 2.3(c)
shall be applied to the scheduled installments under Section 2.3(a) in inverse
order of maturity. Any amount so repaid or applied on account of the Term Loan
under this Section 2.3(c) may not be reborrowed.
(d) Borrowers shall prepay the Term Loan on the earlier of the date
that is ten (10) days after (A) the date on which Borrowers' monthly financial
statements for the month ending September 30 are delivered pursuant to Section
9.6(a) hereof or (B) the date on which such monthly financial statements were
required to be delivered pursuant to Section 9.6(a) hereof in an amount equal to
twenty-five percent (25%) of Excess Cash Flow for the twelve month period ending
on September 30 (commencing with the twelve month period ending on September 30,
2004); provided, that, no such payment may be made, or be deemed to be due and
payable, unless and until the Term Loan Availability Condition has been
satisfied. Any prepayments from Excess Cash Flow paid pursuant to this Section
2.3(d) shall be applied to the scheduled installments under Section 2.3(a) in
inverse order of maturity. Each such prepayment shall be accompanied by a
certificate signed by Administrative Borrower's chief financial officer
certifying the manner in which Excess Cash Flow and the resulting prepayment
were calculated, which certificate shall be substantially in the form attached
hereto as Exhibit E. Any amount so repaid or applied on account of the Term Loan
under this Section 2.3(d) may not be reborrowed.
(e) Notwithstanding anything to the contrary contained in Section
13.1(d), Borrowers may prepay the Term Loan, without penalty or premium
commencing with the first anniversary of the Effective Date so long as the
aggregate amount of such prepayments do not exceed $10,000,000 in any 12-month
period; provided, that, no such payment may be made unless and until the Term
Loan Availability Condition has been satisfied.
(f) To the extent a payment or prepayment pursuant to Sections 2.3(a),
2.3(c) and/or 2.3(d) is not permitted to be made because the Term Loan
Availability Condition has not been satisfied, such circumstance shall not
result in an Event of Default and such payment or prepayment shall be deferred
until such time as the Term Loan Availability Condition can be satisfied with
respect to such payment or prepayment.
(g) Agent, on behalf of the Borrowers, agrees to record each Term Loan
on the Register referred to in Section 13.6(b). The Term Loan recorded on the
Register (the "Registered Term Loan") may not be evidenced by promissory notes
other than a Registered Term Note (as defined below). Upon the registration of a
Term Loan, any promissory note (other than a Registered Term Note) evidencing
the same shall be null and void and shall be returned to the Borrowers.
Borrowers agree, at the request of Required Term Lenders, to execute and deliver
to Term Lenders a promissory note in registered form to evidence such Registered
Term Loan (i.e., containing registered note language) and registered as provided
in Section 13.6(b) hereof (a "Registered Term Note"), payable to the order of
each Term Lender and otherwise duly completed. Once recorded on the Register,
the Obligations evidenced by such Registered Note may not be removed from the
Register so long as it remains outstanding, and a Registered Term Note may not
be exchanged for a promissory note that is not a Registered Term Note.
2.4 Amortization of Fixed Asset Loan Value. The Fixed Asset Loan Value
(determined as of the date hereof) shall be reduced on the first Business Day of
each month,
46
commencing on the first Business Day of October, 2003, by an amount sufficient
(assuming a like repayment each month) to reduce such Fixed Asset Loan Value to
zero ($0) by the first Business Day of July, 2007. Notwithstanding the
foregoing, in the event of any disposition, condemnation or casualty of
Equipment or Real Property of a Borrower pursuant to Section 9.7 hereof (or in
the event of receipt of any condemnation awards or casualty insurance proceeds
in respect thereof), the value of which Equipment or Real Property has been
included in the Fixed Asset Loan Value, the Fixed Asset Loan Value shall be
reduced on the date of such event by an amount equal to a fraction (expressed as
a percentage) where the numerator is the remaining Fixed Asset Loan Value and
the denominator is the original Fixed Asset Loan Value (determined as of the
Original Closing Date) multiplied by (a) in the case of such Equipment, 90% of
the Net Orderly Liquidation Value of such Equipment (as determined by Agent on
the Original Closing Date) and (b) in the case of such Real Property, 70% of the
appraised fair market value of such Real Property (as determined by Agent on the
Original Closing Date), and such reduction shall be allocated to the installment
reductions described above proportionally.
2.5 Commitments.
(a) The aggregate outstanding amount of each Revolving Lender's
Advances (other than the Term Loan) and US Dollar Amount of Foreign Advances
(including through such Lender's Affiliates) shall not exceed the amount of such
Revolving Lender's Commitment, as the same may from time to time be amended in
accordance with the provisions hereof. If at any time the Maximum Revolving
Credit is required to be reduced pursuant to Section 9.7(b)(viii) hereof, (i)
the Maximum Revolving Credit shall be reduced ratably, as to each Revolving
Lender, in accordance with such Revolving Lender's Revolving Commitment
Percentage and (ii) each Lender's Multi- Jurisdictional Commitment, if any,
shall be automatically reduced by the same percentage as such Lender's
Commitment was reduced. Agent is hereby authorized by all the Lenders to amend
Schedule I at any time to reflect such adjustments.
(b) If at any time the outstanding Advances exceed the Maximum Credit,
the Borrowers shall immediately prepay the Revolving Loans by an amount at least
equal to the amount of such excess.
SECTION 3. INTEREST, FEES AND TAXES
3.1 Interest.
(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest
on the outstanding principal amount of the Loans at the Interest Rate. All
interest accruing hereunder during the existence of any Event of Default or
termination hereof shall be payable on demand.
(b) Each Borrower (or Administrative Borrower on behalf of such
Borrower) may from time to time request Eurodollar Rate Loans or may request
that Prime Rate Loans (excluding Prime Rate Loans that are part of the Excess
Prime Loan Tranche and excluding the Term Loan) be converted to Eurodollar Rate
Loans or that any existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from a Borrower (or Administrative Borrower on
behalf of such Borrower) shall specify the amount of the Eurodollar Rate Loans
or the amount of the Prime Rate Loans to be converted to Eurodollar Rate Loans
or the amount of the Eurodollar Rate Loans to be continued (subject to the
limits set forth below) and the Interest
47
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Agent of
such a request from a Borrower (or Administrative Borrower on behalf of such
Borrower), such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be
converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue,
as the case may be, provided, that, (i) no Default or Event of Default shall
exist or have occurred and be continuing, (ii) no party hereto shall have sent
any notice of termination of this Agreement, (iii) such Borrower (or
Administrative Borrower on behalf of such Borrower) shall have complied with
such customary procedures as are established by Agent and specified by Agent to
Administrative Borrower from time to time for requests by Borrowers for
Eurodollar Rate Loans, (iv) no more than seven (7) Interest Periods may be in
effect at any one time in the aggregate under this Agreement, (v) the aggregate
amount of the Eurodollar Rate Loans must be in an amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and (vi)
Agent and each Revolving Lender shall have determined that the Interest Period
or Adjusted Eurodollar Rate is available to Agent and such Revolving Lender and
can be readily determined as of the date of the request for such Eurodollar Rate
Loan by such Borrower as provided under Section 3.3(b) hereof. Any request by or
on behalf of a Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans
to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall
be irrevocable. Notwithstanding anything to the contrary contained herein, Agent
and Revolving Lenders shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Agent and Revolving Lenders had purchased such deposits to
fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Agent has
received and approved a request to continue such Eurodollar Rate Loan at least
three (3) Business Days prior to such last day in accordance with the terms
hereof. Any Eurodollar Rate Loans shall, at Agent's option, upon notice by Agent
to Administrative Borrower, be subsequently converted to Prime Rate Loans in the
event that this Agreement shall terminate or not be renewed. Borrowers shall pay
to Agent, for the benefit of Revolving Lenders, upon demand by Agent (or Agent
may, at its option, charge any loan account of any Borrower) any amounts
required to compensate any Revolving Lender or Participant for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate
Loans pursuant to any of the foregoing as provided under Section 3.3(d) hereof.
(d) Interest shall be payable by Borrowers to Agent, for the account
of Lenders, monthly in arrears not later than the first day of each calendar
month and shall be calculated on the basis of a three hundred sixty (360) day
year and actual days elapsed. The interest rate on non-contingent Obligations
(other than Eurodollar Rate Loans) shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate effective on the first day of the
month after any change in such Prime Rate is announced based on the Prime Rate
in effect on the last day of the month in which any such change occurs. In no
event shall charges constituting interest payable by Borrowers to Agent and
Lenders exceed the maximum amount or the rate permitted under any applicable law
or regulation, and if any such part or provision of this Agreement is in
contravention of any such law or regulation, such part or provision shall be
deemed amended to conform thereto.
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3.2 Fees.
(a) Borrowers shall pay to Agent monthly, for the account of each
Revolving Lender, an unused line fee at a rate equal to one-quarter of one
percent (0.25%) per annum calculated upon the amount by which such Revolving
Lender's Revolving Commitment Percentage of $190,000,000 exceeds the average
daily principal balance of such Revolving Lender's outstanding sum of Advances
(other than the Term Loan) plus the average daily principal balance of the US
Dollar Amount of its Foreign Advances, in each case during the immediately
preceding month (or part thereof) while this Agreement is in effect and for so
long thereafter as any of the Obligations (other than Term Loan Obligations) are
outstanding, which fee shall be payable on the first day of each month in
arrears.
(b) Borrowers shall pay to Fortress for the account of each Term
Lender the fees set forth in the Fortress Fee Letter in the amounts and at the
times specified therein.
(c) Borrowers agree to pay to Agent the other fees and amounts set
forth in the Fee Letter in the amounts and at the times specified therein.
3.3 Changes in Laws and Increased Costs of Loans.
(a) Except as provided in Section 3.4 hereof, if after the Effective
Date, either (i) any change in, or in the interpretation of, any law or
regulation is introduced, including, without limitation, with respect to reserve
requirements, applicable to any Lender or any banking or financial institution
from whom any Lender borrows funds or obtains credit (a "Funding Bank"), or (ii)
a Funding Bank or any Lender complies with any future guideline or request from
any central bank or other Governmental Authority or (iii) a Funding Bank or any
Lender determines that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof has or would have the effect described below, or a Funding Bank or any
Lender complies with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, and in the case of any event set forth in this clause (iii),
such adoption, change or compliance has or would have the direct or indirect
effect of reducing the rate of return on any Lender's capital as a consequence
of its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
the Funding Bank's or such Lender's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, and the result of any of the
foregoing events described in clauses (i), (ii) or (iii) is or results in an
increase in the cost to any Lender of funding or maintaining the Loans or the
Letter of Credit Accommodations, then Borrowers shall from time to time upon
demand by Agent pay to Agent additional amounts sufficient to indemnify Lenders
against such increased cost on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount indemnified). A
certificate as to the amount of such increased cost, setting forth in reasonable
detail the calculation of such cost, shall be submitted to Administrative
Borrower by Agent and shall be conclusive, absent manifest error. Failure or
delay on the part of the Agent or any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital shall not constitute a waiver of such Lender's right to demand
such compensation; provided, that, Borrowers shall not be under any obligation
to
49
compensate any Lender under this Section 3.3(a) with respect to increased costs
with respect to any period prior to the date that is three (3) months prior to
such request if such Lender knew or should have known of the circumstances
giving rise to such increased costs and of the fact that such circumstances
would in fact result in a claim for increased compensation by reason of such
increased costs; provided, further, that, the foregoing limitation shall not
apply to any increased costs arising out of the retroactive application of any
law, regulation, rule, guideline or directive as aforesaid within such
three-month period.
(b) If prior to the first day of any Interest Period, (i) Agent or any
Revolving Lender shall have determined in good faith (which determination shall
be conclusive and binding upon Borrowers) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, (ii) Agent has
received notice from the Required Revolving Lenders that the Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to Revolving Lenders of making or maintaining Eurodollar
Rate Loans during such Interest Period, or (iii) Dollar deposits in the
principal amounts of the Eurodollar Rate Loans to which such Interest Period is
to be applicable are not generally available in the London interbank market,
Agent shall give telecopy or telephonic notice thereof to Administrative
Borrower as soon as practicable thereafter, which notice shall be withdrawn by
prompt telecopy or telephonic notice to Administrative Borrower by Agent when
such conditions no longer exist. If such notice is given (A) any Eurodollar Rate
Loans requested to be made on the first day of such Interest Period shall be
made as Prime Rate Loans, (B) any Revolving Loans that were to have been
converted on the first day of such Interest Period to or continued as Eurodollar
Rate Loans shall be converted to or continued as Prime Rate Loans and (C) each
outstanding Eurodollar Rate Loan shall be converted, on the last day of the
then-current Interest Period thereof, to Prime Rate Loans. Until such notice has
been withdrawn by Agent, no further Eurodollar Rate Loans shall be made or
continued as such, nor shall any Borrower (or Administrative Borrower on behalf
of any Borrower) have the right to convert Prime Rate Loans to Eurodollar Rate
Loans.
(c) Notwithstanding any other provision herein, if the adoption of or
any change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental Authority or in
the interpretation or application thereof occurring after the Effective Date
shall make it unlawful for Agent or any Revolving Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such
Revolving Lender shall promptly give written notice of such circumstances to
Administrative Borrower (which notice shall be withdrawn whenever such
circumstances no longer exist), (ii) the commitment of such Revolving Lender
hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such
and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith be
canceled and, until such time as it shall no longer be unlawful for such
Revolving Lender to make or maintain Eurodollar Rate Loans, such Revolving
Lender shall then have a commitment only to make a Prime Rate Loan when a
Eurodollar Rate Loan is requested and (iii) such Revolving Lender's Loans then
outstanding as Eurodollar Rate Loans, if any, shall be converted automatically
to Prime Rate Loans on the respective last days of the then current Interest
Periods with respect to such Revolving Loans or within such earlier period as
required by law. If any such conversion of a Eurodollar Rate Loan occurs on a
day which is not the last day of the then current Interest Period with respect
thereto, Borrowers shall pay to such Revolving Lender such amounts, if any, as
may be required pursuant to Section 3.3(d) below.
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(d) Borrowers shall indemnify Agent and each Revolving Lender and hold
Agent and each Revolving Lender harmless from any loss or expense which Agent or
such Revolving Lender may sustain or incur as a consequence of (i) default by
Borrower in making a borrowing of, conversion into or extension of Eurodollar
Rate Loans after such Borrower (or Administrative Borrower on behalf of such
Borrower) has given a notice requesting the same in accordance with the
provisions of this Agreement, (ii) default by any Borrower in making any
prepayment of a Eurodollar Rate Loan after such Borrower has given a notice
thereof in accordance with the provisions of this Agreement, and (iii) the
making of a prepayment of Eurodollar Rate Loans on a day which is not the last
day of an Interest Period with respect thereto. With respect to Eurodollar Rate
Loans, such indemnification may include an amount equal to the excess, if any,
of (A) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day of
the applicable Interest Period (or, in the case of a failure to borrow, convert
or extend, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Eurodollar
Rate Loans provided for herein over (B) the amount of interest (as determined by
such Agent or such Revolving Lender) which would have accrued to Agent or such
Revolving Lender on such amount by placing such Revolving amount on deposit for
a comparable period with leading banks in the interbank Eurodollar market. This
covenant shall survive the termination or non-renewal of this Agreement and the
payment of the Obligations.
(e) Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of Section 3.3(a) or 3.3(c) with respect to such Lender,
it will, if requested by the Borrowers, use reasonable efforts (subject to
overall policy considerations of such Lender) to designate another lending
office for any Loans affected by such event with the object of avoiding the
consequences of such event; provided, that, such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section 3.3(e) shall affect or postpone any of the
obligations of the Borrowers or the rights of any Lender pursuant to Section
3.3(a) or 3.3(c).
(f) Upon the receipt by the Borrowers from Agent of a claim by any
Lender (an "Affected Lender") under Section 3.3(a), the Borrowers may: (i)
request one or more of the other Lenders to acquire and assume all or part of
such Affected Lender's Commitment; or (ii) replace such Affected Lender by
designating another Eligible Transferee that is willing to acquire such Loans
and assume such Commitments; provided, that, (A) such replacement does not
conflict with any requirement of law, (B) no Event of Default shall have
occurred and be continuing at the time of such replacement, (C) the Borrowers
shall repay (or the replacement bank or institution shall purchase, at par) all
Loans, accrued interest and other amounts owing to such replaced Lender prior to
the date of replacement, (D) the Borrowers shall be liable to such replaced
Lender under Section 3.3(d) if any Eurodollar Rate Loan owing to such replaced
Lender shall be prepaid (or purchased) other than on the last day of the
Interest Period relating thereto, (E) the replaced Lender shall be obligated to
make such replacement in accordance with the provisions of Section 13.6
(provided that the Borrowers or the replacement Lender shall be obligated to pay
any registration and processing fee), (F) the Borrowers shall pay any additional
fees required by such replacement Lender as an inducement for such replacement
Lender to become a party hereto and (G) the Borrowers shall pay all additional
amounts (if any) required
51
pursuant to Section 3.3(a) to the extent such additional amounts were incurred
on or prior to the consummation of such replacement.
3.4 Taxes.
(a) Any and all payments by any Borrower and any Obligor to Agent or
any Lender under this Agreement and any of the other Financing Agreements shall
be made free and clear of, and without deduction or withholding for any Taxes or
Other Taxes, except to the extent that it is required by law to deduct or
withhold any Taxes or Other Taxes (in which case Section 3.4(c) below shall
apply). In addition, Borrowers shall pay all Other Taxes (or Agent may, at its
option, pay such Other Taxes and charge the loan account of the Borrowers for
such amounts so paid).
(b) Borrowers shall indemnify and hold harmless Agent and Lenders for
the full amount of Taxes and Other Taxes paid by Agent or any Lender (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
any of the Financing Agreements, but not including Taxes or Other Taxes that
arise as a result of Agent or any Lender's arrangements with the applicable
taxing jurisdiction, if any, and not as a result of this Agreement) and any
liability (including penalties, interest and expenses (including reasonable
legal fees and expenses) other than those resulting solely from a failure by
Agent or any Lender to pay any Taxes or Other Taxes which it is required to pay
and for which it received an indemnity payment) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant Governmental Authority. Payment under this
indemnification shall be made within ten (10) days after the date Agent or any
Lender makes written demand therefor. If such Taxes or Other Taxes were not
correctly or legally asserted, Agent or such Lender shall, upon Parent's request
and at Borrowers' expense, provide such documents to Parent as Parent may
reasonably request, to enable Parent to contest such Taxes or Other Taxes
pursuant to appropriate proceedings then available to Parent (so long as
providing such documents shall not, in the good faith determination of Agent or
Lender, have the potential of resulting in any liability of Agent or any
Lender). The foregoing indemnity shall survive the payment of the Obligations
and the termination of this Agreement.
(c) If any Borrower or any Obligor shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to Agent or any Lender, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such
Lender (or Agent on behalf of such Lender) receives an amount equal to the sum
it would have received had no such deductions or withholdings been made;
(ii) each Borrower shall, or shall cause the applicable Obligor
to, make such deductions and withholdings;
(iii) each Borrower shall, or shall cause the applicable Obligor
to, pay the full amount deducted or withheld to the relevant taxing authority or
other authority in accordance with applicable law; and
52
(iv) each Borrower shall, or shall cause the applicable Obligor
to, also pay to Agent or any Lender, at the time interest is paid, all
additional amounts which Agent or any Lender specifies as necessary in such
Lender's good faith determination to preserve the after-tax yield such Lender
would have received if such Taxes or Other Taxes had not been imposed (a "Tax
Payment").
(d) Within thirty (30) days after the date of any payment by any
Borrower or any Obligor of Taxes or Other Taxes referenced in Section 3.4(b)
above, Borrowers shall furnish to Agent the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment satisfactory to
Agent. If any Borrower or Obligor makes a Tax Payment and Agent or any Lender
determines that (i) a credit against, relief or refund of, or repayment of any
Taxes (a "Tax Credit") is available and attributable to that Tax Payment; and
(ii) it has obtained, utilized and retained that Tax Credit, Agent or such
Lender, as applicable, shall notify such Borrower or Obligor of such Tax Credit
and shall pay an amount to such Borrower or Obligor which Agent or such Lender,
as applicable, determines will leave it (following the making of that payment)
in the same after-Tax position as it would have been in had no deduction or
withholding been required, provided, that, nothing in this Section 3.4 shall
require Agent or any Lender to do anything which could, as determined in good
faith by Agent or such Lender, preclude or interfere with the way it conducts
its business or tax affairs or requires it to disclose information which it
considers is confidential to it or any of its Affiliates or customers, as
determined in its sole discretion.
(e) Each Lender that is a "foreign corporation, partnership or trust"
within the meaning of the Code (a "Foreign Lender") shall deliver to the Parent
and to the Agent, prior to receipt of any payment subject to withholding under
the Code (or after accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Person and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Person by the Borrowers
pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Person by the Borrowers pursuant to
this Agreement) or such other evidence satisfactory to the Parent and the Agent
that such Person is entitled to an exemption from, or reduction of, U.S.
withholding tax. Thereafter and from time to time, each such Person shall (a)
promptly submit to the Agent such additional duly completed and signed copies of
one of such forms (or such successor forms as shall be adopted from time to time
by the relevant United States taxing authorities) as may then be available under
then current United States laws and regulations to avoid or reduce such
withholding tax, or such evidence as is satisfactory to the Parent and the Agent
of any available exemption from or reduction of, United States withholding taxes
in respect of all payments to be made to such Person by the Borrowers pursuant
to this Agreement, (b) promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction, and (c)
take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its lending office) to avoid any requirement of
applicable laws that the Borrowers make any deduction or withholding for taxes
from amounts payable to such Person. If such Person fails to deliver the above
forms or other documentation, then the Agent may withhold from any interest
payment to such Person an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction. If any
Governmental Authority asserts that the Agent did not properly withhold any tax
or other amount from payments made in respect of such Person, such Person shall
indemnify
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the Agent therefor, including all penalties and interest, any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section 3.4(e),
and costs and expenses (including legal expenses) of the Agent. The obligation
of the Lenders under this Section shall survive the payment of all Obligations
and the resignation or replacement of the Agent.
(f) The Borrowers shall not be required to indemnify the Agent or any
Lender or to pay any increased amounts to the Agent or any Lender with respect
to Taxes pursuant to this Section 3.4 (and may deduct and withhold such Taxes as
required by law from payments to the Agent or any such Lender) to the extent
that such Taxes are attributable to (i) a Lender's failure to comply in full
with the provisions of Section 3.4(e), (ii) a Lender's failure to establish a
complete exemption from Taxes provided that such failure to establish a complete
exemption is not due to a change in law subsequent to the date of this
Agreement, or (iii) any obligation to withhold, deduct or pay amounts with
respect to Taxes that exists on the date such Agent or Lender becomes a party to
this Agreement except to the extent such Agent's or Lender's assignor was
entitled to receive such amounts with respect to Taxes at the time of the
assignment.
(g) No Lender shall be entitled to a payment of interest or penalties
with respect to Taxes or Other Taxes under this Section 3.4 unless it shall have
provided written notice to the applicable Borrower or Obligor of such Taxes or
Other Taxes, as the case may be, within 60 days from the date on which such
Lender received written notice of the imposition of such Taxes or Other Taxes,
as the case may be, from the relevant taxing or governmental authority, but only
to the extent such penalties or interest are attributable to such failure or
delay by the Lender in providing such written notice.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Effectiveness. This Agreement shall become
effective on the Effective Date so long as each of the following conditions
precedent has been satisfied:
(a) (i) no material adverse change shall have occurred in the assets,
business or prospects of Loan Parties and their Subsidiaries determined on a
consolidated basis since the date of Agent's latest field examination (not
including for this purpose the field review referred to in clause (b) below) and
(ii) no change or event shall have occurred which would impair the ability of
Loan Parties and their Subsidiaries to perform their obligations hereunder or
under any of the other Financing Agreements or Foreign Financing Agreements to
which they are parties or of any Agent Party to enforce the Obligations or
Foreign Obligations, as applicable, or realize upon the Collateral or any
Foreign Collateral, in each case taken as a whole;
(b) the Excess Availability as determined by Agent (based on the
Borrowing Base reflected in the most recent Borrowing Base Certificate delivered
in accordance with Section 7.1(a)(i) herein), as of the Effective Date, shall be
not less than $75,000,000 after giving effect to (i) all Loans made or to be
made and the Letter of Credit Accommodations issued or to be issued prior to or
in connection with the closing of the transactions hereunder, (ii) the Foreign
Advances made or to be made in connection with the transactions contemplated
under the Foreign Financing Agreements and (iii) payment of all fees and
expenses in connection with the transactions under this Agreement, the other
Financing Agreements and the Foreign Financing Agreements;
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(c) Agent shall have received evidence, in form and substance
satisfactory to Agent, that each Collateral Agent has a valid perfected first
priority security interest in all of the Collateral and Foreign Collateral, as
applicable, subject to the senior liens and other encumbrances permitted
hereunder and under the Foreign Financing Agreements;
(d) Agent shall be satisfied that no investigation, litigation or
other proceedings shall be pending or threatened against any Loan Party or any
Subsidiary of any Loan Party which could have a Material Adverse Effect in the
reasonable determination of Agent; and
(e) the Financing Agreements, the Foreign Financing Agreements and all
other instruments, documents, certificates, opinions, agreements, information
and records listed on Schedule 4.1 shall have been duly executed and/or
delivered to Agent, in form and substance satisfactory to Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to the Loans and/or
providing Letter of Credit Accommodations to Borrowers, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto, except to the
extent that such representations and warranties expressly relate solely to an
earlier date (in which case such representations and warranties shall have been
true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any Governmental
Authority shall exist which is applicable to the Loan Parties, and no action,
suit, investigation, litigation or proceeding shall be pending or threatened in
any court or before any arbitrator or Governmental Authority against any of the
Loan Parties, which (i) purports to enjoin, prohibit, restrain or otherwise
adversely affect (A) the making of the Loans or providing the Letter of Credit
Accommodations, or (B) the consummation of the transactions contemplated
pursuant to the terms hereof or the other Financing Agreements or (ii) has or
has a reasonable likelihood of having a Material Adverse Effect; and
(c) no Default or Event of Default shall exist or have occurred and be
continuing on and as of the date of the making of such Loan or providing each
such Letter of Credit Accommodation and after giving effect thereto.
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST; PRIORITIES
5.1 Grant of Security Interest. To secure payment and performance of all
Obligations, each Loan Party hereby grants to Agent, for itself and the ratable
benefit of Lenders and Foreign Lenders, a continuing security interest in, a
lien upon, and a right of set off against, and hereby assigns to Agent, for
itself and the ratable benefit of Lenders and Foreign Lenders, as security, all
personal and real property and fixtures, and interests in property (excluding
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leasehold mortgages) and fixtures, of such Loan Party, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by any Agent Party, collectively, the "Collateral"), including all of
such Loan Party's:
(a) Accounts;
(b) general intangibles, including, without limitation, all
Intellectual Property;
(c) goods, including, without limitation, Inventory and Equipment;
(d) Real Property and fixtures;
(e) chattel paper, including, without limitation, all tangible and
electronic chattel paper;
(f) instruments, including, without limitation, all promissory notes;
(g) documents;
(h) deposit accounts;
(i) letters of credit, banker's acceptances and similar instruments
and including all letter-of-credit rights;
(j) supporting obligations and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Receivables and other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
(k) (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (ii) monies, credit balances,
deposits and other property of such Loan Party now or hereafter held or received
by or in transit to any Agent Party, or its Affiliates or at any other
depository or other institution from or for the account of such Loan Party,
whether for safekeeping, pledge, custody, transmission, collection or otherwise;
(l) commercial tort claims, including, without limitation, those
identified in the Information Certificate;
(m) to the extent not otherwise described above, Receivables;
(n) Records; and
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(o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.
Notwithstanding the foregoing or any other requirement of this
Agreement, with respect to any security interest and lien granted by a Loan
Party in favor of Agent on any of such Loan Party's investment in Capital Stock
of a Person organized outside the United States, no more than 66.5% of the
issued and outstanding Capital Stock of such Person shall secure the Obligations
owing to the Lenders party to this Agreement. Capital Stock of such Persons may
only be pledged to the extent directly owned by a Loan Party organized within
the United States.
5.2 Perfection of Security Interests.
(a) Each Loan Party irrevocably and unconditionally authorizes Agent
(or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and such Loan Party as debtor, as Agent may require, and including
any other information with respect to such Loan Party or otherwise required by
part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Agent
may determine, together with any amendment and continuations with respect
thereto, which authorization shall apply to all financing statements filed on,
prior to or after the Original Closing Date. Each Loan Party hereby ratifies and
approves all financing statements naming Agent or its designee as secured party
and such Loan Party, as debtor with respect to the Collateral (and any
amendments with respect to such financing statements) filed by or on behalf of
Agent prior to Effective Date and ratifies and confirms the authorization of
Agent to file such financing statements (and amendments, if any). Each Loan
Party hereby authorizes Agent to adopt on behalf of such Loan Party any symbol
required for authenticating any electronic filing. In the event that the
description of the Collateral in any financing statement naming Agent or its
designee as the secured party and any Loan Party as debtor includes assets and
properties of such Loan Party that do not at any time constitute Collateral,
whether hereunder, under any of the other Financing Agreements or otherwise, the
filing of such financing statement shall nonetheless be deemed authorized by
such Loan Party to the extent of the Collateral included in such description and
it shall not render the financing statement ineffective as to any of the
Collateral or otherwise affect the financing statement as it applies to any of
the Collateral. In no event shall any Loan Party at any time file, or permit or
cause to be filed, any correction statement or termination statement with
respect to any financing statement (or amendment or continuation with respect
thereto) naming Agent or its designee as secured party and such Loan Party as
debtor, except as expressly permitted by the applicable Uniform Commercial Code.
(b) Each Loan Party hereby represents and warrants to Agent and
Lenders that it does not have any chattel paper (whether tangible or electronic)
or instruments as of the Effective Date, except as set forth in the Information
Certificate. In the event that any Loan Party shall be entitled to or shall
receive any chattel paper or instrument after the Effective Date, such Loan
Party shall promptly notify Agent thereof in writing. Promptly upon the receipt
thereof by or on behalf of any Loan Party (including by any agent or
representative), such Loan Party shall deliver, or cause to be delivered to
Agent, all tangible chattel paper and instruments that such Loan Party has or
may at any time acquire, accompanied by such instruments of transfer or
assignment duly executed in blank as Agent may from time to time specify, in
each case except as Agent may otherwise agree. At Agent's option, each Loan
Party shall, or Agent
57
may at any time on behalf of any Loan Party, cause the original of any such
instrument or chattel paper to be conspicuously marked in a form and manner
acceptable to Agent with the following legend referring to chattel paper or
instruments as applicable: "This [chattel paper] [instrument] is subject to the
security interest of Congress Financial Corporation (Central), as Agent and any
sale, transfer, assignment or encumbrance of this [chattel paper] [instrument]
violates the rights of such secured party."
(c) In the event that any Loan Party shall at any time hold or acquire
an interest in any electronic chattel paper or any "transferable record" (as
such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction), such Loan Party
shall promptly notify Agent thereof in writing. Promptly upon Agent's request,
such Loan Party shall take, or cause to be taken, such actions as Agent may
request to give Agent control of such electronic chattel paper under Section
9-105 of the UCC and control of such transferable record under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect
in such jurisdiction.
(d) Each Loan Party hereby represents and warrants to Agent and
Lenders that it does not have any deposit accounts as of the Effective Date,
except as set forth in the Information Certificate. No Loan Party shall,
directly or indirectly, after the Effective Date open, establish or maintain any
deposit account unless each of the following conditions is satisfied: (i) Agent
shall have received not less than five (5) Business Days prior written notice of
the intention of any Loan Party to open or establish such account which notice
shall specify in reasonable detail and specificity acceptable to Agent the name
of the account, the owner of the account, the name and address of the bank at
which such account is to be opened or established, the individual at such bank
with whom such Loan Party is dealing and the purpose of the account, (ii) the
bank where such account is opened or maintained shall be acceptable to Agent,
and (iii) on or before the opening of such deposit account, such Loan Party
shall deliver to Agent a Deposit Account Control Agreement with respect to such
deposit account duly authorized, executed and delivered by such Loan Party and
the bank at which such deposit account is opened and maintained. The terms of
this subsection (d) shall not apply to deposit accounts specifically and
exclusively used for payroll, ▇▇▇▇▇ cash accounts used in accordance with any
Loan Party's historical practices, payroll taxes and other employee wage and
benefit payments to or for the benefit of any Loan Party's salaried employees.
(e) Each Loan Party hereby represents and warrants to Agent and
Lenders that it does not own or hold, directly or indirectly, beneficially or as
record owner or both, any investment property, as of the Effective Date, or have
any investment account, securities account, commodity account or other similar
account with any bank or other financial institution or other securities
intermediary or commodity intermediary as of the Effective Date, in each case
except as set forth in the Information Certificate.
(i) In the event that any Loan Party shall be entitled to or
shall at any time after the Effective Date hold or acquire any certificated
securities, subject to the last paragraph of Section 5.1 hereof, such Loan Party
shall promptly endorse, assign and deliver the same to Agent, accompanied by
such instruments of transfer or assignment duly executed in blank as Agent may
from time to time specify. Subject to the last paragraph of Section 5.1
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hereof, if any securities, now or hereafter acquired after the Effective Date or
thereafter by any Loan Party are uncertificated and are issued to such Loan
Party or its nominee directly by the issuer thereof, such Loan Party shall
immediately notify Agent thereof and shall cause the issuer to agree to comply
with instructions from Agent as to such securities, without further consent of
any Loan Party or such nominee upon written notice to such issuer from Agent
that an Event of Default exists.
(ii) No Loan Party shall, directly or indirectly, after the
Effective Date open, establish or maintain any investment account, securities
account, commodity account or any other similar account (other than a deposit
account) with any securities intermediary or commodity intermediary unless each
of the following conditions is satisfied: (a) Agent shall have received not less
than five (5) Business Days prior written notice of the intention of such Loan
Party to open or establish such account which notice shall specify in reasonable
detail and specificity acceptable to Agent the name of the account, the owner of
the account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom such Loan Party is dealing and the
purpose of the account, (b) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be acceptable to Agent, and (c) on or before the opening of such
investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, such Loan Party shall execute
and deliver, and cause to be executed and delivered to Agent, an Investment
Property Control Agreement with respect thereto duly authorized, executed and
delivered by such Loan Party and such securities intermediary.
(f) Each Loan Party hereby represents and warrants to Agent and
Lenders that it is not the beneficiary or otherwise entitled to any right to
payment under any letter of credit, banker's acceptance or similar instrument as
of the Effective Date, except as set forth in the Information Certificate. In
the event that any Loan Party shall be entitled to or shall receive any right to
payment under any letter of credit, banker's acceptance or any similar
instrument, whether as beneficiary thereof or otherwise after the Effective
Date, such Loan Party shall promptly notify Agent thereof in writing. During the
existence of an Event of Default and upon Agent's request, such Loan Party shall
use its best efforts to immediately, as Agent may specify, either (i) deliver,
or cause to be delivered to Agent, with respect to any such letter of credit,
banker's acceptance or similar instrument, the written agreement of the issuer
and any other nominated person obligated to make any payment in respect thereof
(including any confirming or negotiating bank), in form and substance
satisfactory to Agent in its good faith determination, consenting to the
assignment of the proceeds of the letter of credit to Agent by such Loan Party
and agreeing to make all payments thereon directly to Agent or as Agent may
otherwise direct or (ii) cause Agent to become, at Borrowers' expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be).
(g) Each Loan Party hereby represents and warrants to Agent and
Lenders that it does not have any commercial tort claims (other than class
actions unless such Loan Party's ascertainable portion of the claim in such
action is in excess of $250,000) as of the Effective Date in excess of $250,000
individually or $1,000,000 in the aggregate outstanding at any time when
combined with all tort claims (other than class actions unless such Loan Party's
ascertainable portion of the claim in such action is in excess of $250,000) for
all Loan Parties, except as set forth in the Information Certificate. In the
event that any Loan Party shall at any
59
time after the Effective Date have any commercial tort claims in excess of
$250,000 individually or $1,000,000 in the aggregate outstanding at any time
when combined with all tort claims for all Loan Parties, such Loan Party shall
promptly notify Agent thereof in writing, which notice shall (i) set forth in
reasonable detail the basis for and nature of such commercial tort claim and
(ii) include the express grant by such Loan Party to Agent of a security
interest in such commercial tort claim (and the proceeds thereof). In the event
that such notice does not include such grant of a security interest, the sending
thereof by such Loan Party to Agent shall be deemed to constitute such grant to
Agent. Upon the sending of such notice, any commercial tort claim described
therein shall constitute part of the Collateral and shall be deemed included
therein. Without limiting the authorization of Agent provided in Section 5.2(a)
hereof or otherwise arising by the execution by such Loan Party of this
Agreement or any of the other Financing Agreements, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing statements
naming Agent or its designee as secured party and such Loan Party as debtor, or
any amendments to any financing statements, covering any such commercial tort
claim as Collateral. In addition, each Loan Party shall promptly upon Agent's
request, execute and deliver, or cause to be executed and delivered, to Agent
such other agreements, documents and instruments as Agent may reasonably require
in connection with such commercial tort claim.
(h) Each Loan Party hereby represents and warrants to Agent and
Lenders that it does not have any goods, documents of title or other Collateral
in the custody, control or possession of a third party as of the Effective Date,
except as set forth in the Information Certificate and except for goods located
in the United States in transit to a location of a Loan Party permitted herein
in the ordinary course of business of such Loan Party in the possession of the
carrier transporting such goods and except for goods, documents of title or
Collateral which are de minimus in value. In the event that any goods, documents
of title or other Collateral are at any time after the Effective Date in the
custody, control or possession of any other person not referred to in the
Information Certificate or such carriers, Loan Parties shall promptly notify
Agent thereof in writing. Promptly upon Agent's request, Loan Parties shall use
commercially reasonable efforts to deliver to Agent a Collateral Access
Agreement duly authorized, executed and delivered by such person and the Loan
Party that is the owner of such Collateral.
(i) Each Loan Party shall take any other actions reasonably requested
by Agent from time to time to cause the attachment, perfection and first
priority of, and the ability of Agent to enforce, the security interest of Agent
in any and all of the Collateral, including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC or other applicable law, to the extent, if any,
that any Loan Party's signature thereon is required therefor, (ii) causing
Agent's name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
Agent to enforce, the security interest of Agent in such Collateral, (iv)
obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.
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SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Accounts. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of any Borrower or Obligor and (c) all other appropriate
debits and credits as provided in this Agreement, including fees, charges,
costs, expenses and interest. All entries in the loan account(s) shall be made
in accordance with Agent's customary practices as in effect from time to time.
6.2 Statements. Agent shall render to Administrative Borrower each month a
statement setting forth the balance in the Borrowers' loan account(s) maintained
by Agent for Borrowers pursuant to the provisions of this Agreement, including
principal, interest, fees, costs, expenses and any advances made pursuant to
Section 6.4(b) hereof. Each such statement shall be subject to subsequent
adjustment by Agent but shall, absent manifest errors or omissions, be
considered correct and deemed accepted by Borrowers and conclusively binding
upon Borrowers as an account stated except to the extent that Agent receives a
written notice from Administrative Borrower of any specific exceptions of
Administrative Borrower thereto within thirty (30) days after the date such
statement has been received by Administrative Borrower. Until such time as Agent
shall have rendered to Administrative Borrower a written statement as provided
above, the balance in any Borrower's loan account(s) shall be presumptive
evidence of the amounts due and owing to Agent and Lenders by Borrowers.
6.3 Collection of Accounts.
(a) Borrowers shall establish and maintain, at their expense, blocked
accounts or lockboxes and related blocked accounts (in either case, "Blocked
Accounts"), as Agent may specify, with such banks as are reasonably acceptable
to Agent into which Borrowers shall promptly deposit and direct their respective
account debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. Borrowers
shall deliver, or cause to be delivered, to Agent a Depository Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2 hereof or at any time and from
time to time Agent may become the bank's customer with respect to any of the
Blocked Accounts and promptly upon Agent's request, Borrowers shall execute and
deliver such agreements and documents as Agent may reasonably require in
connection therewith. Unless and until a Trigger Event exists, Agent shall
permit such banks maintaining such Blocked Accounts to remit amounts deposited
therein to the operating accounts of Borrowers. During the existence of a
Trigger Event, each Borrower agrees that all payments made to such Blocked
Accounts or other funds received and collected by Agent or any Lender, whether
in respect of the Receivables, as proceeds of Inventory or other Collateral or
otherwise shall be treated as payments to Agent and Lenders in respect of the
Obligations and therefore shall constitute the property of Agent and Lenders to
the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Loans available to
Borrowers, such payments will be applied (conditional upon final collection) to
the Obligations in accordance with Section 6.4 hereof on the Business Day of
receipt by Agent of immediately available funds in the Agent Payment Account
provided such payments and notice thereof are
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received in accordance with Agent's usual and customary practices as in effect
from time to time and within sufficient time to credit the applicable Borrower's
loan account on such day, and if not, then on the next Business Day. For the
purposes of calculating interest on the Obligations, such payments or other
funds received will be applied (conditional upon final collection) to the
Obligations one (1) Business Day following the date of receipt of immediately
available funds by Agent in the Agent Payment Account provided such payments or
other funds and notice thereof are received in accordance with Agent's usual and
customary practices as in effect from time to time and within sufficient time to
credit such Borrower's loan account on such day, and if not, then on the next
Business Day. In the event that at any time or from time to time there are no
Revolving Loans outstanding, Agent shall be entitled to an administrative charge
in an amount equivalent to the interest that would have been payable for such
Business Day had there been Revolving Loans outstanding on such day as
calculated by Agent in accordance with its customary practice. The economic
benefit of the timing in the application of payments (and the administrative
charge with respect thereto, if applicable) shall be for the sole benefit of
Agent. In the event that at any time Agent is not receiving collections on
Receivables or other payments under this Section 6.3, Agent shall be entitled to
an administrative charge in an amount equivalent to the collection day charges
Agent would have received in accordance with its customary practice had Agent
received such collections.
(c) Each Loan Party and its respective shareholders, directors,
employees, agents, Subsidiaries or other Affiliates shall, acting as trustee for
Agent, receive, as the property of Agent, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to Agent.
In no event shall the same be commingled with any Loan Party's own funds.
Borrowers agree to reimburse Agent on demand for any amounts owed or paid to any
bank at which a Blocked Account or any other deposit account is established or
any other bank or person involved in the transfer of funds to or from the
Blocked Accounts arising out of Agent's payments to or indemnification of such
bank or person. The obligations of Borrowers to reimburse Agent for such amounts
pursuant to this Section 6.3 shall survive the termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Agent Payment Account as
provided in Section 6.3 or such other place as Agent may designate from time to
time in writing to Administrative Borrower. Agent shall apply payments to the
extent received or collected from any Borrower or any Obligor for the account of
any Borrower or any Obligor (including the monetary proceeds of collections or
of realization upon any Collateral) as follows:
(i) so long as no Priority Event shall have occurred and be
continuing, or will result from any of the following payment applications,
first, to pay in full all indemnities or expense reimbursements
then due to Agent from any Borrower (other than fees);
second, to pay in full indemnities or expense reimbursements then
due to Lenders from any Borrower (other than fees);
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third, to pay in full all fees payable by Borrowers under the
Financing Agreements then due;
fourth, to pay in full interest due in respect of the Loans
(including interest payable in respect of the Revolving Loans, Special
Agent Advances, Term Loan or otherwise);
fifth, to pay or prepay principal in respect of Special Agent
Advances;
sixth, to pay the regularly scheduled principal amounts then due
and payable, if any (other than prepayments or payments pursuant to
acceleration), in respect of the Term Loan;
seventh, to pay principal in respect of the Revolving Loans then
outstanding (whether or not then due) until paid in full; provided,
that, if Agent has not commenced exercising default-related remedies,
(x) the Revolving Loans consisting of the Pro Rata Excess Advances
shall be paid before all other Revolving Loans and (y) the Revolving
Loans comprising the Excess Prime Loan Tranche shall be paid last;
eighth, to cash collateralize any outstanding Letter of Credit
Accommodations;
ninth, to pay the principal in respect of the Term Loan then
outstanding (whether or not then due) in the inverse order of maturity
of the installments due thereunder until paid in full; and
tenth, to pay or prepay any other Obligations whether or not then
due, in such order and manner as Agent determines pursuant to the
terms of the Agency Agreement,
provided, that, in each instance set forth above in Sections 6.4(a)(i) so long
as no Priority Event has occurred and is continuing, Section 6.4(a)(i) shall not
be deemed to apply to any payment by a Borrower specified by such Borrower to be
for the payment of specific Obligations then due and payable (or prepayable)
under and in accordance with any provision of this Agreement;
and
(ii) from and after the occurrence and during the continuance of
a Priority Event,
first, to pay in full the expenses of Agent and the other
Collateral Agents for the collection and enforcement of the
Obligations and for the protection, preservation or sale, disposition
or other realization upon the Collateral, including all expenses,
liabilities and advances incurred or made by or on behalf of Agent and
the other Collateral Agents, in connection therewith (including
attorneys' fees and legal expenses and other expenses of Agent and the
other Collateral Agents);
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second, to the extent proceeds remain after the application
pursuant to the preceding clause, to pay all Obligations (other than
(i) the Term Loan Obligations and (ii) the early termination fee
payable under Section 13.1(c)) and Foreign Obligations until paid in
full, in cash or other immediately available funds, in such order and
manner as Agent shall elect in its discretion (including cash
collateral for any outstanding Letter of Credit Accommodations and
Foreign Letters of Credit Accommodations in accordance with Section
13.1(a) hereof and the applicable provisions of any Foreign Loan
Agreement);
third, to the extent proceeds remain after the application
pursuant to the preceding two clauses, to pay the Term Loan
Obligations (other than the early termination fee payable under
Section 13.1(d)) until paid in full; and
fourth, to the extent proceeds remain after the application
pursuant to the preceding three clauses, ratably to pay in full all
other Obligations (including the early termination fees payable under
Sections 13.1(c) and 13.1(d)).
Notwithstanding anything contained in this Section 6.4 or this Agreement to the
contrary,
(A) if the payment of any expenses, costs, scheduled servicing
fees (such servicing fees to consist of scheduled servicing fees
existing on the date hereof along with any increases to such servicing
fees which have been consented to by Fortress) and/or interest (other
than default interest charged during the existence of an Event of
Default) to Agent for the account of itself and Revolving Lenders
would accrue and become due but for the occurrence of an Insolvency
Event and any such amounts are not allowed or allowable in whole or in
part (any such amounts are hereinafter referred to as the "Specified
Amounts"), then Agent and Revolving Lenders shall receive payment in
full of the Specified Amounts before any payment of any Term Loan
Obligations; provided, that nothing herein shall prevent the Agent or
the Revolving Lenders from recovering any default interest charged
during the existence of an Event of Default from any Borrower or
Obligor not subject to an Insolvency Event, which amounts shall be
payable to Agent and Revolving Lenders before any payment of any Term
Loan Obligations;
(B) should any payment or distribution on security or instrument
or proceeds thereof be received by a Lender other than in accordance
with this Section 6.4, such Lender shall receive and hold the same in
trust, for the benefit of the Agent and Lenders and shall forthwith
deliver the same to Agent (together with any endorsement or assignment
of such Lender where necessary), for application by Agent to the
Obligations in accordance with the terms of Section 6.4; and
(C) unless so directed by Administrative Borrower, or unless a
Default or an Event of Default shall exist or have occurred and be
continuing, Agent shall not apply any payments which it receives to
any Eurodollar Rate Loans, except (1) on the expiration date of the
Interest Period applicable to any such Eurodollar Rate Loans or (2) in
the event that there are no outstanding Prime Rate Loans.
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With respect to any Loans, to the extent not specified above, Agent
may apply payments to such Loans in such order as Agent shall
determine.
(b) At Agent's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of any Borrower and a
description thereof shall be set forth in the monthly statement provided under
Section 6.2 hereof. Agent shall, upon the direction of the Required Term
Lenders, charge the account(s) of Borrowers for all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the other
Financing Agreements so long as (i) such amounts are due and payable to the Term
Lenders and (ii) all conditions to the making of Loans under Section 4.2 have
been satisfied. Borrowers shall make all payments to Agent and Lenders on the
Obligations free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Agent or any Lender is required to surrender or return
such payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Agent or such Lender. Borrowers
shall be liable to pay to Agent, and do hereby indemnify and hold Agent and
Lenders harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4(b) shall remain effective notwithstanding any
contrary action which may be taken by Agent or any Lender in reliance upon such
payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination of this Agreement.
6.5 Authorization to Make Loans. Agent and Lenders are authorized to make
the Loans and provide the Letter of Credit Accommodations based upon telephonic
or other instructions received from anyone purporting to be an officer of
Administrative Borrower or any Borrower or other authorized person or, at the
discretion of Agent, if such Loans are necessary to satisfy any Obligations. All
requests for Loans or Letter of Credit Accommodations hereunder shall specify
the date on which the requested advance is to be made or Letter of Credit
Accommodations established (which day shall be a Business Day) and the amount of
the requested Loan. Requests received after 12:00 noon Chicago time on any day
shall be deemed to have been made as of the opening of business on the
immediately following Business Day. All Loans and Letter of Credit
Accommodations under this Agreement shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, any Borrower when
deposited to the credit of any Borrower or otherwise disbursed or established in
accordance with the instructions of any Borrower or in accordance with the terms
and conditions of this Agreement.
6.6 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
provided by Agent to Borrowers hereunder only for: (a) prepayment of the
Revolving Loans pursuant to Section 2.3(a) hereof and (b) costs, expenses and
fees in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Financing Agreements and Foreign Financing
Agreements. All other Loans made or Letter of Credit Accommodations provided to
or for the benefit of any Borrower pursuant to the provisions hereof shall be
used by such Borrower only for general operating, working capital and other
proper corporate purposes of such Borrower not otherwise prohibited by the terms
hereof. None of the proceeds will be
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used, directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
6.7 Appointment of Administrative Borrower for Requesting Loans and
Receipts of Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to request and receive Loans and Letter of
Credit Accommodations pursuant to this Agreement and the other Financing
Agreements from Agent or any Lender in the name or on behalf of such Borrower.
Agent and Lenders may disburse the Loans to such bank account of Administrative
Borrower or a Borrower or otherwise make such Loans to a Borrower and provide
such Letter of Credit Accommodations to a Borrower as Administrative Borrower
may designate or direct, without notice to any other Borrower or Obligor.
(b) Administrative Borrower hereby accepts the appointment by
Borrowers to act as the agent of Borrowers pursuant to this Section 6.7.
Administrative Borrower shall ensure that the disbursement of any Loans to a
Borrower requested by or paid to or for the account of such Borrower, or the
issuance of any Letter of Credit Accommodations for a Borrower hereunder, shall
be paid to or for the account of such Borrower.
(c) Each Borrower hereby irrevocably appoints and constitutes
Administrative Borrower as its agent to receive statements on account and all
other notices from Agent and Lenders with respect to the Obligations or
otherwise under or in connection with this Agreement and the other Financing
Agreements.
(d) Any notice, election, representation, warranty, agreement or
undertaking by or on behalf of any other Borrower by Administrative Borrower
shall be deemed for all purposes to have been made by such Borrower, as the case
may be, and shall be binding upon and enforceable against such Borrower to the
same extent as if made directly by such Borrower.
(e) No purported termination of the appointment of Administrative
Borrower as agent as aforesaid shall be effective, except after ten (10) days'
prior written notice to Agent.
6.8 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement (including Section 6.10(f) hereof): (a) the making and conversion of
Loans shall be made among the Lenders based on their respective Pro Rata Shares
as to the Loans and (b) each payment on account of any Obligations to or for the
account of one or more of Agent Parties in respect of any Obligations due on a
particular day shall be allocated among the Agent Parties entitled to such
payments based on their respective Pro Rata Shares and shall be distributed
accordingly.
6.9 Sharing of Payments, Etc.
(a) Each Borrower agrees that, in addition to (and without limitation
of) any right of setoff, banker's lien or counterclaim Agent or any Lender may
otherwise have, each Lender shall be entitled, at its option (but subject, as
among Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset
balances held by it for the account of such Borrower at any
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of its offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to such Borrower), in which case it shall promptly notify
Administrative Borrower and Agent thereof; provided, that, such Lender's failure
to give such notice shall not affect the validity thereof.
(b) If any Lender (including Agent) shall obtain from any Borrower or
Obligor payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than the amount of its Pro Rata Share of the principal of the Loans to which it
is entitled under Section 6.4 or more than its share of such other amounts then
due to such Lender hereunder to which it is entitled under Section 6.4 by any
Borrower, it shall promptly pay to Agent, for the benefit of Lenders, the amount
of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such
other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata
Shares or as otherwise agreed by Lenders. To such end all Lenders shall make
appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) Each Borrower agrees that any Lender purchasing a participation
(or direct interest) as provided in this Section may exercise, in a manner
consistent with this Section, all rights of setoff, banker's lien, counterclaim
or similar rights with respect to such participation as fully as if such Lender
were a direct holder of Loans or other amounts (as the case may be) owing to
such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
right of setoff, banker's lien, counterclaims or similar rights or shall affect
the right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other Indebtedness or obligation of any Borrower.
If, under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, assign such rights to Agent for the
benefit of Lenders and, in any event, exercise its rights in respect of such
secured claim in a manner consistent with the rights of Lenders entitled under
this Section to share in the benefits of any recovery on such secured claim.
6.10 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient manner
and to minimize the transfer of funds between Agent and Revolving Lenders, Agent
may, at its option, subject to the terms of this Section, make available, on
behalf of Revolving Lenders, the full amount of the Loans requested or charged
to any Borrower's loan account(s) or otherwise to be advanced by Revolving
Lenders pursuant to the terms hereof, without requirement of prior notice to
Revolving Lenders of the proposed Revolving Loans.
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(b) With respect to all Revolving Loans made by Agent on behalf of
Revolving Lenders as provided in this Section, the amount of each Revolving
Lender's Pro Rata Share of the outstanding Revolving Loans shall be computed
weekly, and shall be adjusted upward or downward on the basis of the amount of
the outstanding Revolving Loans as of 5:00 p.m. Chicago time on the Business Day
immediately preceding the date of each settlement computation; provided, that,
Agent retains the absolute right at any time or from time to time to make the
above described adjustments at intervals more frequent than weekly, but in no
event more than twice in any week. Agent shall deliver to each of the Revolving
Lenders after the end of each week, or at such lesser period or periods as Agent
shall determine, a summary statement of the amount of outstanding Revolving
Loans for such period (such week or lesser period or periods being hereinafter
referred to as a "Settlement Period"). If the summary statement is sent by Agent
and received by a Revolving Lender prior to 12:00 noon Chicago time, then such
Revolving Lender shall make the settlement transfer described in this Section by
no later than 3:00 p.m. Chicago time on the same Business Day and if received by
a Revolving Lender after 12:00 p.m. Chicago time, then such Revolving Lender
shall make the settlement transfer by not later than 3:00 p.m. Chicago time on
the next Business Day following the date of receipt. If, as of the end of any
Settlement Period, the amount of a Revolving Lender's Pro Rata Share of each of
the outstanding Revolving Loans is more than such Revolving Lender's Pro Rata
Share of each of the outstanding Revolving Loans as of the end of the previous
Settlement Period, then such Revolving Lender shall forthwith (but in no event
later than the time set forth in the preceding sentence) transfer to Agent by
wire transfer in immediately available funds the amount of the increase.
Alternatively, if the amount of a Revolving Lender's Pro Rata Share of each of
the outstanding Revolving Loans in any Settlement Period is less than the amount
of such Revolving Lender's Pro Rata Share of each of the outstanding Revolving
Loans for the previous Settlement Period, Agent shall forthwith transfer to such
Revolving Lender by wire transfer in immediately available funds the amount of
the decrease. The obligation of each of the Revolving Lenders to transfer such
funds and effect such settlement shall be irrevocable and unconditional and
without recourse to or warranty by Agent. Agent and each Revolving Lender agrees
to ▇▇▇▇ its books and records at the end of each Settlement Period to show at
all times the dollar amount of its Pro Rata Share of the outstanding Revolving
Loans and Letter of Credit Accommodations. Each Revolving Lender shall only be
entitled to receive interest on its Pro Rata Share of the Revolving Loans to the
extent such Revolving Loans have been funded by such Revolving Lender. Because
the Agent on behalf of Revolving Lenders may be advancing and/or may be repaid
Revolving Loans prior to the time when Revolving Lenders will actually advance
and/or be repaid such Revolving Loans, interest with respect to Revolving Loans
shall be allocated by Agent in accordance with the amount of Revolving Loans
actually advanced by and repaid to each Revolving Lender and the Agent and shall
accrue from and including the date such Revolving Loans are so advanced to but
excluding the date such Revolving Loans are either repaid by Borrowers or
actually settled with the applicable Revolving Lender as described in this
Section.
(c) To the extent that Agent has made any such amounts available and
the settlement described above shall not yet have occurred, upon repayment of
any Revolving Loans by a Borrower, Agent may apply such amounts repaid directly
to any amounts made available by Agent pursuant to this Section. In lieu of
weekly or more frequent settlements, Agent may, at its option, at any time
require each Revolving Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Revolving Loan, prior to Agent's
disbursement of such Revolving Loan to Borrower. In such event, all Revolving
Loans under this Agreement
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shall be made by the Revolving Lenders simultaneously and proportionately to
their Pro Rata Shares. No Revolving Lender shall be responsible for any default
by any other Revolving Lender in the other Lender's obligation to make a
Revolving Loan requested hereunder nor shall the Revolving Commitment of any
Revolving Lender be increased or decreased as a result of the default by any
other Revolving Lender in the other Revolving Lender's obligation to make a
Revolving Loan hereunder.
(d) If Agent is not funding a particular Revolving Loan to a Borrower
(or Administrative Borrower for the benefit of such Borrower) pursuant to this
Section on any day, Agent may assume that each Revolving Lender will make
available to Agent such Revolving Lender's Pro Rata Share of the Revolving Loan
requested or otherwise made on such day and Agent may, in its discretion, but
shall not be obligated to, cause a corresponding amount to be made available to
or for the benefit of such Borrower on such day. If Agent makes such
corresponding amount available to a Borrower and such corresponding amount is
not in fact made available to Agent by such Revolving Lender, Agent shall be
entitled to recover such corresponding amount on demand from such Revolving
Lender together with interest thereon for each day from the date such payment
was due until the date such amount is paid to Agent at the Federal Funds Rate
for each day during such period (as published by the Federal Reserve Bank of New
York or at Agent's option based on the arithmetic mean determined by Agent of
the rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York City time) on that day by each of the three leading brokers
of Federal funds transactions in New York City selected by Agent) and if such
amounts are not paid within three (3) days of Agent's demand, at the highest
Interest Rate provided for in Section 3.1 hereof applicable to Prime Rate Loans
consisting of Revolving Loans. During the period in which such Lender has not
paid such corresponding amount to Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Agent to or for the benefit of any Borrower shall, for
all purposes hereof, be a Revolving Loan made by Agent for its own account. Upon
any such failure by a Revolving Lender to pay Agent, Agent shall promptly
thereafter notify Administrative Borrower of such failure and Borrowers shall
pay such corresponding amount to Agent for its own account within five (5)
Business Days of Parent's receipt of such notice. A Revolving Lender who fails
to pay Agent its Pro Rata Share of any Revolving Loans made available by the
Agent on such Revolving Lender's behalf, or any Revolving Lender who fails to
pay any other amount owing by it to Agent, is a "Defaulting Lender". Agent shall
not be obligated to transfer to a Defaulting Lender any payments received by
Agent for the Defaulting Lender's benefit, nor shall a Defaulting Lender be
entitled to the sharing of any payments hereunder (including any principal,
interest or fees). Amounts payable to a Defaulting Lender shall instead be paid
to or retained by Agent. Agent may hold and, in its discretion, relend to a
Borrower the amount of all such payments received or retained by it for the
account of such Defaulting Lender. For purposes of voting or consenting to
matters with respect to this Agreement and the other Financing Agreements and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Revolving Lender" and such Revolving Lender's Revolving Commitment shall be
deemed to be zero (0). This Section shall remain effective with respect to a
Defaulting Lender until such default is cured. The operation of this Section
shall not be construed to increase or otherwise affect the Revolving Commitment
of any Revolving Lender, or relieve or excuse the performance by any Borrower or
Obligor of their duties and obligations hereunder.
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(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Agent to advance funds on
behalf of any Lender or to relieve any Revolving Lender from its obligation to
fulfill its Revolving Commitment hereunder or to prejudice any rights that any
Borrower may have against any Revolving Lender as a result of any default by any
Revolving Lender hereunder in fulfilling its Revolving Commitment.
(f) The Revolving Lenders acknowledge and agree that:
(i) if there has been a net reduction in Foreign Advances of any
Multi-Jurisdictional Lender during a Settlement Period, then on the date of
settlement for such Settlement Period pursuant to Section 6.10(b) hereof, such
Multi-Jurisdictional Lender shall be deemed to have purchased from the other
Revolving Lenders without Multi-Jurisdictional Commitments an amount of Prime
Rate Loans under the Excess Prime Loan Tranche in an amount equal to the product
of (A) One Hundred Percent (100%) less the sum of all Multi-Jurisdictional
Lenders' Revolving Commitment Percentages multiplied by (B) the US Dollar Amount
of such repayment of Foreign Advances. To the extent such purchase of Prime Rate
Loans results in a Multi-Jurisdictional Lender having a disproportionate Pro
Rata Share of Prime Rate Loans consisting of Revolving Loans, Agent may adjust
the allocation of future Eurodollar Rate Loans for the purpose of providing each
Revolving Lender, if possible, with a Pro Rata Share of Eurodollar Loans and
Prime Rate Loans consisting of Revolving Loans; and
(ii) if there has been a net increase in Foreign Advances of any
Multi-Jurisdictional Lender during a Settlement Period, then on the date of
settlement for such Settlement Period pursuant to Section 6.10(b) hereof, such
Multi-Jurisdictional Lender shall be deemed to have sold to the other Revolving
Lenders without Multi-Jurisdictional Commitments (ratably in accordance with
their Adjusted Revolving Commitment Percentages) such Multi-Jurisdictional
Lender's Prime Rate Loans, to the extent available, in an amount equal to the
product of (A) One Hundred Percent (100%) less the sum of all
Multi-Jurisdictional Lenders' Revolving Commitment Percentages multiplied by (B)
the US Dollar Amount of the increase in Foreign Advances. Revolving Lenders
acknowledge and agree that to the extent any Multi-Jurisdictional Lender does
not have sufficient Prime Rate Loans consisting of Revolving Loans to sell as
described above, (i) such Multi-Jurisdictional Lender shall be deemed to have
sold all of its interests in Prime Rate Loans consisting of Revolving Loans and
(ii) such Multi-Jurisdictional Lender's outstanding Advances (other than the
Term Loan) as of such settlement date will be in excess of its Pro Rata Share
and Revolving Commitment Percentage of all outstanding Advances (other than the
Term Loan), by an amount equal to such deficiency of saleable Prime Rate Loans
consisting of Revolving Loans (such excess amount referred to herein as the "Pro
Rata Excess Advances"). With respect to any Advances (other than the Term Loan)
to be made by any Revolving Lender thereafter, Agent will adjust the "Pro Rata
Share" of such Revolving Lender (by decreasing the Pro Rata Share of Advances
(other than the Term Loan) to be funded by each Multi-Jurisdictional Lender with
a deficiency as described above and increasing the Pro Rata Share of any other
Revolving Lender without a Multi-Jurisdictional Commitment) until such time as
each Revolving Lender can be provided with an unadjusted Pro Rata Share of
Advances (other than the Term Loan).
6.11 Obligations Several; Independent Nature of Lenders' Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or
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commitment of any other Lender hereunder. Nothing contained in this Agreement or
any of the other Financing Agreements and no action taken by the Lenders
pursuant hereto or thereto shall be deemed to constitute the Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and subject to Section 12.3 hereof, each Lender shall be
entitled to protect and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Lender to be joined as an additional party
in any proceeding for such purpose.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Agent and Fortress with the following
documents in a form satisfactory to Agent as soon as possible after the end of
each month (but in any event within ten (10) Business Days after the end
thereof); provided, that, at any time when Average Excess Availability is less
than $40,000,000 or a Default or Event of Default exists, Borrowers shall
provide Agent and Fortress with such documents on a weekly basis or on a more
frequent basis as Agent shall require:
(i) a Borrowing Base Certificate setting forth the calculation of
the Borrowing Base as of the last Business Day of the immediately preceding
month (or more frequent period if applicable), which Borrowing Base Certificate
shall be complete and accurate in all material respects as determined by Agent;
(ii) (A) perpetual inventory reports, (B) inventory reports by
location and category (and including the amounts of Inventory and the value
thereof at any leased locations and at premises of warehouses, processors or
other third parties), the allocations of which shall be consistent with the
procedures used in appraisals delivered to Agent prior to the Original Closing
Date, (C) agings of accounts receivable (together with a reconciliation to the
previous month's aging and general ledger) and (D) agings of accounts payable
(and including information indicating the amounts then owing to owners and
lessors of leased premises, warehouses, processors and other third parties from
time to time in possession of any Collateral);
(iii) upon Agent's request, (A) copies of customer statements and
credit memos, remittance advices and reports, and copies of deposit slips and
bank statements, (B) copies of shipping and delivery documents, and (C) copies
of purchase orders, invoices and delivery documents for Inventory and Equipment
acquired by any Borrower; and
(iv) such other reports as to the Collateral as Agent shall
request from time to time.
(b) During the existence of a Trigger Event, Borrowers shall provide
to Agent on a regularly scheduled basis as required by Agent, schedules in a
form satisfactory to Agent reflecting sales made, credits issued, cash or other
items of payment received and other data relating to the collection of
Receivables and intercompany loan balances as Agent shall require.
(c) If any Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, such Borrower, hereby irrevocably authorizes such service, contractor,
shipper or agent to deliver such records, reports,
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and related documents to Agent and to follow Agent's instructions with respect
to further services at any time that an Event of Default exists or has occurred
and is continuing.
7.2 Accounts Covenants.
(a) Borrowers shall notify Agent promptly of: (i) any material delay
in the Borrowers' performance of any of their material obligations to any
account debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof, in each case where
"material" is determined on a consolidated basis for all Borrowers, (ii) all
material adverse information known to any Borrower relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
any Borrower's knowledge, would cause Agent to consider any then existing
Accounts in excess of $2,000,000 as no longer constituting Eligible Accounts. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without Agent's consent, except in the
ordinary course of a Borrower's business in accordance with practices and
policies disclosed to Agent and except as set forth in the schedules delivered
to Agent pursuant to Section 7.1(a) above. So long as no Event of Default exists
or has occurred and is continuing, Borrowers shall settle, adjust or compromise
any claim, offset, counterclaim or dispute with any account debtor. At any time
that an Event of Default exists or has occurred and is continuing, Agent shall,
at its option, have the exclusive right to settle, adjust or compromise any
claim, offset, counterclaim or dispute with account debtors or grant any
credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any invoice
delivered to Agent or Schedule thereof delivered to Agent shall be true and
complete in all material respects, (ii) during the existence of a Trigger Event
no payments shall be made thereon except payments immediately delivered to Agent
pursuant to the terms of this Agreement, (iii) no credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
debtor except as reported to Agent in accordance with this Agreement and except
for credits, discounts, allowances or extensions made or given in the ordinary
course of each Borrower's business in accordance with practices and policies
disclosed to Agent, (iv) there shall be no setoffs, deductions, contras,
defenses, counterclaims or disputes existing with respect thereto except as
reported to Agent at the time of delivery of the Borrowing Base Certificate in
accordance with the terms of this Agreement, (v) none of the transactions giving
rise thereto, to the extent such Account is in excess of $2,000,000 will violate
in any material respect any applicable foreign, Federal, State or local laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms except in each case as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors' rights generally and by equitable
principles of general applicability (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(c) Agent shall have the right at any time or times, in Agent's name
or in the name of a nominee of Agent, to verify the validity, amount or any
other matter relating to any Receivables or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
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7.3 Inventory Covenants. With respect to the Inventory (a) each Borrower
shall at all times maintain inventory records reasonably satisfactory to Agent,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory and such Borrower's cost therefor, in each
case consistent with the records reviewed by Agent prior to the Original Closing
Date; (b) Borrowers shall conduct a physical count of the Inventory at least
once each year but at any time or times as Agent or Required Term Lenders may
request during the existence of an Event of Default, and promptly following such
physical inventory shall supply Agent with a report in the form and with such
specificity as may be reasonably satisfactory to Agent concerning such physical
count; (c) Borrowers shall not remove any Inventory from the locations set forth
or permitted herein, without the prior written consent of Agent, except (i) for
sales of Inventory in the ordinary course of its business, (ii) to move
Inventory directly from one location set forth or permitted herein to another
such location, (iii) for Inventory shipped from the manufacturer thereof to such
Borrower which is in transit to the locations set forth or permitted herein or
(iv) to an outside processor for processing; (d) upon Agent's request, Borrower
shall, at their expense, no more than one (1) time in any twelve (12) month
period (or twice in any twelve (12) month period in respect of core Inventory),
but at any time or times as Agent may request during the existence of an Event
of Default, deliver or cause to be delivered to Agent written appraisals as to
the Inventory by an independent appraiser acceptable to Agent applying an
approach to valuation which is consistent to the approach used in the appraisals
of Borrowers' Inventory prepared for Agent prior to Original Closing Date,
addressed to Agent and Lenders and upon which Agent and Lenders are expressly
permitted to rely; (e) Borrowers shall produce, use, store and maintain the
Inventory with all reasonable care and caution and in accordance with applicable
standards of any insurance and in conformity with applicable laws (including the
requirements of the Federal Fair Labor Standards Act of 1938, as amended and all
rules, regulations and orders related thereto); (f) none of the Inventory or
other Collateral constitutes farm products or the proceeds thereof; (g) each
Borrower assumes all responsibility and liability arising from or relating to
the production, use, sale or other disposition of the Inventory; (h) Borrowers
shall not sell Inventory to any customer on approval, or any other basis which
entitles the customer to return or may obligate any Borrower to repurchase such
Inventory; (i) Borrowers shall keep the Inventory in good and marketable
condition; and (j) Borrowers shall not, without prior written notice to Agent or
the specific identification of such Inventory in a report with respect thereto
provided by Administrative Borrower to Agent pursuant to Section 7.1(a) hereof,
acquire or accept any Inventory on consignment or approval.
7.4 Equipment and Real Property Covenants. With respect to the Equipment
and owned Real Property: (a) upon Agent's request or Required Term Lenders'
request, Borrowers shall, at their expense, no more than one (1) time in any
twelve (12) month period, but at any time or times as Agent or Required Term
Lenders may request during the existence of an Event of Default, deliver or
cause to be delivered to Agent written appraisals as to the Equipment and/or the
owned Real Property by an independent appraiser in each case acceptable to Agent
applying an approach to valuation which is consistent to the approach used in
the appraisals of Borrowers' Equipment and/or the owned Real Property prepared
for Agent prior to the Original Closing Date, addressed to Agent and upon which
Agent is expressly permitted to rely; (b) Borrowers shall keep the Equipment in
good order, repair, running and marketable condition (obsolescence and ordinary
wear and tear excepted); (c) to the extent included in the Borrowing Base,
Borrowers shall use the Equipment and owned Real Property with all reasonable
care and caution and in material compliance with applicable standards of any
insurance and in material
73
compliance with all applicable material laws; (d) Borrowers shall use all other
Equipment and Real Property with all reasonable care and caution and in
accordance with applicable standards of any insurance and in compliance with all
applicable laws, except in each case where non-compliance could, individually or
in the aggregate for all such non-compliance, not have a Material Adverse
Effect; (e) the Equipment is and shall be used in the business of Borrowers and
not for personal, family, household or farming use; (f) Borrowers shall not
remove any Equipment from the locations set forth or permitted herein, except to
the extent necessary to have any Equipment repaired or maintained in the
ordinary course of its business or to move Equipment directly from one location
set forth or permitted herein to another such location and except for the
movement of motor vehicles used by or for the benefit of such Borrower in the
ordinary course of business; (g) the Equipment is now and shall remain personal
property and Borrowers shall not permit any of the Equipment to be or become a
part of or affixed to real property; and (h) each Borrower assumes all
responsibility and liability arising from the use of the Equipment and Real
Property.
7.5 In-Transit Inventory Covenants. With respect to the Eligible In-Transit
Inventory of any Borrower, such Borrower shall (a) promptly, but in no event
later than five (5) Business Days after any Inventory ceases to be covered by a
▇▇▇▇ of lading from the carrier transporting such goods to the applicable United
States port, (i) pay all applicable freight costs and duties, tariffs, taxes and
any other governmental assessments applicable to the importation and/or sale of
all such Inventory and (ii) satisfy all other requirements necessary for
permitting all such Inventory to gain entry into the United States through the
United States Customs Service in compliance with any applicable import quotas
for immediate sale and/or distribution in the United States; (b) during the
existence of a Trigger Event, cause all bills of lading and other documents of
title issued by any carrier of goods owned by such Borrower being transported to
the United States from any other country to constitute Qualifying ▇▇▇▇ of Lading
and if such goods are being transported other than from overseas, such Borrower
shall cause all bills of lading and other documents of title issued by any
carrier of goods owned by such Borrower to be in non-negotiable form in the name
of such Borrower or such other Person as Agent shall designate; and (c) during
the existence of a Trigger Event, not enter into any arrangement or agreement
with any customs agents, freight forwarders or principal domestic common
carriers, unless Agent receives an agreement with such party on terms and
conditions acceptable to Agent.
7.6 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as such Borrower's true and
lawful attorney-in-fact, and authorizes Agent, in such Borrower's or Agent's
name, to: (a) at any time an Event of Default exists (i) demand payment on
Receivables or other Collateral, (ii) enforce payment of Receivables by legal
proceedings or otherwise, (iii) exercise all of such Borrower's rights and
remedies to collect any Receivable or other Collateral, (iv) sell or assign any
Receivable upon such terms, for such amount and at such time or times as the
Agent deems advisable, (v) settle, adjust, compromise, extend or renew an
Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign
such Borrower's name on any proof of claim in bankruptcy or other similar
document against an account debtor or other obligor in respect of any
Receivables or other Collateral, (viii) notify the post office authorities to
change the address for delivery of remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral to an address
designated by Agent, and open and dispose of all mail addressed to such Borrower
and handle and store all mail relating to the Collateral; and (ix) do all acts
and things
74
which are necessary, in Agent's determination, to fulfill such Borrower's
obligations under this Agreement and the other Financing Agreements and (b) at
any time during the existence of a Trigger Event, to (i) take control in any
manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Agent or any Lender, (ii) have access to any lockbox or
postal box into which remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral are sent or received,
(iii) endorse such Borrower's name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and deposit the same in Agent's account for application to the
Obligations, (iv) endorse such Borrower's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Receivable
or any goods pertaining thereto or any other Collateral, including any warehouse
or other receipts, or bills of lading and other negotiable or non-negotiable
documents, (v) clear Inventory the purchase of which was financed with Letter of
Credit Accommodations through U.S. Customs or foreign export control authorities
in such Borrower's name, Agent's name or the name of Agent's designee, and to
sign and deliver to customs officials powers of attorney in such Borrower's name
for such purpose, and to complete in such Borrower's or Agent's name, any order,
sale or transaction, obtain the necessary documents in connection therewith and
collect the proceeds thereof, and (vi) sign such Borrower's name on any
verification of Receivables and notices thereof to account debtors or any
secondary obligors or other obligors in respect thereof. Each Borrower hereby
releases Agent and Lenders and their respective officers, employees and
designees from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission, except
as a result of Agent's or any Lender's own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court of
competent jurisdiction.
7.7 Right to Cure. Agent may, at its option, upon notice to Administrative
Borrower, (a) cure any default by any Borrower under any material agreement with
a third party that materially adversely affects the Collateral, its value or the
ability of Agent to collect, sell or otherwise dispose of the Collateral or the
rights and remedies of Agent or any Lender therein or the ability of any
Borrower to perform its material obligations hereunder or under any of the other
Financing Agreements, (b) pay or bond on appeal any material judgment entered
against any Borrower, (c) discharge taxes, liens, security interests or other
encumbrances at any time levied on or existing with respect to the Collateral
and pay any amount, incur any expense or perform any act which, in Agent's good
faith judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Agent and Lenders with respect
thereto. Agent may add any amounts so expended to the Obligations and charge any
Borrower's account therefor, such amounts to be repayable by Borrowers on
demand. Agent and Lenders shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of any Borrower. Any payment made or other action taken
by Agent or any Lender under this Section shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed accordingly.
7.8 Access to Premises. From time to time as requested by Agent, the
Required Revolving Lenders or the Required Term Lenders, at the cost and expense
of Borrowers, (a) Agent, any designee of the Required Term Lenders and/or
Agent's designee shall have complete access to all of each Borrower's premises
during normal business hours and after reasonable prior notice to Administrative
Borrower, or at any time during normal business hours
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and without notice to Administrative Borrower if an Event of Default exists or
has occurred and is continuing, for the purposes of inspecting, verifying and
auditing the Collateral and all of each Borrower's books and records, including
the Records, and (b) each Borrower shall promptly furnish to Agent such copies
of such books and records or extracts therefrom as Agent may request, and Agent
or any Lender or Agent's designee may use during normal business hours such of
any Borrower's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Receivables and realization of other
Collateral. Notwithstanding the foregoing, absent the existence of an Event of
Default, the Borrowers shall not be liable for any $750 per diem charge per
person per day for Agent's examiners performing their duties in accordance with
Section 7.8.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Loan Party hereby represents and warrants to Agent and Lenders
the following (which shall survive the execution and delivery of this
Agreement), the truth and accuracy of which are a continuing condition of the
making of Loans and providing Letter of Credit Accommodations to Borrowers:
8.1 Legal Existence, Power and Authority. Each Borrower and each Foreign
Borrower is a corporation, limited liability company or other legal entity duly
organized and in good standing under the laws of its jurisdiction of
organization. Each Material Loan Party is duly qualified as a foreign
corporation, limited liability company or other legal entity and in good
standing in all jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification necessary,
except for those jurisdictions in which the failure to so qualify would not have
a material adverse effect on such Person's financial condition, results of
operation or business or the rights of any Collateral Agent in or to any of the
Collateral or Foreign Collateral, as applicable. Each Subsidiary of Parent
(other than a Borrower or a Foreign Borrower) is a corporation, limited
liability company or other legal entity duly organized and in good standing
under the laws of its jurisdiction of organization and is duly qualified as a
foreign corporation, limited liability company or other legal entity and in good
standing in all jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification necessary,
except for those jurisdictions in which the failure to so qualify would not have
a Material Adverse Effect. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the Foreign Financing Agreements
and the transactions contemplated hereunder and thereunder by any Loan and any
Subsidiary of any Loan Party (a) are all within the powers of each such Loan
Party and each such Subsidiary of each Loan Party party thereto, (b) have been
duly authorized by each such Loan Party and each such Subsidiary of each Loan
Party party thereto; (c) are not in contravention of any law applicable to each
Loan Party and each Subsidiary of each Loan Party the violation of which,
individually or in the aggregate for all such violations, could reasonably be
expected to have a Material Adverse Effect, (d) are not in contravention of the
terms of any articles or certificate of incorporation or formation, by-laws,
limited liability company agreement, or other organizational documentation of
each such Loan Party and each such Subsidiary of each Loan Party, or any
indenture, loan agreement, deed of trust, lease, security or pledge agreement to
which any Loan Party or any Subsidiary of any Loan Party is a party or by which
any Loan Party or any Subsidiary of any Loan Party or its property are bound and
(e) will not result in the creation or imposition of, or require or give rise to
any obligation to grant, any lien, security
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interest, charge or other encumbrance upon any property of any Loan Party or any
Subsidiary of any Loan Party except as provided in the Financing Agreements and
the Foreign Financing Agreements. The Financing Agreements and the Foreign
Financing Agreements to which any Loan Party or any Subsidiary of a Loan Party
is a party constitute or will constitute when executed legal, valid and binding
obligations of such Person enforceable in accordance with their respective terms
except in each case as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally and by equitable principles of
general applicability (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
8.2 Name; State of Organization; Chief Executive Office; Collateral
Locations.
(a) The exact legal name of each Loan Party and each Subsidiary of
each Loan Party is as set forth in the Information Certificate, subject to the
rights of any such Person to change its legal name in accordance with Section
9.1 hereof or to merge or dissolve in accordance with Section 9.7 hereof and
except to the extent such Loan Party or Subsidiary was acquired or formed after
the Effective Date in accordance with Section 9.10(j) hereof. No Loan Party and
no Subsidiary of any Loan Party has, during the past five years, been known by
or used any other corporate or fictitious name or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its property or assets out of the ordinary course of
business, except as set forth in the Information Certificate, subject to the
rights of any such Person to change its name in accordance with Section 9.1
below or merge or acquire assets in accordance with Sections 9.7 and 9.10(j)
below.
(b) Each Loan Party and each Subsidiary of each Loan Party is an
organization of the type and organized in the jurisdiction set forth in the
Information Certificate, subject to the rights of any such Person to change its
organizational type and jurisdiction in accordance with Section 9.1 hereof or to
merge or dissolve in accordance with Section 9.7 hereof and except to the extent
such Person was acquired or formed after the Effective Date in accordance with
Section 9.10(j) hereof. The Information Certificate accurately sets forth the
organizational identification number of each Loan Party and each Obligor or
accurately states that such Person has none and accurately sets forth the
federal employer identification number of each such Person, subject to the
rights of any such Person to changes its organizational type in accordance with
Section 9.1 hereof or to merge or dissolve in accordance with Section 9.7 hereof
and except to the extent such Person was acquired or formed after the Effective
Date in accordance with Section 9.10(j) hereof.
(c) The chief executive office and mailing address of each Loan Party
and each Subsidiary of each Loan Party and each such Person's Records concerning
Accounts are located only at the address identified as such in Schedule 8.2 to
the Information Certificate, subject to the rights of any such Person to
establish new locations in accordance with Section 9.2 hereof or to merge,
dissolve or transfer or receive assets in accordance with Section 9.7 hereof and
except to the extent such Person was acquired or formed after the Effective Date
in accordance with Section 9.10(j) hereof and, with respect to each Borrower,
each Obligor, each Foreign Borrower and each Foreign Obligor its only other
places of business and the only other locations of assets, if any, are the
addresses set forth in Schedule 8.2 to the Information Certificate, subject to
the rights of any such Person to establish new locations in accordance with
Section 9.2 hereof or to merge, dissolve or transfer or receive assets in
accordance with Section
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9.7 hereof and except to the extent such Person was acquired or formed after the
Effective Date in accordance with Section 9.10(j) hereof. The Information
Certificate correctly identifies any of such locations which are not owned by a
Loan Party, an Obligor, a Foreign Borrower or a Foreign Obligor and sets forth
the owners and/or operators thereof subject to the rights of any such Person to
establish new locations in accordance with Section 9.2 hereof or to merge,
dissolve or transfer or receive assets in accordance with Section 9.7 hereof and
except to the extent such Person was acquired or formed after the Effective Date
in accordance with Section 9.10(j) hereof.
8.3 Financial Statements; No Material Adverse Change. All Financial
Statements which have been or may hereafter be delivered by Parent to Agent and
Lenders have been prepared in accordance with GAAP (except as to any Interim
Financial Statements, to the extent such statements are subject to normal
year-end adjustments and do not include any notes) and fairly present in all
material respects the financial condition and the results of operation of Parent
and its consolidated Subsidiaries as at the dates and for the periods set forth
therein. Except as disclosed in any Interim Financial Statements furnished by
Parent to Agent prior to the date of this Agreement, there has been no act,
condition or event which, individually or in the aggregate for all such acts,
conditions or events, has had or is reasonably likely to have a Material Adverse
Effect since the date of the most recent audited Financial Statements furnished
by Loan Parties to Agent prior to the date of this Agreement. As used herein,
"Financial Statements" shall mean (i) an audited balance sheet, statement of
operations and statement of cash flows, in each case on a consolidated basis for
Parent and its consolidated Subsidiaries; and (ii) an unaudited consolidating
balance sheet, statement of operations and a statement of cash flows for the
Parent and its consolidated Subsidiaries; and "Interim Financial Statements"
shall mean an unaudited balance sheet, statement of operations and statement of
cash flows, in each case on a consolidated and consolidating basis for the
Parent and its consolidated Subsidiaries, except that such statements shall be
subject to normal year-end adjustments and shall not include any footnotes.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to the Collateral Agents under this Agreement, the other Financing
Agreements and the Foreign Financing Agreements constitute valid and perfected
first priority liens and security interests in and upon the Collateral and
Foreign Collateral subject only to (a) prior liens and encumbrances described in
Sections 9.8(b), (d), (e), (f), (g), (h) and (j) (to the extent disclosed on the
policies of title insurance delivered to Agent) which existed on the Original
Closing Date; (b) prior liens and encumbrances arising after the Original
Closing Date under Sections 9.8(b), (c), (d), (f), (g) and, to the extent
permitted under Section 9.9(b), prior liens arising under Sections 9.8(e) and
9.8(h) and (c) other liens and encumbrances permitted under Section 9.8 which
are junior to the Collateral Agent's liens in the Collateral and the Foreign
Collateral. Each Loan Party and each Subsidiary of each Loan Party has good and
marketable fee simple title to or valid leasehold interests in all of its Real
Property and good, valid and merchantable title to all of its other properties
and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Collateral Agents
and those described in the previous sentence.
8.5 Tax Returns. Each Loan Party and each Subsidiary of each Loan Party,
individually or on a consolidated basis, has filed, or caused to be filed, in a
timely manner all federal income tax returns and, except where the failure to so
file, individually or in the
78
aggregate for all such failures, would not have a Material Adverse Effect, all
other tax returns, reports and declarations which are required to be filed by
it. All material information of the Loan Parties and their Subsidiaries, taken
as a whole, in such tax returns, reports and declarations is complete and
accurate in all material respects. Each Loan Party and each Subsidiary of each
Loan Party has paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by it, except taxes the validity of
which are being contested in good faith by appropriate proceedings diligently
pursued and available to such Person and with respect to which adequate reserves
in accordance with GAAP have been set aside on its books. Adequate provision has
been made for the payment of all accrued and unpaid Federal, State, county,
local, foreign and other taxes whether or not yet due and payable and whether or
not disputed.
8.6 Litigation. Except as set forth on Schedule 8.6 to the Information
Certificate, (a) to any Loan Party's knowledge, there is no investigation by any
Governmental Authority pending or threatened against or affecting any Loan Party
or any Subsidiary of any Loan Party, its or their assets or business and (b)
there is no action, suit or proceeding by any Person pending, or to any Loan
Party's knowledge threatened, against any Loan Party or any Subsidiary of any
Loan Party or its or their assets, or against or affecting any transactions
contemplated by any Financing Agreement or any Foreign Financing Agreement, in
each case, which if adversely determined against such Person, individually or in
the aggregate for all such matters, has or could reasonably be expected to have
a Material Adverse Effect.
8.7 Applicable Laws.
(a) Each Loan Party and each Subsidiary of each Loan Party is in
compliance with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority relating to their respective businesses,
including, without limitation, those set forth in or promulgated pursuant to the
Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards
Act of 1938, as amended, ERISA, the Code, as amended, and the rules and
regulations thereunder, and all Environmental Laws, except in each case where
the failure to be in compliance, individually or in the aggregate for all such
failures, could not reasonably be expected to have a Material Adverse Effect.
(b) Each Loan Party and each Subsidiary of each Loan Party has
obtained all material permits, material licenses, material approvals, material
consents, material certificates, material orders or material authorizations of
any Governmental Authority required for the lawful conduct of its business
(collectively, the "Permits"). All of the Permits are valid and subsisting and
in full force and effect. There are no actions or proceedings pending or to any
Loan Party's knowledge, threatened that seek the revocation, cancellation,
suspension or modification of any of the Permits.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 to the Information
Certificate, no Loan Party and no Subsidiary of any Loan Party has generated,
used, stored, treated, transported, manufactured, handled, produced or disposed
of any Hazardous Materials, on or off its premises (whether or not owned by it)
in any manner which at any time violates any applicable Environmental Law or
Permit, and the operations of each such Person complies with all
79
Environmental Laws and all Permits in each case except for such violations
which, individually or in the aggregate for all such violations, could not
reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 8.8 to the Information
Certificate, there has been no investigation by any Governmental Authority or
any proceeding, complaint, order, directive, citation or written notice directed
to any Loan Party or any of its Subsidiaries by any Governmental Authority or
any other person nor is any pending or to any Loan Party's knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by any Loan Party or any Subsidiary of any Loan Party or the
release, spill or discharge, threatened or actual, of any Hazardous Material or
the generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which, individually or in the aggregate for all such
matters, could reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 8.8 to the Information
Certificate, no Loan Party and no Subsidiary of any Loan Party has any liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials which, individually or in the aggregate for
all such actions, could reasonably be expected to have a Material Adverse
Effect.
(d) Except as set forth on Schedule 8.8 to the Information
Certificate, Loan Parties and their Subsidiaries have all Permits required to be
obtained or filed in connection with the operations of each such Person under
any Environmental Law and all of such licenses, certificates, approvals or
similar authorizations and other Permits are valid and in full force and effect
except where the failure to have any such Permits could not, individually or in
the aggregate for all such failures, reasonably be expected to have a Material
Adverse Effect.
8.9 Employee Benefits.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or State law and
their foreign equivalents to the extent applicable. Each Plan which is intended
to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service and to any Loan Party's
knowledge, nothing has occurred which could reasonably be expected to cause the
loss of such qualification. Each Loan Party and its ERISA Affiliates have made
all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) Except for individual claims for benefits in the ordinary course
of business, there are no pending, or to any Loan Party's knowledge, threatened,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used
80
for funding such Plan pursuant to Section 412 of the Code) are not less than
such Plan's liabilities under Section 4001(a)(16) of ERISA; (iii) each Loan
Party and its ERISA Affiliates have not incurred and do not reasonably expect to
incur, any liability under Title IV of ERISA with respect to any Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) each
Loan Party and its ERISA Affiliates have not incurred and do not reasonably
expect to incur, any liability (and no event has occurred which, with the giving
of notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) each
Loan Party and its ERISA Affiliates have not engaged in a transaction that would
be subject to Section 4069 or 4212(c) of ERISA, in each case with respect to any
of the events described in clauses (i) through (v), to the extent any such
event, individually or in the aggregate for all such events, could reasonably be
expected to have a Material Adverse Effect.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Loan Party, any Obligor or any
Foreign Borrower maintained at any bank or other financial institution are set
forth on Schedule 8.10 to the Information Certificate, subject to the right of
each such Person to establish new accounts in accordance with Section 5.2
hereof.
8.11 Intellectual Property. Each Loan Party and each Subsidiary of each
Loan Party owns, has an extant license from a third party, or otherwise has the
right to use all Intellectual Property necessary for the operation of its
business as presently conducted or proposed to be conducted. Except where an
omission could not reasonably be expected to have, individually or in the
aggregate for all such omissions, a Material Adverse Effect, as of the Effective
Date, no Loan Party and no Subsidiary of any Loan Party has (i) any Intellectual
Property registered, issued, or subject to pending applications, renewals,
extensions, continuations, or the like in the United States Patent and Trademark
Office or any similar office or agency in the United States, any State thereof,
any political subdivision thereof, or in any other country, other than those
described in Schedule 8.11 to the Information Certificate; (ii) any other
Intellectual Property under common law rights in the United States, any State
thereof, any political subdivision, or any other country, other than those
described in Section 8.11 to the Information Certificate which, if not listed
therein, would have, individually or in the aggregate for all such omissions, a
Material Adverse Effect; and (iii) granted or obtained any Material Licenses
other than as set forth in Schedule 8.11 to the Information Certificate. To the
knowledge of any Loan Party, no event has occurred which permits or would permit
after notice or passage of time or both, the revocation, suspension or
termination of such rights, which could reasonably be expected to have,
individually or in the aggregate for all such events, a Material Adverse Effect.
To any Loan Party's knowledge, no Intellectual Property used by any Loan Party,
Subsidiary of a Loan Party, Affiliate, licensee or other agent (including,
without limitation, the use of such Intellectual Property as a slogan or other
advertising device, product, process method, substance, and on or in association
with other Intellectual Property or goods bearing or using any Intellectual
Property currently sold or contemplated to be sold by any Loan Party, Subsidiary
of a Loan Party, Affiliate, licensee or other agent of any Loan Party or
Subsidiary of any Loan Party) infringes and/or misappropriates any Intellectual
Property right of any other Person; and no claim or litigation is pending or
threatened against or affecting any Loan Party, Subsidiary of any Loan Party,
Affiliate, licensee or other agent of any Loan Party or Subsidiary of any Loan
Party contesting its right to sell, license or use any such Intellectual
Property. Schedule 8.11 to the Information Certificate sets forth all of the
Material Licenses of each Loan Party and each
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Subsidiary of each Loan Party in effect on the Effective Date and the dates of
the expiration of such agreements. No Intellectual Property owned or used by any
Loan Party or any Subsidiary of any Loan Party, or licensed to any Loan Party or
any Subsidiary of any Loan Party pursuant to a Material License is (i) subject
to any security interest, lien, collateral assignment, pledge or other
encumbrance created or established by any Loan Party or any Subsidiary of any
Loan Party in favor of any Person other than a Collateral Agent, or (ii) affixed
to any Eligible Inventory, except (a) to the extent permitted under the terms of
the License Agreements listed on Schedule 8.11 to the Information Certificate
and (b) to the extent the sale of Inventory to which such Intellectual Property
is affixed is permitted to be sold by such Person under applicable law
(including the United States Copyright Act of 1976).
8.12 Subsidiaries; Affiliates; Capitalization; Solvency.
(a) Each Loan Party does not have any direct or indirect Subsidiaries
and each Loan Party, Obligor and Foreign Borrower is not engaged in any joint
venture or partnership except as set forth in Schedule 8.12 to the Information
Certificate, subject to the rights of any such Loan Party, Obligor or Foreign
Borrower to (i) create or acquire Subsidiaries in accordance with Section
9.10(j) hereof and (ii) engage in transactions with joint ventures in accordance
with Section 9.10(k) hereof.
(b) Schedule 8.12 to the Information Certificate reflects the record
and beneficial owner of all of the issued and outstanding shares of Capital
Stock of each of the Loan Parties (but with respect to Parent, only holders of
5% or more of its Capital Stock as of the Effective Date) and their Subsidiaries
listed on Schedule 8.12 to the Information Certificate (subject to the rights of
any such Person to merge, dissolve or transfer or receive assets in accordance
with Section 9.7 hereof and except to the extent such Person was acquired or
formed after the Effective Date in accordance with Section 9.10(j) hereof) and,
with respect to all Subsidiaries of Parent, there are no proxies, irrevocable or
otherwise, with respect to such shares and no equity securities of any of such
Persons are or may become required to be issued by reason of any options,
warrants, rights to subscribe to, calls or commitments of any kind or nature and
there are no contracts, commitments, understandings or arrangements by which any
such Loan Party or Subsidiary is or may become bound to issue additional shares
of it Capital Stock or securities convertible into or exchangeable for such
shares, subject to the rights of any such Person to issue Capital Stock in
accordance with Section 9.7(b)(v) hereof.
(c) The issued and outstanding shares of Capital Stock of each Loan
Party (except Parent) and each Subsidiary of each Loan Party are directly and
beneficially owned and held by the Persons indicated in the Information
Certificate, subject to the rights of any such Person to merge or dissolve in
accordance with Section 9.7 hereof and except to the extent such Loan Party or
Subsidiary was acquired or formed after the Effective Date in accordance with
Section 9.10(j) hereof and in each case all of such shares have been duly
authorized and are fully paid and non-assessable, and, to the extent held by any
Loan Party, free and clear of all claims, liens, pledges and encumbrances of any
kind, except as disclosed in writing to Agent prior to the Original Closing Date
and except for liens arising under Sections 9.8(b) and (c) hereof.
(d) The Loan Parties and their Subsidiaries, taken as a whole, are
Solvent and will continue to be Solvent after the creation of the Obligations,
the Foreign Obligations, the
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security interests of Collateral Agents and the other transaction contemplated
hereunder and under the Foreign Financing Agreements.
8.13 Labor Disputes.
(a) Set forth on Schedule 8.13 to the Information Certificate is a
list (including dates of termination) of all collective bargaining or similar
agreements between or applicable to any Loan Party, any Obligor, any Foreign
Borrower or any Foreign Obligor and any union, labor organization or other
bargaining agent in respect of the employees of any such Person on the Effective
Date.
(b) There is (i) to any Loan Party's knowledge, no unfair labor
practice complaint pending against any Loan Party or any Subsidiary of any Loan
Party or, to any Loan Party's knowledge, threatened against any Loan Party or
any Subsidiary of any Loan Party, before the National Labor Relations Board,
and, to any Loan Party's knowledge, no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is pending on the
Effective Date against any Loan Party or any Subsidiary of any Loan Party or, to
any Loan Party's knowledge, threatened against it, and (ii) to any Loan Party's
knowledge, no strike, labor dispute, slowdown or stoppage is pending against any
Loan Party or any Subsidiary of any Loan Party or, to any Loan Party's
knowledge, threatened against any Loan Party or any Subsidiary of any Loan Party
except in the cases of clauses (i) and (ii) where any such occurrences,
individually or in the aggregate for all such occurrences, could not reasonable
be expected to have a Material Adverse Effect.
8.14 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any Loan
Party or any Subsidiary of any Loan Party permitted hereunder (so long as any
restrictions in any agreement entered into after the Original Closing Date are
no more restrictive than the restrictions as in effect on the Original Closing
Date), there are no contractual or consensual restrictions on any Loan Party or
any Subsidiary of any Loan Party which prohibit or otherwise restrict (a) the
transfer of cash or other assets between any such Persons or (b) the ability of
any such Person to incur Indebtedness or grant security interests to Collateral
Agents or any Lender or Foreign Lender in the Collateral or Foreign Collateral,
as applicable.
8.15 Material Contracts. Schedule 8.15 to the Information Certificate sets
forth all Material Contracts to which any Loan Party or any Subsidiary of any
Loan Party is a party or is bound as of the Effective Date. Loan Parties have
delivered true, correct and complete copies of such Material Contracts to Agent
on or before the Effective Date. No Loan Party and no Subsidiary of any Loan
Party is in breach or in default in any material respect of or under any
Material Contract or has received any notice of the intention of any other party
thereto to terminate any Material Contract.
8.16 Payable Practices. No Loan Party and no Subsidiary of any Loan Party
has made any material change in the historical accounts payable practices from
those in effect immediately prior to the Original Closing Date.
8.17 Single Economic Enterprise. Borrowers and Obligors make up a related
organization of various entities constituting a single economic and business
enterprise so that
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Borrowers and Obligors share an identity of interests such that any benefit
received by any one of them benefits the others. Borrowers and Obligors render
certain services to or for the benefit of the other Borrowers and/or Obligors,
as the case may be, purchase or sell and supply certain goods to or from or for
the benefit of the others, make loans, advances and provide certain other
financial accommodations to or for the benefit of each other (including, inter
alia, the payment by Borrowers and Obligors of creditors of each other and
guarantees by Borrowers and Obligors of the indebtedness of each other) and
provide certain administrative, marketing, payroll and management services to or
for the benefit of each other.
8.18 Restricted Subsidiaries. The "Restricted Subsidiaries" (as defined in
each of the Indentures) under the Indentures are Parent and each Subsidiary of
Parent, except for Electro Diesel Rebuild bvba and the Delphi Subsidiary, as may
be modified from time to time pursuant to the Indentures and subject to Sections
9.7(c) and 9.23 hereof.
8.19 Inactive Subsidiaries. No Inactive Subsidiary (a) has any assets with
a net book value in excess of $10,000, (b) has any material liabilities or (c)
engages in any business activities.
8.20 Accuracy and Completeness of Information. All information furnished by
or on behalf of any Loan Party or any Subsidiary of any Loan Party in writing to
any Agent Party in connection with this Agreement, any of the other Financing
Agreements, any Foreign Financing Agreement, or any transaction contemplated
hereby or thereby, including all information on the Information Certificate is
true and correct in all material respects on the date as of which such
information is dated or certified and does not omit any material fact necessary
in order to make such information not misleading. No event or circumstance has
occurred which has had or could reasonably be expected to have, individually or
in the aggregate for all such events or circumstances, a Material Adverse
Affect, which has not been fully and accurately disclosed to Agent in writing to
the extent required under this Agreement.
8.21 Survival of Warranties; Cumulative. All representations and warranties
contained in this Agreement or any of the other Financing Agreements shall
survive the execution and delivery of this Agreement and shall be deemed to have
been made again to Agent and Lenders on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Agent and Lenders regardless of any investigation made or
information possessed by Agent or any Lender. The representations and warranties
set forth herein shall be cumulative and in addition to any other
representations or warranties which any Loan Party shall now or hereafter give,
or cause to be given, to Agent or any Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence.
(a) Each Loan Party shall, and shall cause each of its Subsidiaries
to, at all times preserve, renew and keep in full force and effect its legal
existence and rights and franchises with respect thereto and maintain in full
force and effect (except for defaults by any other Person) all material
licenses, material trademarks, material tradenames, material approvals,
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material authorizations, material leases, material contracts and Permits
necessary to carry on its business, except as permitted in Section 9.7 hereto.
(b) No Loan Party shall, or shall permit any of its Subsidiaries to,
change its name unless each of the following conditions is satisfied: (i) Agent
shall have received not less than thirty (30) days prior written notice from
Parent of such proposed change in such Person's legal name, which notice shall
accurately set forth the new name; and (ii) Agent shall have received a copy of
the amendment to the Articles or Certificate of Incorporation or Formation (or
such other organizational documents) of such Person providing for the name
change certified by the proper Governmental Authority of the jurisdiction of
incorporation or organization of such Loan Party or Subsidiary as soon as it is
available.
(c) No Loan Party shall, or shall permit any of its Subsidiaries to,
change its chief executive office or its mailing address or organizational
identification number (or if it does not have one, shall not acquire one) unless
Agent shall have received not less than thirty (30) days' prior written notice
from Parent of such proposed change, which notice shall set forth such
information with respect thereto as Agent may reasonably require and Agent shall
have received such agreements as Agent may reasonably require in connection
therewith. No Loan Party shall, or shall permit any of its Subsidiaries to,
change its type of organization, jurisdiction of organization or other legal
structure unless (i) Agent shall have received not less than twenty (20) days'
prior written notice from Parent of such proposed change which notice shall set
forth the changes, (ii) Parent delivers to Agent a new certified charter from
the appropriate Governmental Authority as soon as available reflecting the
proposed change as well as such other certified organizational documents as
Agent shall reasonably require and (iii) the applicable Collateral Agent shall
have received such agreements, documents and instruments, duly executed by the
appropriate Person if required, as such Collateral Agent may deem reasonably
necessary or desirable to protect the interest of such Collateral Agent in the
Collateral or Foreign Collateral, as applicable.
9.2 New Collateral Locations. Each Loan Party may only open any new
location within the continental United States, and each Foreign Borrower may
only open any new location within the country of its formation, in each case
provided such Person (a) gives Agent thirty (30) days prior written notice of
the intended opening of any such new location and (b) executes and delivers, or
causes to be executed and delivered, to the applicable Collateral Agent such
agreements, documents, and instruments as such Collateral Agent may deem
reasonably necessary or desirable to protect its interests in the Collateral or
Foreign Collateral, as applicable, at such location.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each Loan Party shall, and shall cause each of its Subsidiaries
to, at all times, comply with all laws, rules, regulations, licenses, approvals,
orders and other Permits applicable to it and duly observe all requirements of
any foreign, Federal, State or local Governmental Authority (including ERISA,
the Code, the Occupational Safety and Health Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, and their foreign equivalents) and all
statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including all of the
Environmental
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Laws, in each case where the failure to do so, individually or in the aggregate,
has or could reasonably be expected to have a Material Adverse Effect.
(b) Each Loan Party shall, and shall cause each of its Subsidiaries
to, give written notice to Agent promptly, but in any event within ten (10)
Business Days, upon any such Person's receipt of any written or other credible
notice of, or any such Person's otherwise obtaining knowledge of, (i) the
occurrence of any event involving the release, spill or discharge, threatened or
actual, of any Hazardous Material or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or written notice with respect to:
(A) any non-compliance with or violation of any Environmental Law by any such
Person or (B) the release, spill or discharge, threatened or actual, of any
Hazardous Material other than in the ordinary course of business and other than
as permitted under any applicable Environmental Law in each case under clauses
(i) and (ii) where such occurrences or events, individually or in the aggregate
for all such occurrences or events, has or could reasonably be expected to have
a Material Adverse Effect. Copies of all environmental surveys, audits,
assessments, feasibility studies and results of remedial investigations shall be
promptly furnished, or caused to be furnished, by such Loan Parties to Agent
and, to the extent requested by any environmental engineer or any Loan Party,
Agent shall agree to keep such materials confidential pursuant to the terms of
Section 13.10 hereof. Each Loan Party shall, and shall cause each of its
Subsidiaries to, take prompt action to respond to any material non-compliance by
the Loan Parties with any of the Environmental Laws as and to the extent
required by Environmental Laws and shall regularly report to Agent on such
response.
(c) Without limiting the generality of the foregoing, whenever Agent
reasonably determines that there is non-compliance by any Loan Party or any
Subsidiary of any Loan Party, or any condition which requires any action by or
on behalf of any Loan Party or any Subsidiary of any Loan Party in order to
avoid any non-compliance, with any Environmental Law where such non-compliance,
individually or in the aggregate for all non-compliances, has resulted or could
reasonably be expected to result in a Material Adverse Effect, Loan Parties
shall, at Agent's request and Borrowers' expense: (i) cause an independent
environmental engineer reasonably acceptable to Agent to conduct such tests of
the site where non-compliance or alleged non-compliance with such Environmental
Laws has occurred as to such non-compliance and prepare and deliver to Agent a
report as to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof and (ii) provide to Agent a supplemental
report of such engineer whenever the scope of such non-compliance, or such
Person's response thereto or the estimated costs thereof, shall change in any
material respect.
(d) Each Loan Party shall, and shall cause each of its Subsidiaries
to, indemnify and hold harmless Agent and Lenders and their respective
directors, officers, employees, agents, invitees, representatives, successors
and assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including reasonable attorneys' fees and expenses) directly
or indirectly arising out of or attributable to the use, generation,
manufacture, reproduction, storage, release, threatened release, spill,
discharge, disposal or presence of a Hazardous Material, including the costs of
any required or necessary repair, cleanup or other remedial work with respect to
any property of any such Person and the preparation and implementation of any
closure, remedial or other required plans. All indemnifications in this Section
9.3 shall survive the payment of the Obligations and the termination of this
Agreement.
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9.4 Payment of Taxes and Claims. Each Loan Party shall, and shall cause
each of its Subsidiaries to, duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes, assessments, contributions and governmental changes
which are de minimus in amount or taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to such Person and with respect to which adequate reserves in
accordance with GAAP have been set aside on its books.
9.5 Insurance. Each Loan Party shall at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral, against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and similarly
situated. Said policies of insurance shall be reasonably satisfactory to Agent
as to form, amount and insurer. Loan Parties shall furnish certificates,
policies or endorsements to Agent as Agent shall reasonably require as proof of
such insurance, and, if any Loan Party fails to do so, Agent is authorized, but
not required, to obtain such insurance at the expense of Loan Parties. All
policies shall provide for at least thirty (30) days prior written notice to
Agent of any cancellation or reduction of coverage and that Agent may act as
attorney for each Loan Party in obtaining, and at any time an Event of Default
exists or has occurred and is continuing, adjusting, settling, amending and
canceling such insurance. Loan Parties shall cause Agent to be named as a loss
payee and an additional insured (but without any liability for any premiums)
under such insurance policies and Loan Parties shall obtain non-contributory
lender's loss payable endorsements to all insurance policies in form and
substance satisfactory to Agent. Such lender's loss payable endorsements shall
specify that the proceeds of such insurance shall be payable to Agent as its
interests may appear and further specify that Agent and Lenders shall be paid
regardless of any act or omission by any Loan Party or any of their Affiliates.
At its option, Agent may apply any insurance proceeds received by Agent at any
time to the cost of repairs or replacement of Collateral and/or to payment of
the Obligations, whether or not then due, in any order and in such manner as
Agent may determine or hold such proceeds as cash collateral for the
Obligations; provided, that, unless a Trigger Event exists or such insurance
proceeds relate to Collateral included in the Borrowing Base, the Loan Parties
may retain insurance proceeds to the extent the aggregate amount of all proceeds
received at all times do not exceed $1,000,000.
9.6 Financial Statements and Other Information.
(a) Each Loan Party shall, and shall cause each of its Subsidiaries
to, keep proper books and records in which entries required by GAAP (where
applicable) shall be made of all business transactions of or in relation to the
Collateral and Foreign Collateral, as applicable, and the business of such
Person in accordance with GAAP or its foreign equivalent, as applicable. Each
Loan Party shall, and shall cause each of its Subsidiaries to, promptly furnish
to Agent and Fortress all such financial and other information as Agent shall
reasonably request relating to the Collateral and Foreign Collateral and the
assets, business and operations of each Loan Parties and their Subsidiaries, and
to notify the auditors and accountants of each such Person that Agent is
authorized to obtain such information directly from them. Without limiting the
foregoing, Loan Parties shall furnish or cause to be furnished to Agent and
Fortress, the following: (i) within thirty (30) days after the end of each
fiscal month, (A) monthly unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss and statements of cash flow), all in
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reasonable detail, fairly presenting in all material respects the financial
position and the results of the operations of Parent and its Subsidiaries on a
consolidated basis as of the end of and through such fiscal month, certified to
be correct by an Authorized Officer, subject to normal year-end adjustments and
no footnotes and accompanied by a compliance certificate substantially in the
form of Exhibit C hereto, along with a Schedule in a form satisfactory to Agent
of the calculations used in determining, as of the end of such month, whether
the Loan Parties are in compliance with the covenants set forth in Sections 9.17
and 9.18 of this Agreement for such month if such reporting is required
hereunder and (B) a separate report setting forth for each Loan Party and each
Subsidiary of each Loan Party, the beginning balance, ending balance and net
change with respect to Advances and intercompany balances for each such Person,
and (ii) within one hundred and twenty (120) days after the end of each fiscal
year or, if earlier, the date on which Borrowers filed its annual report on Form
10-K with the Securities and Exchange Commission after the end of such fiscal
year, audited consolidated financial statements and unaudited consolidating
financial statements of Parent and its Subsidiaries (including in each case
balance sheets, statements of income and loss and statements of cash flow), and
the accompanying notes thereto, all in reasonable detail, fairly presenting in
all material respects the financial position and the results of the operations
of Parent and its Subsidiaries on a consolidated basis as of the end of and for
such fiscal year, together with the unqualified opinion of independent certified
public accountants with respect to the audited consolidated financial
statements, which accountants shall be Ernst & Young, LLP or an independent
accounting firm selected by Parent and acceptable to Agent, that such audited
consolidated financial statements have been prepared in accordance with GAAP,
and present fairly in all material respects the results of operations and
financial condition of Parent and its Subsidiaries on a consolidated basis as of
the end of and for the fiscal year then ended.
(b) Each Loan Party shall, and shall cause each of its Subsidiaries
to, promptly notify Agent in writing of the details of (i) any loss, damage,
investigation, action, suit, proceeding or claim which, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect, (ii) any Material Contract being terminated or amended or any new
Material Contract entered into (in which event Loan Parties shall provide Agent
with a copy of such Material Contract), (iii) any order, judgment or decree
entered against any Loan Party or any Subsidiary and any Loan Party or any of
its or their properties or assets which, individually or in the aggregate, has
had or could reasonably be expected to have a Material Adverse Effect, (iv) any
notification of a material violation of laws or regulations received by any Loan
Party or any Subsidiary of any Loan Party which, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect, (v) any ERISA Event, and (vi) the occurrence of any Default or Event of
Default.
(c) Each Loan Party shall, and shall cause each of its Subsidiaries
to, promptly after the sending or filing thereof furnish or cause to be
furnished to Agent copies of all reports which any such Person sends to its
stockholders generally and copies of all reports and registration statements
which any such Person files with the Securities and Exchange Commission, any
national or local securities exchange or the National Association of Securities
Dealers, Inc.
(d) Each Loan Party shall furnish or cause to be furnished to Agent on
an annual basis, a yearly business plan with budgets, forecasts and projections
attached thereto and each Loan Party agrees that, from time to time, such Loan
Party will provide updates and
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supplemental information to such annual reports as Agent may reasonably request.
Agent is hereby authorized to deliver a copy of any financial statement or any
other information relating to the business of Loan Parties and their
Subsidiaries to any court or other Governmental Authority or to any other Agent
Party or Participant or prospective Agent Party or Participant or any Affiliate
of any Agent Party or Participant. Each Loan Party hereby irrevocably authorizes
and directs all accountants or auditors to deliver to Agent, at Borrowers'
expense, copies of the financial statements of any Loan Party and its
Subsidiaries and any reports prepared by such accountants (in their capacities
as auditors) or management letters prepared by such accountants or auditors on
behalf of any Loan Party and its Subsidiaries and to disclose to the Agent
Parties such other information reasonably related to such financial statements,
reports or management letters as Agent may request. Any documents, schedules,
invoices or other papers delivered to any Agent Party, may be destroyed or
otherwise disposed of by such Agent Party one (1) year after the same are
delivered to such Agent Party, except as otherwise designated by Administrative
Borrower to any Agent Party in writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. No Loan Party
shall, or shall permit any of its Subsidiaries to, directly or indirectly,
(a) merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it except that (i)
any Borrower (other than Parent) or Obligor may merge with and into or
consolidate with any other Borrower (other than Parent) or Obligor, (ii) the
European Borrowers, Approved Foreign Borrowers or Foreign Obligors, as the case
may be, may merge with and into or consolidate with each other but only to the
extent the Persons party to such merger or consolidation are organized in the
same country, (iii) any Subsidiary of Parent (other than any Borrower or Foreign
Borrower) may merge with and into or consolidate with any other Subsidiary of
Parent (other than any Borrower of Foreign Borrower) and (iv) any Subsidiary
formed for the purpose of effectuating a Permitted Acquisition may merge or
consolidate with a Person acquired pursuant to such Permitted Acquisition,
provided, that, in each case above, each of the following conditions is
satisfied as determined by Agent in good faith: (i) Agent shall have received
not less than ten (10) Business Days' prior written notice of the intention of
such Persons to so merge or consolidate, which notice shall set forth in
reasonable detail satisfactory to Agent, the Persons that are merging or
consolidating, which Person will be the surviving entity, the locations of the
assets of the Persons that are merging or consolidating, and the material
agreements and documents relating to such merger or consolidation, (ii) Agent
shall have received such other information with respect to such merger or
consolidation as Agent may reasonably request, (iii) as of the effective date of
the merger or consolidation and after giving effect thereto, no Default or Event
of Default shall exist, (iv) Agent shall have received, true, correct and
complete copies of all agreements, documents and instruments relating to such
merger or consolidation, including, but not limited to, the certificate or
certificates of merger to be filed with each appropriate Governmental Authority
(with a copy as filed promptly after such filing), (v) the surviving entity
shall expressly confirm, ratify and assume the Obligations (or Foreign
Obligations, as applicable) and the Financing Agreements (or Foreign Financing
Agreements, as applicable) to which it is a party in writing, in form and
substance satisfactory to Agent, and each Loan Party shall, and shall cause each
of its Subsidiaries to, execute and deliver such other agreements, documents and
instruments as Agent may request in connection therewith to ensure that the
appropriate Collateral Agent maintains a perfected security interest in all the
assets of the surviving entity to the extent any Collateral Agent had a lien on
the assets of any entity party to such merger or consolidation;
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(b) issue, sell, assign, lease, transfer, abandon or otherwise dispose
of any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person, except as permitted by each of clauses (i) through (vii) and
(ix) below which shall in each case be subject to the terms and conditions of
clause (viii) below:
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment (including
worn-out, obsolete or excess Equipment or Equipment no longer used or useful in
the business of any Loan Party or any Subsidiary of any Loan Party) or any
portion of Real Property to a non-Affiliate of such Loan Party or Subsidiary (A)
up to $500,000 in net book value in the aggregate for all Equipment and Real
Property or (B) in excess of the amount described in clause (A); provided, that,
with respect to any sale or disposition under this clause (B), (1) no Event of
Default shall exist at the time of, or after giving effect to, such sale or
disposition, (2) Agent shall have received not less than ten (10) Business Days'
prior written notice of the intention of such disposition setting forth the
parties involved, the Equipment or portion of Real Property to be sold and the
purchase price thereof, (3) during the existence of a Trigger Event pursuant to
clause (b) of the definition thereof, the net proceeds from such sale or
disposition shall be immediately applied to repay the outstanding Advances (in
accordance with Section 6.4 hereof) and/or Foreign Advances, as applicable and
(4) the net book value for all such Equipment and Real Property disposed of in
any fiscal year of Parent does not exceed $5,000,000;
(iii) except as otherwise permitted in Section 9.7(b)(i), the
sale, assignment, lease, transfer or disposal of any assets by any Borrower to
another Borrower, by any European Borrower to another European Borrower or by an
Approved Foreign Borrower to another Approved Foreign Borrower to the extent
organized in the same country; provided, that, (A) Agent shall have received not
less than ten (10) Business Days' prior written notice of the intention of such
disposition setting forth the parties involved, the assets involved, and
providing all other information, documents and agreements as Agent shall request
in good faith, (B) no Event of Default shall exist at the time of or after
giving effect to such disposition and (C) the applicable Person acquiring the
assets shall have taken all actions and executed all documents deemed necessary
or appropriate by Agent to maintain the applicable Collateral Agent's perfected
lien on such assets;
(iv) except as otherwise permitted in Section 9.7(b)(i), the
sale, assignment, lease, transfer or disposal of any assets by (A) any
Subsidiary of Parent (other than any Borrower or Foreign Borrower) to any Loan
Party or any Subsidiary of any Loan Party so long as any purchase or lease price
to any Loan Party associated with such transaction does not exceed the net book
value of such assets and (B) any Borrower or Foreign Borrower to any Subsidiary
of Parent (other than any Borrower or Foreign Borrower); provided, that, for
purposes of this clause (B), (1) Agent shall have received not less than ten
(10) Business Days' prior written notice of the intention to engage in such
transaction setting forth the parties involved, the assets involved and
providing all other information, documents and agreements as Agent shall request
in good faith, (2) at the time of, and after giving effect to such disposition,
no Trigger Event shall exist, (3) to the extent such disposition involves assets
included in the Borrowing Base (or any Foreign Borrowing Base), Parent shall
have delivered to the Agent, prior to such transaction, a new Borrowing Base
Certificate (or equivalent in respect of such Foreign Borrowing Base) giving
effect to such transaction, (4) the net book value for all assets sold,
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leased or otherwise disposed of in connection with this clause (iv) in any
fiscal year of Parent does not exceed $5,000,000, (5) to the extent any Borrower
or Foreign Borrower receives proceeds from such disposition, such proceeds shall
be immediately applied to repay the outstanding Advances (in accordance with
Section 6.4 hereof) or Foreign Advances, as applicable and (6) to the extent the
applicable Person acquiring the assets has previously granted a Collateral Agent
a lien on its assets, such Person all have taken all actions and executed all
documents deemed necessary or appropriate by Agent to grant such Collateral
Agent a perfected lien on such acquired assets.
(v) the issuance and sale by any Loan Party or any Subsidiary of
any Loan Party of Capital Stock of such Person after the Effective Date;
provided, that, (A) Agent shall have received not less than ten (10) Business
Days' prior written notice of such issuance and sale by such Person, which
notice shall specify the parties to whom such shares are to be sold, the terms
of such sale, the total amount which it is anticipated will be realized from the
issuance and sale of such stock and the net cash proceeds which it is
anticipated will be received by such Person from such sale, (B) such Person
shall not be required to pay any cash dividends or repurchase or redeem such
Capital Stock or make any other payments in respect thereof, except as otherwise
permitted in Section 9.11 hereof, (C) the terms of such Capital Stock, and the
terms and conditions of the purchase and sale thereof, shall not include any
terms that include any limitation on the right of any such Person to request or
receive Loans or Letter of Credit Accommodations or the right of any such Person
to amend or modify any of the terms and conditions of this Agreement or any of
the other Financing Agreements or Foreign Financing Agreements or otherwise in
any way relate to or affect the arrangements of such Person with any Agent Party
or are more restrictive or burdensome to any Loan Party or any Subsidiary of any
Loan Party than the terms of any Capital Stock in effect on the Original Closing
Date, (D) except as Agent may otherwise agree in writing, all of the proceeds of
the sale and issuance of such Capital Stock shall be paid to Agent for
application to the Obligations and Foreign Obligations in such order and manner
as Agent may determine or at Agent's option, to be held as cash collateral for
the Obligations and Foreign Obligations, (E) such Capital Stock is pledged to
the applicable Collateral Agent if required under the terms of any Financing
Agreements or Foreign Financing Agreements and (F) as of the date of such
issuance and sale and after giving effect thereto, no Default or Event of
Default shall exist;
(vi) the sale, transfer or other disposition by Parent or any
Subsidiary of Parent of the Capital Stock in any Subsidiary owned by such Person
or all or substantially all the assets of such Person; provided, that, (A)
Parent has delivered a certificate to Agent at least ten (10) Business Days
prior to such sale, transfer or disposition identifying the Capital Stock or
assets subject to such sale, transfer or disposition, setting forth a good faith
estimate of the expected net proceeds from such sale, transfer or disposition
and attaching thereto the applicable buy/sell documents to be executed in
connection with such sale, transfer or disposition and a new Borrowing Base
Certificate (or equivalent in respect of any Foreign Borrowing Base) giving
effect to such sale, transfer or disposition; (B) no Trigger Event exists at the
time of, or after giving effect to, such sale, transfer or disposition, (C) all
proceeds of such sale, transfer or disposition shall be immediately applied to
repay the outstanding Advances (in accordance with Section 6.4 hereof) or
Foreign Advances, as applicable, and (D) the aggregate fair market value for any
Capital Stock or assets subject to such sale, transfer or disposition in any
fiscal year of Parent does not exceed $5,000,000 (or up to $10,000,000 with the
prior written consent of Agent). Notwithstanding the foregoing, the liens on the
assets to be sold shall not be deemed
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released and no Collateral Agent shall have any obligation to release such liens
in connection with any such sale, transfer or disposition until Agent receives
satisfactory evidence (including copies of executed buy/sell documents) that (1)
such sale, transfer or disposition was consummated in accordance with the
buy/sell documents previously provided to Agent and (2) the applicable
Collateral Agent received net proceeds from such sale, transfer or disposition
in the amount contemplated by such buy/sell agreements;
(vii) the sale of (A) Receivables owing from AutoZone, Inc. or
other account debtors acceptable to Agent pursuant to a Purchase Commitment;
provided, that, the terms and conditions of such Purchase Commitment have been
approved by Agent, (B) Receivables of Delco UK pursuant to that certain Invoice
Discounting Facility dated as of February 3, 2003 between Delco UK and ▇▇▇▇▇▇▇
Bank PLC; provided that (1) the face amount of Receivables sold pursuant to such
facility shall not exceed (pound)1,500,000 pound sterling in any fiscal year and
(2) such facility shall be terminated upon the execution of an amendment to the
European Loan Agreement which reinstates the ability of Delco UK to request
Foreign Advances subject to the terms and conditions of the European Loan
Agreement and (C) Receivables owing from AutoZone Inc., which sales are made
pursuant to the terms and conditions of that certain letter agreement and
consent agreement entered into by and among SunTrust Bank, as agent, World Wide
Automotive, Inc. and Agent each in the form approved by Agent (collectively, the
"SunTrust Letter Agreement"); provided that, with respect to the sales
contemplated by this clause (C), (1) no such sale of any Receivable generating
net proceeds less than 90% of the face amount of such Receivable shall be made
at any time, (2) the related drafts issued pursuant to the SunTrust Letter
Agreement shall be due no later than six (6) months after the creation of the
related Receivable, (3) no such sale of any Receivable shall be made at any time
that a Default or Event of Default shall have occurred and be continuing and (4)
no amendments or modifications may be made to the SunTrust Letter Agreement
without the Agent's prior written consent;
(viii) notwithstanding anything in this Agreement to the
contrary, to the extent that the Parent or any "Restricted Subsidiary" (as
defined in the Indentures) intends on receiving "Net Available Cash" (as defined
in the Indentures) from any "Asset Disposition" (as defined in the Indentures)
permitted under the terms of this Agreement, then (A) the Parent shall provide
Agent with ten (10) Business Days' prior written notice of such Asset
Disposition setting forth a description of the assets being sold, the parties
involved, the date of such Asset Disposition and the Net Available Cash to be
received in connection with such Asset Disposition, (B) Parent shall, and shall
cause each of its applicable Subsidiaries to, place all such Net Available Cash
upon receipt thereof in a depository account at the Reference Bank (or another
bank acceptable to Agent in the case of any Restricted Subsidiary organized
outside the United States) and, to the extent such deposit is made by a Borrower
or Obligor, undertake to promptly grant to the Agent a first priority perfected
security interest in the Net Available Cash held in such account pursuant to a
blocked account agreement in form and substance satisfactory to Agent (the
"Blocked Account"); provided that to the extent Net Available Cash is received
by a European Borrower or an Approved Foreign Borrower, such entity will grant
European Collateral Agent or other applicable foreign Collateral Agent a first
priority perfected security interest in such account to the extent legally
permissible and to secure the debt of such entity, (C) such amounts in the
Blocked Account (or such other account) shall be released from time to time upon
(1) receipt by Agent, prior to 360 days after receipt of the Net Available Cash,
of a certificate or certificates from Parent stating that Parent or the
applicable Restricted Subsidiary is investing (or entering into a binding
commitment to invest; provided that such commitment shall
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be subject only to customary conditions (other than financing) and such
investment shall be consummated within 360 days after the end of such 360
period) all or a portion of such Net Available Cash in Additional Assets (as
defined in the Indentures) and setting forth the details of such investment and
the date therefore (on the date of such investment, the applicable amount of Net
Available Cash requested to be invested in such certificate will be released
from the Blocked Account (or such other account) solely to make such investment)
or (2) receipt by the Agent of a certificate from Parent stating that Parent or
the applicable Restricted Subsidiary is repaying the Advances or Foreign
Advances, as applicable, with Net Available Cash (and setting forth the date of
such repayment at which time such Net Available Cash held in the Blocked Account
(or such other account) will be applied to the Advances (in accordance with
Section 6.4 hereof) or Foreign Advances, as applicable), (D) to the extent Net
Available Cash is invested in Additional Assets owned (or to be owned) by a
Borrower, Foreign Borrower, Obligor or Foreign Obligor, in each case whose
assets are already subject to a lien in favor of a Collateral Agent, then at the
request of Agent, Parent shall, and shall cause each of its applicable
Subsidiaries to, grant the applicable Collateral Agent a first priority
perfected lien on such Additional Assets, (E) to the extent the Net Available
Cash is applied as a payment against the Advances or Foreign Advances pursuant
to clause (C)(2) above, the Maximum Revolving Credit shall be automatically and
permanently reduced at the time of such payment by the amount of such Net
Available Cash in accordance with Section 2.4 hereof and (F) to the extent the
Maximum Revolving Credit is permanently reduced, the Loan Parties shall pay to
the Agent, for the ratable benefit of the Revolving Lenders based on their
Revolving Commitment Percentages, an early termination fee in the amount equal
to (1) 1.0% of such Net Available Cash if received on or prior to the first
anniversary of the Original Closing Date or (2) 0.5% of such Net Available Cash
if received after the first anniversary of the Original Closing Date but on or
prior to the second anniversary of the Original Closing Date; and
(ix) the sale by Delco Remy Mexico, S. de ▇.▇. de C.V., Delco
Remy Remanufacturing de Mexico, S.R.L. de C.V. and Remy Componentes, S. de ▇.▇.
de C.V. (collectively, the "Delco Mexico Entities") of their fixed assets to
another Person for the purpose of leasing such property from such Person
pursuant to the terms of (A) that certain Master Lease Agreement No. 171 dated
May 29, 2003 among GE Capital CEF Mexico, S. de ▇.▇. de C.V. and the Delco
Mexico Entities and (B) such other agreement, documents and instruments the
terms and conditions of which shall be approved by Agent and Fortress.
(c) wind up, liquidate or dissolve except that any Subsidiary of
Parent (other than Borrowers and Foreign Borrowers) may wind up, liquidate and
dissolve, provided, that, each of the following conditions is satisfied, (i) the
winding up, liquidation and dissolution of such Person shall not violate any law
or any order or decree of any court or other Governmental Authority in any
material respect and shall not conflict with or result in the breach of, or
constitute a default under, any indenture, mortgage, deed of trust, or any other
agreement or instrument to which any Loan Party or Subsidiary of any Loan Party
is a party or may be bound, (ii) such winding up, liquidation or dissolution
shall be done in accordance with the requirements of all applicable laws and
regulations, (iii) effective upon such winding up, liquidation or dissolution,
all of the assets and properties of such Person shall be duly and validly
transferred and assigned to a Borrower, Foreign Borrower or to such Person's
immediate parent (provided, that with respect to the transfer of assets and
properties of Remy Holdings Limited to Remy International, Inc., Parent will
cause Remy International, Inc. to pledge the equity interests of Remy Auto Parts
Holdings B.V. to the European Collateral Agent in form and substance
93
reasonably satisfactory to the European Collateral Agent) to the extent capable
of being transferred and permitted by applicable law, free and clear of any
liens, restrictions or encumbrances other than existing liens and the security
interest and liens of a Collateral Agent (and Agent shall have received such
evidence thereof as Agent may require) and Agent shall have received such deeds,
assignments or other agreements as Agent may request to evidence and confirm the
transfer of such assets of such Person in accordance with this clause, (iv)
Agent shall have received all documents and agreements that such Person has
filed with any Governmental Authority or as are otherwise required to effectuate
such winding up, liquidation or dissolution, (v) no Loan Party or Foreign
Borrower shall assume any Indebtedness, obligations or liabilities as a result
of such winding up, liquidation or dissolution, or otherwise become liable in
respect of any obligations or liabilities of the entity that is winding up,
liquidating or dissolving, unless such Indebtedness is otherwise expressly
permitted hereunder, (vi) Agent shall have received not less than ten (10)
Business Days prior written notice of the intention of such Person to wind up,
liquidate or dissolve (provided, that Agent acknowledges receipt of notice in
accordance with this clause (vi) that Parent intends to dissolve Ballantrae
Corporation, DR Alternators, Inc., DR China Holdings Inc., DR Reman, L.L.C.,
Power Investments Marine, Inc., Publitech, Inc., Remy Korea Holdings, L.L.C.,
World Wide Automotive Distributors, Inc., XL Component Distribution Limited, DR
Alternators Poland Sp. z.o.o., Delco Remy Brasil, Ltda. and Remy Generators de
Mexico, S. de. ▇.▇. de. C.V.), and (vii) as of the date of such winding up,
liquidation or dissolution and after giving effect thereto, no Default or Event
of Default shall exist; or
(d) agree to do any of the foregoing.
9.8 Encumbrances. No Loan Party shall, or shall permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral and Foreign
Collateral, except:
(a) the security interests and liens of any Collateral Agents for
itself and the benefit of Lenders and/or Foreign Lenders, as the case may be;
(b) liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Person and with respect to which adequate reserves have
been set aside on its books;
(c) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of such Person's business to
the extent: (i) such liens secure Indebtedness which is not overdue for a period
of more than sixty (60) days or (ii) such liens secure Indebtedness relating to
claims or liabilities which are fully insured and being defended at the sole
cost and expense and at the sole risk of the insurer or being contested in good
faith by appropriate proceedings diligently pursued and available to such
Person, in each case prior to the commencement of foreclosure or other similar
proceedings and with respect to which adequate reserves have been set aside on
its books;
(d) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of
94
such Real Property or ordinary conduct of the business of such Person as
presently conducted thereon or materially impair the value of the Real Property
which may be subject thereto;
(e) purchase money security interests in Equipment (including Capital
Leases) and purchase money mortgages on Real Property to secure Indebtedness
permitted under Section 9.9(b) hereof;
(f) pledges and deposits of cash by any such Person after the Original
Closing Date in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of such Person as of the Original Closing
Date;
(g) pledges and deposits of cash by any such Person after the Original
Closing Date to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations in each case in the ordinary course of business consistent
with the current practices of such Person as of the Original Closing Date
provided, that, in connection with any performance bonds issued by a surety or
other person, the issuer of such bond shall have waived in writing any rights in
or to, or other interest in, any of the Collateral in an agreement, in form and
substance satisfactory to Agent in its good faith determination;
(h) liens arising from (i) operating leases and the precautionary UCC
financing statement filings or their foreign equivalents in respect thereof,
(ii) equipment or other materials which are not owned by any such Person located
on the premises of such Person (but not in connection with, or as part of, the
financing thereof) from time to time in the ordinary course of business and
consistent with current practices of such Person and the precautionary UCC
financing statement filings or their foreign equivalents in respect thereof and
(iii) subleases or license agreements;
(i) judgments and other similar liens arising in connection with court
proceedings that do not constitute an Event of Default, provided, that, (i) such
liens are being contested in good faith and by appropriate proceedings
diligently pursued, (ii) adequate reserves or other appropriate provision, if
any, as are required by GAAP have been made therefor, (iii) a stay of
enforcement of any such liens is in effect and (iv) Agent (or the applicable
Foreign Lender, as applicable) may establish a Reserve (or its equivalent under
the Foreign Financing Agreements, as applicable) with respect thereto;
(j) the security interests and liens set forth on Schedule 8.4 to the
Information Certificate as well as any exception to title to the Real Properties
appearing on Agent's policies of title insurance;
(k) pledges of cash or marketable securities of any such Person to
secure hedging obligations of such Person made in the ordinary course of
business of such Person and to the extent such obligations are permitted under
Section 9.9 hereof;
(l) liens on the assets of a Foreign Subsidiary securing Indebtedness
of such Foreign Subsidiary to the extent such Indebtedness is permitted under
Section 9.9 hereof;
95
(m) liens on the assets acquired pursuant to a Permitted Acquisition
to secure Indebtedness assumed in connection with such Permitted Acquisitions to
the extent such Indebtedness is permitted under Section 9.9 hereof; provided,
that, (i) such liens were existing prior to the consummation of the Permitted
Acquisition, (ii) such liens were not created in contemplation of or in
connection with such Permitted Acquisition and (iii) such liens are not on
Receivables or Inventory of any Person; and
(n) liens securing Refinancing Indebtedness permitted (and defined)
under Section 9.9 hereof, but only covering assets which secured the
Indebtedness being refinanced.
9.9 Indebtedness. No Loan Party shall, or shall permit any of its
Subsidiaries to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:
(a) the Obligations and the Foreign Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising
after the Effective Date to the extent secured by purchase money security
interests in Equipment (including Capital Leases) and purchase money mortgages
on Real Property so long as such security interests and mortgages do not apply
to any property of such Loan Party or Subsidiary other than the Equipment or
Real Property so acquired, and the Indebtedness secured thereby does not exceed
the cost of the Equipment or Real Property so acquired, as the case may be and
so long as the aggregate amount of such purchase money Indebtedness (including
Capital Leases) does not exceed $10,000,000 outstanding at any time;
(c) guarantees by any Loan Party or any Subsidiary of any Loan Party
of the Obligations or Foreign Obligations;
(d) the Indebtedness consisting of (i) intercompany loans and advances
permitted under Section 9.10(g) hereof and (ii) trade payables permitted under
Section 9.10(n) hereof;
(e) unsecured Indebtedness of any Loan Party or any Subsidiary of any
Loan Party arising after the date hereof to any third person (but not to any
other Loan Party or any Subsidiary of any Loan Party or any of their Affiliates
unless otherwise permitted under this Section 9.9), provided, that, each of the
following conditions is satisfied as determined by Agent: (i) such Indebtedness
shall be on terms and conditions acceptable to Agent and shall be subject and
subordinate in right of payment to the right of the Agent Parties to receive the
prior indefeasible payment and satisfaction in full payment of all of the
Obligations and Foreign Obligations pursuant to the terms of an intercreditor
agreement between the applicable Agent Parties and such third party, in form and
substance satisfactory to Agent; provided, that, if any such Indebtedness is to
be issued pursuant to an indenture that is subject to the Trust Indenture Act of
1939, as amended, the subordination terms set forth in such indenture shall be
acceptable if substantially identical to those terms of subordination set forth
in Article 10 of the 2001 Notes Indenture, (ii) Agent shall have received not
less than ten (10) days prior written notice of the intention of such Loan Party
or Subsidiary to incur such Indebtedness, which notice shall set forth in
reasonable detail satisfactory to Agent the amount of such Indebtedness, the
person or
96
persons to whom such Indebtedness will be owed, the interest rate, the Schedule
of repayments and maturity date with respect thereto and such other information
as Agent may request with respect thereto, (iii) Agent shall have received true,
correct and complete copies of all agreements, documents and instruments
evidencing or otherwise related to such Indebtedness, (iv) except as Agent may
otherwise agree in writing, all of the proceeds of the loans or other
accommodations giving rise to such Indebtedness shall be paid to the Agent for
application to the Obligations (in accordance with Section 6.4 hereof) or
Foreign Obligations, as applicable, (v) as of the date of incurring such
Indebtedness and after giving effect thereto, no Default or Event of Default
shall exist or have occurred, (vi) such Loan Party or Subsidiary shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto, except,
that, such Loan Party or Subsidiary may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to extend the maturity
thereof, or defer the timing of any payments in respect thereof, or to forgive
or cancel any portion of such Indebtedness (other than pursuant to payments
thereof), or to reduce the interest rate or any fees in connection therewith, or
(B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness
(except pursuant to regularly scheduled payments permitted herein), or set aside
or otherwise deposit or invest any sums for such purpose, (vii) Loan Parties
shall, and shall cause their Subsidiaries to, furnish to Agent all notices or
demands in connection with such Indebtedness either received by any Loan Party
or Subsidiary or on its behalf promptly after the receipt thereof, or sent by
any Loan Party or Subsidiary or on its behalf concurrently with the sending
thereof, as the case may be, and (viii) Fortress has consented to the terms and
conditions of such Indebtedness and any intercreditor agreement under clause (i)
above and to any application of the proceeds of such Indebtedness other than to
the Obligations or Foreign Obligations under clause (iv) above; provided, that
the consent of Fortress in each case shall not be required under this clause (e)
to the extent (A) such Indebtedness has no scheduled amortization starting prior
to ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) such Indebtedness matures after March 31, 2006, (C) the
terms and conditions governing such Indebtedness contain no financial covenants,
(D) such Indebtedness is negotiated at arms-length and (E) the interest rate
applicable to such Indebtedness is a market interest rate;
(f) the Indebtedness set forth on Schedule 9.9 to the Information
Certificate; provided, that, (i) Loan Parties and their Subsidiaries may only
make regularly scheduled payments of principal and interest in respect of such
Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the Original
Closing Date, except for the prepayment of any working capital loan facility of
an Approved Foreign Borrower with proceeds from an Approved Foreign Loan
Agreement (ii) no Loan Party shall, or shall permit any of its Subsidiaries to,
directly or indirectly, (A) amend, modify, alter or change the terms of such
Indebtedness or any agreement, document or instrument related thereto as in
effect on the Original Closing Date except, that, Loan Parties and their
Subsidiaries may, after prior written notice to Agent, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose except as provided in
clause (i) above, and (iii) Loan Parties shall, and shall cause their
Subsidiaries to, furnish to Agent all notices or demands in connection with such
Indebtedness either received by any Loan Party or Subsidiary
97
or on its behalf, promptly after the receipt thereof, or sent by any Loan Party
or Subsidiary or on its behalf, concurrently with the sending thereof, as the
case may be;
(g) Indebtedness incurred under credit cards issued to employees,
agents, officers, directors, or other Affiliates of any Loan Party or any
Subsidiary of any Loan Party in the ordinary course of business;
(h) Indebtedness incurred as a result of overdrafts in the ordinary
course of business which shall not be outstanding for more than two (2) Business
Days;
(i) Indebtedness consisting of liens permitted by subsections (a)
through (n) of Section 9.8 to the extent not already described in this Section
9.9;
(j) guarantees constituting endorsement of negotiable instruments for
deposit or collection in the ordinary course of business;
(k) Hedging Agreements of any Loan Party or any Subsidiary of any Loan
Party in respect of Indebtedness permitted hereunder; provided, that, (i) at the
time of entering into any Hedging Agreement, no Event of Default exists or would
result after giving effect thereto and (ii) the transactions contemplated by
such Hedging Agreement are bona fide hedging activities for the purpose of
mitigation risks to which Loan Parties and their Subsidiaries are exposed in the
conduct of their business or the management of their liabilities;
(l) Indebtedness assumed by a Loan Party or any Subsidiary of any Loan
Party in connection with a Permitted Acquisition of assets of a Person after the
Original Closing Date or in connection with a Permitted Acquisition after the
Original Closing Date of any Person which becomes a Subsidiary of Parent after
the Original Closing Date, which Indebtedness in all such cases exists at the
time of such Acquisition and is not created in contemplation of such event;
provided, that, (i) such Indebtedness, if secured, was not secured by
Receivables or Inventory so acquired, (ii) recourse for any Indebtedness
incurred pursuant to an Acquisition shall only be against the Person acquired
pursuant to such Acquisition or the applicable Loan Party or Subsidiary which
acquired assets pursuant to such Acquisition, (iii) Loan Parties and their
Subsidiaries may only make regularly scheduled payments of principal and
interest in respect of such Indebtedness in accordance with the terms of the
agreement or instrument evidencing or giving rise to such Indebtedness as in
effect on the Original Closing Date, (iv) no Loan Party shall, or shall permit
any of its Subsidiaries to, directly or indirectly, (A) amend, modify, alter or
change the terms of such Indebtedness or any agreement, document or instrument
related thereto as in effect on the Original Closing Date except, that, Loan
Parties and their Subsidiaries may, after prior written notice to Agent, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof,
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness (other than pursuant to payments thereof), or
to reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, and (v) Loan Parties
shall, and shall cause their Subsidiaries to, furnish to Agent all notices or
demands in connection with such Indebtedness either received by any Loan Party
or Subsidiary or on its behalf, promptly after the receipt thereof, or sent by
any Loan Party or Subsidiary or on its behalf, concurrently with the sending
thereof, as the case may be;
98
(m) additional Indebtedness incurred by a Foreign Subsidiary to any
Person (other than to a Loan Party or a Subsidiary of a Loan Party); provided,
that, (i) at the time of and after giving effect to such incurrence of
Indebtedness, no Event of Default shall have occurred and be continuing, (ii)
recourse for any such Indebtedness shall only be against such Foreign Subsidiary
and its Subsidiaries (other than any Foreign Borrower or Foreign Obligor) and
(iii) the aggregate amount of such Indebtedness (together with all Indebtedness
incurred by Foreign Subsidiaries under Sections 9.9(b), (e), (l) and (o) hereof)
that may be outstanding at any one time shall not exceed $67,500,000 less
amounts paid after the Effective Date under the "Bae Purchase Agreement" (as
defined in Section 9.9(a) hereof); provided, that the aggregate amount of such
Indebtedness incurred by Foreign Subsidiaries organized and existing under the
laws of Mexico that may be outstanding at any one time shall not exceed
$28,500,000;
(n) Indebtedness of Parent consisting of its guarantee of the
obligations under that certain Lease Agreement dated in April, 2002 (the "Mexico
Lease") between Matamoros Industrial Partners II, L.P. and Parent; provided,
that, (i) such guarantee shall only be in effect upon the assignment of the
Mexico Lease by Parent to its Affiliates and (ii) the guaranteed obligations of
Parent under the Mexico Lease shall not exceed the tenant's obligations under
the Mexico Lease as in effect on the Original Closing Date for any fiscal year;
(o) other unsecured Indebtedness incurred after the Original Closing
Date and not otherwise permitted hereunder in an aggregate principal amount not
exceeding $5,000,000 at any one time outstanding; provided, that, (i) at the
time of and after giving effect to such incurrence of Indebtedness no Event of
Default shall exist and (ii) the Agent shall have received two (2) Business
Days' prior written notice of any Indebtedness to be incurred by a Loan Party or
any Subsidiary of a Loan Party hereunder which notice shall designate this
Section 9.9(o) as the authority under which such Person is incurring such
Indebtedness and stating the unused portion of Indebtedness remaining under this
Section 9.9(o) after giving effect to such Indebtedness to be incurred;
(p) extensions, renewals or refinancings by any Loan Party or any
Subsidiary of any Loan Party of any Indebtedness permitted under this Section
9.9 so long as (i) such Indebtedness ("Refinancing Indebtedness") is in an
original aggregate principal amount not greater than the aggregate principal
amount of the Indebtedness being extended, renewed or refinanced, (ii) if the
Indebtedness being extended, renewed or refinanced is subordinated to any of the
Obligations and Foreign Obligations, such Refinancing Indebtedness is
subordinated to the Obligations and Foreign Obligations on terms not less
favorable to the Lenders and Foreign Lenders than the terms of the subordination
provisions governing such Indebtedness being extended, renewed or refinanced,
(iii) at the time of and after giving effect to such renewal or refinancing, no
Event of Default shall have occurred and be continuing and (iv) the other terms
and conditions of such Refinancing Indebtedness (including amortization,
interest rates and fees) are no less favorable to the applicable Loan Party or
Subsidiary than the Indebtedness being extended, renewed or refinanced;
(q) Indebtedness of Parent consisting of its guarantee under that
certain Letter of Guaranty executed in the form approved by Agent (the "Bae
Guaranty") to ▇▇▇ ▇▇▇▇ Bae, an individual ("▇▇. ▇▇▇"), of the obligations of
Delco Remy Hungary Rt. to ▇▇. ▇▇▇ under that certain Purchase Agreement
substantially in the form approved by Agent (the "Bae Purchase Agreement")
entered into between ▇▇. ▇▇▇, as seller, and Delco Remy Hungary Rt., as
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purchaser, of Capital Stock of Delco Remy Korea Limited; provided, that, (1) no
payment shall be made under the Bae Guaranty unless Excess Availability shall be
at least $32,500,000 immediately before, and after giving effect to, such
payment and (2) the sum of the aggregate amount of payments by (x) Delco Remy
Hungary Rt. under the Bae Purchase Agreement and (y) Parent under the Bae
Guaranty shall not exceed $8,000,000;
(r) Indebtedness of Parent consisting of its guarantee of the rent
payment obligations of JAX Reman, L.L.C., as tenant under that certain Lease
dated June 17, 1998 with Cathedral Baypoint Associates LLC as landlord, provided
that such rent obligations shall not exceed $35,000 per month; and
(s) Indebtedness of Parent consisting of its guarantees of obligations
incurred by any Borrower or Obligor organized in the United States but only to
the extent such obligations are not prohibited by this Agreement.
9.10 Loans, Investments, Etc. No Loan Party shall, or shall permit any of
its Subsidiaries to, directly or indirectly, make any loans or advance money or
property to any Person, or invest in (by capital contribution, dividend or
otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all or
a substantial part of the assets or property of any Person, or form or acquire
any Subsidiaries, or agree to do any of the foregoing, except:
(a) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(b) investments in cash or Cash Equivalents, provided, that, (i) no
Loans or Foreign Advances are then outstanding and (ii) the terms and conditions
of Section 5.2 hereof shall have been satisfied with respect to the deposit
account, investment account or other account in which such cash or Cash
Equivalents are held or, in the case of any Foreign Borrower, the applicable
Collateral Agent shall have received a security interest in the account in which
such cash or cash equivalents are held in a manner satisfactory to such
Collateral Agent;
(c) the equity investments of each Loan Party and each Subsidiary of
each Loan Party as of the Original Closing Date and as permitted by this Section
9.10 in such Person's Subsidiaries, provided, that, no Loan Party shall, or
shall permit any of its Subsidiaries to, have any further obligations or
liabilities to make any capital contributions or other additional investments or
other payments to or in or for the benefit of any of such Subsidiaries except
investments which derive from repurchases or redemptions permitted under Section
9.11(d) hereof;
(d) loans and advances by any Loan Party or any Subsidiary of any Loan
Party to employees of such Person not to exceed the principal amount of $350,000
in the aggregate for all Loan Parties and their Subsidiaries at any time
outstanding for: (i) reasonably and necessary work-related travel or other
ordinary business expenses to be incurred by such employee in connection with
their work for any such Person and (ii) reasonable and necessary relocation
expenses of such employees (including home mortgage financing for relocated
employees);
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(e) stock or obligations issued to any Loan Party or any Subsidiary of
any Loan Party by any Person (or the representative of such Person) in respect
of Indebtedness of such Person owing to such Loan Party or Subsidiary in
connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person;
provided, that, the original of any such stock or instrument evidencing such
obligations shall be promptly delivered to the applicable Collateral Agent, upon
Agent's request, together with such stock power, assignment or endorsement by
such Loan Party or Subsidiary as Agent may request;
(f) obligations of account debtors to any Loan Party or any Subsidiary
of any Loan Party arising from Accounts which are past due evidenced by a
promissory note made by such account debtor payable to such Loan Party or
Subsidiary; provided, that, promptly upon the receipt of the original of any
such promissory note by such Loan Party or Subsidiary, such promissory note
shall be endorsed to the order of the applicable Collateral Agent by such and
promptly delivered to Agent as so endorsed;
(g) intercompany loans and advances for borrowed money by (i) any
Borrower to any Borrower's Subsidiaries which are Obligors, (ii) any Foreign
Borrower to such Foreign Borrower's Subsidiaries which are Foreign Obligors;
(iii) any Subsidiary of Parent (which is not a Borrower or Foreign Borrower) or
any Non-Restricted Subsidiary to any Loan Party or any Subsidiary of any Loan
Party, (iv) any Loan Party or any Subsidiary of any Loan Party to any
Non-Restricted Subsidiary, (v) any Loan Party or any Subsidiary of any Loan
Party to Delco Remy Mexico, S. de ▇.▇. de C.V., Remy Mexico Holdings, S. de ▇.▇.
de C.V. and Remy Componentes, S. de ▇.▇. de C.V. (collectively, the "Mexican
Affiliates") and (vi) any Loan Party or any Subsidiary of any Loan Party to any
Foreign Subsidiary; provided, that, in each case:
(A) as to all of such loans and advances, (1) the Indebtedness
arising pursuant to any such loan shall not be evidenced by a promissory note or
other instrument, unless the single original of such note or other instrument is
promptly delivered to the applicable Collateral Agent upon Agent's request to
hold as part of the Collateral or Foreign Collateral, as applicable, with such
endorsement and/or assignment by the payee of such note or other instrument as
the applicable Collateral Agent may require, (2) as of the date of any such loan
and after giving effect thereto, the Loan Party or Subsidiary making such loan
shall be Solvent, (3) as of the date of any such loan and after giving effect
thereto, no Default or Event of Default shall exist, (4) no loan to any Loan
Party, any Subsidiary of a Loan Party or any Non-Restricted Subsidiary (each, a
"Borrowing Party") may be made by any other Loan Party, Subsidiary of a Loan
Party or Non-Restricted Subsidiary (each, a "Lending Party") unless the balance
of intercompany loans of such Lending Party owing to such Borrowing Party is
zero ($0), and (5) to the extent any such loans and advances are to be provided
to a Foreign Subsidiary, (x) the Indebtedness arising pursuant to any such loans
and advances shall be evidenced by a promissory note promptly delivered to the
applicable Collateral Agent upon Agent's request to hold as part of the
Collateral or Foreign Collateral, as applicable, with such endorsement and/or
assignment by the payee of such note or other instrument as the applicable
Collateral Agent may require and any intercompany liens granted to any Borrower,
Obligor, Foreign Borrower or Foreign Obligor in connection with such loans and
advances shall be assigned to the applicable Collateral Agent, as additional
collateral security for the Obligations and/or Foreign Obligations, as
applicable, in form and substance satisfactory to Agent, (y) such Foreign
Subsidiary shall not be subject to any
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prohibition on, or any condition, limitation or other restriction having the
effect of prohibiting, repatriating or otherwise transferring income (or
repaying intercompany loans or advances), directly or indirectly, to Parent or a
Borrower (other than voluntary restrictions imposed by Parent for tax planning
purposes) and (z) upon request of Agent, the Collateral Agent designated by
Agent shall have received a first priority perfected lien on (including a pledge
if the assets are evidenced by a certificate) all the Capital Stock of such
Foreign Subsidiary to secure the Obligations (to the extent of 66.5% of all
outstanding Capital Stock of such Foreign Subsidiary) and all of the Foreign
Obligations, unless the pledge of such Capital Stock is prohibited by applicable
law or if the consent of a minority shareholder of such Foreign Subsidiary
cannot be obtained after using commercially reasonable efforts to obtain such
consent;
(B) as to all such loans and advances made under clauses (i) and
(ii) of Section 9.10(g), the aggregate amount of all such loans and advances
that may be outstanding at any one time shall not exceed $500,000; provided,
that, if a Trigger Event exists, then the Parent shall provide the Agent with
two (2) Business Days' advance written notice prior to the making of any such
loan or advance;
(C) as to all such loans and advances made under clause (iii) of
this Section 9.10(g), (1) the Indebtedness arising pursuant to such loan shall
be subject to, and subordinate in right of payment to, the right of the Agent
Parties to receive the prior final payment and satisfaction in full of all of
the Obligations and Foreign Obligations on terms and conditions acceptable to
Agent, (2) promptly upon Agent's request, the applicable Agent Parties shall
have received a subordination agreement, in form and substance satisfactory to
Agent, providing for the terms of the subordination in right of payment of such
Indebtedness of such Person to the prior final payment and satisfaction in full
of all of the Obligations and Foreign Obligations, duly authorized, executed and
delivered by the parties to such loan, and (3) the borrowing party shall not,
directly or indirectly make, or be required to make, any payments in respect of
such Indebtedness prior to the end of the then current term of this Agreement;
(D) as to all such loans and advances made under clause (iv) of
Section 9.10(g), (1) the aggregate amount of all such loans and advances
consisting of trade balances that may be outstanding at any one time shall not
exceed $5,000,000 and (2) the aggregate amount of all other loans and advances
that may be outstanding at any one time shall not exceed $500,000; provided,
that, if a Trigger Event exists, then the Parent shall provide the Agent with
two (2) Business Days' advance written notice prior to the making of any such
loan or advance;
(E) as to all such loans and advances made under clause (v) of
Section 9.10(g), (1) the proceeds of such loans and advances shall only be used
to purchase ownership interests of Delco Remy Mexico, S. de ▇. ▇. de C.V. by a
Loan Party on behalf of Remy Mexico Holdings, S. de ▇. ▇. de C.V. or pay for
damages assessed against the Mexican Affiliates as a remedy pursuant to an
arbitration finding or settlement in connection with that certain arbitration
claim instituted in August 2001 (as amended) by GCID Autopartes, S.A. de C.V.
against the Mexican Affiliates, (2) such loans and advances shall not be made
unless Agent has been provided with five (5) Business Days' advance written
notice reflecting the purchase price and amount of damages actually assessed
against the Mexican Affiliates and attaching all applicable settlement
agreements, orders and arbitration findings as Agent shall require to evidence
such assessment, (3) Excess Availability shall be at least $25,000,000
immediately before, and after
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giving effect to, such loans and advances and (4) the aggregate amount of such
loans and advances made to the Mexican Affiliates shall not exceed $20,000,000;
(F) as to all such loans and advances made under clause (vi) of
Section 9.10(g), such loans and advances (1) shall not exceed $10,000,000 in the
aggregate at any time outstanding and (2) in each case shall not be made unless
Excess Availability is at least $32,500,000 immediately before, and after giving
effect to, such loans and advances; and
(G) as to all such loans and advances made under Section 9.10(g),
such loans and advances to the Canadian Subsidiary shall not exceed $3,000,000
in the aggregate at any time outstanding;
(h) investments by the Parent in DR Alternator Holdings, Inc., a
Non-Restricted Subsidiary (together with any subsequent Non-Restricted
Subsidiaries formed by such Non-Restricted Subsidiary, the "Delphi Subsidiary"),
formed for the purpose of acquiring the alternator business and assets of Delphi
Automotive LLC (the "Delphi Acquisition"); provided, that, (i) Excess
Availability shall be at least $40,000,000 before, and after giving effect to,
such investment, and no Event of Default shall exist at the time of, or after
giving effect to, such investment, (ii) the terms and conditions of the Delphi
Acquisition shall have been approved by the Agent in a writing, (iii) the
aggregate amount of investment made by the Parent to the Delphi Subsidiary shall
not exceed $100,000 (in addition to amounts otherwise permitted under clause (D)
of Section 9.10(g)) and (iv) Agent shall have received a pledge and first
priority security interest in all the outstanding Capital Stock of DR Alternator
Holdings, Inc. pursuant to a pledge agreement executed by Parent, in form and
substance satisfactory to Agent, together with the delivery to Agent of all
share certificates (with appropriate transfer powers) evidencing such Capital
Stock;
(i) the investments, loans and advances set forth on Schedule 9.10 to
the Information Certificate; provided, that, (i) as to such loans and advances,
the Loan Parties shall not, and shall not permit any of their Subsidiaries to,
directly or indirectly, amend, modify, alter or change the terms of such loans
and advances or any agreement, document or instrument related thereto except
that such Loan Party or Subsidiary may, after prior written notice to Agent,
amend, modify, alter or change the terms thereof so as to shorten the maturity
thereof, or shorten the timing of any payments in respects thereof or increase
the interest rate or any fees in connection therewith and (ii) the Loan Parties
shall, and shall cause each of their Subsidiaries to, furnish to Agent all
notices or demands in connection with such loans and advances either received by
any Loan Party or Subsidiary or on its behalf, promptly after the receipt
thereof, or sent by any Loan Party or Subsidiary or on its behalf, concurrently
with the sending thereof, as the case may be; and
(j) any Loan Party or Subsidiary of any Loan Party may (i) make an
Acquisition of assets or an Acquisition of a Person to be designated as a
Subsidiary; provided, that, at the time of making such Acquisition (A) Excess
Availability is, and will be after giving effect to such Acquisition,
$40,000,000 and no Default or Event of Default exists or would exist after
giving effect to such Acquisition, (B) Agent receives, thirty (30) days prior to
the day such Acquisition is to be made, a certificate signed by an authorized
officer of Parent describing the Acquisition and attaching all applicable
purchase agreements, (C) if Parent intends for the acquired assets (whether
through the Acquisition of a Person or through the Acquisition of
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assets) to be included in the Borrowing Base (or any Foreign Borrowing Base) at
any time (whether through a subsequent merger, consolidation or otherwise), then
Agent must provide their prior written approval (which approval shall be based
on, among other things, satisfactory results of such field examinations, audits,
appraisals and other due diligence as Agent shall require) and upon such
approval, if the Acquisition is of a Person, such Person shall be designated by
the Agent as a Borrower, European Borrower or Approved Foreign Borrower, as
applicable, and (D) in the event the Acquisition consists of an acquisition of
assets or of a Person, then at Agent's or Fortress' election, Parent shall cause
such Subsidiary (and any other applicable Loan Party or Subsidiary) to execute
such joinder agreements to the Financing Agreements or Foreign Financing
Agreements, and such guarantees, security agreements, pledge agreements and
other documents as Agent shall require, in each case in form and substance
satisfactory to Agent, to further secure the Obligations and/or Foreign
Obligations, as applicable; or (ii) form a direct wholly-owned Subsidiary of
such Person for the purpose of making an Acquisition described in clause (i)
above or otherwise; provided that at the time of forming such Subsidiary, (A) no
Event of Default exists, (B) Parent shall, unless such Subsidiary is a Foreign
Subsidiary, have caused such newly designated Subsidiary (and any other
applicable Loan Party or Subsidiary) to execute such guarantees, security
agreements and pledge agreements, and caused to be executed and/or delivered,
other agreements, documents and instruments as Agent shall require, all in form
and substance satisfactory to Agent to further secure the Obligations and/or
Foreign Obligations, as applicable, and (C) the assets of such Subsidiary shall
not at any time (whether through a subsequent merger, consolidation or
otherwise) be included in the Borrowing Base (or any Foreign Borrowing Base)
unless Agent had provided its prior written approval;
(k) investments, loans or guaranties of loans in or to foreign
corporations, partnerships or joint ventures by any Loan Party or any Subsidiary
of any Loan Party to the extent reasonably related to the business of such Loan
Party or Subsidiary (other than as permitted in Section 9.10(i) above);
provided, that, (i) immediately before and after giving affect to any such
transaction, no Event of Default shall exist, (ii) Excess Availability shall be
at least $40,000,000 immediately before, and after giving effect to, any such
transaction, (iii) the aggregate amount of such investments, loans or guarantees
shall not exceed $10,000,000 in the aggregate and (iv) the Collateral Agent
designated by Agent shall have received a first priority perfected lien on
(including a pledge if evidenced by a note or certificate) against any ownership
interests acquired by any such Loan Party or Subsidiary in connection with any
such transaction to the extent not prohibited by applicable law to secure the
Obligations (to the extent of 66.5% of all outstanding Capital Stock of any such
Person) and the Foreign Obligations;
(l) investments by Parent in any other Person to the extent (i)
reasonably related to the business of Parent and its Subsidiaries and (ii)
Parent's consideration for such investment consists solely of its own Capital
Stock;
(m) investments that constitute Indebtedness permitted under Section
9.9 hereof;
(n) intercompany advances which consist of the deferred and unpaid
balance of the purchase price of goods, materials and/or services provided by a
Loan Party or Subsidiary of a Loan Party to another Loan Party or Subsidiary of
a Loan Party; provided, that, to the extent such trade advances constituting
Indebtedness (including those existing on the Original Closing
104
Date) are due and owing by any Loan Party or Foreign Borrower to a Subsidiary of
Parent (other than a Loan Party) (herein, the "Deferred Payables"), the Loan
Parties shall, and shall cause their Subsidiaries to, not pay any such Deferred
Payables until the Agent Parties receive the prior final payment and
satisfaction in full of all of the Obligations and Foreign Obligations, except
that Deferred Payables may be paid so long as (i) no Event of Default exists at
the time of, and after giving effect to, such payment and (ii) Excess
Availability is at least $32,500,000 at the time of, and after giving effect to,
such payment; provided, further, that, if Excess Availability is less than
$32,500,000 at any time, Deferred Payables may be paid in an amount not to
exceed $1,000,000 in any fiscal year of Parent so long as no Event of Default
exists at the time of, or after giving effect to, such payment; and
(o) investments consisting of non-cash consideration received in
connection with a disposition permitted by Section 9.7; provided, that, (i) at
least seventy-five (75%) of the purchase price of such disposition shall have
been paid in cash and (ii) the applicable Collateral Agent shall have received,
in a manner acceptable to such Collateral Agent, a lien (including a pledge if
such investment is evidenced by an instrument or certificate) against any such
assets acquired in connection with such disposition.
9.11 Dividends and Redemptions. No Loan Party shall, or shall permit any of
its Subsidiaries to, directly or indirectly, declare or pay any dividends on
account of any shares of class of any Capital Stock of any such Person now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums for
such purpose, or redeem, retire, defease, purchase or otherwise acquire any
shares of any class of Capital Stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration or apply or set apart
any sum, or make any other distribution (by reduction of capital or otherwise)
in respect of any such shares or agree to do any of the foregoing, except that:
(a) any Loan Party or any Subsidiary of any Loan Party may declare and
pay such dividends or redeem, retire, defease, purchase or otherwise acquire any
shares of any class of Capital Stock, in each case for consideration in the form
of shares of common stock or equity interests (so long as after giving effect
thereto no Change of Control or other Default or Event of Default shall exist or
occur) and such shares (except in the case of Parent's Capital Stock) are
pledged to the applicable Collateral Agent if required under the terms of any
Financing Agreement or Foreign Financing Agreement;
(b) the Loan Parties and their Subsidiaries may pay dividends to the
extent permitted in clause (c) and Section 9.12 below;
(c) any Subsidiary of Parent may pay dividends to the holder of a
majority of such Subsidiary's Capital Stock so long as such holder is the Parent
or a Subsidiary of Parent;
(d) Parent may repurchase Capital Stock consisting of common stock
held by directors or employees pursuant to the Stockholders Agreement and any
employee or other stock ownership plan or arrangement thereof upon the
resignation, termination, retirement or death of any such employee in accordance
with the provisions of such agreements, plan or arrangement, provided, that, as
to any such repurchase, each of the following conditions is satisfied: (i) as of
the date of the payment for such repurchase and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing, (ii)
such repurchase shall be paid with
105
funds legally available therefor, (iii) such repurchase shall not violate in any
material respect any law or regulation or the terms of any indenture, agreement
or undertaking to which Parent is a party or by which Parent or its property are
bound, and (iv) the aggregate amount of all payments for such repurchases in any
calendar year shall not exceed $1,000,000; and
(e) World Wide Automotive, Inc. and Power Investments, Inc. (and their
successors and assigns) may each repurchase their Capital Stock held by minority
stockholders; provided, that, (i) no Event of Default exist immediately before,
and after giving effect to, such repurchase, (ii) Excess Availability
immediately before, and after giving effect to, such repurchase shall be at
least $35,000,000, (iii) the aggregate amount paid for such repurchased Capital
Stock does not exceed, in the case of World Wide Automotive, Inc., $2,700,000,
and, in the case of Power Investments, Inc., $3,900,000 and (iv) immediately
upon any such repurchase, World Wide Automotive, Inc. and Power Investments,
Inc., as applicable, shall have pledged all repurchased shares of Capital Stock
to the US Collateral Agent, in a manner satisfactory to US Collateral Agent.
9.12 Transactions with Affiliates. No Loan Party shall, or shall permit any
of its Subsidiaries to, directly or indirectly:
(a) purchase, acquire or lease any property or services from, or sell,
transfer or lease any property or services to, any officer, director or other
Affiliate of such Loan Party or Subsidiary, except (i) in the ordinary course of
and pursuant to the reasonable requirements of such Loan Party's or Subsidiary's
business (as the case may be), (ii) the assignment by Parent of its rights as
tenant under the Mexico Lease (as defined in Section 9.9(n) hereof) to the
Delphi Subsidiary or any other Subsidiary and (iii) trade credit provided by any
Loan Party to the Delphi Subsidiary to the extent permitted under Section 9.10
hereof.
(b) make any payments (whether by dividend, loan or otherwise) of
management, consulting or other fees for management or similar services, or of
any Indebtedness owing to any officer, employee, shareholder, director or any
other Affiliate of such Loan Party or Subsidiary, except (i) reasonable
compensation to officers, employees and directors for services rendered to such
Loan Party or Subsidiary in the ordinary course of business, (ii) payments of
management fees by any such Loan Party or Subsidiary to CVC, provided, that, (A)
no Event of Default exists immediately before, and after giving effect to, such
payments and (B) the aggregate amount of all such payments in any fiscal year
shall not exceed $4,000,000 and (iii) payments by any such Loan Party or
Subsidiary to another Loan Party or Subsidiary for property or services provided
in accordance with Section 9.12(a), to the extent not otherwise prohibited by
Section 9.10(n) hereof, or for loans provided in accordance with Section
9.10(g), to the extent not otherwise prohibited by Section 9.10(g).
9.13 Compliance with ERISA. Each Loan Party shall, and shall cause each of
its ERISA Affiliates, to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any liability to the Pension Benefit Guaranty Corporation; (d) not
allow or suffer to exist any prohibited transaction involving any of such Plans
or any trust created thereunder which would subject such Loan Party to a
material tax or penalty or other liability on prohibited transactions imposed
under Section 4975 of the Code or
106
ERISA; (e) make all required contributions to any Plan which it is obligated to
pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
Plan; (f) not allow or suffer to exist any accumulated funding deficiency,
whether or not waived, with respect to any such Plan; or (g) not allow or suffer
to exist any occurrence of a reportable event or any other event or condition
which presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any such Plan that is a single employer plan, which termination
could result in any liability to the Pension Benefit Guaranty Corporation.
9.14 End of Fiscal Years. Each Loan Party shall, for financial reporting
purposes, cause its, and each of its Subsidiaries' fiscal years to end on
December 31 of each year.
9.15 Change in Business. No Loan Party shall, or shall permit any of its
Subsidiaries to, engage in any business other than the business of such Loan
Party or Subsidiary on the Original Closing Date and any business reasonably
related, ancillary or complementary to the business in which such is engaged on
the Original Closing Date.
9.16 Limitation of Restrictions Affecting Subsidiaries. No Loan Party
shall, or shall permit any of its Subsidiaries to, directly, or indirectly,
create or otherwise cause or suffer to exist any encumbrance or restriction
which prohibits or limits the ability of any Subsidiary of such Loan Party or
Subsidiary to (a) pay dividends or make other distributions or pay any
Indebtedness owed to such Loan Party or Subsidiary or any Subsidiary of such
Loan Party or Subsidiary; (b) make loans or advances to such Loan Party or
Subsidiary or any Subsidiary of such Loan Party or Subsidiary, (c) transfer any
of its properties or assets to such Loan Party or Subsidiary or any Subsidiary
of such Loan Party or Subsidiary; or (d) create, incur, assume or suffer to
exist any lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, other than encumbrances and restrictions arising under
(i) applicable law, (ii) this Agreement and any Foreign Financing Agreement,
(iii) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of such Loan Party or Subsidiary or any
Subsidiary of such Loan Party or Subsidiary, (iv) customary restrictions on
dispositions of real property interests found in reciprocal easement agreements
of such Loan Party or Subsidiary or any Subsidiary of such Loan Party or
Subsidiary, (v) any agreement relating to permitted Indebtedness incurred by a
Subsidiary of such Loan Party or Subsidiary prior to the date on which such
Subsidiary was acquired by such Loan Party or Subsidiary and outstanding on such
acquisition date, (vi) the Indentures, and (vii) the extension or continuation
of contractual obligations in existence on the Original Closing Date; provided,
that, any such encumbrances or restrictions contained in such extension or
continuation are no less favorable to Agent and Lenders than those encumbrances
and restrictions under or pursuant to the contractual obligations so extended or
continued.
9.17 EBITDA. At any time when Average Excess Availability is less than
$40,000,000 or at any time any amount of the Term Loan is outstanding, Loan
Parties shall, at the end of each month set forth below (including as of the end
of the month immediately prior to the occurrence of such shortfall in Average
Excess Availability), have EBITDA for the twelve month period then ending of at
least the amount set forth below next to such month:
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Month Ended EBITDA
----------- ------
September 30, 2003 85,000,000
October 31, 2003 93,000,000
November 30, 2003 93,000,000
December 31, 2003 93,000,000
January 31, 2004 97,000,000
February 28, 2004 97,000,000
March 31, 2004 97,000,000
April 30, 2004 101,000,000
May 31, 2004 101,000,000
June 30, 2004 101,000,000
July 31, 2004 105,000,000
August 31, 2004 105,000,000
September 30, 2004 105,000,000
October 31, 2004 108,000,000
November 30, 2004 108,000,000
December 31, 2004 108,000,000
January 31, 2005 109,000,000
February 28, 2005 109,000,000
March 31, 2005 109,000,000
April 30, 2005 110,000,000
May 31, 2005 110,000,000
June 30, 2005 110,000,000
July 31, 2005 111,000,000
August 31, 2005 111,000,000
September 30, 2005 111,000,000
October 31, 2005 111,000,000
November 30, 2005 111,000,000
December 31, 2005 111,000,000
January 31, 2006 126,000,000
February 28, 2006 126,000,000
March 31, 2006 126,000,000
9.18 Fixed Charge Coverage Ratio. At any time when Average Excess
Availability is less than $40,000,000 or at any time any amount of the Term Loan
is outstanding, Loan Parties shall, at the end of each month (including as of
the end of the month immediately prior to the occurrence of such shortfall in
Average Excess Availability), have a Fixed Charge Coverage Ratio for the twelve
month period then ended of not less than: (a) for the months ending September
30, October 31 and November 30 of 2003 0.80 to 1.0 and (b) for each month ending
after November 30, 2003, 1.0 to 1.0.
9.19 License Agreements.
(a) The Loan Parties shall, and shall cause their Subsidiaries to, (i)
promptly and faithfully observe and perform all of the material terms,
covenants, conditions and provisions of the Material Licenses to which they are
a party to be observed and performed by them, at the times set forth therein, if
any, (ii) not do, permit, suffer or refrain from doing
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anything that could reasonably be expected to have a Material Adverse Effect
under any Material License, (iii) not cancel, surrender, modify, amend, waive or
release any Material License in any material respect or any term, provision or
right of the licensee thereunder in any material respect, or consent to or
permit to occur any of the foregoing except where the foregoing action could not
reasonably be expected to have a Material Adverse Effect; except, that, subject
to Section 9.19(b) below, such Loan Party or Subsidiary may cancel, surrender or
release any Material License in the ordinary course of the business of such Loan
Party or Subsidiary; provided, that, Loan Parties shall give Agent prompt prior
written notice of any intention to so cancel, surrender and release any such
Material License, (iv) give Agent prompt written notice of any Material License
entered into by such Loan Party or Subsidiary after the Effective Date, together
with a true, correct and complete copy thereof and such other information with
respect thereto as Agent may request, (v) give Agent prompt written notice of
any material breach of any obligation, or any default, by any party under any
Material License, which could reasonably be expected to have a Material Adverse
Effect, and deliver to Agent (promptly upon the receipt thereof by such Loan
Party or Subsidiary in the case of a notice to such Loan Party or Subsidiary and
concurrently with the sending thereof in the case of a notice from such Loan
Party or Subsidiary) a copy of each notice of default and every other notice and
other communication received or delivered by such Loan Party or Subsidiary in
connection with any Material License which relates to the right of such Loan
Party or Subsidiary to continue to use the property subject to such License
Agreement.
(b) Each Loan Party shall, and shall cause each of its Subsidiaries
to, either: (i) exercise any option to renew or extend the term of each Material
License to which it is a party in such manner as will cause the term of such
Material License to be effectively renewed or extended for the period provided
by such option and give prompt written notice thereof to Agent; or (ii) give
Agent prior written notice that such Loan Party or Subsidiary does not intend to
renew or extend the term of any such Material License or that the term thereof
shall otherwise be expiring, not less than sixty (60) days prior to the date of
any such non-renewal or expiration. In the event of the failure of such Loan
Party or Subsidiary to extend or renew any Material License to which it is a
party, Agent shall have, and is hereby granted, the irrevocable right and
authority, at its option, to renew or extend the term of such Material License,
whether in its own name and behalf, or in the name and behalf of a designee or
nominee of Agent or in the name and behalf of such Loan Party or Subsidiary, as
Agent shall determine at any time when an Event of Default shall exist. Agent
may, but shall not be required to, perform any or all of such obligations of
such Loan Party or Subsidiary under any of the License Agreements, including,
but not limited to, the payment of any or all sums due from such Loan Party or
Subsidiary thereunder. Any sums so paid by Agent shall constitute part of the
Obligations.
9.20 After Acquired Owned Real Property. If any Loan Party or any
Subsidiary of any Loan Party hereafter acquires any owned Real Property,
fixtures or any other property that is of the kind or nature described in the
Mortgages and such owned Real Property, fixtures or other property at any one
location has a fair market value in an amount equal to or greater than $500,000
(or if a Default or Event of Default exists, then regardless of the fair market
value of such assets), without limiting any other rights of Agent Parties, or
duties or obligations of any Loan Party or Subsidiary, promptly upon Agent's
request, such Loan Party shall, or shall cause its Subsidiaries to, execute and
deliver to the applicable Collateral Agent a mortgage, deed of trust or deed to
secure debt, as Agent may determine, in form and substance satisfactory to Agent
in its good faith determination and in form appropriate for recording in the
real estate records of
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the jurisdiction in which such owned Real Property or other property is located
granting to the appropriate Collateral Agent a first and only lien and mortgage
on and security interest in such owned Real Property, fixtures or other property
(except as such Loan Party or Subsidiary would otherwise be permitted to incur
hereunder or under the Mortgages or as otherwise consented to in writing by
Agent) and such other agreements, documents and instruments as Agent may require
in good faith connection therewith.
9.21 Costs and Expenses. Each Loan Party shall pay to Agent on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration (to the
extent not included in the Administrative Management Fee), collection,
liquidation, enforcement and defense of the Obligations, Agent's rights in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) costs and expenses and
fees for insurance premiums, appraisal fees and search fees, costs and expenses
of remitting loan proceeds, collecting checks and other items of payment, and
establishing and maintaining the Blocked Accounts, together with Agent's
customary charges and fees with respect thereto; (c) charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (d) costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Agent,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement the other Financing Agreements or defending any
claims made or threatened against Agent or any Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Agent and Lenders
during the course of periodic field examinations of the Collateral and such Loan
Party's operations, plus a per diem charge at the rate of $750 per person per
day for Agent's examiners in the field and office; provided, that, Borrowers
shall not be liable for any such per diem charges prior to the existence of an
Event of Default; and (g) the fees and disbursements of counsel (including legal
assistants) to Agent and Lenders in connection with any of the foregoing. Agent
shall provide documentation evidencing such costs and expenses to Parent in a
manner consistent with Agent's customary practices.
9.22 Material Adverse Effect. If at any time, (a) any representation or
warranty set forth in this Agreement would be deemed to be false or misleading
in any material respect, (b) any Loan Party would be deemed to have failed to
perform any of the covenants set forth in this Agreement or (c) any condition to
the making of Loans set forth in Section 4.2 hereof would not be deemed to be
satisfied, in each case because a "Material Adverse Effect," as set forth in
such applicable provision but as defined below, then exists, then the Loan
Parties shall deliver to Agent a written description of such Material Adverse
Effect (as defined below) and the events or occurrences relating thereto no
later than five (5) Business Days after any Loan Party knew or should have known
of the occurrence thereof. As used in this Section 9.22, the term "Material
Adverse Effect" shall mean a material adverse effect on (a) the financial
condition, business, operations or prospects of any "Material Party" (as defined
below); (b) the legality, validity, enforceability, perfection or priority of
the security interests and liens of any Collateral Agent
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upon any Loan Party's Collateral taken as whole or any Foreign Borrower's
Foreign Collateral taken as whole; (c) any Loan Party's Collateral, taken as a
whole, which is included in the Borrowing Base or any Foreign Borrower's Foreign
Collateral, taken as a whole which is included in any Foreign Borrowing Base
(but excluding any loss in value to such Collateral or Foreign Collateral to the
extent such loss is covered by insurance, the proceeds of which have been paid
to Agent in accordance with Section 9.5 hereof), or (d) the ability of any
Material Party to perform its obligations under any of the Material Agreements
as and when to be performed. As used above, the term "Material Party" shall mean
any Loan Party who has Collateral making up at least $2,500,000 of the Borrowing
Base and any Foreign Borrower who has Foreign Collateral making up at least
$750,000 of any Foreign Borrowing Base.
9.23 Unrestricted Subsidiaries. Parent shall provide Agent with ten (10)
Business Days prior written notice of Parent's intention to designate any
Subsidiary of Parent as an "Unrestricted Subsidiary" or as a "Restricted
Subsidiary" under (and as such terms are defined in) any Indenture, which notice
shall set forth the name of such Subsidiary, the designation to take effect and
the effective date of such designation.
9.24 Inactive Subsidiaries. No Inactive Subsidiary shall (a) acquire any
assets, (b) incur any liabilities (whether to an Affiliate or otherwise) other
than for de minimus franchise taxes, maintenance fees and other de minimus
expenses or (c) engage in any business activities. Notwithstanding the
foregoing, any Inactive Subsidiary shall be deemed not to be an Inactive
Subsidiary upon satisfaction of the following conditions: (i) Parent shall have
provided ten (10) Business Days' prior written notice to Agent stating the
intention of an Inactive Subsidiary to be redesignated as active and (ii) Parent
shall cause such Inactive Subsidiary (and any other applicable Loan Party or
Subsidiary) to execute such joinder agreements to the Financing Agreements, and
such guarantees, security agreements, pledge agreements and other documents as
Agent shall require, in each case in form and substance satisfactory to Agent,
to further secure the Obligations.
9.25 Further Assurances. At the request of Agent at any time and from time
to time, each Loan Party shall, and shall cause each of its Subsidiaries to, at
their expense, duly execute and deliver, or cause to be duly executed and
delivered, such further agreements, documents and instruments, and do or cause
to be done such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and Foreign Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements or Foreign
Financing Agreements in each case as determined by Agent in its good faith.
Agent may at any time and from time to time request a certificate from an
officer of any Loan Party representing that all conditions precedent to the
making of Loans and providing Letter of Credit Accommodations contained herein
are satisfied. In the event of such request by Agent, Agent and Lenders may, at
Agent's option, cease to make any further Loans or provide any further Letter of
Credit Accommodations until Agent has received such certificate and, in
addition, Agent has determined that such conditions are satisfied.
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SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Loan Party fails to pay any of the Obligations within two
(2) Business Days of the due date thereof or (ii) any Loan Party fails to
perform any of the covenants contained in Sections 9.3, 9.4, 9.13, 9.14, 9.15,
9.16 and 9.19 of this Agreement and such failure shall continue for fifteen (15)
Business Days; provided, that, such fifteen (15) Business Day period shall not
apply in the case of: (A) any failure to observe any such covenant which is not
capable of being cured at all or within such fifteen (15) Business Day period or
(B) an intentional breach by any Loan Party of any such covenant or (iii) any
Loan Party or Obligor fails to perform any of the terms, covenants, conditions
or provisions contained in this Agreement or any of the other Material
Agreements other than those described in Sections 10.1(a)(i) and 10.1(a)(ii)
above or (iv) any Loan Party or Obligor fails to perform any of the terms,
covenants, conditions or provisions contained in other Financing Agreements and
such failure shall continue for thirty (30) days following a written notice
thereof from Agent;
(b) any representation, warranty or statement of fact made by any Loan
Party to Agent in this Agreement, the other Financing Agreements or any other
written agreement or executed certificate, shall when made or deemed made be
false or misleading in any material respect;
(c) any Obligor revokes or terminates or purports to revoke or
terminate or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;
(d) (i) any judgment for the payment of money is rendered against any
Loan Party or Obligor in excess of $5,000,000 in the aggregate (to the extent
not covered by insurance where the insurer has assumed responsibility in writing
for such judgment) and shall remain undischarged or unvacated for a period in
excess of thirty (30) days or execution shall at any time not be effectively
stayed, or (ii) any judgment other than for the payment of money, or injunction,
attachment, garnishment or execution is rendered against any Loan Party or
Obligor or any of the Collateral in each case under this clause (ii) which,
individually or in the aggregate for all such matters, results in a Material
Adverse Effect;
(e) any Obligor (being a natural person or a general partner of an
Obligor which is a partnership) dies or any Loan Party or Obligor, which is a
partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;
(f) any Loan Party or Obligor makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors in connection with a moratorium or adjustment
of the Indebtedness due to them;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership,
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readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction now or hereafter in effect (whether at law or in equity) is filed
against any Loan Party or Obligor or all or any part of its properties and such
petition or application is not dismissed within thirty (30) days after the date
of its filing or any Loan Party or Obligor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Loan Party or Obligor or for all or any part of its
property;
(i) any default in respect of any Indebtedness of any Loan Party or
Obligor (other than Indebtedness owing to Agent and Lenders hereunder), in any
case in an amount in excess of $10,000,000, which default continues for more
than the applicable cure period, if any, with respect thereto;
(j) any material provision hereof or of any of the Material Agreements
shall for any reason cease to be valid, binding and enforceable with respect to
any party hereto or thereto (other than Agent) in accordance with its terms, or
any such party shall challenge the enforceability hereof or thereof, or shall
assert in writing, or take any action or fail to take any action based on the
assertion that any provision hereof or of any of the Material Agreements has
ceased to be or is otherwise not valid, binding or enforceable in accordance
with its terms, or any security interest provided for herein or in any of the
Material Agreements shall cease to be a valid and perfected first priority
security interest in any of the Collateral purported to be subject thereto
(except as otherwise permitted herein or therein);
(k) an ERISA Event shall occur which, individually or in the aggregate
for all such ERISA Events, has or could reasonably be expected to have a
Material Adverse Effect;
(l) any Change of Control;
(m) the indictment by any Governmental Authority, or as Agent may
reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of any Loan Party or Obligor of which any Loan Party,
Obligor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against such Loan Party
or Obligor, pursuant to which statute or proceedings the penalties or remedies
sought or available include forfeiture of (i) any of the Collateral having a
value in excess of $5,000,000 or (ii) any other property of any Loan Party which
is necessary or material to the conduct of its business;
(n) the principal amount of the Term Loan outstanding at any time
shall exceed the then applicable Maximum Term Credit for thirty-five (35) days
or more after Fortress notifies Parent of such occurrence;
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(o) there shall be a material adverse change in the business, assets
or prospects of Borrowers, taken as a whole, or Parent and its Subsidiaries,
taken as a whole, after the Effective Date; or
(p) there shall exist an "Event of Default" under (and as defined in)
any of the other Foreign Loan Agreements; provided, that, if any event of
default exists under any Foreign Loan Agreement solely due to either (i) a
material adverse change in the business, assets or prospects of any Foreign
Borrower or (ii) a Material Adverse Effect under clause (c) of the definition
thereof with respect to any Foreign Borrowers, then any such occurrence shall
not, by itself, constitute an Event of Default hereunder.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Agent and Lenders shall have all rights and remedies provided in
this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by any Loan Party or Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent's discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by any Loan Party or Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against any Loan Party or Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Agent may, in its discretion, and upon
the direction of the Required Lenders, shall (i) accelerate the payment of all
Obligations and demand immediate payment thereof to Agent for itself and the
ratable benefit of Lenders, (provided, that, upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require any Loan Party or Obligor, at Borrowers' expense, to
assemble and make available to Agent any part or all of the Collateral at any
place and time designated by Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker's board,
at any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Agent having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
any Loan Party or Obligor, which right or equity of redemption is hereby
expressly waived and released by Loan Parties and Obligors to the extent
permitted by applicable law and/or (vii) terminate this
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Agreement. If any of the Collateral is sold or leased by Agent upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally collected by Agent. If notice of disposition
of Collateral is required by law, ten (10) days prior notice by Agent to
Administrative Borrower designating the time and place of any public sale or the
time after which any private sale or other intended disposition of Collateral is
to be made, shall be deemed to be reasonable notice thereof and Loan Parties and
Obligors waive any other notice. In the event Agent institutes an action to
recover any Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, each Loan Party and Obligor waives the posting of any bond which might
otherwise be required. At any time an Event of Default exists or has occurred
and is continuing, upon Agent's request, Loan Parties will either, as Agent
shall specify, furnish cash collateral to the issuer to be used to secure and
fund Agent's reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Agent for the
Letter of Credit Accommodations. Such cash collateral shall be in the amount
equal to one hundred ten (110%) percent of the amount of the Letter of Credit
Accommodations plus the amount of any fees and expenses payable in connection
therewith through the end of the latest expiration date of such Letter of Credit
Accommodations.
(c) At any time or times that an Event of Default exists or has
occurred and is continuing, Agent may, in its discretion, and upon the direction
of the Required Lenders, Agent shall, enforce the rights of any Loan Party or
Obligor against any account debtor, secondary obligor or other obligor in
respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, at such time or times (i) notify
any or all account debtors, secondary obligors or other obligors in respect
thereof that the Receivables have been assigned to Agent and that Agent has a
security interest therein and Agent may direct any or all accounts debtors,
secondary obligors and other obligors to make payment of Receivables directly to
Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables or such
other obligations, but without any duty to do so, and Agent and Lenders shall
not be liable for any failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and Loan Parties and Obligors shall deliver to Agent such
originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Agent may require. In the
event any account debtor returns Inventory when an Event of Default exists or
has occurred and is continuing, Loan Parties shall, upon Agent's request, hold
the returned Inventory in trust for Agent, segregate all returned Inventory from
all of its other property, dispose of the returned Inventory solely according to
Agent's instructions, and not issue any credits, discounts or allowances with
respect thereto without Agent's prior written consent.
(d) Notwithstanding anything to the contrary contained herein, Agent
shall demand payment of the Obligations and commence and pursue such other
Enforcement Actions,
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in each case as Agent in good ▇▇▇▇▇ ▇▇▇▇▇ appropriate upon the expiration of any
Standstill Period; provided, that, (i) the applicable Specified Default has not
been waived or cured, (ii) in the good faith determination of Agent, taking an
Enforcement Action is permitted under the terms of this Agreement and applicable
law, (iii) taking an Enforcement Action shall not result in any liability of any
Agent Party to any Borrower, any Obligor or any other Person and (iv) Agent
shall be entitled to all of the benefits of Section 12 hereof. Agent shall not
be required to take an Enforcement Action so long as within the Standstill
Period, Agent shall, at its option, either (A) appoint Fortress, as an agent of
Agent for purposes of exercising the rights of Agent to take an Enforcement
Action, subject to the terms hereof or (B) resign as Agent and Fortress shall
automatically be deemed to be the successor Agent hereunder for purposes hereof,
except with respect to the provisions of Section 2 hereof and except in
connection with all matters relating to the determination of the Borrowing Base
and each of their components (including, without limitation, Eligible Inventory,
Eligible Accounts, Eligible Processor Inventory, Eligible In-Transit Inventory,
A/R Core Credit Add-Backs, Reserves and receiving reports in respect of
Collateral and conducting field examinations with respect to the Collateral and
similar matters).
(e) If the Agent determines at any time that any amount received by
the Agent must be returned to any Borrower or Obligor 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 Financing Agreement, the
Agent will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to the Agent on demand any portion of such
amount that the Agent has distributed to such Lender, together with interest at
such rate, if any, that the Agent is required to pay to any Borrower or Obligor
or such other person (without setoff, counterclaim or deduction of any kind).
(f) Anything in this Agreement or otherwise to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action (other than actions against the Agent for violating its
obligations under this Agreement) to protect or enforce its rights arising out
of this Agreement or one or more Financing Agreements or Foreign Financing
Agreements without first obtaining the prior written consent of the Agent, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement or one or more Financing Agreements or Foreign Financing
Agreements shall be taken in concert and at the direction or with the consent of
the Agent. Notwithstanding the foregoing, in any bankruptcy or similar
proceeding involving any Borrower or any of its Subsidiaries, Agent and Fortress
(as agent for the Term Lenders) shall each have the option to act separately,
with Agent acting on behalf of itself and in its capacity as agent for the
Lenders, and Fortress acting on behalf of itself and in its capacity as agent
for the Term Lenders. Each Lender agrees and acknowledges that Agent, as US
Collateral Agent for the Lenders, may exercise all rights and remedies provided
to Agent under, and in accordance with, the terms of the Financing Agreements
and applicable law (including, without limitation, with respect to the liens
granted to Agent) but the foregoing shall not prevent each of Agent, on behalf
of itself and the Lenders, and Fortress, on behalf of itself and the Term
Lenders, from asserting, to the extent permitted by applicable law, separate
claims and taking separate positions in any such proceeding (so long as such
separate claims and separate positions do not contest Agent's exclusive rights
and remedies in respect of the liens it holds on the Collateral); provided,
however, that, neither Agent nor Fortress shall assert any claim or take any
such position or support any other Person asserting a claim or taking such a
position that violates any of the terms of this Agreement or any other Financing
Agreements.
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(g) To the extent that applicable law imposes duties on Agent or any
Lender to exercise remedies in a commercially reasonable manner (which duties
cannot be waived under such law), each Loan Party acknowledges and agrees that
it is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as any Loan Party, for expressions
of interest in acquiring all or any portion of the Collateral, (vii) to hire one
or more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent or Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Each Loan Party acknowledges that the purpose of this Section is to
provide non-exhaustive indications of what actions or omissions by Agent or any
Lender would not be commercially unreasonable in the exercise by Agent or any
Lender of remedies against the Collateral and that other actions or omissions by
Agent or any Lender shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section. Without limitation of the
foregoing, nothing contained in this Section shall be construed to grant any
rights to any Loan Party or to impose any duties on Agent or Lenders that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section.
(h) For the purpose of enabling Agent to exercise the rights and
remedies hereunder, each Loan Party hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to any Loan Party,
to use, assign, license or sublicense any of the trademarks, service-marks,
trade names, business names, trade styles, designs, logos and other source of
business identifiers and other Intellectual Property and general intangibles now
owned or hereafter acquired by any Loan Party, wherever the same maybe located,
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout thereof.
(i) Agent may apply the cash proceeds of Collateral actually received
by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the
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Obligations, in whole or in part and in such order as Agent may elect, whether
or not then due. Loan Parties shall remain liable to Agent and Lenders for the
payment of any deficiency with interest at the highest rate provided for herein
and all costs and expenses of collection or enforcement, including attorneys'
fees and expenses.
(j) Without limiting the foregoing, upon the occurrence of a Default
or an Event of Default, (i) Agent and Lenders may, at Agent's option, and upon
the occurrence of an Event of Default at the direction of the Required Lenders,
Agent and Lenders shall, without notice, (A) cease making Loans or arranging for
Letter of Credit Accommodations or reduce the lending formulas or amounts of
Loans and Letter of Credit Accommodations available to Borrowers and/or (B)
terminate any provision of this Agreement providing for any future Loans or
Letter of Credit Accommodations to be made by Agent and Lenders to Borrowers,
including terminating the Commitments and (ii) Agent may, at its option,
establish such Reserves as Agent determines, without limitation or restriction,
notwithstanding anything to the contrary contained herein.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.
(a) The validity, interpretation and enforcement of this Agreement and
the other Financing Agreements (other than the Mortgages to the extent provided
therein) and any dispute arising out of the relationship between the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by the
internal laws of the State of New York but excluding any principles of conflicts
of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.
(b) Loan Parties, Agent and Lenders irrevocably consent and submit to
the non-exclusive jurisdiction of the state and federal courts located in either
New York County, City of New York (Borough of Manhattan), New York, or ▇▇▇▇
County, City of Chicago, Illinois, whichever Agent may elect, and waive any
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Agent and Lenders shall
have the right to bring any action or proceeding against any Loan Party or its
or their property in the courts of any other jurisdiction which Agent deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against any Loan Party or its or their property). Each Loan
Party (other than Parent) hereby irrevocably appoints and designates Parent as
such Loan Party's true and lawful attorney and duly authorized agent for
acceptance of service of legal process in the State of New York.
(c) To the extent permitted by law, each Loan Party hereby waives
personal service of any and all process upon it and consents that all such
service of process may be made by certified mail (return receipt requested)
directed to its address set forth herein and service so
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made shall be deemed to be completed five (5) days after the same shall have
been so deposited in the U.S. mails, or, at Agent's option, by service upon any
Borrower (or Administrative Borrower on behalf of such Loan Party) in any other
manner provided under the rules of any such courts.
(d) LOAN PARTIES, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF
THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. LOAN PARTIES, AGENT
AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY
LOAN PARTY, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Agent and Lenders shall not have any liability to any Loan Party
(whether in tort, contract, equity or otherwise) for losses suffered by such
Loan Party in connection with, arising out of, or in any way related to the
transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Agent and such
Lender, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Agent and Lenders
shall be entitled to the benefit of the rebuttable presumption that it acted in
good faith and with the exercise of ordinary care in the performance by it of
the terms of this Agreement. Each Loan Party: (i) certifies that neither Agent,
any Lender nor any representative, agent or attorney acting for or on behalf of
Agent or any Lender has represented, expressly or otherwise, that Agent and
Lenders would not, in the event of litigation, seek to enforce any of the
waivers provided for in this Agreement or any of the other Financing Agreements
and (ii) acknowledges that in entering into this Agreement and the other
Financing Agreements, Agent and Lenders are relying upon, among other things,
the waivers and certifications set forth in this Section 11.1 and elsewhere
herein and therein.
11.2 Waiver of Notices. Each Loan Party hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Loan Party which Agent or any Lender may elect to give shall
entitle such Loan Party to any other or further notice or demand in the same,
similar or other circumstances.
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11.3 Amendments and Waivers.
(a) Neither this Agreement nor any other Financing Agreement nor any
terms hereof or thereof may be amended, waived, discharged or terminated unless
such amendment, waiver, discharge or termination is in writing signed by Agent
and the Required Lenders (or Required Revolving Lenders in the case of clause D.
below) or at Agent's option, by Agent with the authorization of the Required
Lenders, and as to amendments to any of the Financing Agreements (other than
with respect to any provision of Sections 6.8, 6.9, 6.10, 12 or the definitions
of "Revolving Commitment Percentage" or "Pro Rata Share" hereof), by any Loan
Party; except, that, no such amendment, waiver, discharge or termination shall:
(i) reduce the interest rate or any fees or extend the time of
payment of principal, interest or any fees or reduce the principal amount of any
Loan or Letter of Credit Accommodations, in each case without the consent of
each Lender directly affected thereby,
(ii) increase the Commitment of any Lender over the amount
thereof then in effect or provided hereunder, in each case without the consent
of the Lender directly affected thereby,
(iii) release any Collateral (except as expressly required
hereunder or under any of the other Financing Agreements or applicable law and
except as permitted under Section 12.11(b) hereof) or subordinate the liens of
Agent for the benefit of Lenders (except for the subordination of Agent's liens
to any liens which are permitted to be senior to Agent's liens pursuant to the
terms of this Agreement), without the consent of Agent and all of Lenders,
(iv) reduce any percentage specified in the definition of
Required Lenders, Required Revolving Lenders or Required Term Lenders without
the consent of Agent and all of Lenders,
(v) consent to the assignment or transfer by any Loan Party of
any of their rights and obligations under this Agreement, without the consent of
Agent and all of Lenders,
(vi) amend, modify or waiver any terms of this Section 11.3
hereof, without the consent of Agent and all of Lenders, or
(vii) increase the advance rates constituting part of the
Borrowing Base from the specific percentages set forth on the Effective Date,
without the consent of Agent and all of Revolving Lenders.
Notwithstanding anything to the contrary contained herein, any amendment,
waiver, discharge or termination with respect to the following shall require the
consent of Agent and the Required Term Lenders (except as set forth in clause D.
below):
A. the terms of Section 9.17 or Section 9.18 hereof (or any
definition with respect to financial terms used in such financial covenants in a
manner which has the effect of reducing the amounts which Loan Parties are
required to maintain pursuant to such financial covenants);
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B. the definitions of (1) "Borrowing Base" (but only to the
extent such proposed change in the definition would increase the advance rates
above those in effect on the Effective Date), (2) "Eligible Accounts", "Eligible
Inventory", "Eligible Processor Inventory", "Eligible In-Transit Inventory", and
"A/R Core Credit Add-Backs" (but only to the extent such proposed change in any
of such definitions would make any eligibility criteria less restrictive than
the criteria in effect on the Effective Date), and (3) "Eligible Transferee",
"Enforcement Action", "Excess Availability", "Excess Cash Flow", "Interest Rate"
(but only to the extent such proposed change would change clause (a)(ii) and
clause (c)(y) thereof), "Material Adverse Effect", "Maximum Credit" (but only to
the extent such proposed change would have the effect of increasing the amount
of Revolving Loans available to the Borrowers), "Maximum Revolving Credit" (but
only to the extent such proposed change would have the effect of increasing the
amount of Revolving Loans available to the Borrowers), "Maximum Term Credit",
"Prime Rate" (but only to the extent such proposed change would change the
Interest Rate of the Term Loan), "Priority Event", "Pro Rata Share" (but only to
the extent such proposed change would change clause (a), (d) and (e)(ii)
thereof), "Specified Default", "Standstill Period", "Term Loan Availability
Condition" and "Trigger Event" (but only to the extent such proposed change
would apply to Sections 7.6, 9.5, 9.7(b)(iv) and 9.7(b)(vi)); and
C. any of the following Sections in any material respect: 2.1(a)
(but only to the extent such proposed change would have the effect of increasing
the amount of Revolving Loans available to the Borrowers), 2.3, 2.4, 2.5(a) (but
only to the extent such proposed change would have the effect of increasing the
amount of Revolving Loans available to the Borrowers), 2.5(b), 3.2(b), 6.3(b)
(but only to the extent such proposed change would have the effect of changing
the application of payments as provided in the first sentence thereof), 6.4, 7.8
(but only to the extent such proposed change would affect the access of the
Required Term Lenders), 9.7, 9.8, 9.9, 9.10, 9.11, 10.1(a) (but only to the
extent such proposed change would waive, or extend any applicable cure period
with respect to, an Event of Default arising from any Section set forth in
clause A. or C. of this Section 11.3(a)), 10.1(n), 10.2(d), 11.3(a) (but only to
the extent such proposed change relates to this proviso), 12.8, 12.11(a),
12.11(b), 13.1 (but only to the extent that such proposed change relates to the
Term Loan) or 13.6(a) (but only to the extent such proposed change would
increase the $5,000,000 threshold (or the $2,500,000 threshold if the assignee
is an Approved Fund) for assignments of the Term Loans hereof.
D. notwithstanding anything to the contrary herein, Borrowers may
prepay the Term Loan to the extent permitted under Section 2.3(e) hereof,
without penalty or premium, in the event (x) fees (if any) charged to the
Borrowers in connection with the receipt of the consent of Fortress or the
Required Term Lenders under Section 9 and/or clauses A., B. or C. of this
Section 11.3(a) in the twelve-month period preceding the applicable prepayment
date exceed $400,000 or in the aggregate exceed $800,000 or (y) Fortress
declines or the Required Term Lenders decline to consent to the amendment or
waiver of any provision under Section 9 or pursuant to clauses A., B. or C. of
this Section 11.3(a) and the Agent or the Required Lenders (or all Lenders
(other than the Required Term Lenders), to the extent the consent of all Lenders
is required under this Section 11.3(a)) consent to such amendment or waiver, but
only if the consent of Fortress or the Required Term Lenders is required in
order to approve such amendment or waiver. To the extent Borrowers are permitted
to prepay the Term Loan in accordance with this clause D., the Term Lenders
agree and acknowledge that the Agent and the Required Revolving Lenders may
waive any of the conditions set forth in Section 2.3(e) hereof without the
consent of any Term Lender.
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(b) Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
11.3(a) above, in the event that any Loan Party requests that this Agreement or
any other Financing Agreements be amended or otherwise modified in a manner
which would require the consent of any Lenders in addition to Required Lenders
and such amendment or other modification is agreed to by the Required Lenders,
then, with the consent of Administrative Borrower, Agent and the Required
Lenders, Administrative Borrower, Agent and the Required Lenders may amend this
Agreement without the consent of the Lenders that did not agree to such
amendment or other modification (collectively, the "Minority Lenders") so long
as such parties provide for (i) the termination of the Commitment of each of the
Minority Lenders and subject to the restrictions in Section 13.6(a), the
addition to this Agreement of one or more other Lenders, or an increase in the
Commitment of one or more of the Required Lenders, so that the Commitments,
after giving effect to such amendment, shall be in the same aggregate amount as
the Commitments immediately before giving effect to such amendment, (ii) if any
Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new Lenders or Required Lenders, as the case may be, as
may be necessary to repay in full the outstanding Loans of the Minority Lenders
immediately before giving effect to such amendment and (iii) the payment of all
interest, fees and other Obligations payable or accrued in favor of the Minority
Lenders and such other modifications to this Agreement as Loan Parties and the
Required Lenders may determine to be appropriate.
(d) The consent of Agent shall be required for any amendment, waiver
or consent affecting the rights or duties of Agent hereunder or under any of the
other Financing Agreements, in addition to the consent of the Lenders otherwise
required by this Section and the exercise by Agent of any of its rights
hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory
shall not be deemed an amendment to the advance rates provided for in this
Section 11.3.
11.4 Waiver of Counterclaims. Each Loan Party waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature (other
then compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Loan Party shall, jointly and severally,
indemnify and hold Agent and each Lender, and its officers, directors, agents,
employees, advisors and counsel and their respective Affiliates (each such
person being an "Indemnitee"), harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses (including reasonable attorneys'
fees and expenses) imposed on, incurred by or asserted against any of them in
connection with any litigation, investigation, claim or proceeding commenced or
threatened related to the negotiation, preparation, execution, delivery,
enforcement, performance or administration of this Agreement, any other
Financing Agreements, or any undertaking or proceeding related to any of
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the transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel except that Loan Parties shall not have any
obligation under this Section 11.5 to indemnify an Indemnitee with respect to a
matter covered hereby resulting from the gross negligence or willful misconduct
of such Indemnitee as determined pursuant to a final, non-appealable order of a
court of competent jurisdiction (but without limiting the obligations of Loan
Parties as to any other Indemnitee). To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Loan Parties shall pay the maximum
portion which it is permitted to pay under applicable law to Agent and Lenders
in satisfaction of indemnified matters under this Section. To the extent
permitted by applicable law, no Loan Party shall assert, and each Loan Party
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. All amounts due under this Section shall be
payable upon demand. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
SECTION 12. THE AGENT
12.1 Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for herein or
therein or for any failure by any Loan Party or any Obligor or any other Person
to perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.
12.2 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the
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proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Agent. As to any matters
not expressly provided for by this Agreement or any other Financing Agreement,
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder or thereunder in accordance with instructions given by the
Required Lenders or all of Lenders as is required in such circumstance, and such
instructions of such Agents and any action taken or failure to act pursuant
thereto shall be binding on all Lenders.
12.3 Events of Default.
(a) Agent shall not be deemed to have knowledge or notice of the
occurrence of an Event of Default or other failure of a condition precedent to
the Loans and Letter of Credit Accommodations hereunder, unless and until Agent
has received written notice from a Lender, or a Loan Party specifying such Event
of Default or any unfulfilled condition precedent, and stating that such notice
is a "Notice of Default or Failure of Condition". In the event that Agent
receives such a Notice of Default or Failure of Condition, Agent shall give
prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7) take
such action with respect to any such Event of Default or failure of condition
precedent as shall be directed by the Required Lenders; provided, that, unless
and until Agent shall have received such directions, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to or by reason of such Event of Default or failure of condition precedent, as
it shall deem advisable in the best interest of Lenders. Without limiting the
foregoing, and notwithstanding the existence or occurrence and continuance of an
Event of Default or any other failure to satisfy any of the conditions precedent
set forth in Section 4 of this Agreement to the contrary, Agent may, but shall
have no obligation to, continue to make Loans and issue or cause to be issued
Letter of Credit Accommodations for the ratable account and risk of Lenders from
time to time if Agent believes making such Loans or issuing or causing to be
issued such Letter of Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Agent, no Lender may
assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against any Loan Party
or Obligor or any of the Collateral or other property of any Loan Party or
Obligor.
12.4 Congress in its Individual Capacity. With respect to its Commitment
and the Loans made and Letter of Credit Accommodations issued or caused to be
issued by it (and any successor acting as Agent), so long as Congress shall be a
Lender hereunder, it shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not acting as Agent,
and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include Congress in its individual capacity as Lender hereunder.
Congress (and any successor acting as Agent) and its Affiliates may (without
having to account therefor to any Lender) lend money to, make investments in and
generally engage in any kind of business with Loan Parties (and any of its
Subsidiaries or Affiliates) as if it were not acting as Agent, and Congress and
its Affiliates may accept fees and other consideration from any Loan Party and
any of its Subsidiaries and Affiliates for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
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12.5 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Loan Parties hereunder and without limiting any obligations of
Loan Parties hereunder) ratably, in accordance with their Pro Rata Shares, for
any and all claims of any kind and nature whatsoever that may be imposed on,
incurred by or asserted against Agent (including by any Lender) arising out of
or by reason of any investigation in or in any way relating to or arising out of
this Agreement or any other Financing Agreement or any other documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby (including the costs and expenses that Agent is
obligated to pay hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided, that, (i) to the extent Agent
determines that the indemnification obligations were for actions taken by Agent
for the benefit of all the Agent Parties, such Lenders reimbursement obligations
shall be made ratably in accordance with their Pro Rata Shares and (ii) no
Lender shall be liable for any of the foregoing to the extent it arises from the
gross negligence or willful misconduct of the party to be indemnified as
determined by a final non-appealable judgment of a court of competent
jurisdiction. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has, independently and without reliance on Agent or other Lender, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of Loan Parties and Obligors and has made its own decision to enter
into this Agreement and 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 analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by any Loan Party or Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of any Loan Party or Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from any Loan
Party or Obligor which is required to be provided to Lenders hereunder and with
a copy of any Notice of Default or Failure of Condition received by Agent from
any Loan Party or any Lender; 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 own gross negligence or willful misconduct as determined
by a final non-appealable judgment of a court of competent jurisdiction. Except
for notices, reports and other documents expressly required to be furnished to
Lenders by Agent hereunder, Agent shall not have any duty or responsibility to
provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of any Loan Party or Obligor that may
come into the possession of Agent.
12.7 Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
12.8 Additional Loans. Agent shall not make any Revolving Loans or provide
any Letter of Credit Accommodations to any Borrower on behalf of Lenders
intentionally and with
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actual knowledge that such Revolving Loans or Letter of Credit Accommodations
would cause the aggregate amount of the total outstanding Revolving Loans and
Letter of Credit Accommodations to such Borrower to exceed the Borrowing Base,
without the prior consent of all Lenders, except, that, Agent may make such
additional Revolving Loans or provide such additional Letter of Credit
Accommodations on behalf of Lenders, intentionally and with actual knowledge
that such Revolving Loans or Letter of Credit Accommodations will cause the
total outstanding Revolving Loans and Letter of Credit Accommodations to such
Borrower to exceed the Borrowing Base, as Agent may deem necessary or advisable
in its discretion, provided, that: (a) the total principal amount of the
additional Revolving Loans or additional Letter of Credit Accommodations to any
Borrower which Agent may make or provide after obtaining such actual knowledge
that the aggregate principal amount of the Revolving Loans equal or exceed the
Borrowing Base, plus the amount of Special Agent Advances made pursuant to
Section 12.11(a) (ii) hereof then outstanding, shall not exceed (x) an amount
equal to ten (10%) percent of the Borrowing Base at any time, or (y) the Maximum
Revolving Credit less the US Dollar Amount of all Foreign Advances outstanding
at such time; provided that the aggregate amount of all Revolving Loans, Letter
of Credit Accommodations and Special Agent Advances shall not exceed the
Borrowing Base at any time in effect by more than $7,500,000 unless and until
Fortress has provided its prior written consent and (b) no such additional
Revolving Loan or Letter of Credit Accommodation shall be outstanding more than
ninety (90) days after the date such additional Revolving Loan or Letter of
Credit Accommodation is made or issued (as the case may be), except as the
Required Lenders may otherwise agree. Each Revolving Lender shall be obligated
to pay Agent the amount of its Pro Rata Share of any such additional Revolving
Loans or Letter of Credit Accommodations.
12.9 Concerning the Collateral and the Related Financing Agreements. Each
Lender authorizes and directs Agent to enter into this Agreement and the other
Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders. Each Lender acknowledges that Congress, in its capacity as US
Collateral Agent, is acting hereunder and under the other Financing Agreements
for the benefit of Lenders and Foreign Lenders pursuant to the terms of the
Agency Agreement and each Lender agrees to be bound by the terms of the Agency
Agreement.
12.10 Field Audit, Examination Reports and other Information; Disclaimer by
Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report and a copy of the Borrowing Base prepared by Loan Parties (each field
audit or examination report and Borrowing Base being referred to herein as a
"Report" and collectively, "Reports");
(b) expressly agrees and acknowledges that Agent (i) does not make any
representation or warranty as to the accuracy of any Report, or (ii) shall not
be liable for any information contained in any Report;
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(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or any other party performing
any audit or examination will inspect only specific information regarding Loan
Parties and will rely significantly upon Loan Parties' books and records, as
well as on representations of Loan Parties' personnel; and
(d) agrees to keep all Reports confidential and strictly for its
internal use in accordance with the terms of Section 13.10 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Agent may, at its option, from time to time, at any time on or
after an Event of Default and for so long as the same is continuing or upon any
other failure of a condition precedent to the Loans and Letter of Credit
Accommodations hereunder, make such disbursements and advances ("Special Agent
Advances") which Agent, in its sole discretion, (i) deems necessary or desirable
either to preserve or protect the Collateral or any portion thereof or (ii) to
enhance the likelihood or maximize the amount of repayment by Loan Parties of
the Loans and other Obligations, provided, that, the aggregate principal amount
of the Special Agent Advances pursuant to clause (ii) above plus the then
outstanding principal amount of the additional Loans and Letter of Credit
Accommodations which Agent may make or provide as set forth in Section 12.8
hereof, shall not exceed an amount equal to ten (10%) percent of the Borrowing
Base at any time; provided that the aggregate amount of all Revolving Loans,
Letter of Credit Accommodations and Special Agent Advances shall not exceed the
Borrowing Base at any time in effect by more than $7,500,000 unless and until
Fortress has provided its prior written consent, or (iii) to pay any other
amount chargeable to any Loan Party pursuant to the terms of this Agreement or
any of the other Financing Agreements consisting of costs, fees and expenses and
payments to any issuer of Letter of Credit Accommodations. Special Agent
Advances shall be repayable on demand and be secured by the Collateral. Special
Agent Advances shall not constitute Loans but shall otherwise constitute
Obligations hereunder. Agent shall notify each Lender and Administrative
Borrower in writing of each such Special Agent Advance, which notice shall
include a description of the purpose of such Special Agent Advance. Without
limitation of its obligations pursuant to Section 6.9, each Revolving Lender
agrees that it shall make available to Agent, upon Agent's demand, in
immediately available funds, the amount equal to such Revolving Lender's Pro
Rata Share of each such Special Agent Advance. If such funds are not made
available to Agent by such Lender, Agent shall be entitled to recover such
funds, on demand from such Lender together with interest thereon for each day
from the date such payment was due until the date such amount is paid to Agent
at the Federal Funds Rate for each day during such period (as published by the
Federal Reserve Bank of New York or at Agent's option based on the arithmetic
mean determined by Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of the three leading brokers of Federal funds transactions in New York City
selected by Agent) and if such amounts are not paid within three (3) days of
Agent's demand, at the highest Interest Rate provided for in Section 3.1 hereof
applicable to Prime Rate Loans.
(b) Lenders hereby irrevocably authorize Agent, at its option and in
its discretion to release any security interest in, mortgage or lien upon, any
of the Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations and
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Foreign Obligations and delivery of cash collateral to the extent required under
Section 13.1 below, or (ii) constituting property being sold or disposed of if
Administrative Borrower or any Loan Party certifies to Agent that the sale or
disposition is made in compliance with Section 9.7 hereof (and Agent may rely
conclusively on any such certificate, without further inquiry), or (iii)
constituting property in which any Loan Party did not own an interest at the
time the security interest, mortgage or lien was granted or at any time
thereafter, or (iv) upon the sale, lease, transfer, assignment or disposition of
any property of any Borrower or any Obligor in connection with an Enforcement
Action, or (v) if approved, authorized or ratified in writing by all of Lenders.
Except as provided above, Agent will not release any security interest in,
mortgage or lien upon, any of the Collateral without the prior written
authorization of all of Lenders. Upon request by Agent at any time, Lenders will
promptly confirm in writing Agent's authority to release particular types or
items of Collateral pursuant to this Section.
(c) Without any manner limiting Agent's authority to act without any
specific or further authorization or consent by the Required Lenders, each
Lender agrees to confirm in writing, upon request by Agent, the authority to
release Collateral conferred upon Agent under this Section. Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Agent upon any Collateral to the extent set forth above; provided,
that, (i) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligations or entail any consequence other than the release of such security
interest, mortgage or liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
security interest, mortgage or lien upon (or obligations of any Loan Party in
respect of) the Collateral retained by such Loan Party.
(d) Agent shall have no obligation whatsoever to any Lender or any
other Person to investigate, confirm or assure that the Collateral exists or is
owned by any Loan Party or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Agent pursuant hereto or any of the Financing
Agreements or otherwise have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent in this Agreement or in any
of the other Financing Agreements, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto, Agent
may act in any manner it may deem appropriate, in its discretion, given Agent's
own interest in the Collateral as a Lender and that Agent shall have no duty or
liability whatsoever to any other Lender.
12.12 Agency for Perfection. Each Lender hereby appoints Agent and each
other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon the Collateral of Agent in assets which, in
accordance with Article 9 of the UCC can be perfected only by possession (or
where the security interest of a secured party with possession has priority over
the security interest of another secured party) and Agent and each Lender hereby
acknowledges that it holds possession of any such Collateral for the benefit of
Agent as secured party. Should any Lender obtain possession of any such
Collateral, such Lender shall notify
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Agent thereof, and, promptly upon Agent's request therefor shall deliver such
Collateral to Agent or in accordance with Agent's instructions.
12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days'
notice to Lenders and Parent. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Parent, a successor agent from among Lenders. Upon the acceptance by the Lender
so selected of its appointment as successor agent hereunder, such successor
agent shall succeed to all of the rights, powers and duties of the retiring
Agent and the term "Agent" as used herein and in the other Financing Agreements
shall mean such successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 12 shall inure to its benefit
as to any actions taken or omitted by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days after the date of a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.
12.14 Duties of Other Parties. Notwithstanding any thing to the contrary
contained in this Agreement, Wachovia Bank, National Association, designated on
the cover page to this Agreement as "Documentation Agent", is titled as such for
administrative purposes only and shall not have any rights or obligations in
respect to the Financing Agreements except such rights and obligations in its
capacity as a Lender.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on March 31, 2006 (the "Renewal
Date"), and from year to year thereafter, unless sooner terminated pursuant to
the terms hereof. Agent may, at its option (or shall at the direction of any
Lender in writing received by Agent at least sixty (60) days prior to the
Renewal Date or the anniversary of any Renewal Date, as the case may be),
terminate this Agreement and the other Financing Agreements, or Administrative
Borrower may terminate this Agreement and the other Financing Agreements, in
each case, effective on the Renewal Date or on the anniversary of the Renewal
Date in any year by giving to the other party at least sixty (60) days prior
written notice; provided, that, this Agreement and all other Financing
Agreements and the Foreign Financing Agreements must be terminated
simultaneously. In addition, Borrowers may terminate this Agreement at any time
upon ten (10) days prior written notice to Agent (which notice shall be
irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time during the existence of
an Event of Default. Upon the Renewal Date or any other effective date of
termination of the Financing Agreements, Borrowers shall pay to Agent Parties
all outstanding and unpaid Obligations and shall furnish cash collateral to
Agent (or at Agent's option, a letter of credit issued for the account of
Borrowers and at Borrowers' expense, in form and substance satisfactory to
Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in
such amounts as Agent determines
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are reasonably necessary to secure Agent and Lenders from loss, cost, damage or
expense, including attorneys' fees and expenses, in connection with any
contingent Obligations, including issued and outstanding Letter of Credit
Accommodations and checks or other payments provisionally credited to the
Obligations and/or as to which Agent or any Lender has not yet received final
and indefeasible payment. The amount of such cash collateral (or letter of
credit, as Agent may determine) as to any Letter of Credit Accommodations shall
be in the amount equal to one hundred five (105%) percent of the amount of the
Letter of Credit Accommodations plus the amount of any fees and expenses payable
in connection therewith through the end of the latest expiration date of such
Letter of Credit Accommodations. Such payments in respect of the Obligations and
cash collateral shall be remitted by wire transfer in Federal funds to the Agent
Payment Account or such other bank account of Agent, as Agent may, in its
discretion, designate in writing to Administrative Borrower for such purpose.
Interest shall be due until and including the next Business Day, if the amounts
so paid by Borrowers to the Agent Payment Account or other bank account
designated by Agent are received in such bank account later than 12:00 noon,
Chicago time.
(b) No termination of this Agreement or the other Financing Agreements
shall relieve or discharge any Loan Party of its respective duties, obligations
and covenants under this Agreement or the other Financing Agreements until all
Obligations and Foreign Obligations have been fully and finally discharged and
paid, and Agent's continuing security interest in the Collateral and the rights
and remedies of Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such Obligations
and Foreign Obligations have been fully and finally discharged and paid.
Accordingly, each Loan Party waives any rights it may have under the UCC to
demand the filing of termination statements with respect to the Collateral and
Agent shall not be required to send such termination statements to Loan Parties,
or to file them with any filing office, unless and until this Agreement shall
have been terminated in accordance with its terms and all Obligations and
Foreign Obligations paid and satisfied in full in immediately available funds.
(c) If for any reason this Agreement is terminated prior to the
Renewal Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Agent's and each Lender's lost profits as a result
thereof, Borrowers agree to pay to Agent for itself and the ratable benefit of
Lenders based on their Revolving Commitment Percentages, upon the effective date
of such termination, an early termination fee in the amount equal to
Amount Period
------ ------
(i) 1.0% of Maximum Revolving Credit From the Effective Date to and including
the first anniversary of the Effective
Date
(ii) 0.5% of Maximum Revolving Credit From and after the first anniversary of
the Effective Date to and including the
second anniversary of the Effective Date
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Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrowers agree that it is reasonable under the circumstances currently
existing. In addition, Agent and Lenders shall be entitled to such early
termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof, even if Agent and Lenders do not exercise
the right to terminate this Agreement, but elect, at their option, to provide
financing to any Borrower or permit the use of cash collateral under the United
States Bankruptcy Code. The early termination fee provided for in this Section
13.1 shall be deemed included in the Obligations.
(d) If for any reason the Term Loan Obligations are satisfied in full
and in cash at any time prior to the Renewal Date, in view of the impracticality
and extreme difficulty of ascertaining actual damages and by mutual agreement of
the parties as to a reasonable calculation of Term Lenders' lost profits as a
result thereof, Borrowers agree to pay to Agent for the account of each Term
Lender upon the effective date of such satisfaction, an early termination fee in
the amount of such Term Lender's Pro Rata Share with respect to the Term Loan of
the amounts set forth below if such satisfaction is effective in the period
indicated:
Amount Period
------ ------
(i) three (3%) percent of the amount of From the Effective Date to and
the Term Loan outstanding immediately including the first anniversary of the
prior to such termination Effective Date
(ii) two (2%) percent of the amount of From the first anniversary of the date
the Term Loan outstanding immediately Effective Date to and excluding the
prior to such termination second anniversary of the Effective
Date
(iii) one (1%) percent of the amount of From the second anniversary of the
the Term Loan outstanding immediately Effective Date to and excluding the
prior to such termination Renewal Date.
Such early termination fee shall be presumed to be the amount of damages
sustained by Term Lenders as a result of such early termination and Borrowers
agree that it is reasonable under the circumstances currently existing. The
early termination fee provided for in this Section 13.1(d) shall be deemed
included in the Term Loan Obligations.
(e) Notwithstanding anything to the contrary contained in Section
13.1(c) above, in the event of the termination of this Agreement by Loan Parties
prior to the second anniversary of the Effective Date and the full and final
repayment of all of the Obligations and Foreign Obligations and the receipt by
Agent and Lenders of cash collateral to secure the Letter of Credit
Accommodations, in each case from the proceeds of (i) initial loans and advances
to Borrowers pursuant to a revolving credit facility where the Reference Bank or
any of its Affiliates serves as agent or sole lender to Borrowers to replace the
financing arrangements provided for herein, (ii) an initial public offering of
Capital Stock of the Parent, (iii) the sale of Parent or (iv) initial loans and
advances to Borrowers or Parent on an unsecured basis, Borrowers shall not be
required to pay the early termination fee provided for in Section 13.1(c) above.
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13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1, Article 8 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.
(b) All references to the plural herein shall also mean the singular
and to the singular shall also mean the plural unless the context otherwise
requires.
(c) All references to any Loan Party, Agent and Lenders pursuant to
the definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.
(d) The words "hereof", "herein", "hereunder", "this Agreement" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) An Event of Default shall exist or continue or be continuing until
such Event of Default is waived in accordance with Section 11.3 or is cured in a
manner satisfactory to Agent, if such Event of Default is capable of being cured
as determined in good faith by Agent.
(g) All references to the term "good faith" used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned and the observance of reasonable commercial standards for
fair dealing as practiced within the commercial finance industry. Loan Parties
shall have the burden of proving any lack of good faith on the part of Agent or
any Lender alleged by any Loan Party at any time.
(h) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Parent most recently received
by Agent prior to the Original Closing Date.
(i) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including".
(j) Unless otherwise expressly provided herein, (i) references herein
to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
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including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(k) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.
(l) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(m) This Agreement and the other Financing Agreements are the result
of negotiations among and have been reviewed by counsel to Agent and the other
parties, and are the products of all parties. Accordingly, this Agreement and
the other Financing Agreements shall not be construed against Agent or Lenders
merely because of Agent's or any Lender's involvement in their preparation.
(n) All references to an amount indicated by "$" shall be a reference
to such amount in United States dollars.
13.3 Notices. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by registered or
certified mail, return receipt requested, five (5) Business Days after mailing.
If notice has been sent by prepaid registered or certified mail and before the
fifth Business Day after the mailing there is a discontinuance or interruption
of regular postal service so that such notice cannot reasonably be expected to
be delivered within five (5) Business Days after the mailing, such notice will
be deemed to have been given when it is actually received. All notices, requests
and demands upon the parties are to be given to the following addresses (or to
such other address as any party may designate by notice in accordance with this
Section):
If to any Loan Party: c/o Delco Remy International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Agent: Congress Financial Corporation (Central)
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Fortress or
Term Lenders: c/o Fortress Credit Opportunities I LP
1251 Avenues of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
13.4 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Agent, Lenders, Loan Parties and their
respective successors and assigns, except that no Loan Party may assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.6 below. The terms and provisions of this Agreement and
the other Financing Agreements are for the purpose of defining the relative
rights and obligations of Loan Parties, Agent and Lenders with respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and provisions of this Agreement or any of the other
Financing Agreements.
13.6 Assignments; Participations.
(a) Each Lender may assign all or, if less than all, a portion equal
to at least $5,000,000 (or, in the case of any Term Lender, a portion equal to
at least $2,500,000 if the assignee is an Approved Fund) in the aggregate for
the assigning Lender, of such rights and obligations under this Agreement to one
or more Eligible Transferees or Approved Funds (but not including for this
purpose any assignments in the form of a participation), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Acceptance; provided, that, (i) Borrowers and Agent may continue to deal
solely and directly with such Lender in connection with the interest so assigned
to an assignee until such Lender and its assignee have delivered to Agent a
fully executed Assignment and Acceptance, (ii) no Lender with a
Multi-Jurisdictional Commitment may assign all or any portion of its
Multi-Jurisdictional Commitment unless the assignee thereof also is, or is to
become at the time of such assignment, a Lender hereunder and under each of the
Foreign Loan Agreements and (iii) Agent shall have received for its sole account
payment of a processing fee from the assigning Lender or the assignee in the
amount of $5,000; provided that such fee shall not be applicable to any
assignments made by Fortress for up to five (5) days after the Effective Date.
(b) Agent shall maintain a register of the names and addresses of
Lenders, their Commitments and the principal amount of their Loans (the
"Register"). Agent shall also maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and shall
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modify the Register to give effect to each Assignment and Acceptance. The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and any Borrowers, Obligors, Agent and Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Administrative Borrower and any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and the
assigning Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance, the
assignor and assignee thereunder confirm to and agree with each other and the
other parties hereto as follows: (i) other than as provided in such Assignment
and Acceptance, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any of the other
Financing Agreements or the execution, legality, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Financing Agreements
furnished pursuant hereto, (ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party, Obligor or any of their Subsidiaries or the performance or
observance by any Loan Party, or Obligor or any of their Subsidiaries of any of
the Obligations or Foreign Obligations; (iii) such assignee confirms that it has
received a copy of this Agreement and the other Financing Agreements, together
with such other documents and information it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(iv) such assignee will, independently and without reliance upon the assigning
Lender, Agent 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 and the other Financing Agreements, (v)
such assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement, the other Financing
Agreements and the Agency Agreement as are delegated to Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning any Loan Party or Obligor in
the possession of Agent or any Lender from time to time to assignees and
Participants.
(e) Each Lender may sell participations to one or more Eligible
Transferees in or to all or a portion of its rights and obligations under this
Agreement and the other Financing Agreements (including, without limitation, all
or a portion of its Commitments and the Loans owing to it and its participation
in the Letter of Credit Accommodations, without the consent of Agent or the
other Lenders); provided, that, (i) such Lender's obligations under this
Agreement
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(including, without limitation, its Commitment hereunder) and the other
Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Loan Parties, the other Lenders and Agent shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Financing Agreements,
and (iii) the Participant shall not have any rights under this Agreement or any
of the other Financing Agreements (the Participant's rights against such Lender
in respect of such participation to be those set forth in the agreement executed
by such Lender in favor of the Participant relating thereto and any rights of
consent by such Participant in such agreement to any amendment or waiver in
respect of the terms and conditions in the Financing Agreements shall be limited
to those consents, amendments and waivers requiring the approval of all the
Lenders hereunder) and all amounts payable by any Loan Party or Obligor
hereunder shall be determined as if such Lender had not sold such participation.
(f) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank.
(g) Loan Parties shall assist Agent or any Lender permitted to sell
assignments or participations under this Section 13.6 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Loan Parties shall
certify the correctness, completeness and accuracy, in all material respects, of
all descriptions of Loan Parties and their affairs provided, prepared or
reviewed by any Loan Parties that are contained in any selling materials and all
other information provided by it and included in such materials.
(h) (i) A Registered Term Loan (and the Registered Term Note, if any,
evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Term Note shall expressly so provide). Any assignment or sale of all or part of
such Registered Term Loan (and the Registered Term Note, if any, evidencing the
same) may be effected only by registration of such assignment or sale on the
Register, together with the surrender of the Registered Term Note, if any,
evidencing the same duly endorsed by (or accompanied by a written instrument of
assignment or sale duly executed by) the holder of such Registered Term Note,
whereupon, at the request of the designated assignee(s) or transferee(s), one or
more new Registered Term Notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s). Prior to the registration
of assignment or sale of any Registered Term Loan (and the Registered Term Note,
if any evidencing the same), Agent and the Borrowers shall treat the Person in
whose name such Loan (and the Registered Term Note, if any, evidencing the same)
is registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding notice to the contrary. In
the case of an assignment by a Lender to any of its Approved Funds that is not
reflected in Agent's Register, the assigning Lender shall maintain a comparable
register on behalf of Agent.
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(ii) In the event that any Term Lender sells participations in a
Registered Term Loan, such Term Lender shall maintain a register on which it
enters the name of all participants in such Registered Term Loan (the
"Participant Register"). A Registered Term Loan (and the Registered Term Note,
if any, evidencing the same) may be participated in whole or in part only by
registration of such participation on the Participant Register (and each
Registered Term Note shall expressly so provide). Any participation of such
Registered Term Loan (and the Registered Term Note, if any, evidencing the same)
may be effected only by the registration of such participation on the
Participant Register.
13.7 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represent the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written. In the event of any inconsistency between the terms of this
Agreement and any Schedule or Exhibit hereto, the terms of this Agreement shall
govern.
13.8 Counterparts, Etc. This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.
13.9 Joint and Several Liability of Borrowers. Each of the Borrowers shall
be jointly and severally liable hereunder and under each of the other Financing
Agreements with respect to all Obligations, regardless of which of the Borrowers
actually receives the proceeds of the Loans or the benefit of any other
extensions of credit hereunder, or the manner in which the Administrative
Borrower, the Borrowers, the Agent or the Lenders account therefor in their
respective books and records. In furtherance and not in limitation of the
foregoing, (i) each Borrower's obligations and liabilities with respect to
proceeds of Loans which it receives or Letters of Credit Accommodations issued
for its account, and related fees, costs and expenses, and (ii) each Borrower's
obligations and liabilities arising as a result of the joint and several
liability of the Borrowers hereunder with respect to proceeds of Loans received
by, or Letter of Credit Accommodations issued for the account of, any of the
other Borrowers, together with the related fees, costs and expenses, shall be
separate and distinct obligations, both of which are primary obligations of such
Borrower. Neither the joint and several liability of, nor the liens granted to
the Agent under the Financing Agreements by, any of the Borrowers shall be
impaired or released by (A) the failure of the Agent, any Lender or any
successors or assigns thereof, or any holder of any of the Obligations to assert
any claim or demand or to exercise or enforce any right, power or remedy against
any Loan Party or any Subsidiary of any Loan Party, any other Person, the
Collateral or otherwise; (B) any extension or renewal for any period (whether or
not longer than the original period) or exchange of any of the Obligations or
the release or compromise of any obligation of any nature of any Person with
respect thereto; (C) the
137
surrender, release or exchange of all or any part of any property (including
without limitation the Collateral) securing payment, performance and/or
observance of any of the Obligations or the compromise or extension or renewal
for any period (whether or not longer than the original period) of any
obligations of any nature of any Person with respect to any such property; (D)
any action or inaction on the part of the Agent or any Lender, or any other
event or condition with respect to any other Borrower, including any such action
or inaction or other event or condition, which might otherwise constitute a
defense available to, or a discharge of, such Borrower or Obligor of the
Obligations; and (E) any other act, matter or thing (other than payment or
performance of the Obligations) which would or might, in the absence of this
provision, operate to release, discharge or otherwise prejudicially affect the
obligations of such Borrower or any other Borrower. The amount of any Borrower's
liability in respect of this Section 13.9 shall be subject to that certain
Contribution, Incentive and Offset Agreement dated as of the Original Closing
Date (as amended, supplemented or otherwise modified from time to time) among
the Loan Parties and Obligors.
13.10 Confidentiality.
(a) Agent and each Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, the "Information"
(as defined below) and all copies thereof, extracts therefrom and analysis or
other material based thereon, provided, that, nothing contained herein shall
limit the disclosure of any such Information: (i) to the extent required by
statute, rule, regulation, subpoena or court order, (ii) to bank examiners and
other regulators, auditors and/or accountants, (iii) in connection with any
litigation (including, but not limited to, any bankruptcy proceeding) involving
any Loan Party or any Subsidiary of any Loan Party to which Agent or any Lender
is a party, (iv) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant (or prospective assignee or
participant) shall have first agreed in writing to treat such information as
confidential in accordance with this Section 13.10, (v) to counsel for Agent or
any Lender or any participant or assignee (or prospective participant or
assignee) or (vi) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Financing Agreements. For
purposes of this Section 13.10, "Information" shall mean all non-public
financial statements, certificates, reports and information (including all
analyses, compilations and studies prepared by Agent or any Lender based on any
of the foregoing) which are received from any Loan Party or any Subsidiary of
any Loan Party which relates to any such Person, a shareholder of any such
Person or any employee, customer or supplier of Parent or any of its
Subsidiaries, other than which were available to Agent or any Lender on a
non-confidential basis prior to the Original Closing Date and which are, in the
case of Information provided after the Original Closing Date, clearly identified
at the time of delivery as confidential.
(b) In no event shall this Section 13.10 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of Information that has been or is made public by any Loan Party or
any Subsidiary of any Loan Party or any third party without breach of this
Section 13.10 or otherwise become generally available to the public other than
as a result of a disclosure in violation hereof, (ii) to apply to or restrict
disclosure of Information that was or becomes available to Agent or any Lender
on a non-confidential basis from a person other than any Loan Party or any
Subsidiary of any Loan Party, (iii) to require Agent or any Lender to return any
materials furnished by any Loan Party or any Subsidiary of
138
any Loan Party to Agent or any Lender (and Parent may request that such
materials be destroyed which request may be complied with by Agent or any Lender
to the extent consistent with its internal policies) or (iv) prevent Agent or
any Lender from responding to routine informational requests in accordance with
the Code of Ethics for the Exchange of Credit Information promulgated by The
▇▇▇▇▇▇ ▇▇▇▇▇▇ Associates or other applicable industry standards relating to the
exchange of credit information. The obligations of Agent and each Lender under
this Section 13.10 shall supersede and replace the obligations of Agent and each
Lender under any confidentiality letter signed prior to the Original Closing
Date.
13.11 Amendment and Restatement. This Agreement amends and restates the
provisions of the Original Agreement and, as of the Effective Date, except as
expressly modified herein: (a) all of the terms and provisions of the Original
Agreement shall continue to apply for the period prior to the Effective Date,
including any determinations of payment dates, interest rates, Events of Default
or any amount that may be payable, and (b) the Obligations (as defined in the
Original Agreement) under the Original Agreement shall continue to be paid or
prepaid in accordance with the Original Agreement on or prior to the Effective
Date, and be secured by the Collateral, and shall, from and after the Effective
Date, continue to be owing, shall constitute Obligations hereunder and shall be
subject to the terms of this Agreement. All references in the Financing
Agreements to the Original Agreement shall be deemed to include references to
this Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, and such Financing Agreements are hereby amended to
reflect such changed reference. Each Lender hereunder that was a party to the
Original Agreement immediately prior to the Effective Date agrees that its
"Commitment" (as defined in the Original Agreement) shall be terminated upon the
Effective Date and shall be replaced with the Commitment assigned to such Lender
under Schedule I hereto as in effect on the Effective Date. On the Effective
Date, the Revolving Loans then outstanding (after giving effect to the
prepayment of such Revolving Loans with proceeds of the Term Loan) shall be
allocated to each such Lender in accordance with its Pro Rata Share.
[Signature pages follow]
139
IN WITNESS WHEREOF, Agent, Lenders, and Loan Parties have caused these
presents to be duly executed as of the day and year first above written.
LOAN PARTIES
DELCO REMY INTERNATIONAL, INC.
DELCO REMY AMERICA, INC.
DR SALES, INC.
FRANKLIN POWER PRODUCTS, INC.
HSG I, INC.
HSG II, INC.
INTERNATIONAL FUEL SYSTEMS, INC.
JAX REMAN, L.L.C.
M. & ▇. ▇▇▇▇▇ AUTO PARTS, L.L.C.
NABCO, INC.
POWRBILT PRODUCTS, INC.
REMY LOGISTICS, L.L.C.
REMY REMAN, L.L.C.
▇▇▇▇▇▇▇▇ TECHNOLOGIES, INC.
WORLD WIDE AUTOMOTIVE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
{Signature Page to Amended and Restated Loan and Security Agreement}
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AGENT
CONGRESS FINANCIAL CORPORATION
(Central), as Administrative Agent and US
Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Title: First Vice President
----------------------------------
REVOLVING LENDERS REVOLVING LENDERS
THE CIT GROUP/BUSINESS CREDIT, INC. WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- -------------------------------------
Title: Vice President Title: Executive Vice President
----------------------------- ----------------------------------
FLEET CAPITAL CORPORATION GMAC BUSINESS CREDIT, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- -------------------------------------
Title: Vice President Title: Senior Vice President
----------------------------- ----------------------------------
NATIONAL CITY BANK UPS CAPITAL CORPORATION
By: /s/ K. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- -------------------------------------
Title: Senior Vice President Title: Senior Vice President
----------------------------- ----------------------------------
RZB Finance LLC
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------ -------------------------------------
Title: Vice President and Title: Assistant Vice President
--------------------------- ----------------------------------
{Signature Page to Amended and Restated Loan and Security Agreement}
S-2
TERM LENDERS
FORTRESS CREDIT OPPORTUNITIES I LP
By; Fortress Credit Opportunities I GP
LLC, its General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Chief Operating Officer
-------------------------
{Signature Page to Amended and Restated Loan and Security Agreement}
S-3