EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of January 12, 2006
among
INSTEEL WIRE PRODUCTS COMPANY,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
GECC CAPITAL MARKETS GROUP, INC.
as Lead Arranger
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TABLE OF CONTENTS
Page
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1. AMOUNT AND TERMS OF CREDIT......................................................................... 1
1.1 Credit Facilities......................................................................... 1
1.2 Letters of Credit......................................................................... 5
1.3 Prepayments............................................................................... 5
1.4 Use of Proceeds........................................................................... 7
1.5 Interest and Applicable Margins........................................................... 7
1.6 Eligible Accounts......................................................................... 9
1.7 Eligible Inventory........................................................................ 12
1.8 Cash Management Systems................................................................... 13
1.9 Fees...................................................................................... 13
1.10 Receipt of Payments....................................................................... 15
1.11 Application and Allocation of Payments.................................................... 15
1.12 Loan Account and Accounting............................................................... 15
1.13 Indemnity................................................................................. 16
1.14 Access.................................................................................... 17
1.15 Taxes..................................................................................... 17
1.16 Capital Adequacy; Increased Costs; Illegality............................................. 18
1.17 Single Loan............................................................................... 20
2. CONDITIONS PRECEDENT............................................................................... 20
2.1 Conditions to the Initial Loans........................................................... 20
2.2 Further Conditions to Each Loan........................................................... 21
3. REPRESENTATIONS AND WARRANTIES..................................................................... 21
3.1 Corporate Existence; Compliance with Law.................................................. 21
3.2 Executive Offices, Collateral Locations, FEIN............................................. 22
3.3 Corporate Power, Authorization, Enforceable Obligations................................... 22
3.4 Financial Statements and Projections...................................................... 22
3.5 Material Adverse Effect................................................................... 23
3.6 Ownership of Property; Liens.............................................................. 23
3.7 Labor Matters............................................................................. 24
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness................. 24
3.9 Government Regulation..................................................................... 25
3.10 Margin Regulations........................................................................ 25
3.11 Taxes..................................................................................... 25
3.12 ERISA..................................................................................... 26
3.13 No Litigation............................................................................. 26
3.14 Brokers................................................................................... 27
3.15 Intellectual Property..................................................................... 27
3.16 Full Disclosure........................................................................... 27
3.17 Environmental Matters..................................................................... 27
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3.18 Insurance................................................................................. 28
3.19 Deposit and Disbursement Accounts......................................................... 28
3.20 Government Contracts...................................................................... 28
3.21 Customer and Trade Relations.............................................................. 28
3.22 Bonding; Licenses......................................................................... 29
3.23 Solvency.................................................................................. 29
3.24 Status of Holdings........................................................................ 29
3.25 Inactive Subsidiaries..................................................................... 29
3.26 Motor Vehicles............................................................................ 29
3.27 Vacant Land Lease......................................................................... 29
4. FINANCIAL STATEMENTS AND INFORMATION............................................................... 29
4.1 Reports and Notices....................................................................... 29
4.2 Communication with Accountants............................................................ 29
5. AFFIRMATIVE COVENANTS.............................................................................. 30
5.1 Maintenance of Existence and Conduct of Business.......................................... 30
5.2 Payment of Charges........................................................................ 30
5.3 Books and Records......................................................................... 31
5.4 Insurance; Damage to or Destruction of Collateral......................................... 31
5.5 Compliance with Laws...................................................................... 32
5.6 Supplemental Disclosure................................................................... 32
5.7 Intellectual Property..................................................................... 33
5.8 Environmental Matters..................................................................... 33
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases..... 34
5.10 [Intentionally Omitted]................................................................... 34
5.11 Remediation............................................................................... 35
5.12 Further Assurances........................................................................ 35
6. NEGATIVE COVENANTS................................................................................. 35
6.1 Mergers, Subsidiaries, Etc................................................................ 35
6.2 Investments; Loans and Advances........................................................... 37
6.3 Indebtedness.............................................................................. 38
6.4 Employee Loans and Affiliate Transactions................................................. 39
6.5 Capital Structure and Business............................................................ 39
6.6 Guaranteed Indebtedness................................................................... 39
6.7 Liens..................................................................................... 40
6.8 Sale of Stock and Assets.................................................................. 40
6.9 ERISA..................................................................................... 40
6.10 Financial Covenants....................................................................... 41
6.11 Hazardous Materials....................................................................... 41
6.12 Sale-Leasebacks........................................................................... 41
6.13 Restricted Payments....................................................................... 41
6.14 Change of Corporate Name or Location; Change of Fiscal Year............................... 41
6.15 No Impairment of Intercompany Transfers................................................... 42
6.16 Real Estate Purchases..................................................................... 42
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6.17 Holdings.................................................................................. 42
6.18 Inactive Subsidiaries..................................................................... 42
6.19 Leases.................................................................................... 42
6.20 Vacant Land Lease......................................................................... 42
7. TERM............................................................................................... 42
7.1 Termination............................................................................... 42
7.2 Survival of Obligations Upon Termination of Financing Arrangements........................ 42
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES............................................................. 43
8.1 Events of Default......................................................................... 43
8.2 Remedies.................................................................................. 45
8.3 Waivers by Credit Parties................................................................. 45
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT................................................ 46
9.1 Assignment and Participations............................................................. 46
9.2 Appointment of Agent...................................................................... 48
9.3 Agent's Reliance, Etc..................................................................... 49
9.4 GE Capital and Affiliates................................................................. 49
9.5 Lender Credit Decision.................................................................... 50
9.6 Indemnification........................................................................... 50
9.7 Successor Agent........................................................................... 50
9.8 Setoff and Sharing of Payments............................................................ 51
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert.................. 52
10. SUCCESSORS AND ASSIGNS............................................................................. 54
10.1 Successors and Assigns.................................................................... 54
11. MISCELLANEOUS...................................................................................... 54
11.1 Complete Agreement; Modification of Agreement............................................. 54
11.2 Amendments and Waivers.................................................................... 55
11.3 Fees and Expenses......................................................................... 57
11.4 No Waiver................................................................................. 58
11.5 Remedies.................................................................................. 58
11.6 Severability.............................................................................. 58
11.7 Conflict of Terms......................................................................... 58
11.8 Confidentiality........................................................................... 58
11.9 GOVERNING LAW............................................................................. 59
11.10 Notices................................................................................... 60
11.11 Section Titles............................................................................ 60
11.12 Counterparts.............................................................................. 60
11.13 WAIVER OF JURY TRIAL...................................................................... 60
11.14 Press Releases and Related Matters........................................................ 60
11.15 Reinstatement............................................................................. 61
11.16 Advice of Counsel......................................................................... 61
11.17 No Strict Construction.................................................................... 61
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11.18 Patriot Act Notice........................................................................ 61
12. RESTATEMENT OF ORIGINAL CREDIT AGREEMENT........................................................... 61
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INDEX OF APPENDICES
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A-
Commitments definition) - Commitments as of Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B-1 - Application for Standby Letter of Credit
Exhibit B-2 - Application for Documentary Letter of Credit
Schedule 1.1 - Agent's Representatives
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a) - Financial Statements
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.14 - Brokers
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.22 - Bonds; Patent, Trademark Licenses
Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.7 - Existing Liens
Disclosure Schedule 6.8 - Net Cash Proceeds for Real Estate Held for Sale
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This AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), dated as of
January 12, 2006 among INSTEEL WIRE PRODUCTS COMPANY, a North Carolina
corporation ("Borrower"); the other Credit Parties signatory hereto; GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual
capacity, "GE Capital"), for itself, as Lender, and as Agent for Lenders, and
the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, parties hereto are parties to a Credit Agreement, dated as of
June 2, 2004 (as amended and restated and as otherwise amended, restated,
supplemented or otherwise modified prior to the date hereof, the "Original
Credit Agreement"); and
WHEREAS, pursuant to and upon the terms and conditions set forth in the
Agreement, each of the parties hereto wishes to and agrees to amend and restate
the Original Credit Agreement on the terms and conditions set forth herein; and
WHEREAS, Borrower has agreed to secure and continue to secured all of its
obligations under the Loan Documents by granting and continuing to grant to
Agent, for the benefit of Agent and Lenders, a security interest in and lien
upon all or substantially all of its existing and after-acquired personal and
real property; and
WHEREAS, Insteel Industries, Inc., a North Carolina corporation
("Holdings") is willing to guarantee and continue to guarantee all of the
obligations of Borrower to Agent and Lenders under the Loan Documents and to
pledge and continue to pledge to Agent, for the benefit of Agent and Lenders,
all of the Stock of Borrower to secure such guaranty; and
WHEREAS, capitalized terms used in this Agreement shall have the meanings
ascribed to them in Annex A and, for purposes of this Agreement and the other
Loan Documents, the rules of construction set forth in Annex A shall govern. All
Annexes, Disclosure Schedules, Exhibits and other attachments (collectively,
"Appendices") hereto, or expressly identified to this Agreement, are
incorporated herein by reference, and taken together with this Agreement, shall
constitute but a single agreement. These Recitals shall be construed as part of
the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto agree to amend and restate the Original Credit Agreement
(including all Schedules, Annexes and Exhibits thereto) in its entirety to read
as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving
Lender agrees to make available to Borrower from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance").
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The Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at
any time exceed its separate Revolving Loan Commitment. The obligations of each
Revolving Lender hereunder shall be several and not joint. Until the Commitment
Termination Date, Borrower may from time to time borrow, repay and reborrow
under this Section 1.1(a); provided, that the amount of any Revolving Credit
Advance to be made at any time shall not exceed Borrowing Availability at such
time. Borrowing Availability may be further reduced by Reserves imposed by Agent
in its reasonable credit judgment. Each Revolving Credit Advance shall be made
on notice by Borrower to one of the representatives of Agent identified in
Schedule 1.1 at the address specified therein. Any such notice must be given no
later than (1) 11:00 a.m. (Chicago time) on the Business Day of the proposed
Revolving Credit Advance, in the case of an Index Rate Loan, or (2) 11:00 a.m.
(Chicago time) on the date which is three (3) Business Days prior to the
proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice
(a "Notice of Revolving Credit Advance") must be given in writing (by telecopy
or overnight courier) substantially in the form of Exhibit 1.1(a)(i), and shall
include the information required in such Exhibit and such other information as
may be required by Agent. If Borrower desires to have the Revolving Credit
Advances bear interest by reference to a LIBOR Rate, it must comply with Section
1.5(e).
(ii) Except as provided in Section 1.12, Borrower shall execute and
deliver to each Revolving Lender a note to evidence the Revolving Loan
Commitment of that Revolving Lender. Each note shall be in the principal amount
of the Revolving Loan Commitment of the applicable Revolving Lender, dated the
Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each a
"Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note
shall represent the obligation of Borrower to pay the amount of Revolving
Lender's Revolving Loan Commitment or, if less, such Revolving Lender's Pro Rata
Share of the aggregate unpaid principal amount of all Revolving Credit Advances
to Borrower together with interest thereon as prescribed in Section 1.5. The
entire unpaid balance of the Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Commitment Termination Date.
(iii) Any provision of this Agreement to the contrary
notwithstanding, at the request of Borrower, in its discretion Agent may (but
shall have absolutely no obligation to), make Revolving Credit Advances to
Borrower on behalf of Revolving Lenders in amounts that cause the outstanding
balance of the aggregate Revolving Loan to exceed the Borrowing Base (less the
Swing Line Loan) (any such excess Revolving Credit Advances are herein referred
to collectively as "Overadvances"); provided, that (A) no such event or
occurrence shall cause or constitute a waiver of Agent's, the Swing Line
Lender's or Revolving Lenders' right to refuse to make any further Overadvances,
Swing Line Advances or Revolving Credit Advances, or incur any Letter of Credit
Obligations, as the case may be, at any time that an Overadvance exists, and (B)
no Overadvance shall result in a Default or Event of Default due to Borrower's
failure to comply with Section 1.3(b)(i) for so long as Agent permits such
Overadvance to remain outstanding, but solely with respect to the amount of such
Overadvance. In addition, Overadvances may be made even if the conditions to
lending set forth in Section 2 have not been met. All Overadvances shall
constitute Index Rate Loans, shall
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bear interest at the Default Rate and shall be payable on the earlier of demand
or the Commitment Termination Date. Except as otherwise provided in Section
1.11(b), the authority of Agent to make Overadvances is limited to an aggregate
amount not to exceed $5,000,000 at any time, shall not cause the Revolving Loan
to exceed the Maximum Amount, and may be revoked prospectively by a written
notice to Agent signed by the Requisite Lenders.
(b) [Intentionally Omitted]
(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's receipt of
any Notice of Revolving Credit Advance. Subject to the terms and conditions
hereof, the Swing Line Lender may, in its discretion, make available from time
to time until the Commitment Termination Date advances (each, a "Swing Line
Advance") in accordance with any such notice. The provisions of this Section
1.1(c) shall not relieve Revolving Lenders of their obligations to make
Revolving Credit Advances under Section 1.1(a); provided, that if the Swing Line
Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line
Advance shall be in lieu of any Revolving Credit Advance that otherwise may be
made by Revolving Credit Lenders pursuant to such notice. The aggregate amount
of Swing Line Advances outstanding shall not exceed at any time the lesser of
(A) the Swing Line Commitment and (B) the lesser of the Maximum Amount and
(except for Overadvances) the Borrowing Base, in each case, less the outstanding
balance of the Revolving Loan at such time ("Swing Line Availability"). Until
the Commitment Termination Date, Borrower may from time to time borrow, repay
and reborrow under this Section 1.1(c). Each Swing Line Advance shall be made
pursuant to a Notice of Revolving Credit advance delivered by Borrower to Agent
in accordance with Section 1.1(a). Any such notice must be given no later than
11:00 a.m. (Chicago time) on the Business Day of the proposed Swing Line
Advance. The Swing Line Lender shall, notwithstanding the failure of any
condition precedent set forth in Sections 2.2, be entitled to fund that Swing
Line Advance, and to have each Revolving Lender make Revolving Credit Advances
in accordance with Section 1.1(c)(iii) or purchase participating interests in
accordance with Section 1.1(c)(iv). Notwithstanding any other provision of this
Agreement or the other Loan Documents, the Swing Line Loan shall constitute an
Index Rate Loan. Borrower shall repay the aggregate outstanding principal amount
of the Swing Line Loan upon demand therefor by Agent.
(ii) Borrower shall execute and deliver to the Swing Line Lender a
promissory note to evidence the Swing Line Commitment. Such note shall be in the
principal amount of the Swing Line Commitment of the Swing Line Lender, dated
the Closing Date and substantially in the form of Exhibit 1.1(c)(ii) (the "Swing
Line Note"). The Swing Line Note shall represent the obligation of Borrower to
pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid
principal amount of all Swing Line Advances made to Borrower together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
Swing Line Loan and all other non-contingent Obligations shall be immediately
due and payable in full in
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immediately available funds on the Commitment Termination Date if not sooner
paid in full.
(iii) The Swing Line Lender, at any time and from time to time no
less frequently than once weekly, shall on behalf of Borrower (and Borrower
hereby irrevocably authorizes the Swing Line Lender to so act on its behalf)
request each Revolving Lender (including the Swing Line Lender) to make a
Revolving Credit Advance to Borrower (which shall be an Index Rate Loan) in an
amount equal to that Revolving Lender's Pro Rata Share of the principal amount
of the Swing Line Loan (the "Refunded Swing Line Loan") outstanding on the date
such notice is given. Unless any of the events described in Sections 8.1(h) or
8.1(i) has occurred (in which event the procedures of Section 1.1(c)(iv) shall
apply) and regardless of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Credit Advance are then satisfied, each
Revolving Lender shall disburse directly to Agent, its Pro Rata Share of a
Revolving Credit Advance on behalf of the Swing Line Lender, prior to 2:00 p.m.
(Chicago time), in immediately available funds on the Business Day next
succeeding the date that notice is given. The proceeds of those Revolving Credit
Advances shall be immediately paid to the Swing Line Lender and applied to repay
the Refunded Swing Line Loan.
(iv) If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(c)(iii), one of the events described in
Sections 8.1(h) or 8.1(i) has occurred, then, subject to the provisions of
Section 1.1(c)(v) below, each Revolving Lender shall, on the date such Revolving
Credit Advance was to have been made for the benefit of Borrower, purchase from
the Swing Line Lender an undivided participation interest in the Swing Line Loan
in an amount equal to its Pro Rata Share of such Swing Line Loan. Upon request,
each Revolving Lender shall promptly transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation interest.
(v) Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(c)(iii) and to purchase participation
interests in accordance with Section 1.1(c)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Swing Line Lender, Borrower or any other Person for
any reason whatsoever; (B) the occurrence or continuance of any Default or Event
of Default; (C) any inability of Borrower to satisfy the conditions precedent to
borrowing set forth in this Agreement at any time or (D) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
If any Revolving Lender does not make available to Agent or the Swing Line
Lender, as applicable, the amount required pursuant to Sections 1.1(c)(iii) or
1.1(c)(iv), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender, together with interest
thereon for each day from the date of non-payment until such amount is paid in
full at the Federal Funds Rate for the first two Business Days and at the Index
Rate thereafter.
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(d) Reliance on Notices. Agent shall be entitled to rely upon, and shall
be fully protected in relying upon, any Notice of Revolving Credit Advance,
Notice of Conversion/Continuation or similar notice believed by Agent to be
genuine. Agent may assume that each Person executing and delivering any notice
in accordance herewith was duly authorized, unless the responsible individual
acting thereon for Agent has actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms and
conditions contained herein and in Annex B, Borrower shall have the right to
request, and Revolving Lenders agree to incur, or purchase participations in,
Letter of Credit Obligations in respect of Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments.
Borrower may at any time on at least five (5) days' prior written notice to
Agent permanently reduce (but not terminate) the Revolving Loan Commitment;
provided, that (A) any such reductions shall be in a minimum amount of $1,
000,000 and integral multiples of $1,000,000 in excess of such amount, (B) the
Revolving Loan Commitment shall not be reduced to an amount less than
$45,000,000, and (C) after giving effect to such reductions, Borrower shall
comply with Section 1.3(b)(i). Borrower may at any time on at least ten (10)
days' prior written notice to Agent terminate the Revolving Loan Commitment,
provided that upon such termination all Loans and other Obligations shall be
immediately due and payable in full and all Letter of Credit Obligations shall
be cash collateralized or otherwise satisfied in accordance with Annex B hereto.
Any voluntary prepayment and any reduction or termination of the Revolving Loan
Commitment must be accompanied by payment of the Fee required by Section 1.9(c),
if any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 1.13(b). Upon any such reduction or termination of the Revolving Loan
Commitment, Borrower's right to request Revolving Credit Advances, or request
that Letter of Credit Obligations be incurred on its behalf, or request Swing
Line Advances, shall simultaneously be permanently reduced or terminated, as the
case may be; provided, that a permanent reduction of the Revolving Loan
Commitment shall not require a corresponding pro rata reduction in the L/C
Sublimit. Each notice of partial prepayment shall designate the Loan or other
Obligations to which such prepayment is to be applied.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balances of the Revolving Loan
and the Swing Line Loan exceed the lesser of (A) the Maximum Amount and (B) the
Borrowing Base, Borrower shall immediately repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such excess. If
any such excess remains after repayment in full of the aggregate outstanding
Revolving Credit Advances, Borrower shall provide cash collateral for the Letter
of Credit Obligations in the manner set forth in Annex B to the extent required
to eliminate such excess. Notwithstanding the foregoing, any Overadvance made
pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section
1.1(a)(iii).
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(ii) Immediately upon receipt by any Credit Party of any cash
proceeds of any asset disposition, Borrower shall prepay the Loans in an amount
equal to all such proceeds, net of (A) commissions and other reasonable and
customary transaction costs, fees and expenses properly attributable to such
transaction and payable by Borrower in connection therewith (in each case, paid
to non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior
Liens on such asset (to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, and (D) an appropriate reserve for income taxes in
accordance with GAAP in connection therewith (all such proceeds net of amounts
described in clauses (A), (B), (C) and (D) being the "Net Asset Disposition
Proceeds"). Any such prepayment shall be applied in accordance with Section
1.3(c). The following shall not be subject to mandatory prepayment under this
clause (ii): (1) proceeds of sales of Inventory in the ordinary course of
business; (2) Net Asset Disposition Proceeds of less than $1,000,000 in the
aggregate in any Fiscal Year and (3) asset disposition proceeds that are
reinvested in Equipment, Fixtures or Real Estate within one hundred and eighty
(80) days following receipt thereof; provided, that Borrower notifies Agent of
its intent to reinvest at the time such proceeds are received and when such
reinvestment occurs.
(iii) [Intentionally Omitted].
(iv) Following the occurrence and during the continuance of an Event
of Default, any proceeds of Keyman Life Insurance (whether such proceeds arise
by reason of death benefit, at maturity, surrendering the policy and receiving
the surrender value thereof (unless upon such receipt of such surrender value,
Keyman Life Insurance is purchased which has a death benefit that is not less
than the death benefit of the Keyman Life Insurance which was surrendered) or
otherwise) shall be immediately used to prepay the Obligations in an amount
equal to such proceeds, which shall be applied in accordance with Section 1.11.
(c) Application of Certain Mandatory Prepayments. Any prepayments made by
Borrower with respect to any or all Obligations pursuant to Sections 1.3(b)(ii)
or (b)(iv) above shall be applied as follows: first, to Fees and reimbursable
expenses of Agent then due and payable pursuant to any of the Loan Documents;
second, to interest then due and payable on the Swing Line Loan; third to the
principal balance of the Swing Line Loan until the same has been repaid in full;
fourth, to interest then due and payable on the Revolving Credit Advances;
fifth, to the outstanding principal balance of Revolving Credit Advances until
the same has been paid in full; and sixth, to any Letter of Credit Obligations,
to provide cash collateral therefor in the manner set forth in Annex B, until
all such Letter of Credit Obligations have been fully cash collateralized in the
manner set forth in Annex B. Neither the Revolving Loan Commitment nor the Swing
Line Commitment shall be permanently reduced by the amount of any such
prepayments.
(d) Application of Prepayments from Insurance Proceeds and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4(b) or 5.4(c) and the Mortgage(s), respectively, shall be applied as
follows: first, to interest then due and payable on the Swing Line Loan, second
to the principal balance of the Swing Line Loan until the same has been repaid
in full, third, to interest then due and payable on the
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Revolving Credit Advances, fourth to the outstanding principal balance of
Revolving Credit Advances until the same has been paid in full, and fifth to any
Letter of Credit Obligations, to provide cash collateral therefor in the manner
set forth in Annex B, until all such Letter of Credit Obligations have been
fully cash collateralized in the manner set forth in Annex B. Neither the
Revolving Loan Commitment nor the Swing Line Commitment shall be permanently
reduced by the amount of any such prepayments.
(e) No Implied Consent. Nothing in this Section 1.3 shall be construed to
constitute Agent's or any Lender's consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.
1.4 Use of Proceeds. Borrower shall utilize the proceeds of the Loans
solely for the Refinancing (and to pay any related transaction expenses), and
for the financing of Borrower's ordinary working capital and general corporate
needs.
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the Index Rate plus the
Applicable Revolver Index Margin per annum or, at the election of Borrower, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum.
As of the Closing Date, the Applicable Margins are as follows:
Applicable Revolver Index Margin 0.00%
Applicable Revolver LIBOR Margin 1.25%
Applicable L/C Margin 1.25%
Applicable Unused Line Fee Margin 0.375%
The Applicable Margins shall be adjusted by reference to the following
grids:
LEVEL OF
IF REFERENCE AVAILABILITY IS: APPLICABLE MARGINS:
---------------------------- ------------------
>$35,000,000 Level I
> $25,000,000, but < or = $35,000,000 Level II
> $15,000,000, but < or = $25,000,000 Level III
< or = $15,000,000 Level IV
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APPLICABLE MARGINS
-------------------
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇
------ ------- -------- --------
Applicable Revolver 0.00% 0.00% 0.25% 0.50%
Index Margin
Applicable Revolver LIBOR Margin 1.25% 1.50% 1.75% 2.00%
Applicable L/C Margin 1.25% 1.50% 1.75% 2.00%
Applicable Unused Line Fee Margin 0.375% 0.375% 0.25% 0.25%
Adjustments in the Applicable Margins commencing with the Fiscal Quarter
ending on or about December 31, 2005 shall be implemented quarterly on a
prospective basis, commencing on the first day of the calendar month that begins
after the date of delivery to Lenders of the Compliance Certificate delivered to
Agent and Lenders pursuant to paragraph (b) of Annex E with respect to a Fiscal
Quarter evidencing the need for an adjustment. Concurrently with the delivery of
such Compliance Certificate, Borrower shall deliver to Agent and Lenders a
certificate, signed by its chief financial officer, setting forth in reasonable
detail the basis for the continuance of, or any change in, the Applicable
Margins. Failure to timely deliver such Compliance Certificate shall, in
addition to any other remedy provided for in this Agreement, result in an
increase in the Applicable Margins to the highest level set forth in the
foregoing grid, until the date of the delivery of a Compliance Certificate
demonstrating that such an increase is not required. If an Event of Default has
occurred and is continuing at the time any reduction in the Applicable Margins
is to be implemented, that reduction shall be deferred until the date on which
such Event of Default is waived or cured.
(b) If any payment on any Loan becomes due and payable on a day other than
a Business Day, the maturity thereof will be extended to the next succeeding
Business Day (except as set forth in the definition of LIBOR Period) and, with
respect to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and interest
shall be made by Agent on the basis of a 360-day year, in each case for the
actual number of days occurring in the period for which such interest and Fees
are payable. The Index Rate is a floating rate determined for each day. Each
determination by Agent of interest rates and Fees hereunder shall be presumptive
evidence of the correctness of such rates and Fees.
(d) So long as an Event of Default has occurred and is continuing under
Section 8.1(a), (h) or (i), or so long as any other Event of Default has
occurred and is continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Loans and the Letter of Credit
Fees shall be increased by two percentage points (2%) per annum above the
highest interest rate on the grid of interest or the rate of such Fees otherwise
applicable hereunder unless Agent or Requisite Lenders elect to impose a smaller
increase (the "Default Rate"), and all outstanding Obligations shall bear
interest at the Default Rate applicable to such Obligations.
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Interest and Letter of Credit Fees at the Default Rate shall accrue from the
initial date of such Event of Default until that Event of Default is cured or
waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section 2.2, Borrower
shall have the option to (i) request that any Revolving Credit Advance be made
as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Loans
(other than the Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii)
convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan (other than the Swing Line Loan) as a LIBOR Loan
upon the expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after the last day
of the LIBOR Period of the Loan to be continued. Any Loan or group of Loans
having the same proposed LIBOR Period to be made or continued as, or converted
into, a LIBOR Loan must be in a minimum amount of $2,000,000 and integral
multiples of $1,000,000 in excess of such amount. Any such election must be made
by 11:00 a.m. (Chicago time) on the Third Business Day prior to (1) the date of
any proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of
each LIBOR Period with respect to any LIBOR Loans to be continued as such, or
(3) the date on which Borrower wishes to convert any Index Rate Loan to a LIBOR
Loan for a LIBOR Period designated by Borrower in such election. If no election
is received with respect to a LIBOR Loan by 11:00 a.m. (Chicago time) on the
Third Business Day prior to the end of the LIBOR Period with respect thereto (or
if a Default or an Event of Default has occurred and is continuing or the
additional conditions precedent set forth in Section 2.2 shall not have been
satisfied), that LIBOR Loan shall be converted to an Index Rate Loan at the end
of its LIBOR Period. Borrower must make such election by notice to Agent in
writing, by telecopy or overnight courier. In the case of any conversion or
continuation, such election must be made pursuant to a written notice (a "Notice
of Conversion/Continuation") in the form of Exhibit 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. In no event shall the total interest received by any Lender pursuant
to the terms hereof exceed the amount that such Lender could lawfully have
received had the interest due hereunder been calculated for the full term hereof
at the Maximum Lawful Rate.
1.6 Eligible Accounts. All of the Accounts owned by Borrower and reflected
in the most recent Borrowing Base Certificate delivered by Borrower to Agent
shall be "Eligible Accounts" for purposes of this Agreement, except any Account
to which any of the exclusionary criteria set forth below applies. Agent shall
have the right to establish, modify or
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eliminate Reserves against Eligible Accounts from time to time in its reasonable
credit judgment. In addition, Agent reserves the right, at any time and from
time to time after the Closing Date, to adjust any of the criteria set forth
below and to establish new criteria, and to adjust advance rates with respect to
Eligible Accounts, in its reasonable credit judgment, subject to the approval of
Supermajority Revolving Lenders in the case of adjustments or new criteria or
changes in advance rates which have the effect of making more credit available.
Eligible Accounts shall not include any Account of Borrower:
(a) that does not arise from the sale of goods or the performance of
services by Borrower in the ordinary course of its business;
(b) (i) upon which Borrower's right to receive payment is not absolute or
is contingent upon the fulfillment of any condition whatsoever or (ii) as to
which Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process, or (iii) if the Account
represents a progress billing consisting of an invoice for goods sold or used or
services rendered pursuant to a contract under which the Account Debtor's
obligation to pay that invoice is subject to Borrower's completion of further
performance under such contract or is subject to the equitable lien of a surety
bond issuer;
(c) to the extent that any defense, counterclaim, contra, setoff or
dispute is asserted as to such Account;
(d) that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or services
rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably acceptable to Agent in
form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by Borrower or (ii) is subject to any Lien of
any other Person, other than Liens in favor of Agent, on behalf of itself and
Lenders;
(g) that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common officer or
director with any Credit Party (other than those sales to an Affiliate
(determined solely for the purposes of this clause (g), as if the phrase "5% or
more" set forth in clause (a) of the definition of the term of "Affiliate" was
the phrase "15% or less" and without giving effect to clauses (b), (c) and (d)
of such definition) of any Credit Party so long as such sales are on an
arms-length basis and in the ordinary course of such Credit Party's business);
(h) that is the obligation of an Account Debtor that is the United States
government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and Borrower, if
necessary or desirable, has complied with respect to such obligation with the
Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting the assignment thereof with respect to such
obligation;
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(i) that is the obligation of an Account Debtor located in a foreign
country other than Canada unless payment thereof is assured by a letter of
credit assigned and delivered to Agent, satisfactory to Agent as to form, amount
and issuer;
(j) to the extent Borrower or any Subsidiary thereof is liable for goods
sold or services rendered by the applicable Account Debtor to Borrower or any
Subsidiary thereof but only to the extent of the potential offset;
(k) that arises with respect to goods that are delivered on a
cash-on-delivery basis or placed on consignment, guaranteed sale or other terms
by reason of which the payment by the Account Debtor is or may be conditional;
(l) that is in default; provided, that, without limiting the generality of
the foregoing, an Account shall be deemed in default upon the occurrence of any
of the following:
(i) the Account is not paid within the earlier of: sixty (60) days
following its due date or one hundred twenty (120) days following its original
invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails to
pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account Debtor obligated
upon such Account under any bankruptcy law or any other federal, state or
foreign (including any provincial) receivership, insolvency relief or other law
or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor for which fifty percent
(50%) or more of the Dollar amount of all Accounts owing by that Account Debtor
are ineligible under the other criteria set forth in this Section 1.6 (l)(i);
(n) as to which Agent's Lien thereon, on behalf of itself and Lenders, is
not a first priority perfected Lien;
(o) as to which any of the representations or warranties in the Loan
Documents are untrue;
(p) that is a ▇▇▇▇-and-Hold Account to the extent that the book value
thereof, when added to the book value of all other ▇▇▇▇-and-Hold Accounts,
exceeds 60% of the aggregate book value of all ▇▇▇▇-and-Hold Accounts, provided,
however, that the aggregate amount of Borrowing Availability attributable to
▇▇▇▇-and-Hold Accounts which are not excluded from being Eligible Accounts
pursuant to this clause (p) and which otherwise constitute and are deemed to be
"Eligible Accounts" in accordance with this Section 1.6 shall not exceed
$3,000,000 at any time;
(q) to the extent such Account is evidenced by a judgment, Instrument or
Chattel Paper;
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(r) to the extent such Account exceeds any credit limit established by
Agent, in its reasonable credit judgment; provided, that Agent shall notify
Borrower of Agent's proposed credit limit or an amendment of the existing credit
limit, as the case may be, prior to Agent's establishment or amendment thereof
and Agent and Borrower shall mutually agree on such credit limit; provided,
further, that if no agreement is reached within three (3) Business Days of the
date of the proposal of such credit limit or amendment thereof by the Agent, the
Agent's proposed credit limit or amendment thereof shall be deemed to be
established and in effect for purposes of this clause (r);
(s) to the extent that such Account, together with all other Accounts
owing to such Account Debtor and its Affiliates as of any date of determination
exceed 15% of all Eligible Accounts; or
(t) that is payable in any currency other than Dollars.
1.7 Eligible Inventory. All of the inventory owned by the Borrower and
reflected in the most recent Borrowing Base Certificate delivered by Borrower to
Agent shall be "Eligible Inventory" for purposes of this Agreement, except any
Inventory to which any of the exclusionary criteria set forth below applies.
Agent shall have the right to establish, modify, or eliminate Reserves against
Eligible Inventory from time to time in its reasonable credit judgment. In
addition, Agent reserves the right, at any time and from time to time after the
Closing Date, to adjust any of the criteria set forth below and to establish new
criteria and to adjust advance rates with to Eligible Inventory in its
reasonable credit judgment, subject to the approval of Supermajority Revolving
Lenders in the case of adjustments or new criteria or changes in advance rates
which have the effect of making more credit available. Eligible Inventory shall
not include any Inventory of Borrower that:
(a) is not owned by Borrower free and clear of all Liens and rights of any
other Person (including the rights of a purchaser that has made progress
payments and the rights of a surety that has issued a bond to assure Borrower's
performance with respect to that Inventory), except the Liens in favor of Agent,
on behalf of itself and Lenders;
(b) (i) is not located on premises owned, leased or rented by Borrower and
set forth in Disclosure Schedule (3.2) or (ii) is stored at a leased location,
unless Agent has given its prior consent thereto and unless (x) a reasonably
satisfactory landlord waiver has been delivered to Agent, and/or (y) Reserves
satisfactory to Agent have been established with respect thereto, (iii) is
stored with a bailee or warehouseman unless a reasonably satisfactory,
acknowledged bailee letter and other documentation as required by Agent has been
received by Agent and, if required by Agent, Reserves reasonably satisfactory to
Agent have been established with respect to all past-due amounts owing to any
such bailee or warehouseman, or (iv) is located at an owned location subject to
a mortgage in favor of a lender other than Agent, unless a reasonably
satisfactory mortgagee waiver has been delivered to Agent, or (v) is located at
any site if the aggregate book value of Inventory at any such location is less
than $100,000;
(c) is placed on consignment or is in transit, except for Inventory in
transit between domestic locations (including leased locations and domestic port
locations with respect
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to which a Bailee Letter has been delivered to Agent) of Credit Parties as to
which Agent's Liens have been perfected at origin and destination;
(d) is covered by a negotiable document of title, unless such document has
been delivered to Agent with all necessary endorsements, free and clear of all
Liens except those in favor of Agent and Lenders;
(e) obsolete, slow moving (in excess of one year's supply), unsalable,
shopworn, seconds, damaged or unfit for sale;
(f) consists of display items or packing or shipping materials,
manufacturing supplies, stores or replacement parts;
(g) consists of goods which have been returned by the buyer unless such
returned goods have been inspected by Borrower and determined to be free of
defect or damage and have been returned to finished goods Inventory for sale;
(h) is not of a type held for sale in the ordinary course of Borrower's
business;
(i) is not subject to a first priority lien in favor of Agent on behalf of
itself and Lenders;
(j) breaches any of the representations or warranties pertaining to
Inventory set forth in the Loan Documents;
(k) consists of any costs associated with "freight-in" charges, except
those charges that are customary in, and consistent with, Borrower's historical
accounting practices;
(l) consists of Hazardous Materials or goods that can be transported or
sold only with licenses that are not readily available;
(m) is not covered by casualty insurance reasonably acceptable to Agent;
or
(n) is subject to any patent or trademark license requiring the payment of
royalties or fees or requiring the consent of the licensor for a sale thereof by
Agent.
1.8 Cash Management Systems. On or prior to the Closing Date, Borrower and
Holdings will establish and will maintain until the Termination Date, the cash
management systems described in Annex C (the "Cash Management Systems").
1.9 Fees.
(a) Borrower shall pay to GE Capital, individually, the Fees specified in
the GE Capital Fee Letter.
(b) As additional compensation for the Revolving Lenders, Borrower shall
pay to Agent, for the ratable benefit of such Lenders, in arrears, on the first
Business Day of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a
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Fee for Borrower's non-use of available funds in an amount equal to Applicable
Unused Line Fee Margin per annum (calculated on the basis of a 360 day year for
actual days elapsed) multiplied by (A) at all times after the Closing Date and
until the date (the "Maximum Amount Triggering Date") on which the aggregate
principal balance of the Loans and outstanding Letter of Credit Obligations is
$70,000,000 or more, the difference between (x) $75,000,000 and (y) the average
for the period of the daily closing balances of the Revolving Loan and the Swing
Line Loan outstanding during the period for which the such Fee is due and (B) at
all times after the Maximum Amount Triggering Date, the difference between (x)
the Maximum Amount (as it may be reduced from time to time) and (y) the average
for the period of the daily closing balances of the Revolving Loan and the Swing
Line Loan outstanding during the period for which the such Fee is due.
(c) If Borrower prepays the Revolving Loan and reduces or terminates the
Revolving Loan Commitment, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations or if the Commitments are
otherwise terminated, Borrower shall pay to Agent, for the benefit of Lenders as
liquidated damages and compensation for the costs of being prepared to make
funds available hereunder an amount equal to the Applicable Percentage (as
defined below) multiplied by the amount of the reduction of the Revolving Loan
Commitment. As used herein, the term "Applicable Percentage" shall mean (y) two
percent (2%), in the case of a prepayment on or prior to the second anniversary
of the Original Closing Date, and (z) one percent (1%), in the case of a
prepayment after the second anniversary of the Original Closing Date but on or
prior to the third anniversary thereof. The Credit Parties agree that the
Applicable Percentages are a reasonable calculation of Lenders' lost profits in
view of the difficulties and impracticality of determining actual damages
resulting from an early termination of the Commitments. Notwithstanding the
foregoing, no prepayment fee shall be payable by Borrower (A) upon one or more
permanent reductions of the Revolving Loan Commitment pursuant to and in
accordance with Section 1.3(a) during the period commencing on and including
July 1, 2005 and ending on but excluding June 30, 2006 as long as (i) such
reductions do not exceed $15,000,000 in the aggregate during such period and
(ii) Borrower does not terminate the Revolving Loan Commitment upon any such
reduction, and (B) upon a mandatory prepayment made pursuant to Sections 1.3(b)
or 1.16(c); provided, that Borrower does not permanently reduce or terminate the
Revolving Loan Commitment upon any such prepayment and, in the case of
prepayments made pursuant to Section 1.3(b)(ii), the transaction giving rise to
the applicable prepayment is expressly permitted under Section 6.
(d) Borrower shall pay to Agent, for the ratable benefit of Revolving
Lenders, the Letter of Credit Fee as provided in Annex B.
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1.10 Receipt of Payments. Borrower shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability as of any
date, all payments shall be deemed received on the first Business Day following
the Business Day on which immediately available funds therefor are received in
the Collection Account prior to 2:00 p.m. (New York time). Payments received
after 2:00 p.m. (New York time) on any Business Day or on a day that is not a
Business Day shall be deemed to have been received on the following Business
Day.
1.11 Application and Allocation of Payments.
(a) So long as no Event of Default has occurred and is continuing, (i)
payments consisting of proceeds of Accounts received in the ordinary course of
business shall be applied, first, to the Swing Line Loan and, second, to the
Revolving Loan; (ii) payments matching specific scheduled payments then due
shall be applied to those scheduled payments; (iii) voluntary prepayments shall
be applied in accordance with the provisions of Section 1.3(a); and (iv)
mandatory prepayments shall be applied as set forth in Sections 1.3(c) and
1.3(d). All payments and prepayments applied to a particular Loan shall be
applied ratably to the portion thereof held by each Lender as determined by its
Pro Rata Share. As to any other payment, and as to all payments made when an
Event of Default has occurred and is continuing or following the Commitment
Termination Date, Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of Borrower, and
Borrower hereby irrevocably agrees that Agent shall have the continuing
exclusive right to apply any and all such payments against the Obligations as
Agent may deem advisable notwithstanding any previous entry by Agent in the Loan
Account or any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments shall be applied to
amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Swing Line Loan; (3) to
principal payments on the Swing Line Loan; (4) to interest on the other Loans
ratably in proportion to the interest accrued as to each Loan; (5) to principal
payments on the other Loans and to provide cash collateral for Letter of Credit
Obligations in the manner described in Annex B, ratably to the aggregate,
combined principal balance of the other Loans and outstanding Letter of Credit
Obligations; and (6) to all other Obligations including expenses of Lenders to
the extent reimbursable under Section 11.3.
(b) Agent is authorized to, and at its sole election may, charge to the
Revolving Loan balance on behalf of Borrower and cause to be paid all Fees,
expenses, Charges, costs (including insurance premiums in accordance with
Section 5.4(a)) and interest and principal, other than principal of the
Revolving Loan, owing by Borrower under this Agreement or any of the other Loan
Documents if and to the extent Borrower fails to pay promptly any such amounts
as and when due, even if the amount of such charges would exceed Borrowing
Availability at such time. At Agent's option and to the extent permitted by law,
any charges so made shall constitute part of the Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account (the
"Loan Account") on its books to record: all Advances, all payments made by
Borrower, and all other debits and credits as provided in this Agreement with
respect to the Loans or any other Obligations. All entries in the Loan Account
shall be made in accordance
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with Agent's customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded on Agent's most recent printout or
other written statement, shall, absent manifest error, be presumptive evidence
of the amounts due and owing to Agent and Lenders by Borrower; provided, that
any failure to so record or any error in so recording shall not limit or
otherwise affect Borrower's duty to pay the Obligations. Agent shall render to
Borrower a monthly accounting of transactions with respect to the Loans setting
forth the balance of the Loan Account for the immediately preceding month.
Unless Borrower notifies Agent in writing of any objection to any such
accounting (specifically describing the basis for such objection), within thirty
(30) days after the date thereof, each and every such accounting shall be
presumptive evidence of all matters reflected therein. Only those items
expressly objected to in such notice shall be deemed to be disputed by Borrower.
Notwithstanding any provision herein contained to the contrary, any Lender may
elect (which election may be revoked) to dispense with the issuance of Notes to
that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, "Indemnified Liabilities"); provided, that no such Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or
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interest on any LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing
of, or shall request a termination of any borrowing, conversion into or
continuation of LIBOR Loans after Borrower has given notice requesting the same
in accordance herewith; or (iv) Borrower shall fail to make any prepayment of a
LIBOR Loan after Borrower has given a notice thereof in accordance herewith,
then Borrower shall indemnify and hold harmless each Lender from and against all
losses, costs and expenses resulting from or arising from any of the foregoing.
Such indemnification shall include any loss (including loss of margin) or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which such funds were obtained. For the
purpose of calculating amounts payable to a Lender under this subsection, each
Lender shall be deemed to have actually funded its relevant LIBOR Loan through
the purchase of a deposit bearing interest at the LIBOR Rate in an amount equal
to the amount of that LIBOR Loan and having a maturity comparable to the
relevant LIBOR Period; provided, that each Lender may fund each of its LIBOR
Loans in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this subsection. This covenant
shall survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.13(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within ten (10) Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.14 Access. Each Credit Party that is a party hereto shall, during normal
business hours, from time to time upon two (2) Business Days' prior notice as
frequently as Agent reasonably determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors, officers and employees of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party. If an Event of Default has occurred and is
continuing, each such Credit Party shall provide such access to Agent and to
each Lender at all times and without advance notice. Each Credit Party shall
make available to Agent and its counsel reasonably promptly originals or copies
of all books and records that Agent may reasonably request. Each Credit Party
shall deliver any document or instrument necessary for Agent, as it may from
time to time request, to obtain records from any service bureau or other Person
that maintains records for such Credit Party, and shall maintain duplicate
records or supporting documentation on media, including computer tapes and discs
owned by such Credit Party. Agent will give Lenders at least five (5) Business
Days' prior written notice of regularly scheduled audits. Representatives of
other Lenders may accompany Agent's representatives on regularly scheduled
audits at no charge to Borrower.
1.15 Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes shall be
made, in accordance with this Section 1.15, free and clear of and without
deduction for any and all present or future Taxes. If Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder or
under the Notes, (i) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
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applicable to additional sums payable under this Section 1.15) Agent or Lenders,
as applicable, receive an amount equal to the sum they would have received had
no such deductions been made, (ii) Borrower shall make such deductions, and
(iii) Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law. Within thirty (30) days after
the date of any payment of Taxes, Borrower shall furnish to Agent the original
or a certified copy of a receipt evidencing payment thereof.
(b) Each Credit Party that is a signatory hereto shall indemnify and,
within ten (10) days of demand therefor, pay Agent and each Lender for the full
amount of Taxes (including any Taxes imposed by any jurisdiction on amounts
payable under this Section 1.15) paid by Agent or such Lender, as appropriate,
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes were correctly or legally
asserted.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
Agreement or under the Notes are exempt from United States withholding tax under
an applicable statute or tax treaty shall provide to Borrower and Agent a
properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request or
directive regarding capital adequacy, reserve requirements or similar
requirements (whether or not having the force of law), in each case, adopted
after the Closing Date, from any central bank or other Governmental Authority
increases or would have the effect of increasing the amount of capital, reserves
or other funds required to be maintained by such Lender and thereby reducing the
rate of return on such Lender's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time upon demand by such Lender
(with a copy of such demand to Agent) pay to Agent, for the account of such
Lender, additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and showing the
basis of the computation thereof submitted by such Lender to Borrower and to
Agent shall be presumptive evidence of the matters set forth therein.
(b) If, due to either (i) the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) or (ii) the compliance
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), in each case adopted after
the Closing Date, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining any Loan, then Borrower shall
from time to time, upon demand by such Lender (with a copy of such demand to
Agent),
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pay to Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost. A certificate as to the amount
of such increased cost, submitted to Borrower and to Agent by such Lender, shall
be presumptive evidence of the matters set forth therein. Each Lender agrees
that, as promptly as practicable after it becomes aware of any circumstances
referred to above which would result in any such increased cost, the affected
Lender shall, to the extent not inconsistent with such Lender's internal
policies of general application, use reasonable commercial efforts to minimize
costs and expenses incurred by it and payable to it by Borrower pursuant to this
Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
reasonable opinion, materially adversely affecting it or its Loans or the income
obtained therefrom, on notice thereof and demand therefor by such Lender to
Borrower through Agent, (i) the obligation of such Lender to agree to make or to
make or to continue to fund or maintain LIBOR Loans shall terminate and (ii)
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing to
such Lender, together with interest accrued thereon, unless Borrower, within
five (5) Business Days after the delivery of such notice and demand, converts
all LIBOR Loans into Index Rate Loans.
(d) Within thirty (30) days after receipt by Borrower of written notice
and demand from any Lender (an "Affected Lender") for payment of additional
amounts or increased costs as provided in Sections 1.15(a), 1.16(a) or 1.16(b),
Borrower may, at its option, notify Agent and such Affected Lender of its
intention to replace the Affected Lender. So long as no Default or Event of
Default has occurred and is continuing, Borrower, with the consent of Agent, may
obtain, at Borrower's expense, a replacement Lender ("Replacement Lender") for
the Affected Lender, which Replacement Lender must be reasonably satisfactory to
Agent. If Borrower obtains a Replacement Lender within ninety (90) days
following notice of its intention to do so, the Affected Lender must sell and
assign its Loans and Commitments to such Replacement Lender for an amount equal
to the principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of such sale and
such assignment shall not require the payment of an assignment fee to Agent;
provided, that Borrower shall have reimbursed such Affected Lender for the
additional amounts or increased costs that it is entitled to receive under this
Agreement through the date of such sale and assignment. Notwithstanding the
foregoing, Borrower shall not have the right to obtain a Replacement Lender if
the Affected Lender rescinds its demand for increased costs or additional
amounts within 15 days following its receipt of Borrower's notice of intention
to replace such Affected Lender. Furthermore, if Borrower gives a notice of
intention to replace and does not so replace such Affected Lender within ninety
(90) days thereafter, Borrower's rights under this Section 1.16(d) shall
terminate with respect to such Affected Lender and Borrower shall promptly pay
all increased costs or additional amounts demanded by such Affected Lender
pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).
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1.17 Single Loan. All Loans to Borrower and all of the other Obligations
of Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of Borrower secured, until the Termination
Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to make
any Loan or incur any Letter of Credit Obligations on the Closing Date, or to
take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner reasonably
satisfactory to Agent, or waived in writing by Agent and Requisite Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, each other
Credit Party, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance reasonably satisfactory to Agent.
(b) Repayment of Prior Term Loan. Borrower shall have repaid in full the
outstanding principal balance and all accrued but unpaid interest and fees with
respect to Term Loans under and as defined the Original Credit Agreement.
(c) Approvals. Agent shall have received (i) satisfactory evidence that
the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions or (ii) an officer's certificate in
form and substance reasonably satisfactory to Agent affirming that no such
consents or approvals are required.
(d) [Intentionally Omitted]
(e) Payment of Fees. Borrower shall have paid the Fees required to be paid
on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Closing Date.
(f) [Intentionally Omitted]
(g) [Intentionally Omitted]
(h) Consummation of Related Transactions. Agent shall have received fully
executed copies of each of the Related Transactions Documents, each of which
shall be in full force and effect in form and substance reasonably satisfactory
to Agent. The Related Transactions shall have been consummated in accordance
with the terms of the Related Transactions Documents.
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2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein (including, without limitation, Section 1.1(a)(iii)), no Lender
shall be obligated to fund any Advance, convert or continue any Loan as a LIBOR
Loan or incur any Letter of Credit Obligation, if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained herein or
in any other Loan Document to which a Credit Party is a party is untrue or
incorrect as of such date as determined by Agent or Requisite Lenders, except to
the extent that such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or expressly
contemplated by this Agreement, and Agent or Requisite Lenders have determined
not to make such Advance, convert or continue any Loan as LIBOR Loan or incur
such Letter of Credit Obligation as a result of the fact that such warranty or
representation is untrue or incorrect;
(b) (i) any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligation), and Agent or Requisite Lenders shall have determined not
to make any Advance, convert or continue any Loan as a LIBOR Loan or incur any
Letter of Credit Obligation as a result of that Default or Event of Default; or
(c) after giving effect to any Advance (or the incurrence of any Letter of
Credit Obligations), the outstanding principal amount of the Revolving Loan
would exceed the lesser of the Borrowing Base and the Maximum Amount, in each
case, less the then outstanding principal amount of the Swing Line Loan.
The request and acceptance by Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrower that the conditions
in this Section 2.2 have been satisfied and (ii) a reaffirmation by Borrower of
the granting and continuance of Agent's Liens, on behalf of itself and Lenders,
pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses or liabilities which could
reasonably be expected to have a Material Adverse Effect; (c) has the requisite
power and authority and the legal right to own, pledge,
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mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease and to conduct its business as now conducted or proposed
to be conducted; (d) subject to specific representations regarding Environmental
Laws, has all licenses, permits, consents or approvals from or by, and has made
all material filings with, and has given all notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (e) is in compliance with its charter and bylaws or
partnership or operating agreement, as applicable; and (f) subject to specific
representations set forth herein regarding ERISA, Environmental Laws, tax and
other laws, is in compliance with all applicable provisions of law, except where
the failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing Date,
each Credit Party's name as it appears in official filings in its state of
incorporation or organization, state of incorporation or organization,
organization type, organization number, if any, issued by its state
incorporation or organization, and the current location of each Credit Party's
chief executive office and the warehouses and premises at which any Collateral
is located as of the Closing Date (or could be located at a future date) are set
forth in Disclosure Schedule (3.2). In addition, Disclosure Schedule (3.2) sets
forth the locations of warehouses and premises at which any Collateral has been
located at any time within four (4) months preceding the Closing Date. In
addition, Disclosure Schedule (3.2) lists the federal employer identification
number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(c), all of which will have been duly obtained,
made or complied with prior to the Closing Date. Each of the Loan Documents
shall be duly executed and delivered by each Credit Party that is a party
thereto and each such Loan Document shall constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms.
3.4 Financial Statements and Projections. Except for the Projections, all
Financial Statements concerning Holdings and its Subsidiaries that are referred
to below have been prepared in accordance with GAAP consistently applied
throughout the periods covered (except as disclosed therein and except, with
respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material
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respects the financial position of the Persons covered thereby as at the dates
thereof and the results of their operations and cash flows for the periods then
ended.
(a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:
(i) [Intentionally Omitted]
(ii) The audited consolidated balance sheet at October 2, 2004 and
the related statements of income and cash flows of Holdings and its Subsidiaries
for the Fiscal Year then ended certified by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
(iii) The audited consolidated balance sheet at September 27, 2003
and the related statements of income and cash flows of Holdings and its
Subsidiaries for the Fiscal Year then ended, certified by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP.
(iv) The audited consolidated balance sheet at October 1 2005 and
the related statement(s) of income and cash flows of Holdings and its
Subsidiaries for the Fiscal Year then ended, certified by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP.
(b) [Intentionally Omitted]
(c) [Intentionally Omitted]
3.5 Material Adverse Effect. Between October 1, 2005 and the Closing Date,
(a) no Credit Party has incurred any obligations, contingent or noncontingent
liabilities, liabilities for Charges, long-term leases or unusual forward or
long-term commitments that are not reflected in the Projections and that, alone
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, (b) no contract, lease or other agreement or instrument has been entered
into by any Credit Party or has become binding upon any Credit Party's assets
and no law or regulation applicable to any Credit Party has been adopted that
has had or could reasonably be expected to have a Material Adverse Effect, and
(c) no Credit Party is in default and to the best of Borrower's knowledge no
third party is in default under any material contract, lease or other agreement
or instrument, that alone or in the aggregate could reasonably be expected to
have a Material Adverse Effect. Since October 1, 2005 no event has occurred,
that alone or together with other events, could reasonably be expected to have a
Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real estate
("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of the real
property owned, leased, subleased, or used by any Credit Party. Each Credit
Party owns good and marketable fee simple title to all of its owned Real Estate,
and valid and marketable leasehold interests in all of its leased Real Estate,
all as described on Disclosure Schedule (3.6), and copies of all such leases or
a summary of terms thereof reasonably satisfactory to Agent have been delivered
to Agent. Disclosure Schedule (3.6) further describes any Real Estate with
respect to which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party
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are subject to any Liens other than Permitted Encumbrances, and there are no
facts, circumstances or conditions known to any Credit Party that may result in
any Liens (including Liens arising under Environmental Laws) other than
Permitted Encumbrances. Each Credit Party has received all deeds, assignments,
waivers, consents, nondisturbance and attornment or similar agreements, bills of
sale and other documents, and has duly effected all recordings, filings and
other actions necessary to establish, protect and perfect such Credit Party's
right, title and interest in and to all such Real Estate and other properties
and assets. Disclosure Schedule (3.6) also describes any purchase options,
rights of first refusal or other similar contractual rights pertaining to any
Real Estate. As of the Closing Date, no portion of any Credit Party's Real
Estate has suffered any material damage by fire or other casualty loss that has
not heretofore been repaired and restored in all material respects to its
original condition or otherwise remedied. As of the Closing Date, all material
permits required to have been issued or appropriate to enable the Real Estate to
be lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. Except as set forth on Disclosure Schedule (3.7), as of
the Closing Date: (a) no strikes or other material labor disputes against any
Credit Party are pending or, to any Credit Party's knowledge, threatened; (b)
hours worked by and payment made to employees of each Credit Party comply with
the Fair Labor Standards Act and each other federal, state, local or foreign law
applicable to such matters; (c) all payments due from any Credit Party for
employee health and welfare insurance have been paid or accrued as a liability
on the books of such Credit Party; (d) no Credit Party is a party to or bound by
any collective bargaining agreement, management agreement, consulting agreement,
employment agreement, bonus, restricted stock, stock option, or stock
appreciation plan or agreement or any similar plan, agreement or arrangement
(and true and complete copies of any agreements described on Disclosure Schedule
(3.7) have been delivered to Agent); (e) there is no organizing activity
involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) there are no material complaints or charges against any
Credit Party pending or, to the knowledge of any Credit Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by any Credit Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. Except for Holdings, all of the issued and outstanding Stock of each
Credit Party is owned by each of the Stockholders and in the amounts set forth
in Disclosure Schedule (3.8). Except as set forth in Disclosure Schedule (3.8),
there are no outstanding rights to purchase, options, warrants or similar rights
or agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for
the Obligations) is described in Section 6.3 (including Disclosure Schedule
(6.3)).
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3.9 Government Regulation. No Credit Party is an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lenders to Borrower, the
incurrence of the Letter of Credit Obligations on behalf of Borrower, the
application of the proceeds thereof and repayment thereof and the consummation
of the Related Transactions will not violate any provision of any such statute
or any rule, regulation or order issued by the Securities and Exchange
Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" as such
terms are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to herein as
"Margin Stock"). No Credit Party owns any Margin Stock, and none of the proceeds
of the Loans or other extensions of credit under this Agreement will be used,
directly or indirectly, for the purpose of purchasing or carrying any Margin
Stock, for the purpose of reducing or retiring any Indebtedness that was
originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All Federal and other material tax returns, reports and
statements, including information returns, required by any Governmental
Authority to be filed by any Credit Party have been filed with the appropriate
Governmental Authority, and all Charges have been paid prior to the date on
which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, excluding Charges or other amounts being contested in
accordance with Section 5.2(b) and unless the failure to so file or pay would
not reasonably be expected to result in fines, penalties or interest in excess
of $100,000 in the aggregate. Proper and accurate amounts have been withheld by
each Credit Party from its respective employees for all periods in full and
complete compliance with all applicable federal, state, local and foreign laws
and such withholdings have been timely paid to the respective Governmental
Authorities. Disclosure Schedule (3.11) sets forth as of the Closing Date those
taxable years for which any Credit Party's tax returns are currently being
audited by the IRS or any other applicable Governmental Authority and any
assessments or threatened assessments in connection with such audit, or
otherwise currently outstanding. Except as described in Disclosure Schedule
(3.11), as of the Closing Date, no Credit Party has executed or filed with the
IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. None of the Credit Parties and their respective
predecessors are liable for any Charges: (a) under any agreement (including any
tax sharing agreements) or (b) to each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which would reasonably be expected to have a
Material Adverse Effect.
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3.12 ERISA.
(a) Disclosure Schedule (3.12) lists as of the Closing Date, all Plans and
separately identifies all Pension Plans, including Title IV Plans, Multiemployer
Plans, ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of
all such listed Plans, together with a copy of the latest form. IRS/DOL
5500-series for each such Plan have been delivered to Agent. Except with respect
to Multiemployer Plans, each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the IRC,
and, nothing has occurred that would cause the loss of such qualification or
tax-exempt status. Each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the timely filing of all
reports required under the IRC or ERISA, including the statement required by 29
CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has failed
to make any material contribution or pay any material amount due as required by
either Section 412 of the IRC or Section 302 of ERISA or the terms of any such
Plan. Neither any Credit Party nor ERISA Affiliate has engaged in a "prohibited
transaction," as defined in Section 406 of ERISA and Section 4975 of the IRC, in
connection with any Plan, that would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of
the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
Plan has any material Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened material claims (other than claims
for benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any material liability as a result of a complete or partial withdrawal
from a Multiemployer Plan; (v) within the last five years no Title IV Plan of
any Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041 of ERISA, nor has
any Title IV Plan of any Credit Party or ERISA Affiliate (determined at any time
within the past five years) with material Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; (vi) except in the
case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes
up, in the aggregate, no more than 10% of fair market value of the assets of any
Plan measured on the basis of fair market value as of the latest valuation date
of any Plan; and (vii) no liability under any Title IV Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated AAA
by the Standard & Poor's Corporation or an equivalent rating by another
nationally recognized rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party and
that, if so determined, could
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reasonably be expected to have a Material Adverse Effect. Except as set forth on
Disclosure Schedule (3.13), as of the Closing Date there is no Litigation
pending or threatened that seeks damages in excess of $250,000 or injunctive
relief against, or alleges criminal misconduct of, any Credit Party.
3.14 Brokers. Except as set forth on Disclosure Schedule (3.14), no broker
or finder acting on behalf of any Credit Party or Affiliate thereof brought
about the obtaining, making or closing of the Loans or the Related Transactions,
and no Credit Party or Affiliate thereof has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party owns
or has rights to use all Intellectual Property necessary to continue to conduct
its business as now conducted by it or presently proposed to be conducted by it,
and each Patent, Trademark, Copyright and License is listed, together with
application or registration numbers, as applicable, in Disclosure Schedule
(3.15). Each Credit Party conducts its business and affairs without infringement
of or interference with any Intellectual Property of any other Person in any
material respect. Except as set forth in Disclosure Schedule (3.15), no Credit
Party is aware of any material infringement claim by any other Person with
respect to any Intellectual Property.
3.16 Full Disclosure. No information contained in this Agreement, any of
the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other written reports from time to time prepared by any Credit Party
and delivered hereunder or any written statement prepared by any Credit Party
and furnished by or on behalf of any Credit Party to Agent or any Lender
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading in
light of the circumstances under which they were made. Projections from time to
time delivered hereunder are or will be based upon the estimates and assumptions
stated therein, all of which Borrower believed at the time of delivery to be
reasonable and fair in light of current conditions and current facts known to
Borrower as of such delivery date, and reflect Borrower's good faith and
reasonable estimates of the future financial performance of Borrower and of the
other information projected therein for the period set forth therein. Such
Projections are not a guaranty of future performance and actual results may
differ from those set forth in such Projections. The Liens granted to Agent, on
behalf of itself and Lenders, pursuant to the Collateral Documents will at all
times be fully perfected first priority Liens in and to the Collateral described
therein, subject, as to priority, only to Permitted Encumbrances.
3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of the Closing
Date: (i) the Real Estate is free of contamination from any Hazardous Material
except for such contamination that would not adversely impact the value or
marketability of such Real Estate and that would not result in Environmental
Liabilities that could reasonably be expected to exceed $200,000; (ii) no Credit
Party has caused or suffered to occur any material Release of Hazardous
Materials on, at, in, under, above, to, from or about any of its Real Estate;
(iii) the Credit Parties are and have been in compliance with all Environmental
Laws, except for such noncompliance
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that would not result in Environmental Liabilities which could reasonably be
expected to exceed $200,000; (iv) the Credit Parties have obtained, and are in
compliance with, all Environmental Permits required by Environmental Laws for
the operations of their respective businesses as presently conducted or as
proposed to be conducted, except where the failure to so obtain or comply with
such Environmental Permits would not result in Environmental Liabilities that
could reasonably be expected to exceed $200,000, and all such Environmental
Permits are valid, uncontested and in good standing; (v) no Credit Party is
involved in operations or knows of any facts, circumstances or conditions,
including any Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of such Credit Party which could reasonably be
expected to exceed $200,000; (vi) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or Hazardous Material
that seeks damages, penalties, fines, costs or expenses in excess of $200,000 or
injunctive relief against, or that alleges criminal misconduct by, any Credit
Party; (vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties, there are
no facts, circumstances or conditions that may result in any Credit Party being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes; and (viii) the Credit Parties have provided to Agent copies of all
existing environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i) is not
now, and has not ever been, in control of any of the Real Estate or any Credit
Party's affairs, and (ii) does not have the capacity through the provisions of
the Loan Documents or otherwise to influence any Credit Party's conduct with
respect to the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies of
any nature maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19) lists
all banks and other financial institutions at which any Credit Party maintains
deposit or other accounts as of the Closing Date, including any Disbursement
Accounts, and such Schedule correctly identifies the name, address and telephone
number of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any
similar state or local law.
3.21 Customer and Trade Relations. As of the Closing Date, there exists no
actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in: the business
relationship of any Credit Party with any customer or group of customers whose
purchases during the preceding 12 months
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caused them to be ranked among the ten largest customers of such Credit Party;
or the business relationship of any Credit Party with any supplier essential to
its operations.
3.22 Bonding; Licenses. Except as set forth on Disclosure Schedule (3.22),
as of the Closing Date, no Credit Party is a party to or bound by any surety
bond agreement or bonding requirement with respect to products or services sold
by it or any trademark or patent license agreement with respect to products sold
by it.
3.23 Solvency. Both before and after giving effect to (a) the Loans and
Letter of Credit Obligations to be made or incurred on the Closing Date or such
other date as Loans and Letter of Credit Obligations requested hereunder are
made or incurred, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrower, (c) the Refinancing and the consummation of the
other Related Transactions and (d) the payment and accrual of all transaction
costs in connection with the foregoing, each Credit Party is and will be
Solvent.
3.24 Status of Holdings. Prior to the Original Closing Date, Holdings will
not have engaged in any business or incurred any Indebtedness or any other
liabilities (except in connection with its corporate formation, the Prior Lender
Obligations under and as defined in the Original Credit Agreement, the Related
Transactions Documents and this Agreement).
3.25 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)
is engaged in any trade or business.
3.26 Motor Vehicles. [Intentionally Omitted]
3.27 Vacant Land Lease. No Collateral is stored or located on the property
that is subject to the Vacant Land Lease.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to Agent
or to Agent and Lenders, as required, the Financial Statements, notices,
Projections and other information at the times, to the Persons and in the manner
set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to Agent
or to Agent and Lenders, as required, the various Collateral Reports (including
Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the times, to the
Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes Agent and each Lender, so long as an Event of Default has
occurred and is continuing, to communicate directly with its independent
certified public accountants,
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including ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, and authorizes and shall instruct those
accountants and advisors to communicate to Agent and each Lender information
relating to any Credit Party with respect to the business, results of operations
and financial condition of any Credit Party; provided, that Agent shall give a
representative of the Borrower reasonable opportunity to participate in such
communications.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that from and after the date hereof and until the
Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its material rights and franchises;
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; at all times maintain, preserve and protect all of its
assets and properties used or useful in the conduct of its business, and keep
the same in good repair, working order and condition in all material respects
(taking into consideration ordinary wear and tear) (except for Real Estate Held
for Sale, which will be maintained adequately in order to preserve the value and
marketability of such real estate) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate and trade names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and discharge
or cause to be paid and discharged promptly all Charges payable by it, including
(i) Charges imposed upon it, its income and profits, or any of its property
(real, personal or mixed) and all Charges with respect to tax, social security
and unemployment withholding with respect to its employees, (ii) lawful claims
for labor, materials, supplies and services or otherwise, and (iii) all storage
or rental charges payable to warehousemen and bailees, in each case, before any
thereof shall become past due, except in the case of clauses (ii) and (iii)
where the failure to pay or discharge such Charges would not result in aggregate
liabilities in excess of $200,000.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing payment of the Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, and (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met.
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5.3 Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense, maintain the
policies of insurance described on Disclosure Schedule (3.18) and Keyman Life
Insurance as in effect on the date hereof or otherwise in form and amounts and
with insurers reasonably acceptable to Agent. Such policies of insurance (or the
loss payable and additional insured endorsements delivered to Agent) shall
contain provisions pursuant to which the insurer agrees to provide thirty (30)
days prior written notice to Agent in the event of any non-renewal, cancellation
or amendment of any such insurance policy. If any Credit Party at any time or
times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay all premiums relating thereto, Agent may at
any time or times thereafter obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto that Agent
deems advisable. Agent shall have no obligation to obtain insurance for any
Credit Party or pay any premiums therefor. By doing so, Agent shall not be
deemed to have waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including reasonable attorneys' fees, court costs and other
charges related thereto, shall be payable on demand by Borrower to Agent and
shall be additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit Party)
to require additional forms and limits of insurance to, in Agent's reasonable
opinion, adequately protect both Agent's and Lenders' interests in all or any
portion of the Collateral and to ensure that each Credit Party is protected by
insurance in amounts and with coverage customary for its industry. If reasonably
requested by Agent, each Credit Party shall deliver to Agent from time to time a
report of a reputable insurance broker reasonably satisfactory to Agent, with
respect to its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each
Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Default or
Event of Default has occurred and is continuing or the anticipated insurance
proceeds exceed $2,000,000, as each Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of each Credit Party
on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $500,000 or more, whether or not
covered by insurance. After
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deducting from such proceeds (i) the expenses incurred by Agent in the
collection or handling thereof, and (ii) amounts required to be paid to
creditors (other than Lenders) having Permitted Encumbrances, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance
with Section 1.3(d), provided, that in the case of insurance proceeds pertaining
to any Credit Party other than Borrower, such insurance proceeds shall be
applied to the Loans owing by Borrower, or permit or require each Credit Party
to use such money, or any part thereof, to replace, repair, restore or rebuild
the Collateral in a diligent and expeditious manner with materials and
workmanship of substantially the same quality as existed before the loss, damage
or destruction. Notwithstanding the foregoing, if the casualty giving rise to
such insurance proceeds could not reasonably be expected to have a Material
Adverse Effect and such insurance proceeds do not exceed $500,000 in the
aggregate, Agent shall permit the applicable Credit Party to replace, restore,
repair or rebuild the property; provided, that if such Credit Party has not
completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 90 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d); provided, further that in the case of insurance proceeds pertaining to
any Credit Party other than Borrower, such insurance proceeds shall be applied
to the Loans owing by Borrower. All insurance proceeds that are to be made
available to Borrower to replace, repair, restore or rebuild the Collateral
shall be applied by Agent to reduce the outstanding principal balance of the
Revolving Loan (which application shall not result in a permanent reduction of
the Revolving Loan Commitment) and upon such application, Agent shall establish
a Reserve against the Borrowing Base in an amount equal to the amount of such
proceeds so applied. All insurance proceeds made available to any Credit Party
that is not a Borrower to replace, repair, restore or rebuild Collateral shall
be deposited in a cash collateral account. Thereafter, such funds shall be made
available to such Credit Party to provide funds to replace, repair, restore or
rebuild the Collateral as follows: (i) Borrower shall request a Revolving Credit
Advance or release from the cash collateral account be made to such Credit Party
in the amount requested to be released; (ii) so long as the conditions set forth
in Section 2.2 have been met, Revolving Lenders shall make such Revolving Credit
Advance or Agent shall release funds from the cash collateral account; and (iii)
in the case of insurance proceeds applied against the Revolving Loan, the
Reserve established with respect to such insurance proceeds shall be reduced by
the amount of such Revolving Credit Advance. To the extent not used to replace,
repair, restore or rebuild the Collateral, such insurance proceeds shall be
applied in accordance with Section 1.3(d); provided, that in the case of
insurance proceeds pertaining to any Credit Party other than Borrower, such
insurance proceeds shall be applied to the Loans owing by Borrower.
5.5 Compliance with Laws. Each Credit Party shall comply with all federal,
state, local and foreign laws and regulations applicable to it, including ERISA,
labor laws, and Environmental Laws and Environmental Permits, except to the
extent that the failure to comply, individually or in the aggregate, could not
reasonably be expected to create liabilities in excess of $500,000.
5.6 Supplemental Disclosure. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of an Event of Default) or at
Credit Parties' election, the Credit Parties shall supplement each Disclosure
Schedule hereto, or any representation herein or in any other Loan Document,
with respect to any matter hereafter arising that, if existing or occurring at
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the date of this Agreement, would have been required to be set forth or
described in such Disclosure Schedule or as an exception to such representation
or that is necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite Lenders
in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person in any material respect and shall comply in all material
respects with the terms of its Licenses.
5.8 Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions that are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate in all material respects; (c) notify Agent promptly after such Credit
Party becomes aware of any violation of Environmental Laws or Environmental
Permits or any Release on, at, in, under, above, to, from or about any Real
Estate that is reasonably likely to result in Environmental Liabilities in
excess of $250,000; and (d) promptly forward to Agent a copy of any order,
notice, request for information or any communication or report received by such
Credit Party in connection with any such violation or Release or any other
matter relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in Environmental Liabilities in excess of
$250,000 in each case whether or not the Environmental Protection Agency or any
Governmental Authority has taken or threatened any action in connection with any
such violation, Release or other matter. If Agent at any time has a reasonable
basis to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability arising
thereunder, or a Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate, that, in each case, could reasonably be
expected to create liabilities in excess of $250,000, then each Credit Party
shall, upon Agent's written request (i) cause the performance of such
environmental audits including subsurface sampling of
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soil and groundwater, and preparation of such environmental reports, at
Borrower's expense, as Agent may from time to time reasonably request, which
shall be conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance reasonably acceptable to
Agent, and (ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Agent deems appropriate, including subsurface sampling of soil and groundwater.
Borrower shall reimburse Agent for the reasonable costs of such audits and tests
and the same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real
Estate Purchases. Each Credit Party shall use commercially reasonable efforts to
obtain a landlord's agreement, mortgagee agreement or bailee letter, as
applicable, from the lessor of each leased property (other than property leased
to Borrower by ▇▇▇▇▇ Family I, L.L.C., a Virginia limited liability company
pursuant to that Lease dated June 24, 1996 (as in effect on the date hereof, the
"Vacant Land Lease" as long as (i) such property remains subject to the Vacant
Land Lease and (ii) no Collateral is stored or located on such property),
mortgagee of owned property or bailee with respect to any warehouse, processor
or converter facility or other location where Collateral is stored or located,
which agreement or letter shall contain a waiver or subordination of all Liens
or claims that the landlord, mortgagee or bailee may assert against the
Collateral at that location, and shall otherwise be reasonably satisfactory in
form and substance to Agent. With respect to such locations or warehouse space
leased or owned as of the Original Closing Date and thereafter, if Agent has not
received a landlord or mortgagee agreement or bailee letter as of the Original
Closing Date (or, if later, as of the date such location is acquired or leased),
Borrower's Eligible Inventory at that location shall, in Agent's discretion, be
excluded from the Borrowing Base or be subject to such Reserves as may be
established by Agent in its reasonable credit judgment. After the Original
Closing Date, no real property or warehouse space shall be leased by any Credit
Party and no Inventory shall be shipped to a processor or converter under
arrangements established after the Closing Date without (i) a 45 days' prior
written notice to Agent describing and identifying such real properties,
warehouses, processors and converters, as the case may be, if the book value of
all Inventory at all such other real estate properties and warehouses,
including, without limitation, the book value of all Inventory shipped or to be
shipped to all such processors and converters, is less than $10,000,000 in the
aggregate and (ii) the prior written consent of Agent (which consent, in Agent's
discretion, may be conditioned upon the exclusion from the Borrowing Base of
Eligible Inventory at that location or the establishment of Reserves acceptable
to Agent) and unless and until a satisfactory landlord agreement or bailee
letter, as appropriate, shall first have been obtained with respect to such
location, if the book value of all Inventory at all such other real estate
properties and warehouses, including, without limitation, the book value all
Inventory shipped or to be shipped to all such processors and converters, is
$10,000,000 or more in the aggregate. Each Credit Party shall timely and fully
pay and perform its obligations under all leases and other agreements with
respect to each leased location or public warehouse where any Collateral is or
may be located. To the extent permitted hereunder, if any Credit Party proposes
to acquire a fee ownership interest in Real Estate after the Closing Date, it
shall first provide to Agent a mortgage or deed of trust granting Agent a first
priority Lien on such Real Estate, together with environmental audits, mortgage
title insurance commitment, real property survey, local counsel opinion(s), and,
if required by Agent, supplemental casualty insurance and flood insurance, and
such other documents, instruments or agreements reasonably requested by Agent,
in each case, in form and substance reasonably satisfactory to Agent.
5.10 [Intentionally Omitted].
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5.11 Remediation. Each Credit Party shall, upon Agent's request and no
later than date(s) specified in such request, remediate in an appropriate manner
Hazardous Materials located at the Borrower's property located in Gallatin,
Tennessee.
5.12 Further Assurances.
(a) Each Credit Party executing this Agreement agrees that it shall and
shall cause each other Credit Party to, at such Credit Party's expense and upon
the reasonable request of Agent, duly execute and deliver, or cause to be duly
executed and delivered, to Agent such further instruments and do and cause to be
done such further acts as may be necessary or proper in the reasonable opinion
of Agent to carry out more effectively the provisions and purposes of this
Agreement and each Loan Document
(b) Each Credit Party shall (i) cause each Person, upon its becoming a
Domestic Subsidiary of such Credit Party (provided that this shall not be
construed to constitute consent by any of the Lenders to any transaction not
expressly permitted by the terms of this Agreement), promptly to guaranty the
Obligations and to grant to Agent, for the benefit of Agent and Lenders, a
security interest in the real, personal and mixed property of such Domestic
Subsidiary to secure the Obligations and (ii) pledge, or cause to be pledged, to
Agent, for the benefit of Agent and Lenders, all of the Stock of such Domestic
Subsidiary to secure the Obligations. Each Credit Party shall pledge, or cause
to be pledged, to Agent, for the benefit of Agent and Lenders, 66% of the
outstanding voting Stock and 100% of the outstanding nonvoting Stock of any
person upon its becoming a first tier Foreign Subsidiary of any Credit Party.
The documentation for such guaranty, security and pledge shall be substantially
similar to the Loan Documents executed concurrently herewith with such
modifications as are reasonably requested by Agent.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees as
to all Credit Parties that from and after the date hereof until the Termination
Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person.
Notwithstanding the foregoing, Borrower (or Holdings, so long as
contemporaneously therewith, all assets so acquired are transferred to
Borrower), may acquire all or substantially all of the assets or Stock of any
Person (the "Target") (in each case, a "Permitted Acquisition") subject to the
satisfaction of each of the following conditions:
(i) Agent shall receive at least twenty (20) Business Days' prior
written notice of such proposed Permitted Acquisition, which notice shall
include a reasonably detailed description of such proposed Permitted
Acquisition;
(ii) such Permitted Acquisition shall only comprise a business, or
those assets of a business, of the type engaged in by Borrower as of the Closing
Date, and which business would not subject Agent or any Lender to regulatory or
third party approvals in connection with the exercise of its rights and remedies
under this Agreement or any other Loan
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Documents other than approvals applicable to the exercise of such rights and
remedies with respect to Borrower prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual and shall have
been approved by the Target's board of directors;
(iv) the business and assets acquired in such Permitted Acquisition
shall be free and clear of all Liens (other than Permitted Encumbrances);
(v) at or prior to the closing of any Permitted Acquisition, Agent
will be granted a first priority perfected Lien (subject to Permitted
Encumbrances) in all assets acquired pursuant thereto or in the assets and Stock
of the Target, any Person upon becoming a Subsidiary of a Credit party pursuant
to any Permitted Acquisition shall guarantee Obligations and join this Agreement
as a Credit Party, and Holdings and Borrower and the Target shall have executed
such documents and taken such actions as may be required by Agent in connection
therewith;
(vi) Concurrently with delivery of the notice referred to in clause
(i) above, Borrower shall have delivered to Agent, in form and substance
reasonably satisfactory to Agent:
(A) Audited financial statements of the Target (or, if not
available, other financial information reasonably satisfactory to Agent);
(B) a pro forma consolidated balance sheet, income statement
and cash flow statement of Holdings, its Subsidiaries and the business and
operations being acquired and such Acquisition Pro Forma shall reflect
that (x) Borrowing Availability is at least $10,000,000 immediately prior
to and after giving effect to such Permitted Acquisition and all Loans
funded in connection therewith, if any, and (y) on a pro forma basis,
Holdings and its Subsidiaries would have on a consolidated basis a Fixed
Charge Coverage Ratio of (I) not less than 1.10 : 1.00 if such Permitted
Acquisition is to be consummated prior to the Fixed Asset Availability
Date and (II) not less than 1.15 : 1.00 if such Permitted Acquisition is
to be consummated on or after the Fixed Asset Availability Date, for the
four quarter period reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the consummation of such
Permitted Acquisition (calculated as if such Permitted Acquisition and all
Loans funded in connection therewith had been made on the first day of
such period);
(C) Projections covering the one (1) year period commencing on
the date of such Permitted Acquisition and otherwise prepared in
accordance with the Projections (the "Acquisition Projections") and based
upon historical financial data of a recent date reasonably satisfactory to
Agent, taking into account such Permitted Acquisition; and
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(D) a certificate of the chief financial officer of Holdings
and Borrower to the effect that: (w) Borrower (after taking into
consideration all rights of contribution and indemnity Borrower has
against Holdings and each other Subsidiary of Holdings) will be Solvent
upon the consummation of the Permitted Acquisition; (x) the Acquisition
Pro Forma fairly presents the financial condition of Holdings and Borrower
(on a consolidated basis) as of the date thereof after giving effect to
the Permitted Acquisition; and (y) Holdings and Borrower has completed
their due diligence investigation with respect to the Target and such
Permitted Acquisition, which investigation was conducted in a manner
similar to that which would have been conducted by a prudent purchaser of
a comparable business, and the results of which investigation which were
reasonably requested by Agent were delivered to Agent and Lenders; and
(vii) on or prior to the date of such Permitted Acquisition, Agent
shall have received copies of the acquisition agreement and related agreements
and instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by Agent, including those specified in the last
sentence of Section 5.9.
Notwithstanding the foregoing, the Accounts and Inventory of the Target shall
not be included in Eligible Accounts and Eligible Inventory until a field audit
and appraisals and environmental due diligence of Target and/or its assets have
been satisfactorily completed (and with respect to such Accounts and Inventory,
Agent shall have the right to adjust the criteria of Eligible Accounts and
Eligible Inventory, adjust advance rates and establish Reserves in its
reasonable credit judgment,).
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, no Credit Party shall make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that: (a) Borrower may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to Borrower pursuant to negotiated agreements with respect to settlement
of such Account Debtor's Accounts in the ordinary course of business, consistent
with past practices; (b) each Credit Party may maintain its existing investments
in its Subsidiaries as of the Closing Date; (c) so long as (x) no Default or
Event of Default has occurred and is continuing, (y) the outstanding Revolving
Loan balance does not exceed $5,000,000 and (z) Borrowing Availability is at
least $25,000,000, Borrower may make investments, subject to Control Letters in
favor of Agent for the benefit of Lenders or otherwise subject to a perfected
security interest in favor of Agent for the benefit of Lenders, in (i)
marketable direct obligations issued or unconditionally guaranteed by the United
States of America or any agency thereof maturing within one year from the date
of acquisition thereof, (ii) commercial paper maturing no more than 270 days
from the date of creation thereof and currently having the highest rating
obtainable from at least two of the following: Standard & Poor's Ratings Group,
▇▇▇▇▇'▇ Investors Service, Inc. and Fitch Investors Services, (iii) certificates
of deposit maturing no more than one year from the date of creation thereof
issued by commercial banks incorporated under the laws of the United States of
America,
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each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of "A" or better by a
nationally recognized rating agency (an "A Rated Bank"), (iv) time deposits
maturing no more than thirty (30) days from the date of creation thereof with A
Rated Banks and (v) mutual funds that invest solely in one or more of the
investments described in clauses (i) through (iv) above, (d) so long as (x) no
Default or Event of Default has occurred and is continuing, (y) the outstanding
Revolving Loan balance does not exceed $5,000,000 and (z) Borrowing Availability
is at least $25,000,000, Borrower may make investments in taxable or tax-free
money market mutual funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, and (ii) are either rated A by Standard & Poor's Ratings Group and A by
▇▇▇▇▇'▇ Investors Service, Inc. or have portfolio assets of at least
$2,000,000,000 and (e) other investments not exceeding $500,000 in the aggregate
at any time outstanding.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (without duplication) (i) Indebtedness secured by purchase
money security interests and Capital Leases permitted in Section 6.7(c), (ii)
the Loans and the other Obligations, (iii) unfunded pension fund and other
employee benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (iv) existing Indebtedness
described in Disclosure Schedule (6.3) and refinancings thereof or amendments or
modifications thereof that do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable to any
Credit Party, Agent or any Lender, as determined by Agent, than the terms of the
Indebtedness being refinanced, amended or modified and (v) Indebtedness
consisting of intercompany loans and advances made by Borrower to any other
Credit Party that is a Guarantor (other than a Guarantor that is an Inactive
Subsidiary) or by any such Guarantor (other than a Guarantor that is an Inactive
Subsidiary) to BORROWER; provided, that: (A) such intercompany Indebtedness is
evidenced by a subordinated demand note (collectively, the "Intercompany Notes")
executed and delivered by Borrower to each such Guarantor, and by each such
Guarantor to Borrower (including, without limitation, the Intercompany Note
executed and delivered on the Original Closing Date), which Intercompany Notes
shall be pledged (and in the case of the Intercompany Note dated as of the
Original Closing Date, have been pledged) and delivered to Agent pursuant to the
applicable Pledge Agreement or Security Agreement as additional collateral
security for the Obligations; (B) Borrower shall record all intercompany
transactions on its books and records in a manner reasonably satisfactory to
Agent; (C) the obligations of Borrower under any such Intercompany Notes shall
be subordinated to the Obligations of Borrower hereunder in a manner reasonably
satisfactory to Agent; (D) at the time any such intercompany loan or advance is
made by Borrower and after giving effect thereto, Borrower shall be Solvent; (E)
no Default or Event of Default would occur and be continuing after giving effect
to any such proposed intercompany loan; (F) the aggregate amount of such
intercompany loans owing by Borrower to all such Guarantors shall not exceed
$2,000,000 at any one time outstanding; and (G) the aggregate balance of all
such intercompany loans owing to Borrower shall not exceed $3,000,000 at any
time, (vi) amounts owing by Borrower to Holdings as a result of taxes paid or
owing by Holdings to Governmental Authorities as a result of the assets or
operations of Borrower as long as all such amounts are evidenced by Intercompany
Notes, (vii) loans made by Borrower to Holdings to the extent necessary to
permit Holdings to
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pay operating expenses incurred in the ordinary course of business consistent
with past practices as in existence on the Original Closing Date (as long as (A)
Holdings promptly upon its receipt thereof uses the proceeds of such loans to
pay such operating expenses and (B) such loans are repaid within twelve (12)
months of the date made and (C) such loans are evidenced by Intercompany Notes),
and (viii) Indebtedness owing by Holdings to Borrower in an aggregate amount not
to exceed $8,000,000 arising as a result of the Refinancing under and as defined
in the Original Credit Agreement, including a payment, on the Original Closing
Date, on a guaranty by Borrower of Prior Lender Obligations under and as defined
in the Original Credit Agreement.
(b) No Credit Party shall, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other
amount payable in respect of any Indebtedness prior to its scheduled maturity,
other than (i) the Obligations; (ii) Indebtedness secured by a Permitted
Encumbrance if the asset securing such Indebtedness has been sold or otherwise
disposed of in accordance with Sections 6.8(b) or (c); (iii) Indebtedness
permitted by Section 6.3(a)(iv) upon any refinancing thereof in accordance with
Section 6.3(a)(iv); and (iv) as otherwise permitted in Section 6.13..
6.4 Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any transaction with
any other Credit Party or any Affiliate thereof except in the ordinary course of
and pursuant to the reasonable requirements of such Credit Party's business and
upon fair and reasonable terms that are no less favorable to such Credit Party
than would be obtained in a comparable arm's length transaction with a Person
not an Affiliate of such Credit Party. In addition, if any such transaction or
series of related transactions involves payments in excess of $250,000 in the
aggregate, the terms of these transactions must be disclosed in advance to Agent
and Lenders. All such transactions existing as of the date hereof are described
in Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing transaction
with any employees of any Credit Party, except loans to its respective employees
on an arm's-length basis in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $10,000 to any employee and up to a maximum of
$50,000 in the aggregate at any one time outstanding.
6.5 Capital Structure and Business. If all or part of a Credit Party's
Stock is pledged to Agent, that Credit Party shall not issue additional Stock.
No Credit Party shall amend its charter or bylaws in a manner that would
adversely affect Agent or Lenders or such Credit Party's duty or ability to
repay the Obligations. No Credit Party shall engage in any business other than
the businesses currently engaged in by it or businesses reasonably related
thereto.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur, assume
or permit to exist any Guaranteed Indebtedness except (a) by endorsement of
instruments or items of payment for deposit to the general account of any Credit
Party, and (b) for Guaranteed Indebtedness incurred for the benefit of any other
Credit Party if the primary obligation is expressly permitted by this Agreement.
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6.7 Liens. No Credit Party shall create, incur, assume or permit to exist
any Lien on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized on
Disclosure Schedule (6.7) securing Indebtedness described on Disclosure Schedule
(6.3) and permitted refinancings, extensions and renewals thereof, including
extensions or renewals of any such Liens; provided that the principal amount so
secured is not increased and the Lien does not attach to any other property; (c)
Liens created after the date hereof by conditional sale or other title retention
agreements (including Capital Leases) or in connection with purchase money
Indebtedness with respect to Equipment and Fixtures acquired by any Credit Party
in the ordinary course of business as long as (x) the terms and conditions of
such purchase money Indebtedness and Capital Lease Obligations have been
approved by Agent in advance in writing and (y) Agent shall have received such
subordination and/or intercreditor agreements, all in form and substance
satisfactory to Agent, in its sole discretion, as Agent may request in
connection with such Indebtedness or Capital Lease Obligations (provided, that
such Liens attach only to the assets subject to such purchase money debt and
such Indebtedness is incurred within twenty (20) days following such purchase
and does not exceed 100% of the purchase price of the subject assets) and (d)
Liens against real property acquired in a Permitted Acquisition that have been
assumed by the Borrower as long as (x) the terms and conditions of Indebtedness
securing such Liens have been approved by Agent in advance in writing and (y)
Agent shall have received such subordination and/or intercreditor agreements,
all in form and substance satisfactory to Agent, in its sole discretion, as
Agent may request in connection with such Indebtedness. In addition, no Credit
Party shall become a party to any agreement, note, indenture or instrument, or
take any other action, that would prohibit the creation of a Lien on any of its
properties or other assets in favor of Agent, on behalf of itself and Lenders,
as additional collateral for the Obligations, except operating leases, Capital
Leases or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale of
Inventory in the ordinary course of business, (b) the sale or other disposition
by a Credit Party of Inventory that is obsolete or no longer used or useful in
such Credit Party's business and having a book value not exceeding $500,000 in
the aggregate in any Fiscal Year and (c) the sale or other disposition by a
Credit Party of Equipment or Fixtures that are obsolete or no longer used or
useful in such Credit Party's business and having a book value not exceeding
$200,000 in the aggregate in any Fiscal Year, (c) the sale or other disposition
of other Equipment and Fixtures having a book value not exceeding $100,000 in
the aggregate in any Fiscal Year and (d) the sale of Real Estate located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, provided, however, that
each of such Real Estate sales shall be for net cash proceeds of not less than
50% of the fair market value of the Real Estate being sold as determined by the
most recent real estate appraisals that have been prepared on behalf of Agent
(collectively, the "Real Estate Held for Sale").
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur (i) an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or (ii) an ERISA Event to the
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extent such ERISA Event would reasonably be expected to result in taxes,
penalties and other liability in excess of $250,000 in the aggregate.
6.10 Financial Covenants. Borrower shall not breach or fail to comply with
any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause or permit a Release
of any Hazardous Material on, at, in, under, above, to, from or about any of the
Real Estate where such Release would (a) violate in any respect, or form the
basis for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have create liabilities in excess of $500,000.
6.12 Sale-Leasebacks. No Credit Party shall engage in any sale-leaseback,
synthetic lease or similar transaction involving any of its assets, except for a
sale and subsequent leaseback of a portion of the Real Estate located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ for a period not to
exceed two (2) years.
6.13 Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) intercompany loans and advances between Borrower and
Guarantors to the extent permitted by Section 6.3, and payments of principal and
interest with respect thereto, (b) dividends and distributions by Subsidiaries
of Borrower paid to Borrower, (c) employee loans permitted under Section 6.4(b),
(d) any Credit Party may pay cash dividends in respect of its Stock
("Dividends") as long as (A) Borrowing Availability is at least (I) $10,000,000
after giving effect to the proposed Dividend and Revolving Credit Advances, if
any, used to fund such Dividend that is to be made prior to the Fixed Asset
Availability Date and (II) $20,000,000 after giving effect to the proposed
Dividend and Revolving Credit Advances, if any, used to fund such Dividend that
is to be made after the Fixed Asset Availability Date, (B) no Default or Event
of Default has occurred and is continuing or would result after giving effect to
any such Dividend and Revolving Credit Advances, if any, used to fund such
Dividend and (e) Holdings may redeem, purchase, repurchase or retire, or obtain
the surrender of, any outstanding Stock in Holdings, or any outstanding
warrants, options or other rights to acquire such Stock ("Stock Repurchase") as
long as (A) Borrowing Availability is at least (I) $10,000,000 after giving
effect to the proposed Stock Repurchase and Revolving Credit Advances, if any,
used to fund such Stock Repurchase that is to be made prior to the Fixed Asset
Availability Date and (II) $20,000,000 after giving effect to the proposed Stock
Repurchase and Revolving Credit Advances, if any, used to fund such Stock
Repurchase that is to be made after the Fixed Asset Availability Date, (B) no
Default or Event of Default has occurred and is continuing or would result after
giving effect to any such Stock Repurchase and Revolving Credit Advances, if
any, used to fund such Stock Repurchase).
6.14 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (c) change the type of entity that it is, (d)
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change its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least thirty (30) days prior written
notice to Agent and after Agent's written acknowledgment that any reasonable
action requested by Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral, has been completed or taken, and provided, that any such new
location shall be in the continental United States. No Credit Party shall change
its Fiscal Year without ninety (90) days' advance written notice to Agent.
6.15 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.
6.16 Real Estate Purchases. [Intentionally Omitted]
6.17 Holdings. At all times after the Original Closing Date, Holdings
shall not engage in any trade or business, or own any assets (other than (i)
assets which it owns of the Closing Date and (ii) other assets as long as the
fair market value of all such assets does not exceed $500,000 in the aggregate
at any time) or incur any Indebtedness or Guaranteed Indebtedness (other than
the Obligations).
6.18 Inactive Subsidiaries. No Inactive Subsidiary shall (a) acquire any
assets, (b) incur any liabilities (whether to an Affiliate or otherwise) other
than for franchise taxes, maintenance fees and other de minimus expenses or (c)
engage in any active trade or business.
6.19 Leases. No Credit Party shall enter into any operating lease for
Equipment or Real Estate, if the aggregate of all operating lease payments for
leases of Equipment and Real Estate payable in any year for all Credit Parties
on a consolidated basis would exceed $1,500,000.
6.20 Vacant Land Lease No Credit shall store or maintain, or permit to be
stored or maintained, any Collateral on the property that is subject to the
Vacant Land Lease.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall be
in effect until the Commitment Termination Date, and the Loans and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Loans
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or any other Obligations, due or not due, liquidated, contingent or unliquidated
or any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is required after the Commitment
Termination Date. Except as otherwise expressly provided herein or in any other
Loan Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder:
(a) Borrower (i) fails to make any payment of principal of, or interest
on, or Fees owing in respect of, the Loans or any of the other Obligations when
due and payable, or (ii) fails to pay or reimburse Agent or Lenders for any
expense reimbursable hereunder or under any other Loan Document within ten (10)
days following Agent's demand for such reimbursement or payment of expenses.
(b) Any Credit Party fails or neglects to perform, keep or observe any of
the provisions of Sections 1.4, 1.8, 5.4(a) or 6, or any of the provisions set
forth in Annexes C or G, respectively.
(c) Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4.1 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for three (3) Business Days
or more.
(d) Any Credit Party fails or neglects to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents (other
than any provision embodied in or covered by any other clause of this Section
8.1) and the same shall remain unremedied for thirty (30) days or more.
(e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party is a party that is not cured within any
applicable grace period therefor, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness or
Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $500,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $500,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in
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each case, regardless of whether such default is waived, or such right is
exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is untrue
or incorrect in any respect (other than (i) immaterial errors not exceeding the
greater of (1) $200,000 or (2) 2.5% of the Borrowing Availability as such
Borrowing Availability is calculated after giving effect to the correction of
such errors and (ii) errors understating the amount of the Borrowing Base), or
any representation or warranty herein or in any Loan Document or in any written
statement, report, financial statement or certificate (other than a Borrowing
Base Certificate) made or delivered to Agent or any Lender by any Credit Party
is untrue or incorrect in any material respect as of the date when made or
deemed made.
(g) Assets of any Credit Party with a fair market value of the greater of
(1) $500,000 and (2) 2.5% of the Borrowing Availability or more are attached,
seized, levied upon or subjected to a writ or distress warrant, or come within
the possession of any receiver, trustee, custodian or assignee for the benefit
of creditors of any Credit Party and such condition continues for thirty (30)
days or more.
(h) A case or proceeding is commenced against any Credit Party seeking a
decree or order in respect of such Credit Party (i) under the Bankruptcy Code or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Credit Party or for any substantial
part of any such Credit Party's assets, or (iii) ordering the winding-up or
liquidation of the affairs of such Credit Party, and such case or proceeding
shall remain undismissed or unstayed for sixty (60) days or more or a decree or
order granting the relief sought in such case or proceeding is granted by a
court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under the
Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) consents to or fails to contest in a timely and
appropriate manner to the institution of proceedings thereunder or to the filing
of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, or (iv)
takes any action in furtherance of any of the foregoing, or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of money in excess of
$500,000 in the aggregate at any time are outstanding against one or more of the
Credit Parties (which judgments are not covered by insurance policies as to
which liability has been accepted by the insurance carrier), and the same are
not, within thirty (30) days after the entry thereof, discharged or execution
thereof stayed or bonded pending appeal, or such judgments are not discharged
prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason ceases to
be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or
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inaction based on any such assertion, that any provision of any of the Loan
Documents has ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms), or any Lien created under any Loan Document ceases
to be a valid and perfected first priority Lien (except as otherwise permitted
herein or therein) in any of the Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
(m) After a Fixed Asset Availability Date has occurred, any event occurs,
whether or not insured or insurable, as a result of which revenue-producing
activities cease or are substantially curtailed at facilities of Borrower
generating more than 10% of Borrower's revenues for the Fiscal Year preceding
such event and such cessation or curtailment continues for more than thirty (30)
days (other than planned closures of any facility as long as (i) such facility
has generated less than 10% of Borrower's aggregate EBITDA for the 12-month
period ended on or about the date of such closure and (ii) Borrower has notified
Agent in writing of such closure no less than 60 days prior to such closure).
8.2 Remedies.
(a) If any Event of Default has occurred and is continuing, Agent may (and
at the written request of the Requisite Lenders shall), without notice, suspend
the Revolving Loan facility with respect to additional Advances and/or the
incurrence of additional Letter of Credit Obligations, whereupon any additional
Advances and additional Letter of Credit Obligations shall be made or incurred
in Agent's sole discretion (or in the sole discretion of the Requisite Lenders,
if such suspension occurred at their direction) so long as such Default or Event
of Default is continuing. If any Event of Default has occurred and is
continuing, Agent may (and at the written request of Requisite Lenders shall),
without notice except as otherwise expressly provided herein, increase the rate
of interest applicable to the Loans and the Letter of Credit Fees to the Default
Rate.
(b) If any Event of Default has occurred and is continuing, Agent may (and
at the written request of the Requisite Lenders shall), without notice: (i)
terminate the Revolving Loan facility with respect to further Advances or the
incurrence of further Letter of Credit Obligations; (ii) reduce the Revolving
Loan Commitment from time to time; (iii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized in the manner set forth in Annex B, all without presentment,
demand, protest or further notice of any kind, all of which are expressly waived
by Borrower and each other Credit Party; or (iv) exercise any rights and
remedies provided to Agent under the Loan Documents or at law or equity,
including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(h) or (i), the
Commitments shall be immediately terminated and all of the Obligations,
including the Revolving Loan, shall become immediately due and payable without
declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest,
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default, nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Agent on which any
Credit Party may in any way be liable, and hereby ratifies and confirms whatever
Agent may do in this regard, (b) all rights to notice and a hearing prior to
Agent's taking possession or control of, or to Agent's replevy, attachment or
levy upon, the Collateral or any bond or security that might be required by any
court prior to allowing Agent to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sale of participations in, at any time
or times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "Assignment Agreement" substantially in
the form attached hereto as Exhibit 9.1(a) and otherwise in form and substance
reasonably satisfactory to, and acknowledged by, Agent and Borrower, which shall
not to be unreasonably withheld or delayed; (ii) be conditioned on such assignee
Lender representing to the assigning Lender and Agent that it is purchasing the
applicable Loans to be assigned to it for its own account, for investment
purposes and not with a view to the distribution thereof; (iii) after giving
effect to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $10,000,000 and the assigning Lender
shall have retained Commitments in an amount at least equal to $10,000,000; (iv)
include a payment to Agent of an assignment fee of $3,500, and (v) so long as no
Event of Default has occurred and is continuing, require the consent of the
Borrower, which shall not be unreasonably withheld or delayed and shall be
deemed granted if not objected to within ten (10) Business Days following notice
thereof to Borrower. In the case of an assignment by a Lender under this Section
9.1, the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as all other Lenders hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Loans
hereunder shall be several and not joint and shall be limited to such Lender's
Pro Rata Share of the applicable Commitment. In the event Agent or any Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Notes in exchange for the Notes, if any, being
assigned. Notwithstanding the foregoing provisions of this Section 9.1(a), any
Lender may at any time pledge the Obligations held by it and such Lender's
rights under this Agreement and the other Loan Documents to a Federal Reserve
Bank, and any lender that is an investment fund may assign the Obligations held
by it and such Lender's rights under this Agreement and the other Loan Documents
to another investment fund managed by the same investment advisor; provided,
that no such pledge to a
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Federal Reserve Bank shall release such Lender from such Lender's obligations
hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its Commitments
shall be made with the understanding that all amounts payable by Borrower
hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Loan in which such holder participates, (ii) any
extension of the scheduled amortization of the principal amount of any Loan in
which such holder participates or the final maturity date thereof, and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the other Loan
Documents). Solely for purposes of Sections 1.13, 1.15, 1.16 and 9.8, Borrower
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrower to the participant and the participant shall be
considered to be a "Lender". Except as set forth in the preceding sentence
neither Borrower nor any other Credit Party shall have any obligation or duty to
any participant. Neither Agent nor any Lender (other than the Lender selling a
participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall, as
between Borrower and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans,
the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and
the preparation of informational materials for, and the participation of
management in meetings with, potential assignees or participants. Each Credit
Party executing this Agreement shall certify the correctness, completeness and
accuracy of all descriptions of the Credit Parties and their respective affairs
contained in any selling materials provided by it and all other information
provided by it and included in such materials, except that any Projections
delivered by Borrower shall only be certified by Borrower as having been
prepared by Borrower in compliance with the representations contained in Section
3.4(c).
(e) A Lender may furnish any information concerning Credit Parties in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.16(a),
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increased costs under Section 1.16(b), an inability to fund LIBOR Loans under
Section 1.16(c), or withholding taxes in accordance with Section 1.15(a).
(g) Notwithstanding anything to the contrary contained herein, any Lender
(a "Granting Lender"), may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing by the Granting Lender to Agent and
Borrower, the option to provide to Borrower all or any part of any Loans that
such Granting Lender would otherwise be obligated to make to Borrower pursuant
to this Agreement; provided, that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if such Loan were made by such
Granting Lender. No SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). Any SPC may (i) with notice to, but without the prior written
consent of, Borrower and Agent and without paying any processing fee therefor
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by Borrower and Agent) providing
liquidity and/or credit support to or for the account of such SPC to support the
funding or maintenance of Loans and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC. This Section 9.1(g) may not be amended without the
prior written consent of each Granting Lender, all or any of whose Loans are
being funded by an SPC at the time of such amendment. For the avoidance of
doubt, the Granting Lender shall for all purposes, including without limitation,
the approval of any amendment or waiver of any provision of any Loan Document or
the obligation to pay any amount otherwise payable by the Granting Lender under
the Loan Documents, continue to be the Lender of record hereunder.
(h) Nothing contained in this Section 9 shall be construed to require the
consent of any party for the Swing Line Lender to make a Swing Lien Advance.
9.2 Appointment of Agent. GE Capital is hereby appointed to act on behalf
of all Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this Section 9.2 are solely for the benefit of Agent and Lenders
and no Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act solely
as an agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
Credit Party or any other Person. Agent shall have no duties or responsibilities
except for those expressly set forth in this Agreement and the other Loan
Documents. The duties of Agent shall be mechanical and administrative in nature
and Agent shall not have, or be deemed to have, by reason of this Agreement, any
other Loan Document or otherwise a fiduciary relationship in respect of any
Lender. Except as expressly set forth in this Agreement and the other Loan
Documents, Agent shall not have any duty to disclose, and shall not be liable
for failure to disclose, any information relating to any Credit Party or any of
their respective Subsidiaries or any Account Debtor that is communicated to or
obtained by GE Capital or any of its Affiliates in any capacity. Neither Agent
nor any of its Affiliates nor any of their respective officers,
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directors, employees, agents or representatives shall be liable to any Lender
for any action taken or omitted to be taken by it hereunder or under any other
Loan Document, or in connection herewith or therewith, except for damages caused
by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders, Supermajority
Revolving Lenders or all affected Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any other Loan
Document, then Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from Requisite
Lenders, Supermajority Revolving Lenders, or all affected Lenders, as the case
may be, and Agent shall not incur liability to any Person by reason of so
refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Supermajority Revolving Lenders or all affected Lenders,
as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor any
of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments hereunder,
GE Capital shall have the same rights and powers under this Agreement and the
other Loan Documents as any other Lender and may exercise the same as though it
were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include GE
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Capital in its individual capacity. GE Capital and its Affiliates may lend money
to, invest in, and generally engage in any kind of business with, any Credit
Party, any of their Affiliates and any Person who may do business with or own
securities of any Credit Party or any such Affiliate, all as if GE Capital were
not Agent and without any duty to account therefor to Lenders. GE Capital and
its Affiliates may accept fees and other consideration from any Credit Party for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders. Each Lender acknowledges the potential conflict
of interest between GE Capital as a Lender holding disproportionate interests in
the Loans and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent not
reimbursed by Credit Parties and without limiting the obligations of Credit
Parties hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less than
thirty (30) days' prior written notice thereof to Lenders and Borrower. Upon any
such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within thirty (30)
days after the resigning Agent's giving notice of resignation, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of
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America or of any State thereof and has a combined capital and surplus of at
least $300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within thirty (30) days after the date such notice of resignation was
given by the resigning Agent, such resignation shall become effective and the
Requisite Lenders shall thereafter perform all the duties of Agent hereunder
until such time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders hereunder
shall be subject to the approval of Borrower, such approval not to be
unreasonably withheld or delayed; provided that such approval shall not be
required if a Default or an Event of Default has occurred and is continuing.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall succeed to and become vested with all the rights,
powers, privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent's resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Agent shall continue. After any resigning Agent's resignation
hereunder, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was acting as Agent under
this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without prior notice to any Credit Party or to any Person
other than Agent, any such notice being hereby expressly waived, to offset and
to appropriate and to apply any and all balances held by it at any of its
offices for the account of Borrower or any Guarantor (regardless of whether such
balances are then due to Borrower or any Guarantor) and any other properties or
assets at any time held or owing by that Lender or that holder to or for the
credit or for the account of Borrower or any Guarantor against and on account of
any of the Obligations that are not paid when due; provided that the Lender
exercising such offset rights shall give notice thereof to the affected Credit
Party promptly after exercising such rights. Any Lender exercising a right of
setoff or otherwise receiving any payment on account of the Obligations in
excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so offset or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares, (other
than offset rights exercised by any Lender with respect to Sections 1.13, 1.15
or 1.16). Each Lender's obligation under this Section 9.8 shall be in addition
to and not in limitation of its obligations to purchase a participation in an
amount equal to its Pro Rata Share of the Swing Line Loans under Section 1.1.
Borrower and each Guarantor agrees, to the fullest extent permitted by law, that
(a) any Lender may exercise its right to offset with respect to amounts in
excess of its Pro Rata Share of the Obligations and may sell participations in
such amounts so offset to other Lenders and holders and (b) any Lender so
purchasing a participation in the Loans made or other Obligations held by other
Lenders or holders may exercise all rights of offset, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from
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the Lender that has exercised the right of offset, the purchase of
participations by that Lender shall be rescinded and the purchase price restored
without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in the Swing Line
Loan in accordance with clauses (iii) and (iv) of Section 1.1(c). If the Swing
Line Lender declines to make a Swing Line Loan or if Swing Line Availability is
zero, Agent shall notify Revolving Lenders, promptly after receipt of a Notice
of Revolving Advance and in any event prior to 1:00 p.m. (New York time) on the
date such Notice of Revolving Advance is received, by telecopy, telephone or
other similar form of transmission. Each Revolving Lender shall make the amount
of such Lender's Pro Rata Share of such Revolving Credit Advance available to
Agent in same day funds by wire transfer to Agent's account as set forth in
Annex H not later than 3:00 p.m. (New York time) on the requested funding date,
in the case of an Index Rate Loan and not later than 11:00 a.m. (New York time)
on the requested funding date in the case of a LIBOR Loan. After receipt of such
wire transfers (or, in the Agent's sole discretion, before receipt of such wire
transfers), subject to the terms hereof, Agent shall make the requested
Revolving Credit Advance to Borrower. All payments by each Revolving Lender
shall be made without setoff, counterclaim or deduction of any kind.
(ii) Not less than once during each calendar week or more frequently
at Agent's election (each, a "Settlement Date"), Agent shall advise each Lender
by telephone, or telecopy of the amount of such Lender's Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that each Lender has funded all payments and
Advances required to be made by it and purchased all participations required to
be purchased by it under this Agreement and the other Loan Documents as of such
Settlement Date, Agent shall pay to each Lender such Lender's Pro Rata Share of
principal, interest and Fees paid by Borrower since the previous Settlement Date
for the benefit of such Lender on the Loans held by it. To the extent that any
Lender (a "Non-Funding Lender") has failed to fund all such payments and
Advances or failed to fund the purchase of all such participations, Agent shall
be entitled to set off the funding short-fall against that Non-Funding Lender's
Pro Rata Share of all payments received from Borrower. Such payments shall be
made by wire transfer to such Lender's account (as specified by such Lender in
Annex H or the applicable Assignment Agreement) not later than 1:00 p.m.
(Chicago time) on the next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that each
Revolving Lender will make its Pro Rata Share of each Revolving Credit Advance
available to Agent on each funding date. If such Pro Rata Share is not, in fact,
paid to Agent by such Revolving Lender when due, Agent will be entitled to
recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith within five (5) Business Days following
Agent's demand, Agent shall promptly notify Borrower and Borrower shall
immediately repay such amount to Agent. Nothing in this Section 9.9(b) or
elsewhere in this
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Agreement or the other Loan Documents shall be deemed to require Agent to
advance funds on behalf of any Revolving Lender or to relieve any Revolving
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Borrower may have against any Revolving Lender as a result of
any default by such Revolving Lender hereunder. To the extent that Agent
advances funds to Borrower on behalf of any Revolving Lender and is not
reimbursed therefor on the same Business Day as such Advance is made, Agent
shall be entitled to retain for its account all interest accrued on such Advance
until reimbursed by the applicable Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in the
belief or expectation that a related payment has been or will be received by
Agent from Borrower and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to make any
Revolving Credit Advance or any payment required by it hereunder, or to purchase
any participation in any Swing Line Loan to be made or purchased by it on the
date specified therefor shall not relieve any other Lender (each such other
Revolving Lender, an "Other Lender") of its obligations to make such Advance or
purchase such participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make an
Advance, purchase a participation or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Non-Funding Lender
shall not have any voting or consent rights under or with respect to any Loan
Document or constitute a "Lender" or a "Revolving Lender" (or be included in the
calculation of "Requisite Lenders" or "Supermajority Revolving Lenders"
hereunder) for any voting or consent rights under or with respect to any Loan
Document. At Borrower's request, Agent or a Person acceptable to Agent shall
have the right with Agent's consent and in Agent's sole discretion (but shall
have no obligation) to purchase from any Non-Funding Lender, and each
Non-Funding Lender agrees that it shall, at Agent's request, sell and assign to
Agent or such Person, all of the Commitments of that Non-Funding Lender for an
amount equal to the principal balance of all Loans held by such Non-Funding
Lender and all accrued interest and fees with respect thereto through the date
of sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.
(e) Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or
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delivered by Agent to, any Credit Party, with notice of any Event of Default of
which Agent has actually become aware and with notice of any action taken by
Agent following any Event of Default; provided, that Agent shall not be liable
to any Lender for any failure to do so, except to the extent that such failure
is attributable to Agent's gross negligence or willful misconduct. Lenders
acknowledge that Borrower is required to provide Financial Statements and
Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent and Requisite Lenders, it being the
intent of Lenders that any such action to protect or enforce rights under this
Agreement and the Notes shall be taken in concert and at the direction or with
the consent of Agent or Requisite Lenders. With respect to any action by Agent
to enforce the rights and remedies of Agent and the Lenders under this Agreement
and the other Loan Documents, each Lender hereby consents to the jurisdiction of
the court in which such action is maintained, and agrees to deliver its Notes to
Agent to the extent necessary to enforce the rights and remedies of Agent for
the benefit of the Lenders under the Mortgages in accordance with the provisions
hereof.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of each Credit Party, Agent,
Lenders and their respective successors and assigns (including, in the case of
any Credit Party, a debtor-in-possession on behalf of such Credit Party), except
as otherwise provided herein or therein. No Credit Party may assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder or under any of the other Loan Documents without the prior express
written consent of Agent and Lenders. Any such purported assignment, transfer,
hypothecation or other conveyance by any Credit Party without the prior express
written consent of Agent and Lenders shall be void. The terms and provisions of
this Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, fee letter or
confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement. Notwithstanding the foregoing, the GE Capital
Fee Letter
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between Agent and Borrower shall survive the execution and delivery of this
Agreement and shall continue to be binding obligations of the parties.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrower, and by Requisite Lenders,
Supermajority Revolving Lenders or all affected Lenders, as applicable. Except
as set forth in clauses (b) and (c) below, all such amendments, modifications,
terminations or waivers requiring the consent of any Lenders shall require the
written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement that increases the percentage advance
rates set forth in the definition of the Borrowing Base, or that makes less
restrictive the nondiscretionary criteria for exclusion from Eligible Accounts
and Eligible Inventory set forth in Sections 1.6 and 1.7, shall be effective
unless the same shall be in writing and signed by Agent, Supermajority Revolving
Lenders and Borrower. No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that waives compliance
with the conditions precedent set forth in Section 2.2 to the making of any Loan
or the incurrence of any Letter of Credit Obligations shall be effective unless
the same shall be in writing and signed by Agent, Requisite Lenders and
Borrower. Notwithstanding anything contained in this Agreement to the contrary,
no waiver or consent with respect to any Default or any Event of Default shall
be effective for purposes of the conditions precedent to the making of Loans or
the incurrence of Letter of Credit Obligations set forth in Section 2.2 unless
the same shall be in writing and signed by Agent, Requisite Lenders and
Borrower.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender's Commitment (which action shall be
deemed to directly affect all Lenders); (ii) reduce the principal of, rate of
interest on or Fees payable with respect to any Loan or Letter of Credit
Obligations of any affected Lender; (iii) extend any scheduled payment date
(other than payment dates of mandatory prepayments under Section
1.3(b)(ii)-(iv)) or final maturity date of the principal amount of any Loan of
any affected Lender; (iv) waive, forgive, defer, extend or postpone any payment
of interest or Fees as to any affected Lender; (v) release any Guaranty or,
except as otherwise permitted herein or in the other Loan Documents, release, or
permit any Credit Party to sell or otherwise dispose of, any Collateral with a
value exceeding $5,000,000 in the aggregate (which action shall be deemed to
directly affect all Lenders); (vi) change the percentage of the Commitments or
of the aggregate unpaid principal amount of the Loans that shall be required for
Lenders or any of them to take any action hereunder; and (vii) amend or waive
this Section 11.2 or the definitions of the terms "Requisite Lenders" or
"Supermajority Revolving Lenders" insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment, modification,
termination or waiver affecting the rights or duties of Agent or L/C Issuer
under this Agreement or any other Loan Document shall be effective unless in
writing and signed by Agent or L/C Issuer, as the case may be, in addition
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to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the holder of that Note. No notice to or demand on
any Credit Party in any case shall entitle such Credit Party or any other Credit
Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Notes at the time outstanding and each future holder of the Notes.
(d) If, in connection with any proposed amendment, modification, waiver or
termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained as
described in this clause (i) and in clause (ii) below being referred to as "Non
Consenting Lender");
(ii) requiring the consent of Supermajority Revolving Lenders, the
consent of Requisite Lenders is obtained, but the consent of Supermajority
Revolving Lenders is not obtained; or
then, so long as Agent is not a Non Consenting Lender, at Borrower's request
Agent, or a Person reasonably acceptable to Agent, shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non Consenting Lenders, and such Non Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non Consenting Lenders for an amount equal to the
principal balance of all Loans held by the Non Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(e) Upon payment in full in cash and performance of all of the Obligations
(other than indemnification Obligations), termination of the Commitments and a
release of all claims against Agent and Lenders, and so long as no suits,
actions proceedings, or claims are pending or threatened against any Indemnified
Person asserting any damages, losses or liabilities that are Indemnified
Liabilities, Agent shall deliver to Borrower termination statements, mortgage
releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
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11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for all fees,
costs and expenses (including the reasonable fees and expenses of all of its
counsel, advisors, consultants and auditors) and (ii) Agent (and, with respect
to clauses (c) and (d) below, all Lenders) for all fees, costs and expenses,
including the reasonable fees, costs and expenses of counsel or other advisors
(including environmental and management consultants and appraisers) incurred in
connection with the negotiation, preparation and filing and/or recordation of
the Loan Documents and incurred in connection with:
(a) any amendment, modification or waiver of, or consent with respect to,
or termination of, any of the Loan Documents or Related Transactions Documents
or advice in connection with the administration of the Loans made pursuant
hereto or its rights hereunder or thereunder;
(b) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Lender, any Credit Party or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Credit Parties
or any other Person that may be obligated to Agent by virtue of the Loan
Documents, including any such litigation, contest, dispute, suit, proceeding or
action arising in connection with any work-out or restructuring of the Loans
during the pendency of one or more Events of Default; provided, that no Person
shall be entitled to reimbursement under this clause (c) in respect of any
litigation, contest, dispute, suit, proceeding or action to the extent any of
the foregoing results from such Person's gross negligence or willful misconduct;
(c) any attempt to enforce any remedies of Agent or any Lender against any
or all of the Credit Parties or any other Person that may be obligated to Agent
or any Lender by virtue of any of the Loan Documents, including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided, that
in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(d) any workout or restructuring of the Loans during the pendency of one
or more Events of Default; provided, that in the case of reimbursement of
counsel for Lenders other than Agent, such reimbursement shall be limited to one
counsel for all such Lenders; and
(e) efforts to (i) monitor the Loans or any of the other Obligations, (ii)
evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (e) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be
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payable, on demand, by Borrower to Agent. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include: fees, costs and
expenses of accountants, environmental advisors, appraisers, investment bankers,
management and other consultants and paralegals; court costs and expenses;
photocopying and duplication expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram or telecopy
charges; secretarial overtime charges; and expenses for travel, lodging and food
paid or incurred in connection with the performance of such legal or other
advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times, to
require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrower specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement and
the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement or
any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintain the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Credit Parties
and designated as confidential for a period of two (2) years following receipt
thereof, except that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or
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potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required
or requested by any Governmental Authority or reasonably believed by Agent or
such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent's or such
Lender's counsel, is required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any Litigation to
which Agent or such Lender is a party; or (f) that ceases to be confidential
through no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY AND; PROVIDED, FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR
THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
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11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three (3)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated in Annex I or to such other address
(or facsimile number) as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person (other than Borrower or Agent) designated in Annex I
to receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents contained
in this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party executing this
Agreement agrees that neither it nor its Affiliates will in the future issue any
press releases or other public disclosure using the name of GE Capital or its
affiliates without at least two (2)
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Business Days' prior notice to GE Capital and without the prior written consent
of GE Capital unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law (including as a requisite part of
reports required to be filed with the Securities and Exchange Commission), and
then, in any event, such Credit Party or Affiliate will consult with GE Capital
before issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Agent or any Lender of advertising material
relating to the financing transactions contemplated by this Agreement using
Borrower's name, product photographs, logo or trademark. Agent or such Lender
shall provide a draft of any advertising material to each Credit Party for
review and comment prior to the publication thereof. Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.
11.15 Reinstatement. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against any
Credit Party for liquidation or reorganization, should any Credit Party become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Credit Party's assets, and shall continue to be effective or to be reinstated,
as the case may be, if at any time payment and performance of the Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
11.18 Patriot Act Notice. Each Lender subject to the USA Patriot Act of
2001 (31 U.S.C. 5318 et seq.) hereby notifies the Borrower that, pursuant to
Section 326 thereof, it is required to obtain, verify and record information
that identifies the Borrower, including the name and address of the Borrower and
other information allowing such Lender to identify the Borrower in accordance
with such act.
12. RESTATEMENT OF ORIGINAL CREDIT AGREEMENT
(a) The parties hereto agree that, on the Closing Date, the following
transactions shall be deemed to occur automatically, without further action by
any party hereto:
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(i) the Original Credit Agreement shall be deemed to be amended and
restated in its entirety in the form of this Agreement;
(ii) all Existing Obligations outstanding on the Closing Date shall,
to the extent not paid on the Closing Date, be deemed to be Obligations
outstanding hereunder;
(iii) the guaranties and Collateral Documents, including the Liens
created thereunder in favor of Agent for the benefit of Agent and Lenders or in
favor of Agent and Lenders, as applicable, and securing payment of the Existing
Obligations, as amended and restated on the Closing Date, shall remain in full
force and effect with respect to the Obligations and are hereby reaffirmed; and
(iv) all references in the other Loan Documents to the Original
Credit Agreement shall be deemed to refer without further amendment to this
Agreement.
(b) The parties acknowledge and agree that this Agreement and the other
Loan Documents do not constitute a novation, payment and reborrowing or
termination of the Existing Obligations and that all such Existing Obligations
are in all respects continued and outstanding as Obligations under this
Agreement and the Notes with only the terms being modified from and after the
Closing Date of this Agreement as provided in this Agreement, the Notes and the
other Loan Documents.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
BORROWER:
INSTEEL WIRE PRODUCTS COMPANY, a North
Carolina corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CFO and Treasurer
AGENT AND LENDERS:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Duly Authorized Signatory
[Signature Page to the Amended and Restated Credit Agreement]
The following Persons are signatories to this Agreement in their capacity
as Credit Parties and not as Borrowers.
INSTEEL INDUSTRIES, INC., a North
Carolina corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CFO and Treasurer
INTERCONTINENTAL METALS CORPORATION, a
North Carolina corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CFO and Treasurer
[Signature Page to the Amended and Restated Credit Agreement]
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings and
all references to Sections, Exhibits, Schedules or Annexes in the following
definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:'
"Account Debtor" means any Person who may become obligated to any Credit
Party under, with respect to, or on account of, an Account, Chattel Paper or
General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed thereto in Annex G.
"Accounts" means all "accounts," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments), (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Credit Party for property sold, leased, licensed, assigned
or otherwise disposed of, for a policy of insurance issued or to be issued, for
a secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all healthcare insurance receivables, and (f) all collateral
security of any kind, now or hereafter in existence, given by any Account Debtor
or other Person with respect to any of the foregoing.
"Advance" means any Revolving Credit Advance or Swing Line Advance, as the
context may require.
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
A-1
"Agent" means GE Capital in its capacity as Agent for Lenders or its
successor appointed pursuant to Section 9.7.
"Agreement" means the Credit Agreement by and among Borrower, the other
Credit Parties party thereto, GE Capital, as Agent and Lender and the other
Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Appendices" has the meaning ascribed to it in the recitals to the
Agreement.
"Applicable L/C Margin" means the per annum fee, from time to time in
effect, payable with respect to outstanding Letter of Credit Obligations as
determined by reference to Section 1.5(a).
"Applicable Margins" means collectively the Applicable L/C Margin, the
Applicable Unused Line Fee Margin, the Applicable Revolver Index Margin and the
Applicable Revolver LIBOR Margin.
"Applicable Revolver Index Margin" means the per annum interest rate
margin from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Loan, as determined by reference to Section 1.5(a).
"Applicable Revolver LIBOR Margin" means the per annum interest rate from
time to time in effect and payable in addition to the LIBOR Rate applicable to
the Revolving Loan, as determined by reference to Section 1.5(a).
"Applicable Unused Line Fee Margin" means the per annum fee, from time to
time in effect, payable in respect of Borrower's non-use of committed funds
pursuant to Section 1.9(b), which fee is determined by reference to Section
1.5(a).
"Assignment Agreement" has the meaning ascribed to it in Section 9.1(a).
"Bailee Letter" means bailee letters, in form and substance satisfactory
to Agent and its counsel delivered to Agent pursuant to Section 5.9.
"Bankruptcy Code" means the provisions of Title 11 of the United States
Code, 11 U.S.C. Sections 101 et seq.
"▇▇▇▇-and-Hold Account" means an Account arising with respect to goods
that are sold on a ▇▇▇▇-and-hold basis.
"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Borrower" has the meaning ascribed thereto in the preamble to the
Agreement.
"Borrower Pledge Agreement" means the Pledge Agreement dated as of the
Original Closing Date executed by Borrower in favor of Agent, on behalf of
itself and Lenders, pledging all Stock of Intercontinental and all Intercompany
Notes owing to or held by it.
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"Borrowing Availability" means as of any date of determination the lesser
of (i) the Maximum Amount less any Reserves established by Agent at such time
and (ii) the Borrowing Base, in each case, less the sum of the Revolving Loan
and Swing Line Loan then outstanding.
"Borrowing Base" means, as of any date of determination by Agent, from
time to time, an amount equal to the sum at such time of:
(a) up to 85% of the book value of Borrower's Eligible Accounts at such
time; plus
(b) the lesser of:
(i) the lesser of (x) up to 65% of the book value of Eligible
Inventory consisting of raw materials and finished goods plus up to
55% of the book value of Eligible Inventory consisting of
work-in-process Inventory, in each case valued at the lower of cost
(determined on a first-in, first-out basis) or market and (y) 85% of
the most recently appraised NOLV of Eligible Inventory consisting of
raw materials, NOLV of Eligible Inventory consisting of finished
goods and NOLV of Eligible Inventory consisting of work-in-process
Inventory; and
(ii) the lesser of (x) $45,000,000 and (y) the greater of (A) 60% of
the Maximum Amount in effect at such time and (B) $35,000,000; plus
(c) at all times on and after the Fixed Asset Availability Date, the
lesser of (A) the Fixed Asset Availability Value at such time multiplied by
the FALV Amortization Factor and (B) the Requested Fixed Asset Availability
Value multiplied by the FALV Amortization Factor,
in each case, less any Reserves established by Agent at such time.
"Borrowing Base Certificate" means a certificate to be executed and
delivered from time to time by Borrower's Chief Financial Officer, or another
responsible officer of Borrower having substantially the same authority and
responsibility or otherwise acceptable to Agent in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the States of Illinois
and/or New York and in reference to LIBOR Loans shall mean any such day that is
also a LIBOR Business Day.
"Capital Expenditures" means, with respect to any Person, all expenditures
(by the expenditure of cash or the incurrence of Indebtedness) by such Person
during any measuring period for any fixed assets or improvements or for
replacements, substitutions or additions thereto, that have a useful life of
more than one year and that are required to be capitalized under GAAP.
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"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital Lease of any
Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex B.
"Cash Equivalents" has the meaning ascribed to it in Annex B.
"Cash Management Systems" has the meaning ascribed to it in Section 1.8.
"Change of Control" means any of the following: (a) any person or group of
persons (within the meaning of the Securities Exchange Act of 1934) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 20% or more of the issued and outstanding shares of capital Stock of
Holdings having the right to vote for the election of directors of Holdings
under ordinary circumstances; (b) during any period of twelve consecutive
calendar months, individuals who at the beginning of such period constituted the
board of directors of Holdings (together with any new directors whose election
by the board of directors of Holdings or whose nomination for election by the
Stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; (c) Holdings ceases to own and control
all of the economic and voting rights associated with all of the outstanding
capital Stock of Borrower or (d) Holdings ceases to own and control all of the
economic and voting rights associated with all of the outstanding capital Stock
of any of its Subsidiaries other than Borrower.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is defined in the
Code, including electronic chattel paper, now owned or hereafter acquired by any
Credit Party, wherever located.
"Closing Date" means January 12, 2006.
"Closing Checklist" means the schedule, including all appendices, exhibits
or schedules thereto, listing certain documents and information to be delivered
in connection with
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the Agreement, the other Loan Documents and the transactions contemplated
thereunder, substantially in the form attached hereto as Annex D.
"Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided, further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" means the property covered by the Security Agreement, the
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" means the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security Agreement and all similar
agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.
"Collateral Reports" means the reports with respect to the Collateral
referred to in Annex F.
"Collection Account" means that certain account of Agent, account number
▇▇▇-▇▇▇-▇▇ in the name of Agent at DeutscheBank Trust Company Americas in New
York, New York ABA No. 021 001 033, or such other account as may be specified in
writing by Agent as the "Collection Account."
"Commitment Termination Date" means the earliest of (a) June 2, 2010, (b)
the date of termination of Lenders' obligations to make Advances and to incur
Letter of Credit Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b), and (c) the date of indefeasible prepayment in full
by Borrower of the Loans and the cancellation and return (or stand-by guarantee)
of all Letters of Credit or the cash collateralization of all Letter of Credit
Obligations pursuant to Annex B, and the permanent reduction of the Commitments
to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate of such Lender's
Revolving Loan Commitment (including without duplication the Swing Line Lender's
Swing Line Commitment as a subset of its Revolving Loan Commitment) as set forth
on Annex J to the Agreement or in the most recent Assignment Agreement executed
by such Lender and (b) as to
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all Lenders, the aggregate of all Lenders' Revolving Loan Commitments (including
without duplication the Swing Line Lender's Swing Line Commitment as a subset of
its Revolving Loan Commitment), which aggregate commitment shall be One Hundred
Million Dollars ($100,000,000) on the Closing Date, as to each of clauses (a)
and (b), as such Commitments may be reduced, amortized or adjusted from time to
time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in Annex E.
"Concentration Account" has the meaning ascribed to it in Annex C.
"Contracts" means all "contracts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.
"Control Letter" means a letter agreement between Agent and (i) the issuer
of uncertificated securities with respect to uncertificated securities in the
name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant limits any security interest in the applicable
financial assets in a manner reasonably satisfactory to Agent, acknowledges the
Lien of Agent, on behalf of itself and Lenders, on such financial assets, and
agrees to follow the instructions or entitlement orders of Agent without further
consent by the affected Credit Party.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyright Security Agreements" means the Copyright Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party.
"Copyrights" means all of the following now owned or hereafter adopted or
acquired by any Credit Party: (a) all copyrights and General Intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" means Holdings, Borrower, and each of their respective
Subsidiaries.
A-6
"Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section 1.5(d).
"Deposit Accounts" means all "deposit accounts" as such term in defined in
the Code, now or hereafter held in the name of any Credit Party.
"Disbursement Accounts" has the meaning ascribed to it in Annex C.
"Disclosure Schedules" means the Schedules prepared by Borrower and
denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the
Agreement.
"Documents" means any "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of America.
"Domestic Subsidiaries" means any Subsidiary organized under the laws of a
jurisdiction in the United States of America.
"EBITDA" means, with respect to any Person for any fiscal period, without
duplication, an amount equal to (a) consolidated net income (with Inventory
valued on a FIFO basis) of such Person for such period, determined in accordance
with GAAP, minus (b) the sum of (i) income tax credits, (ii) interest income,
(iii) gain from extraordinary items for such period, (iv) any aggregate net gain
(but not any aggregate net loss) during such period arising from the sale,
exchange or other disposition of capital assets by such Person (including any
fixed assets, whether tangible or intangible, all inventory sold in conjunction
with the disposition of fixed assets and all securities), (v) any cash pension
or other post retirement employee benefits ("OPEB") contribution payments, and
(vi) any other non-cash gains recorded as other income that have been added in
determining consolidated net income, in each case (other than clause (v) above)
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period as agreed upon by Agent, (iv)
depreciation and amortization for such period, (v) amortized debt discount for
such period, (vi) pension or OPEB expenses, (vii) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, (viii) any other non-cash losses (other
than those reflecting write-down of Inventory or Accounts) recorded as other
expenses that have been subtracted in determining consolidated net income, and
(ix) any losses or expenses specifically recorded in connection with the
termination of the Interest Rate Swaps, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (2) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of
A-7
cash dividends or distributions; (3) the undistributed earnings of any
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person; (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets; and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.
"Eligible Accounts" has the meaning ascribed to it in Section 1.6 of the
Agreement.
"Eligible Equipment" mean any Equipment owned by Borrower which meets, and
so long as it continues to meet, the following requirements:
(a) it is located at one of the business locations in the United States or
Canada set forth on Disclosure Schedule (3.2),
(b) it is subject to a first priority lien in favor of Agent on behalf of
itself and Lenders;
(c) it is owned by Borrower free and clear of all Liens and rights of any
other Person, except the Liens in favor of Agent, on behalf of itself and
Lenders
(d) it does not breach any of the representations or warranties pertaining
to such property set forth in this Agreement or the other Loan Documents,
(e) it is appraised by an independent appraisal or audit firm designated
by Agent and reasonably acceptable to Borrower,
(f) Borrower has good, valid, and marketable title thereto;
(g) it is not located on real property leased by Borrower, unless it is
subject to a landlord waivers and consents and bailee letters in form and
substance satisfactory to Agent, as the case may be, and unless it is segregated
or otherwise separately identifiable from goods of other Persons, if any, stored
on the premises;
(h) it is not damaged, defective or obsolete, it does not constitute
furnishings, parts or fixtures and it is not affixed to Real Estate, unless such
Equipment is affixed to the Mortgaged Property;
(i) Agent has received evidence of the property or casualty insurance
required by this Agreement with respect to such Equipment;
A-8
(j) it is not subject to a lease with any Person (other than the Borrower,
provided, that the Lien on and security interest in the related lease shall be
granted to the Agent and Agent shall have received all control agreements and
instruments and all actions shall be taken as reasonably requested by the Agent
to perfect the Agent's security interest in such lease); and
(k) it is not located at an owned location subject to a mortgage in favor
of a lender other than the Agent (unless a reasonably satisfactory mortgagee
agreement has been delivered to the Agent).
"Eligible Inventory" has the meaning ascribed to it in Section 1.7 of the
Agreement.
"Eligible Real Estate" means the Mortgaged Property which (a) is located
at one of the following locations (i) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, (ii) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, (iii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
(iv) ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, (v) ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, (vi) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, (vii) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, (viii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and (ix) ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, (b) is owned by Borrower or Holdings (b) is subject to a first priority
mortgage and Lien in favor of Agent, (c) is owned by Borrower and Holdings, as
applicable free and clear of all Liens and rights of any other Person, Agent, on
behalf of itself and Lenders, (d) is appraised pursuant to paragraph (f) of
Annex F, (e) is owned by such Credit Party free and clear of all Liens and
rights of any other Person, except the Liens in favor of Agent, on behalf of
itself and Lenders, (f) does not breach any of the representations or warranties
pertaining to such property set forth in the Loan Documents, and (g) is covered
by insurance reasonably acceptable to Agent.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C.
Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. Sections 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42 U.S.C.
Sections 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C.
Sections 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C.
Sections 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. Sections
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
A-9
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located and, in
any event, including all such Credit Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any trade or
business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within thirty (30) days; (g)
any other event or condition that would reasonably be expected to constitute
grounds under Section
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4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the loss of a Qualified Plan's qualification or tax exempt status; or (j) the
termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section 8.1.
"Existing Obligations" means the "Obligations" under and as defined in the
Original Credit Agreement.
"FALV Amortization Factor" means mean 1 minus a fraction, the numerator of
which is the number of calendar months elapsed as of any date of determination
since the Fixed Asset Availability Date (but in no event more than 84) and the
denominator of which is 84.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29 U.S.C.
Section 201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fees" means any and all fees payable to Agent or any Lender pursuant to
the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth in Annex G.
"Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Holdings and its
Subsidiaries delivered in accordance with Section 3.4 and Annex E.
"Fiscal Month" means any of the monthly accounting periods of Borrower.
"Fiscal Quarter" means any of the quarterly accounting periods of
Borrower.
"Fiscal Year" means the 52 or 53 week period, as the case may be, of
Holdings and its Subsidiaries ending on the Saturday closest to September 30 in
each year.
"Fixed Asset Availability Date" means the date on which each of the
following shall have been satisfied or shall have occurred: (1) Borrower shall
have given Agent written
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notice, in form and substance satisfactory to Agent, requesting that the
Borrowing Base include availability based on the Fixed Asset Availability Value
(which written notice may be given by Borrower not more than once during the
term of this Agreement) and specifying in detail reasonably satisfactory to
Agent the Equipment and Real Estate owned by Borrower proposed to be included in
the calculation of the Fixed Asset Value, (2) Agent shall have received (A)
appraisals conducted by an appraiser, and in form and substance reasonably
satisfactory to Agent conducted at Borrower's sole cost and expense, of, as
applicable, the NOLV of the Equipment owned by Borrower and the appraised fair
market value of the Real Estate owned by Borrower proposed to be included in the
calculation of the Fixed Asset Availability Value, which appraisals shall be
conducted and completed no earlier than the 60th date prior to the Fixed Asset
Availability Date and (B) with respect to each relevant Real Estate, if, in
Agent's reasonable judgment, there is any adverse change to the environmental
status of the properties, Phase I Environmental Site Assessment Reports,
consistent with American Society of Testing and Materials (ASTM) Standard E
1527-00 (or the current ASTM standard for Phase I environmental site assessment
reports), and applicable state requirements, dated no more than six (6) months
prior to the Fixed Asset Availability Date, prepared by environmental engineers
reasonably satisfactory to Agent, all in form and substance reasonably
satisfactory to Agent, in its sole discretion; and Agent shall have further
received such environmental review and audit reports, including Phase II reports
as Agent shall have requested, and Agent shall be satisfied, in its sole
discretion, with the contents of all such environmental reports (and Agent shall
have received letters executed by the environmental firms preparing such
environmental reports, in form and substance reasonably satisfactory to Agent,
authorizing Agent and Lenders to rely on such reports), (3) within three (3)
days of the receipt by Agent of all of the appraisals and reports described in
the immediately preceding clause (2)), Agent shall have calculated availability
based on the Fixed Asset Availability Value at such time which shall be equal to
the lesser of (x) the Fixed Asset Availability Value of the relevant Eligible
Equipment and relevant Eligible Real Estate at such time and (y) $25,000,000,
and Agent shall have provided the Borrower with a written notice specifying such
amount (the "Agent Notice"), (4) within three (3) days following the delivery of
the Agent Notice, Borrower shall have given Agent written notice in form and
substance satisfactory to Agent specifying the amount of availability based on
the Fixed Asset Availability Value that the Borrower is requesting (which amount
shall be equal to or less than the amount of availability specified by the Agent
in the Agent Notice) (the amount of availability so specified by the Borrower
being the "Requested Fixed Asset Availability Value"), (iv) Borrower shall have
paid the Agent a fee equal to three eighths of one percent (0.375%) multiplied
by the Requested Fixed Asset Availability Value, which fee shall be
non-refundable and fully earned on the Fixed Asset Availability Date and (iv)
Agent shall have received a certificate dated as of the Fixed Asset Availability
Date executed and delivered on such date by Borrower's Chief Financial Officer,
or another responsible officer of Borrower having substantially the same
authority and responsibility or otherwise acceptable to Agent, certifying that
no Default or Event of Default has occurred and is continuing.
"Fixed Asset Availability Value" means at any time an amount equal to the
sum of (a) 85% of the appraised NOLV of the Eligible Equipment of the Borrower
as set forth in the most recent appraisal conducted by an appraiser, and in form
and substance reasonably satisfactory to Agent, plus (b) 50% of the appraised
fair market value of the Eligible Real Estate of the Borrower as set forth in
the most recent appraisal conducted by an appraiser, and in form and substance
reasonably satisfactory to Agent.
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"Fixed Charges" means, with respect to any Person for any fiscal period,
(a) the aggregate of all Interest Expense paid or accrued during such period
(excluding amortized capitalized financing costs to the extent included in
determining Interest Expense), plus (b) scheduled payments of principal with
respect to Indebtedness during such period, plus (c) income taxes paid in cash
during such fiscal period plus (d) dividends or stock repurchases during such
fiscal period. For the avoidance of doubt, Fixed Charges shall not include any
expenses or losses specifically recorded in connection with the termination of
the Interest Rate Swaps.
"Fixed Charge Coverage Ratio" means, with respect to any Person for any
fiscal period, the ratio of EBITDA minus Unfunded Capital Expenditures to Fixed
Charges.
"Fixtures" means all "fixtures" as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party.
"Foreign Subsidiary" means any direct or indirect Subsidiary of Holdings
organized under the laws of a jurisdiction outside of the United States.
"Funded Debt" means, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and that by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrower, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
"GAAP" means generally accepted accounting principles in the United States
of America, consistently applied, as such term is further defined in Annex G to
the Agreement.
"GE Capital" means General Electric Capital Corporation, a Delaware
corporation.
"GE Capital Fee Letter" means that certain second amended and restated
letter, dated as of January 12, 2006, between GE Capital and Borrower with
respect to certain Fees to be paid from time to time by Borrower to GE Capital.
"General Intangibles" means "general intangibles," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, including all
right, title and interest that such Credit Party may now or hereafter have in or
under any Contract, all payment intangibles, customer lists, Licenses,
Copyrights, Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
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rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
chooses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash, Instruments and other property in respect of or in exchange for pledged
Stock and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.
"Goods" means any "goods" as defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located, including embedded software to
the extent included in "goods" as defined in the Code, manufactured homes,
standing timber that is cut and removed for sale and unborn young of animals.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" means, as to any Person, any obligation of such
Person guaranteeing, providing comfort or otherwise supporting any Indebtedness,
lease, dividend, or other obligation ("primary obligation") of any other Person
(the "primary obligor") in any manner, including any obligation or arrangement
of such Person to (a) purchase or repurchase any such primary obligation, (b)
advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (c) purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (d) protect the beneficiary of such arrangement from loss (other
than product warranties given in the ordinary course of business) or (e)
indemnify the owner of such primary obligation against loss in respect thereof.
The amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable amount
of the primary obligation in respect of which such Guaranteed Indebtedness is
incurred and (y) the maximum amount for which such Person may be liable pursuant
to the terms of the instrument embodying such Guaranteed Indebtedness, or, if
not stated or determinable, the maximum reasonably anticipated liability
(assuming full performance) in respect thereof.
"Guaranties" means, collectively, the Holdings Guaranty, each Subsidiary
Guaranty and any other guaranty executed by any Guarantor in favor of Agent and
Lenders in respect of the Obligations.
"Guarantors" means Holdings, each Subsidiary of Holdings other than
Borrower and each other Person, if any, that executes a guaranty or other
similar agreement in favor of Agent, for itself and the ratable benefit of
Lenders, in connection with the transactions contemplated by the Agreement and
the other Loan Documents.
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"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Holdings" has the meaning ascribed thereto in the recitals to the
Agreement.
"Holdings Guaranty" means the guaranty dated as of the Original Closing
Date executed by Holdings in favor of Agent and Lenders.
"Holdings Pledge Agreement" means the Pledge Agreement of dated as of the
Original Closing Date executed by Holdings in favor of Agent, on behalf of
itself and Lenders, pledging all Stock of Borrower and all Intercompany Notes
owing to or held by it.
"Inactive Subsidiaries" means Intercontinental Metals Corporation, a North
Carolina Corporation.
"Indebtedness" means , with respect to any Person, without duplication (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred 6 months or more, but excluding
obligations to trade creditors incurred in the ordinary course of business that
are unsecured and not overdue by more than 6 months unless being contested in
good faith, (b) all reimbursement and other obligations with respect to letters
of credit, bankers' acceptances and surety bonds, whether or not matured, (c)
all obligations evidenced by notes, bonds, debentures or similar instruments,
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index
Rate as in effect on the Closing Date) of future rental payments under all
synthetic leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred
to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in Section 1.13.
"Indemnified Person" has the meaning ascribed to it in Section 1.13.
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"Index Rate" means, for any day, a floating rate equal to the higher of
(i) the rate publicly quoted from time to time by The Wall Street Journal as the
"prime rate" (or, if The Wall Street Journal ceases quoting a prime rate, the
highest per annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled "Selected Interest
Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal
Funds Rate plus 50 basis points per annum. Each change in any interest rate
provided for in the Agreement based upon the Index Rate shall take effect at the
time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.
"Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents, Copyrights,
Trademarks, and the goodwill associated with such Trademarks.
"Intercompany Notes" has the meaning ascribed to it in Section 6.3.
"Intercontinental" means Intercontinental Metals Corporation, a North
Carolina corporation.
"Interest Coverage Ratio" means, with respect to any Person for any
period, the ratio of EBITDA to Interest Expense.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including
interest expense with respect to any Funded Debt of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.
"Interest Rate Swaps" means the interest rate swap transactions between
Holdings and Bank of America, N.A. (Reference No. 148487) for a notional amount
of $25,000,000 and the interest rate swap transactions between Holdings and
First Union National Bank (n/k/a Wachovia National Bank, N.A. (Reference No.
135835/195600) for a notional amount of $25,000,000.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided that,
in addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest that has then accrued under the Agreement.
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"Inventory" means any "inventory," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located, and in
any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, supplies or
materials of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.
"Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"Keyman Life Insurance" means the keyman life insurance policy on the life
of H.O. ▇▇▇▇▇, III issued by Northwestern Mutual (or any replacement policy).
"IRS" means the Internal Revenue Service.
"L/C Issuer" has the meaning ascribed to it in Annex B.
"L/C Sublimit" has the meaning ascribed to in it Annex B.
"Lenders" means GE Capital, the other Lenders named on the signature pages
of the Agreement, and, if any such Lender shall decide to assign all or any
portion of the Obligations, such term shall include any assignee of such Lender.
"Letter of Credit Fee" has the meaning ascribed to it in Annex B.
"Letter of Credit Obligations" means all outstanding obligations incurred
by Agent and Lenders at the request of Borrower, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the issuance of
Letters of Credit by Agent or another L/C Issuer or the purchase of a
participation as set forth in Annex B with respect to any Letter of Credit. The
amount of such Letter of Credit Obligations shall equal the maximum amount that
may be payable by Agent or Lenders thereupon or pursuant thereto.
"Letters of Credit" means documentary or standby letters of credit issued
for the account of Borrower by any L/C Issuer, and bankers' acceptances issued
by Borrower, for which Agent and Lenders have incurred Letter of Credit
Obligations.
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"Letter-of Credit Rights" means "letter-of-credit rights" as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.
"LIBOR Business Day" means a Business Day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two or three months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next succeeding
LIBOR Business Day unless the result of such extension would be to carry such
LIBOR Period into another calendar month in which event such LIBOR Period
shall end on the immediately preceding LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end two (2) LIBOR Business Days prior to such date;
(c) any LIBOR Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Period) shall end on the
last LIBOR Business Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a payment or
prepayment of any LIBOR Loan during a LIBOR Period for such Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be no more
than five (5) separate LIBOR Loans in existence at any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest determined by
Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which
event the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in effect
on the day that is
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two (2) LIBOR Business Days prior to the beginning of such LIBOR Period
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental Authority
having jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Federal Reserve Board that are required
to be maintained by a member bank of the Federal Reserve System).
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower.
"License" means any Copyright License, Patent License, Trademark License
or other license of rights or interests now held or hereafter acquired by any
Credit Party.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
"Loan Account" has the meaning ascribed to it in Section 1.12.
"Loan Documents" means the Agreement, the Notes, the Collateral Documents,
the GE Capital Fee Letter, the Master Standby Agreement, the Master Documentary
Agreement, and all other agreements, instruments, documents and certificates
identified in the Closing Checklist executed and delivered to, or in favor of,
Agent or any Lenders and including all other pledges, powers of attorney,
consents, assignments, contracts, notices, letter of credit agreements and all
other written matter whether heretofore, now or hereafter executed by or on
behalf of any Credit Party, or any employee of any Credit Party, and delivered
to Agent or any Lender in connection with the Agreement, the Original Credit
Agreement or the transactions contemplated thereby. Any reference in the
Agreement or any other Loan Document to a Loan Document shall include all
appendices, exhibits or schedules thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to the Agreement or
such Loan Document as the same may be in effect at any and all times such
reference becomes operative.
"Loans" means the Revolving Loan and the Swing Line Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Margin Stock" has the meaning ascribed to it in Section 3.10.
"Master Documentary Agreement" means the Master Agreement for Documentary
Letters of Credit dated as of the Original Closing Date between Borrower, as
Applicant, and GE Capital, as Issuer.
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"Master Standby Agreement" means the Master Agreement for Standby Letters
of Credit dated as of the Original Closing Date between Borrower, as Applicant,
and GE Capital, as Issuer.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of any
Credit Party, (b) Borrower's ability to pay any of the Loans or any of the other
Obligations in accordance with the terms of the Agreement, (c) the Collateral or
Agent's Liens, on behalf of itself and Lenders, on the Collateral or the
priority of such Liens, or (d) Agent's or any Lender's rights and remedies under
the Agreement and the other Loan Documents. Without limiting the generality of
the foregoing, any event or occurrence adverse to one or more Credit Parties
which results or could reasonably be expected to result in losses, costs,
damages, liabilities or expenditures in excess of $5,000,000 shall constitute a
Material Adverse Effect.
"Maximum Amount" means, as of any date of determination, an amount equal
to the Revolving Loan Commitment of all Lenders as of that date.
"Mortgaged Properties" has the meaning assigned to it in Annex D.
"Mortgages" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to the Mortgaged Properties, all in form and
substance reasonably satisfactory to Agent.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making,
is obligated to make or has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.
"Net Asset Disposition Proceeds" has the meaning assigned to it in Section
1.3(b)(ii).
"Net Orderly Liquidation Value" or "NOLV" means, with respect to any
category of Eligible Inventory or Equipment, as the case may be, the appraised
orderly liquidation value (expressed as a percentage) as determined by Agent in
good faith based on the most recent appraisal report prepared by an appraiser
reasonably acceptable to Agent which reflects the net cash value (expressed as a
percentage) 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 or
Equipment, as the case may be, after deducting all costs, expenses and fees
attributable to such sale or disposition, including, without limitation, all
fees, costs and expenses of any attorneys, appraisers, auctioneers and
liquidators engaged to conduct such sale or disposition, all costs and expenses
of removing and delivering the same to purchasers, and the costs and expenses of
operating Credit Parties' businesses and securing the Collateral during the
pendency of the liquidation process.
"Non-Funding Lender" has the meaning ascribed to it in Section 9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes and the Swing Line Note.
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"Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.5(e).
"Notice of Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement, letter of credit agreement or other instrument, arising
under the Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such case or proceeding), Fees, expenses, attorneys' fees and
any other sum chargeable to any Credit Party under the Agreement or any of the
other Loan Documents.
"Overadvance" has the meaning ascribed to it in Section 1.1(a)(iii).
"Original Closing Date" means June 2, 2004.
"Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patent Security Agreements" means the Patent Security Agreements made in
favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party.
"Patents" means all of the following in which any Credit Party now holds
or hereafter acquires any interest: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of ERISA.
"Permitted Encumbrances" means the following encumbrances: (a) Liens for
taxes or assessments or other governmental Charges not yet due and payable or
which are being contested in accordance with Section 5.2(b); (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of
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business, so long as such Liens attach only to Equipment, Fixtures and/or Real
Estate; (e) carriers', warehousemen's, suppliers' or other similar possessory
liens arising in the ordinary course of business and securing liabilities in an
outstanding aggregate amount not in excess of $ 100,000 at any time, so long as
such Liens attach only to Inventory; (f) deposits securing, or in lieu of,
surety, appeal or customs bonds in proceedings to which any Credit Party is a
party; (g) any attachment or judgment lien not constituting an Event of Default
under Section 8.1(j); (h) zoning restrictions, easements, licenses, or other
restrictions on the use of any Real Estate or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i) presently
existing or hereafter created Liens in favor of Agent, on behalf of Lenders; and
(j) Liens expressly permitted under clauses (b) and (c) of Section 6.7 of the
Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any Credit Party.
"Pledge Agreements" means the Holdings Pledge Agreement, the Borrower
Pledge Agreement and any other pledge agreement entered into after the Closing
Date by any Credit Party (as required by the Agreement or any other Loan
Document).
"Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Projections" means Borrower's forecasted consolidated: (a) balance
sheets; (b) profit and loss statements; and (c) cash flow statements consistent
with the historical Financial
A-22
Statements of Borrower, together with appropriate supporting details and a
statement of underlying assumptions.
"Pro Rata Share" means with respect to all matters relating to any Lender
(a) with respect to the Revolving Loan, the percentage obtained by dividing (i)
the Revolving Loan Commitment of that Lender by (ii) the aggregate Revolving
Loan Commitments of all Lenders, as any such percentages may be adjusted by
assignments permitted pursuant to Section 9.1, (b) with respect to all Loans,
the percentage obtained by dividing (i) the aggregate Commitments of that Lender
by (ii) the aggregate Commitments of all Lenders, and (c) with respect to all
Loans on and after the Commitment Termination Date, the percentage obtained by
dividing (i) the aggregate outstanding principal balance of the Loans held by
that Lender, by (ii) the outstanding principal balance of the Loans held by all
Lenders.
"Qualified Plan" means a Pension Plan that is intended to be tax-qualified
under Section 401(a) of the IRC.
"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender
and, with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which has a rating of BBB or higher from S&P and a rating of Baa2 or
higher from ▇▇▇▇▇'▇ at the date that it becomes a Lender and which, through its
applicable lending office, is capable of lending to Borrower without the
imposition of any withholding or similar taxes; provided that no Person proposed
to become a Lender after the Closing Date and determined by Agent to be acting
in the capacity of a vulture fund or distressed debt purchaser shall be a
Qualified Assignee, and no Person or Affiliate of such Person proposed to become
a Lender after the Closing Date and that holds Subordinated Debt or Stock issued
by any Credit Party shall be a Qualified Assignee.
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Real Estate Held for Sale" has the meaning ascribed to it in Section 6.8.
"Reference Availability" means, for any period, the lesser of (i) the
daily average Borrowing Availability for the immediately preceding 90-day period
and (ii) the daily average Borrowing Availability for the immediately preceding
30-day period.
"Refinancing" means the repayment in full by Borrower of the Term Loans
under and as defined in the Original Credit Agreement on the Closing Date.
"Refunded Swing Line Loan" has the meaning ascribed to it in Section
1.1(c)(iii).
"Related Transactions" means the borrowing under the Revolving Loan on the
Closing Date, the Refinancing, the payment of all fees, costs and expenses
associated with all of the foregoing and the execution and delivery of all of
the Related Transactions Documents.
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"Related Transactions Documents" means the Loan Documents and all other
agreements or instruments executed in connection with the Related Transactions.
"Release" means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material in
the indoor or outdoor environment, including the movement of Hazardous Material
through or in the air, soil, surface water, ground water or property.
"Requisite Lenders" means Lenders having (a) more than 50% of the
Commitments of all Lenders, or (b) if the Commitments have been terminated, more
than 50% of the aggregate outstanding amount of the Loans.
"Reserves" means (a) reserves established by Agent from time to time
against Eligible Inventory pursuant to Section 5.9, (b) reserves established
pursuant to Section 5.4(c), and (c) such other reserves against Eligible
Accounts, Eligible Inventory, Eligible Equipment, Eligible Real Estate, Maximum
Amount or Borrowing Availability that Agent may, in its reasonable credit
judgment, establish from time to time. Without limiting the generality of the
foregoing, Reserves established to ensure the payment of accrued Interest
Expenses or Indebtedness shall be deemed to be a reasonable exercise of Agent's
credit judgment.
"Restricted Payment" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party's Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of such Credit
Party other than payment of compensation or benefits in the ordinary course of
business to Stockholders who are employees or directors of such Credit Party;
and (g) any payment of management fees (or other fees of a similar nature) by
such Credit Party to any Stockholder of such Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that provides
for continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Revolving Credit Advance" has the meaning ascribed to it in Section
1.1(a)(i).
A-24
"Revolving Lenders" means, as of any date of determination, Lenders having
a Revolving Loan Commitment.
"Revolving Loan" means, at any time, the sum of (i) the aggregate amount
of Revolving Credit Advances outstanding to Borrower plus (ii) the aggregate
Letter of Credit Obligations incurred on behalf of Borrower. Unless the context
otherwise requires, references to the outstanding principal balance of the
Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.
"Revolving Loan Commitment" means (a) as to any Revolving Lender, the
aggregate commitment of such Revolving Lender to make Revolving Credit Advances
or incur Letter of Credit Obligations as set forth on Annex J to the Agreement
or in the most recent Assignment Agreement executed by such Revolving Lender and
(b) as to all Revolving Lenders, the aggregate commitment of all Revolving
Lenders to make Revolving Credit Advances or incur Letter of Credit Obligations,
which aggregate commitment shall be One Hundred Million Dollars ($100,000,000)
on the Closing Date, as such amount may be adjusted, if at all, from time to
time in accordance with the Agreement.
"Revolving Note" has the meaning ascribed to it in Section 1.1(a)(ii).
"Security Agreement" means the Security Agreement dated as of the Original
Closing Date entered into by and among Agent, on behalf of itself and Lenders,
and each Credit Party that is a signatory thereto.
"Software" means all "software" as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, other than software embedded in
any category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person;
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person's property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term
A-25
is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934).
"Stockholder" means, with respect to any Person, each holder of Stock of
such Person.
"Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty dated as of the
Original Closing Date executed by Intercontinental in favor of Agent, on behalf
of itself and Lenders.
"Supermajority Revolving Lenders" means Lenders having (a) 80% or more of
the Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, 80% or more of the aggregate outstanding
amount of the Revolving Loan (with the Swing Line Loan being attributed to the
Lender making such Loan) and Letter of Credit Obligations.
"Supporting Obligations" means all "supporting obligations" as such term
is defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles, Instruments,
or Investment Property.
"Swing Line Advance" has the meaning ascribed to it in Section 1.1(c)(i).
"Swing Line Availability" has the meaning ascribed to it in Section
1.1(c)(i).
"Swing Line Commitment" means, as to the Swing Line Lender, the commitment
of the Swing Line Lender to make Swing Line Advances as set forth on Annex J to
the Agreement, which commitment constitutes a subfacility of the Revolving Loan
Commitment of the Swing Line Lender.
"Swing Line Lender" means GE Capital.
A-26
"Swing Line Loan" means at any time, the aggregate amount of Swing
Line Advances outstanding to Borrower.
"Swing Line Note" has the meaning ascribed to it in Section
1.1(c)(ii).
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"Termination Date" means the date on which (a) the Loans have been
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged, (c) all Letter of
Credit Obligations have been cash collateralized, cancelled or backed by standby
letters of credit in accordance with Annex B, and (d) Borrower shall not have
any further right to borrow any monies under the Agreement.
"Title IV Plan" means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark Security Agreements" means the Trademark Security
Agreements made in favor of Agent, on behalf of Lenders, by each applicable
Credit Party.
"Trademark License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"Unfunded Capital Expenditures" means Capital Expenditures other
than Capital Expenditures that are specifically financed by lenders other than
the Lenders hereunder within 60 days of the date such amount became a Capital
Expenditure.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of five (5) years following a
transaction which might reasonably be
A-27
expected to be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by any Credit Party or any ERISA Affiliate as a
result of such transaction.
"Vacant Land Lease" has the meaning ascribed to it in Section 5.9.
"Welfare Plan" means a Plan described in Section 3(i) of ERISA.
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated
in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
A-28
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the Agreement,
Agent and Revolving Lenders agree to incur, from time to time prior to the
Commitment Termination Date, upon the request of Borrower and for Borrower's
account, Letter of Credit Obligations by causing Letters of Credit to be issued
by GE Capital or a Subsidiary thereof or a bank or other legally authorized
Person selected by or acceptable to Agent in its sole discretion (each, an "L/C
Issuer") for Borrower's account and guaranteed by Agent; provided, that if the
L/C Issuer is a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall, subject to the terms
and conditions hereinafter set forth, purchase (or be deemed to have purchased)
risk participations in all such Letters of Credit issued with the written
consent of Agent, as more fully described in paragraph (b)(ii) below. The
aggregate amount of all such Letter of Credit Obligations shall not at any time
exceed the least of (i) Ten Million Dollars ($10,000,000) (the "L/C Sublimit"),
and (ii) the Maximum Amount less the aggregate outstanding principal balance of
the Revolving Credit Advances and the Swing Line Loan, and (iii) the Borrowing
Base less the aggregate outstanding principal balance of the Revolving Credit
Advances and the Swing Line Loan. No such Letter of Credit shall have an expiry
date that is more than one year following the date of issuance thereof, unless
otherwise determined by Agent in its sole discretion (including with respect to
customary evergreen provisions), and neither Agent nor Revolving Lenders shall
be under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date that
is later than the Commitment Termination Date.
(b)(i) Advances Automatic; Participations. In the event that Agent
or any Revolving Lender shall make any payment on or pursuant to any Letter of
Credit Obligation, such payment shall then be deemed automatically to constitute
a Revolving Credit Advance under Section 1.1(a) of the Agreement regardless of
whether a Default or Event of Default has occurred and is continuing and
notwithstanding Borrower's failure to satisfy the conditions precedent set forth
in Section 2, and each Revolving Lender shall be obligated to pay its Pro Rata
Share thereof in accordance with the Agreement. The failure of any Revolving
Lender to make available to Agent for Agent's own account its Pro Rata Share of
any such Revolving Credit Advance or payment by Agent under or in respect of a
Letter of Credit shall not relieve any other Revolving Lender of its obligation
hereunder to make available to Agent its Pro Rata Share thereof, but no
Revolving Lender shall be responsible for the failure of any other Revolving
Lender to make available such other Revolving Lender's Pro Rata Share of any
such payment.
(ii) If it shall be illegal or unlawful for Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Sections 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
or if the L/C Issuer is a Revolving Lender, then (i) immediately and without
further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may
B-1
be) an undivided interest and participation equal to such Revolving Lender's Pro
Rata Share (based on the Revolving Loan Commitments) of the Letter of Credit
Obligations in respect of all Letters of Credit then outstanding and (ii)
thereafter, immediately upon issuance of any Letter of Credit, each Revolving
Lender shall be deemed to have irrevocably and unconditionally purchased from
Agent (or such L/C Issuer, as the case may be) an undivided interest and
participation in such Revolving Lender's Pro Rata Share (based on the Revolving
Loan Commitments) of the Letter of Credit Obligations with respect to such
Letter of Credit on the date of such issuance. Each Revolving Lender shall fund
its participation in all payments or disbursements made under the Letters of
Credit in the same manner as provided in the Agreement with respect to Revolving
Credit Advances.
(c) Cash Collateral. (i) If Borrower is required to provide cash
collateral for any Letter of Credit Obligations pursuant to the Agreement,
including Section 8.2 of the Agreement, prior to the Commitment Termination
Date, Borrower will pay to Agent for the ratable benefit of itself and Revolving
Lenders cash or cash equivalents acceptable to Agent ("Cash Equivalents") in an
amount equal to 103% of the maximum amount then available to be drawn under each
applicable Letter of Credit outstanding. Such funds or Cash Equivalents shall be
held by Agent in a cash collateral account (the "Cash Collateral Account")
maintained at a bank or financial institution acceptable to Agent. The Cash
Collateral Account shall be in the name of Borrower and shall be pledged to, and
subject to the control of, Agent, for the benefit of Agent and Lenders, in a
manner satisfactory to Agent. Borrower hereby pledges and grants to Agent, on
behalf of itself and Lenders, a security interest in all such funds and Cash
Equivalents held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of all amounts due in respect of
the Letter of Credit Obligations and other Obligations, whether or not then due.
The Agreement, including this Annex B, shall constitute a security agreement
under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrower shall either (A) provide cash collateral therefor in the manner
described above, or (B) cause all such Letters of Credit and guaranties thereof,
if any, to be canceled and returned, or (C) deliver a stand-by letter (or
letters) of credit in guarantee of such Letter of Credit Obligations, which
stand-by letter (or letters) of credit shall be of like tenor and duration (plus
thirty (30) additional days) as, and in an amount equal to 103% of the aggregate
maximum amount then available to be drawn under, the Letters of Credit to which
such outstanding Letter of Credit Obligations relate and shall be issued by a
Person, and shall be subject to such terms and conditions, as are be
satisfactory to Agent in its sole discretion.
(iii) From time to time after funds are deposited in the Cash
Collateral Account by Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable by Borrower to
Agent and Lenders with respect to such Letter of Credit Obligations of Borrower
and, upon the satisfaction in full of all Letter of Credit Obligations of
Borrower, to any other Obligations then due and payable.
B-2
(iv) Neither Borrower nor any Person claiming on behalf of or
through Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrower to Agent and Lenders in respect thereof, any funds remaining
in the Cash Collateral Account shall be applied to other Obligations then due
and owing and upon payment in full of such Obligations any remaining amount
shall be paid to Borrower or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be held as additional collateral.
(d) Fees and Expenses. Borrower agrees to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (i) all reasonable costs and expenses
incurred by Agent or any Lender on account of such Letter of Credit Obligations,
and (ii) for each month during which any Letter of Credit Obligation shall
remain outstanding, a fee (the "Letter of Credit Fee") in an amount equal to the
Applicable L/C Margin from time to time in effect multiplied by the maximum
amount available from time to time to be drawn under the applicable Letter of
Credit. Such fee shall be paid to Agent for the benefit of the Revolving Lenders
in arrears, on the first day of each month and on the Commitment Termination
Date. In addition, Borrower shall pay to any L/C Issuer, on demand, such fees
(including all per annum fees), charges and expenses of such L/C Issuer in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or otherwise payable pursuant to the
application and related documentation under which such Letter of Credit is
issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
shall give Agent at least two (2) Business Days' prior written notice requesting
the incurrence of any Letter of Credit Obligation. The notice shall be
accompanied by the form of the Letter of Credit (which shall be acceptable to
the L/C Issuer) and a completed Application for Standby Letter of Credit
Application for Documentary Letter of Credit, as applicable, in the form Exhibit
B-1 or B-2 attached hereto. Notwithstanding anything contained herein to the
contrary, Letter of Credit applications by Borrower and approvals by Agent and
the L/C Issuer may be made and transmitted pursuant to electronic codes and
security measures mutually agreed upon and established by and among Borrower,
Agent and the L/C Issuer.
(f) Obligation Absolute. The obligation of Borrower to reimburse
Agent and Revolving Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrower and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following:
(i) any lack of validity or enforceability of any Letter of Credit
or the Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, setoff, defense or other right that
Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit (or any
Persons or entities for whom any such
B-3
transferee may be acting), Agent, any Lender, or any other Person, whether
in connection with the Agreement, the Letter of Credit, the transactions
contemplated herein or therein or any unrelated transaction (including any
underlying transaction between Borrower or any of its Affiliates and the
beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided in
paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of Credit
or guaranty thereof against presentation of a demand, draft or certificate
or other document that does not comply with the terms of such Letter of
Credit or such guaranty;
(v) any other circumstance or event whatsoever, that is similar to
any of the foregoing; or
(vi) the fact that a Default or an Event of Default has occurred and
is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in the
Agreement, Borrower hereby agrees to pay and to protect, indemnify, and save
harmless Agent and each Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and allocated costs of internal counsel) that Agent or any
Lender may incur or be subject to as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit or guaranty thereof, or (B) the failure of
Agent or any Lender seeking indemnification or of any L/C Issuer to honor a
demand for payment under any Letter of Credit or guaranty thereof as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority, in each case other than
to the extent as a result of the gross negligence or willful misconduct of Agent
or such Lender (as finally determined by a court of competent jurisdiction).
(ii) As between Agent and any Lender and Borrower, Borrower assumes
all risks of the acts and omissions of, or misuse of any Letter of Credit by
beneficiaries of any Letter of Credit. In furtherance and not in limitation of
the foregoing, to the fullest extent permitted by law neither Agent nor any
Lender shall be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document issued by any party in connection
with the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason; (C) failure of
the beneficiary of any Letter of Credit to comply fully with conditions required
in order to demand payment under such Letter of Credit; provided, that in the
case of any payment by Agent under any Letter of Credit or guaranty thereof,
Agent shall be liable to the extent such payment was made solely as a result of
its gross
B-4
negligence or willful misconduct (as finally determined by a court of competent
jurisdiction) in determining that the demand for payment under such Letter of
Credit or guaranty thereof complies on its face with any applicable requirements
for a demand for payment under such Letter of Credit or guaranty thereof; (D)
errors, omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not they may
be in cipher; (E) errors in interpretation of technical terms; (F) any loss or
delay in the transmission or otherwise of any document required in order to make
a payment under any Letter of Credit or guaranty thereof or of the proceeds
thereof; (G) the credit of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (H) any consequences arising from causes beyond
the control of Agent or any Lender. None of the above shall affect, impair, or
prevent the vesting of any of Agent's or any Lender's rights or powers hereunder
or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to expand
any waivers, covenants or indemnities made by Borrower in favor of any L/C
Issuer in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between Borrower and such L/C Issuer,
including a Master Documentary Agreement and a Master Standby Agreement entered
into with L/C Issuer.
B-5
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Borrower and Holdings shall, and shall cause their Subsidiaries to,
establish and maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination Date,
Borrower and Holdings shall (i) establish lock boxes ("Lock Boxes") or, at
Agent's discretion, blocked accounts ("Blocked Accounts") at one or more of the
banks set forth in Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries
to deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) into one or more Blocked Accounts in Borrower's name or any such
Subsidiary's name and at a bank identified in Disclosure Schedule (3.19) (each,
a "Relationship Bank"). On or before the Closing Date, Borrower shall have
established a concentration account in its name (the "Concentration Account") at
the bank that shall be designated as the Concentration Account bank for Borrower
in Disclosure Schedule (3.19) (the "Concentration Account Bank") which bank
shall be reasonably satisfactory to Agent.
(b) Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
acceptable to Agent into which Agent shall, from time to time, deposit proceeds
of Revolving Credit Advances and Swing Line Advances made to Borrower pursuant
to Section 1.1 for use by Borrower in accordance with the provisions of Section
1.4.
(c) On or before the Closing Date (or such later date as Agent shall
consent to in writing), the Concentration Account Bank, each bank where a
Disbursement Account is maintained and all other Relationship Banks, shall have
entered into tri-party blocked account agreements with Agent, for the benefit of
itself and Lenders, and Borrower, Holdings and Subsidiaries thereof, as
applicable, in form and substance reasonably acceptable to Agent, which shall
become operative on or prior to the Closing Date. Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in such account and proceeds thereof deposited in the Concentration
Account are held by such bank as agent or bailee-in-possession for Agent, on
behalf of itself and Lenders, (ii) the bank executing such agreement has no
rights of setoff or recoupment or any other claim against such account, as the
case may be, other than for payment of its service fees and other charges
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) from and after the Closing Date (A) with
respect to banks at which a Blocked Account is maintained, such bank agrees to
forward immediately all amounts in each Blocked Account to the Concentration
Account Bank and to commence the process of daily sweeps from such Blocked
Account into the Concentration Account and (B) with respect to the Concentration
Account
C-1
Bank, such bank agrees from and after the receipt of a notice (on "Activation
Notice") from the Agent (which Activation Notice may be given by Agent at any
time following the occurrence and during the continuance of an Event of Default
or at any time after Borrowing Availability is less than $10,000,000) to
immediately forward all amounts received in the Concentration Account to the
Collection Account through daily sweeps from such Concentration Account into the
Collection Account. Borrower shall not, and shall not cause or permit any
Subsidiary thereof to, accumulate or maintain cash in Disbursement Accounts or
payroll accounts as of any date of determination in excess of checks outstanding
against such accounts as of that date and amounts necessary to meet minimum
balance requirements.
(d) So long as no Event of Default has occurred and is continuing,
Borrower may amend Disclosure Schedule (3.19) to add or replace a Relationship
Bank, Lock Box or Blocked Account or to replace any Concentration Account or any
Disbursement Account; provided, that (i) Agent shall have consented in writing
in advance to the opening of such account or Lock Box with the relevant bank and
(ii) prior to the time of the opening of such account or Lock Box, Borrower or
its Subsidiaries, as applicable, and such bank shall have executed and delivered
to Agent a tri-party blocked account agreement, in form and substance reasonably
satisfactory to Agent. Borrower shall close any of its accounts (and establish
replacement accounts in accordance with the foregoing sentence) promptly and in
any event within thirty (30) days following notice from Agent that the
creditworthiness of any bank holding an account is no longer acceptable in
Agent's reasonable judgment, or as promptly as practicable and in any event
within one hundred and twenty (120) days following notice from Agent that the
operating performance, funds transfer or availability procedures or performance
with respect to accounts or Lock Boxes of the bank holding such accounts or
Agent's liability under any tri-party blocked account agreement with such bank
is no longer acceptable in Agent's reasonable judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Account shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and shall be applied (and
allocated) by Agent in accordance with Section 1.11. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by Borrower or any such Related Person, and (ii) within one (1)
Business Day after receipt by Borrower or any such Related Person of any checks,
cash or other items of payment, deposit the same into a Blocked Account.
Borrower on behalf of itself and each Related Person acknowledges and agrees
that all cash, checks or other items of payment constituting proceeds of
Collateral are part of the Collateral. All proceeds of the sale or other
disposition of any Collateral, shall be deposited directly into Blocked
Accounts.
C-2
Any provision of this Annex C to the contrary notwithstanding,
Credit Parties may maintain (A) disbursement or ▇▇▇▇▇ cash accounts with local
banks that are not a part of the Cash Management Systems described in this Annex
C (including account #▇▇▇▇-▇▇▇-▇ maintained at Citizens Bank; account #▇▇▇▇▇▇▇▇
maintained at Citizen Bank of ▇▇▇▇▇▇▇; account #0 002 9306 5447 maintained at
U.S. Bank; account #2078281047935 maintained at Wachovia National Bank, N.A.;
and account #5139126825 maintained at BB&T), so long as the balance on deposit
in each such accounts does not exceed $5000 at any time (net of checks written
but not yet cleared against the balance on deposit in such accounts) and the
aggregate balance on deposit in all such accounts does not exceed $25,000 at any
time (net of checks written but not yet cleared against the balance on deposit
in such accounts); (B) account #2020000363204 of Holdings maintained at Wachovia
National Bank, N.A. so long as (i) the balance on deposit in such accounts does
not exceed $1,100,000 in the aggregate at any time, (ii) the disbursements of
funds from such account are used solely to satisfy Holdings' Voluntary Employee
Beneficiary Association ("VEBA") obligations and (ii) funds are deposited in
such account no earlier than 120 days prior the distribution of funds from such
account to satisfy Holdings' VEBA obligations and (C) account #2079900011199 of
Borrower maintained at Wachovia National Bank, N.A. so long as (i) the balance
on deposit in such accounts does not exceed $50,000 in the aggregate at any
time, (ii) the disbursements of funds from such account are used solely to
satisfy Borrower's payroll obligations and (iii) funds are deposited in such
account no earlier than 2 days prior the distribution of funds from such account
to satisfy Borrower's payroll obligations.
C-3
ANNEX D (SECTION 2.1(A))
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described
in Section 2.1 of the Agreement, pursuant to Section 2.1(a), the following items
must be received by Agent in form and substance satisfactory to Agent on or
prior to the Closing Date (each capitalized term used but not otherwise defined
herein shall have the meaning ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and
substance satisfactory to Agent.
B. Revolving Notes and Swing Line Note. Duly executed originals of
the Revolving Notes and Swing Line Note for each applicable Lender, dated the
Closing Date.
C. Master Reaffirmation. Duly executed originals of the master
reaffirmation of the Loan Documents executed and delivered in connection with
the Original Credit Agreement, dated the Closing Date, and in form and substance
satisfactory to the Agent.
D. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as reasonably requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings. (a) Evidence satisfactory to
Agent that Agent (for the benefit of itself and Lenders) has a valid and
perfected first priority security interest in the Collateral, including (i) such
documents duly executed by each Credit Party (including financing statements
under the Code and other applicable documents under the laws of any jurisdiction
with respect to the perfection of Liens) as Agent may request in order to
perfect its security interests in the Collateral and (ii) copies of Code search
reports listing all effective financing statements that name any Credit Party as
debtor, together with copies of such financing statements, none of which shall
cover the Collateral, except for those relating to the Prior Lender Obligations
(all of which shall be terminated on the Closing Date) and Permitted
Encumbrances.
(b) Evidence reasonably satisfactory to Agent, including copies, of
all UCC-1 and other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Inventory may be consigned.
I. Keyman Life Insurance. Agent shall have received evidence that
the Keyman Life Insurance is in effect.
D-1
F. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex C.
G. Charter and Good Standing. For each Credit Party, such Person's
(a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental Authority.
H. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors, approving and authorizing the execution, delivery
and performance of the Loan Documents to which such Person is a party and the
transactions to be consummated in connection therewith, each certified as of the
Closing Date by such Person's corporate secretary or an assistant secretary as
being in full force and effect without any modification or amendment.
I. Incumbency Certificates. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
J. Opinions of Counsel. Duly executed originals of opinions of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., counsel for the Credit Parties, in form and
substance reasonably satisfactory to Agent and its counsel, dated the Closing
Date, and accompanied by a letter addressed to such counsel from the Credit
Parties, authorizing and directing such counsel to address its opinion to Agent,
on behalf of Lenders, and to include in such opinion an express statement to the
effect that Agent and Lenders are authorized to rely on such opinion.
K. Fee Letter. Duly executed originals of the GE Capital Fee Letter.
L. Officer's Certificate. Agent shall have received duly executed
originals of a certificate of the Chief Executive Officer and Chief Financial
Officer of Borrower, dated the Closing Date, stating that, since October 1, 2005
(a) no event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (b) there has been no material
adverse change in the industry in which Borrower operates; (c) no Litigation has
been commenced which, if successful, would have a Material Adverse Effect or
could challenge any of the transactions contemplated by the Agreement and the
other Loan Documents; (d) there have been no Restricted Payments made by any
Credit Party; and (e) before and after giving effect to the transactions
contemplated by the Credit Agreement, each Credit Party will be Solvent, and (f)
there has been no material increase in liabilities, liquidated or contingent,
and no material decrease in assets of Borrower or any of its Subsidiaries.
D-2
M. Mortgages. With respect to Mortgages covering all of the Real
Estate (the "Mortgaged Properties") (a) endorsements to each title insurance
policy as shall be reasonably requested by the Agent to "bring-down" the status
of title and to confirm that title insurance policy continues to apply to the
Mortgages and the Obligations under this Agreement, (b) with respect to each
Mortgaged Property, such affidavits, certificates, information (including
financial data) and instruments of indemnification (including, without
limitation, a so-called "gap" indemnification and no-new improvements to survey
affidavits) as shall be required to induce the relevant title company to issue
the endorsements contemplated in clause (a) above, (c) with respect to each
Mortgage, an amendment to such Mortgage, in recordable form and substance
acceptable to the Agent, as the Agent may request providing, among other things,
for the recognition of the amendment and restatement of this Agreement as set
forth herein and the reaffirmation of the Mortgage, and (d) evidence of payment
of any and all mortgage, documentary, intangibles or similar taxes, if any,
which shall be due and payable in connection with recording of any such Mortgage
amendment referenced in clause (c) above.
N. Audited Financials; Financial Condition. Agent shall have
received the Financial Statements and other materials set forth in Section 3.4,
certified by Borrower's Chief Financial Officer, in each case in form and
substance satisfactory to Agent, and Agent shall be satisfied, in its sole
discretion, with all of the foregoing. Agent shall have further received a
certificate of the Chief Executive Officer and/or the Chief Financial Officer of
Borrower (a) to the effect that Borrower will be Solvent upon the consummation
of the transactions contemplated herein and (b) containing such other statements
with respect to the solvency of Borrower and matters related thereto as Agent
shall request.
O. Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Agent may reasonably request.
D-3
ANNEX E (SECTION 4.1(A))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrower shall deliver or cause to be delivered to Agent or to Agent
and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within thirty (30)
days after the end of each Fiscal Month (including the Fiscal Month of September
of each Fiscal Year), financial information regarding Holdings and its
Subsidiaries, certified by the Chief Financial Officer of Borrower, consisting
of (i) unaudited consolidating balance sheets as of the close of such Fiscal
Month and the related consolidated statements of income and cash flows for that
portion of the Fiscal Year ending as of the close of such Fiscal Month; (ii)
unaudited consolidated statements of income and cash flows for such Fiscal
Month, setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Projections for such
Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments and year-end audit adjustments); and (iii) a summary of the
outstanding balance of all intercompany balances as evidenced by Intercompany
Notes as of the last day of that Fiscal Month. Such financial information shall
be accompanied by the certification of the Chief Financial Officer of Borrower
that (i) such financial information presents fairly in accordance with GAAP
(subject to normal year-end adjustments and year-end audit adjustments) the
financial position and results of operations of Holdings and its Subsidiaries,
on a consolidated basis, in each case as at the end of such Fiscal Month and for
that portion of the Fiscal Year then ended and (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default shall have occurred and be continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default.
(b) Quarterly Financials. To Agent and Lenders, within forty-five
(45) days after the end of each Fiscal Quarter (including the last Fiscal
Quarter of each Fiscal Year), consolidated financial information regarding
Holdings and its Subsidiaries, certified by the Chief Financial Officer of
Borrower, including consolidated (i) unaudited balance sheets as of the close of
such Fiscal Quarter and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal Quarter and
(ii) unaudited statements of income and cash flows for such Fiscal Quarter, in
each case setting forth in comparative form the figures for the corresponding
period in the prior year and the figures contained in the Projections for such
Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments and year-end audit adjustments). Such financial information shall be
accompanied by (A) a statement in reasonable detail (each, a "Compliance
Certificate") showing (x) reasonably detailed calculation of Reference
Availability for such Fiscal Quarter and (y) if then applicable, the
calculations used in determining compliance with each of the Financial Covenants
that is tested on a quarterly basis and (B) the certification of the Chief
Financial Officer of Borrower that (i) such financial information presents
fairly in accordance with GAAP (subject to normal year-end adjustments and
year-end audit adjustments) the financial position, results of operations and
statements of cash flows of Holdings and its Subsidiaries, on a consolidated
basis, as at the end
F-1
of such Fiscal Quarter and for that portion of the Fiscal Year then ended, (ii)
any other information presented is true, correct and complete in all material
respects and that there was no Default or Event of Default in existence as of
such time or, if a Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure such Default or
Event of Default. In addition, Borrower shall deliver to Agent and Lenders,
within forty-five (45) days after the end of each Fiscal Quarter, the management
discussion and analysis as provided in the Form 10-Q for such Fiscal Quarter.
(c) Operating Plan. To Agent and Lenders, as soon as available, but
not later than thirty (30) days after the end of each Fiscal Year, an annual
operating plan for Holdings and its Subsidiaries as presented by management to
the Board of Directors of Holdings, for the following Fiscal Year, which (i)
includes a statement of all of the material assumptions on which such plan is
based, (ii) includes monthly consolidated balance sheets and a monthly budget
for the following year and (iii) integrates sales, gross profits, operating
expenses, operating profit, cash flow projections and Borrowing Availability
projections, all prepared on the same basis and in similar detail as that on
which operating results are reported (and in the case of cash flow projections,
representing management's good faith estimates of future financial performance
based on historical performance), and including plans for Capital Expenditures
and facilities.
(d) Annual Audited Financials. To Agent and Lenders, within twenty
(20) days after the Closing Date in respect of the Fiscal Year 2003 and within
ninety (90) days after the end of each Fiscal Year in respect of any other
Fiscal Year, audited Financial Statements for Holdings and its Subsidiaries on a
consolidated basis, consisting of balance sheets and statements of income and
retained earnings and cash flows, setting forth in comparative form in each case
the figures for the previous Fiscal Year, which Financial Statements shall be
prepared in accordance with GAAP and certified without qualification, by an
independent certified public accounting firm of national standing or otherwise
acceptable to Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared in reasonable detail showing the calculations used in
determining compliance with each of the Financial Covenants, (ii) a report from
such accounting firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to believe that a
Default or Event of Default has occurred with respect to the Financial Covenants
(or specifying those Defaults and Events of Default that they became aware of),
it being understood that such audit examination extended only to accounting
matters and that no special investigation was made with respect to the existence
of Defaults or Events of Default, and (iii) the certification of the Chief
Executive Officer or Chief Financial Officer of Borrower that all such Financial
Statements present fairly in accordance with GAAP the financial position,
results of operations and statements of cash flows of Holdings and its
Subsidiaries on a consolidated basis, as at the end of such Fiscal Year and for
the period then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has occurred and
is continuing, describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default.
(e) Management Letters. To Agent and Lenders, within five (5)
Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants.
F-2
(f) Default Notices. To Agent and Lenders, as soon as practicable,
and in any event within three (3) Business Days after an executive officer of
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event that has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly
upon their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
(h) Subordinated Debt and Equity Notices. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within two (2) Business Days after any Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any Subordinated Debt,
notice of such event of default.
(i) Supplemental Schedules. To Agent, supplemental disclosures, if
any, required by Section 5.6.
(j) Litigation. To Agent in writing, promptly upon learning thereof,
notice of any Litigation commenced or threatened against any Credit Party that
(i) seeks damages in excess of $250,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Credit Party, (v) alleges the violation of
any law regarding, or seeks remedies in connection with, any Environmental
Liabilities; or (vi) involves any product recall.
(k) Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4.
(l) Lease Default Notices. To Agent, (i) within two (2) Business
Days after receipt thereof, copies of any and all default notices received under
or with respect to any leased location or public warehouse where Collateral is
located, (ii) monthly within three (3) Business Days after payment thereof,
evidence of payment of lease or rental payments as to each leased or rented
location for which a landlord or bailee waiver has not been obtained and (iii)
such other notices or documents as Agent may reasonably request.
(m) Lease Amendments. To Agent, within ten (10) Business Days after
receipt thereof, copies of all material amendments to real estate leases.
F-3
(n) Hedging Agreements. To Agent within ten (10) Business Days after
entering into such agreement or amendment, copies of all interest rate,
commodity or currency hedging agreements or amendments thereto.
(o) Material Agreements. To Agent or its counsel, on behalf of
Lenders, complete copies (or accurate summaries) of the following agreements or
documents: supply agreements, purchase agreements and sale agreements not
terminable by such Credit Party within sixty (60) days following written notice
issued by such Credit Party and involving transactions in excess of $500,000 per
annum; leases of Equipment having a remaining term of one year or longer and
requiring aggregate rental and other payments in excess of $500,000 per annum;
licenses and permits held by the Credit Parties, the absence of which could be
reasonably likely to have a Material Adverse Effect; instruments and documents
evidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party in
excess of $500,000 and any Lien granted by such Credit Party with respect
thereto; and instruments and agreements evidencing the issuance of any equity
securities, warrants, rights or options to purchase equity securities of such
Credit Party.
(p) Certain Bank Accounts. To Agent, immediately upon request of
Agent, copies of all bank statements provided to the applicable Credit Parties
relating to each of the bank accounts referenced in the last paragraph of Annex
C and such other information relating to such accounts as shall reasonably be
requested by Agent from time to time.
(q) Other Documents. To Agent and Lenders, such other financial and
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall, from time to time, reasonably request.
F-4
ANNEX F (SECTION 4.1(B))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrower shall deliver or cause to be delivered the following:
(a) To Agent, ,within five (5) Business Days after the end of each
Fiscal Month, or more frequently upon Agent's request made at any time that
Borrowing Availability is less than $25,000,000, (together with a copy of all or
any part of the following reports requested by any Lender in writing after the
Closing Date), each of the following reports, each of which shall be prepared by
the Borrower as of the date two (2) days prior to the date of any such request:
(i) a Borrowing Base Certificate with respect to Borrower,
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(ii) with respect to Borrower, a summary of Inventory by location
and type with a supporting perpetual Inventory report, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion; and
(iii) with respect to Borrower, a monthly trial balance showing
Accounts outstanding aged from invoice date and due date in form
reasonably satisfactory to Agent, accompanied by such supporting detail
and documentation as shall be requested by Agent in its reasonable
discretion.
(b) To Agent, on a monthly basis or at such more frequent intervals
as Agent may request from time to time (together with a copy of all or any part
of such delivery requested by any Lender in writing after the Closing Date),
collateral reports with respect to Borrower, including all additions and
reductions (cash and non-cash) with respect to Accounts of Borrower, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion each of which shall be prepared
by the applicable Borrower as of the last day of the immediately preceding week
or the date two (2) days prior to the date of any request;
(c) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E:
(i) a reconciliation of the most recent Borrowing Base,
general ledger and monthly trial balance of Borrower to Borrower's general
ledger and monthly Financial Statements delivered pursuant to such Annex
E, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
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(ii) a reconciliation of the perpetual inventory by location
to Borrower's most recent Borrowing Base Certificate, general ledger and
monthly Financial Statements delivered pursuant to Annex E, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(iii) an aging of accounts payable and a reconciliation of
that accounts payable aging to Borrower's general ledger and monthly
Financial Statements delivered pursuant to Annex E, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(iv) a reconciliation of the outstanding Loans as set forth in
the monthly Loan Account statement provided by Agent to Borrower's general
ledger and monthly Financial Statements delivered pursuant to Annex E, in
each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the Financial
Statements delivered pursuant to Annex E, (i) a listing of government contracts
of Borrower subject to the Federal Assignment of Claims Act of 1940; and (ii) a
list of any applications for the registration of any Patent, Trademark or
Copyright filed by any Credit Party with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
the prior Fiscal Quarter;
(e) Borrower, at its own expense, shall deliver to Agent the results
of each physical verification, if any, that Borrower or any of its Subsidiaries
may in their discretion have made, or caused any other Person to have made on
their behalf, of all or any portion of their Inventory (and, if a Default or an
Event of Default has occurred and be continuing, Borrower shall, upon the
request of Agent, conduct, and deliver the results of, such physical
verifications as Agent may require);
(f) Borrower, at its own expense, shall deliver to Agent such
appraisals of its assets as Agent may request at any time after the occurrence
and during the continuance of a Default or an Event of Default, such appraisals
to be conducted by an appraiser, and in form and substance reasonably
satisfactory to Agent. In the absence of an Event of Default, at Borrower's own
expense, Agent may obtain appraisal reports to be conducted by an appraiser, and
in form and substance reasonably satisfactory to Agent (i) relating to Inventory
and stating the then current Net Orderly Liquidation Value of Inventory, (A)
prior to the Fixed Asset Availability Date, not more than two (2) times during
any twelve (12) month period commencing with the Closing Date and (B) after the
Fixed Asset Availability Date, not more than three (3) times during any twelve
(12) month period commencing with the Closing Date; (ii) relating to Equipment
and stating the then current Net Orderly Liquidation Value and forced
liquidation value of Equipment, not more than once during any twelve (12) month
period commencing with the date of the appraisals referred to in clause (2) of
the definition of the term "Fixed Asset Availability Date" and (iii) relating to
Real Estate and stating the then current fair market value of all or any portion
of the Real Estate owned by Credit Parties, not more than once during any twelve
(12) month period commencing with the date of the appraisals referred to in
clause (2) of the definition of the term "Fixed Asset Availability Date" (and,
in each case, Borrower shall
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cooperate fully with such appraisers, Agent and its agents in an effort to
facilitate and promptly conclude any such appraisal); and
(g) Such other reports, statements and reconciliations with respect
to the Borrowing Base or Collateral or Obligations of any or all Credit Parties
as Agent shall from time to time request in its reasonable discretion.
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ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrower shall not breach or fail to comply with any of the
following financial covenants, each of which shall be calculated in accordance
with GAAP consistently applied:
Minimum Fixed Charge Coverage Ratio.
(a) Holdings and its Subsidiaries shall have on a consolidated basis at
all times during any Pre-Fixed Asset Availability Date Testing Period (as
defined below) a Fixed Charge Coverage Ratio (measured as of the last day of the
Fiscal Quarter then most recently ended for the 12-month period then ended) of
not less than 1.10 : 1.00. As used herein, the "Pre-Fixed Asset Availability
Date Testing Period " means each period commencing on a day occurring prior to
the Fixed Asset Availability Date on which Borrowing Availability is less than
$10,000,000 and ending on the first day immediately following a period of ninety
(90) consecutive days during which Borrowing Availability is equal to or exceeds
$10,000,000.
(b) Holdings and its Subsidiaries shall have on a consolidated basis at
all times during any Post-Fixed Asset Availability Date Testing Period (as
defined below) a Fixed Charge Coverage Ratio (measured as of the last day of the
Fiscal Month then most recently ended for the 12-month period then ended) of not
less than 1.15 : 1.00. As used herein, the "Post-Fixed Asset Availability Date
Testing Period " means each period commencing on a day occurring on or after the
Fixed Asset Availability Date on which Borrowing Availability is less than the
greater of (x) availability then in effect pursuant to clause (c) of the
definition of the term "Borrowing Base" and (y) $10,000,000 and ending on the
first day immediately following a period of ninety (90) consecutive days during
which Borrowing Availability is equal to or exceeds the greater of (I)
availability then in effect pursuant to clause (c) of the definition of the term
"Borrowing Base" and (II) $10,000,000.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrower, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrower's and its Subsidiaries' financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made;
provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified
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Public Accountants (or successor thereto or any agency with similar functions),
(ii) changes in accounting principles concurred in by Borrower's certified
public accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17
and EITF 88-16, and the application of the accounting principles set forth in
FASB 109, including the establishment of reserves pursuant thereto and any
subsequent reversal (in whole or in part) of such reserves; and (iv) the
reversal of any reserves established as a result of purchase accounting
adjustments. If Agent, Borrower and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrower and Requisite Lenders cannot agree upon the required amendments
within thirty (30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1,
a breach of a Financial Covenant contained in this Annex G shall be deemed to
have occurred as of any date of determination by Agent or as of the last day of
any specified measurement period, regardless of when the Financial Statements
reflecting such breach are delivered to Agent.
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ANNEX H (SECTION 1.1(D))
TO
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: DeutscheBank Trust Company Americas
New York, New York
ABA #: ▇▇▇▇▇▇▇▇▇
Account #: ▇▇▇▇▇▇▇▇
Account Name: GECC/CAF Depository
Reference: Insteel CFN 5577
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ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Insteel, Account Manager
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
General Electric Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Counsel-Commercial Finance
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower, at
Insteel Wire Products Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
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Insteel Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President - Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
TO
CREDIT AGREEMENT
Lender: General Electric Capital Corporation
Revolving Loan Commitment
(including a Swing Line Commitment
of $5,000,000): $100,000,000
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