[EXECUTION COPY]
$15,000,000
CREDIT AGREEMENT,
dated as of July 30, 1999,
among
U.S. AUTOMOTIVE MANUFACTURING, INC.,
QUALITY AUTOMOTIVE COMPANY
and
US AUTOMOTIVE FRICTION, INC.
as the Borrowers,
and
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
and
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as the Agent for the Lenders.
Table of Contents
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.......................................................2
SECTION 1.1 Defined Terms..........................................................................2
SECTION 1.2 Use of Defined Terms..................................................................32
SECTION 1.3 Cross-References......................................................................32
SECTION 1.4 Accounting and Financial Determinations...............................................32
ARTICLE II COMMITMENTS, BORROWING PROCEDURES.....................................................32
SECTION 2.1 Revolving Loan Commitment.............................................................33
SECTION 2.2 Lenders Not Permitted or Required To Make Credit Extensions...........................33
SECTION 2.2.1 Revolving Loans.......................................................................33
SECTION 2.2.2 Term Loans............................................................................34
SECTION 2.2.3 CapEx Loans...........................................................................34
SECTION 2.2.4 Letters of Credit.....................................................................34
SECTION 2.3 Reduction of the Revolving Loan Commitment Amount.....................................34
SECTION 2.4 Borrowing Procedures..................................................................34
SECTION 2.5 Continuation and Conversion Elections.................................................36
SECTION 2.6 Funding...............................................................................36
SECTION 2.7 Letters of Credit.....................................................................36
SECTION 2.7.1 Issuance Procedures...................................................................36
SECTION 2.7.2 Other Revolving Lenders' Participation................................................37
SECTION 2.7.3 Disbursements.........................................................................37
SECTION 2.7.4 Reimbursement.........................................................................38
SECTION 2.7.5 Deemed Disbursements..................................................................38
SECTION 2.7.6 Nature of Reimbursement Obligations...................................................39
SECTION 2.8 Notes.................................................................................39
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES............................................40
SECTION 3.1 Repayments and Prepayments............................................................40
SECTION 3.1.1 Voluntary Prepayments.................................................................40
SECTION 3.1.2 Mandatory Repayments and Prepayments..................................................40
SECTION 3.2 Interest Provisions...................................................................42
SECTION 3.2.1 Rates.................................................................................42
SECTION 3.2.2 Post-Default Rates....................................................................43
SECTION 3.2.3 Payment Dates.........................................................................43
SECTION 3.3 Fees..................................................................................44
SECTION 3.3.1 Commitment Fee........................................................................44
SECTION 3.3.2 Agent's Fees, etc.....................................................................44
SECTION 3.3.3 Early Termination Fee.................................................................44
SECTION 3.3.4 Letter of Credit Fee..................................................................45
SECTION 3.4 Collection of Receivables and Payments, etc...........................................45
SECTION 3.4.1 Establishment of Lock-Box Accounts and Concentration Account; ..........................
Collections...........................................................................45
SECTION 3.4.2 Payments Held in Trust................................................................46
SECTION 3.4.3 Application of Amounts in Concentration Account.......................................46
SECTION 3.4.4 Additional Payments...................................................................47
SECTION 3.4.5 Verification of Receivables...........................................................47
SECTION 3.4.6 Agent's Loan Account; Monthly Statements..............................................47
SECTION 3.4.7 Fees and Expenses.....................................................................48
SECTION 3.5 Reduction in Excess Availability, etc.................................................48
ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS................................................48
SECTION 4.1 LIBO Rate Lending Unlawful............................................................48
SECTION 4.2 Inability to Determine Rates..........................................................49
SECTION 4.3 Increased Costs, etc..................................................................49
SECTION 4.4 Funding Losses........................................................................50
SECTION 4.5 Taxes.................................................................................51
SECTION 4.7 Payments, Computations, etc...........................................................52
SECTION 4.8 Sharing of Payments...................................................................53
SECTION 4.9 Setoff................................................................................53
SECTION 4.10 Use of Proceeds.......................................................................54
ARTICLE V CONDITIONS TO CREDIT EXTENSIONS.......................................................54
SECTION 5.1 Initial Credit Extension..............................................................54
SECTION 5.1.1 Resolutions, Good Standing, etc.......................................................54
SECTION 5.1.2 Agreement.............................................................................55
SECTION 5.1.3 Delivery of Notes.....................................................................55
SECTION 5.1.4 Required Consents and Approvals.......................................................55
SECTION 5.1.5 Documentation Questionnaire...........................................................55
SECTION 5.1.6 Account Agreements....................................................................55
SECTION 5.1.7 Borrowing Base Certificate............................................................55
SECTION 5.1.8 Financial Information, etc............................................................55
SECTION 5.1.9 Compliance Certificate................................................................56
SECTION 5.1.10 Corporate Guaranty....................................................................56
SECTION 5.1.11 Pledged Property......................................................................56
SECTION 5.1.12 UCC Search Results....................................................................57
SECTION 5.1.13 Control Agreements....................................................................57
SECTION 5.1.14 Security Agreement, Filings, etc......................................................57
SECTION 5.1.15 Solvency Certificate..................................................................57
SECTION 5.1.16 Closing Date Certificate..............................................................57
SECTION 5.1.17 Funds Flow Memorandum.................................................................58
SECTION 5.1.18 Evidence of Insurance.................................................................58
SECTION 5.1.19 Environmental Matters.................................................................58
SECTION 5.1.20 Payment of Outstanding Indebtedness, etc..............................................58
SECTION 5.1.21 Bailee Waivers........................................................................58
SECTION 5.1.22 Appraisals and Collateral Audit Reports...............................................58
SECTION 5.1.23 Copies of Material Agreements.........................................................59
SECTION 5.1.24 Opinions of Counsel...................................................................59
SECTION 5.1.25 Intercreditor Agreement...............................................................59
SECTION 5.1.26 Agent's Closing Fees, Expenses, etc...................................................59
SECTION 5.1.27 Accountant's Letter...................................................................59
SECTION 5.1.28 Cash Collateral Agreement.............................................................59
SECTION 5.1.29 IBJ Authorization Letter..............................................................59
SECTION 5.1.30 Cancellation of Existing Intercompany Notes...........................................59
SECTION 5.1.31 Satisfactory Due Diligence............................................................60
SECTION 5.2 All Credit Extensions.................................................................60
SECTION 5.2.1 Compliance with Warranties, No Default, etc...........................................60
SECTION 5.2.3 Satisfactory Legal Form...............................................................62
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................62
SECTION 6.1 Organization, etc.....................................................................62
SECTION 6.2 Due Authorization, Non-Contravention, etc.............................................63
SECTION 6.3 Government Approval, Regulation, etc..................................................63
SECTION 6.4 Validity, etc.........................................................................63
SECTION 6.5 Financial Information.................................................................64
SECTION 6.6 No Material Adverse Change............................................................64
SECTION 6.7 Litigation, Labor Controversies, etc..................................................64
SECTION 6.8 Capitalization........................................................................65
SECTION 6.9 Ownership of Properties...............................................................65
SECTION 6.10 Taxes.................................................................................65
SECTION 6.11 Pension and Benefit Plans.............................................................65
SECTION 6.12 Environmental Warranties..............................................................66
SECTION 6.13 Inventory.............................................................................67
SECTION 6.14 Accuracy of Information...............................................................67
SECTION 6.15 Documentation Questionnaire...........................................................68
SECTION 6.16 Absence of Default....................................................................68
SECTION 6.17 Regulations G, U and X................................................................68
SECTION 6.18 Government Regulation.................................................................68
SECTION 6.19 Material Agreements...................................................................69
SECTION 6.20 Solvency..............................................................................69
SECTION 6.21 Insurance.............................................................................69
SECTION 6.22 Compliance with Laws..................................................................69
SECTION 6.23 Year 2000.............................................................................69
SECTION 6.24 Senior Indebtedness, etc..............................................................69
ARTICLE VII COVENANTS.............................................................................70
SECTION 7.1 Affirmative Covenants.................................................................70
SECTION 7.1.1 Financial Information, Reports, Notices, etc..........................................70
SECTION 7.1.2 Compliance with Laws; Payment of Obligations..........................................74
SECTION 7.1.3 Maintenance of Properties.............................................................74
SECTION 7.1.4 Insurance.............................................................................74
SECTION 7.1.5 Books and Records; Inspections........................................................76
SECTION 7.1.6 Environmental Covenants...............................................................77
SECTION 7.1.7 Rate Protection Agreements............................................................78
SECTION 7.1.8 As to Intellectual Property Collateral................................................78
SECTION 7.1.9 Future Subsidiaries...................................................................79
SECTION 7.1.10 Post-Closing Items, etc...............................................................80
SECTION 7.2 Negative Covenants....................................................................81
SECTION 7.2.1 Business Activities...................................................................81
SECTION 7.2.2 Indebtedness..........................................................................81
SECTION 7.2.3 Liens.................................................................................82
SECTION 7.2.4 Financial Condition...................................................................83
SECTION 7.2.5 Investments...........................................................................83
SECTION 7.2.7 Capital Expenditures, etc.............................................................84
SECTION 7.2.8 Take or Pay Contracts.................................................................85
SECTION 7.2.9 Consolidation, Merger, etc............................................................85
SECTION 7.2.10 Asset Dispositions, etc...............................................................85
SECTION 7.2.12 Transactions with Affiliates..........................................................86
SECTION 7.2.13 Negative Pledges, Restrictive Agreements, etc.........................................86
SECTION 7.2.14 Management Fees, Expenses, etc........................................................87
SECTION 7.2.15 Fiscal Year End.......................................................................87
SECTION 7.2.16 Limitation on Sale and Leaseback Transactions.........................................87
SECTION 7.2.17 No Speculative Transactions...........................................................87
ARTICLE VIII EVENTS OF DEFAULT.....................................................................87
SECTION 8.1 Listing of Events of Default..........................................................87
SECTION 8.1.1 Non-Payment of Obligations............................................................87
SECTION 8.1.2 Breach of Representations and Warranties..............................................88
SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations..................................88
SECTION 8.1.4 Non-Performance of Other Covenants and Obligations....................................88
SECTION 8.1.5 Default on Other Indebtedness.........................................................88
SECTION 8.1.6 Judgments.............................................................................88
SECTION 8.1.7 Pension Plans.........................................................................89
SECTION 8.1.8 Control of the Borrowers..............................................................89
SECTION 8.1.9 Bankruptcy, Insolvency, etc...........................................................89
SECTION 8.1.10 Impairment of Loan Documents, Security, etc...........................................90
SECTION 8.1.11 Non-Payment of Taxes..................................................................90
SECTION 8.1.12 Impairment of Material Agreements, etc................................................90
SECTION 8.1.13 Subordinated Debt Documents...........................................................90
SECTION 8.1.14 Intercreditor Agreement...............................................................91
SECTION 8.1.15 Convertible Debentures................................................................91
SECTION 8.2 Action if Bankruptcy..................................................................91
SECTION 8.3 Action if Other Event of Default......................................................91
SECTION 8.4 Foreclosure on Collateral.............................................................91
SECTION 8.5 Payments Upon Acceleration............................................................91
ARTICLE IX THE AGENT.............................................................................92
SECTION 9.1 Actions...............................................................................92
SECTION 9.2 Funding Reliance, etc.................................................................93
SECTION 9.3 Exculpation...........................................................................93
SECTION 9.4 Successor.............................................................................93
SECTION 9.5 Loans by IBJW.........................................................................94
SECTION 9.6 Credit Decisions......................................................................94
SECTION 9.7 Copies, etc...........................................................................94
SECTION 9.8 Certain Collateral Matters............................................................94
SECTION 9.9 Application to Issuers................................................................95
ARTICLE X MISCELLANEOUS PROVISIONS..............................................................95
SECTION 10.1 Waivers, Amendments, etc..............................................................95
SECTION 10.2 Notices...............................................................................96
SECTION 10.3 Payment of Costs and Expenses.........................................................97
SECTION 10.4 Indemnification.......................................................................98
SECTION 10.5 Survival..............................................................................99
SECTION 10.6 Severability..........................................................................99
SECTION 10.7 Headings..............................................................................99
SECTION 10.8 Execution in Counterparts, Effectiveness, etc........................................100
SECTION 10.9 Governing Law; Entire Agreement......................................................100
SECTION 10.10 Successors and Assigns...............................................................100
SECTION 10.11 Sale and Transfer of Loans and Notes;
Participations in Loans and Notes....................................................100
SECTION 10.11.1 Assignments..........................................................................100
SECTION 10.11.2 Participations.......................................................................102
SECTION 10.12 Other Transactions...................................................................102
SECTION 10.13 Guaranty of Borrowers................................................................102
SECTION 10.14 Forum Selection and Consent to Jurisdiction..........................................104
SECTION 10.15 Waiver of Jury Trial, etc............................................................105
SECTION 10.16 Waiver of Certain Claims.............................................................106
SECTION 10.17 Borrower Consents, Notices, etc......................................................106
SECTION 10.18 ▇▇▇▇▇▇▇ Leased Premises..............................................................106
SCHEDULE I Disclosure Schedule
SCHEDULE II Percentages
SCHEDULE III Administrative Information
EXHIBIT A Form of Revolving Note
EXHIBIT B Form of Term Note
EXHIBIT C Form of CapEx Note
EXHIBIT D-1 Form of Borrowing Request
EXHIBIT D-2 Form of Continuation/Conversion Notice
EXHIBIT D-3 Form of Issuance Request
EXHIBIT E Form of Borrowing Base Certificate
EXHIBIT F Form of Compliance Certificate
EXHIBIT G Form of Pledge Agreement
EXHIBIT H Form of Security Agreement
EXHIBIT I-1 Form of Lock-Box Agreement
EXHIBIT I-2 Form of Concentration Account Agreement
EXHIBIT J Form of Corporate Guaranty
EXHIBIT K Form of Closing Date Certificate
EXHIBIT L Form of Solvency Certificate
EXHIBIT M Form of Lender Assignment Agreement
EXHIBIT N-1 Form of Opinion of New York Counsel to the Borrowers
EXHIBIT N-2 Form of Opinion of Local Counsel to the Borrowers
EXHIBIT O Form of Real Estate Mortgage
EXHIBIT P Form of Intercreditor Agreement
EXHIBIT Q Form of Cash Collateral Account
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of July 30, 1999, among U.S. AUTOMOTIVE
MANUFACTURING, INC. ("USAM"), a Delaware corporation, QUALITY AUTOMOTIVE COMPANY
("QAC"), a Delaware corporation, US AUTOMOTIVE FRICTION, INC. ("USAF"), a
Delaware corporation (USAM, QAC and USAF are referred to individually as a
"Borrower" and collectively as the "Borrowers"), the various financial
institutions as are or may become parties hereto (collectively, the "Lenders"),
and IBJ WHITEHALL BUSINESS CREDIT CORPORATION ("IBJW"), as agent (in such
capacity, the "Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, QAC is a direct, Wholly-Owned Subsidiary (such capitalized term
and all other capitalized terms used in these recitals without definition shall
have the meanings provided for in Article I hereto) of USAM, and USAF is a
direct, wholly-owned Subsidiary of QAC;
WHEREAS, the Borrowers are engaged in the manufacture, assembly and
distribution of new and rebuilt automotive friction products;
WHEREAS, the Borrowers desire to obtain from the Lenders a Revolving Loan
Commitment pursuant to which
(a) Revolving Loans will be made by the Lenders from time to time in
an aggregate principal amount at any one time outstanding not to exceed
$15,000,000, provided that the aggregate outstanding principal amount of
all Revolving Loans, together with the aggregate amount of all Letters of
Credit Outstandings and the aggregate outstanding principal amount of all
Term Loans and CapEx Loans, shall not at any one time exceed the lesser of
(i) the Revolving Loan Commitment Amount or (ii) (x) the Borrowing Base
Amount in effect at such time (y) minus (A) $1,000,000 on the date of the
initial Credit Extension and (B) $360,000 (or such lesser amount as
provided in Section 3.5) at all times following the date of the initial
Credit Extension (the amounts referred to in subclause (y) being the
"Excess Availability Requirement");
(b) Term Loans will be made by the Lenders from time to time in an
aggregate principal amount not to exceed $2,625,000 (the "Term Loan
Sublimit");
(c) CapEx Loans will be made by the Lenders from time to time in an
aggregate principal amount at any one time outstanding not to exceed
$1,000,000 (the "CapEx Loan Sublimit"); and
(d) Letters of Credit will be issued by the Issuer from time to time
in a maximum aggregate principal amount at any one time outstanding not to
exceed $500,000 (the "Letter of Credit Sublimit"); and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend the Revolving
Loan Commitment and make such Loans to, and issue (or participate in) Letters of
Credit for the account of, the Borrowers.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Defined Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):
"Account" means any "account" (as that term is defined in Section 9-106 of
the U.C.C.) of any Person.
"Account Debtor" is defined in clause (e) of the definition of "Eligible
Account".
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted basis)
or other interests having ordinary voting power for the election of
directors or managing general partners; or
(b) to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise.
"Agent" is defined in the preamble and includes each other Person as shall
have subsequently been appointed as the successor Agent pursuant to Section 9.4.
"Agreement" means this Credit Agreement, as amended, supplemented, restated
or otherwise modified from time to time.
"Alternate Base Rate" shall mean, for any day, the higher of (a) the rate
of interest per annum publicly announced from time to time by IBJ Whitehall Bank
& Trust Company as its base commercial lending rate in effect at its principal
office in New York City and (b) the rate which is 1/2 of 1% in excess of Federal
Funds Effective Rate.
"Applicable Margin" means (a) with respect to the unpaid principal amount
of each Base Rate Loan that is a Revolving Loan, .75% per annum, and that is a
Term Loan or CapEx Loan, 1.00% per annum, and (b) with respect to the unpaid
principal amount of each LIBO Rate Loan
-2-
that is a Revolving Loan, 3.00% per annum, and that is a Term Loan or CapEx
Loan, 3.25% per annum.
"Assigned Agreements" is defined in the Security Agreement.
"Assignee Lender" is defined in clause (a) of Section 10.11.1.
"Assignor Lender" is defined in clause (a) of Section 10.11.1.
"Authorized Officer" means, relative to any Obligor, those of its officers
whose signatures and incumbency shall have been certified to the Agent and the
Lenders pursuant to Section 5.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating interest
rate determined by reference to the Alternate Base Rate.
"Borrower" and "Borrowers" are defined in the preamble.
"Borrower Representative" means QAC.
"Borrowing" means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period, made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.1.
"Borrowing Base Amount" means, at any time, an amount equal to the sum of
(a) (i) up to 85% of the aggregate amount of Net Amount of Eligible
Accounts at such time;
plus
(ii) up to 60% of the aggregate amount of Net Amount of Eligible
Inventory and Net Amount of Eligible Processed Cores at such time;
plus
(iii) up to 45% of the aggregate amount of Net Amount of Eligible Raw
Materials and Net Amount of Eligible Unprocessed Cores at such time;
plus
(iv) up to 100% of the amount on deposit in the cash collateral
account
pursuant to the Cash Collateral Agreement;
minus
(b) the Eligibility Reserves then in effect.
-3-
Clause (a) of the definition of Borrowing Base Amount shall initially be
computed by USAM in each Borrowing Base Certificate delivered from time to time
by USAM to the Agent pursuant to clause (i) of Section 7.1.1. The Agent shall
have the right to review such computations and, if such computations have not
been computed in accordance with the terms of this Agreement, the Agent shall
have the right to adjust such computations, such adjustment to be binding on
USAM absent manifest error.
"Borrowing Base Certificate" means the Borrowing Base Certificate duly
completed and executed by the chief executive Authorized Officer of USAM,
substantially in the form of Exhibit E hereto, together with such changes
thereto as the Agent may from time to time reasonably request for the purpose of
monitoring USAM's compliance therewith.
"Borrowing Request" means a Borrowing Request, duly executed by an
Authorized Officer of the Borrower Representative, in substantially the form of
Exhibit D-1 hereto.
"Business Day" means
(a) any day on which the Agent is open for business and is neither a
Saturday or Sunday nor a legal holiday on which banks are authorized or
required to be closed in New York, New York; and
(b) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loan, any day which is a Business Day described in clause (a)
above and which is also a day on which dealings in Dollars are carried on
in the interbank eurodollar market.
"CapEx Loans" is defined in Section 2.1.
"CapEx Note" means a promissory note of each Borrower payable to any
Lender, in the form of Exhibit C hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of such Borrower to such Lender resulting from outstanding CapEx
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"CapEx Sublimit" is defined in the third recital.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the Borrowers and
their Subsidiaries for fixed or capital assets or additions to plant,
property or equipment (including replacements and capitalized repairs) made
during such period which, in accordance with GAAP, would be classified as
capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities payments
during such period.
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrowers and their Subsidiaries under any leasing or similar arrangement with
respect to any real or personal
-4-
property which, in accordance with GAAP, would be classified as capitalized
leases, and, for purposes of this Agreement and each other Loan Document, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP, and the stated maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date upon which such lease may be terminated by the lessee without payment
of a penalty.
"Cash Collateral Agreement" means the Cash Collateral Agreement,
substantially in the form of Exhibit Q hereto, as amended, supplemented,
restated or otherwise modified from time to time.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after the date of issuance, issued or guaranteed by the United States
Government;
(b) commercial paper, maturing not more than nine months from the date
of issuance and rated at least A-1 by Standard & Poor's Corporation or P-1
by ▇▇▇▇▇'▇ Investors Service, Inc., which is issued by
(i) a corporation (other than an Affiliate of any Obligor)
organized under the laws of any state of the United States or of the
District of Columbia, or
(ii) any Lender or any Affiliate thereof;
(c) any certificate of deposit or bankers acceptance, maturing not
more than one year after such time, which is issued by a Lender or a
commercial banking institution that is a member of the Federal Reserve
System and has a combined capital and surplus and undivided profits of not
less than $1,000,000,000; or
(d) any repurchase agreement entered into with any Lender (or other
commercial banking institution of the stature referred to in clause (c))
secured by a fully perfected Lien in any securities of the type described
in any of clauses (a) through (c), having a market value at the time such
repurchase agreement is entered into of not less than 100% of the
repurchase obligation thereunder of such Lender or other commercial banking
institution.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response Compensation, and
Liability Information System from time to time.
"Change in Control"
(a) the failure of (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to be President and Chief
Executive Officer of USAM or (ii) ▇▇▇▇ ▇▇▇▇▇ to be Chairman of USAM;
-5-
(b) the failure of USAM at any time to own beneficially (or through
ownership of QAC) 100% of the issued and outstanding shares of common stock
of any of the other Borrowers (whether voting or non-voting), on a fully
diluted basis, such shares to be held free and clear of all Liens (other
than Liens in favor of the Agent or otherwise permitted by the terms of the
Intercreditor Agreement);
(c) the failure of the Borrowers at any time to own beneficially 100%
of the issued and outstanding shares of common stock of any of their
Subsidiaries (whether voting or non-voting), on a fully diluted basis, such
shares to be held free and clear of all Liens (other than Liens in favor of
the Agent);
(d) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), excluding the Investor Group, shall become, or obtain rights
(whether by means or warrants, options or otherwise) to become, the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act), directly or indirectly, of more than 20% of the outstanding
common stock of USAM; or
(e) the failure at any time of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇ to be
members of the board of directors of USAM.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means the common stock of the Subsidiaries of USAM and any
assets of the Borrowers, any of their Subsidiaries or of any other Obligor
subject to a Lien pursuant to any Loan Document.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a) through (d)
of Section 8.1.9; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans to be due and payable pursuant
to Section 8.3, or
(ii) the giving of notice by the Agent, acting at the direction
of the Required Lenders, to the Borrowers that the Revolving Loan
Commitment has been terminated.
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with any Borrower within the meaning of Section
4001 of ERISA or is a part of a group which includes any Borrower and which is
treated as a single employer under Section 414 of the Code.
-6-
"Compliance Certificate" means a Compliance Certificate duly executed by
the chief executive Authorized Officer of USAM, substantially in the form of
Exhibit F hereto, together with such changes thereto as the Agent may from time
to time reasonably request for the purpose of monitoring compliance by the
Borrowers with the financial covenants contained herein.
"Concentration Account" means the concentration account maintained by the
Concentration Bank in connection with this Agreement and the other Loan
Documents.
"Concentration Account Agreement" means the Concentration Account
Agreement, substantially in the form of Exhibit I-2 attached hereto, executed by
the Concentration Bank in favor of the Agent.
"Concentration Bank" shall mean IBJW or another financial institution that
is acceptable to the Agent.
"Contingent Liability" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The principal amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount, if larger) of the
debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a Continuation/Conversion Notice
duly executed by an Authorized Officer of the Borrower Representative,
substantially in the form of Exhibit D-2 hereto.
"Convertible Debenture Debt" means the principal and interest and other
amounts owing pursuant to the Convertible Debenture Documents.
"Convertible Debenture Documents" means, collectively, each 8.0% Redeemable
Convertible Debenture, dated June 30, 1998, between USAM and Advantage (Bermuda)
Fund, Ltd., Dominion Capital Fund, Ltd., and Canadian Advantage Ltd.
Partnership, together with all agreements and documents entered into in
connection therewith.
"Corporate Guaranty" means the Corporate Guaranty, substantially in the
form of Exhibit J hereto, as amended, supplemented, amended and restated or
otherwise modified from time to time.
"Credit Extension" means, as the context may require, (a) the making of a
Revolving Loan, CapEx Loan or Term Loan or (b) the issuance of any Letter of
Credit, or the extension of any Stated Expiry Date of any existing Letter of
Credit, by an Issuer.
-7-
"Credit Extension Request" means, as the context may require, any Borrowing
Request or Issuance Request.
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Defaulting Lender" shall mean any Lender with respect to which a Lender
Default is in effect.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by any Borrower with the written consent of the Agent and the Required
Lenders.
"Documentation Questionnaire" is defined in Section 6.15.
"Dollar" and the symbol "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or designated in a Lender Assignment
Agreement, or such other office of a Lender (or any successor or assign of such
Lender) within the United States as may be designated from time to time by
notice from such Lender to USAM and the Agent.
"Domestic Subsidiary" means each Subsidiary of the Borrowers that is
organized under the laws of any State of the United States of America or the
District of Columbia.
"EBITDA" means, for any period, the sum, without duplication, for such
period, of
(a) Net Income during such period;
plus
(b) the amount deducted, in determining Net Income, of all income
taxes (whether paid or deferred) of the Borrowers and their Subsidiaries
during such period;
plus
(c) Interest Expense during such period;
plus
(d) the amount deducted, in determining Net Income, representing
amortization and depreciation of assets of the Borrowers and their
Subsidiaries during such period.
"Effective Date" means the date this Agreement becomes effective pursuant
to Section 10.8.
-8-
"Eligibility Reserves" means such reserves as the Agent, in its sole credit
judgment, may from time to time establish against the gross amounts of Eligible
Inventory, Eligible Accounts, Eligible Raw Materials, Eligible Processed Cores
and Eligible Unprocessed Cores, to reflect risks or contingencies which may
affect such items and which have not already been taken into account in the
determination of Eligible Inventory, Eligible Accounts, Eligible Raw Materials,
Eligible Processed Cores and Eligible Unprocessed Cores, as the case may be. In
establishing Eligibility Reserves, the Agent may consider those factors which,
in its sole judgment, may affect the value of any Eligible Receivable, Eligible
Inventory, Eligible Raw Materials, Eligible Processed Cores or Eligible
Unprocessed Cores, including the enforceability or priority of the Agent's
security interest thereon, the amount which the Agent and the Lenders would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of the Collateral, the financial and business
climate of the Borrowers' industry, changes in the collection history and
dilution with respect to the Borrowers' Accounts, changes in respect of the
Borrowers' Inventory and other items comprising the Borrowing Base Amount and
any other event which could reasonably be expected to result in any Default or
Event of Default.
"Eligible Account" means, at any time of determination thereof, any Account
(or part thereof) of any Borrower which the Agent, in its sole credit judgment,
determines to be eligible for the purpose of making Credit Extensions to the
Borrowers. Without limiting the Agent's discretion, no Account of a Borrower
shall be an Eligible Account unless each of the following requirements has been
fulfilled to the satisfaction of the Agent:
(a) such Borrower has lawful and absolute title to such Account, free
and clear of all Liens, other than the Liens in favor of the Agent for the
benefit of the Lenders;
(b) the Agent has a legal, valid, binding, perfected and first
priority security interest in such Account under the U.C.C.:
(c) (i) with regard to an Account as to which any United States
federal or state governmental agency or instrumentality is the Account
Debtor, such Borrower has complied with the Assignment of Claims Act of
1940, as amended (31 ▇.▇.▇.▇▇. 3727; 41 ▇.▇.▇.▇▇. 15), by delivering to the
Agent a notice of assignment in favor of the Agent under such Act and in
compliance with applicable provisions of 31 C.F.R.ss.7-103.8 and 41
C.F.R.ss.1-30.7, or with similar state law; and
(ii) such Account is not an Account as to which any other
government or agency of such government is the Account Debtor;
(d) such Borrower has the full and unqualified right to assign and
grant a security interest in such Account to the Agent;
(e) such Account is payable in Dollars, is the legal, valid, binding
and enforceable obligation of the Person who is obligated under such
Account (the "Account Debtor") and is payable within 90 days after the
invoice date (which invoice shall be delivered to the Account Debtor on or
within 60 days after such Account is created as provided in clause (h)
below);
-9-
(f) such Account is not subject to any dispute, setoff, counterclaim
or other claim or defense on the part of the Account Debtor denying
liability under such Account, in whole or in part;
(g) such Account is evidenced by an invoice rendered to the Account
Debtor and evidences monetary obligations;
(h) such Account is a bona fide Account which arose in the ordinary
course of business, and with respect to which,
(i) in the case of an Account arising from the sale of goods,
such goods have been shipped or delivered to and accepted by the
Account Debtor, such Account was created as a result of a sale on an
absolute basis and not on a consignment, approval, ▇▇▇▇-and-hold or
sale-and-return basis and all other actions necessary to create a
binding obligation on the part of the Account Debtor for such Account
have been taken; and
(ii) in the case of an Account relating to the sale of services,
such services have been performed or completed and accepted by the
Account Debtor and all other actions necessary to create a binding
obligation on the part of the Account Debtor have been taken; and
(iii) the goods or services upon which such Account arose were
not for personal, family or household purposes;
(i) with respect to such Account, the Account Debtor is not
(i) an Affiliate, Subsidiary, officer, director, employee,
supplier or creditor of such Borrower or any of its Subsidiaries;
(ii) organized or located in a jurisdiction other than the United
States;
(iii) a domestic or foreign government or any agency, department
or instrumentality thereof (except to the extent clause (c) is
complied with);
(iv) the subject of any reorganization, bankruptcy, receivership,
custodianship or insolvency or any other condition of the type
described in clauses (a) through (d) of Section 8.1.9; or
(v) a natural Person (unless such Person operates as a sole
proprietorship or similar commercial entity);
(i) that part of such Account which is (i) outstanding more than 90
days past the original invoice date with respect thereto or (ii) more than
60 days overdue;
(j) such Account is not an Account owing by an Account Debtor
-10-
(i) more than 50% of the Accounts of which are (i) outstanding
more than 90 days past the original invoice date with respect thereto
or (ii) more than 60 days overdue;
(ii) whose Accounts are in an aggregate dollar amount exceeding a
credit limit determined by the Agent;
(k) payment with respect to such Account is evidenced by a promissory
note, draft, trade acceptance or other instrument for the payment of money
and the Agent does not have possession thereof;
(l) such Account has not been placed with a lawyer or other agent for
collection;
(m) all amounts payable pursuant to such Account shall be paid to a
Lock-Box Account or the Concentration Account;
(n) such Borrower has not made any agreement with the Account Debtor
of such Account for any deduction therefrom, except a discount or allowance
allowed by such Borrower in the ordinary course of its business;
(o) such Account complies with all material requirements of all
applicable laws, rules and regulations;
(p) such Account is not with respect to an Account Debtor located in
New Jersey, Minnesota or another State or jurisdiction denying creditors
access to its courts in the absence of a Notice of Business Activities
Report or other similar filing, unless such Borrower is duly qualified as a
foreign corporation in each such State or jurisdiction or has duly filed
and has a currently effective Notice of Business Activities Report or other
similar filing;
(q) to the best of such Borrower's knowledge, there are no facts,
events or occurrences which in any material respect may impair the validity
or enforceability of such Account or may reduce materially the amount
payable thereunder as shown on such Borrower's aged trial balance delivered
pursuant to Section 7.1.1 or such Borrower's books and records and invoices
and statements delivered to Agent and/or Lenders with respect thereto;
(r) such Borrower has no knowledge of any fact or circumstance which
could reasonably be expected to impair materially the validity or
collectibility of such Account or render it ineligible under the criteria
set forth in clauses (a) through (s) above; and
(s) in the Agent's sole credit judgment,
(i) the relevant Account Debtor is creditworthy; and
-11-
(ii) the collectibility of such Account is not impaired, whether
as a result of the Account Debtor's unwillingness or inability to pay
or otherwise.
The Agent may, in the exercise of its sole credit discretion on prior notice to
USAM, impose, reduce or otherwise modify the standards of eligibility set forth
in this definition. If any Account at any time ceases to be an Eligible Account,
such Account shall promptly be excluded from the calculation of Eligible
Accounts.
"Eligible Inventory" means, at any time of determination thereof, any
Inventory of the Borrowers which the Agent, in its sole credit judgment,
determines to be eligible for the purpose of making Credit Extensions to the
Borrowers. Without limiting the Agent's discretion, no Inventory of a Borrower
shall be Eligible Inventory unless it arose in the ordinary course of business
of such Borrower and each of the following requirements has been fulfilled to
the satisfaction of the Agent:
(a) such Inventory is located in the United States on real property
that is either (i) owned by such Borrower, free and clear of any Liens
other than of the nature referred to in clause (a) or (h) of Section 7.2.3
or (ii) located in or with, as the case may be, a public warehouse or third
party described in Section 3.1.1 of the Security Agreement (provided that
such Borrower shall have delivered to the Agent or landlord or bailee
waiver, as applicable, as required by in clause (a) of Section 6.13);
(b) such Borrower has full and unqualified right to assign and ▇▇▇▇▇ ▇
▇▇▇▇ in such Inventory to the Agent for the benefit of the Lenders;
(c) such Borrower has full and lawful title to such Inventory, free
and clear of all Liens, other than any Liens in favor of the Agent for the
benefit of the Lenders;
(d) the Agent has a legal, valid, binding, perfected and first
priority security interest in such Inventory under the U.C.C.;
(e) none of such Inventory shall consist of
(i) items in the custody of third parties for processing or
manufacture;
(ii) items in such Borrower's possession but intended by such
Borrower for return to the suppliers thereof;
(iii) items belonging to third parties (other than such Borrower)
that have been consigned to such Borrower or are otherwise in such
Borrower's custody or possession; or
(iv) items in such Borrower's custody and possession on a
sale-on-approval or sale-or-return basis or subject to any other
repurchase or return agreement; and
(f) none of such Inventory
-12-
(i) is obsolete, unsalable, damaged or otherwise unfit for sale
or further processing in the ordinary course of such Borrower's
business;
(ii) is a work in process; or
(iii) is in the Agent's discretion, slow moving, obsolete or
unmerchantable; and
(g) that part of such Inventory which is less than twice the amount of
product constituting Inventory that was sold by the Borrowers during the
preceding 12 months.
The Agent may, in the exercise of its sole credit discretion on prior notice to
USAM, impose, reduce or otherwise modify the standards of eligibility set forth
in this definition. If any Inventory ceases at any time to be Eligible
Inventory, such Inventory shall promptly be excluded from the calculation of
Eligible Inventory.
"Eligible Processed Cores" means, at any time of determination thereof, any
Processed Cores of the Borrowers which the Agent, in its sole credit judgment,
determines to be eligible for the purpose of making Credit Extensions to the
Borrowers. Without limiting the Agent's discretion, no Processed Core of a
Borrower shall be an Eligible Processed Core unless it arose in the ordinary
course of business of such Borrower and each of the following requirements has
been fulfilled to the satisfaction of the Agent:
(a) such Processed Core is located in the United States on real
property that is either (i) owned by such Borrower, free and clear of any
Liens other than of the nature referred to in clause (a) or (h) of Section
7.2.3 or (ii) located in or with, as the case may be, a public warehouse or
third party described in Section 3.1.1 of the Security Agreement (provided
that such Borrower shall have delivered to the Agent or landlord or bailee
waiver, as applicable, as required by in clause (a) of Section 6.13);
(b) such Borrower has full and unqualified right to assign and ▇▇▇▇▇ ▇
▇▇▇▇ in such Processed Core to the Agent for the benefit of the Lenders;
(c) such Borrower has full and lawful title to such Processed Core,
free and clear of all Liens, other than any Liens in favor of the Agent for
the benefit of the Lenders;
(d) the Agent has a legal, valid, binding, perfected and first
priority security interest in such Processed Core under the U.C.C.;
(e) none of such Processed Cores shall consist of
(i) items in the custody of third parties for processing or
manufacture;
(ii) items in such Borrower's possession but intended by such
Borrower for return to the suppliers thereof;
-13-
(iii) items belonging to third parties (other than such Borrower)
that have been consigned to such Borrower or are otherwise in such
Borrower's custody or possession; or
(iv) items in such Borrower's custody and possession on a
sale-on-approval or sale-or-return basis or subject to any other
repurchase or return agreement;
(f) none of such Processed Cores
(i) is obsolete, unsalable, damaged or otherwise unfit for sale
or further processing in the ordinary course of such Borrower's
business;
(ii) is a work in process; or
(iii) is in the Agent's discretion, slow moving, obsolete or
unmerchantable; and
(g) the aggregate fair market value of all such Processed Cores
located at any one location is not less than $100,000.
The Agent may, in the exercise of its sole credit discretion on prior notice to
USAM, impose, reduce or otherwise modify the standards of eligibility set forth
in this definition. If any Processed Core ceases at any time to be an Eligible
Processed Core, such Processed Core shall promptly be excluded from the
calculation of Eligible Processed Cores.
"Eligible Raw Material" means, at any time of determination thereof, any
Raw Material of the Borrowers which the Agent, in its sole credit judgment,
determines to be eligible for the purpose of making Credit Extensions to the
Borrowers. Without limiting the Agent's discretion, no Raw Material of a
Borrower shall be Eligible Raw Material unless it arose in the ordinary course
of business of such Borrower and each of the following requirements has been
fulfilled to the satisfaction of the Agent:
(a) such Raw Material is located in the United States on real property
that is either (i) owned by such Borrower, free and clear of any Liens
other than of the nature referred to in clause (a) or (h) of Section 7.2.3
or (ii) located in or with, as the case may be, a public warehouse or third
party described in Section 3.1.1 of the Security Agreement (provided that
such Borrower shall have delivered to the Agent or landlord or bailee
waiver, as applicable, as required by in clause (a) of Section 6.13);
(b) such Borrower has full and unqualified right to assign and ▇▇▇▇▇ ▇
▇▇▇▇ in such Raw Material to the Agent for the benefit of the Lenders;
(c) such Borrower has full and lawful title to such Raw Material, free
and clear of all Liens, other than any Liens in favor of the Agent for the
benefit of the Lenders;
-14-
(d) the Agent has a legal, valid, binding, perfected and first
priority security interest in such Raw Material under the U.C.C.;
(e) none of such Raw Material shall consist of
(i) items in the custody of third parties for processing or
manufacture;
(ii) items in such Borrower's possession but intended by such
Borrower for return to the suppliers thereof;
(iii) items belonging to third parties (other than such Borrower)
that have been consigned to such Borrower or are otherwise in such
Borrower's custody or possession; or
(iv) items in such Borrower's custody and possession on a
sale-on-approval or sale-or-return basis or subject to any other
repurchase or return agreement;
(f) none of such Raw Material
(i) is obsolete, unsalable, damaged or otherwise unfit for sale
or further processing in the ordinary course of such Borrower's
business;
(ii) is a work in process; or
(iii) is in the Agent's discretion, slow moving, obsolete or
unmerchantable; and
(g) the aggregate fair market value of all such Raw Materials located
at any one location is not less than $100,000.
The Agent may, in the exercise of its sole credit discretion on prior notice to
USAM, impose, reduce or otherwise modify the standards of eligibility set forth
in this definition. If any Raw Material ceases at any time to be Eligible Raw
Material, such Raw Material shall promptly be excluded from the calculation of
Eligible Raw Material.
"Eligible Unprocessed Cores" means, at any time of determination thereof,
any Unprocessed Cores of the Borrowers which the Agent, in its sole credit
judgment, determines to be eligible for the purpose of making Credit Extensions
to the Borrowers. Without limiting the Agent's discretion, no Unprocessed Cores
of a Borrower shall be an Eligible Unprocessed Core unless it arose in the
ordinary course of business of such Borrower and each of the following
requirements has been fulfilled to the satisfaction of the Agent:
(a) such Unprocessed Core is located in the United States on real
property that is either (i) owned by such Borrower, free and clear of any
Liens other than of the nature referred to in clause (a) or (h) of Section
7.2.3 or (ii) located in or with, as the case may be, a public warehouse or
third party described in Section 3.1.1 of the Security Agreement
-15-
(provided that such Borrower shall have delivered to the Agent or landlord
or bailee waiver, as applicable, as required by in clause (a) of Section
6.13);
(b) such Borrower has full and unqualified right to assign and ▇▇▇▇▇ ▇
▇▇▇▇ in such Unprocessed Core to the Agent for the benefit of the Lenders;
(c) such Borrower has full and lawful title to such Unprocessed Core,
free and clear of all Liens, other than any Liens in favor of the Agent for
the benefit of the Lenders;
(d) the Agent has a legal, valid, binding, perfected and first
priority security interest in such Unprocessed Core under the U.C.C.;
(e) none of such Unprocessed Cores shall consist of
(i) items in the custody of third parties for processing or
manufacture;
(ii) items in such Borrower's possession but intended by such
Borrower for return to the suppliers thereof;
(iii) items belonging to third parties (other than such Borrower)
that have been consigned to such Borrower or are otherwise in such
Borrower's custody or possession; or
(iv) items in such Borrower's custody and possession on a
sale-on-approval or sale-or-return basis or subject to any other
repurchase or return agreement;
(f) none of such Unprocessed Cores
(i) is obsolete, unsalable, damaged or otherwise unfit for sale
or further processing in the ordinary course of such Borrower's
business;
(ii) is a work in process; or
(iii) is in the Agent's discretion, slow moving, obsolete or
unmerchantable; and
(g) the aggregate fair market value of all such Unprocessed Cores
located at any one jurisdiction is not less than $100,000.
The Agent may, in the exercise of its sole credit discretion on prior notice to
USAM, impose, reduce or otherwise modify the standards of eligibility set forth
in this definition. If any Unprocessed Core ceases at any time to be an Eligible
Unprocessed Core, such Unprocessed Core shall promptly be excluded from the
calculation of Eligible Inventory.
"Environmental Consultant" is defined in clause (b) of Section 7.1.6.
-16-
"Environmental Laws" means all applicable federal, state or local statutes,
laws, ordinances, codes, rules, regulations and guidelines (including consent
decrees and administrative orders) relating to public health and safety and
protection of the environment, preservation or reclamation of natural resources,
the management, Release of any Hazardous Material or to health and safety
matters, including CERCLA, the Resource Conservation and Recovery Act, the
Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977,
33 U.S.C. ss.ss.1251 et seq., the Clean Air Act of 1970, 42 U.S.C.ss.ss.7401 et
seq., the Toxic Substances Control Act of 1976, 15 U.S.C.ss.ss.2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.,ss.ss.651 et
seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C.ss.ss.11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42
U.S.C.ss.ss.300(f) et seq., the Hazardous Materials Transportation Act, 49
U.S.C. ss.ss.5101 et seq., and any similar or implementing state or local law,
and all amendments or regulations promulgated under any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Excess Availability Requirement" is defined in the third recital.
"Excluded Foreign Subsidiaries" means any Foreign Subsidiary the pledge of
all or any part of whose capital stock or other property or assets as
Collateral, or the guaranty of the Obligations by, would result in material
adverse tax consequences to the Borrowers, provided that for purposes of this
definition (a) the term "Foreign Subsidiary" shall not include any Subsidiary
(i) which is properly treated as a partnership or branch of a Borrower or a
Domestic Subsidiary for United States federal income tax purposes and (ii) the
pledge of all of any part of whose capital stock or other property or assets as
Collateral, or the guaranty of the Obligations by, would not result in material
adverse tax consequences to the Borrowers and (b) any determination as to
whether a Subsidiary is an Excluded Foreign Subsidiary shall be approved by the
Agent.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.
"Fiscal Month" means any month of a Fiscal Year.
"Fiscal Quarter" means any quarter of a Fiscal Year.
-17-
"Fiscal Year" means any period of twelve consecutive calendar months ending
on December 31. References to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1999") refer to the Fiscal Year ending during
such calendar year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of,
(a) (i) EBITDA;
less
(ii) the aggregate amount of all non-financed Capital
Expenditures made by the Borrowers and their Subsidiaries;
to
(b) the sum of
(i) Interest Expense;
plus
(ii) all scheduled payments of principal of Indebtedness
(including scheduled payments of the Term Loans and CapEx Loans);
plus
(iii) all income taxes paid in cash or accrued by the Borrowers
and their Subsidiaries.
"Foreign Subsidiary" means each Subsidiary of the Borrowers that is not a
Domestic Subsidiary.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" is defined in Section 1.4.
"Hard Costs" means the purchase price of new equipment, provided that the
foregoing shall not include, in any event, any other costs, fees and expenses
related to the foregoing (including, without limitation, the costs of
installation, site preparation and the like).
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation and
Recovery Act;
-18-
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance within the meaning of any applicable
federal, state or local law, regulation, ordinance or requirement
(including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as amended or hereafter
amended.
"Hedging Obligations" means, with respect to any Person, all liabilities of
such Person under any Rate Protection Agreement.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"IBJW" is defined in the preamble.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Obligor, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
there to exist a Default or Event of Default.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that where general words are
followed by a specific listing of items, the general words shall be given their
widest meaning, and shall not be limited by an enumeration of specific matters.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money, including all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
-19-
(c) all obligations of such Person as lessee under leases which have
been or should be, in accordance with GAAP, recorded as Capitalized Lease
Liabilities;
(d) net liabilities of such Person with respect to each Hedging
Obligation;
(e) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade accounts payable arising in the
ordinary course of business), and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse;
(f) all obligations of such Person to purchase, redeem, retire or
otherwise acquire for value any capital stock (other than common stock) of
such Person;
(g) the liquidation value of any preferred capital stock of such
Person or its Subsidiaries held by any Person other than such Person and
its Wholly-Owned Subsidiaries;
(h) all obligations and liabilities secured by any Lien on such
Person's property or assets, even though such Person shall not have assumed
or become liable for the payment thereof;
(i) all accrued and unfunded obligations and liabilities under any
Plan; and
(j) all Contingent Liabilities of such Person in respect of any of the
foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 10.4.
"Indemnified Parties" is defined in Section 10.4.
"Intellectual Property Collateral" has the meaning provided for such term
in the Security Agreement.
"Intercreditor Agreement" means the Subordination and Intercreditor
Agreement, substantially in the form of Exhibit P hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"Interest Expense" means, for any period, the aggregate consolidated
interest expense of the Borrowers and their Subsidiaries for such period (other
than pay-in-kind interest), as determined in accordance with GAAP, including,
without duplication, the portion of any Capitalized Lease Liabilities of the
Borrowers and their Subsidiaries allocable to interest expense, all commissions,
discounts and other fees charged with respect to letters of credit and
-20-
bankers' acceptance financing, the amortization of debt discounts and the net
costs under Rate Protection Agreements, in each case paid or payable during such
period.
"Interest Period" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.4 or 2.5
and shall end on (but exclude) the day which numerically corresponds to such
date one, two or three months thereafter, as the relevant Borrower may select in
its relevant notice pursuant to Section 2.4 or 2.5; provided, however, that
(a) the Borrowers shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more
than three different dates;
(b) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business
Day of a calendar week or month, as the case may be, in which case such
Interest Period shall end on the Business Day next preceding such
numerically corresponding day);
(c) if there is no numerically corresponding day in such month, such
Interest Period shall end on the last Business Day of such month; and
(d) the Borrowers shall not be permitted to select, and there shall
not be applicable, any Interest Period that would be broken by reason of a
mandatory payment of Term Loans required pursuant to clause (b) of Section
3.1.2 or any Interest Period for any Loan which would end later than the
Stated Maturity Date for such Loan.
"Inventory" means all present and future inventory merchandise and goods
intended for sale, lease or other disposition, including, without limitation,
all raw materials, work in process, finished goods, returned goods and materials
and supplies of any kind, nature or description which are or might be used in
connection with the manufacture, packing, shipping, advertising, selling or
finishing of any such goods, all documents of title or documents representing
the same and all records, files and writings with respect thereto.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person incurred in connection
with loans or advances described in clause (a); and
(c) any ownership or similar interest held by such Person in any other
Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial
-21-
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.
"Issuance Request" means an Issuance Request duly executed by an Authorized
Officer of the Borrower Representative, substantially in the form of Exhibit D-3
attached hereto.
"Issuer" means IBJW in its capacity as issuer of the Letters of Credit. At
the request of IBJW, another Lender or an Affiliate of IBJW may issue one or
more Letters of Credit hereunder.
"Lender Assignment Agreement" means a Lender Assignment Agreement in
substantially the form of Exhibit M hereto.
"Lender Default" shall mean (a) the refusal (which has not been retracted)
of a Lender to make available its portion of any Credit Extension or (b) a
Lender having notified in writing the Borrowers and/or the Agent that it does
not intend to comply with its obligations under Section 2.1 or 2.2.
"Lenders" is defined in the preamble and shall include, each person named
on Schedule II attached hereto and specified as such in any Lender Assignment
Agreement.
"Lending Office" means, as the context may require, the Domestic Office
and/or LIBOR Office.
"Letter of Credit" is defined in Section 2.1.
"Letter of Credit Outstandings" means, on any date, an amount equal to the
sum of
(a) the then aggregate amount which is undrawn and available under all
issued and outstanding Letters of Credit;
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"Letter of Credit Sublimit" is defined in the third recital.
"LIBO Rate" is defined in Section 3.2.1.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.
-22-
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such on Schedule III hereto or designated in a Lender Assignment
Agreement, or such other office of a Lender as designated from time to time by
notice from such Lender to the Borrowers and the Agent, whether or not outside
the United States, which shall be making or maintaining LIBO Rate Loans of such
Lender hereunder.
"LIBOR Reserve Percentage" is defined in Section 3.2.1.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" means, as the context may require, a Revolving Loan, CapEx Loan or a
Term Loan.
"Loan Account" is defined in Section 3.4.6.
"Loan Document" means this Agreement, the Notes, Letters of Credit, the Fee
Letter, the Security Agreement, the Pledge Agreement, the Corporate Guaranty,
the Cash Collateral Agreement, each Real Estate Mortgage (from and after the
delivery thereof), any Rate Protection Agreement with a Lender, each Lender
Assignment Agreement, the Documentation Questionnaire and each other instrument
or document executed and delivered pursuant to or in connection with this
Agreement and the other Loan Documents.
"Lock-Box Accounts" is defined in clause (a) of Section 3.4.1.
"Lock-Box Agreement" means each Lock-Box Agreement, in substantially the
form of Exhibit I-1 attached hereto, executed by each Lock-Box Bank in favor of
the Agent.
"Lock-Box Banks" is defined in clause (a) of Section 3.4.
"Material Adverse Effect" shall mean a material adverse effect on (i) the
business, assets, operations, properties, condition (financial or otherwise) or
prospects of the Borrowers and their Subsidiaries, taken as a whole, (ii) the
ability of any Borrower or any other Obligor to perform or pay its Obligations
in accordance with the terms hereof or of any other Loan Document, (iii) the
Agent's security interest on the Collateral or the priority of such security
interest, (iv) the value of the Collateral or the amount the Agent and the
Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of the Collateral or (v)
the validity or enforceability of any Loan Document or the rights and remedies
available to the Agent or the Lenders under any Loan Document.
"Material Agreements" is defined in Section 5.1.23.
"Material Environmental Amount" means an amount payable by the Borrowers
and their Subsidiaries in excess of $100,000 for remedial costs, compliance
costs (other than in the
-23-
ordinary course of business), compensatory damages, punitive damages, fines,
penalties or any combination thereof, in each case with respect to Environmental
Laws.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Accounts" means the gross amount of Eligible
Accounts less sales, excise or similar taxes, and less returns, discounts,
claims, credits and allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed in respect of such Eligible Accounts.
"Net Amount of Eligible Inventory" means the value of Eligible Inventory
computed at the lower of cost (computed on a "first in, first out" basis) or
market, less returns, discounts, claims, credits and allowances of any nature at
any time issued, owing, granted, outstanding, available or claimed in respect of
such Eligible Inventory.
"Net Amount of Eligible Raw Materials" means the gross amount of Eligible
Raw Materials, less returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed in
respect of such Eligible Raw Materials.
"Net Amount of Eligible Processed Cores" means the gross amount of Eligible
Processed Cores, less returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed in
respect of such Eligible Processed Cores.
"Net Amount of Eligible Unprocessed Cores" means the gross amount of
Eligible Unprocessed Cores, less returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed in respect of such Eligible Unprocessed Cores.
"Net Debt Proceeds" means, in the case of the issuance, placement or sale
of any Indebtedness of the type referred to in clause (a) of the definition
thereof (excluding Indebtedness permitted to be outstanding pursuant to Section
7.2.2 on the date hereof), the sum of
(a) the gross cash proceeds received by the Borrowers and their
Subsidiaries from such issuance, placement or sale of permitted
Indebtedness (including any cash payments received by way of deferred
payment of principal pursuant to a permitted promissory note or installment
receivable or otherwise, but only as and when received);
minus
(b) in connection with the issuance, placement or sale of such
permitted Indebtedness, all reasonable and customary fees and expenses and
underwriters' discounts and commissions actually paid by the Borrowers and
their Subsidiaries to Persons other than any of the Borrowers, any of their
Subsidiaries or any of their Affiliates.
"Net Disposition Proceeds" means the sum of
-24-
(a) the gross cash proceeds received by the Borrowers and their
Subsidiaries (i) from any Permitted Disposition or (ii) as a result of the
taking of any of their assets under the power of eminent domain,
condemnation or similar proceeding, including any cash payments received by
way of a deferred payment of principal pursuant to a permitted note or
installment receivable or otherwise, but only when and as received;
minus
(b) in the case of clause (i) only, (i) all reasonable and customary
fees and expenses with respect to legal, investment banking, brokerage,
accounting and other professional fees actually incurred by the Borrowers
and their Subsidiaries in connection with such Permitted Disposition which
have not been paid to any of the Borrowers, any of their Subsidiaries or
any of their Affiliates and (ii) all taxes actually paid or reasonably
estimated by the Borrowers (determined in good faith by the chief financial
officer of USAM) to be payable in cash pursuant to such Permitted
Disposition in the same year or the next following year after the
occurrence of such Permitted Disposition; provided, however, that if, after
the payment of all taxes with respect to such Permitted Disposition, the
amount of estimated taxes, if any, pursuant to clause (ii) above exceeded
the amount actually paid in cash in respect of such Permitted Disposition,
the aggregate amount of such excess shall be immediately payable, pursuant
to clause (d) of Section 3.1.2, as Net Disposition Proceeds.
"Net Income" means, for any period, the sum of all amounts (exclusive of
all amounts in respect of any extraordinary gains or losses) which, in
accordance with GAAP, would be included as net income on the consolidated
statements of income of the Borrowers and their Subsidiaries at such time;
provided that there shall be excluded from Net Income the income of any Person
in which any other Person (other than the Borrowers or any of their
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions (a) that the Borrowers or their Subsidiaries
have the power to cause such Person to make to the Borrowers or their
Subsidiaries during such period and such dividend or other distribution is not
prohibited by the terms of any agreement binding upon such Person or otherwise
or (b) that, to the extent not already included in Net Income for any period
pursuant to clause (a) above, were actually paid to the Borrowers or their
Subsidiaries by such Person during such period.
"Net Insurance Proceeds" means the insurance proceeds received by the Agent
pursuant to clause (d) of Section 7.1.4 and constituting "Net Insurance
Proceeds" as therein provided.
"Net Securities Proceeds" means, in the case of the issuance, placement or
sale of equity securities or any obligations convertible into or exchangeable
for, or giving any Person a right, option or warrant to acquire such securities
or such convertible or exchangeable obligations (in each case whether pursuant
to a public or private offering), from and after the Effective Date (excluding
the proceeds of the foregoing that are applied, in accordance with Section
3.1.2, contemporaneously with the issuance, placement or sale thereof, to repay
the Permitted Borrower Subordinated Debt), the sum of
-25-
(a) the gross cash proceeds received by the Borrowers and their
Subsidiaries from such issuance, placement or sale of equity securities
(including any cash payments received by way of deferred payment of
principal pursuant to a permitted promissory note or installment receivable
or otherwise, but only as and when received);
minus
(b) in connection with such issuance, placement or sale of such equity
securities, all reasonable and customary fees and expenses and
underwriters' discounts and commissions actually paid by the Borrowers and
their Subsidiaries to Persons other than any of the Borrowers, any of their
Subsidiaries or any of their Affiliates.
"Net Worth" means, at any time, the sum of all amounts (without
duplication) which, in accordance with GAAP, would be included under
shareholders' equity on a consolidated balance sheet of USAM at such time.
"Non-Defaulting Lender" shall mean each Lender other than a Defaulting
Lender.
"Non-U.S. Lender" is defined in Section 4.6.
"Note" means, as the context may require, either a Revolving Note, a Term
Note or a CapEx Note.
"Obligations" means all obligations (monetary or otherwise) of each
Borrower and each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document, including principal, interest
(including post-default interest and interest accruing after the commencement of
any bankruptcy, insolvency or similar proceeding referred to in Section 8.1.9,
whether or not a claim for post-filing or post-petition interest is allowed in
any such proceeding), reimbursement obligations, fees, indemnities, costs and
expenses (including the fees and disbursements of counsel to the Agent and each
Lender required to be paid by the Borrowers) that are owing under this Agreement
and the other Loan Documents, in each case whether now existing or hereafter
incurred, direct or indirect, absolute or contingent, and due or to become due.
"Obligor" means a Borrower or any other Person (other than the Agent, any
Issuer or any Lender) obligated under any Loan Document.
"Organic Document" means, relative to any Obligor, its articles of
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital stock
as amended, supplemented, restated or otherwise modified from time to time in
accordance with Section 7.2.11.
"Participant" is defined in Section 10.11.2.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
-26-
"Pension Plan" means any employee benefit plan which is covered by ERISA
and in respect of which any of the Borrowers or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite the name of such Lender on Schedule II hereto or set forth in a duly
executed Lender Assignment Agreement, as such percentage may be adjusted from
time to time pursuant to each Lender Assignment Agreement executed and delivered
by such Lender and its Assignee Lender pursuant to Section 10.11.
"Permitted Borrower Subordinated Debt" means the principal, interest and
other amounts owing under the Subordinated Debt Documents.
"Permitted Capital Expenditures" means Capital Expenditures incurred on
account the purchase of machinery and equipment useful in the business of the
Borrowers as provided in Section 7.2.1.
"Permitted Disposition" means any sale, lease, transfer or other
disposition of assets (including without limitation capital stock and
receivables) of any of the Borrowers or any of their Subsidiaries not otherwise
permitted by clause (a) or (c) of Section 7.2.10, provided that (a) the
Borrowers shall receive only cash consideration therefor, (b) the aggregate fair
market value of all such dispositions shall not exceed $150,000 in any Fiscal
Year, (c) the Borrowers and their Subsidiaries shall have received fair value
therefor and (d) both immediately before and after giving effect to each such
disposition no Default or Event of Default shall have occurred and be
continuing.
"Permitted Encumbrances" means Liens permitted under Section 7.2.3.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreement" means the Pledge Agreement, substantially in the form of
Exhibit G hereto, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
"Processed Cores" means previously used brake shoes which have been
reconditioned through a process of removing remaining previously installed
friction material, cleaning and repainting so as to be immediately ready and
available for installation of new friction material.
"QAC" is defined in the preamble.
-27-
"Rate Protection Agreement" means any interest rate cap agreement, interest
rate collar agreement or similar arrangement designed to protect a Person
against fluctuations in interest rates.
"Raw Materials" means friction materials, steel parts, fasteners and
associated hardware and materials used in the manufacture and distribution of
disk pads and drum brakes.
"Real Estate Mortgages" is defined in clause (c)(ii) of Section 5.2.2,
together with any and all mortgages, deeds of trust and other real estate
security instruments securing the Credit Extensions, as amended, restated,
amended and restated or otherwise modified from time to time.
"Real Estate Mortgage Notes" means the demand bearer promissory notes
secured by the Real Estate Mortgages.
"Realty" means all of the Borrowers' and their Subsidiaries' right, title
and interest in any land, buildings, improvements, fixtures, other interests in
real estate and any leasehold interest in any of the foregoing.
"Realty Permits" means, collectively, all building, construction,
environmental and other permits, licenses, franchises, approvals, consents,
authorizations and other approvals required in connection with the construction,
ownership, use, occupation or operation of the Realty.
"Receivables" means with respect to any Person all of such Person's now
owned and hereafter arising or acquired Accounts (whether or not earned by
performance), including Accounts owned to such Person by any of its Subsidiaries
or Affiliates, together with all interest, late charges, penalties, collection
fees, and other sums which shall be due and payable in connection with any
Account; proceeds of any letters of credit naming such Person as beneficiary;
contract rights, chattel paper, instruments, documents, investment property,
general intangibles (including without limitation chooses in action, causes of
action, tax refunds, tax refund claims and other amounts payable to such Person
from or with respect to any Plan) and all forms of obligations owing to such
Person (including without limitation, in respect of loans, advances, and
extensions of credit by such Person to its Subsidiaries and Affiliates);
guarantees and other security for any of the foregoing; goods represented by or
the sale, lease of delivery of which gave rise to any of the foregoing;
merchandise returned to or repossessed by such Person and rights of stoppage in
transit, replevin, and reclamation; and other rights or remedies of an unpaid
vendor, lienor, or secured party.
"Refunding Loans" is defined in clause (b)(ii) of Section 2.4.
"Reimbursement Obligation" is defined in Section 2.7.4.
"Release" means a "release" or "threatened release" as such terms are
defined in CERCLA.
"Reportable Event" means (a) any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg ss. 2615, (b)
withdrawal from a Plan described in Section
-28-
4063 of ERISA, (c) a cessation of operations described in Section 4062(e) of
ERISA, (d) an amendment to a Plan necessitating the posting of security under
Section 401(a)(29) of the Code, or (e) a failure to make a payment required by
Section 412(m) of the Code of Section 302(e) of ERISA when due.
"Required Lenders" means, at the time any determination thereof is to be
made, Non-Defaulting Lenders holding more than 51% of the then aggregate unused
Commitments and unpaid principal amount of the Notes and Letter of Credit
Outstandings (excluding the aggregate unpaid principal amount of Notes and
Letter of Credit outstandings held by Defaulting Lenders).
"Resource Conservation and Recovery Act" means collectively the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendments of 1984, as amended, 42 U.S.C. ss.ss.6901, et seq., as in effect from
time to time.
"Revolving Loans" is defined in Section 2.1.
"Revolving Loan Commitment" is defined in Section 2.1.
"Revolving Loan Commitment Amount" means $15,000,000, as such amount is
reduced from time to time pursuant to Section 2.3.
"Revolving Loan Commitment Termination Date" means the earliest of
(a) July 30, 2002;
(b) the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.3; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described above, the Revolving Loan Commitments
shall terminate automatically and without any further action.
"Revolving Note" means a promissory note of each Borrower payable to any
Lender, in the form of Exhibit A hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of such Borrower to such Lender resulting from outstanding
Revolving Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"Rolling Period" means, as of any date of calculation, the immediately
preceding twelve Fiscal Months, provided, however, that prior to the first
twelve full Fiscal Months following the date of the initial Credit Extension,
the Rolling Period as of the date of calculation of the Fixed Charge Coverage
Ratio shall be based solely upon the actual number of full Fiscal Months since
the date of the initial Credit Extension (with such results not to be annualized
but to be cumulative for such period).
-29-
"Security Agreement" means the Security Agreement substantially in the form
of Exhibit H hereto, as amended, supplemented, restated or otherwise modified
from time to time.
"Settlement Date" means (a) the date of the initial Credit Extension, (b)
the Wednesday of each calendar week, or, if such day is not a Business Day, the
next succeeding Business Day and (c) the day any Default or Event of Default
shall have occurred and be continuing.
"Solvent" means, when used with respect to any Person, that, as of any date
of determination, (a) the amount of the "present fair saleable value" of the
assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
value is established and such liabilities are evaluated in accordance with
Section 101(32) of the federal Bankruptcy Code and the state laws governing
determinations of the insolvency of debtors of New York and each state where
such Person is doing business or has its principal place of business, (b) the
present fair saleable value of the tangible and intangible assets of such Person
will, as of such date, be greater than the amount the will be required to pay
the liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably small
amount of capital with which to conduct its business, and (d) such Person will
be able to pay its debts as they mature. For purposes of this definition, (i)
"debt" means liability on a "claim" and (ii) "claim" means any (x) right to
payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
"Single Employer Plan" means any Pension Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Stated Amount" of each Letter of Credit means the total amount available
to be drawn under such Letter of Credit upon the issuance thereof.
"Stated Expiry Date" is defined in Section 2.7.1.
"Stated Maturity Date" means July 30, 2002.
"Subordinated Debt Documents" means, collectively, the Amended and Restated
Promissory Note, dated August 29, 1997, of QAC in favor of ▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇ ▇. Ram and in the aggregate original principal amount of $1,802,158.27,
the Guaranty, dated August 29, 1997, of USAM in favor of ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇
▇. Ram, the Amended and Restated Promissory Note, dated August 29, 1997, of QAC
in favor of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and in the aggregate
original principal amount of $2,697,841.73, the Guaranty, dated August 29, 1997,
of USAM in favor of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the Stock Pledge
and Security Agreement, August 29, 1997 among USAM, each Subordinated Debt
Holder and QAC, as all of the foregoing is amended by the First Amendment and
Modification Agreement, dated as of the date hereof, among the Persons that are
parties to the foregoing agreements.
-30-
"Subordinated Debt Holder" means any holder of Permitted Borrower
Subordinated Debt.
"Subordination Provisions" is defined in Section and 8.1.13.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, or by
one or more Subsidiaries of such Person, or (b) any partnership, joint venture,
or other entity as to which such Person, or one or more Subsidiaries of such
Person owns more than a 50% ownership, equity or similar interest or has power
to direct or cause the direction of management and policies, or the power to
elect the managing partner (or the equivalent), of such partnership, joint
venture or other entity, as the case may be.
"Taxes" is defined in Section 4.6.
"Term Loan Sublimit" is defined in the third recital.
"Term Loans" is defined in Section 2.1.
"Term Note" means a promissory note of each Borrower payable to any Lender,
substantially in the form of Exhibit B hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of such Borrower to such Lender resulting from
outstanding Term Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"Title Insurer" is defined in clause (b)(iii) of Section 5.2.2.
"Type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"U.C.C." means the Uniform Commercial Code as from time to time in effect
in the State of New York.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Unprocessed Cores" means previously used brake shoes with remaining
friction material attached and which are usable in Borrower's remanufacturing
process.
"USAF" is defined in the preamble.
"USAM" is defined in the preamble.
-31-
"Welfare Plan" means a "welfare plan" (as such term is defined in Section
3(1) of ERISA), maintained by any Borrower or for which any Borrower or any of
its Subsidiaries has any contractual liability.
"Wholly-Owned Subsidiary" means any Subsidiary of a Person of which the
securities (except for directors' qualifying shares) or other ownership
interests representing 100% of the equity is, at the time any determination is
being made, owned, controlled or held by such Person or one or more Wholly-Owned
Subsidiaries of such Person.
SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such meanings when used in the Disclosure Schedule and each other
Loan Document.
SECTION 1.3 Cross-References. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4 Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under Section 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in clause (a) of
Section 5.1.8. In the event that any "Accounting Change" (as defined below)
shall occur and such change results in a change in the method of calculation of
financial covenants, standards or terms in this Agreement, USAM and the Agent
shall enter into negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Changes with the desired
result that the criteria for evaluating the Borrowers' financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed and
delivered by the Borrowers, the Agent and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Changes had not occurred. "Accounting Change"
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the Securities and Exchange Commission.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES
AND NOTES
SECTION 2.1 Revolving Loan Commitment. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender severally agrees
to make from
-32-
time to time on any Business Day occurring prior to the Revolving Loan
Commitment Termination Date, revolving loans (relative to each Lender, its
"Revolving Loan"), term loans (relative to each Lender, its "Term Loan") and
capital expenditure loans (relative to each Lender, its "CapEx Loans"), in each
case in an amount equal to such Lender's Percentage of the aggregate amount of
the Borrowing of the Loans requested by the Borrower Representative to be made
on such day; provided, that (a) not more than $2,108,000 in aggregate principal
amount of the Term Loans may be made on the date of the initial Credit Extension
and no Term Loans may be made after the date that is 90 days after the date of
the initial Credit Extension and (b) no CapEx Loans may be made after the date
that is 18 months after the date of initial Credit Extension. In addition, each
Issuer, for and on behalf of the Lenders, shall issue prior to the Revolving
Loan Commitment Termination Date standby letters of credit ("Letters of Credit")
with a Stated Expiry Date not later than one year from such requested date of
issuance, and the Lenders shall participate therein as herein provided. The
commitment of each Issuer and each Lender described in this Section 2.1 is
herein referred to as its "Revolving Loan Commitment". On the terms and subject
to the conditions hereof, the Borrower Representative may (i) from time to time
borrow, prepay and reborrow the Revolving Loans, (ii) borrow from time to time
the Term Loans and CapEx Loans and (iii) request the issuance or extension of
the Stated Expiry Date of any Letter of Credit. No amounts paid or prepaid with
respect to Term Loans and CapEx Loans may be reborrowed.
SECTION 2.2 Lenders Not Permitted or Required To Make Credit Extensions. No
Lender shall be permitted or required to make any Loan and no Issuer shall be
obligated to issue or extend any Letter of Credit, under any circumstance
described below in this Section 2.2.
SECTION 2.2.1 Revolving Loans. No Borrowing of Revolving Loans shall be
made if, after giving effect thereto,
(a) the aggregate outstanding principal amount of all the Revolving
Loans, together with the aggregate amount of all Letter of Credit
Outstandings and the outstanding principal amount of all the CapEx Loans
and Term Loans, (i) of all the Lenders would exceed the lesser of (x) the
Revolving Loan Commitment Amount or (y) the then existing Borrowing Base
Amount minus the Excess Availability Requirement or (ii) of any Lender
would exceed the lesser of (x) such Lender's Percentage of the Revolving
Loan Commitment Amount or (y) such Lender's Percentage of the then existing
Borrowing Base Amount minus the Excess Availability Requirement;
(b) the aggregate outstanding principal amount of all the Revolving
Loans in respect of those items referred to in clauses (a)(ii) and (iii) of
the definition of "Borrowing Base Amount" would exceed $5,000,000; or
(c) the aggregate outstanding principal amount of all the Revolving
Loans in respect of Eligible Processed Cores and Eligible Unprocessed Cores
would exceed $1,000,000.
SECTION 2.2.2 Term Loans. No Borrowing of Term Loans shall be made if,
after giving effect thereto, the aggregate outstanding principal amount of all
the Term Loans (a) of all
-33-
the Lenders would exceed the Term Loan Sublimit (or, on the date of the initial
Credit Extension, $2,108,000) or (b) of such Lender would exceed such Lender's
Percentage of the Term Loan Sublimit (or, on the date of the initial Credit
Extension, $2,108,000).
SECTION 2.2.3 CapEx Loans. No Borrowing of CapEx Loans shall be made if,
after giving effect thereto, the aggregate outstanding principal amount of all
the CapEx Loans (a) of all the Lenders would exceed the lesser of (i) the CapEx
Loan Sublimit or (ii) 80% of the Hard Costs of any new equipment purchased with
such CapEx Loans as provided in clause (b) of Section 5.2.2; or (b) of any
Lender would exceed the lesser of (i) such Lender's Percentage of the CapEx
Sublimit or (ii) such Lender's Percentage of 80% of the Hard Costs of any new
equipment purchased with such CapEx Loans as provided in clause (b) Section
5.2.2.
SECTION 2.2.4 Letters of Credit. No issuance or extension of the Stated
Expiry Date of any Letter of Credit shall be made if, after giving effect
thereto, the aggregate amount of all Letter of Credit Outstandings would exceed
the lesser of (a) the Revolving Loan Commitment Amount and (b) the Letter of
Credit Sublimit.
SECTION 2.3 Reduction of the Revolving Loan Commitment Amount. The Borrower
Representative may, from time to time on any Business Day after the date of the
initial Credit Extension, voluntarily reduce the unused amount of the Revolving
Loan Commitment Amount; provided, however, that (a) all such reductions shall
require at least one Business Days' prior notice to the Agent and be permanent,
(b) any partial reduction of the unused amount of the Revolving Loan Commitment
Amount shall be in a minimum amount of $500,000 and in an integral multiple of
$250,000, (c) the Loans shall have been prepaid to the extent required by
Section 3.1.2. and (d) the fee, if any, required to be paid pursuant to Section
3.3.3. has been paid.
SECTION 2.4 Borrowing Procedures.
(a) Borrowing Requests. By telephonic notice to the Agent on or before
11:00 a.m. (New York City time), on a Business Day (promptly followed by
facsimile transmission to the Agent, not later than 1:00 p.m. (New York
City time) on such Business Day, of a confirming Notice of Borrowing), the
Borrower Representative may from time to time irrevocably request that Base
Rate Loans be made on such Business Day or another Business Day within
three Business Days of such Business Day, or that LIBO Rate Loans be made
three Business Days thereafter; provided, that no Loan shall be made as a
LIBO Rate Loan after the day that is one month prior to the Revolving Loan
Commitment Termination Date. All (i) Base Rate Loans may be in any minimum
or multiple amount and (ii) LIBO Rate Loans shall be in the minimum amount
of $500,000 and an integral multiple of $100,000. If the Borrower
Representative requests any LIBO Rate Loans on the date of the initial
Credit Extension it shall have executed an indemnity agreement in form and
substance satisfactory to the Agent. The proceeds of all Loans shall be
used solely for the purposes described in Section 4.10.
(b) Funding by Lenders.
(i) Initial Credit Extension. On the date of the initial Credit
Extension each Lender shall deposit with the Agent same day funds in an
amount equal to such
-34-
Lender's Percentage of the requested Borrowing. To the extent funds are
received from the Lenders, the Agent shall make such funds available to the
relevant Borrower by wire transfer to the accounts the Borrower
Representative shall have specified in its Borrowing Request. No Lender's
obligation to make any Loan shall be affected by any other Lender's failure
to make any Loan.
(ii) Subsequent Credit Extensions. Each Borrowing of any Loans after
the date of the initial Credit Extension shall be advanced by IBJW (for and
on behalf of the Lenders) to the relevant Borrower by wire transfer to the
account the Borrower Representative shall have specified in its Borrowing
Request. On or before 1:00 p.m. (New York City time) on each Settlement
Date, each Lender (other than IBJW) irrevocably agrees that it will make a
Revolving Loan, CapEx Loan and/or Term Loan (each a "Refunding Loan") in an
amount equal to such Lender's Percentage of the then aggregate outstanding
principal amount of all the Revolving Loans, CapEx Loans and/or Term Loans,
respectively. The proceeds of the Refunding Loans shall be applied to repay
the Revolving Loans, CapEx Loans and/or Term Loans then outstanding and
previously funded by IBJW, as the case may be. Once made, the Refunding
Loans shall be deemed to be, for all purposes of this Agreement and the
other Loan Documents, Revolving Loans, CapEx Loans or Term Loans, as the
case may be, of the Lender making each such Loan. Until a Lender makes a
Refunding Loan that repays in full the Revolving Loan, CapEx Loan and/or
Term Loan made by IBJW on its behalf, IBJW shall be entitled to all
principal and interest payments with respect to such Revolving Loans,
Equity Loan and/or Term Loan. If any Lender fails to make any Refunding
Loan on any Settlement Date, such Lender agrees to pay IBJW such amount,
together with interest thereon accruing at the Federal Funds Effective
Rate, for the first three Business Days following such Settlement Date, and
thereafter at the applicable interest rate under this Agreement. In
addition, if any Lender fails to make its Refunding Loans within three
Business Days of any Settlement Date, the relevant Borrower agrees to repay
such amount on demand. Each Lender's obligation to make the Refunding Loans
referred to in this clause (ii) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation,
(A) any set-off, counterclaim, recoupment, defense or other right which
such Lender may have against IBJW, the Borrowers or any other Person for
any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) the acceleration or maturity of any Loans or the
termination of the Revolving Loan Commitment; (D) any breach of this
Agreement or any other Loan Document by the Borrowers, any Lender or the
Agent; or (E) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
SECTION 2.5 Continuation and Conversion Elections. By delivering a
Continuation/ Conversion Notice to the Agent on or before 10:00 a.m. (New York
City time) on a Business Day, the Borrower Representative may from time to time
irrevocably elect, on one Business Day's notice, in the case of Base Rate Loans,
or three Business Days' notice, in the case of LIBO Rate Loans, notice, that
all, or any portion in an aggregate minimum amount of $500,000 and an integral
multiple of $100,000 be, in the case of Base Rate Loans, converted into LIBO
Rate Loans or be, in the case of LIBO Rate Loans, converted into Base Rate Loans
or continued as LIBO Rate Loans (in the absence of delivery of a
Continuation/Conversion Notice
-35-
with respect to any LIBO Rate Loan at least three Business Days (but not more
than five Business Days) before the last day of the then current Interest Period
with respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however, that (a) each such conversion
or continuation shall be prorated among the applicable outstanding Loans of all
Lenders, (b) no portion of the outstanding principal amount of any Loans may be
continued as, or be converted into, LIBO Rate Loans when any Default has
occurred and is continuing, unless the Required Lenders otherwise agree in
writing, (c) no Loans may be continued as, or be converted into, LIBO Rate Loans
after the day that is one month prior to the Stated Maturity Date and (d) if the
aggregate amount of LIBO Rate Loans in respect of any Borrowing is reduced by
payment, prepayment or conversion to be less than $500,000 such LIBO Rate Loans
shall automatically convert to Base Rate Loans.
SECTION 2.6 Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert LIBO Rate Loans hereunder by causing one
of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such LIBO Rate Loan; provided,
however, that such LIBO Rate Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of each Borrower to repay such
LIBO Rate Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, each
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of Sections 4.1 through 4.5, it shall be conclusively
assumed that each Lender elected to fund all LIBO Rate Loans by purchasing
Dollar deposits in its LIBOR Office's interbank eurodollar market.
SECTION 2.7 Letters of Credit. The Borrower Representative may request, in
accordance with the terms hereof, the issuance of a Letter of Credit for its own
account, in a form reasonably acceptable to the Agent and the applicable Issuer,
at any time and from time to time while the Revolving Loan Commitment remains in
effect.
SECTION 2.7.1 Issuance Procedures. (a) By delivering to the Agent and the
relevant Issuer an Issuance Request on or before 11:00 a.m. (New York City time)
on a Business Day, the Borrower Representative may, from time to time
irrevocably request, on not less than three nor more than five Business Days'
notice that such Issuer issue, or extend the Stated Expiry Date of, as the case
may be, a Letter of Credit in such form as may be requested by the Borrower
Representative and approved by such Issuer, such Letter of Credit to be used
solely for the purposes described in Section 4.10. Each Letter of Credit shall
by its terms be stated to expire on a date (its "Stated Expiry Date") no later
than the earlier of (a) one year from the date of issuance and (b) five Business
Days prior to the Revolving Loan Commitment Termination Date. The relevant
Issuer will make available to the beneficiary thereof the original of each
Letter of Credit which it issues hereunder. Unless notified in writing by the
Required Lenders before it issues a Letter of Credit that a Default or Event of
Default exists, the relevant Issuer may issue the requested Letter of Credit in
accordance with such Issuer's customary practices.
(b) No Issuer shall be under any obligation to issue any Letter of Credit
if at the time of request of such issuance any order, judgment or decree of any
governmental authority shall by its terms purport to enjoin or restrain such
Issuer from issuing such Letter of Credit, or any requirement of law applicable
to such Issuer or any directive from any governmental authority
-36-
with jurisdiction over such Issuer shall prohibit, or request that such Issuer
refrain from, the issuance of letters of credit generally or such Letter of
Credit in particular, or shall impose upon such Issuer with respect to such
Letter of Credit any restriction, reserve or capital requirement (for which such
Issuer is not otherwise compensated hereunder) not in effect on the Effective
Date, or shall impose upon such Issuer any unreimbursed loss, cost or expense
which was not applicable on the Effective Date and which such Issuer in good
▇▇▇▇▇ ▇▇▇▇▇ material to it. Such Issuer shall not be required to amend, extend
or renew any Letter of Credit if at the time of the request therefor it would
not be required to issue a Letter of Credit as provided in this clause (b).
SECTION 2.7.2 Other Revolving Lenders' Participation. Upon the issuance of
each Letter of Credit issued by any Issuer pursuant hereto, and without further
action, each Lender (other than the Issuer) shall be deemed to have irrevocably
and unconditionally purchased (without recourse, representation or warranty), to
the extent of its Percentage, a participation interest in such Letter of Credit
(including the Contingent Liability and any Reimbursement Obligation with
respect thereto), and such Lender shall, to the extent of its Percentage, be
responsible for reimbursing promptly (and in any event within one Business Day
together with interest at the Federal Funds Effective Rate for each day until
reimbursement is made) such Issuer for Reimbursement Obligations which have not
been reimbursed by the Borrowers in accordance with Section 2.7.4 or which have
been reimbursed by the Borrowers but have been required to be returned or
disgorged by such Issuer. All reimbursements made by any Lender hereunder to the
Agent shall, automatically and without the requirement of notice to or action by
any Person, constitute Base Rate Loans hereunder. Each Lender shall, to the
extent of its Percentage and so long as it shall have complied with its
obligations under this Sections 2.7.2 and 2.7.4, be entitled to receive a
ratable portion of the Letter of Credit fees payable pursuant to Section 3.3.2
with respect to each Letter of Credit and of interest payable pursuant to
Section 3.2 with respect to any Reimbursement Obligation.
SECTION 2.7.3 Disbursements. Each Issuer will notify USAM and the Agent
promptly of the presentment for payment of any Letter of Credit issued by such
Issuer, together with notice of the date (the "Disbursement Date") such payment
shall be made (each such payment, a "Disbursement"). Subject to the terms and
provisions of such Letter of Credit and this Agreement, such Issuer shall make
such payment to the beneficiary (or its designee) of such Letter of Credit. Not
later than two hours after any Issuer notifies USAM that it has made a
Disbursement under a Letter of Credit (or, if USAM receives such notice after
3:00 p.m. (New York City time) on any Business Day, prior to 10:00 a.m. (New
York City time) on the first Business Day following the Disbursement Date), the
relevant Borrower will reimburse the Agent, for the account of the relevant
Issuer, for all amounts which such Issuer has disbursed under such Letter of
Credit, together with interest thereon at a rate per annum equal to the highest
rate per annum then in effect pursuant to Section 3.2 for the period from the
Disbursement Date through the date of such reimbursement.
SECTION 2.7.4 Reimbursement. The obligation (a relevant "Reimbursement
Obligation") of each Borrower under Section 2.7.3 to reimburse the relevant
Issuer with respect to each Disbursement (including interest thereon), and, upon
the failure of the relevant Borrower to reimburse such Issuer (or if any
reimbursement by the relevant Borrower must be returned or disgorged by the
Issuer for any reason), each Lender's obligation under Section 2.7.2 to
reimburse
-37-
such Issuer, shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
relevant Borrower or such Lender, as the case may be, may have or have had
against such Issuer or any Lender, including any defense based upon the failure
of any Disbursement to conform to the terms of the applicable Letter of Credit
or any non-application or misapplication by the beneficiary of the proceeds of
such Letter of Credit; provided, however, that after paying in full its
Reimbursement Obligation hereunder, nothing herein shall adversely affect the
right of the relevant Borrower or such Lender, as the case may be, to commence
any proceeding against such Issuer for any wrongful Disbursement made by such
Issuer under a Letter of Credit as a result of acts or omissions constituting
gross negligence or willful misconduct on the part of such Issuer.
SECTION 2.7.5 Deemed Disbursements. Upon the occurrence and during the
continuation of any Default of the type described in Section 8.1.9 or, with
notice from the Agent, upon the occurrence and during the continuation of any
other Event of Default
(a) an amount equal to that portion of all Letter of Credit
Outstandings attributable to the then aggregate amount which is undrawn and
available under all Letters of Credit issued and outstanding for the
account of the Borrowers shall, without demand upon or notice to the
Borrowers, be deemed to have been paid or disbursed by the relevant Issuer
under such Letters of Credit (notwithstanding that such amount may not in
fact have been so paid or disbursed); and
(b) upon notification by the Agent to USAM of its obligations under
this Section, the Borrowers shall be immediately obligated to reimburse
such Issuer for the amount deemed to have been so paid or disbursed by such
Issuer.
Any amounts so payable by the Borrowers pursuant to this Section shall be
deposited in cash with the Agent and held as collateral security for the
Obligations in connection with the Letters of Credit issued by the Issuers. In
the case of any such deemed disbursement resulting from the occurrence of a
Default or Event of Default, if such Default or Event of Default has been cured
or waived, the Agent shall return to the Borrowers all amounts then on deposit
with the Agent pursuant to this Section, which have not been applied to the
partial satisfaction of such Obligations.
SECTION 2.7.6 Nature of Reimbursement Obligations. The Borrowers and, to
the extent set forth in Section 2.7.2, each Lender shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. No
Issuer shall be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any Loan Document, any Letter of Credit or any document submitted
by any party in connection with the application for and issuance of a
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 form, validity, sufficiency, accuracy, genuineness or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the
-38-
rights or benefits thereunder or the proceeds thereof in whole or in part,
which may prove to be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise;
(e) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a Disbursement under a Letter of Credit;
or
(f) any other act or omission to act or delay of any kind of the
Issuer, the Lenders, the Agent or any other Person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing,
that might, but for the provisions of this Section, constitute a legal or
equitable discharge of the Borrowers' obligations hereunder.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Issuers, the Agent or any Lender hereunder. In
furtherance and extension and not in limitation or derogation of any of the
foregoing, any action taken or omitted to be taken by an Issuer in good faith
shall be binding upon the Borrowers and each such Lender, and shall not put such
Issuer under any resulting liability to the Borrowers or any such Lender, as the
case may be.
SECTION 2.8 Notes. Each Lender's Loans under the Revolving Loan Commitment
shall be evidenced by a Note payable to the order of such Lender in a maximum
principal amount equal to such Lender's Percentage of the original Revolving
Loan Commitment Amount. Each Borrower hereby irrevocably authorizes each Lender
to make (or cause to be made) appropriate notations on the grid attached to such
Lender's Notes (or on any continuation of such grid), which notations, if made,
shall evidence, inter alia, the date of, the outstanding principal of, and the
interest rate applicable to, the Loans evidenced thereby. Such notations shall
be conclusive and binding on each Borrower absent manifest error; provided,
however, that the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of any Borrower or any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 Repayments and Prepayments. Each Borrower shall repay in full
the unpaid principal amount of each Loan upon the Stated Maturity Date therefor
and pursuant to Sections 8.2 through 8.4. Prior thereto, repayments and
prepayments of Loans shall be made as set forth in this Section 3.1.
SECTION 3.1.1 Voluntary Prepayments. Prior to the Stated Maturity Date,
each Borrower may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of the
Loans; provided, however, that
-39-
(a) any such prepayments shall be made pro rata among Loans of the
same Type and, if applicable, having the same Interest Period of all the
Lenders;
(b) all such voluntary prepayments shall require (i) notice on or
before 10:00 a.m. one Business Day in advance of any prepayment of Base
Rate Loans and (ii) notice on or before 10:00 a.m. three Business Days in
advance of any prepayment of LIBO Rate Loans, in each case to the Agent;
and
(c) all such voluntary partial prepayments of the Term Loans and CapEx
Loans shall be in an aggregate minimum amount of $250,000 and an integral
multiple of $100,000.
Each voluntary prepayment of Term Loans and CapEx Loans made pursuant to this
Section shall be applied, to the extent of such prepayment, in the inverse order
of the scheduled repayments of Term Loans set forth in clause (b) of Section
3.1.2. Each prepayment of any Loans made pursuant to this Section shall be
without premium or penalty but subject to Section 4.4.
SECTION 3.1.2 Mandatory Repayments and Prepayments.
(a) Revolving Loans. The Borrowers shall, on each date when the
aggregate outstanding principal amount of all Revolving Loans, together
with the aggregate amount of all Letter of Credit Outstandings and the
aggregate outstanding principal amount of all Term Loans and CapEx Loans,
exceeds the lesser of (i) the Revolving Loan Commitment Amount (as it may
be reduced from time to time) or (ii) the then existing Borrowing Base
Amount minus the Excess Availability Requirement, first make a mandatory
prepayment of all Revolving Loans and, second, cash collateralize the
Letter of Credit Outstandings on terms in form and substance satisfactory
to the Agent, in each case in an amount equal to such excess.
(b) Term Loans. The Borrowers shall, on the first Business Day of each
calendar month following the making of each Term Loan, make a scheduled
repayment of the aggregate outstanding principal amount in an amount equal
to 1/72 of the original principal amount of each such Term Loan.
(c) CapEx Loans. The Borrowers shall, on the first Business Day of
each calendar month following the making of each CapEx Loan, make a
scheduled repayment of the aggregate outstanding principal amount thereof
in an amount equal to 1/72 of the original principal amount of each such
CapEx Loan.
(d) Mandatory Prepayments from Certain Sources. The Borrowers shall,
(i) on the date of receipt by any Borrower of any Net Disposition Proceeds,
Net Securities Proceeds or Net Debt Proceeds and (ii) on the dates
specified in Section 7.1.4 with respect to Net Insurance Proceeds, apply
(x) 100% of all such Net Disposition Proceeds and Net Insurance Proceeds
and (y) 50% of all such Net Securities Proceeds and Net Debt Proceeds to
(A) first, make a mandatory prepayment of the Term Loans to be
applied to the installments thereof in the inverse order of maturity;
and
-40-
(B) second, if all the Term Loans have been paid in full, make a
mandatory prepayment of the CapEx Loans to be applied to the
installments thereof in the inverse order of maturity;
(C) third, if all the Term Loans and the CapEx Loans have been
paid in full, make a mandatory prepayment of the Revolving Loans; and
(D) fourth, cash collateralize all Letter of Credit Outstandings
on terms in form and substance satisfactory to the Agent.
USAM shall deliver to the Agent, at the time of each prepayment required under
this Section, (i) a certificate signed by its chief executive Authorized Officer
setting forth in reasonable detail the calculation of the amount of such
prepayment and (ii) notice thereof on or before 10:00 a.m. one Business Day in
advance of such prepayment. All Indebtedness constituting Net Debt Proceeds
shall be on terms no less favorable in any respect to the Borrowers, the Agent
and the Lenders than those contained in the Subordinated Debt Documents and the
Intercreditor Agreement. The proceeds of the Net Debt Proceeds and Net
Securities Proceeds that are not required to prepay the Credit Extensions may be
used to prepay principal and interest owing pursuant to the Subordinated Debt
Documents or for other legitimate corporate purposes consistent with the
Borrowers' businesses as set forth in the second recital; provided, that if any
Default or Event of Default has occurred and is continuing or would result from
any such payment, 100% of all such Net Debt Proceeds and Net Securities Proceeds
shall be applied to prepay the Credit Extensions as provided above.
(e) Stated Maturity Date. On the Stated Maturity Date, the Borrowers
shall repay in full the aggregate outstanding principal amount of all the
Loans and Letter of Credit Outstandings.
(f) Acceleration. The Borrowers shall, immediately upon any
acceleration of the Stated Maturity Date of any Loans pursuant to Section
8.2 or Section 8.3, repay all (or if only a portion is accelerated
thereunder, such portion of) the Loans then outstanding and all Letters of
Credit Outstandings.
Each prepayment of any Loans made pursuant to this Section shall be made without
premium or penalty, except as specified herein, and applied, first, to the
prepayment of Base Rate Loans and, second, to the prepayment of LIBO Rate Loans.
SECTION 3.2 Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1 Rates. Subject to Sections 2.4 and 2.5, the Borrower
Representative may elect, pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, that Loans comprising a Borrowing
accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate Loan,
equal to the sum of the Alternate Base Rate from time to time in effect
plus the Applicable Margin; and
-41-
(b) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin.
The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Agent on the basis of the LIBOR Reserve
Percentage in effect on, and the applicable rates furnished to and received by
the Agent from IBJW, two Business Days before the first day of such Interest
Period.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans, the
rate of interest equal to the average (rounded upwards, if necessary, to the
nearest 1/16 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Agent's LIBOR Office in the
London, England interbank market at or about 11:00 a.m. (London, England time)
two Business Days prior to the beginning of such Interest Period for delivery on
the first day of such Interest Period, and in an amount approximately equal to
the amount of the Agent's LIBO Rate Loan and for a period approximately equal to
such Interest Period.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) specified under regulations
issued from time to time by the F.R.S. Board and then applicable to assets or
liabilities consisting of or including "Eurocurrency Liabilities", as currently
defined in Regulation D of the F.R.S. Board, such rate to be adjusted
automatically on and as of the effective date of any change in any such reserve
percentage.
All LIBO Rate Loans shall bear interest from and including the first day of
the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan.
SECTION 3.2.2 Post-Default Rates. Upon the occurrence and during the
continuation of any Default, or after any other monetary Obligation of the
Borrowers shall have become due and payable, the Borrowers shall pay, but only
to the extent permitted by law, interest (after as well as before judgment) on
such amounts at a rate per annum equal to (a), in the case of Loans, the rate
per annum otherwise in effect plus a margin of 2% per annum and (b) in the case
of Letter of Credit Outstandings and other Obligations payable hereunder,
interest at a rate per annum equal to the rate applicable to Base Rate Term
Loans plus 2%, in each case, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
-42-
SECTION 3.2.3 Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Loan on the principal amount so paid or
prepaid;
(c) with respect to Base Rate Loans, on the first Business Day of each
calendar month occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period;
(e) with respect to any Base Rate Loans converted into LIBO Rate Loans
on a day when interest would not otherwise have been payable pursuant to
clause (c), on the date of such conversion; and
(f) on that portion of any Loans the Stated Maturity Date of which is
accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such
acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3 Fees. The Borrowers jointly and severally agree to pay the fees
set forth in this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1 Commitment Fee. The Borrowers jointly and severally agree to
pay to the Agent, for the pro rata account of each Lender, for the period
(including any portion thereof when the Revolving Loan Commitment is suspended
by reason of the Borrowers' inability to satisfy any condition of Article V)
commencing on the Effective Date and continuing through the Revolving Loan
Commitment Termination Date, a commitment fee at the rate of 1/2 of 1% per annum
on such Lender's Percentage of the sum of the average daily unused portion of
the Revolving Loan Commitment Amount (excluding for all purposes of calculating
the commitment fee that portion of the Revolving Loan Commitment Amount
evidenced by the Excess Availability Requirement). Such commitment fees shall be
payable by the Borrowers in arrears on the first Business Day of each calendar
month following the Effective Date, and on the Revolving Loan Commitment
Termination Date.
SECTION 3.3.2 Agent's Fees, etc. The Borrowers jointly and severally agree
to pay to the Agent, for its own account, fees in the amounts, on the dates and
in the manner set forth in the commitment letter with IBJW.
SECTION 3.3.3 Early Termination Fee. If any Borrower reduces or terminates
the Revolving Loan Commitment, in whole or in part, the Borrowers jointly and
severally agree to pay to the Agent, for the ratable benefit of the Lenders, an
early termination fee in an amount
-43-
equal to the amount of the Revolving Loan Commitment so terminated or
reduced multiplied by the applicable percentage set forth below:
Period Percentage
------ ----------
On or prior to the first anniversary of 2%
the Effective Date
After the first anniversary of the 1%
Effective Date and on or prior to the
second anniversary of the Effective Date
After the second anniversary of the 0%
Effective Date
SECTION 3.3.4 Letter of Credit Fee. The Borrowers agree jointly and
severally to pay to the Agent, for the pro rata account of each Issuer and each
Lender, a Letter of Credit fee in an amount equal to 3.0% per annum multiplied
by the average daily Letter of Credit Outstandings of each such Letter of
Credit, such fees to be paid by the Borrowers in arrears on the first Business
Day of each calendar month and on the Revolving Loan Commitment Termination
Date. The Borrowers further jointly and severally agree to pay to each Issuer
all costs and expenses incurred by such Issuer in connection with each Letter of
Credit.
SECTION 3.4 Collection of Receivables and Payments, etc. Each Borrower
shall establish, for and on behalf of itself and each of its Subsidiaries, a
cash management system on the terms provided for in this Section 3.4.
SECTION 3.4.1 Establishment of Lock-Box Accounts and Concentration Account;
Collections. (a) Each Borrower shall, and shall cause each of its Subsidiaries
to, establish lock-box accounts (collectively, the "Lock-Box Accounts") pursuant
to Lock-Box Agreements with any Lender or such other financial institutions as
are acceptable to the Agent (collectively, the "Lock-Box Banks") in which all
obligors shall directly remit all payments on their Receivables. Set forth at
Item 3.4.1(a) ("Lock-Box Accounts") of the Disclosure Schedule is a listing as
of the Effective Date of all Lock-Box Accounts, Lock-Box Banks and the
respective addresses and account numbers. All amounts on deposit in each
Lock-Box Account shall be transferred on a daily basis to the Concentration
Account. Unless otherwise agreed to by the Agent, each Lock-Box Bank and the
Concentration Bank shall acknowledge and agree, pursuant to its Lock-Box
Agreement or Concentration Account Agreement, as the case may be, that all
payments and deposits made to the Lock-Box Accounts of such Lock-Box Bank or the
Concentration Account (in the case of the Concentration Bank) are the sole and
exclusive property of Agent, for the benefit of itself, the Issuers and the
Lenders, that such Lock-Box Bank and the Concentration Bank has no right to
setoff against its Lock-Box Account or the Concentration Account, as the case
may be, except as expressly provided in its Lock-Box
-44-
Agreement or the Concentration Account Agreement, as the case may be, and that
such Lock-Box Bank will wire transfer immediately available funds in a manner
satisfactory to Agent, funds deposited into its Lock-Box Account to the
Concentration Account on a daily basis as soon as such funds are collected. Each
Borrower agrees that all payments, whether by cash, check, wire transfer or any
other instrument on deposit in any Lock-Box Account or the Concentration Account
shall be the sole and exclusive property of the Agent, for the benefit of
itself, the Issuers and the Lenders, and neither the Borrowers nor their
Subsidiaries shall have any right, title or interest therein.
(b) The Borrowers and their Subsidiaries shall directly remit all payments
constituting proceeds of Collateral, including Net Securities Proceeds, Net
Insurance Proceeds, Net Debt Proceeds and Net Disposition Proceeds, to the
Concentration Account in the form received. All such payments, whether by cash,
check, wire transfer or other instrument, made to the Concentration Account,
shall be the exclusive property of the Agent, for the benefit of itself, the
Issuers and the Lenders, and neither the Borrowers nor their Subsidiaries shall
have any right, title or interest therein.
(c) None of the Borrowers nor any of their Subsidiaries shall, without
obtaining the prior consent of the Agent, establish any accounts, other than the
Lock-Box Accounts and the Concentration Account, pursuant to which payments on
account of Receivables are made to or on behalf of any of the Borrowers or any
of their Subsidiaries. In addition, none of the Borrowers nor any of their
Subsidiaries shall not modify in any respect, without the prior consent of the
Agent, any Lock-Box Agreement, Concentration Account Agreement or other
arrangement relating to any Lock-Box Account or the Concentration Account.
SECTION 3.4.2 Payments Held in Trust. To the extent that, notwithstanding
the terms of clause (a) of Section 3.4.1, Account Debtors remit any payments on
account of the Receivables of the Borrowers or any of their Subsidiaries
directly to any of them, such payments shall be held by the Borrowers and their
Subsidiaries in trust for the Agent, on behalf of itself, the Issuers and the
Lenders, and shall, promptly upon receipt thereof, be deposited in the same form
received into a Lock-Box Account or the Concentration Account.
SECTION 3.4.3 Application of Amounts in Concentration Account. (a) Subject
to Section 8.4, all amounts deposited in the Concentration Account from time to
time shall be applied (which application shall conditioned upon final
collection) one Business Day following the receipt thereof by the Agent, (i) in
the case of amounts deposited in the Concentration Account pursuant to clause
(a) of Section 3.4.1, to repay the Revolving Loans, cash collateralize the
Letter of Credit Outstandings on terms in form and substance satisfactory to the
Agent and pay the other Obligations (other than the principal of, and interest
accrued on, the Term Loans and CapEx Loans) hereunder as provided in clause (b),
and (ii) in the case of amounts deposited in the Concentration Account pursuant
to clause (b) of Section 3.4.1, as provided in clauses (c) of Section 3.1.2. For
purposes of the preceding sentence, the Agent shall be deemed to have received a
payment on a particular day in the Concentration Account if it received the same
prior to 1:00 p.m. (New York City time) on such day or, if received after such
time, on the next following Business Day.
-45-
(b) Subject to Section 8.3, the Agent shall apply all amounts deposited in
the Concentration Account pursuant to clause (a) of Section 3.4.1 as follows:
(i) first, to pay Obligations in respect of any expense reimbursements
or indemnities then due to the Agent, including, without limitation, fees
and expenses referred to in Sections 3.4.8 and 10.3;
(ii) second, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders and the Issuers;
(iii) third, to pay Obligations in respect of any fees due to the
Agent, the Lenders and the Issuers;
(iv) fourth, to pay interest due in respect of the Revolving Loans;
(v) fifth, to pay the principal outstanding with respect to the
Revolving Loans;
(vi) sixth, to cash collateralize the Letter of Credit Outstandings on
terms in form and substance satisfactory to the Agent;
(vii) seventh, to the payment of all other Obligations other than the
Term Loans and CapEx Loans; and
(viii) eighth, as instructed by the Borrower.
Each prepayment of a Revolving Loan pursuant to this Section shall be applied,
first, to the payment of Base Rate Loans and second, to the payment of LIBO Rate
Loans. If sufficient funds are not available to fund all payments to be made in
respect of any of the Obligations described in any of the foregoing clauses (i)
through (vi), the available funds being applied with respect to any such
Obligations referred to in any one of such clauses shall be allocated to the
payment of such Obligations ratably, based on the proportion of the Agent's each
Lender's and the Issuers' interest in the aggregate outstanding Obligations
described in such clauses.
SECTION 3.4.4 Additional Payments. If at any time the Agent determines that
any funds held in any Lock-Box Account or the Concentration Account are subject
to the Lien of any Person, other than the Agent as herein provided, (a) the
Borrowers agree that forthwith upon demand by the Agent, to pay to the Agent as
additional funds to be deposited and held in the Concentration Account, an
amount equal to the amount of funds subject to such Lien, or (b) if no such
payment is made, the Agent shall establish Eligibility Reserves by the amount of
such funds.
SECTION 3.4.5 Verification of Receivables. The Agent shall have the right,
and shall, upon the request of the Required Lenders, at any time verify the
validity, amount or any other matter relating to any Receivables.
-46-
SECTION 3.4.6 Agent's Loan Account; Monthly Statements. The Agent shall
maintain an account on its books in the name of each Borrower (the "Loan
Accounts") in which each Borrower will be charged with all Credit Extensions and
other monetary Obligations. The Loan Accounts will be credited with all amounts
received by the Agent from or on behalf of the relevant Borrower. All entries in
the Loan Account shall be conclusive and binding on the relevant Borrower,
absent manifest error, irrespective of whether any Obligation is also evidenced
by a Note or other instrument. The Agent will provide to USAM a monthly
statement reflecting activity in its Loan Account, and such statement shall be
conclusive and binding on the Borrowers if they do not object to the same within
30 days after such statement is received by USAM.
SECTION 3.4.7 Fees and Expenses. Without limiting the other terms hereof,
the Borrowers jointly and severally agree to pay to the Agent any and all
reasonable fees, costs and expenses which the Agent (including the reasonable
fees and out-of-pocket expenses of counsel to the Agent) incurs in connection
with any actions it takes, including enforcement actions, with respect to any
Lock-Box Account, the Concentration Account or the Accounts. The Borrowers
jointly and severally agree to reimburse the Agent for any amounts paid to any
Lock-Box Bank or the Concentration Bank arising out of any indemnification by
the Agent of such Lock-Box Bank or the Concentration Bank against damages
incurred by the Lock-Box Bank in the operation of a Lock-Box Account or
Concentration Account, as the case may be.
SECTION 3.5 Reduction in Excess Availability, etc. (a) If the balance sheet
and financial statements delivered by USAM pursuant to clause (b) of Section
7.1.1 with respect to its 1999 Fiscal Year are satisfactory to the Agent, the
Agent may, in the exercise of its sole and absolute discretion and without any
obligation to take (or not to take) any action with respect to the following,
reduce or eliminate the Excess Availability Requirement by an amount not to
exceed $300,000 or permit excess cash flow of the Borrowers to be applied to pay
the amounts outstanding under the Permitted Borrower Subordinated Debt. Anything
in this clause to the contrary notwithstanding, the Agent shall not be required
to take any action pursuant to this clause and, if it takes any such action, it
may do so without consideration of any facts or circumstances relating to any
Obligor or Subordinated Debt Holder.
(b) If USAM delivers to the Agent a landlord estoppel certificate with
respect to its leased premises with the ▇▇▇▇▇▇▇ Airport Authority, which
certificate the Agent has confirmed is in form and substance satisfactory to it
in it sole discretion, the Agent shall reduce the Excess Availability
Requirement by an amount not to exceed $60,000.
ARTICLE IV
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 4.1 LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to USAM and the Agent, be
conclusive and binding on the Borrowers) that the introduction of or any change
in or in the interpretation of any law makes it unlawful, or any central bank or
other governmental authority asserts that it is unlawful, for such Lender to
make, continue or maintain any Loan as, or to convert any Loan
-47-
into, a LIBO Rate Loan, the obligations of such Lender to make, continue,
maintain or convert any such LIBO Rate Loan shall, upon such determination,
forthwith be suspended until such Lender shall notify the Agent that the
circumstances causing such suspension no longer exist, and all outstanding LIBO
Rate Loans shall automatically convert into Base Rate Loans at the end of the
then current Interest Periods with respect thereto or sooner, if required by
such law or assertion.
SECTION 4.2 Inability to Determine Rates. If the Agent shall have
determined or been instructed by the Required Lenders that
(a) Dollar certificates of deposit or Dollar deposits, as the case may
be, in the relevant amount and for the relevant Interest Period are not
available to Agent in its relevant market; or
(b) adequate means do not exist for adequately and fairly determining
the cost to the Lenders of making or maintaining LIBO Rate Loans or
calculating the same.
then, upon notice from the Agent to USAM and the Lenders, the obligations of all
Lenders under Section 2.3 and Section 2.4 to make or continue any Loans as, or
to convert any Loans into, LIBO Rate Loans shall forthwith be suspended until
the Agent shall notify USAM and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 4.3 Increased Costs, etc. (a) The Borrowers jointly and severally
agree to reimburse each Lender for any increase in the cost to such Lender of,
or any reduction in the amount of any sum receivable by such Lender in respect
of, making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Loans as, or of converting (or of its obligation to convert) any
Loans into, LIBO Rate Loans (including but not limited to any imposition or
effectiveness of reserve requirements) that arise in connection with any change
in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in of, any law or regulation, directive, guideline,
decision or request (whether or not having the force of law) of any court,
central bank, regulator or other governmental authority. Such Lender shall
promptly notify the Agent and USAM in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount. Such additional amounts shall be paid jointly and
severally by the Borrowers directly to such Lender promptly (and, in any event,
within three Business Days of receipt of such notice), and such notice shall, in
the absence of manifest error, be conclusive and binding on the Borrowers.
(b) If at any time the introduction or effectiveness of or any change in
any applicable law, rule or regulation (including without limitation those
announced or published prior to the date of this Agreement), or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Lender
with any request or directive by any such authority (whether or not having the
force of law) shall either (i) impose, modify or make applicable any reserve,
deposit, capital adequacy or similar requirement against Letters of Credit
issued, or participated in, by any Issuer or Lender, or (ii) impose on any
Issuer or Lender any other conditions affecting this Agreement or any Letter of
-48-
Credit, and the result of any of the foregoing is to increase the cost to any
Issuer or Lender of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount of any sum received or receivable by any Issuer or
Lender hereunder with respect to Letters of Credit, then, within ten days of the
receipt of the notice referred to below (which notice shall be given by the
respective Issuer or Lender promptly after it determines such increased cost or
reduction is applicable to Letters of Credit or its participation therein) to
USAM by the respective Issuer or Lender (a copy of which notice shall be sent by
such Issuer or Lender to the Agent), the Borrowers shall jointly and severally
pay to such Issuer or Lender such additional amount or amounts as will
compensate such Issuer or Lender for such increased cost or reduction. A notice
submitted to USAM by such Issuer or Lender, setting forth the basis for the
calculation of such additional amount or amounts necessary to compensate such
Issuer or Lender as aforesaid shall be conclusive and binding on the Borrowers
absent manifest error.
SECTION 4.4 Funding Losses. In the event any Lender shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of
(a) any conversion or repayment or prepayment of the principal amount
of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 3.1,
Section 4.1, Article VIII or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with the
Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/Conversion Notice therefor,
then, upon the written notice of such Lender to USAM (with a copy to the Agent),
the Borrowers shall promptly (and, in any event, within three Business Days of
receipt of such notice) pay directly to such Lender such amount as will (in the
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and binding on the
Borrowers. Such reimbursement shall include an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert, or continue to the last day of such Interest Period that would have
commenced on the date of such failure), in each case at the applicable rate of
interest for such Loans provided for herein over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market.
SECTION 4.5 Increased Capital Costs. If any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation,
-49-
directive, guideline, decision or request (whether or not having the force of
law) of any court, central bank, regulator or other governmental authority
affects or would affect the amount of capital required or expected to be
maintained by any Lender or Issuer or any Person controlling such Lender or
Issuer, and such Lender or Issuer determines (in its sole and absolute
discretion) that the rate of return on its or such controlling Person's capital
as a consequence of its Revolving Loan Commitment or the Loans made by such
Lender or Letters of Credit issued or participated in by such Lender or Issuer
is reduced to a level below that which such Lender, Issuer or such controlling
Person could have achieved but for the occurrence of any such circumstance,
then, in any such case upon notice from time to time by such Lender or Issuer to
USAM, the Borrowers jointly and severally agree to immediately pay directly to
such Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrowers. In determining such amount, such Lender
or Issuer may use any method of averaging and attribution that it (in its sole
and absolute discretion) shall deem applicable.
SECTION 4.6 Taxes. All payments by the Borrowers of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts by the jurisdiction under the laws of which each such Lender
is organized or any political subdivision thereof (such non-excluded items being
called "Taxes"). In the event that any withholding or deduction from any payment
to be made by the Borrowers hereunder is required in respect of any Taxes
pursuant to any applicable law, rule or regulation, then the Borrowers jointly
and severally agree to
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such additional
amount or amounts as is necessary to ensure that the net amount actually
received by each Lender will equal the full amount such Lender would have
received had no such withholding or deduction been required (including
penalties, interest, additional taxes and expenses (including reasonable
attorney's fees and expenses) arising therefrom or with respect thereto).
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder, the
Agent or such Lender may pay such Taxes and the Borrowers will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such Person after the payment
of such Taxes (including any Taxes on such additional amount) shall equal the
amount such Person would have received had not such Taxes been asserted. A
-50-
certificate from any Lender as to the amount of such Taxes that are owing,
absent manifest error, shall be final, conclusive and binding for all purposes.
If the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent for the account of the respective
Lenders the required receipts or other required documentary evidence, the
Borrowers jointly and severally agree to indemnify the Lenders for any
incremental Taxes, interest or penalties that may become payable by any Lender
as a result of any such failure. For purposes of this Section 4.6, a
distribution hereunder by the Agent or any Lender to or for the account of any
Lender shall be deemed a payment by the Borrowers.
Each Lender that is not a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States (or any jurisdiction thereof), or any estate or trust
that is subject to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender") shall deliver to USAM and the Agent:
(a) two copies of Internal Revenue Service Form 1001 or Form 4224, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form
W-8, a certificate representing that such Non-U.S. Lender is not a bank for
purposes of Section 881(c)(3)(A) of the Code, is not a 10% shareholder
(within the meaning of Section 881(c)(3)(B) of the Code) of any Borrower
and is not a controlled foreign corporation related to any Borrower (within
the meaning of Section 881(c)(3)(C) of the Code)), properly completed and
duly executed by such Non-U.S. Lender claiming a complete exemption from,
or reduced rate of, U.S. Federal withholding tax on payments by the
Borrowers or the Agent under this Agreement and the other Loan Documents;
(b) an Internal Revenue Service Form W-8 or W-9 or successor
applicable forms unless otherwise delivered pursuant to preceding clause
(a); and
(c) any other documentation as may be required under applicable U.S.
tax law and regulations to evidence complete exemption from U.S. Federal
withholding tax on all payments by the Borrowers or the Agent under this
Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date
it becomes a party to this Agreement. In addition, each Non-U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrowers at any time it determines that it is no longer in
a position to provide any previously delivered form to the Borrowers (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this Section 4.6, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this Section that
such Non-U.S. Lender is not legally able to deliver. In addition, nothing
contained in this Section 4.6 shall require any Lender to make available any of
its tax returns (or any other information that it deems to be confidential or
proprietary).
-51-
SECTION 4.7 Payments, Computations, etc. Unless otherwise expressly
provided, all payments by the Borrowers pursuant to or in respect of this
Agreement, the Notes, each Letter of Credit or any other Loan Document shall be
made by the Borrowers to the Agent for the pro rata account of the Lenders
entitled to receive such payment. All such payments required to be made to the
Agent shall be made, without setoff, deduction or counterclaim, not later than
11:00 a.m. (New York City time), on the date due, in same day or immediately
available funds, to such account as the Agent shall specify from time to time by
notice to USAM. Funds received after that time shall be deemed to have been
received by the Agent on the next succeeding Business Day. The Agent shall
promptly remit in same day funds to each Lender its share, if any, of such
payments received by the Agent for the account of such Lender. All interest and
fees shall be computed on the basis of the actual number of days (including the
first day but excluding the last day) occurring during the period for which such
interest or fee is payable over a year comprised of 360 days. Whenever any
payment to be made shall otherwise be due on a day which is not a Business Day,
such payment shall (except as otherwise required by clause (c) of the definition
of the term "Interest Period" with respect to LIBO Rate Loans) be made on the
next succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment. The Agent
is authorized to charge any account maintained by the Borrowers with it for any
Obligations owing to it or any of the Lenders.
SECTION 4.8 Sharing of Payments. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
4.3, 4.4, 4.5 and 4.6) in excess of its pro rata share of payments pursuant to
Section 4.7, then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Credit Extensions made by
them (without recourse, representation or warranty) as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and each Lender which has sold a
participation to the purchasing Lender shall repay to the purchasing Lender to
the purchase price to the ratable extent of such recovery together with an
amount equal to such selling Lender's ratable share (according to the proportion
of (a) the amount of such selling Lender's required repayment to the purchasing
Lender to (b) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered. The Borrowers agree that any Lender so purchasing
a participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including pursuant
to Section 4.9) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrowers in the amount of such participation.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this Section applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 4.9 Setoff. Each Lender shall, upon the occurrence of any Event of
Default and with the consent of the Required Lenders, have the right to
appropriate and apply to the payment of the Obligations owing to it (whether or
not then due), and (as security for such
-52-
Obligations) the Borrowers hereby grant to each Lender a continuing security
interest in, any and all balances, credits, deposits, accounts or moneys of the
Borrowers then or thereafter maintained with such Lender; provided, however,
that any such appropriation and application shall be subject to the provisions
of Section 4.8 (each Lender agreeing promptly to notify USAM and the Agent after
any such setoff and application made by such Lender but the failure to give such
notice shall not affect the validity of such setoff and application). The rights
of each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such
Lender may have.
SECTION 4.10 Use of Proceeds. The Borrowers shall apply all the proceeds of
(a) the CapEx Loans to finance Permitted Capital Expenditures and (b) the
Revolving Loans for the purposes described in clause (a), to repay the
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, to repay past due accounts payable of the Borrowers and for
working capital corporate purposes of the Borrowers, provided that the Revolving
Loans shall not be applied for the purpose described in clause (a) unless the
CapEx Loans have been fully drawn, and (c) the Term Loans to repay the
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule and refinance the Revolving Loans that were used to repay
the Indebtedness identified in Item 7.2.2 (b) ("Indebtedness to be Paid") of the
Disclosure Schedule. In addition, each Letter of Credit shall be used for the
working capital corporate purposes of the Borrowers.
ARTICLE V
CONDITIONS TO CREDIT EXTENSIONS
SECTION 5.1 Initial Credit Extension. The obligations of the Lenders and,
if applicable, the Issuer to fund the initial Credit Extension shall be subject
to the prior or concurrent fulfillment of each of the conditions precedent set
forth in this Section 5.1 to the satisfaction of the Agent.
SECTION 5.1.1 Resolutions, Good Standing, etc. The Agent shall have
received from each Obligor a certificate, dated as of the date of the initial
Credit Extension, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
(b) each Organic Document of each Obligor; and
(c) the incumbency and signatures of each officer of each Obligor
authorized to act with respect to this Agreement, the Notes and each other
Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary or Assistant Secretary of the
relevant Obligor canceling or amending such prior certificate. In addition, the
Agent shall have received satisfactory good standing
-53-
certificates for each Obligor from its jurisdiction of incorporation and each
jurisdiction in which it is qualified to do business as a foreign corporation.
SECTION 5.1.2 Agreement. The Agent shall have received, with counterparts
for each Lender, this Agreement duly executed by each Lender, the Agent and an
Authorized Officer of each Borrower.
SECTION 5.1.3 Delivery of Notes. The Agent shall have received, for the
account of each Lender entitled thereto, its Term Note, Revolving Note and CapEx
Note dated the date of the initial Credit Extension and duly executed and
delivered by an Authorized Officer of each Borrower.
SECTION 5.1.4 Required Consents and Approvals. All required consents and
approvals shall have been obtained and be in full force and effect with respect
to the transactions contemplated hereby from (a) all relevant governmental
authorities and regulatory bodies and (b) any other Person whose consent or
approval the Agent deems necessary or appropriate to effect the transactions
contemplated hereby.
SECTION 5.1.5 Documentation Questionnaire. The Agent shall have received a
completed Documentation Questionnaire, dated as of the date hereof, duly
executed and delivered by an Authorized Officer of USAM.
SECTION 5.1.6 Account Agreements. The Agent shall have received (a) a
Lock-Box Agreement from each Lock-Box Bank with respect to its Lock-Box
Accounts, (b) a satisfactory forwarding order letter from NationsBank in which
it agrees to forward all checks and other amounts of the Borrowers deposited
with it to a Lock-Box Account designated by the Agent, (c) a satisfactory letter
from the Borrowers to all of their customers directing them to make payments to
a Lock-Box Account specified by the Agent and (d) a Concentration Account
Agreement from the Concentration Bank with respect to the Concentration Account.
SECTION 5.1.7 Borrowing Base Certificate. The Agent shall have received,
with counterparts for each Lender, an initial Borrowing Base Certificate from
USAM, dated the date of the initial Credit Extension and calculated as of a
recent date satisfactory to the Agent (but in no event later than five days
prior to the date of the initial Credit Extension), duly executed and delivered
by the chief executive Authorized Officer of USAM. The Borrowing Base
Certificate shall evidence that the Excess Availability Requirement has been
satisfied.
SECTION 5.1.8 Financial Information, etc. The Agent shall have received,
with counterparts for each Lender, each of the following (all of which shall be
satisfactory to the Agent and each Lender):
(a) audited financial statements for USAM and its Subsidiaries for
each of its last three fiscal years, in each case prepared in accordance
with GAAP consistently applied;
(b) quarterly unaudited consolidated financial statements for USAM and
its Subsidiaries for the six month period ending June 30, 1999 certified by
the chief executive
-54-
Authorized Officer of USAM, prepared in accordance with GAAP consistently
applied and subject to year-end audit adjustments;
(c) a pro forma balance sheet for USAM and its Subsidiaries, certified
by the chief executive Authorized Officer of USAM, after giving effect to
the consummation of the transactions contemplated by this Agreement and the
other Loan Documents; and
(d) pro forma financial statements for USAM and its Subsidiaries for
the period from the Effective Date through the Stated Maturity Date,
certified by the chief executive Authorized Officer of USAM, after giving
effect to the transactions contemplated by this Agreement and the other
Loan Documents, which financial statements (i) shall be prepared on a
monthly basis and (ii) shall establish, on a pro forma basis from the
Effective Date through the Stated Maturity Date, compliance with the
financial covenants contained in Section 7.2.4 and the ability of the
Borrowers to repay the Obligations hereunder and satisfy the Excess
Availability Requirement.
SECTION 5.1.9 Compliance Certificate. The Agent shall have received, with
counterparts for each Lender, an initial Compliance Certificate on a pro forma
basis after giving effect to the transactions contemplated by this Agreement,
the other Loan Documents, such Compliance Certificate to be dated the date of
the initial Credit Extension and to be duly executed (and with all schedules
thereto duly completed and establishing compliance with the covenants contained
herein) and delivered by the chief executive Authorized Officer of USAM.
SECTION 5.1.10 Corporate Guaranty. The Agent shall have received the
Corporate Guaranty, dated as of the date hereof and duly executed by each
Subsidiary of each Borrower (other than any Excluded Foreign Subsidiary).
SECTION 5.1.11 Pledged Property. The Agent shall have received:
(a) the Pledge Agreement, dated as of the date hereof, duly executed
by each of the Borrowers and each of their Subsidiaries (other than any
Excluded Foreign Subsidiary);
(b) the original certificates evidencing all of the issued and
outstanding shares of capital stock required to be pledged pursuant to the
terms of the Pledge Agreement, which certificates shall be accompanied by
undated stock powers duly executed in blank by each relevant pledgor; and
(c) the original promissory notes, if any, evidencing intercompany
Indebtedness required to be pledged pursuant to the terms of the Pledge
Agreement, duly endorsed in blank by each relevant pledgor in favor of the
Agent.
SECTION 5.1.12 UCC Search Results. The Agent shall have received certified
copies of Uniform Commercial Code Requests for Information or Copies (Form
UCC-11), or a similar search report certified by a party acceptable to the
Agent, dated a date reasonably near (but prior to) the date of the initial
Credit Extension, listing all effective U.C.C. financing statements, tax liens
and judgment liens which name the Borrowers or any of their Subsidiaries, as the
debtor, and which are filed in the jurisdictions in which filings are to be made
pursuant to
-55-
this Agreement and the other Loan Documents, and in such other jurisdictions as
the Agent may reasonably request, together with copies of such financing
statements (none of which (other than financing statements filed pursuant to the
terms hereof in favor of the Agent, if such Form UCC-11 or search report, as the
case may be, is current enough to list such financing statements) shall cover
any of the Collateral).
SECTION 5.1.13 Control Agreements. If any of the Borrowers or any of their
Subsidiaries has any monies, deposits or investments in any account (other than
with respect to its Receivables as provided in clause (a) of Section 3.4.1), it
shall provide satisfactory evidence of the termination of the same or the
Agent's first priority security interest therein, including, if necessary,
providing satisfactory control agreements.
SECTION 5.1.14 Security Agreement, Filings, etc. The Agent shall have
received executed counterparts of the Security Agreement, dated as of the date
hereof, duly executed by each of the Borrowers and each of their Subsidiaries,
together with acknowledgment copies of U.C.C. financing statements naming the
relevant Borrower and each of its Subsidiaries, as the case may be, as the
debtor and the Agent as the secured party, such U.C.C. financing statements to
have been filed under the U.C.C. of all jurisdictions as may be necessary or, in
the opinion of the Agent, desirable to perfect the first priority security
interest of the Agent pursuant to the Security Agreement, together with evidence
satisfactory to the Agent of the filing (or delivery for filing) of appropriate
trademark, copyright and patent security supplements.
SECTION 5.1.15 Solvency Certificate. The Agent shall have received, with
copies for each Lender, a solvency certificate in substantially the form of
Exhibit L attached hereto, duly executed by the chief executive Authorized
Officer of USAM, dated the date of the initial Credit Extension and expressly
permitting the Agent and the Lenders to rely thereon.
SECTION 5.1.16 Closing Date Certificate. The Agent shall have received,
with copies for each Lender, a Closing Date Certificate in substantially the
form of Exhibit K attached hereto, duly executed by the chief executive
Authorized Officer of USAM and dated the date of the initial Credit Extension,
in which certificate USAM shall agree and acknowledge that the statements made
therein shall be true and correct representations and warranties of the
Borrowers as of such date. All documents and agreements appended to such Closing
Date Certificate (including the Convertible Debenture Documents and the
Subordinated Debt Documents) shall be in form and substance satisfactory to the
Agent and the Lenders.
SECTION 5.1.17 Funds Flow Memorandum. The Agent shall have received a
satisfactory funds flow memorandum with respect to all payments made on the date
of the initial Credit Extension.
SECTION 5.1.18 Evidence of Insurance. The Agent shall have received
evidence of the insurance coverage required to be maintained pursuant to Section
7.1.4 (including, without limitation, all the endorsements and other matters
referred to in clause (b) thereof), which insurance shall have been reviewed by
one or more of the Agent's risk managers and be satisfactory to the same,
together with a satisfactory insurance brokers letter as to the adequacy of
-56-
the Borrowers' insurance and the compliance of the same with the requirements of
this Agreement and the other Loan Documents.
SECTION 5.1.19 Environmental Matters. The Agent shall have received, with
copies for each Lender, a certificate signed by an Authorized Officer and dated
as of the date of the initial Credit Extension, certifying true and correct
copies of environmental assessment reports with respect to each of the
Borrowers, each of their Subsidiaries and their respective property, all of the
foregoing to be from a satisfactory environmental consultant and otherwise be
satisfactory to the Agent and each of the Lenders. In addition, the Agent shall
have received satisfactory letters from GeoSyntech Consultants as to potential
environmental liabilities and the scope for additional Phase II analysis and
from the Borrowers as to proposed remedian actions.
SECTION 5.1.20 Payment of Outstanding Indebtedness, etc. The Agent shall
have received satisfactory evidence that all the Indebtedness identified in Item
7.2.2(b) ("Indebtedness to be Paid") of the Disclosure Schedule, together with
all interest, all prepayment premiums and other amounts due and payable with
respect thereto, have been paid in full and all obligations with respect thereto
have been terminated, and that all Liens securing payment of any such
Indebtedness have been released. In addition, the Agent shall have received
termination agreements and Uniform Commercial Code Form UCC-3 termination
statements or other instruments as may be suitable or appropriate in connection
with the foregoing.
SECTION 5.1.21 Bailee Waivers. If any Inventory of any of the Borrowers or
any of their Subsidiaries is located in a public warehouse or other facility
under the control of a third Person, each such Person shall have executed a
bailee waiver or entered into other appropriate arrangements that are
satisfactory to the Agent.
SECTION 5.1.22 Appraisals and Collateral Audit Reports. The Agent shall
have received, with copies for each Lender, a satisfactory appraisal and
collateral audit report with respect to all the real property, machinery and
equipment of the Borrowers and their Subsidiaries, which appraisal and
collateral audit report shall be conducted by an appraiser, and auditors as the
case may be, that is satisfactory to the Agent.
SECTION 5.1.23 Copies of Material Agreements. The Agent shall have received
copies of all the agreements evidencing the Indebtedness referred to at Item
7.2.2(c) ("Ongoing Indebtedness") of the Disclosure Schedule (including the
Convertible Debenture Documents and the Subordinated Debt Documents) and all
other agreements, documents and instruments the breach, nonperformance,
cancellation or failure to renew may have a Material Adverse Effect
(collectively, the "Material Agreements"), all of which agreements shall be
satisfactory to the Agent.
SECTION 5.1.24 Opinions of Counsel. The Agent shall have received
opinions, each dated the date of the initial Credit Extension and addressed to
the Agent and all the Lenders, from New York and local counsel to the Borrowers,
substantially in the form of Exhibits N-1 and N-2, respectively, attached
hereto.
-57-
SECTION 5.1.25 Intercreditor Agreement. The Agent shall have received the
Intercreditor Agreement, dated as of the date hereof, duly executed by each
Subordinated Debt Holder.
SECTION 5.1.26 Agent's Closing Fees, Expenses, etc. The Agent shall have
received for its own account, and for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and, if then invoiced, 10.3.
SECTION 5.1.27 Accountant's Letter. The Agent shall have received, with
copies for each Lender, a letter from the Borrowers' accountants that, after
giving effect to the financing being made available pursuant to this Agreement,
there would not have been a "going concern" qualification with respect to the
Borrowers' 1998 financial statements.
SECTION 5.1.28 Cash Collateral Agreement. The Agent shall have received the
Cash Collateral Agreement, dated as of the date hereof, duly executed by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇. Ram.
SECTION 5.1.29 IBJ Authorization Letter. The Agent shall have received,
with copies for each Lender, a letter from the Borrowers authorizing the Agent
to rely upon, among other things, telephone requests for the making of Credit
Extensions.
SECTION 5.1.30 Cancellation of Existing Intercompany Notes. The Agent shall
have received satisfactory evidence that all the existing intercompany notes
among the Borrowers have been cancelled on satisfactory terms.
SECTION 5.1.31 Satisfactory Due Diligence. The Agent and each Lender shall
have completed, to their satisfaction, a due diligence analysis with respect to
the Borrowers and their Subsidiaries, including with respect to the ability of
the Borrowers to comply with the representations and warranties and covenants
contained in this Agreement and the other Loan Documents, and their customer and
vendor references.
SECTION 5.2 All Credit Extensions. The obligation of each Lender and Issuer
to make any Credit Extension (including the initial Credit Extension) shall be
subject to the fulfillment of each of the conditions precedent set forth in this
Section 5.2 to the satisfaction of the Agent:
SECTION 5.2.1 .Compliance with Warranties, No Default, etc. Both
before and after giving effect to any Credit Extension:
(a) the representations and warranties set forth in Article VI and in
the other Loan Documents shall be true and correct in all material respects
with the same effect as if then made (unless stated to relate solely to an
earlier date, in which case such representations and warranties shall be
true and correct as of such earlier date); and
(b) no Default or Event of Default shall have then occurred and be
continuing.
-58-
SECTION 5.2.2 Credit Extension Request, etc. (a) The Agent (and the
relevant Issuer, if a Letter of Credit is being requested) shall have received
from the Borrower Representative a duly executed and completed Borrowing
Request, if Loans are being requested, or an Issuance Request, if a Letter of
Credit is being requested or extended. The delivery of a Borrowing Request or
Issuance Request and the acceptance by any Borrower of the proceeds of such
Credit Extension shall constitute a representation and warranty by such Borrower
that on the date of such Credit Extension (both immediately before and after
giving effect to such Credit Extension and the application of the proceeds
thereof) the statements made in Section 5.2.1 are true and correct.
(b) Prior to the making of any CapEx Loan or Revolving Loan the
proceeds of which are to be used to fund any Permitted Capital Expenditure
the Agent shall have received satisfactory evidence that the aggregate
principal amount of each such Loan shall not exceed 80% of the Hard Costs
of the relevant equipment being purchased by the relevant Borrower.
(c) Prior to the making of any Term Loan after the date of the initial
Credit Extension the following additional conditions shall have been
satisfied:
(i) Environmental Matters. The Agent shall have received, with
copies for each Lender, a certificate signed by an Authorized Officer
and dated as of a date reasonably near (but prior to) the date that
the initial Term Loan is made, certifying true and correct copies of
the Phase I and II environmental assessment reports as of a recent
date with respect to each of the Borrowers, each of their Subsidiaries
and their respective property, all of the foregoing to be from a
satisfactory environmental consultant and otherwise be satisfactory to
the Agent and each of the Lenders (including that such reports do not
disclose a liability exceeding a Material Environmental Amount).
(ii) Real Estate Mortgages. The Agent and each Lender shall have
received counterparts of real estate mortgages or deeds of trust,
substantially in the form of Exhibit O hereto (collectively, the "Real
Estate Mortgages"), duly executed by each Borrower and each applicable
Subsidiary, together with
(A) evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of the Real Estate
Mortgages (and related fixture filings) as may be necessary or, in the
opinion of the Agent or any Lender, desirable to effectively create a
valid first priority mortgage Lien against all of the Realty, subject
only to the Permitted Encumbrances;
(B) such other approvals, opinions or documents in connection
therewith as the Agent or any Lender may reasonably request,
including, without limitation, consents and estoppel agreements from
landlords; and
(C) a duly executed Real Estate Mortgage Note in the name of the
Agent for each Real Estate Mortgage.
-59-
(iii) Title Insurance. The Agent and each Lender shall have
received in its favor a mortgagee's title insurance policy or policies
satisfactory to each of them and from an independent title insurer
satisfactory to it (the "Title Insurer"), with respect to all the
Realty, insuring that title to the Realty is marketable and that the
security interests created by the Real Estate Mortgages constitute
valid Liens thereon free and clear of all defects and encumbrances,
other than the Permitted Encumbrances, and such other matters
reasonably approved by the Agent and each Lender, and such policy
shall also include a revolving credit endorsement, comprehensive
endorsement, variable rate endorsement, access and utilities
endorsements (to the extent available), a mechanic's lien endorsement
endorsements (to the extent available) and such other endorsements as
the Agent or any Lender shall reasonably request. All premiums, title
examination, survey, departmental violations, judgment and U.C.C.
search charges, mortgage recording taxes and fees, and other taxes,
charges and fees shall have been paid in full or provided for in a
manner satisfactory to the Title Insurer, the Agent and each Lender,
and the Agent and each Lender shall have received satisfactory
evidence of such payment or provision.
(iv) Realty Survey. The Agent and each Lender shall have received
a current survey of the Realty, and the improvements thereon, prepared
in accordance with the current Minimum Standard Detail Requirements
for Land Title Surveys as adopted by the American Land Title
Association and the American Congress on Surveying and Mapping,
prepared and certified to each Lender and the Title Insurer by a
licensed surveyor or engineer, which surveyor and survey shall be
reasonably satisfactory in all respects to the Agent, each Lender and
to the Title Insurer and which certification shall include, among
other things, a statement to the effect that all portions of the
Realty that lie within any flood areas designated on any maps entitled
"Flood Insurance Rate Map", "Flood Hazard Floodway Boundary Map",
"Flood Hazard Boundary Map", or "Flood Boundary and Floodway Map"
published by the Federal Emergency Management Agency or on any Flood
Hazard Boundary Map published by the U.S. Department of Housing and
Urban Development have been outlined and labeled on the survey.
(v) Realty Permits and Contracts The Agent and each Lender shall
have received a certificate from an Authorized Officer of each
Borrower certifying to such Authorized Officer's knowledge (after due
inquiry) true and correct copies of all Realty Permits required for,
or useful in connection with, the current use and operation of the
Realty of the Disclosure Schedule held by such Borrower, together with
evidence in form and substance satisfactory to the Agent and each
Lender to the effect that such Realty benefits from such zoning
classifications and entitlements as may be necessary or desirable for
its intended uses.
(D) The Agent and each Lender shall have received a certificate
signed by an Authorized Officer of each Borrower certifying true and
correct copies of all material contracts relating to the use or
operation of the Realty held by such Borrower.
(vi) Legal Opinions. The Agent and each Lender shall have
received satisfactory legal opinions covering those relevant matters
addressed in the opinion letters attached at Exhibits N-1 and N-2,
respectively, attached hereto.
-60-
SECTION 5.2.3 .Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of the Borrowers or any other Obligor shall be
satisfactory in form and substance to the Agent, the Lenders and their counsel.
In addition, the Agent, the Lenders and their counsel shall have received all
information, approvals, opinions, documents or instruments as the Agent, the
Lenders or their counsel may reasonably request.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders, each Issuer and the Agent to enter into
this Agreement and to make Credit Extensions hereunder, each Borrower, with
respect to itself, represents and warrants to the Agent, each Issuer and each
Lender as set forth in this Article VI.
SECTION 6.1 Organization, etc. Each of the Borrowers and each of their
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business requires such qualification,
and has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Notes and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it.
SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each Borrower of this Agreement, the Notes and each
other Loan Document executed or to be executed by it, and the execution,
delivery and performance by each other Obligor of each Loan Document executed or
to be executed by it, are within the Borrowers' and each such Obligor's
corporate powers, have been duly authorized by all necessary corporate action,
and do not
(a) contravene or result in a default under any such Borrower's or
other Obligor's Organic Documents;
(b) contravene or result in a default under any law or governmental
regulation or court decree or order binding on any such Borrower or other
Obligor;
(c) contravene (i) any material provision of any indenture, agreement
or other instrument to which any such Borrower or other Obligor is a party
or by which any of them or any of their property is or may be bound or (ii)
be in conflict with, result in a breach of or constitute (along or with
notice or lapse of time or both) a default under, or give rise to any right
to accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument; or
(d) result in, or require the creation or imposition of, any Lien on
any such Borrower's or other Obligor's properties (other than in favor of
the Agent).
-61-
SECTION 6.3 Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for
(a) the due execution, delivery or performance by each Borrower or any
other Obligor of this Agreement, the Notes or any other Loan Document to
which it is a party;
(b) the grant by the Borrowers of the security interests, pledges and
Liens granted by the Loan Documents; or
(c) for the perfection of or the exercise by the Agent of its rights
and remedies under this Agreement or any other Loan Document.
SECTION 6.4 Validity, etc. This Agreement constitutes, and the Notes and
each other Loan Document executed by the Borrowers will, on the due execution
and delivery thereof, constitute, the legal, valid and binding obligations of
the Borrowers enforceable in accordance with their respective terms; and each
Loan Document executed pursuant hereto by each other Obligor will, on the due
execution and delivery thereof by such Obligor, be the legal, valid and binding
obligation of such Obligor enforceable in accordance with its terms, subject in
each case to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally,
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law). Each of the Loan Documents
which purports to create a security interest creates a valid first priority
registered or possessory security interest in the Collateral subject thereto (in
the case of non-possessory security interests) only to Liens permitted by
Section 7.2.3, securing the payment of the Obligations, and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been duly taken.
SECTION 6.5 Financial Information. (a) The balance sheets and financial
statements of the Borrowers delivered pursuant to Section 5.1.8 and Section
7.1.1 have each been or will be, as the case may be, prepared in accordance with
GAAP consistently applied and do or will, as the case may be, present fairly the
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended. The pro forma
balance sheet and financial statements delivered pursuant to Section 5.1.8 (i)
have been prepared in good faith based on reasonable assumptions, (ii) are based
on the best information available to the Borrowers after due inquiry, (iii)
accurately reflect all adjustments necessary to give effect to the Loan
Documents and (iv) present fairly, in all material respects, the pro forma
financial position of the Borrowers and their Subsidiaries as of each relevant
date.
(b) Except as disclosed in the financial statements referred to above or
the notes thereto and for the items disclosed in the Disclosure Schedule, none
of the Borrowers or any of their Subsidiaries has, as of the date of the initial
Credit Extension, any material contingent liabilities, unusual long-term
commitments or unrealized losses.
SECTION 6.6. No Material Adverse Change. (a) There has been no material
adverse change in the condition (financial or otherwise), operations, assets,
business, properties
-62-
or prospects of the businesses or companies of the Borrowers and their
Subsidiaries, taken as a whole, as reflected in the financial statements
delivered pursuant to clause (a) of Section 5.1.8.
(b) From and after the date of the initial Credit Extension, there has been
no material adverse change in the condition (financial or otherwise),
operations, assets, business, properties or prospects of the Borrowers and their
Subsidiaries, taken as a whole, as reflected in the pro forma balance sheet
delivered pursuant to clause (c) of Section 5.1.8.
SECTION 6.7 Litigation, Labor Controversies, etc. Except as set
forth on Item 6.7(a) of the Disclosure Schedule ("Litigation"), there is no
pending or, to the knowledge of the Borrowers, threatened litigation, action,
proceeding, or labor controversy affecting the Borrowers or any of their
Subsidiaries, or any of their respective properties, businesses, assets or
revenues, (a) with respect to this Agreement, the Notes or any other Loan
Document or (b) which could reasonably be expected to have a Material Adverse
Effect. The hours worked by and payments made to employees of the Borrowers and
their Subsidiaries have not been in violation of the Fair Labor Standards Act or
any other applicable Federal, state, local or other law dealing with such
matters. Set forth on Item 6.7(b) of the Disclosure Schedule ("Labor Contracts")
is a listing of all labor contracts to which any of the Borrowers and any of
their Subsidiaries is a party.
SECTION 6.8 Capitalization. As of the date of the initial Credit Extension,
the authorized capital stock or the other equity interests in USAM and its
Subsidiaries and their Affiliates, including the holders thereof, is set forth
in Item 6.8 ("Initial Capitalization") of the Disclosure Schedule. The Borrowers
will not establish after the Effective Date (a) any additional Subsidiaries
without (i) obtaining the prior consent of the Agent and (ii) complying with
Section 7.1.9 or (b) make any Investments in any other Person without complying
with the applicable terms of this Agreement. The shares of capital stock or
other ownership interests so indicated on the Disclosure Schedule are fully paid
and non-assessable and are owned by the Borrowers, directly or indirectly, free
and clear of all Liens (other than Liens in favor of the Agent pursuant to the
Loan Documents).
SECTION 6.9 Ownership of Properties. Each of the Borrowers and each of
their Subsidiaries has good and marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights), free
and clear of all Liens, charges or claims (including infringement claims with
respect to patents, trademarks, copyrights and the like), except as permitted
pursuant to Section 7.2.3. Each of the Borrowers and each of their Subsidiaries
has complied in all material respect with all obligations under all material
leases to which it is a party and all such leases are in full force and effect.
Each of the Borrowers and each of their Subsidiaries enjoys peaceful and
undisturbed possession under all such material leases. Item 6.9 ("Realty") of
the Disclosure Schedule sets forth the address of each real property that is
owned or leased by the Borrowers and their Subsidiaries as of the date of the
initial Credit Extension.
SECTION 6.10 Taxes. The Borrowers and their Subsidiaries have filed all tax
returns and reports required by law to have been filed by them and have paid all
taxes and governmental charges thereby shown to be owing, except any such taxes
or charges which are
-63-
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on
their books.
SECTION 6.11 Pension and Benefit Plans. Item 6.11 ("Plans") of the
Disclosure Schedule lists all Plans as of the date of the initial Credit
Extension. Neither a Reportable Event nor an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made with respect to any Pension Plan, and each Pension Plan
has complied in all material respects with the applicable provisions of ERISA,
the Code and all other applicable laws. No termination of a Single Employer Plan
has occurred, and no Lien in favor of the PBGC or a Pension Plan has arisen
during such five-year period. The present value of all accrued benefits under
each Single Employer Plan (based on those assumptions used to fund such Pension
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made, exceed the value of the assets of such Pension Plan
allocable to such accrued benefits by a material amount. No Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan which has resulted or could reasonably be expected to result
in a material liability under ERISA, and no Borrower nor any Commonly Controlled
Entity would become subject to any material liability under ERISA if any
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made.
SECTION 6.12 Environmental Warranties. Except as set forth in Item 6.12
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying groundwater)
owned, operated or leased by the Borrowers and their Subsidiaries have
been, and continue to be, owned, operated or leased by the Borrowers and
their Subsidiaries in compliance with all Environmental Laws, except for
such violations that, singly or in the aggregate, would not reasonably be
expected to result in a liability exceeding a Material Environmental
Amount;
(b) there have been no past, and there are no pending or threatened
(i) claims, complaints, notices or requests for information
received by the Borrowers or any of their Subsidiaries with respect to
any alleged violation of any Environmental Law that, singly or in the
aggregate, may reasonably be expected to result in a liability
exceeding a Material Environmental Amount; or
(ii) complaints, notices or inquiries to the Borrowers or any of
their Subsidiaries regarding potential liability under any
Environmental Law that, singly or in the aggregate, may reasonably be
expected to result in a liability exceeding a Material Environmental
Amount;
(c) there have been no Releases of Hazardous Materials at, on or under
any property now or previously owned, operated or leased by the Borrowers
or any of their
-64-
Subsidiaries that, singly or in the aggregate, has, or may reasonably be
expected to result in having, a liability exceeding a Material
Environmental Amount;
(d) the Borrowers and their Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary or
desirable for their businesses;
(e) no property now or previously owned, operated or leased by the
Borrowers or any of their Subsidiaries is listed or (to the best of their
knowledge) proposed for listing on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or
previously owned or leased by the Borrowers or any of their Subsidiaries;
(g) neither any of the Borrowers nor any of their Subsidiaries have
transported or arranged for the transportation of any Hazardous Material to
any location which is listed or (to the best of their knowledge) proposed
for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the subject of federal,
state or local enforcement actions or other investigations which may lead
to claims against any Borrower or such Subsidiary thereof for any remedial
work, damage to natural resources or personal injury (including claims
under CERCLA) which, singly or in the aggregate, may reasonably be expected
to result in a liability exceeding a Material Environmental Amount;
(h) there are no polychlorinated biphenyls or friable asbestos present
at any property now or previously owned, operated or leased by the
Borrowers or any of their Subsidiaries that, singly or in the aggregate,
may reasonably be expected to result in a liability exceeding a Material
Environmental Amount; and
(i) no conditions exist at, on or under any property now or previously
owned, operated or leased by the Borrowers or any of their Subsidiaries
which, with the passage of time, or the giving of notice or both, would
give rise to liability under any Environmental Law which would reasonably
be expected to result in a liability exceeding a Material Environmental
Amount.
SECTION 6.13 Inventory. (a) All Inventory of the Borrowers is located on or
is in transit to the premises described in Section 3.1.1 of the Security
Agreement, as the same may hereafter be supplemented from time to time. All
Inventory located on any property leased to the Borrowers or in or with, as the
case may be, a public warehouse or other third party is subject to a landlord or
bailee waiver, as applicable, and appropriately completed and filed UCC-1
financing statements, in each case to which the Agent has confirmed to USAM is
in form and substance acceptable to it.
(b) The Borrowers shall at all times hereafter keep correct and accurate
records itemizing and describing generally the kind, type and quantity of
Inventory, the
-65-
Borrowers' cost therefor and daily withdrawals therefrom and additions thereto,
all of which records shall be available during the Borrowers' usual business
hours at the request of the Agent.
(c) All Receivables of the Borrowers and their Subsidiaries shall be
subject, without limitation, to the terms of Section 4.1.2. of the Security
Agreement.
SECTION 6.14 Accuracy of Information. (a) All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrowers, any
of their Subsidiaries and any of their Affiliates in writing to the Agent or any
Lender for purposes of or in connection with this Agreement or any transaction
contemplated hereby is, and all other such factual information hereafter
furnished by or on behalf of the Borrowers, any of their Subsidiaries and any of
their Affiliates to the Agent or any Lender will be, true and accurate in every
material respect on the date as of which such information is dated or certified
and, as to information heretofore delivered, as of the date of the initial
Credit Extension, and such information is not, or shall not be, as the case may
be, incomplete by omitting to state any material fact necessary to make such
information not misleading.
(b) All written information prepared by any consultant or professional
advisor on behalf of the Borrowers or any of their Subsidiaries which was
furnished to the Agent or any Lender in connection with the preparation,
execution and delivery of this Agreement has been reviewed by the Borrowers, and
nothing has come to the attention of the Borrowers in the context of such review
which would lead them to believe that such information (or the assumptions on
which such information is based) is not true and correct in all material
respects or that such information omits to state any material fact necessary to
make such information not misleading in any material respect.
(c) Insofar as any of the information described above includes assumptions,
estimates, projections or opinions, the Borrowers have reviewed such matters and
nothing has come to the attention of the Borrowers in the context of such review
which would lead them to believe that such matters were not or are not true and
correct in all material respects or that such assumptions, estimates,
projections or opinions omit to state any material fact necessary to make such
assumptions, estimates, projections or opinions not reasonable or not misleading
in any material respect. All projections and estimates have been prepared in
good faith on the basis of reasonable assumptions and represent the best
estimate of future performance by the party supplying the same.
SECTION 6.15 Documentation Questionnaire. As of the date of the initial
Credit Extension all of the information provided by USAM to the Agent pursuant
to the documentation questionnaire (the "Documentation Questionnaire") is true
and correct in all material respects.
SECTION 6.16 Absence of Default. Except as set forth on Item 6.16 of the
Disclosure Schedule ("Defaults"), none of the Borrowers nor any of their
Subsidiaries is in default in the payment of (or in the performance of any
obligation applicable to) any Indebtedness, or in violation of any law or
governmental regulation or court decree or order in any material respect.
-66-
SECTION 6.17 Regulations G, U and X. None of the Borrowers nor any of their
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
"margin stock". None of the proceeds of any Loan or Letter of Credit will be
used for the purpose of, or be made available by any of the Borrowers or any of
their Subsidiaries in any manner to any other Person to enable or assist such
Person in, directly or indirectly purchasing or carrying "margin stock". Terms
for which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section 6.17 with such meanings.
SECTION 6.18 Government Regulation. None of the Borrowers nor any of their
Subsidiaries is an "investment company" nor a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940, as
amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 6.19 Material Agreements. Set forth on Item 6.19 of the Disclosure
Schedule ("Material Agreements") is a listing, as of the date of the initial
Credit Extension, of all the Material Agreements, and each Obligor is in
material compliance with all the terms contained therein. Each Obligor is in
material compliance with all the terms contained in each Material Agreement and
all consents to duly assign each such Material Agreement to the Agent have been
obtained and are in full force and effect.
SECTION 6.20 Solvency. Each of the Borrowers and each of their Subsidiaries
is, and after giving effect to the incurrence of all Indebtedness and
obligations being incurred pursuant to the Loan Documents or otherwise will be
and will continue to be, Solvent.
SECTION 6.21 Insurance. Item 6.21 ("Insurance") of the Disclosure Schedule
sets forth a true, complete and correct description of all insurance maintained
by the Borrowers and their Subsidiaries as of the date of the initial Credit
Extension. As of such date, such insurance is in full force and effect and all
premiums have been duly paid.
SECTION 6.22 Compliance with Laws. Each of the Borrowers and each of their
Subsidiaries is in material compliance with all laws, rules, regulations and
orders of governmental authorities applicable to them and their properties.
SECTION 6.23 Year 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of the Borrowers' computer systems
and equipment containing embedded microchips (including systems and equipment
supplied by others or with which Borrowers' systems interface) and the testing
of all such systems and equipment, as so reprogrammed, has been completed,
except that the foregoing which relates to the Borrowers' financial reporting
systems in their Florida operations shall be completed no later than October 31,
1999. The cost to the Borrowers of such reprogramming and testing and of the
reasonably foreseeable consequences of year 2000 to the Borrowers (including,
without limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in a Default or a Material Adverse Effect. Except for
such of the reprogramming referred to in the preceding
-67-
sentence, the computer and management information systems of the Borrowers and
their Subsidiaries are and, with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the
Borrowers to conduct their business without a Material Adverse Effect.
SECTION 6.24 Senior Indebtedness, etc. All principal of, and accrued
interest owing on, all the Credit Extensions and all other Obligations owing
hereunder and under the other Loan Documents are "Senior Indebtedness" under the
Intercreditor Agreement. USAM has duly executed and delivered each Subordinated
Debt Document and each Subordinated Debt Document constitutes the legal, valid
and binding obligation of USAM, enforceable against USAM in accordance with its
terms, subject, as to enforcement only, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally, and subject to the effect of general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
USAM has delivered true and complete copies of the Subordinated Debt Documents
to the Lenders, together with all amendments, waivers and other changes thereto.
Notwithstanding any bankruptcy, insolvency, reorganization, moratorium or
similar proceeding in respect of USAM, at all times (i) the subordination
provisions in the Intercreditor Agreement will be enforceable against the
Subordinated Debt Holders thereof by the Agent and the Lenders, (ii) all
Obligations, including the Obligations to pay principal of and interest on the
Credit Extensions, constitute "Senior Indebtedness", as defined in the
Intercreditor Agreement and all such Obligations will be entitled to the
benefits of subordination created by the Intercreditor Agreement and (iii) all
payments of principal of or interest on each Subordinated Debt Document made by
USAM from the liquidation of its property will be subject to such subordination
provisions. At the time of the execution and delivery of each Subordinated Debt
Document, the same was duly registered or qualified under all applicable United
States Federal, state and Commonwealth securities laws or exempt therefrom. The
Borrowers acknowledge that the Agent and Lenders are entering into this
Agreement, and have extended the Loans and other Credit Extensions, in reliance
upon the subordination provisions contained in the Intercreditor Agreement and
the representations and warranties made pursuant to this Section.
ARTICLE VII
COVENANTS
SECTION 7.1 Affirmative Covenants. The Borrowers agree with the Agent, each
Issuer and each Lender that, until the Revolving Loan Commitment has terminated
and all Obligations have been paid in cash and performed in full, the Borrowers
will perform the obligations set forth in this Section 7.1.
SECTION 7.1.1 Financial Information, Reports, Notices, etc. The Borrowers
will furnish, or will cause to be furnished, to each Lender and the Agent copies
of the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 30 days after the end
of each of each Fiscal Month of USAM (except for January), consolidated and
consolidating balance sheets of USAM and its Subsidiaries as of the end of
such Fiscal Month and consolidated and
-68-
consolidating statements of earnings and cash flow of USAM and its
consolidated Subsidiaries for such Fiscal Month and for the period
commencing at the end of the previous Fiscal Year and ending with the end
of such Fiscal Month, together with (i) comparable information adjusted to
reflect any changes at the close of and for the corresponding Fiscal Month
for the prior Fiscal Year and for the corresponding portion of the previous
Fiscal Year and (ii) a comparison of such financial condition with the
projections for the applicable period provided pursuant to clause (j), in
each case certified as complete and correct by the treasurer or chief
executive Authorized Officer of USAM as fairly presenting the financial
position of USAM and its consolidated Subsidiaries as of the date thereof
and for the period then ended;
(b) as soon as available and in any event within 50 days after the end
of each Fiscal Quarter of USAM and 95 days after the end of each Fiscal
Year of USAM, copies of the Quarterly Report on Form 10-Q of USAM for such
Fiscal Quarter that is filed with the Securities and Exchange Commission
and copies of the Annual Report on Form 10-K of USAM for such Fiscal Year
that is filed with the Securities and Exchange Commission, respectively,
such annual financial statements to be certified (without any Impermissible
Qualification) in a manner acceptable to the Agent and the Required Lenders
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent public accountants acceptable
to the Agent and the Required Lenders, together with a certificate from
such accountants containing a computation of, and showing compliance with,
each of the financial ratios and restrictions contained in Section 7.2.4
and to the effect that, in making the examination necessary for the signing
of such annual report by such accountants, they have not become aware of
any Default or Event of Default that has occurred and is continuing, or, if
they have become aware of such Default or Event of Default, describing such
Default or Event of Default and the steps, if any, being taken to cure it,
together with a comparison of such financial condition with the projections
for the applicable period provided pursuant to clause (j), in each case
certified as complete and correct by the treasurer or chief executive
Authorized Officer of USAM;
(c) concurrently with the delivery of the financial statements
pursuant to clauses (a) and (b), a certificate from the treasurer or chief
executive Authorized Officer of USAM that, to the best of his knowledge,
each Obligor during the period covered by such financial statements has
observed or performed all of its covenants and other agreements contained
in this Agreement and the other Loan Documents required to be observed,
performed or satisfied by it, and that such Authorized Officer has obtained
no knowledge of any Default or Event of Default except as specified in such
certificate;
(d) as soon as available and in any event within 30 days after the end
of each Fiscal Month, a Compliance Certificate, executed by the treasurer
or chief executive Authorized Officer of USAM, showing (in reasonable
detail and with appropriate calculations and computations in all respects
satisfactory to the Agent) compliance with the financial covenants set
forth in Section 7.2.4;
(e) as soon as possible and in any event within three Business Days
after the occurrence of each Default, Event of Default or event which may
result in a Material Adverse Effect, a statement of an Authorized Officer
setting forth details of such Default, Event of
-69-
Default, or event and the action which the Borrowers have taken and propose
to take with respect thereto;
(f) as soon as possible and in any event within three Business Days
after (i) the occurrence of any adverse development with respect to any
litigation, action, proceeding, or labor controversy described in Section
6.7 or (ii) the commencement of any labor controversy, litigation, action,
proceeding of the type described in Section 6.7, notice thereof by an
Authorized Officer and copies of all documentation relating thereto;
(g) concurrently after the sending or filing thereof, copies of (i)
all reports and documents which the Borrowers or any of their Subsidiaries
sends to any of their security holders and (ii) all reports, financial
statements and registration statements which the Borrowers or any of their
Subsidiaries files with the Securities and Exchange Commission or any
securities exchange, except that the Borrowers shall not be required to
deliver any of the foregoing which has previously been delivered hereunder;
(h) immediately upon becoming aware of any events which would result
in a violation of the representations contained in Section 6.12.;
(i) within 15 days after the end of each Fiscal Month (or less
frequently as may be requested by the Agent) a Borrowing Base Certificate
calculated as of the last day of the immediately preceding Fiscal Month,
all certified as being true, accurate and complete by the treasurer or
chief executive Authorized Officer of USAM;
(j) promptly when available and, in any event, within 45 days prior to
the last day of each Fiscal Year a budget in form and scope satisfactory to
the Agent for the next succeeding Fiscal Year, (including a projected
consolidated balance sheet of USAM and its Subsidiaries as of the end of
the following Fiscal Year, and the related consolidated statements of
projected cash flow, projected changes in financial position and projected
income), which projections shall be on a monthly basis (except that the
months of January and February may be combined) and be accompanied by a
certificate of the chief executive Authorized Officer of USAM stating that
such projections are based on reasonable estimates, information and
assumptions and that such Authorized Officer has no reason to believe that
such projections are incorrect or misleading in any material respect;
(k) concurrently with the delivery of the financial statements
pursuant to clause (b), the final management letter, if any, prepared by
the independent public accountants who prepared the delivered financial
statements with respect to internal audit and financial controls of USAM
and its Subsidiaries;
(l) all such notices and documents required to be delivered pursuant
to the Security Agreement, including, pursuant to Section 4.1.7 thereof;
(m) promptly after the receipt thereof, copies of any notice of
non-payment or underpayment of taxes or other governmental charges by the
Borrowers or any of their Subsidiaries that is received from any relevant
governmental authority;
-70-
(n) (i) promptly, and in any event within three Business Days after
any Material Agreement is terminated or amended or any new Material
Agreement is entered into, a written statement describing such event and
copies of any such new contract and (ii) promptly following the receipt
(and in any event within three Business Days of receipt), and concurrently
with the delivery of, all material notices under any Material Agreement;
(o) concurrently with the delivery of the annual financial statements
pursuant to clause (b), a certificate of the chief executive Authorized
Officer of USAM (i) setting forth the information required pursuant to the
disclosure schedule of the Security Agreement or confirming that there has
been no change in such information since the date of the initial Credit
Extension or the date of the most recent certificate delivered pursuant to
this clause and (ii) certifying that all Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings, rerecordings
and reregistrations, containing a description of the Collateral have been
filed of record in each governmental, municipal or other appropriate office
in each jurisdiction that is necessary to protect and perfect the security
interests under the Security Agreement;
(p) within 15 days after the end of each Fiscal Month, a Schedule of
Receivables as of the last Business Day of such Fiscal Month setting forth
a detailed aged trial balance of all the Borrowers' then existing
Receivables, and specifying the name of and the balance due from (and any
rebate due to) each Account Debtor obligated on a Receivable so listed;
(q) within 20 days after the end of each Fiscal Month, a Schedule of
payables as of the last day of such Fiscal Month setting forth a detailed
aged trial balance of all of the Borrowers' then existing payables,
specifying the name and the balance owing to each Person;
(r) within 20 days after the end of each Fiscal Month, a Schedule of
Inventory as of the last Business Day of such Fiscal Month itemizing and
describing the kind, type, quantity and location of Inventory and the cost
thereof;
(s) as soon as possible and in any event within three Business Days
after the occurrence of any of the following as it relates to any Plan,
notice thereof and copies of all relevant material information:
(i) a Reportable Event;
(ii) any condition existing with respect to a Plan which presents
a material risk of the termination of such Plan or the incurrence of a
material liability by any Borrower or any Commonly Controlled Entity;
(iii) the filing by any plan administrator of a Plan of a notice
of intent to terminate such Plan;
(iv) a copy of any application by any Borrower or any ERISA
Affiliate for a waiver of the minimum funding standard under Section
412 of the Code;
-71-
(v) copies of each annual report which is filed on Form 5500,
together with certified financial statements (if any) for the Plan as
of the end of such year and actuarial statements on Schedule B to such
Form 5500;
(vi) any event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan;
(vii) the receipt by any Borrower or any Commonly Controlled
Entity of a notice received by such Borrower or any Commonly
Controlled Entity concerning the imposition of any withdrawal
liability under Section 4202 of ERISA;
(viii) if any of the representations and warranties in Section
6.7 ceases to be true and correct in all material respects; or
(ix) the adoption of, or material change to, any Plan;
(t) concurrently with the receipt or delivery thereof, copies of all
notices with respect to the premises leased from the ▇▇▇▇▇▇▇ Airport
Authority, and evidence of the payment of each monthly rental payment
(which shall be provided not later than the date each such rented payment
is due under the lease with the ▇▇▇▇▇▇▇ Airport Authority); and
(u) such other information respecting the condition or operations,
financial or otherwise, of the Borrowers or any of their Subsidiaries as
any Lender through the Agent may from time to time reasonably request,
including in respect of establishing the eligibility of those items
including in determining the Borrowing Base Amount.
SECTION 7.1.2 Compliance with Laws; Payment of Obligations. Each Borrower
will, and will cause each of its Subsidiaries to, comply in all material
respects with all governmental rules and regulations and all other material
applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate existence and
qualification as a foreign corporation in any jurisdiction where such
Borrower or its Subsidiaries have assets or conduct business, except where
failure to maintain and preserve such existence or qualification would not
reasonably be expected to have a Material Adverse Effect; and
(b) the payment, before the same become delinquent, of (i) all its
Indebtedness and other obligations, including all taxes, assessments and
governmental charges imposed upon it or upon its property, and (ii) all
lawful claims for labor, materials and supplies or otherwise that, if
unpaid, could reasonably be expected to give rise to a Lien upon any of
their properties, except, in each case, to the extent being diligently
contested in good faith by appropriate proceedings which suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien and for which adequate reserves in accordance with GAAP shall have
been set aside on its books.
-72-
SECTION 7.1.3 Maintenance of Properties. Each Borrower will, and will cause
each of its Subsidiaries to, maintain, preserve, protect and keep its properties
in good repair, working order and condition, and make necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times.
SECTION 7.1.4 Insurance. (a) The Borrowers shall maintain, and shall cause
each of their Subsidiaries to maintain, insurance policies and coverage with
respect to all their property and assets at least as expansive as set forth on
Item 6.21 ("Insurance") of the Disclosure Schedule and, in any event, to such
extent and covering such risks as is customary for companies in sound financial
condition in the same or similar businesses and operations and in the same or
similar locations. In addition, the Borrowers shall maintain, and shall cause
each of their Subsidiaries to maintain (i) "key man" life insurance for ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ in an amount not less than $3,000,000, and (ii) such other additional
insurance coverage in such amounts and with respect to such risks as the Agent
or the Lenders may reasonably request from time to time. All such insurance
shall be provided (x) by insurers authorized by Lloyds of London to underwrite
such risks, (y) by insurers having an A.M. Best policyholders rating of not less
than "A" or (iii) by such other insurers as the Agent may approve in writing.
(b) All premiums on insurance policies required under this Section shall be
paid by the Borrowers. All insurance policies relating to "key man" life
insurance, business interruption and any loss or damage sustained in respect of
any item constituting a part of the Collateral shall contain a loss payable
endorsement, in form and substance satisfactory to the Agent, in favor of the
Agent. All insurance policies relating to general liability, umbrella and excess
insurance coverages shall contain an additional insured endorsement, in form and
substance satisfactory to the Agent, in favor of the Agent. All such insurance
policies shall provide that:
(i) neither any of the Borrowers, any of their Subsidiaries, the
Agent, the Issuers or any of the Lenders shall be a coinsurer thereunder;
and
(ii) such insurance shall not be affected by any unintentional act or
negligence or representation or warranty on the part of the Borrowers or
other owner of the policy or the property described in such policy.
All such insurance policies shall provide that the insurer shall, simultaneously
with the delivery to the Borrowers or any of their Subsidiaries of any notice
under such policy, deliver to the Agent a copy of such notice. All such
insurance policies and loss payable clauses shall provide that they may not be
cancelled, amended or terminated unless the Agent is given at least the same
number of days' notice that the insurance company which issued such policies is
required to give the Borrowers or any of their Subsidiaries, but in no event
less than 30 days' prior written notice.
(c) The Borrowers shall provide or cause to be provided to the Agent and to
its insurance consultant (or any agent, officer or employee of the Agent) such
other information relating to their insurance coverage as may be reasonably
requested by the Agent. The insurance consultant (through its officers or
employees) shall have the right to visit the Borrowers' offices, upon reasonable
prior notice during usual business hours, to inspect the insurance policies
-73-
provided for herein. The reasonable fees, costs and expenses of the insurance
consultant shall be paid for by the Borrowers.
(d) If no Default or Event of Default has occurred and is continuing, USAM
may, during the 60 day period following receipt by the Agent of any proceeds of
insurance in an aggregate amount of less than $100,000 that has been paid on
account of the loss or damage to any Collateral, request that the Agent
authorize it to apply the same to repair, restore or replace the asset or
property on account of which such proceeds of insurance were paid. Such request
by USAM shall describe in reasonable detail the nature of such loss or damage
and include a statement that USAM or one or more of its Subsidiaries has a
reasonable and good faith intention to apply such insurance proceeds within 60
days of its receipt to the repair, replacement or restoration of such lost or
damaged property. To the extent that USAM does not send the notice referred to
in the preceding sentence or does not repair, restore or replace the relevant
property within such 60 day period, the relevant proceeds of insurance shall
constitute Net Insurance Proceeds and shall be applied by the Agent as mandatory
prepayment of the Loans pursuant to clause (d) of Section 3.1.2. All amounts
shall be held by the Agent prior to its application to repair, restore or
replace the relevant property, and while so held shall form a part of the
Collateral and be subject to the Agent's first priority security interest. All
insurance proceeds paid by the Agent to the Borrowers for the repair,
replacement or restoration of property shall be promptly applied (and, in any
event, not later than the next following Business Day after receipt by the
relevant Borrower) to complete the same. All proceeds of insurance paid on
account of the loss or damage to any Collateral in an amount exceeding $100,000
or during the continuance of any Default or Event of Default shall be retained
by the Agent and immediately constitute Net Insurance Proceeds to be applied as
a mandatory prepayment of the Loans pursuant to clause (d) of Section 3.1.2.
(e) If any of the Borrowers or any of their Subsidiaries fails to maintain
any of the policies of insurance required by this Section the Agent may (but
shall not be required), at the sole cost and expense of such Borrower to obtain
and maintain such policies of insurance, pay the related premiums and take such
other action as it deems reasonably advisable. All costs related to the
foregoing shall be charged to the Borrower's loan account as a Revolving Loan.
SECTION 7.1.5 Books and Records; Inspections. (a) The Borrowers will, and
will cause each of their Subsidiaries to, keep books and records which
accurately reflect all of their business affairs and transactions. The Borrowers
shall maintain at all times books and records pertaining to the Collateral in
such detail, form, and scope as the Agent shall reasonably require, including
without limitation, records of: (i) all payments received and all credits and
extensions granted with respect to the Accounts; (ii) the return, rejection,
repossession, stoppage in transit, loss, damage or destruction of all Inventory;
and (iii) all other dealings affecting the Collateral.
(b) The Borrowers will, and will cause their Subsidiaries to, permit the
Agent and each Lender or any of their respective representatives (including
outside auditors), at reasonable times and intervals, to visit all of their
offices, to discuss their financial matters with their officers and independent
public accountant (and the Borrowers hereby authorize such independent public
accountant to discuss the Borrowers' financial matters with each Lender or its
-74-
representatives whether or not any representative of the Borrowers is present)
and to examine (and, at the expense of the Borrowers, copy extracts from) and
conduct audits of any of their Inventory, Receivables, other assets and books or
other corporate records (including computer records).
(c) The Borrowers jointly and severally agree to pay any fees of such
independent public accountant incurred in connection with the Agent's or any
Lender's exercise of its rights pursuant to this Section. The Agent, in its sole
discretion and at the sole expense of the Borrowers, may conduct such audits and
examinations of the Accounts as the Agent reasonably deems necessary or
advisable.
SECTION 7.1.6 Environmental Covenants. (a) The Borrowers will, and will
cause each of their Subsidiaries, lessees and other Persons occupying any of
their properties to,
(i) use and operate all of their facilities and properties in
compliance with all Environmental Laws, keep all permits, approvals,
certificates, licenses and other authorizations relating to environmental
matters in effect and remain in compliance therewith, and handle all
Hazardous Materials in compliance with all applicable Environmental Laws,
except where the failure to do any of the foregoing would not, singly or in
the aggregate, reasonably be expected to result in a liability exceeding a
Material Environmental Amount;
(ii) take all such actions as are necessary and appropriate so that no
liability with respect to the Environmental Laws may arise which could
reasonably be expected to result in a liability exceeding a Material
Environmental Amount;
(iii) immediately notify the Agent and provide copies upon receipt of
all written claims, complaints, notices or inquiries relating to the
condition of their facilities and properties or compliance with
Environmental Laws, and shall promptly cure and have dismissed with
prejudice to the satisfaction of the Agent any actions and proceedings
relating to compliance with or liability pursuant to Environmental Laws
which, singly or in the aggregate, could reasonably be expected to result
in a liability exceeding a Material Environmental Amount;
(iv) provide such information and certifications which the Agent may
reasonably request from time to time to evidence compliance with this
Section 7.1.6.
(b) Prior to acquiring any ownership or leasehold interest in real
property, or other interest in any real property that could give rise to the
Borrowers or any of their Subsidiaries being found an owner, operator or
otherwise subject to potential liability under any Environmental Law the
Borrowers shall (i) obtain a written report by a reputable independent
environmental consultant reasonably acceptable to the Agent (an "Environmental
Consultant") of the Environmental Consultant's assessment of the presence or
potential presence of significant levels of any Hazardous Material on, in,
under, or about such property, or of other conditions that could give rise to a
potentially significant liability under violations of any Environmental Law
relating to such acquisition, and notify the Agent of such potential
acquisition, and (ii) if
-75-
requested by the Agent after learning of such potential acquisition, provide
such report to the Agent and afford the Agent a reasonable opportunity to review
and, if requested by the Agent, discuss such report with the Environmental
Consultant who prepared it and a knowledgeable representative of the Borrowers.
The Agent shall have the right, but shall not have any duty, to obtain, review,
or discuss any such report.
(c) Promptly upon the Agent's request if there has occurred, or the Agent
reasonably anticipates that there may occur, an Event of Default, permit an
environmental consultant whom the Agent in its discretion designates, subject to
the approval of the Borrowers, which shall not be unreasonably withheld or
delayed, to perform an environmental assessment on all real property owned or
leased by the Borrowers and their Subsidiaries (including, without limitation:
reviewing documents; interviewing knowledgeable persons; and sampling and
analyzing soil, air, surface water, groundwater, and/or other media in or about
property owned or leased by the Borrowers or any of their Subsidiaries, or on
which operations of the Borrowers or any of their Subsidiaries otherwise take
place.) Such environmental assessment shall be in form, scope, and substance
reasonably satisfactory to the Agent, subject to the approval of the Borrowers,
which shall not be unreasonably withheld or delayed. The Borrowers and their
Subsidiaries shall cooperate fully in the conduct of such environmental
assessment, and shall pay the reasonable costs of such environmental assessment
promptly following written demand therefore by the Agent. The Agent shall have
the right, but not the duty to obtain such environmental report.
SECTION 7.1.7 Rate Protection Agreements. All Rate Protection Agreements
shall be (a) with a counterparty that is a Lender or another Person that is
reasonably satisfactory to the Agent and (b) unsecured unless the counterparty
is a Lender, in which case the obligations under each such Rate Protection
Agreement shall be secured pro rata with all the other Obligations hereunder.
SECTION 7.1.8 As to Intellectual Property Collateral. (a) The Borrowers
shall not, and shall not permit any of their Subsidiaries, unless the Borrowers
shall reasonably and in good faith determine (and notice of such determination
shall have been delivered to the Agent) that any of the Intellectual Property
Collateral is of negligible economic value to the Borrowers or any such
Subsidiary, do any act, or omit to do any act, whereby any of the Intellectual
Property Collateral may lapse or become abandoned or dedicated to the public or
unenforceable.
(b) Each of the Borrowers and each of their Subsidiaries shall promptly
notify the Agent immediately if it knows, or has reason to know, that any
application or registration relating to any material item of the Intellectual
Property Collateral may become abandoned or dedicated to the public or placed in
the public domain or invalid or unenforceable, or of any adverse determination
or development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark Office,
the United States Copyright Office or any foreign counterpart thereof or any
court) regarding the Borrowers' or any such Subsidiary's ownership of any of the
Intellectual Property Collateral, its right to register the same or to keep and
maintain and enforce the same.
-76-
(c) In no event shall any of the Borrowers, any of their Subsidiaries or
any of their agents, employees, designees or licensees file an application for
the registration of any Intellectual Property Collateral with the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency in any other country or any political subdivision thereof,
unless it promptly informs the Agent, and upon request of the Agent, executes
and delivers any and all agreements, instruments, documents and papers as the
Agent may reasonably request to evidence the Agent's security interest in such
Intellectual Property Collateral and the goodwill and general intangibles of the
Borrowers and their Subsidiaries relating thereto or represented thereby.
(d) The Borrowers and their Subsidiaries shall take all necessary steps,
including in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and pursue
any application (and to obtain the relevant registration) filed with respect to,
and to maintain any registration of, the Intellectual Property Collateral,
including the filing of applications for renewal, affidavits of use, affidavits
of incontestability and opposition, interference and cancellation proceedings
and the payment of fees and taxes (except to the extent that dedication,
abandonment or invalidation is permitted under the foregoing clauses (a), (b)
and (c)).
SECTION 7.1.9 Future Subsidiaries. Upon any Person becoming, after the
Effective Date, either a direct or indirect Subsidiary of any Borrower, or upon
any Borrower acquiring additional capital stock of any existing Subsidiary or
any Borrower or any Subsidiary of any Borrower acquiring additional Realty, the
Borrowers shall notify the Agent of such acquisition and, on or prior to the
consummation of such acquisition,
(a) such Person shall, if it is not an Excluded Foreign Subsidiary and
not already a party to any of the following, become a party to the
Corporate Guaranty, a Real Estate Mortgage (with appropriate changes
reasonably requested by the Agent) if it owns or leases Realty, the Pledge
Agreement and the Security Agreement in a manner satisfactory to the Agent
and, if such Person maintains any bank accounts or Investments at a
financial institution other than the Agent, such bank accounts or
Investments shall be subject to a Lock-Box Agreement and control agreement,
as the case may be;
(b) the Borrowers and each such Subsidiary that is not an Excluded
Foreign Subsidiary shall, pursuant to the Borrower Pledge Agreement, pledge
to the Agent:
(i) all of the outstanding shares of such capital stock of such
Subsidiary owned directly by it (but, in the case of a Foreign
Subsidiary, not more than 66% of the voting capital stock of such
Foreign Subsidiary shall be so pledged), along with undated stock
powers for such certificates, executed in blank (or, if any such
shares of capital stock are uncertificated, confirmation and evidence
satisfactory to the Agent that the security interest in such
uncertificated securities has been transferred to and perfected by the
Agent in accordance with the U.C.C. or any similar law which may be
applicable); and
-77-
(ii) all notes evidencing intercompany Indebtedness in favor of
the Borrowers and each such Subsidiary (which shall be in the form of
Exhibit A to the Pledge Agreement), as the case may be;
(c) the Agent shall have received from each such Subsidiary that is
not an Excluded Foreign Subsidiary certified copies of Uniform Commercial
Code Requests for Information or Copies (Form UCC-11), or a similar search
report certified by a party acceptable to the Agent, dated a date
reasonably near (but prior to) the date of any such Person becoming a
direct or indirect Subsidiary of a Borrower, listing all effective
financing statements, tax liens and judgment liens which name such Person
as the debtor and which are filed in the jurisdictions in which filings are
to be made pursuant to this Agreement and the other Loan Documents, and in
such other jurisdictions as the Agent may reasonably request, together with
copies of such financing statements (none of which (other than financing
statements filed pursuant to the terms hereof in favor of the Agent, if
such Form UCC-11 or search report, as the case may be, is current enough to
list such financing statements) shall cover any of the Collateral);
(d) the Agent shall have received from each such Subsidiary that is
not an Excluded Foreign Subsidiary, acknowledgment copies of properly filed
U.C.C. financing statements or such other evidence of filing or delivery
for filing as may be acceptable to the Agent, naming each such Subsidiary
as the debtor and the Agent as the secured party, filed under the U.C.C. of
all jurisdictions as may be necessary or, in the opinion of the Agent,
desirable to perfect the first priority security interest of the Agent of
the assets of such Subsidiary that is subject to the Security Agreement,
together, in each case, with such opinions of legal counsel for the
Borrowers relating thereto, which legal opinions shall be in form and
substance satisfactory to the Agent; and
(e) the Agent shall have received in connection with any Realty that
that is owned by each such Subsidiary that is not an Excluded Subsidiary
those items referred to in clause (b) of Section 5.2.2 which shall be
satisfactory to the Agent.
Each of the Borrowers agree that if (i) any Excluded Foreign Subsidiary is
permitted to execute and deliver the Corporate Guaranty, the Pledge Agreement, a
Real Estate Mortgage or the Security Agreement or (ii) it is permitted to pledge
more than 66% of the voting capital stock of any Foreign Subsidiary, in any such
case without material adverse tax consequences which would result in such
Subsidiary being an Excluded Foreign Subsidiary, then the provisions of clauses
(a), (c), (d) and (e) of this Section 7.1.9 shall thereafter apply to such
Foreign Subsidiary and/or (as the case may be) the provisions of clause (b) of
this Section 7.1.9 shall thereafter apply to 100% of the capital stock of such
Foreign Subsidiary.
SECTION 7.1.10 Post-Closing Items, etc. Not later than 90 days after the
date of the initial Credit Extension USAM shall have delivered to the Agent
copies of recently completed Phase I and Phase II environmental assessment
reports with respect to all property owned by the Borrowers in the State of
Florida, the foregoing to be from a satisfactory environmental consultant and
otherwise be satisfactory to the Agent and each of the Lenders (including that
such reports do not disclose a liability exceeding a Material Environmental
Amount).
-78-
SECTION 7.2 Negative Covenants. The Borrowers agree with the Agent, each
Issuer and each Lender that, until the Revolving Loan Commitment has terminated
and all Obligations have been paid in cash and performed in full, the Borrowers
will perform the obligations set forth in this Section 7.2.
SECTION 7.2.1 Business Activities. The Borrowers will not, and will not
permit any of their Subsidiaries to, engage in any business activity, except
those described in the first recital.
SECTION 7.2.2 Indebtedness. The Borrowers will not, and will not permit any
of their Subsidiaries to, create, incur, assume or suffer to exist or otherwise
become or be liable in respect of any Indebtedness, other than, without
duplication, the following:
(a) Indebtedness in respect of the Credit Extensions and other
Obligations;
(b) until the date of the initial Credit Extension, Indebtedness
identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure
Schedule;
(c) Indebtedness identified in Item 7.2.2(c) ("Ongoing Indebtedness")
of the Disclosure Schedule;
(d) Indebtedness in respect of any Rate Protection Agreement entered
into pursuant to Section 7.1.10;
(e) Indebtedness (i) of any Wholly-Owned Subsidiary of a Borrower
owing to such Borrower or any other Subsidiary of such Borrower or (ii) of
a Borrower owing to any of its Subsidiaries, which Indebtedness
(A) shall be evidenced by one or more promissory notes duly
executed and delivered to the Agent (each such promissory note to be
in substantially the form of Attachment II to the Pledge Agreement),
and
(B) shall not be forgiven or otherwise discharged for any
consideration other than payment in full in cash, unless the Agent and
the Required Lenders otherwise consent;
(f) Indebtedness that is incurred to purchase a capital asset and is
secured by the Liens referred to in clause (b) of Section 7.2.3 in an
aggregate principal amount not to exceed $3,000,000 at any time
outstanding;
(g) any extensions, renewals or replacements of Indebtedness described
in clause (c) above to the extent that (i) the aggregate principal amount
of such Indebtedness is not at any time increased and neither the maturity
nor the average life of such Indebtedness is shortened, (ii) if the
Indebtedness being refinanced is subordinated to the Obligations, the
refinancing Indebtedness shall be subordinated to the Obligations and the
Loan Documents in all respects at least to the same extent and shall not be
less favorable to the Lenders in any respect and (iii) no terms applicable
to such Indebtedness shall be less favorable to the Lenders or more
-79-
onerous to the Borrowers or their Subsidiaries in any material respect than
the terms of the Indebtedness being refinanced; and
(h) other subordinated indebtedness, on terms in form and substance
satisfactory to the Agent and the Lenders in their sole discretion, the
proceeds of which are used contemporaneously upon the issuance thereof to
refinance the Convertible Debenture Debt;
provided, however, that no Indebtedness otherwise permitted by clause (d), (e),
(f), (g) or (h) may be incurred if, immediately before or after giving effect to
the incurrence thereof, any Default or Event of Default shall have occurred and
be continuing. The Borrowers will, prior to entering into any agreement
evidencing any extension, renewal or replacement of Indebtedness as provided in
clause (c), deliver to the Agent with copies for each Lender reasonably in
advance of the execution thereof, any final or execution form copy of such
agreement, and agrees not to enter into any such agreement without obtaining the
prior approval of the Required Lenders as provided in clause (c).
SECTION 7.2.3 Liens. The Borrowers will not, and will not permit any of
their Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
any of their property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) Liens securing payment of the Obligations, granted pursuant to any
Loan Document;
(b) purchase money Liens granted to secure payment of the Indebtedness
permitted pursuant to clause (f) of Section 7.2.2, provided that (i) each
such Lien covers only those capital assets acquired with the proceeds of
such Indebtedness, (ii) each such Lien attaches to the relevant capital
asset concurrently with the acquisition thereof and (iii) the principal
amount of such Indebtedness does not exceed 85% of the lesser of the cost
or fair market value of the relevant capital asset;
(c) Liens existing on the Effective Date and disclosed on Item
7.2.3(c) ("Existing Liens") of the Disclosure Schedule, provided that such
Liens do not spread to cover any additional property or assets after the
Effective Date;
(d) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or being diligently contested in good
faith by appropriate proceedings which suspends enforcement of such Liens
and for which adequate reserves in accordance with GAAP shall have been set
aside on their books;
(e) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being diligently contested in good faith by appropriate proceedings
which suspends enforcement of such Liens and for which adequate reserves in
accordance with GAAP shall have been set aside on their books;
(f) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other
-80-
than for borrowed money) entered into in the ordinary course of business or
to secure obligations on surety or appeal bonds;
(g) judgment Liens in existence less than 10 days after the entry
thereof or with respect to which execution has been stayed or the payment
of which is covered in full (subject to a customary deductible) by
insurance maintained with insurance companies in accordance with the terms
of Section 7.1.4; and
(h) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrowers or their Subsidiaries.
(i) Liens in favor of the Subordinated Debt Holders in the capital
stock of QAC to the extent permitted in the Intercreditor Agreement.
SECTION 7.2.4 Financial Condition. The Borrowers will not permit:
(a) Fixed Charge Coverage Ratio. Their Fixed Charge Coverage Ratio for
the Rolling Period ending on the last day of each Fiscal Month (beginning
August 31, 1999) to be less than 1.25:1.00:
(b) Net Worth. The Borrowers will not permit their Net Worth at any
time to be less than (i) $8,500,000 at any time prior to the receipt by the
Agent and the Lenders of the annual financial statements for USAM's 1999
Fiscal Year, (ii) at the end of any Fiscal Quarter (beginning with the
Fiscal Quarter end September 30, 1999), the sum of (x) Net Worth as of the
last day of the prior Fiscal Quarter plus (y) 75% of Net Income (with no
deduction for net losses) for such current Fiscal Quarter and (iii) at the
end of any Fiscal Month (beginning with the Fiscal Month end January 31,
2000), not less than Net Worth as of (x) June 30, 1999, until the annual
financial statements referred to in clause (i) are delivered and (y) the
last day of the preceding Fiscal Year, after the annual financial
statements referred to in clause (i) are delivered.
SECTION 7.2.5 Investments. The Borrowers will not, and will not permit any
of their Subsidiaries to, make, incur, assume or suffer to exist any Investment
in any other Person, except:
(a) Investments existing on the Effective Date and identified in Item
7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Capital Expenditures
pursuant to Section 7.2.7;
(d) Investments by the Borrowers in Subsidiaries permitted by Section
6.8 comprising the equity ownership and initial approved capitalization of
such Subsidiaries; and
-81-
(e) intercompany loans permitted by clause (f) of Section 7.2.2;
provided, however, that any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment" may
continue to be held notwithstanding that such Investment if made thereafter
would not comply with such All Investments referred to in clauses (a) and (b)
shall be subject to a control agreement, in form and substance satisfactory to
the Agent, that evidences the Agent's first priority security interest therein.
SECTION 7.2.6 Restricted Payments, etc. (a) USAM will not (notwithstanding
the terms of any Organic Document) declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class of
capital stock (now or hereafter outstanding) of USAM or on any warrants, options
or other rights with respect to any shares of any class of capital stock now or
hereafter outstanding of USAM (other than dividends or distributions payable in
its common stock or warrants to purchase its common stock or split-ups or
reclassifications of its stock into additional or other shares of its common
stock) or apply, or permit any of its Subsidiaries to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other retirement
of, or agree or permit any of its Subsidiaries to purchase or redeem, any shares
of any class of capital stock (now or hereafter outstanding) of USAM, or
warrants, options or other rights with respect to any shares of any class of
capital stock (now or hereafter outstanding) of USAM; and
(b) USAM will not, and will not permit any of its Subsidiaries to, make any
deposit for any of the foregoing purposes; and
(c) the Borrowers will not (notwithstanding the terms of the Subordinated
Debt Documents or Convertible Debenture Documents) make any payment on any
Permitted Borrower Subordinated Debt or Convertible Debenture Debt (other than
payment in shares of common stock of USAM or as provided in the last paragraph
of clause (d) of Section 3.1.2).
SECTION 7.2.7 Capital Expenditures, etc. The Borrowers will not, and will
not permit any of their Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year, except Capital Expenditures which do not
aggregate in any Fiscal Year in excess of the amount set forth opposite each
Fiscal Year below;
Fiscal Year Amount
1999 $1,200,000
2000 $1,300,000
2001 $1,400,000
2002 $817,000;
provided, however, that (a) the Borrowers may incur additional Capital
Expenditures in an amount not to exceed $750,000 in Fiscal Year 2000 and
$750,000 in Fiscal Year 2001, which Capital Expenditures are used to acquire and
equip a new distribution center, in each case on terms in form and substance
satisfactory to the Agent in its sole discretion, and (b) no such Capital
Expenditure shall be made if any Default or Event of Default shall have occurred
and be
-82-
continuing immediately prior to or after giving effect to the making of any such
Capital Expenditure.
SECTION 7.2.8 Take or Pay Contracts. The Borrowers will not, and will not
permit any of their Subsidiaries to, enter into or be a party to any arrangement
for the purchase of materials, supplies, other property or services if such
arrangement by its express terms requires that payment be made by a Borrower or
its Subsidiary regardless of whether such materials, supplies, other property or
services are delivered or furnished to it.
SECTION 7.2.9 Consolidation, Merger, etc. The Borrowers will not,
and will not permit any of their Subsidiaries to, liquidate or dissolve,
consolidate or amalgamate with, or merge into or with, any other corporation, or
purchase, lease or otherwise acquire (in each case in one transaction or series
of transactions) all or any substantial part of the assets or stock of any
Person (or of any division thereof), except that any Wholly-Owned Subsidiary of
any Borrower may liquidate or dissolve voluntarily into, and may merge with and
into, any Borrower or any other Wholly-Owned Subsidiary of any Borrower, and the
assets or stock of any Wholly-Owned Subsidiary of any Borrower may be purchased
or otherwise acquired by any Borrower or any other Wholly-Owned Subsidiary of
any Borrower.
SECTION 7.2.10 Asset Dispositions, etc. The Borrowers will not, and will
not permit any of their Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey or dispose of (in each case in one transaction or series of
transactions), or grant options, warrants or other rights with respect to (in
each case in one transaction or series of related transactions), all or any part
of their assets (including accounts receivable and capital stock of
Subsidiaries) to any Person, except
(a) if such sale, transfer, lease, contribution or conveyance is of
Inventory in the ordinary course of their business;
(b) if such disposition is a Permitted Disposition; or
(c) if such assets are worn out or obsolete and are sold in the
ordinary course of business.
SECTION 7.2.11 Modification of Certain Agreements. None of the Borrowers
nor any of their Subsidiaries will consent to any amendment, supplement or other
modification of any of the terms or provisions contained in, or applicable to,
any Organic Document of the Borrowers or any of their Subsidiaries, any Material
Contract, any Subordinated Debt Document or any Convertible Debenture Document
which (a) is contrary to the terms of this Agreement or any other Loan Document,
(b) may be adverse to the rights, interests or privileges of the Agent or the
Lenders or their ability to enforce the same or (c) results in the imposition or
expansion in any material respect of any restriction or burden on the Borrowers
or any of their Subsidiaries (it being understood and agreed that any such
determination shall be made in the discretion of the Agent and (A) any such
amendment, supplement or modification to the subordination provisions contained
in the Subordinated Debt Documents, or (B) any increase in the amount of, or any
change (other than a deferral) of the date for payment of, or any increased rate
with respect to,
-83-
any redemption, fee, interest rate, principal or interest repayment or other
payment or sinking fund provisions, or (C) any amendment, supplement or
modification to any remedial or default provisions or covenant restrictions and
related definitions that result in any of the same being more onerous on the
Borrowers shall in any event require the consent of the Required Lenders). In
addition, neither the Borrowers nor any of their Subsidiaries will terminate any
Material Agreement. The Borrowers will, prior to entering into any amendment,
addition or other modification of any of the foregoing documents, deliver to the
Agent (with copies for each Lender) reasonably in advance of the execution
thereof, any final or execution form copy of amendments, supplements, additions
or other modifications to such documents, and agrees not to take any such action
with respect to any such documents without the approval of the Required Lenders.
SECTION 7.2.12 Transactions with Affiliates. The Borrowers will not, and
will not permit any of their Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with, any of their other Affiliates
unless such arrangement or contract (a) is otherwise permitted by this
Agreement, (b) is in the ordinary course of business of the Borrowers and (c) is
on fair and reasonable terms and is an arrangement or contract of the kind which
would be entered into by a prudent Person in the position of the Borrowers or
such Subsidiary with a Person which is not one of their Affiliates.
SECTION 7.2.13 Negative Pledges, Restrictive Agreements, etc. The Borrowers
will not, and will not permit any of their Subsidiaries to, enter into any
agreement (excluding this Agreement and any other Loan Document) prohibiting:
(a) the creation or assumption of any Lien upon their properties,
revenues or assets, whether now owned or hereafter acquired, or the ability
of the Borrowers or any other Obligor to amend or otherwise modify this
Agreement or any other Loan Document; or
(b) the ability of any Subsidiary to make any payments, directly or
indirectly, to the Borrowers by way of dividends, advances, repayments of
loans or advances, reimbursements of management and other intercompany
charges, expenses and accruals or other returns on investments, or any
other agreement or arrangement which restricts the ability of any such
Subsidiary to make any payment, directly or indirectly, to the Borrowers.
SECTION 7.2.14 Management Fees, Expenses, etc. The Borrowers will not, and
will not permit any of their Subsidiaries to,
(a)pay management, advisory, consulting or other similar fees, other
than
(i) fees payable to the Lenders or any of their Affiliates;
(ii) fees payable to non-Affiliate consultants engaged on
arm's-length basis as approved by the Board of Directors of USAM; and
(iii) fees payable to Ramko Venture Management, Inc. pursuant to
the Management Agreement in existence on the date hereof and any
successor agreement that is reasonably acceptable to the Agent; or
-84-
(b) reimburse employees or any Affiliates for any expenses unless the
same shall be otherwise permitted hereunder and shall be reasonable and
documented in reasonable detail.
SECTION 7.2.15 Fiscal Year End. None of the Borrowers nor any of their
Subsidiaries shall change its Fiscal Year.
SECTION 7.2.16 Limitation on Sale and Leaseback Transactions. The Borrowers
will not, and will not permit any of their Subsidiaries to, enter into any
arrangement with any Person whereby in a substantially contemporaneous
transaction the Borrowers or any of their Subsidiaries sells or transfers all or
substantially all of their right, title and interest in an asset and, in
connection therewith, acquires or leases back the right to use such asset.
SECTION 7.2.17 No Speculative Transactions. The Borrowers will not, and
will not permit any of their Subsidiaries to, engage in any transaction
involving commodity options, futures contracts or similar transactions, except
solely to hedge against fluctuations in the prices of commodities owned or
purchased by them and the values of foreign currencies receivable or payable by
them and interest swaps, caps or collars.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 Listing of Events of Default. Each of the following events or
occurrences described in this Section 8.1 shall constitute an "Event of
Default".
SECTION 8.1.1 Non-Payment of Obligations. The Borrowers shall default in
the payment or prepayment when due of any monetary Obligation hereunder or under
any other Loan Document (including, without limitation, any principal of, or
interest on, any Loan, any Reimbursement Obligation, any fees or any other
amounts payable hereunder or thereunder).
SECTION 8.1.2 Breach of Representations and Warranties. Any representation
or warranty of the Borrowers or any other Obligor made or deemed to be made
hereunder or in any other Loan Document executed by any of them or any other
writing or certificate furnished by or on behalf of the Borrowers or any other
Obligor to the Agent or any Lender for the purposes of or in connection with
this Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made in any
material respect.
SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations. The
Borrowers shall default in the due performance and observance of any of their
obligations under clause (e) of Section 7.1.1, or Sections 4.10, 7.1.9, 7.1.10
or 7.2.
SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. Any
Obligor shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document (other than items
covered by Sections 8.1.1 or 8.1.3) executed by it, and such default shall
continue unremedied for a period of 30 days after any
-85-
Borrower has actual knowledge thereof or notice thereof shall have been given to
USAM by the Agent or any Lender.
SECTION 8.1.5 Default on Other Indebtedness. A default shall occur in the
payment when due, whether by acceleration or otherwise, of (a) the Permitted
Borrower Subordinated Debt or the Convertible Debenture Debt or (b) any other
Indebtedness (other than Indebtedness described in Section 8.1.1) of any
Borrower or any other Obligor having a principal amount, individually or in the
aggregate, in excess of $100,000, or a default shall occur in the performance or
observance of any obligation or condition with respect to (i) the Subordinated
Debt Documents or Convertible Debenture Documents or (ii) any such other
Indebtedness if the effect of such default is to accelerate the maturity of any
such Indebtedness or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such other
Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity.
SECTION 8.1.6 Judgments.
(a) Any judgment or order for the payment of money (not paid or fully
covered by insurance maintained in accordance with the requirements of this
Agreement and as to which the relevant insurance company has acknowledged
coverage) in excess of $100,000 shall be rendered against any Borrower or
any other Obligor, and either
(b) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order, or
(c) there shall be any period of 15 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending
appeal, bond or otherwise, shall not be in effect.
SECTION 8.1.7 Pension Plans. Any of the following events shall occur with
respect to any Pension Plan: (a) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Pension Plan, (b) any "accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect to any
Pension Plan or any Lien in favor of the PBGC shall arise on the assets of any
Borrower or any Commonly Controlled Entity, (c) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Pension Plan for purposes of Title IV of ERISA, (d) any Plan
shall terminate for purposes of Title IV of ERISA, (e) any Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the Required
Lenders is likely to, incur any liability on connection with a withdrawal from,
or the insolvency or reorganization of, a Plan or (f) any other event or
condition shall occur or exist with respect to any Plan; and in each case in
clauses (a) through (f) above, such event or condition, together with all other
such events or conditions, if any, could in the aggregate reasonably be expected
to result in a liability to the Borrowers and their Subsidiaries exceeding
$100,000.
-86-
SECTION 8.1.8 Control of the Borrowers. Any Change in Control shall occur.
SECTION 8.1.9 Bankruptcy, Insolvency, etc. Any Borrower or any other
Obligor shall
(a) generally fail to pay debts as they become due, or admit in
writing its inability to pay debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator, or other custodian for any Borrower or any
other Obligor or any property of any thereof, or make a general assignment
for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the involuntary appointment of a trustee,
receiver, sequestrator or other custodian for any Borrower or any other
Obligor or for a substantial part of the property of any thereof, and such
trustee, receiver, sequestrator or other custodian shall not be discharged
within 30 days;
(d) permit or suffer to exist the involuntary commencement of, or
voluntarily commence, any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency laws, or permit
or suffer to exist the involuntary commencement of, or voluntarily
commence, any dissolution, winding up or liquidation proceeding, in each
case, by or against any Borrower or any other Obligor, provided that if not
commenced by any Borrower or any other Obligor such proceeding shall be
consented to or acquiesced in by any Borrower or any Obligor, or shall
result in the entry of an order for relief or shall remain for 30 days
undismissed; or
(e) take any corporate action authorizing, or in furtherance of, any
of the foregoing.
SECTION 8.1.10 Impairment of Loan Documents, Security, etc. Any Loan
Document, or any Lien granted thereunder, shall (except in accordance with its
terms), in whole or in part, terminate, cease to be effective or cease to be the
legally valid, binding and enforceable obligation of any Borrower or any other
Obligor party thereto; any Borrower, any other Obligor or any other party shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; or any Lien securing any Obligation shall, in
whole or in part, cease to be a perfected first registered priority Lien.
SECTION 8.1.11 Non-Payment of Taxes. The Borrowers and their Subsidiaries
shall have failed to pay when due any taxes or other governmental charges in
excess of an aggregate amount of $100,000, except any such taxes or other
governmental charges which are being diligently contested by them in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on their books.
SECTION 8.1.12 Impairment of Material Agreements, etc. Any Material
Agreement shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of any Borrower or
-87-
any Obligor party thereto; or there shall be any material event of default under
any Material Agreement; or there shall be any default under the lease with the
▇▇▇▇▇▇▇ Airport Authority.
SECTION 8.1.13 Subordinated Debt Documents. The subordination provisions
contained in the Intercreditor Agreement (collectively, the "Subordination
Provisions") shall fail to be enforceable by the Agent or any Lender which has
not effectively waived the benefits thereof, or the principal of, and accrued
interest owing on, the Credit Extensions or any of the other Obligations shall
fail to constitute "Senior Indebtedness" (as defined in Intercreditor
Agreement); or the Borrowers, any of their Affiliates or any Subordinated Debt
Holder shall, directly or indirectly, disavow or contest in any manner (a) the
effectiveness, validity or enforceability of any of the Subordination
Provisions, (b) that any of such Subordination Provisions exist for the benefit
of the Agent and the Lenders or (c) that all payments of principal or interest
with respect to the Permitted Borrower Subordinated Debt or realized from the
liquidation of any property of the Borrowers or their Subsidiaries shall be
subject to any of such Subordination Provisions; or any of the Subordination
Provisions shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligations of any Subordinated Debt Holder; or any Subordinated
Debt Holder fails to comply with any term of the Subordination Provisions.
SECTION 8.1.14 Intercreditor Agreement. Any representation or warranty made
by any Subordinated Debt Holder in the Intercreditor Agreement is untrue in any
material respect; any Subordinated Debt Holder fails to comply with any term,
agreement, covenant, condition or provision in the Intercreditor Agreement; or
the Intercreditor Agreement, including the subordination provisions contained
therein, shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of the any Subordinated Debt Holder, or shall fail to be
enforceable by the Agent or any Lender; or any Subordinated Debt Holder or any
other Person shall, directly or indirectly, disavow or contest in any manner (a)
the effectiveness, validity, binding nature and enforceability (including with
respect to the subordination provisions contained therein) of the Intercreditor
Agreement, (b) that any of the terms contained in the Intercreditor Agreement
exist for the benefit of the Agent and the Lenders or (c) that all payments of
principal or interest with respect to the Permitted Borrower Subordinated Debt
or realized from the liquidation of any property of the Borrowers or any of
their Subsidiaries shall be subject to the terms contained in the Intercreditor
Agreement.
SECTION 8.1.15 Convertible Debentures. USAM shall have failed, on or prior
to June 30, 2000, to have either (a) refinanced all of the Convertible Debenture
Debt on terms in form and substance satisfactory to the Agent or (b) converted
all of the Convertible Debenture Debt into common stock of USAM.
SECTION 8.2 Action if Bankruptcy. If any Event of Default described in
clauses (a) through (d) of Section 8.1.9 shall occur, the Revolving Loan
Commitment (if not theretofore terminated) shall automatically terminate and the
outstanding principal amount of all outstanding Loans and all other Obligations
shall automatically be and become immediately due and payable, without notice or
demand.
-88-
SECTION 8.3 Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of Section
8.1.9) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent, may, and upon the direction of the Required Lenders,
shall by notice to USAM declare all or any portion of the outstanding principal
amount of the Loans and other Obligations to be due and payable and/or the
Revolving Loan Commitment (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the case may be, the
Revolving Loan Commitment shall terminate.
SECTION 8.4 Foreclosure on Collateral. If any Event of Default shall occur,
the Agent shall have, in addition to all rights and remedies provided for in the
U.C.C., all such rights (including the right of foreclosure) with respect to the
Collateral as provided in the Pledge Agreement, the Security Agreement and each
Real Estate Mortgage.
SECTION 8.5 Payments Upon Acceleration. After the occurrence and during the
continuance of an Event of Default and the acceleration of the Obligations
pursuant to Sections 8.2 or 8.3, the Agent shall apply all payments in respect
of the Obligations and all proceeds of Collateral to the Obligations in the
following order:
(a) first, to pay Obligations in respect of any expense reimbursements
or indemnities then due to the Agent, including, without limitation, fees
and expenses referred to in Sections 3.4.7, 10.3 and 10.4;
(b) second, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders and the Issuers;
(c) third, to pay Obligations in respect of any fees then due to the
Agent, the Lenders and the Issuers;
(d) fourth, to pay interest due in respect of the Loans and Letters of
Credit;
(e) fifth, to pay the principal outstanding with respect to the Loans;
(f) sixth, to cash collateralize the Letter of Credit Outstandings on
terms in form and substance satisfactory to the Agent; and
(g) seventh, to the payment of all other Obligations;
provided, however, all available funds being applied with respect to any such
Obligations referred to in any one of the above clauses shall be allocated to
the payment of such Obligations ratably, based on the proportion of the Agent's,
each Lender's and the Issuer's interest in the aggregate outstanding Obligations
described in such clauses.
-89-
ARTICLE IX
THE AGENT
SECTION 9.1 Actions. Each Lender hereby appoints IBJW as Agent under and
for purposes of this Agreement, the Notes and each other Loan Document. Each
Lender authorizes the Agent to act on behalf of such Lender under this
Agreement, the Notes and each other Loan Document and, in the absence of other
written instructions from the Required Lenders received from time to time by the
Agent (with respect to which the Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) the Agent, pro
rata according to such Lender's Percentage of the Revolving Loan Commitment
hereunder, from and against any and all liabilities, obligations, losses,
damages, claims, costs or expenses of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against, the Agent in any way
relating to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which the Agent is not
reimbursed by the Borrowers; provided, however, that no Lender shall be liable
for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the gross
negligence or willful misconduct of the Agent. The Agent shall not be required
to take any action hereunder, under the Notes or under any other Loan Document,
or to prosecute or defend any suit in respect of this Agreement, the Notes or
any other Loan Document, unless it is indemnified hereunder to its satisfaction.
If any indemnity in favor of the Agent shall be or become, in the determination
of the Agent, inadequate, the Agent may call for additional indemnification from
the Lenders and cease to do the acts indemnified against hereunder until such
additional indemnity is given.
SECTION 9.2 Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m. (New
York City time), on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made such
amount available to the Agent and, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such Lender
and the Borrowers severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrowers to the date such amount is
repaid to the Agent at the interest rate applicable at the time to Loans
comprising such Borrowing.
SECTION 9.3 Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own willful misconduct or
gross negligence, nor be responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrowers of their obligations hereunder or under any other
-90-
Loan Document. Any such inquiry which may be made by the Agent shall not
obligate it to make any further inquiry or to take any action. The Agent shall
not be deemed to have knowledge of the existence of any Default or Event of
Default unless it has received written notice that refers specifically to the
same. The Agent shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement or writing
which the Agent believes to be genuine and to have been presented by a proper
Person.
SECTION 9.4 Successor. The Agent may resign as such at any time upon at
least 30 days' prior notice to USAM and all the Lenders. If no successor Agent
shall have been appointed by the Required Lenders, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, (a) appoint
a successor Agent, which shall be one of the Lenders or a commercial banking or
finance institution organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking or finance institution, and
having a combined capital and surplus of at least $250,000,000 or (b) designate
the Lenders to perform the Agent's responsibilities. The successor Agent shall
be entitled to receive from the retiring Agent such documents of transfer and
assignment as such successor Agent may reasonably request, and shall thereupon
succeed to and become vested with all rights, powers, privileges and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Agent's resignation
hereunder as the Agent, the provisions of
(a) this Article IX shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement;
and
(b) Section 10.3 and Section 10.4 shall continue to inure to its
benefit.
SECTION 9.5 Loans by IBJW. IBJW shall have the same rights and powers with
respect to (x) the Loans made by it or any of its Affiliates, and (y) the Notes
held by it or any of its Affiliates as any other Lender and may exercise the
same as if it were not, the Agent. IBJW and each of its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrowers or any Subsidiary or Affiliate of the Borrowers as if it were not
the Agent hereunder.
SECTION 9.6 Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrowers, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Revolving
Loan Commitment. Each Lender also acknowledges that it will, independently of
the Agent and each other Lender, and based on such other documents, information
and investigations as it shall deem appropriate at any time, continue to make
its own credit decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Agreement or any other Loan
Document.
SECTION 9.7 Copies, etc. The Agent shall give prompt notice to each Lender
of each notice or request given to the Agent by the Borrowers and required to be
delivered to the
-91-
Lenders pursuant to the terms of this Agreement (unless concurrently delivered
to the Lenders by the Borrowers). The Agent will distribute to each Lender each
document or instrument received for its account and copies of all other
communications received by the Agent from the Borrowers for distribution to the
Lenders by the Agent in accordance with the terms of this Agreement.
SECTION 9.8 Certain Collateral Matters. The Agent is authorized on behalf
of all the Lenders, without the necessity of any notice to or further consent
from the Lenders, from time to time to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Loan Documents.
(a) Each Lender agrees that no Lender shall have any right
individually to seek to realize upon the Collateral, it being agreed that
such rights and remedies may be exercised solely by the Agent for the
benefit of the Lenders and the Agent pursuant to the terms of the Loan
Documents.
(b) The Lenders irrevocably authorize the Agent, at its option and in
its discretion, to release any security interest or Lien granted to or held
by the Agent upon any Collateral (i) upon termination of the Revolving Loan
Commitment and payment in full of all Loans and all other Obligations
payable under this Agreement and under any other Loan Document; (ii)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; (iii) constituting
property in which the Borrowers or any Subsidiary thereof owned no interest
at the time the security interest and/or Lien was granted or at any time
thereafter; (iv) constituting property leased to the Borrowers or any
Subsidiary thereof under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which
has not been, and is not intended by the Borrowers or such Subsidiary to
be, renewed or extended; (v) consisting of an instrument evidencing
Indebtedness or other debt instrument, if the Indebtedness evidenced
thereby has been paid in full; or (vi) if approved, authorized or ratified
in writing by the Required Lenders or, if required by Section 10.1, each
Lender. Upon request by the Agent at any time, the Lenders will confirm in
writing the Agent's authority to release particular types or items of
collateral pursuant to this Section 9.8.
SECTION 9.9 Application to Issuers. Each Issuer shall have all of the
benefits and immunities (a) provided to the Agent in this Article IX with
respect to any acts taken or omissions suffered by such Issuer in connection
with Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the Letters of
Credit as fully as if the term "Agent", as used in this Article IX, included
such Issuer with respect to such acts or omissions, and (b) as additionally
provided in this Agreement with respect to such Issuer.
-92-
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 .Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrowers and the Agent (acting only at the direction or with the
authority of the Required Lenders); provided, however, that no such amendment,
modification or waiver which would:
(a) modify any requirement hereunder that any particular action be
taken by all the Lenders or by the Required Lenders shall be effective
unless consented to by each Lender;
(b) modify this Section 10.1, increase the Revolving Loan Commitment
Amount or the Percentage of any Lender, reduce any fees described in
Article III, change the time for payment of fees to the Lenders described
in Article III, release all or any substantial part of the Collateral
except as otherwise specifically provided in any Loan Document, release or
limit any Obligor from its guarantee obligations under Loan Document except
as otherwise specifically provided therein or alter in any manner the pro
rata sharing of payments required hereunder, shall be made without the
consent of any Lender affected thereby;
(c) change the definition of "Required Lenders" or any other provision
of this Agreement or other Loan Document specifying the number or
percentage of Lenders required to waive, amend or modify any rights
thereunder or make any determination or grant any consent thereunder, shall
be made without the consent of any Lender;
(d) extend the due date for, or reduce the amount of, any scheduled
repayment or prepayment under clause (b), (c) or (d) of Section 3.1.2 of
principal of, or interest on, any Loan (or reduce the principal amount of
or rate of interest on any Loan or Reimbursement Obligation), change the
schedule of reductions to the Revolving Loan Commitment provided for in
Section 2.3(b) or extend the Revolving Loan Commitment Termination Date
without the consent of the holder of that Note evidencing such Loan;
(e) increase the Stated Amount of any Letter of Credit unless
consented to by each Issuer; or
(f) affect adversely the interests, rights or obligations of the Agent
or any Issuer in its capacity as Agent or such Issuer, as the case may be.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
any Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder. The
remedies provided in this Agreement are cumulative, and not exclusive of
remedies provided by law.
-93-
SECTION 10.2 Notices. All notices and other communications provided to any
party hereto under this Agreement or any other Loan Document shall be in writing
and addressed, delivered or transmitted to such party at its address or telecopy
number set forth on Schedule III hereto (or set forth in a Lender Assignment
Agreement) or at such other address or telecopy number as may be designated by
such party in a notice to the other parties given in accordance with this
Section 10.2. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given three Business Days after posting; any notice, if sent by
prepaid overnight express shall be deemed delivered on the next Business Day;
any notice, if transmitted by telecopy, shall be deemed given when sent, with
confirmation of receipt; any notice, if transmitted by hand, shall be deemed
received when delivered.
SECTION 10.3 Payment of Costs and Expenses. The Borrowers jointly and
severally agree to pay on demand all reasonable expenses of the Agent
(including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel to the Agent, including the allocated fees and expenses of in-house
counsel, and consultants, if any, who may be retained in connection with the
transactions contemplated hereby by the Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time
to time hereafter be required, and the Lenders' and the Agent's
consideration of their rights and remedies hereunder or in connection
herewith from time to time whether or not the transactions contemplated
hereby or thereby are consummated;
(b) the filing, recording, refiling or rerecording of the Pledge
Agreement, the Real Estate Mortgages, the Security Agreement (and any
supplements thereto) and any other security instruments executed in
connection with the transactions contemplated hereby and/or U.C.C.
financing statements relating thereto, all amendments, supplements and
modifications to any thereof and any and all other documents or instruments
of further assurance required to be filed or recorded or refiled or
rerecorded by the terms hereof or the Pledge Agreement, the Real Estate
Mortgages, the Security Agreement or such other documents;
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document;
(d) sums paid or incurred to pay any amount or take any action
required by the Borrowers or any other Obligor under the Loan Documents
that the Borrowers or any such Obligor fails to pay or take;
(e) costs of appraisals, field exams, inspections and verification of
the Collateral, including, without limitation, travel, lodging, meals and
other charges, including the costs, fees and expenses of independent
auditors and appraisers; and
(f) all amounts referred to in Section 3.4.6 with respect to the
Lock-Box Accounts and the Concentration Account.
-94-
The Borrowers further jointly and severally agree to pay, and to save the Agent,
each Issuer and the Lenders harmless from all liability for, any stamp or other
taxes which may be payable in connection with the execution or delivery of this
Agreement, the Credit Extensions hereunder, or the issuance of the Notes or any
other Loan Documents. The Borrowers jointly and severally agree to reimburse the
Agent, each Issuer and each Lender upon demand for all reasonable expenses
(including, without limitation, the fees and out-of-pocket expenses of counsel
to the Agent, each Issuer and each Lender, including the allocated fees and
expenses of in-house counsel and consultants, if any, who may be retained by
such persons) incurred by the Agent or each such Lender in connection with (x)
the negotiation of any restructuring or "work-out", whether or not consummated,
of any Obligations and (y) the enforcement of any Obligations. The Borrowers
further jointly and severally agree to reimburse the Agent on demand for all
administration, audit and monitoring expenses incurred in connection with
determinations made in respect of those items included in determining the
Borrowing Base Amount. To the extent the Borrowers fail to pay any such amount,
each Lender hereunder agrees to pay to the Agent its pro rata share of such
unpaid amount.
SECTION 10.4 Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Revolving
Loan Commitment, the Borrowers hereby jointly and severally agree to indemnify,
exonerate and hold the Agent, each Issuer and each Lender and each of their
respective officers, directors, employees and agents (collectively, the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities, damages, and expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys' fees and disbursements (collectively, the
"Indemnified Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or with any Letter of
Credit;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties (including any action
brought by or on behalf of the Borrowers as the result of any determination
by the Required Lenders pursuant to Article V not to fund any Borrowing);
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by the Borrowers or any of their
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Agent or any Lender is party thereto;
(d) Environmental Laws relating to the Borrowers or their
Subsidiaries, including the assertion of any lien thereunder;
(e) the presence on or under, or the discharge, emission, spill or
disposal from, any real property owned or leased by the Borrowers or any of
their Subsidiaries or into or upon any land or the atmosphere, of any
Hazardous Material where a source of the Hazardous Material is such real
property (including, without limitation: (i) the costs of defending and or
-95-
counterclaiming or claiming over against third parties in respect of any
related action or matter; and (ii) any cost, liability or damage arising
out of a settlement of any action entered into by the Lender);
(f) complying with or otherwise in connection with any order, consent,
decree, settlement, judgement or verdict arising from the deposit, storage,
disposal, burial, dumping, injection, spilling, leaking, or other placement
or release in, on or from any real property owned or leased by any of the
Borrowers or any of their Subsidiaries of any Hazardous Material (including
without limitation any order under the Environmental Laws to clean-up or
decommission), whether or not such deposit, storage, disposal, burial,
dumping, injecting, spillage, leaking or other placement or release in, on
or from any such real property of any Hazardous Material:
(i) results by, through or under property owned or leased by the
Borrowers or any of their Subsidiaries; or
(ii) occurred with the Borrowers' knowledge and consent; or
(iii) occurred before or after the Effective Date, whether with
or without the Borrower's knowledge;
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction. If and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Borrowers hereby jointly and severally
agree to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
SECTION 10.5 Survival. The obligations of the Borrowers under Sections 4.3,
4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under Section
9.1, shall in each case survive any termination of this Agreement, the payment
in full of all the Obligations and the termination of the Revolving Loan
Commitment. All covenants, agreements, representations and warranties made by
the Obligors in the Loan Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of the Loan Documents and
the making of any Credit Extension, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Agent or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder.
SECTION 10.6 Severability. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
-96-
SECTION 10.7 Headings. The various headings of this Agreement and of each
other Loan Document are inserted for convenience only and shall not affect the
meaning or interpretation of this Agreement or such other Loan Document or any
provisions hereof or thereof.
SECTION 10.8 Execution in Counterparts, Effectiveness, etc. This Agreement
may be executed by the parties hereto in several counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement. This Agreement shall become effective when
counterparts hereof executed on behalf of each Borrower and each initial Lender
(or notice thereof satisfactory to the Agent) shall have been received by the
Agent and notice thereof shall have been given by the Agent to USAM and each
Lender.
SECTION 10.9 Governing Law; Entire Agreement. THIS AGREEMENT AND THE NOTES
SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. This Agreement, the Notes and the other Loan Documents
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof and supersede any prior agreements, written or oral, with
respect thereto.
SECTION 10.10 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that:
(a) the Borrowers may not assign or transfer their rights or
obligations hereunder without the prior written consent of the Agent and
all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 10.11.
SECTION 10.11 Sale and Transfer of Loans and Notes; Participations in Loans
and Notes. Each Lender may assign, or sell participations in, its Loans and the
Revolving Loan Commitment to one or more other Persons in accordance with this
Section 10.11.
SECTION 10.11.1 Assignments. Any Lender (the "Assignor Lender"), with the
written consent of the Borrowers and the Agent (which consent, in the case of
the Borrowers, shall not to be unreasonably withheld or delayed and shall not,
in any event, be required if any Default or Event of Default shall have occurred
and be continuing), may at any time assign and delegate all or any fraction of
such Lender's Loans, Letter of Credit participations and the Revolving Loan
Commitment to one or more commercial banks, finance companies, insurance
companies or other financial institutions or funds, and with notice to the
Borrowers and the Agent, but without the consent of the Borrowers or the Agent,
may assign and delegate to any of its Affiliates or to any other Lender (each
Person described in either of the foregoing clauses as the Person to whom such
assignment and delegation is to be made being hereinafter referred to as an
"Assignee Lender"), all or any fraction of such Lender's total Loans, Letter of
Credit participations and the Revolving Loan Commitment in a minimum aggregate
amount of
-97-
$5,000,000 (or, if less, the total of such Lender's Revolving Loan Commitment
Amount and aggregate principal amount of Loans outstanding); provided, however,
that the Borrowers, each other Obligor and the Agent shall be entitled to
continue to deal solely and directly with such Assignor Lender in connection
with the interests so assigned and delegated to an Assignee Lender until
(i) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrowers and the Agent
by the Assignor Lender and the Assignee Lender;
(ii) the Assignee Lender and the Assignor Lender shall have executed
and delivered to the Borrowers and the Agent a Lender Assignment Agreement,
accepted by the Agent; and
(iii) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the Assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrowers shall execute
and deliver to the Agent (for delivery to the relevant Assignee Lender) new
Notes evidencing such Assignee Lender's assigned Loans and Revolving Loan
Commitment and, if the Assignor Lender has retained Loans and the Revolving Loan
Commitment hereunder, replacement Notes in the principal amount of the Loans and
the Revolving Loan Commitment retained by the Assignor Lender hereunder (such
Notes to be in exchange for, but not in payment of, those Notes then held by
such Assignor Lender). Each such Note shall be dated the date of the predecessor
Notes. The Assignor Lender shall ▇▇▇▇ the predecessor Notes "exchanged" and
deliver them to the Borrowers. Accrued interest on that part of the predecessor
Notes evidenced by the new Notes, and accrued fees, shall be paid as provided in
the Lender Assignment Agreement. Accrued interest on that part of the
predecessor Notes evidenced by the replacement Notes shall be paid to the
Assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Notes and in this Agreement. The
Assignor Lender or the Assignee Lender must also pay a processing fee to the
Agent upon delivery of any Lender Assignment Agreement in the amount of $4,000.
Any attempted assignment and delegation not made in accordance with this Section
10.11.1 shall be null and void.
(a) Notwithstanding clause (a), any Lender may assign and pledge all or any
portion of its Loans and Notes and other rights to a Federal Reserve Bank as
collateral security; provided, however, that no such assignment under this
clause (b) shall release the Assignor Lender from any of its obligations
hereunder.
-98-
SECTION 10.11.2 Participations. (a) Any Lender may at any time with the
consent of the Agent sell to one or more commercial banks or other Persons (each
of such commercial banks and other Persons being herein called a "Participant")
participating interests in any of the Loans, the Revolving Loan Commitment, or
other interests of such Lender hereunder; provided, however, that
(i) no participation contemplated in this Section 10.11.2 shall
relieve such Lender from its Revolving Loan Commitment or its other
obligations hereunder or under any other Loan Document;
(ii) such Lender shall remain solely responsible for the performance
of its Revolving Loan Commitment and such other obligations;
(iii) the Borrowers and each other Obligor and the Agent shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and each of the
other Loan Documents; and
(iv) no Participant, unless such Participant is an Affiliate of such
Lender, or is itself a Lender, shall be entitled to require such Lender to
take or refrain from taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions of
the type described in clause (b), (c) or (d) of Section 10.1.
(b) The Borrowers acknowledge and agree that each Participant, for purposes
of Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, shall be considered a Lender.
SECTION 10.12 Other Transactions. Nothing contained herein shall preclude
either the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrowers or any of their Affiliates in which the Borrowers or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 10.13 Guaranty of Borrowers.
(a) Guaranty. Each Borrower unconditionally and irrevocably guarantees
the full and prompt payment when due, whether at stated maturity, by
acceleration or otherwise (including, without limitation, all amounts which
would have become due but for the operation of the automatic stay under
Section 362(a) of the Federal Bankruptcy Code, 11 U.S.C. 362(a)), of all
Obligations of the other Borrower, whether for principal, interest, fees,
expenses or otherwise, and including any and all costs and expenses
(including reasonable attorney costs) incurred by the Agent or any Lender
in enforcing any of their respective rights with respect thereto. The
foregoing guaranty constitutes a guaranty of payment when due and not
merely of collection, and each Borrower specifically agrees that it shall
not be necessary or required that the Agent or any Lender exercise any
right, assert any claim or demand or enforce any remedy whatsoever against
any Obligor before or as a condition to the obligations of such Borrower
hereunder.
-99-
(b) Acceleration of Guaranty. Each Borrower agrees that (i) in the
event that any Obligor is subject to any proceeding of the nature referred
to in Section 8.1.9, or (ii) upon notice of acceleration of the Obligations
from the Agent pursuant to Section 8.3, and if any such event shall occur
at a time when any of the Obligations may not then be due and payable, such
Borrower will pay to the Lenders forthwith the full amount which would be
payable hereunder by such Borrower if all the Obligations were then due and
payable.
(c) Guaranty Absolute. The guaranty pursuant to this Section 10.13 is
a continuing, absolute, unconditional and irrevocable guarantee of payment
and shall remain in full force and effect until all the Obligations have
been indefeasibly paid in full in cash and the Revolving Loan Commitment
shall have permanently terminated. The Borrowers guaranty that the
Obligations will be paid strictly in accordance with the terms of each
agreement under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agent or any of the Lenders with respect
thereto. The liability of each of the Guarantors under this Section 10.13
shall be absolute and unconditional irrespective of:
(i) any lack of validity, legality or enforceability of this
Agreement, the Notes, any other Loan Document or any other agreement
or instrument relating to any thereof;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any compromise,
renewal, extension, acceleration or release with respect thereto, or
any other amendment or waiver of or any consent to departure from this
Agreement, the Notes or any other Loan Document;
(iii) any addition, exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
(iv) the failure of the Agent or any Lender
(A) to assert any claim or demand or to enforce any right or
remedy against any Obligor or any other Person (including any other
guarantor) under the provisions of this Agreement, any Note, any other
Loan Document or otherwise, or
(B) to exercise any right or remedy against any other guarantor
of, or Collateral securing, any of the Obligations;
(v) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of this
Agreement, any Note or any other Loan Document;
(vi) any defense, set-off or counterclaim which may at any time
be available to or be asserted by Obligor against the Agent or any
Lender;
-100-
(vii) any reduction, limitation, impairment or termination of the
Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and
each Borrower hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, the Obligations or otherwise; or
(viii) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, any
Obligor.
(d) Reinstatement, etc. Each Borrower agrees that its guaranty
hereunder shall continue to be effective or be reinstated, as the case may
be, if at any time any payment (in whole or in part) of any of the
Obligations is rescinded or must otherwise be restored by the Agent or any
Lender, upon any Obligor being subject to any proceeding of the nature
referred to in Section 8.1.9 or otherwise, all as though such payment had
not been made.
(e) Waiver. Each Borrower hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Obligations
and this guaranty, and any requirement that the Agent or any Lender
protect, secure, perfect or insure any Lien on any of the Collateral or
other property or exhaust any right or take any action against any other
Obligor or any other Person (including any other guarantor) or any
Collateral securing the Obligations.
(f) Waiver of Subrogation. Each Borrower hereby irrevocably waives any
claim or other rights which it may now or hereafter acquire against any
Obligor that arise from the existence, payment, performance or enforcement
of its obligations under its guaranty hereunder, including any right of
subrogation, reimbursement, exoneration or indemnification, any right to
participate in any claim or remedy of the Agent or any Lender against any
Obligor or any Collateral which the Agent or any Lender now has or
hereafter acquires, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including the right to
take or receive from any Obligor, directly or indirectly, in cash or other
property or by set-off or in any manner, payment or security on account of
such claim or other rights. If any amount shall be paid to any Borrower in
violation of the preceding sentence and the Obligations shall not have been
paid in cash in full and the Commitments have not been permanently
terminated, such amount shall be deemed to have been paid to such Borrower
for the benefit of, and held in trust for, the Lenders, and shall forthwith
be paid to the Agent on behalf of the Lenders to be credited and applied
against the Obligations, whether matured or unmatured. Each Borrower
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Agreement and that the waiver
set forth in this Section is knowingly made in contemplation of such
benefits.
SECTION 10.14 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS
-101-
OR THE BORROWERS SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE FEDERAL OR
STATE COURTS OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY
SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH BORROWER
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT SUCH BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH BORROWER
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 10.15 Waiver of Jury Trial, etc. THE AGENT, THE LENDERS AND THE
BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWERS. EACH BORROWER
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN
DOCUMENT.
SECTION 10.16 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH BORROWER AND EACH OF ITS SUBSIDIARIES SHALL NOT ASSERT, AND
HEREBY WAIVES, ANY CLAIM AGAINST THE AGENT AND EACH LENDER ON ANY THEORY OF
LIABILITY FOR SPECIAL, INDIRECT,
-102-
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, ANY LOAN DOCUMENT OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, ANY CREDIT EXTENSION OR THE USE OF
THE PROCEEDS THEREOF.
SECTION 10.17 Borrower Consents, Notices, etc. By execution of this
Agreement each of the Borrowers appoint the Borrower Representative as its agent
to make all requests for Credit Extensions hereunder. In addition, each Borrower
agrees that (a) any notice received from the Agent or any Lender by any Borrower
shall be deemed received contemporaneously by all the Borrowers and (b) each
item delivered by or consented or otherwise approved by any Borrower shall
irrevocably bind all the Borrowers.
SECTION 10.18 ▇▇▇▇▇▇▇ Leased Premises. If there is at any time any default
by a Borrower under the lease with the ▇▇▇▇▇▇▇ Airport Authority, or any
Borrower is not performing thereunder, the Agent may, in its sole discretion,
cure the same by using amounts deposited in the Concentration Account from time
to time. The Borrowers hereby appoint the Agent their attorney-in-fact in taking
all such actions and agree that the Agent shall not incur any liability in so
acting.
-103-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
U.S. AUTOMOTIVE MANUFACTURING, INC.
By: ________________________________
Name:
Title:
QUALITY AUTOMOTIVE COMPANY
By: ________________________________
Name:
Title:
US AUTOMOTIVE FRICTION, INC.
By: ________________________________
Name:
Title:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as the Agent
By: ________________________________
Name:
Title:
LENDERS
IBJ WHITEHALL BUSINESS CREDIT CORPORATION
By: ________________________________
Name:
Title:
-104-
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 3.4.1(a) Lock-Box Accounts.
ITEM 5.1.4 Required Consents and Approvals.
ITEM 6.7(a) Litigation
ITEM 6.7(b) Labor Contracts.
ITEM 6.8 Initial Capitalization.
ITEM 6.9 Real Property.
ITEM 6.11 Plans.
ITEM 6.12 Environmental Matters.
ITEM 6.15 Governmental Approvals.
ITEM 6.16 Defaults
ITEM 6.19 Material Agreements.
ITEM 6.21 Insurance.
ITEM 7.2.2(b) Indebtedness to be Paid.
ITEM 7.2.2(c) Ongoing Indebtedness.
ITEM 7.2.3(c) Existing Liens.
ITEM 7.2.5(a) Ongoing Investments.
SCHEDULE II
PERCENTAGES
================================================================================
Revolving Loan Commitment
Lender
--------------------------------------------------------------------------------
IBJ Whitehall Business Credit Corporation 100%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
SCHEDULE III
ADMINISTRATIVE INFORMATION
Borrowers
US Automotive Manufacturing, Inc.
Quality Automotive Company
US Automotive Friction, Inc.
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Agent
IBJ Whitehall Business Credit Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders
IBJ Whitehall Business Credit Corporation
Domestic ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
LIBOR ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Administrative ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT G
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 30, 1999 (as amended, supplemented,
restated or otherwise modified from time to time, this "Agreement"), made by
U.S. AUTOMOTIVE MANUFACTURING, INC., a Delaware corporation, QUALITY AUTOMOTIVE
COMPANY, a Delaware corporation and US AUTOMOTIVE FRICTION, INC., a Delaware
corporation (collectively, the "Borrowers"), and each of the other Persons (such
capitalized term and all other capitalized terms not otherwise defined herein to
have the meanings provided for in Article I) listed on the signature pages
hereof (such other Persons, together with the Additional Pledgors (as defined in
Section 7.2(b)), and the Borrowers, are collectively referred to as the
"Pledgors" and individually as a "Pledgor"), in favor of IBJ WHITEHALL BUSINESS
CREDIT CORPORATION, as agent (in such capacity, the "Agent") for each of the
Lender Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof
(together with all amendments, supplements, restatements and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among the Borrowers, the various lending institutions (individually
a "Lender" and collectively the "Lenders") as are, or may from time to time
become, parties thereto and the Agent, the Lenders have extended Commitments to
make Credit Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making of the initial Credit
Extension under the Credit Agreement, the Pledgors are required to execute and
deliver this Agreement; and
WHEREAS, each Pledgor has duly authorized the execution, delivery and
performance of this Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Credit
Extensions (including the initial Credit Extension) to the Borrowers pursuant to
the Credit Agreement, each Pledgor agrees, for the benefit of each Lender Party,
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):
"Additional Pledgors" is defined in clause (b) of Section 7.2.
"Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Borrower" and "Borrowers" are defined in the preamble.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares of
stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends and all other
distributions (whether similar or dissimilar to the foregoing) on or with
respect to any Pledged Shares or other shares of capital stock constituting
Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to any
Pledged Shares or other Pledged Property made in the ordinary course of business
and not as a liquidating dividend.
"Lender" and "Lenders" are defined in the first recital.
"Lender Party" means, as the context may require, any Lender, any Issuer or
the Agent and each of its respective successors, transferees and assigns.
"Pledge Agreement Supplement" is defined in clause (b) of Section 7.2.
"Pledged Note Issuer" means each Person identified in Item A of Attachment
1 hereto as the issuer of the Pledged Note identified opposite the name of such
Person.
"Pledged Notes" means all promissory notes of any Pledged Note Issuer that
are delivered by each Pledgor to the Agent as Pledged Property hereunder, as
such promissory notes, in accordance with Section 4.4, are amended, modified,
supplemented, restated or otherwise modified from time to time and together with
any promissory note of any Pledged Note Issuer taken in extension or renewal
thereof or substitution therefor. The form of the original Pledged Notes
hereunder is attached at Attachment 2 hereto.
"Pledged Property" means all Pledged Shares, Pledged Notes, and all other
pledged shares of capital stock or promissory notes, all other securities, all
assignments of any amounts due or to become due with respect thereto, all other
instruments that are now being delivered by each Pledgor to the Agent or may
from time to time hereafter be delivered by each Pledgor to the
-2-
Agent for the purpose of pledge under this Agreement or any other Loan Document,
and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Item B of Attachment
1 hereto as the issuer of the Pledged Shares identified opposite the name of
such Person.
"Pledged Shares" means the shares of capital stock of any Pledged Share
Issuer in the amounts and percentages listed on Attachment 1 hereto.
"Pledgor" and "Pledgors" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"U.C.C." means the Uniform Commercial Code as from time to time in effect
in the State of New York or, with respect to any Collateral located in any state
other than the State of New York, the Uniform Commercial Code as from time to
time in effect in such state.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3 U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
PLEDGE
SECTION 2.1 Grant of Security Interest. Each Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the Agent,
for its benefit and the ratable benefit of each of the Lender Parties, and
hereby grants to the Agent, for its benefit and the ratable benefit of the
Lender Parties, a continuing security interest in, all of the following property
(collectively, the "Collateral"):
(a) all promissory notes of each Pledged Note Issuer identified in
Item A of Attachment 1 hereto;
(b) all other promissory notes of any Pledged Note Issuer issued from
time to time to any Obligor, as such promissory notes are amended,
modified, supplemented, restated or otherwise modified from time to time
and together with any promissory note of any Pledged Note Issuer taken in
extension or renewal thereof or substitution therefor;
-3-
(c) all issued and outstanding shares of capital stock of each Pledged
Share Issuer identified in Item B of Attachment 1 hereto and all additional
shares of capital stock of Subsidiaries of the Borrowers from time to time
acquired by such Pledgor in any manner (other than shares of voting capital
stock in any Foreign Subsidiary, in which case only 66% of the issued and
outstanding shares of capital stock or other ownership interests of such
Pledgor in such Foreign Subsidiary), and the certificates representing such
shares;
(d) all other securities, all assignments of any amounts due or to
become due with respect thereto, and all other instruments from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the items listed in clauses (a), (b) and (c)
above;
(e) all Dividends, Distributions, interest, and other payments and
rights with respect to any of the items listed in clauses (a), (b), (c) and
(d) above; and
(f) all proceeds of any of the foregoing.
SECTION 2.2 Security for Obligations. This Agreement secures the payment in
full of all Obligations, including all amounts payable by each Borrower and each
other Obligor under or in connection with the Credit Agreement, the Notes and
each other Loan Document, whether for principal, interest, costs, fees,
expenses, indemnities or otherwise and whether now or hereafter existing (all of
such obligations being the "Secured Obligations").
SECTION 2.3 Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares and all
Pledged Notes, shall be delivered to and held by or on behalf of (and, in the
case of the Pledged Notes, endorsed to the order of) the Agent pursuant hereto,
shall be in suitable form for transfer by delivery, and shall be accompanied by
all necessary instruments of transfer or assignment, duly executed in blank.
SECTION 2.4 Dividends on Pledged Shares and Payments on Pledged Notes. In
the event that any Dividend is to be paid on any Pledged Share or any payment of
principal or interest is to be made on any Pledged Note at a time when (a) no
Default of the nature referred to in Section 8.1.9 of the Credit Agreement has
occurred and is continuing, and (b) no Event of Default has occurred and is
continuing, such Dividend or payment may be paid directly to each Pledgor. If
any such Default or Event of Default has occurred and is continuing, then any
such Dividend or payment shall be paid directly to the Agent.
SECTION 2.5 Continuing Security Interest; Transfer of Notes. This Agreement
shall create a continuing security interest in the Collateral and shall
(a) remain in full force and effect until payment in full in cash of
all Secured Obligations and the termination of the Revolving Loan
Commitment,
-4-
(g) be binding upon each Pledgor and its successors, transferees and
assigns, and
(h) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Credit Extension held by it to any
other Person, and such other Person shall thereupon become vested with all the
rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Agreement) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Section 10.11 and Article IX of the Credit Agreement. Upon the indefeasible
payment in full in cash of all Secured Obligations and the termination of the
Revolving Loan Commitment, the security interest granted herein shall terminate
and all rights to the Collateral shall revert to each Pledgor. Upon any such
termination, the Agent will, at each Pledgor's sole expense, deliver to such
Pledgor, without any representations, warranties or recourse of any kind
whatsoever, all certificates and instruments representing or evidencing all
Pledged Shares and all Pledged Notes, together with all other Collateral held by
the Agent hereunder, and execute and deliver to such Pledgor such documents as
such Pledgor shall reasonably request to evidence such termination or release.
SECTION 2.6 Security Interest Absolute. All rights of the Agent and the
security interests granted to the Agent hereunder, and all obligations of each
Pledgor hereunder, shall be, to the extent permitted by applicable law, absolute
and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document,
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against any Pledgor, any other Obligor or any other Person
under the provisions of the Credit Agreement, any Note, any other Loan
Document, or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Secured Obligation of any Pledgor or
any other Obligor,
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other
extension, compromise or renewal of any Obligation of any Pledgor or any
other Obligor, including any increase in the Secured Obligations resulting
from the extension of additional credit to any Pledgor or any other Obligor
or otherwise,
-5-
(d) any reduction, limitation, impairment or termination of any
Secured Obligation of any Pledgor or any other Obligor for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and each Pledgor hereby waives any
right to or claim of) any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other
event or occurrence affecting, any Secured Obligation of any Pledgor, any
other Obligor or otherwise,
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document,
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for
any of the Secured Obligations, or
(g) any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Pledgor, any other
Obligor, any surety or any guarantor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Warranties, etc. Each Pledgor represents and warrants unto each
Lender Party, as at the date of each pledge and delivery hereunder (including
each pledge and delivery of Pledged Shares and each pledge and delivery of a
Pledged Note) by such Pledgor to the Agent of any Collateral, as set forth in
this Article.
SECTION 3.1.1 Ownership, No Liens, etc. Such Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all
Liens, except for this security interest granted pursuant hereto in favor of the
Agent and as provided in the Intercreditor Agreement.
SECTION 3.1.2 Valid Security Interest. The delivery of such Collateral to
the Agent is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Secured
Obligations. No filing or other action will be necessary to perfect or protect
such security interest.
SECTION 3.1.3 As to Pledged Notes. In the case of each Pledged Note, all of
such Pledged Notes have been duly authorized, executed, endorsed, issued and
delivered, and are the legal, valid and binding obligation of the issuers
thereof, and are not in default.
-6-
SECTION 3.1.4 As to Pledged Shares. In the case of any Pledged Shares
constituting such Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all (or, in the
case of a Pledged Share Issuer that is an Excluded Foreign Subsidiary, 66%
(subject to Section 7.1.9 of the Credit Agreement)) of the issued and
outstanding shares of voting capital stock and 100% of the non-voting capital
stock of each Pledged Share Issuer (or, if less, 100% of the issued and
outstanding shares of capital stock of such Pledged Share Issuer owned by such
Pledgor). The Pledgors have no Subsidiaries other than (a) the Pledged Share
Issuers and (b) Subsidiaries of Excluded Foreign Subsidiaries.
SECTION 3.1.5 Authorization, Approval, etc. No authorization, approval, or
other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(a) for the pledge by such Pledgor of any Collateral pursuant to this
Agreement or for the execution, delivery, and performance of this Agreement
by such Pledgor, or
(b) for the exercise by the Agent of the voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except, with respect to the Pledged Shares, as
may be required in connection with a disposition of such Pledged Shares by
laws affecting the offering and sale of securities generally.
SECTION 3.1.6 Due Execution, Validity, Etc. Such Pledgor has full power and
authority, and holds all requisite governmental licenses, permits and other
approvals, to enter into and perform its obligations under this Agreement. The
execution, delivery and performance by such Pledgor of this Agreement does not
contravene or result in a default under such Pledgor's Organic Documents or
contravene or result in a default under any material contractual restriction,
Lien or governmental regulation or court decree or order binding on such
Pledgor. This Agreement has been duly authorized by such Pledgor, has been duly
executed and delivered on behalf of such Pledgor and constitutes the legal,
valid and binding obligation of such Pledgor enforceable in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditor's right generally,
and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
SECTION 3.1.7 Other Loan Documents. Each representation and warranty of
such Pledgor contained in each Loan Document to which it is a party is true and
correct in all material respects as of such date (unless such representation and
warranty is stated to relate solely to an earlier date, in which case such
representation and warranty is true and correct in all material respects as of
such earlier date).
-7-
ARTICLE IV
COVENANTS
SECTION 4.1 Protect Collateral; Further Assurances, etc. No Pledgor will
sell, assign, transfer, pledge, or encumber in any other manner the Collateral
(except in favor of the Agent). Each Pledgor will warrant and defend the right
and title herein granted unto the Agent in and to the Collateral (and all right,
title, and interest represented by the Collateral) against the claims and
demands of all Persons whomsoever. Each Pledgor agrees that at any time, and
from time to time, at the expense of such Pledgor, such Pledgor will promptly
execute and deliver all further instruments, and take all further action, that
may be necessary, or that the Agent may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable the Agent to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. The Pledgor will not permit any Pledged Share
Issuer to issue any capital stock unless the same (or, in the case of a Pledged
Share Issuer that is an Excluded Foreign Subsidiary, 66% of the same that is
voting capital stock (subject to Section 7.1.9 of the Credit Agreement)) is
immediately delivered in pledge to the Agent hereunder.
SECTION 4.2 Stock Powers, etc. Each Pledgor agrees that all Pledged Shares
(and all other shares of capital stock constituting Collateral) delivered by
such Pledgor pursuant to this Agreement will be accompanied by duly executed
undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Agent. Each Pledgor will, from time to time upon the request
of the Agent, promptly deliver to the Agent such stock powers, instruments, and
similar documents, satisfactory in form and substance to the Agent, with respect
to the Collateral as the Agent may reasonably request and will, from time to
time upon the request of the Agent after the occurrence of any Default of the
nature referred to in Section 8.1.9 of the Credit Agreement or any Event of
Default, promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the Agent.
SECTION 4.3 Continuous Pledge. Subject to Section 2.4, each Pledgor will,
at all times, keep pledged to the Agent pursuant hereto all Pledged Shares and
all other shares of capital stock constituting Collateral, all Dividends and
Distributions with respect thereto, all Pledged Notes, all interest, principal
and other proceeds received by the Agent with respect to the Pledged Notes, and
all other Collateral and other securities, instruments, proceeds, and rights
from time to time received by or distributable to such Pledgor in respect of any
Collateral.
SECTION 4.4 Voting Rights; Dividends, etc. Each Pledgor agrees:
(a) after any Default of the nature referred to in Section 8.1.9 of
the Credit Agreement or any Event of Default shall have occurred and be
continuing, promptly upon receipt thereof by such Pledgor and without any
request therefor by the Agent, to deliver (properly endorsed where required
hereby or requested by the Agent) to the Agent all Dividends,
Distributions, interest, principal, other cash payments, and proceeds of
the Collateral, all of which shall be held by the Agent as additional
Collateral for use in accordance with Section 6.3; and
-8-
(b) after Default of the nature referred to in Section 8.1.9 of the
Credit Agreement or any Event of Default shall have occurred and be
continuing and the Agent has notified such Pledgor of the Agent's intention
to exercise its voting power under this clause (b):
(i) the Agent may exercise (to the exclusion of such Pledgor) the
voting power and all other incidental rights of ownership with respect
to any Pledged Shares or other shares of capital stock constituting
Collateral and such Pledgor hereby grants the Agent an irrevocable
proxy, exercisable under such circumstances, to vote the Pledged
Shares and such other Collateral; and
(ii) such Pledgor shall promptly deliver to the Agent such
additional proxies and other documents as may be necessary to allow
the Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by any Pledgor but which
such Pledgor is then obligated to deliver to the Agent, shall, until delivery to
the Agent, be held by each Pledgor separate and apart from its other property in
trust for the Agent. The Agent agrees that unless a Default of the nature
referred to in Section 8.1.9 of the Credit Agreement or an Event of Default
shall have occurred and be continuing and the Agent shall have given the notice
referred to in clause (b), each Pledgor shall have the exclusive voting power
with respect to any shares of capital stock (including any of the Pledged
Shares) constituting Collateral and the Agent shall, upon the written request of
each Pledgor, promptly deliver such proxies and other documents, if any, as
shall be reasonably requested by each Pledgor which are necessary to allow such
Pledgor to exercise voting power with respect to any such share of capital stock
(including any of the Pledged Shares) constituting Collateral; provided,
however, that no vote shall be cast, or consent, waiver, or ratification given,
or action taken by the Pledgor that would impair any Collateral or be
inconsistent with or violate any provision of the Credit Agreement or any other
Loan Document (including this Agreement).
SECTION 4.5 Additional Undertakings. Each Pledgor will not, without the
prior written consent of the Agent:
(a) enter into any agreement amending, supplementing, or waiving any
provision of any Pledged Note (including any underlying instrument pursuant
to which such Pledged Note is issued) or compromising or releasing or
extending the time for payment of any obligation of the maker thereof; or
(b) take or omit to take any action the taking or the omission of
which could result in any impairment or alteration of any obligation of the
maker of any Pledged Note or other instrument constituting Collateral.
-9-
ARTICLE V
THE AGENT
SECTION 5.1 Agent Appointed Attorney-in-Fact. Each Pledgor hereby
irrevocably constitutes and appoints the Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such Pledgor and
in the name of such Pledgor or in its own name, for the purpose of carrying out
the terms of this Agreement, to take, upon the occurrence and during the
continuance of any Default of the nature referred to in Section 8.1.9 of the
Credit Agreement or any Event of Default, any and all appropriate action and to
execute any and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Pledgor hereby gives the Agent the power and
right, on behalf of such Pledgor, without notice to or assent by such Pledgor,
to do any or all of the following:
(a) in the name of such Pledgor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under or in
respect of any Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Agent for the purpose of collecting any and all such moneys due under
or in respect of any Collateral whenever payable; and
(b) (i) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (ii) ask or
demand for, collect, and receive payment of and give receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) receive, collect, sign
and indorse any drafts or other instruments, documents and chattel paper in
connection in connection with any of the Collateral; (iv) commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (v)
defend any suit, action or proceeding brought against such Pledgor with
respect to any Collateral; (vi) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Agent may deem appropriate; and (vii) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Agent were
the absolute owner thereof for all purposes, and do, at the Agent's option
and such Pledgor's expense, at any time, or from time to time, all acts and
things that the Agent deems necessary to protect, preserve or realize upon
the Collateral and the Lender Parties' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as such
Pledgor might do.
Each Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
-10-
SECTION 5.2 Agent May Perform. If any Pledgor fails to perform any
agreement contained herein, upon prior notice to the relevant Pledgor, the Agent
may itself perform, or cause performance of, such agreement and the reasonable
expenses of the Agent incurred in connection therewith shall be payable by such
Pledgor pursuant to Section 6.4; provided, however, if any Default of the nature
referred to in Section 8.1.9 of the Credit Agreement or Event of Default has
occurred and is continuing, no such notice shall be required.
SECTION 5.3 Agent Has No Duty. The powers conferred on the Agent hereunder
are solely to protect its interest (on behalf of the Lender Parties) in the
Collateral and shall not impose any duty on it to exercise any such powers. The
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
U.C.C. or otherwise, shall be to deal with it in the same manner as the Agent
deals with similar property for its own account. Neither the Agent nor any of
its officers, directors, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof
(including (a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Agent has or is deemed to have knowledge of such
matters, and (b) the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral). The powers
conferred on the Agent hereunder are solely to protect the Lender Parties'
interests in the Collateral and shall not impose any duty upon the Agent to
exercise any such powers. The Agent shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither the
Agent nor any of its officers, directors, employees or agents shall be
responsible to any Pledgor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
ARTICLE VI
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the
U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and
also may, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by
law referred to below) to or upon any Pledgor or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby
waived), sell, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to
do any of the foregoing) in one or more parcels at public or private sale,
at any of the Agent's offices or elsewhere, for cash, on
-11-
credit or for future delivery, and upon such other terms as the Agent may
deem commercially reasonable. Each Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten days' prior notice to
such Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) The Agent may
(i) transfer all or any part of the Collateral into the name of
the Agent or its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Agent of any amount due or to become due
thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party
with respect thereto,
(iv) endorse any checks, drafts, or other writings in each
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of each Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
Each such purchaser of the Collateral shall hold the property sold absolutely
free from any claim or right on the part of any Pledgor, and to the extent
permitted by applicable law, the Pledgors hereby waive all rights of redemption,
stay, valuation and appraisal any Pledgor now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Agent shall give the Pledgors 10 days' written notice (which each Pledgor
agrees is reasonable notice within the meaning of Section 9-504(3) of the
U.C.C.) of the Agent's intention to make any sale of Collateral. Such notice, in
the case of a public sale, shall state the time and place for such sale and, in
the case of a sale at a broker's board or on a securities exchange, shall state
the board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale
-12-
shall be held at such time or time within ordinary business hours and at such
place or places as the Agent may fix and state in the notice (if any) of such
sale. At any such sale, the Collateral, or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the Agent may (in its
sole and absolute discretion) determine. The Agent shall not be obligated to
make any sale of any Collateral if it shall determine not to do so, regardless
of the fact that notice of sale of such Collateral shall have been given. The
Agent may, without notice or publication adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Agent until the sale price is paid by
the purchase or purchasers thereof, but the Agent shall not incur any liability
in case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public (or, to the extent permitted by law,
private) sale made pursuant to this Section, any Lender Party may bid for or
purchase, free (to the extent permitted by law) from any right of redemption,
stay, valuation or appraisal on the part of any Pledgor (all said rights being
also hereby waived and released to the extent permitted by law), the Collateral
or any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Lender Party from any Pledgor as a
credit against the purchase price, and such Lender Party may upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to any Pledgor therefor.
SECTION 6.2 Securities Laws. If the Agent shall determine to exercise its
right to sell all or any of the Collateral pursuant to Section 6.1, each Pledgor
agrees that, upon request of the Agent, such Pledgor will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be done
all such other acts and things, as may be necessary or, in the opinion of
the Agent, advisable to register such Collateral under the provisions of
the Securities Act of 1933, as from time to time amended (the "Securities
Act"), and to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of the Agent,
are necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the Agent;
-13-
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
Each Pledgor further acknowledges the impossibility of ascertaining the amount
of damages that would be suffered by the Agent or the Lender Parties by reason
of the failure by such Pledgor to perform any of the covenants contained in this
Section and, consequently, to the extent permitted under applicable law, agrees
that, if such Pledgor shall fail to perform any of such covenants, it shall pay,
as liquidated damages and not as a penalty, an amount equal to the value (as
determined by the Agent) of the Collateral on the date the Agent shall demand
compliance with this Section.
SECTION 6.3 Compliance with Restrictions. Each Pledgor agrees that in any
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Agent is hereby authorized to comply with any limitation
or restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and each Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Agent be liable nor accountable to any Pledgor
for any discount allowed by reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION 6.4 Application of Proceeds. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon, all
or any part of the Collateral shall be applied (after payment of any amounts
payable to the Agent pursuant to Section 10.3 of the Credit Agreement and
Section 6.5 below) in whole or in part by the Agent for the ratable benefit of
the Lender Parties against all or any part of the Secured Obligations in
accordance with Section 8.4 of the Credit Agreement. Any surplus of such cash or
cash proceeds held by the Agent and remaining after payment in full in cash of
all the Secured Obligations, and the termination of all Commitments, shall be
paid over to the applicable Pledgor or to whomsoever may be lawfully entitled to
receive such surplus.
SECTION 6.5 Indemnity and Expenses. Each Pledgor hereby agrees to jointly
and severally indemnify and hold harmless the Agent from and against any and all
claims, losses, and liabilities arising out of or resulting from this Agreement
(including enforcement of this
-14-
Agreement), except claims, losses, or liabilities resulting from the Agent's
gross negligence or willful misconduct as determined by the final judgment of a
court of competent jurisdiction. Upon demand, each Pledgor will pay to the Agent
the amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent may
incur in connection with:
(a) the administration of this Agreement, the Credit Agreement and
each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the Agent
hereunder; or
(d) the failure by such Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 Loan Document. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof including Article X thereof.
SECTION 7.2 Amendments, etc.; Additional Pledgors; Successors and Assigns.
(a) No amendment to or waiver of any provision of this Agreement nor
consent to any departure by any Pledgor herefrom shall in any event be
effective unless the same shall be in writing and signed by the Agent and,
in the case of any such amendment, each Pledgor, and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which it is given.
(b) Upon the execution and delivery by any Person of a pledge
agreement supplement in substantially the form of Attachment 3 hereto (each
a "Pledge Agreement Supplement"), (i) such Person shall be referred to as
an "Additional Pledgor" and shall be and become a Pledgor, and each
reference in this Agreement to "Pledgor" shall also mean and be a reference
to such Additional Pledgor and (ii) the attachment supplement attached to
each Pledge Agreement Supplement shall be incorporated into and become a
part of and supplement Attachment 1 hereto, and the Agent may attach such
attachment supplements to Attachment 1, and each reference to Attachment 1
shall mean and be a reference to Attachment 1, as supplemented pursuant
hereto.
-15-
(c) Any Pledgor that becomes an Excluded Foreign Subsidiary after the
date hereof shall, upon written request of such Pledgor to the Agent and at
the sole cost of such Pledgor, be released from the terms hereof pursuant
to documentation reasonably satisfactory to the Agent.
(d) This Agreement shall be binding upon each Pledgor and its
successors, transferees and assignees and shall inure to the benefit of and
be enforceable by the Agent and each other Lender Party and their
respective successors and assigns; provided, however, that no Pledgor may
assign its obligations hereunder without the prior written consent of the
Agent.
SECTION 7.3 Protection of Collateral. The Agent may from time to time, at
its option and at the expense of the Pledgors, perform any act which any Pledgor
agrees hereunder to perform and which such Pledgor shall fail to perform after
being requested in writing so to perform (it being understood that no such
request need be given after the occurrence and during the continuance of any
Event of Default) and the Agent may from time to time take any other action
which the Agent deems necessary or appropriate for the maintenance, preservation
or protection of any of the Collateral or of its security interest therein.
SECTION 7.4 Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing or by facsimile transmission and, if
to any Pledgor, at the address of USAM provided for in the Credit Agreement,
and, if to the Agent, at the address provided for in the Credit Agreement, or as
to any such party at such other address as shall be designated by such party in
a written notice to each other party complying as to delivery with the terms of
this Section. All such notices and other communications, if mailed and properly
addressed with postage prepaid, shall be deemed given three Business Days after
posting; any notice sent by prepaid overnight express mail shall be deemed
delivered on the next following Business Day; and any notice transmitted by
facsimile shall be deemed given upon receipt of electronic confirmation of
transmission by the sender thereof.
SECTION 7.5 Section Captions. Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.
SECTION 7.6 Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 7.7 Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be original and
all of which shall constitute but one and the same agreement.
-16-
SECTION 7.8 Governing Law, Entire Agreement, etc. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.9 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF ANY LENDER PARTY SHALL BE BROUGHT AND MAINTAINED IN THE
FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN OF THE STATE OF NEW
YORK PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL
OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PLEDGOR
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH
COURTS FOR THE PURPOSE OF ANY LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY PLEDGOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, SUCH PLEDGOR HEREBY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT.
-17-
SECTION 7.10 Waiver of Jury Trial, etc. EACH LENDER PARTY AND PLEDGOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PLEDGOR. EACH
PLEDGOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT ENTERING INTO THIS AGREEMENT.
SECTION 7.11 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NO PLEDGOR SHALL ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST
EACH LENDER PARTY ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES)
ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS AGREEMENT OR ANY
INSTRUMENT CONTEMPLATED HEREBY.
-18-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
U.S. AUTOMOTIVE MANUFACTURING, INC.
By: ________________________________
Name:
Title:
QUALITY AUTOMOTIVE COMPANY
By: ________________________________
Name:
Title:
US AUTOMOTIVE FRICTION, INC.
By: ________________________________
Name:
Title:
VIRECO, INC.
By: ________________________________
Name:
Title:
Acknowledged and Accepted:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as Agent
By: ____________________________
Name:
Title:
-19-
ATTACHMENT 1
to
Pledge Agreement
Item A. Pledged Notes
Pledged Original Principal
Note Amount and
Pledgor Issuer Date
------- ------ ----
Item B. Pledged Shares
Capital Stock
-------------
Pledged Share Authorized Outstanding % of Shares
Pledgor Issuer Shares Shares Pledged Certificate #
------- ------ ------ ------ ------- -------------
ATTACHMENT 2
to
Pledge Agreement
INTERCOMPANY
PROMISSORY NOTE(1)
$_____________,_________
FOR VALUE RECEIVED, the undersigned, [NAME OF PLEDGED NOTE ISSUER], a
_______________ corporation (the "Maker"), unconditionally promises to pay to
the order of [NAME OF PLEDGOR], a ___________ corporation (the "Payee"), on
demand, the principal sum of _________________ UNITED STATES DOLLARS
(U.S.$________), or if less, the aggregate unpaid principal amount set forth on
the schedule attached hereto and made a part hereof (and any continuation
thereof), representing the aggregate principal amount of an intercompany loan
made by the Payee to the Maker.
The unpaid principal amount of this promissory note (this "Note") from time
to time outstanding shall bear interest at a rate of interest equal to
_________, which the Maker represents to be a lawful and commercially reasonable
rate, payable _________, and all payments of principal of and interest on this
Note shall be payable in lawful currency of the United States of America. All
such payments shall be made by the Maker to an account established by the Payee
at such financial institution as is specified by the Payee to the Maker from
time to time and shall be recorded on the grid attached hereto by the holder
hereof (including the Agent (as hereinafter defined), as pledgee). Upon the
occurrence and during the continuance of any Default of the nature referred to
in Section 8.1.9 of the Credit Agreement (as hereinafter defined) or any Event
of Default under the Credit Agreement, and notice thereof by the Agent to the
Maker, the Maker shall make every payment due under this Note, in same day
funds, to such other account as the Agent shall direct in such notice.
The Maker may not prepay the unpaid principal of this Note.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to, clause (f) of Section 7.2.2 of the Credit
Agreement, dated as of July 30, 1999 (as
----------
(1) Each Intercompany Promissory Note in which the Maker is a Borrower shall
have Annex A hereto attached to it and shall contain the following legend:
"THE INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATE AND JUNIOR IN RIGHT
OF PAYMENT TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN ANNEX A HERETO) TO THE
EXTENT PROVIDED IN SAID ANNEX A."
amended, supplemented, restated or otherwise modified from time to time, the
"Credit Agreement"), among U.S. Automotive Manufacturing, Inc., a Delaware
corporation, Quality Automotive Company, a Delaware corporation, and US
Automotive Friction, Inc., a Delaware corporation, the various lending
institutions as are, or may from time to time become, parties thereto
(collectively, the "Lenders"), and IBJ Whitehall Business Credit Corporation, as
agent (in such capacity, the "Agent") for the Lenders. Upon the occurrence and
during the continuance of any Event of Default under the Credit Agreement, and
notice thereof by the Agent to the Maker, the Agent shall have all rights of the
Payee to collect and accelerate, and enforce all rights with respect to, the
indebtedness evidenced by this Note.
Unless otherwise defined herein or the context otherwise requires, terms
used herein have the meanings provided in the Pledge Agreement, dated as of July
30, 1999, from the Payee and certain other Persons in favor of the Agent, as
amended, supplemented, restated or otherwise modified from time to time.
This Note has been pledged to the Agent as security for the Secured
Obligations.
In addition to, but not in limitation of, the foregoing, the Maker further
agrees to pay all expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder (including the Agent, as pledgee) of this Note
endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
-2-
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE.
THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[NAME OF MAKER]
By: _______________________
Name:
Title:
Pay to the order of
By: _______________________
Name:
Title:
-3-
GRID
Intercompany Loans made by [Name of Pledged Note Issuer] to [Name of
Pledgor] and payments of principal on such Loans.
===================================================================================================
Amount of Amount of Principal Outstanding
Intercompany Loan Payment Principal Notation Made By
Date Balance
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
===================================================================================================
-4-
Annex A
to
Attachment 2
to
Pledge Agreement
SUBORDINATION PROVISIONS TO INTERCOMPANY NOTE
[Each Intercompany Promissory Note in which the maker is the Borrower shall
have the following subordination provisions attached as Annex A thereto.]
Section 1.01. Subordination of Liabilities. [Name of Borrower] (the
"Company"), for itself, its successors and assigns, covenants and agrees, and
each holder of the Intercompany Promissory Note to which this Annex A is
attached (the "Note") by its acceptance thereof likewise covenants and agrees,
that the payment of the principal of, interest on, and all other amounts owing
in respect of, the Note (the "Subordinated Indebtedness") is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, to the
prior payment in full in cash of all Senior Indebtedness (as defined in Section
1.07 of this Annex A). The provisions of this Annex A shall constitute a
continuing offer to all Persons who, in reliance upon such provisions, become
holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness, and such holders are
hereby made obligees hereunder the same as if their names were written herein as
such, and they and/or each of them may proceed to enforce such provisions.
Section 1.02. Company Not to Make Payments with Respect to Subordinated
Indebtedness in Certain Circumstances.
(a) Upon the maturity of any Senior Indebtedness (including interest
thereon or fees or any other amounts owing in respect thereof), whether at
stated maturity, by acceleration or otherwise, all Obligations (as defined in
Section 1.07 of this Annex A) owing in respect thereof, in each case to the
extent due and owing, shall first be paid in full in cash before any payment
(whether in cash, property, securities or otherwise) is made on account of the
Subordinated Indebtedness.
(b) If any Default or Event of Default under the Credit Agreement (as
defined in Section 1.07 of this Annex A) is in existence the Company may not,
directly or indirectly, make any payment of any Subordinated Indebtedness and
may not acquire any Subordinated Indebtedness for cash or property until all
Senior Indebtedness has been paid in full in cash. Each holder of the Note
hereby agrees that, so long as any such Default or Event of Default in respect
of any issue of Senior Indebtedness exists, it will not ▇▇▇ for, or otherwise
take any action to enforce the Company's obligations to pay, amounts owing in
respect of the Note.
(c) In the event that notwithstanding the provisions of the preceding
clauses (a) and (b) of this Section 1.02, the Company shall make any payment on
account of the Subordinated Indebtedness at a time when payment is not permitted
by said clauses (a) or (b), such payment shall be held by the holder of the
Note, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the Agent (as defined in Section 1.07 of this Annex A) for
application to the payment in full in cash of all the Senior Indebtedness.
Section 1.03. Subordination to Prior Payment of all Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company upon dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency, receivership
proceedings, upon an assignment for the benefit of creditors or otherwise or any
other event described in Section 8.1.9 of the Credit Agreement):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full in cash of all Senior Indebtedness (including, without
limitation, post-petition interest at the rate provided in the documentation
with respect to the Senior Indebtedness, whether or not such post-petition
interest is an allowed claim against the Company in any bankruptcy or similar
proceeding) before the holder of the Note is entitled to receive any payment of
any kind or character on account of the Subordinated Indebtedness;
(b) any payment or distributions of assets of the Company of any kind or
character, whether in cash, property or securities to which the holder of the
Note would be entitled except for the provisions of this Annex A, shall be paid
by the liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or other trustee or agent, directly to the Agent for application to the payment
in full in cash of all the Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 1.03, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, shall be received by the
holder of the Note on account of Subordinated Indebtedness before all Senior
Indebtedness is paid in full in cash, such payment or distribution shall be
received and held in trust for and shall be paid over to the Agent for
application to the payment in full in cash of all the Senior Indebtedness.
Section 1.04. Subrogation. Subject to the prior payment in full in cash of
all Senior Indebtedness, the holder of the Note shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Note shall be paid in full, and for the purpose
of such subrogation no payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the holder of
the Note by virtue of this Annex A which otherwise would have been made to the
holder of the Note shall, as between the Company, its creditors (other than the
holders of Senior Indebtedness) and the holder of the Note, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Annex A are and are intended solely for
the purpose of
-2-
defining the relative rights of the holder of the Note, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing contained in
this Annex A or in the Note is intended to or shall impair, as between the
Company and the holder of the Note, the obligation of the Company, which is
absolute and unconditional, to pay to the holder of the Note the principal of
and interest on the Note as and when the same shall become due and payable in
accordance with their terms.
Section 1.06. Subordination Rights not Impaired by Acts or Omissions of
Company or Holders of Senior Indebtedness. No right of the Agent or any present
or future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act in
good faith by the Agent or any such holder, or by any noncompliance by the
Company with the terms and provisions of the Note, regardless of any knowledge
thereof which the Agent or such holder may have or be otherwise charged with.
The Agent and the holders of the Senior Indebtedness may, without in any way
affecting the obligations of the holder of the Note with respect hereto, at any
time or from time to time and in their absolute discretion, change the manner,
place or terms of payment of, change or extend the time of payment of, or renew
or alter, any Senior Indebtedness (including, without limitation, increase the
amount of Senior Indebtedness by extending additional credit to the Company) or
amend, modify or supplement any agreement or instrument governing or evidencing
such Senior Indebtedness or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of any Default or Event
of Default or the release of any Collateral (as defined in Section 1.07 of this
Annex A) securing such Senior Indebtedness, all without notice to or assent from
the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior Indebtedness" shall
mean all Obligations of the Company under, or in respect of, the Credit
Agreement (as amended, supplemented, restated, or otherwise modified from time
to time, the "Credit Agreement"), dated as of July 30, 1999, by and among the
Company, the other Borrowers named therein, the various lending institutions as
are, or may from time to time become, parties thereto (collectively the
"Lenders"), and IBJ Whitehall Business Credit Corporation, as agent (in such
capacity, the "Agent") for the Lenders, or any other Loan Document (as defined
in the Credit Agreement) to which the Company is a party, and in each case any
renewal, extension, restatement, refinancing or refunding thereof. As used
herein, the term "Obligation" shall mean any principal, interest, premium,
penalties, fees, expenses, indemnities and other liabilities and obligations
payable under the documentation governing any Senior Indebtedness (including
interest after the commencement of any bankruptcy, insolvency, receivership or
similar proceeding, whether or not such interest is an allowed claim against the
debtor in any such proceeding). All other capitalized terms used herein without
definition shall have the meanings provided for in the Credit Agreement.
-3-
ATTACHMENT 3
to
Pledge Agreement
FORM OF PLEDGE AGREEMENT SUPPLEMENT
[__________, 19___]
IBJ Whitehall Business Credit Corporation,
as Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Pledge Agreement, dated as of July 30, 1999 (as
amended, supplemented or otherwise modified, the "Pledge Agreement"; the terms
defined therein being used herein as therein defined) by U.S. Automotive
Manufacturing, Inc., a Delaware corporation, Quality Automotive Company, a
Delaware corporation and US Automotive Friction, Inc., a Delaware corporation
(collectively, the "Borrowers"), and each of the other Persons listed on the
signature pages thereto (such other Persons, together with the Additional
Pledgors and the Borrowers are collectively referred to as the "Pledgors" and
individually as a "Pledgor"), in favor of IBJ Whitehall Business Credit
Corporation, as agent (together with any successor(s) thereto in such capacity,
the "Agent") for each of the Lender Parties.
The undersigned hereby agrees, as of the date first above written, to
become a Pledgor under the Pledge Agreement as if it were an original party
thereto and agrees that each reference in the Pledge Agreement to a "Pledgor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Agent for its benefit and
the ratable benefit of the Lender Parties, and hereby grants to the Agent for
its benefit and the ratable benefit of the Lender Parties, as collateral for the
Secured Obligations, a pledge and assignment of, and a security interest in, all
of the right, title and interest of the undersigned in and to its Collateral,
whether now owned or hereafter acquired, subject to all of the terms and
provisions of the Pledge Agreement, as if such Collateral of the undersigned had
been subject to the Pledge Agreement on the date of its original execution.
The undersigned has attached hereto a supplement to Attachment 1 to the
Pledge Agreement, and the undersigned hereby certifies that such supplement has
been prepared by the undersigned in substantially the form of Attachment 1 to
the Pledge Agreement and is accurate and complete as of the date first above
written.
The undersigned hereby makes each representation and warranty set forth in
Article III of the Pledge Agreement as to itself and as to its Collateral to the
same extent as each other Pledgor and hereby agrees to be bound as a Pledgor by
all of the terms and provisions of the Pledge Agreement to the same extent as
all other Pledgors.
This letter shall be governed by and construed in accordance with the laws
of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL PLEDGOR]
By: ________________________________
Name:
Title:
Address:
Acknowledged and Accepted:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as Agent
By: ______________________
Name:
Title:
-2-
EXHIBIT H
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of July 30, 1999 (as amended, supplemented,
restated or otherwise modified from time to time, this "Agreement"), made by
U.S. AUTOMOTIVE MANUFACTURING, INC. ("USAM"), a Delaware corporation, QUALITY
AUTOMOTIVE COMPANY ("QAC"), a Delaware corporation, US AUTOMOTIVE FRICTION, INC.
("USAF"), a Delaware corporation (USAM, QAC and USAF are referred to
individually as a "Borrower" and collectively as the "Borrowers"), and each of
the other Persons (such capitalized term and all other capitalized terms not
otherwise defined herein to have the meanings provided for in Article I) listed
on the signature pages hereof (such other Persons, together with the Additional
Collateral Grantors and the Borrowers, are collectively referred to as the
"Grantors" and individually as a "Grantor"), in favor of IBJ WHITEHALL BUSINESS
CREDIT CORPORATION, as agent (in such capacity, the "Agent") for each of the
Lender Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of the date hereof
(together with all amendments, supplements, restatements and other
modifications, if any, from time to time thereafter made thereto, the "Credit
Agreement"), among the Borrowers, the various lending institutions (individually
a "Lender" and collectively the "Lenders") as are, or may from time to time
become, parties thereto and the Agent, the Lenders have extended the Revolving
Loan Commitment to make Credit Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making of the initial Credit
Extension under the Credit Agreement, each Grantor is required to execute and
deliver this Agreement; and
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
to make Credit Extensions (including the initial Credit Extension) to the
Borrowers pursuant to the Credit Agreement, each Grantor agrees, for the benefit
of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):
"Additional Collateral Grantors" is defined in clause (b) of Section 7.2.
"Agent" is defined in the preamble.
"Agreement" is defined in the preamble.
"Assigned Agreements" is defined in clause (g) of Section 2.1.
"Borrower" and "Borrowers" are defined in the preamble.
"Collateral" is defined in Section 2.1.
"Commodity Account" means an account maintained by a Commodity Intermediary
in which a Commodity Contract is carried out for a Commodity Customer.
"Commodity Contract" means a commodity futures contract, an option on a
commodity futures contract, a commodity option or any other contract that, in
each case, is (a) traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract pursuant to the federal
commodities laws or (b) traded on a foreign commodity board of trade, exchange
or market, and is carried on the books of a Commodity Intermediary for a
Commodity Customer.
"Commodity Customer" means a person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"Commodity Intermediary" means (a) a Person who is registered as a futures
commission merchant under the federal commodities laws or (b) a Person who in
the ordinary course of its business provides clearance or settlement services
for a board of trade that has been designated as a contract market pursuant to
federal commodities laws.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units,
display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and
other related computer hardware;
(b) all software programs (including both source code, object code and
all related applications and data files), whether now owned, licensed or
leased or hereafter acquired by each Grantor, designed for use on the
computers and electronic data processing hardware described in clause (a)
above;
(c) all licenses and leases of software programs;
2
(d) all firmware associated therewith;
(e) all documentation (including flow charts, logic diagrams, manuals,
guides and specifications) with respect to such hardware, software and
firmware described in the preceding clauses (a) through (c); and
(f) all rights with respect to all of the foregoing, including any and
all copyrights, licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications and any substitutions,
replacements, additions or model conversions of any of the foregoing.
"Copyright Collateral" means all copyrights of each Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
throughout the world including all of such Grantor's right, title and interest
in and to all copyrights registered in the United States opyright Office or
anywhere else in the world and also including the copyrights referred to in Item
A of Schedule IV attached hereto, and all applications for registration thereof,
whether pending or in preparation, all copyright licenses, including each
copyright license referred to in Item B of Schedule IV attached hereto, the
right to ▇▇▇ for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Entitlement Holder" means a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the U.C.C., such person is the Entitlement
Holder.
"Equipment" means all machinery and equipment in all its forms, wherever
located, including all computers, furniture and furnishings, all other property
similar to the foregoing (including tools, parts, rolling stock and supplies of
every kind and description), components, parts and accessories installed thereon
or affixed thereto and all parts thereof, and all Fixtures and all accessories,
additions, attachments, improvements, substitutions and replacements thereto and
therefor.
"Financial Asset" means (a) a Security, (b) an obligation of a Person or a
share, participation or other interest in a Person or in property or an
enterprise of a Person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the U.C.C. As
the context requires, the term Financial Asset shall mean either the interest
itself or the means by which a Person's claim to it is evidenced, including a
3
certificated or uncertificated Security, a certificate representing a Security
or a Security Entitlement.
"Fixtures" means all items of Equipment, whether now owned or hereafter
acquired, of any Grantor that become so related to particular real estate that
an interest in them arises under any real estate law applicable thereto.
"General Intangibles" shall mean all choses in action and causes of action
and all other assignable intangible personal property of any Grantor of every
kind and nature (other than Receivables) now owned or hereafter acquired by any
Grantor, including all rights and interests in partnerships, limited
partnerships, limited liability companies and other unincorporated entities,
corporate or other business records, indemnification claims, contract rights
(including rights under leases, whether entered into as lessor or lessee, Rate
Protection Agreements and other agreements), goodwill, registrations,
franchises, tax, refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Grantor to secure
payment by an Account Debtor of any Receivable.
"Grantor" and "Grantors" are defined in the preamble.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Inventory" means all present and future inventory merchandise and goods
intended for sale, lease or other disposition, including, without limitation,
(a) all raw materials, work in process, finished goods, returned goods and
materials and supplies of any kind, nature or description which are or might be
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of any of the foregoing; (b) all goods in which any Grantor has an
interest in mass or a joint or other interest or right of any kind (including
goods in which any Grantor has an interest or right as consignee); and (c) all
goods which are returned to or repossessed by any Grantor, and all accessions
thereto, products thereof and documents therefor (any and all such inventory,
materials, goods, accessions, products and documents being the "Inventory").
"Investment Property" means all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Commodity Contracts
and Commodity Accounts of each Grantor, whether now owned or hereafter acquired
by any Grantor.
"Lender" and "Lenders" are defined in the first recital.
"Lender Party" means, as the context may require, any Lender, any Issuer or
the Agent and each of its respective successors, transferees and assigns.
"Patent Collateral" means:
4
(a) all letters patent and applications for letters patent throughout
the world, including all patent applications in preparation for filing
anywhere in the world and including each patent and patent application
referred to in Item A of Schedule II attached hereto;
(b) all patent licenses, including each patent license referred to in
Item B of Schedule II attached hereto;
(c) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in
clauses (a) and (b) above; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the right
to ▇▇▇ third parties for past, present or future infringements of any
patent or patent application, including any patent or patent application
referred to in Item A of Schedule II attached hereto, and for breach or
enforcement of any patent license, including any patent license referred to
in Item B of Schedule II attached hereto, and all rights corresponding
thereto throughout the world.
"Receivables" means all accounts (including all bank accounts, collection
accounts and concentration accounts, together with all funds held therein and
all certificates and instruments, if any, from time to time representing or
evidencing such accounts), contracts, contract rights, chattel paper, documents,
instruments, proceeds of letters of credit and rights to receive payment of any
Grantor (including invoices, contracts, rights, accounts receivable, notes,
refunds, indemnities, interest, late charges, fees, undertakings and all other
obligations and amounts owing to any Grantor from any Person), whether or not
arising out of or in connection with the sale or lease of goods or the rendering
of services, and all rights of any Grantor now or hereafter existing in and to
all security agreements, guaranties, leases and other contracts securing or
otherwise relating to any such accounts, contracts, contract rights, chattel
paper, documents, instruments, including goods represented by the sale or lease
of delivery which gave rise to any of the foregoing, returned or repossessed
merchandise and rights of stoppage in transit, replevin, reclimation and other
rights and remedies of an unpaid vendor, lienor or secured party (any and all
such accounts, contracts, contract rights, chattel paper, documents,
instruments, and general intangibles being the "Receivables", and any and all
such security agreements, guaranties, leases and other contracts being the
"Related Contracts").
"Related Contract" is defined in the definition of "Receivables".
"Secured Obligations" is defined in Section 2.2.
"Securities" means any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations, interests or obligations and (c)(i) are, or are of a type, dealt
with or trade on securities exchanges or
5
securities markets or (ii) are a medium for investment and by their terms
expressly provide that they are a security governed by Article 8 of the U.C.C.
"Securities Account" shall mean an account to which a Financial Asset is or
may be credited in accordance with an agreement under which the person
maintaining the account undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"Security Agreement Supplement" is defined in clause (b) of Section 7.2.
"Security Entitlements" shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"Security Intermediary" shall mean (a) a clearing corporation or (b) a
person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared
or appear, designs and general intangibles of a like nature (all of the
foregoing items in this clause (a) being collectively called a
"Trademark"), now existing anywhere in the world or hereafter adopted or
acquired, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State thereof or
any foreign country, including those referred to in Item A of Schedule III
attached hereto;
(b) all Trademark licenses, including each Trademark license referred
to in Item B of Schedule III attached hereto;
(c) all reissues, extensions or renewals of any of the items described
in clauses (a) and (b) above;
(d) all of the goodwill of the business connected with the use of, and
symbolized by the items described in, clauses (a) and (b) above; and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by each Grantor against third parties for past, present
or future infringement or dilution of any Trademark, Trademark registration
or Trademark license, including any Trademark, Trademark registration or
Trademark license referred to in Item B of Schedule III attached
6
hereto, or for any injury to the goodwill associated with the use of any
such Trademark or for breach or enforcement of any Trademark license.
"Trade Secrets Collateral" means common law and statutory trade secrets and
all other confidential or proprietary or useful information and all know-how
obtained by or used in or contemplated at any time for use in the business of
each Grantor (all of the foregoing being collectively called a "Trade Secret"),
whether or not such Trade Secret has been reduced to a writing or other tangible
form, including all documents and things embodying, incorporating or referring
in any way to such Trade Secret, all Trade Secret licenses, including each Trade
Secret license referred to in Schedule V attached hereto, and including the
right to ▇▇▇ for and to enjoin and to collect damages for the actual or
threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as from time to time in effect
in the State of New York or, with respect to any Collateral located in any state
other than the State of New York, the Uniform Commercial Code as from time to
time in effect in such state. "Vehicles" is defined in clause (h) of Section
2.1.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Agreement, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3 U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1 Grant of Security. Each Grantor hereby assigns and pledges to
the Agent for its benefit and the ratable benefit of each of the Lender Parties,
and hereby grants to the Agent for its benefit and the ratable benefit of each
of the Lender Parties a security interest in, all of its right, title and
interest in and to the following, whether now or hereafter existing or acquired
(collectively, the "Collateral"):
(a) all Equipment in all of its forms of such Grantor;
(b) all Inventory in all of its forms of such Grantor;
(c) all Receivables in all of its forms of such Grantor;
(d) all Intellectual Property Collateral in all of its forms of such
Grantor;
(e) all Investment Property in all of its forms of such Grantor;
7
(f) all General Intangibles in all of its forms of such Grantor;
(g) all of such Grantor's right, title and interest in and to the Material
Agreements specified in Schedule VI attached hereto, and each Rate Protection
Agreement to which such Grantor is now or may hereafter become a party, in each
case as such agreements may be amended or otherwise modified from time to time
(collectively, the "Assigned Agreements"), including (i) all rights of such
Grantor to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) all claims of such Grantor for damages arising out of or for
breach of or default under the Assigned Agreements and (iv) the right of such
Grantor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder;
(h) all trucks, cars and other motor vehicles owned or leased by such
Grantor, wherever located, and including all machinery, components, parts and
accessories installed thereon or affixed thereto, together with all accessions,
additions, attachments, improvements, substitutions and replacements thereto and
therefor, the foregoing to include, without limitation, the trucks, cars and
motor vehicles identified in Schedule VII attached hereto (collectively, the
"Vehicles");
(i) all of such Grantor's books, records, writings, data bases, information
and other property relating to, used or useful in connection with, evidencing,
embodying, incorporating or referring to any of the foregoing in this Section
2.1;
(j) all of such Grantor's other property and rights of every kind and
description and interests therein, including all moneys, securities and other
property, now or hereafter held or received by, or in transit to, the Agent or
any Lender Party from or for such Grantor, whether for safekeeping, pledge,
custody, transmission, collection or otherwise; and
(k) all products, offspring, rents, issues, profits, returns, income and
proceeds of and from any and all of the foregoing Collateral (including proceeds
which constitute property of the types described in clauses (a) through (i)
above, proceeds deposited from time to time in any Lock-Box Account, the
Concentration Account or any other account of such Grantor, and, to the extent
not otherwise included, all claims against third Persons and the right to ▇▇▇
for damages and lost profits, and all payments under insurance (whether or not
the Agent is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral).
SECTION 2.2 Security for Obligations. This Agreement secures the prompt
payment in full of all Obligations, including all amounts payable by each
Borrower and each other Obligor under or in connection with the Credit
Agreement, the Notes and each other Loan Document, whether for principal,
interest, costs, fees, expenses, indemnities or otherwise and whether now or
hereafter existing (all of such obligations being the "Secured Obligations").
8
SECTION 2.3 Continuing Security Interest; Transfer of Notes. This Agreement
shall create a continuing security interest in the Collateral and shall
(a) remain in full force and effect until payment in full in cash of
all Secured Obligations and the irrevocable termination of the Revolving
Loan Commitment,
(b) be binding upon each Grantor, its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent and each other Lender Party.
Without limiting the generality of the foregoing clause (c), any Lender may
assign or otherwise transfer (in whole or in part) any Credit Extension held by
it to any other Person, and such other Person shall thereupon become vested with
all the rights and benefits in respect thereof granted to such Lender under any
Loan Document (including this Agreement) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Section 10.11 and Article IX of the Credit Agreement. Upon the indefeasible
payment in full in cash of all Secured Obligations and the termination of the
Revolving Loan Commitment, the security interest granted herein shall terminate
and all rights to the Collateral shall revert to the Grantors. Upon any such
termination or release, the Agent will, at each Grantor's sole expense, execute
and deliver to such Grantor such documents as such Grantor shall reasonably
request to evidence such termination.
SECTION 2.4 Grantors Remains Liable. Anything herein to the contrary
notwithstanding
(a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral (including the Assigned Agreements)
to the extent set forth therein, and shall perform all of its duties and
obligations under such contracts and agreements to the same extent as if
this Agreement had not been executed;
(b) each Grantor will comply in all material respects with all laws,
rules and regulations relating to the ownership and operation of the
Collateral, including, without limitation, all registration requirements
under applicable laws, and shall pay when due all taxes, fees and
assessments imposed on or with respect to the Collateral, except to the
extent the validity thereof is being contested in good faith by appropriate
proceedings for which adequate reserves in accordance with GAAP have been
set aside by such Grantor;
(c) the exercise by the Agent of any of its rights hereunder shall not
release any Grantor from any of its duties or obligations under any such
contracts or agreements included in the Collateral; and
(d) neither the Agent nor any other Lender Party shall have any
obligation or liability under any such contracts or agreements included in
the Collateral by reason of this Agreement, nor shall the Agent or any
other Lender Party be obligated to perform any of the
9
obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 2.5 Security Interest Absolute. All rights of the Agent and the
security interests granted to the Agent hereunder, and all obligations of each
Grantor hereunder, shall be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document;
(b) the failure of any Lender Party
(i) to assert any claim or demand or to enforce any right or
remedy against any Borrower, any Obligor or any other Person under the
provisions of the Credit Agreement, any Note, any other Loan Document
or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Secured Obligation;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other
extension, compromise or renewal of any Secured Obligation, including any
increase in the Secured Obligations resulting from the extension of
additional credit to any Grantor or any other Obligor or otherwise;
(d) any reduction, limitation, impairment or termination of any
Secured Obligation for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and each
Grantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Secured Obligation or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for
any of the Secured Obligations; or
(g) any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Borrower, any other
Obligor or otherwise.
10
SECTION 2.6 Waiver of Subrogation. Each Grantor hereby irrevocably waives
to the extent permitted by applicable law any claim or other rights which it may
now or hereafter acquire against any other Obligor that arises from the
existence, payment, performance or enforcement of such Grantor's obligations
under this Agreement, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
against any other Obligor or any collateral which the Agent now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including the right to take or receive from any
other Obligor, directly or indirectly, in cash or other property or by set-off
or in any manner, payment or security on account of such claim or other rights,
until such time as the Secured Obligations shall have been indefeasibly paid in
full in cash and the Revolving Loan Commitment has irrevocably terminated. If
any amount shall be paid to any Grantor in violation of the preceding sentence
and the Secured Obligations shall not have been terminated, such amount shall be
deemed to have been paid to the Lender Parties, and shall forthwith be paid to
the Agent to be credited and applied upon the Secured Obligations, whether
matured or unmatured. Each Grantor acknowledges that it will receive direct and
indirect benefits for the financing arrangements contemplated by the Credit
Agreement and that the waiver set forth in this Section is knowingly made in
contemplation of such benefits.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties. Each Grantor represents and
warrants unto each Lender Party as set forth in this Article.
SECTION 3.1.1 Location of Collateral, etc.
(a) All of the Equipment and Inventory of such Grantor are located at
the places specified in Item A and Item B, respectively, of Schedule I
hereto. None of the Equipment and Inventory has, within 12 months preceding
the date of this Agreement, been located at any place other than the places
specified in Item A and Item B, respectively, of Schedule I hereto. The
principal place of business and chief executive office of such Grantor and
the office where such Grantor keeps its records concerning the Receivables,
and the original copies of each Assigned Agreement and all originals of all
chattel paper which evidence Receivables are located at the places
specified in Item C of Schedule I hereto. Except as set forth in Item D of
Schedule I hereto such Grantor has no trade names and during the 12-month
period preceding the date hereof such Grantor has not been known by any
legal name different from the one set forth on the signature page hereto,
nor has such Grantor been the subject of any merger or other corporate
reorganization. All of the Vehicles identified on Schedule VII hereto are
duly titled and registered in the places specified therein, and the Grantor
does not own or lease, directly or indirectly, on the date hereof any other
Vehicle.
(b) If the Collateral of such Grantor includes any Inventory located
in the State of California, such Grantor is not a "retail merchant" within
the meaning of Section 9-102 of the Uniform Commercial Code - Secured
Transactions of the State of California. Except as
11
notified by such Grantor to the Agent in writing, such Grantor is not a
party to any one or more Federal, state or local government contracts.
SECTION 3.1.2 Ownership, No Liens, etc. Such Grantor owns its portion of
the Collateral free and clear of any Lien, except for the security interest
created by this Agreement and except as otherwise permitted by Section 7.2.3 of
the Credit Agreement. No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of the Agent
relating to this Agreement. The Grantor is the duly registered owner or lessee,
as the case may be, of each Vehicle and, with respect to each Vehicle owned by
such Grantor, has furnished to the Agent true, genuine original certificates of
ownership issued by the relevant Department of Motor Vehicles with respect to
each Vehicle, on which certificates of ownership the security interest of the
Agent in each such Vehicle has been duly noted in accordance with all applicable
laws.
SECTION 3.1.3 Negotiable Documents, Instruments, Chattel Paper and Assigned
Agreements. Such Grantor has, delivered to the Agent possession of all originals
of all negotiable documents, instruments and chattel paper currently owned or
held by such Grantor (duly endorsed in blank, if requested by the Agent) and
original copies of each Assigned Agreement.
SECTION 3.1.4 Intellectual Property Collateral. With respect to any
Intellectual Property Collateral of any Grantor:
(a) each patent, patent application, trademark or servicemark
registration, use-based trademark or service ▇▇▇▇ application, copyright
registration, copyright application and license of such Grantor included in
such Intellectual Property Collateral is subsisting and has not been
adjudged invalid or unenforceable, in whole or in part, and is valid and
enforceable;
(b) such Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including
recordations of all of its interests in the Patent Collateral and Trademark
Collateral in the United States Patent and Trademark Office and in
corresponding offices throughout the world and its claims to the Copyright
Collateral in the United States Copyright Office and in corresponding
offices throughout the world;
(c) in the case of any such Intellectual Property Collateral that is
owned by such Grantor, such Grantor is the exclusive owner of the entire
and unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted rights of
any third party;
(d) in the case of any such Intellectual Property Collateral that is
licensed by such Grantor, such Grantor is in compliance with all the
material terms of such license; and
12
(e) the Grantor has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and taxes to
maintain each and every item of Intellectual Property Collateral in full
force and effect throughout the world, as applicable.
Such Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, licenses, technology, know-how,
processes and rights with respect to any of the foregoing used in or necessary
for the conduct of such Grantor's business.
SECTION 3.1.5 Validity, etc. This Agreement creates a valid, first priority
security interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly taken (or, in the case of the
filings referred to in Section 3.1.7, have been delivered to the Agent pursuant
to the Credit Agreement).
SECTION 3.1.6 Authorization, Approval, etc. No authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body (other than the filing of financing statements in the U.C.C.
filing offices of each jurisdiction referred to in Schedule I hereto and, if
there is any Intellectual Property Collateral, the filing of this Agreement with
the United States Patent and Trademark Office and the United States Copyright
Office, as the case may be) is required either
(a) for the grant by such Grantor of the security interest granted
hereby or for the execution, delivery and performance of this Agreement by
such Grantor, or
(b) for the perfection of or the exercise by the Agent of its rights
and remedies hereunder.
SECTION 3.1.7 Due Execution, Validity, Etc. Such Grantor has full power and
authority, and holds all requisite governmental licenses, permits and other
approvals, to enter into and perform its obligations under this Agreement. The
execution, delivery and performance by such Grantor of this Agreement does not
contravene or result in a default under such Grantor's Organic Documents or
contravene or result in a default under any material contractual restriction,
Lien or governmental regulation or court decree or order binding on such
Grantor. This Agreement has been duly executed and delivered on behalf of each
Grantor and constitutes the legal, valid and binding obligation of each Grantor
enforceable in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditor's right generally, and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law). In addition, each representation and warranty of each Grantor
contained in each Loan Document to which it is a party is true and correct in
all material respects (unless such representation and warranty is stated to
relate solely to an earlier date, in which case such representation and warranty
is true and correct as of such earlier date).
13
SECTION 3.1.8 Farm Products. None of the Collateral constitutes, or is the
proceeds of, farm products.
SECTION 3.1.9 Assigned Agreements. The Assigned Agreements of such Grantor,
true and complete copies of which have been furnished to each Lender, have been
duly authorized, executed and delivered by such Grantor and (to the best
knowledge of such Grantor) each other party thereto, are in full force and
effect and are binding upon and enforceable against such Grantor and (to the
best knowledge of such Grantor) each other party thereto, in accordance with
their terms. To the knowledge of such Grantor, there exists no default under any
Assigned Agreement by any party thereto. With respect to each Assigned Agreement
for which the Agent has requested such Grantor to obtain a written consent to
assignment, each party to such Assigned Agreement other than such Grantor has
executed and delivered to such Grantor a consent, in substantially the form of
Exhibit A, to the assignment of such Assigned Agreement to the Agent pursuant to
this Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1 Certain Covenants. Each Grantor covenants and agrees that, so
long as any portion of the Secured Obligations shall remain unpaid or any Lender
shall have an outstanding Revolving Loan Commitment, such Grantor will, unless
the Required Lenders shall otherwise consent in writing, perform the obligations
set forth in this Section.
SECTION 4.1.1 Accounts. (a) Each Account of such Grantor is and shall
(i)(A) result from a bona fide sale or lease and delivery of goods by such
Grantor, or rendition of services by such Grantor, in the ordinary course of
business of such Grantor, and (B) be for a liquidated amount payable by the
Account Debtor thereon on the terms set forth in the invoice therefor or in the
schedule thereof delivered to the Agent, without offset, deduction, defense, or
counterclaim; (ii) be paid in accordance with its terms and no credit, discount,
agreement to settle the same (except for payment in full) or extension, or
agreement therefor, will be granted on any Account, except as approved by the
Agent; and (iii) be evidenced by a true and correct copy of an invoice delivered
to the Agent by such Grantor.
(b) Such Grantor shall not re-date any invoice, make sales on extended
dating, settle for less than the full amount any Account or extend or modify any
Account, in each case unless approved by the Agent. If such Grantor becomes
aware of any material matter affecting any Account, including information
regarding the Account Debtor's creditworthiness, such Grantor will promptly so
advise the Agent.
(c) Such Grantor shall not accept any note or other instrument (except a
check or other instrument for the immediate payment of money) with respect to
any Account without the Agent's consent. If the Agent consents to the acceptance
of any such note or other instrument, it shall be considered as evidence of the
Account and not payment thereof, and such Grantor shall promptly deliver such
note or instrument to the Agent appropriately endorsed. Regardless of the form
of presentment, demand, notice of dishonor, protest, and notice of protest
14
with respect thereto, such Grantor will remain liable thereon until such note or
instrument is paid in full.
(d) Such Grantor shall notify the Agent promptly of all disputes and claims
with Account Debtors and settle or adjust them at no expense to the Agent, but
no discount, credit or allowance shall be granted to any Account Debtor without
the Agent's consent, except for discounts, credits and allowances made or given
in the ordinary course of the such Grantor's business when no Event of Default
exists hereunder. The Agent may settle or adjust disputes and claims directly
with customers or Account Debtors for amounts and upon terms which the Agent
considers advisable and, in all cases, the Agent will credit the such Grantor's
loan account with only the net amounts received by the Agent in payment of any
Accounts.
SECTION 4.1.2 Inventory.
(a) All of the Inventory of such Grantor is held for sale or lease in the
ordinary course of such Grantor's business, and is and will be fit for such
purposes. Such Grantor will keep the Inventory in good and marketable condition,
at its own expense. Such Grantor will not, without prior notice to the Agent,
acquire to accept any Inventory on consignment or approval. Such Grantor agrees
that all Inventory will be produced in accordance with the Federal Fair Labor
Standards Act of 1938, as amended, and all rules, regulations, and orders
thereunder. Such Grantor will maintain a perpetual inventory reporting system at
all times. Such Grantor will not, without the Agent's prior consent, sell any
Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on
approval, consignment or other repurchase or return basis.
(b) If an Account Debtor returns any Inventory to such Grantor when no
Event of Default exists, such Grantor shall promptly determine the reason for
such return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount. Such Grantor shall immediately report to the Agent any
return involving an amount in excess of $10,000. In the event any Account Debtor
returns Inventory to such Grantor when an Event of Default exists, such Grantor
shall: (i) hold the returned Inventory in trust for the Agent; (ii) segregate
all returned Inventory from all of its other Property; (iii) dispose of the
returned Inventory solely according to the Agent's written instructions; and
(iv) not issue any credits or allowances with respect thereto without the
Agent's prior consent.
SECTION 4.1.3 Equipment. All of the Equipment of such Grantor is and will
be used or held for use in such Grantor's business and is and will be fit for
such purposes. Such Grantor shall keep and maintain its Equipment in good
operating condition and repair (ordinary wear and tear excepted) and shall make
all necessary replacements thereof. Such Grantor shall promptly inform the Agent
of any material additions to or deletions from its Equipment. Such Grantor shall
maintain accurate and complete records itemizing and describing the location,
kind, type, age and condition of its Equipment, the cost therefor and
accumulated depreciation thereof and all dispositions thereof. Such Grantor
shall not permit any of its Equipment to become a fixture to real property or an
accession to other personal property, unless the Agent has a valid, perfected,
and first priority security interest in such real or personal property. Such
Grantor will not, without the Agent's prior consent, alter or remove any
identifying symbol or number on its
15
Equipment. Such Grantor shall not, without the Agent's prior consent, sell,
lease or otherwise dispose of any of its Equipment, provided, however, that such
Agent may dispose of Equipment to the extent permitted in Section 7.2.10 of the
Credit Agreement.
SECTION 4.1.4 Intellectual Property Collateral.
(a) No Grantor shall, unless such Grantor shall either (i) reasonably
and in good faith determine (and notice of such determination shall have
been delivered to the Agent) that any of the Patent Collateral is of
negligible economic value to such Grantor, or (ii) have a valid business
purpose (exercised in the ordinary course of its business) to do otherwise,
do any act, or omit to do any act, whereby any of the Patent Collateral may
lapse or become abandoned or dedicated to the public or unenforceable.
(b) No Grantor shall, and no Grantor shall permit any of its licensees
to, unless such Grantor shall either (i) reasonably and in good faith
determine (and notice of such determination shall have been delivered to
the Agent) that any of the Trademark Collateral is of negligible economic
value to such Grantor, or (ii) have a valid business purpose (exercised in
the ordinary course of its business) to do otherwise,
(A) fail to continue to use any of the Trademark Collateral in
order to maintain all of the Trademark Collateral in full force free
from any claim of abandonment for non-use,
(B) fail to maintain as in the past the quality of products and
services offered under all of the Trademark Collateral,
(C) fail to employ all of the Trademark Collateral registered
with any Federal or state or foreign authority with an appropriate
notice of such registration,
(D) adopt or use any other Trademark which is confusingly similar
or a colorable imitation of any of the Trademark Collateral,
(E) use any of the Trademark Collateral registered with any
Federal or state or foreign authority except for the uses for which
registration or application for registration of all of such Trademark
Collateral has been made, or
(F) do or permit any act or knowingly omit to do any act whereby
any of the Trademark Collateral may lapse or become invalid or
unenforceable.
(c) No Grantor shall, unless such Grantor shall either reasonably and
in good faith determine (and notice of such determination shall have been
delivered to the Agent) that any of the Copyright Collateral or any of the
Trade Secrets Collateral is of negligible economic value to such Grantor,
or have a valid business purpose (exercised in the ordinary course of its
business) to do otherwise, do or permit any act or knowingly omit
16
to do any act whereby any of the Copyright Collateral or any of the Trade
Secrets Collateral may lapse or become invalid or unenforceable or placed
in the public domain except upon expiration of the end of an unrenewable
term of a registration thereof.
(d) Each Grantor shall notify the Agent immediately if it knows that
any application or registration relating to any material item of the
Intellectual Property Collateral may become abandoned or dedicated to the
public or placed in the public domain or invalid or unenforceable, or of
any adverse determination or development (including the institution of, or
any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or
any foreign counterpart thereof or any court) regarding such Grantor's
ownership of any of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.
(e) In no event shall any Grantor or any of its agents, employees,
designees or licensees file an application for the registration of any
Intellectual Property Collateral with the United States Patent and
Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, unless
it promptly informs the Agent and, upon request of the Agent, executes and
delivers any and all agreements, instruments, documents and papers as the
Agent may reasonably request to evidence the Agent's security interest in
such Intellectual Property Collateral and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby.
(f) Each Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue any
application (and to obtain the relevant registration) filed with respect
to, and to maintain any registration of, the Intellectual Property
Collateral, including the filing of applications for renewal, affidavits of
use, affidavits of incontestability and opposition, interference and
cancellation proceedings and the payment of fees and taxes (except to the
extent that dedication, abandonment or invalidation is permitted under the
foregoing clauses (a), (b) and (c)).
SECTION 4.1.5 Assigned Agreements.
(a) Each Grantor shall at its expense:
(i) perform and observe in all material respects all the terms
and provisions of the Assigned Agreements to be performed or observed
by it, maintain the Assigned Agreements in full force and effect,
enforce the Assigned Agreements in accordance with their terms and
take all such action to such end as may be from time to time
reasonably requested by the Agent; and
17
(ii) furnish to the Agent promptly upon receipt or delivery
thereof copies of all material notices, requests and other documents
received by such Grantor under or pursuant to the Assigned Agreements,
and from time to time furnish to the Agent such information and reports
regarding the Assigned Agreements as the Agent may reasonably request.
(b) Except to the extent permitted under Section 7.2.11 of the Credit
Agreement, no Grantor shall, without the prior written consent of the
Agent:
(i) cancel or terminate any Assigned Agreement or consent to or
accept any cancellation or termination thereof;
(ii) amend or otherwise modify any Assigned Agreement or give any
consent, waiver or approval thereunder;
(iii) waive any default under or breach of any Assigned
Agreement; or
(iv) take any other action in connection with any Assigned
Agreement that would impair in any material respect the value of the
interest or rights of such Grantor thereunder or that would impair in
any material respect the interest or rights of any Lender Party.
(c) Each Grantor shall notify the Agent promptly after it becomes
aware of any event or fact which could give rise to a claim by it for
indemnification under any of the Assigned Agreements and shall diligently
pursue such right and promptly report to the Agent all further material
developments with respect thereto. Each Grantor shall remit directly to the
Agent, for application to the Obligations, all amounts received by such
Grantor as indemnification or otherwise pursuant to the Assigned
Agreements. If any Grantor shall fail after the Agent's demand to
diligently pursue any right under the Assigned Agreements, or if any Event
of Default exists, then the Agent may directly enforce such right in its
own or such Grantor's name and may enter into such settlements or other
agreements with respect thereto as the Agent determines. All amounts
thereby recovered by the Agent, after deducting Agent's costs and expenses
in connection therewith, shall be applied to the Obligations. In any suit,
proceeding or action brought by the Agent under any Assigned Agreement for
any sum owing thereunder or to enforce any provision thereof, each Grantor
shall indemnify and hold the Agent harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment, or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by such Grantor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time
owing from such Grantor to or in favor of such obligor or its successors.
SECTION 4.1.6 Collateral Reporting. The Borrowers will provide, on
behalf of each Grantor, to the Agent the following documents in form
satisfactory to the Agent: (a) on a daily basis, a schedule of credit memos and
reports, a schedule of collections
18
of Accounts, a schedule of Accounts created since the last such schedule and a
report of the Inventory balance (by location) based on the perpetual Inventory
reports; (b) on a weekly basis, a schedule of remittance advices no later than
five Business Days following the end of the week; (c) upon request, copies of
invoices, credit memos, shipping and delivery documents; (d) monthly agings of
Accounts to be delivered no later than the 10th day of each month respecting the
immediately preceding month; (e) monthly Inventory reports by category to be
delivered no later than the 10th day of each month respecting the immediately
preceding month; (f) upon request, monthly perpetual Inventory reports; (g) upon
request, copies of purchase orders, invoices, and delivery documents for
Inventory and Equipment acquired by any Grantor; (h) on a weekly basis, a report
as to all Inventory indicating the reasons for the returns and the locations and
condition of the returned Inventory; (i) such other reports as to the Collateral
as the Agent shall request from time to time; and (j) certificates of an
Authorized Officer of USAM certifying as to the foregoing. In addition, USAM,
for and on behalf of each Grantor, shall conduct a physical verification of all
Inventory of each Grantor not less than once every 12 months and at such other
times as the Agent may reasonably request. The annual physical verification of
Inventory shall (a) be evidenced by a report describing in reasonable detail the
Inventory by category and item and the then appraised value (at lower of cost or
market) and (b) be observed and tested by USAM's independent public accountants
in accordance with generally accepted auditing standards and GAAP. If any
Grantor's records or reports of the Collateral are prepared by an accounting
service or other agent, such Grantor hereby authorizes such service or agent to
deliver such records, reports, and related documents to the Agent.
SECTION 4.1.7 Appraisals. Whenever any Default or Event of Default exists,
and at such other times as the Agent may reasonably request, each Grantor shall,
at its sole cost and expense and promptly following the Agent's request
therefor, provide the Agent with appraisals or updates thereof of any or all of
the Collateral from an appraiser that is reasonably acceptable to the Agent.
SECTION 4.1.8 Transfers of Collateral and Other Liens, etc.
(a) No Grantor shall sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral, except as permitted by
Section 7.2.10 of the Credit Agreement.
(b) No Grantor shall create or suffer to exist any Lien upon or with
respect to any of the Collateral, except for the security interest created
by this Agreement and except those permitted by Section 7.2.3 of the Credit
Agreement.
(c) Each Grantor shall keep all its Equipment, Inventory (other than
Inventory sold in the ordinary course of business) and other Collateral at
the places therefor specified in Section 3.1.1 or, upon 30 days' prior
written notice to the Agent, at such other places in a jurisdiction where
all representations, warranties and covenants contained herein shall be
true and correct, including all actions required pursuant to Section 4.1.11
having been taken with respect to such Equipment and Inventory.
19
(d) Each Grantor shall keep its principal place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and all originals of all chattel paper which evidence
Receivables, located at the places specified in clause (a) of Section 3.1.1
or, upon 30 days' prior written notice to the Agent, at such other
locations in a jurisdiction where all actions required by Section 4.1.11
shall have been taken with respect to the Receivables; and not change its
name except upon 30 days' prior written notice to the Agent and having
taken all action required pursuant to Section 4.1.11.
SECTION 4.1.9 As to Vehicles. Each Grantor hereby agrees that
(a) it shall keep all the Vehicles identified on Schedule VII hereto
in the locations specified therein, and will keep each certificate of
ownership (duly evidencing the Agent's security interest in each such
Vehicle) on file with the relevant Department of Motor Vehicles in each
such jurisdiction, or, upon 30 days' prior notice to the Agent, at such
other places in a jurisdiction where all the representations and warranties
set forth in Article III shall be true and correct in all material
respects.
(b) if it acquires any Vehicles other than the Vehicles specified on
Schedule VII hereto, promptly (and, in any event, within five Business Days
thereafter) notify the Agent of the same, and in the case of any owned
Vehicles, duly cause to be noted on the relevant certificate of ownership
the security interest of the Agent, file the relevant certificate of
ownership with the relevant Department of Motor Vehicles and provide copies
of the foregoing to the Agent. In addition to, and not in limitation of,
the foregoing, the Grantor shall take all steps necessary so that the
representation and warranties set forth in Article III (including Section
3.1.6) shall be true and correct in all material respects, and all actions
required pursuant to the first sentence of Section 4.1.9 shall have been
taken with respect to the Vehicles;
(c) it shall cause the Vehicles to be maintained and preserved in good
repair and working order, ordinary wear and tear excepted, and make
necessary and proper repairs, renewals and replacements so that the
business of the Grantor carried on in connection therewith may be properly
conducted; and
(d) it shall pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon or with respect
to, and all claims (including claims resulting from the use or operation of
the Vehicles) against or with respect to the Vehicles, except to the extent
the validity thereof is being contested in good faith by appropriate
proceedings for which adequate reserves in accordance with GAAP have been
set aside by the Grantor.
The Agent may, in its sole discretion, waive the requirement that its security
interest be noted on the certificate of occupancy of each Vehicle, provided
that, if requested by the Agent (in its sole discretion), each Grantor agrees to
take all steps to promptly note the same.
20
SECTION 4.1.10 Insurance. Each Grantor will maintain or cause to be
maintained insurance as provided in Section 7.1.4 of the Credit Agreement. All
proceeds of insurance maintained by each Grantor covering the Collateral shall
be retained by the Agent for application to the payment in full of the Secured
Obligations under the circumstances provided for in Section 7.1.4 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the Agent
(and all officers, employees or agents designated by the Agent) as such
Grantor's true and lawful agent (and attorney-in-fact) for the purpose, during
the continuance of an Event of Default, of making, settling and adjusting claims
in respect of Collateral under policies of insurance, endorsing the name of such
Grantor on any check, draft, instrument or other item of payment for the
proceeds of such policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at any time or
times shall fail to obtain or maintain any of the policies of insurance required
by Section 7.1.4 of the Credit Agreement or to pay any premium in whole or part
relating thereto, the Agent may, without waiving or releasing any obligation or
liability of the Grantors hereunder or any Event of Default, in its sole
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Agent deems advisable.
All sums disbursed by the Collateral Agent in connection with this Section
4.1.5, including reasonable attorneys' fees, court costs, expenses and other
charges relating thereto, shall be payable, upon demand, by the Grantors to the
Agent and shall be additional Secured Obligations secured hereby.
SECTION 4.1.11 Further Assurances, etc. Each Grantor agrees that, from time
to time at its own expense, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Agent may reasonably request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will
(a) ▇▇▇▇ conspicuously each asset forming a part of the Collateral,
including each Related Contract, its books and records, with a legend, in
form and substance satisfactory to the Agent, indicating that each such
asset is subject to the security interest granted hereby;
(b) if any Receivable shall be evidenced by a promissory note or other
instrument, negotiable document or chattel paper, deliver and pledge to the
Agent hereunder such promissory note, instrument, negotiable document or
chattel paper duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Agent;
(c) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices (including any
assignment of claim form under or pursuant to the federal assignment of
claims statute, 31 U.S.C. ss. 3726, any successor or amended version
thereof or any regulation promulgated under or pursuant to any version
thereof), as may be necessary, or as the Agent may request, in order to
perfect
21
and preserve the security interests and other rights granted or purported
to be granted to the Agent hereby;
(d) furnish to the Agent, from time to time at the Agent's request,
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Agent may
request, all in reasonable detail; and
(e) deliver to the Agent the original certificates of title for motor
vehicles with the security interest properly granted hereby endorsed
thereon;
(f) deliver to the Agent warehouse receipts covering any portion of
the Collateral located in warehouses which show the Agent, for the ratable
benefit of the Lender Parties, as the beneficiary thereof;
(g) transfer Inventory to warehouses designated by the Agent;
(h) if at any time any Collateral is located on any premises that are
not owned by the Grantor, such Grantor shall obtain written waivers, in
form and substance satisfactory to the Agent, of all present and future
Liens to which the owner or lessor or any mortgagee of such premises may be
entitled to assert against the Collateral;
(i) take all actions that the Agent deems necessary or advisable to
enforce collection of the Accounts; and
(j) from time to time, promptly following the Agent's request, execute
and deliver confirmatory written instruments pledging to the Agent the
Collateral, but any such Grantor's failure to do so shall not affect or
limit the security interest granted hereby or the Agent's other rights in
and to the Collateral.
With respect to the foregoing and the grant of the security interest hereunder,
each Grantor hereby authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, and make filings with the
United States Patent and Trademark Office or United States Copyright Office (or
any successor office or any similar office in any other country) in each case
for the purpose of perfecting, confining, continuing, enforcing or protecting
the security interest granted by each Grantor, without the signature of any
Grantor, and naming any Grantor or the Grantors as debtors and the Collateral
Agent as secured party. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
SECTION 4.1.12 Inspections and Verification. The Agent shall have the
right, at the Grantors' own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantors' affairs with the officers of the Grantors and their independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the
22
case of Accounts or Collateral in the possession of any third Person, by
contacting Account Debtors in the event of and during the continuance of an
Event of Default or the third person possessing such Collateral for the purpose
of making such a verification.
ARTICLE V
THE AGENT
SECTION 5.1 Agent Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably constitutes and appoints the Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such Grantor and
in the name of such Grantor or in its own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments that may be necessary or desirable
to accomplish the purposes of this Agreement. Without limiting the generality of
the foregoing, each Grantor hereby gives the Agent the power and right, on
behalf of such Grantor, without notice to or assent by such Grantor, to do any
or all of the following:
(a) (i) demand payment of its Receivables; (ii) enforce payments of
its Receivables by legal proceedings or otherwise; (iii) exercise all of
its rights and remedies with respect to proceedings brought to collect its
Receivables; (iv) sell or assign its Receivables upon such terms, for such
amount and at such times as the Agent deems advisable; (v) settle, adjust,
compromise, extend or renew any of its Receivables; (vi) discharge and
release any of its Receivables; (vii) prepare, file and sign such Grantor's
name on any proof of claim in bankruptcy or other similar document against
any obligor of any of its Receivables; (viii) notify the post office
authorities to change the address for delivery of the such Grantor's mail
to an address designated by the Agent, and open and dispose of all mail
addressed to the Grantor; and (ix) endorse such Grantor's name upon any
chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Receivable or any goods pertaining thereto;
(b) in the case of any Intellectual Property Collateral, execute and
deliver, and have recorded, any and all agreements, instruments, documents
and papers as the Agent may request to evidence the Lender Parties'
security interest in such Intellectual Property Collateral and the goodwill
and general intangibles of such Grantor relating thereto or represented
thereby;
(c) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by
the terms of this Agreement and pay all or any part of the premiums
therefor and the costs thereof;
(d) execute, in connection with any sale or other disposition provided
for in Section 6.1, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
23
(e) (i) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (ii) ask or
demand for, collect, and receive payment of and give receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) sign and indorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (iv) commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (v)
defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (vi) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Agent may deem appropriate; (vii) notify, or require any
Grantor to notify, Account Debtors to make payment directly to the Agent;
(viii) assign any Intellectual Property Collateral (along with the goodwill
of the business to which any such Intellectual Property Collateral
pertains) throughout the world for such terms, on such conditions, and in
such manner, as the Agent shall in its sole discretion determine; and (ix)
generally, sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though
the Agent were the absolute owner thereof for all purposes, and do, at the
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things that the Agent deems necessary to protect,
preserve or realize upon the Collateral and the Lender Parties' security
interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Each Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2 Agent May Perform. If any Grantor fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by such Grantor pursuant to Section 6.2; provided,
however, if any Default of the nature referred to in Section 8.1.9 of the Credit
Agreement or Event of Default has occurred and is continuing, no such notice
shall be required.
SECTION 5.3 Access and Examination. The Agent may at all reasonable times
have access to, examine, audit, make extracts from and inspect each Grantor's
records, files and books of account and the Collateral, and may discuss each
Grantor's affairs with such Grantor's officers and management. Each Grantor will
deliver to the Agent promptly following its request therefor any instrument
necessary for the Agent to obtain records from any service bureau maintaining
records for the such Grantor. The Agent may, at expense of the Grantors, use
each Grantor's personnel, supplies and premises as may be reasonably necessary
for maintaining or enforcing the security interest granted hereunder. The Agent
shall have the right, at any time, in each Grantor's name to verify the
validity, amount or any other matter relating to the Accounts, by mail,
telephone or otherwise.
24
SECTION 5.4 Agent Has No Duty.
(a) In addition to, and not in limitation of, Section 2.4, the powers
conferred on the Agent hereunder are solely to protect its interest (on
behalf of the Lender Parties) in the Collateral and shall not impose any
duty on it to exercise any such powers. Neither the Agent nor any of its
officers, directors, employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of
any Collateral upon the request of any Grantor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof (including the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral).
The powers conferred on the Agent hereunder are solely to protect the
Lender Parties' interests in the Collateral and shall not impose any duty
upon the Agent to exercise any such powers. The Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of
such powers, and neither the Agent nor any of its officers, directors,
employees or agents shall be responsible to any Grantor for any act or
failure to act hereunder, except for their own gross negligence or willful
misconduct.
(b) Each Grantor assumes all responsibility and liability arising from
or relating to the use, sale or other disposition of the Collateral. The
Obligations shall not be affected by any failure of the Agent to take any
steps to perfect the security interest granted hereunder or to collect or
realize upon the Collateral, nor shall loss of or damage to the Collateral
release any Grantor from any of its Obligations.
ARTICLE VI
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the
U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and
also may
(i) require each Grantor to, and each Grantor hereby agrees that
it will, at its expense and upon the request of the Agent forthwith,
assemble all or part of the Collateral as directed by the Agent and
make it available to the Agent at its premises or another place
designated by the Agent;
(ii) without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), sell,
25
lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or
private sale, at any of the Agent's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Agent
may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten days'
prior notice to such Grantor of the time and place of any public sale
or the time after which any private sale is to be made shall
constitute reasonable notification. The Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having
been given. The Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned;
(iii) with respect to the Intellectual Property, on demand, to
cause the security interest to become an assignment, transfer and
conveyance of any of or all such Collateral by the applicable Grantors
to the Agent, or to license or sublicense, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any
such Collateral throughout the world on such terms and conditions and
in such manner as the Agent shall determine (other than in violation
of any then existing licensing arrangements to the extent that waivers
cannot be obtained); and
(iv) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral
and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or
removing the Collateral.
(b) All cash proceeds received by the Agent in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Agent, be held, to the extent
permitted under applicable law, by the Agent as additional collateral
security for all or any part of the Secured Obligations, and/or then or at
any time thereafter shall be applied (after payment of any amounts payable
to the Agent pursuant to Section 10.3 of the Credit Agreement and Section
6.2 below) in whole or in part by the Agent for the ratable benefit of the
Lender Parties against all or any part of the Secured Obligations in
accordance with Section 8.4 of the Credit Agreement. Any surplus of such
cash or cash proceeds held by the Agent and remaining after payment in full
of all the Secured Obligations, and the termination of the Revolving Loan
Commitment, shall be paid over to the Grantors or to whomsoever may be
lawfully entitled to receive such surplus.
(c) The Agent may exercise any and all rights and remedies of each
Grantor under or in connection with the Equipment, Inventory, Receivables,
the Related Contracts, the Assigned Agreements or otherwise in respect of
the Collateral, including the right to ▇▇▇ upon or otherwise collect,
extend the time for payment of, modify or amend the terms of, compromise or
settle for cash, credit, or otherwise upon any terms,
26
grant other indulgences, extensions, renewals, compositions, or releases,
and take or omit to take any other action with respect to the Collateral,
any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in
connection with any of the foregoing, without discharging or otherwise
affecting the liability of any Grantor for the Obligations or under this
Agreement or any other Loan Document and Assigned Agreements or otherwise
in respect of the Collateral, including any and all rights of such Grantor
to demand or otherwise require payment of any amount under, or performance
of any provision of, any Equipment, Inventory, Receivables, Related
Contracts, Assigned Agreements or other Collateral.
The Agent shall give the Grantors 10 days' written notice (which each
Grantor agrees is reasonable notice within the meaning of Section 9-504(3) of
the U.C.C.) of the Agent's intention to make any sale of Collateral. Such
notice, in the case of a public sale, shall state the time and place for such
sale and, in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange. Any such public sale shall be held at such time or time
within ordinary business hours and at such place or places as the Agent may fix
and state in the notice (if any) of such sale. At any such sale, the Collateral,
or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Agent may (in its sole and absolute discretion)
determine. The Agent shall not be obligated to make any sale of any Collateral
if it shall determine not to do so, regardless of the fact that notice of sale
of such Collateral shall have been given. The Agent may, without notice or
publication adjourn any public or private sale or cause the same to be adjourned
from time to time by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place to which the
same was so adjourned. In case any sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be retained by
the Agent until the sale price is paid by the purchase or purchasers thereof,
but the Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold and, in case
of any such failure, such Collateral may be sold again upon like notice. At any
public (or, to the extent permitted by law, private) sale made pursuant to this
Section, any Lender Party may bid for or purchase, free (to the extent permitted
by law) from any right of redemption, stay, valuation or appraisal on the part
of any Grantor (all said rights being also hereby waived and released to the
extent permitted by law), the Collateral or any part thereof offered for sale
and may make payment on account thereof by using any claim then due and payable
to such Lender Party from any Grantor as a credit against the purchase price,
and such Lender Party may upon compliance with the terms of sale, hold, retain
and dispose of such property without further accountability to any Grantor
therefor.
SECTION 6.2 Indemnity and Expenses.
(a) Each Grantor agrees to jointly and severally indemnify the Agent
from and against any and all claims, losses and liabilities arising out of
or resulting from this Agreement (including enforcement of this Agreement),
except claims, losses or liabilities
27
resulting from the Agent's gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction.
(b) Each Grantor will upon demand pay to the Agent the amount of any
and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent
may incur in connection with
(i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the
Agent or the Lender Parties hereunder, or
(iv) the failure by any Grantor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 Loan Document. This Agreement is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Article X thereof.
SECTION 7.2 Amendments, etc.; Additional Grantors; Successors and Assigns.
(a) No amendment to or waiver of any provision of this Agreement nor
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Agent and,
with respect to any such amendment, by the Grantors, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
(b) Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit B hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as
an "Additional Collateral Grantor" and shall be and become a Grantor, and
each reference in this Agreement to "Grantor" shall also mean and be a
reference to such Additional Collateral Grantor and (ii) the schedule
supplements attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I through
VI hereto, as appropriate, and the Agent may attach such schedule
supplements to such Schedules, and each reference to such Schedules shall
mean and be a reference to such Schedules, as supplemented pursuant hereto.
28
(c) Any Grantor that becomes an Excluded Foreign Subsidiary after the
date hereof shall, upon written request of such Grantor to the Agent and at
the sole cost of such Grantor, be released from the terms hereof pursuant
to documentation reasonably satisfactory to the Agent.
(d) This Agreement shall be binding upon each Grantor and its
successors, transferees and assigns and shall inure to the benefit of and
be enforceable by the Agent and each other Lender Party and their
respective successors, transferees and assigns; provided, however, that no
Grantor may assign its obligations hereunder without the prior written
consent of the Agent.
SECTION 7.3 Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and mailed, delivered or transmitted
by facsimile to either party hereto at the address set forth in the Credit
Agreement, or at such other address as shall be designated by such party in a
written notice to each other party. Any notice, if mailed and properly addressed
with postage prepaid, shall be deemed given three Business Days after posting;
any notice sent by prepaid overnight express mail shall be deemed delivered on
the next following Business Day; and any notice transmitted by facsimile shall
be deemed given upon electronic confirmation of transmission by the sender
thereof.
SECTION 7.4 Section Captions. Section captions used in this Agreement are
for convenience of reference only, and shall not affect the construction of this
Agreement.
SECTION 7.5 Severability. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 7.6 Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
SECTION 7.7 Waivers. Each Grantor hereby waives any right, to the extent
permitted by applicable law, to receive prior notice of or a judicial or other
hearing with respect to any action or prejudgment remedy or proceeding by the
Agent to take possession, exercise control over or dispose of any item of
Collateral where such action is permitted under the terms of this Agreement or
any other Loan Document or by applicable law or the time, place or terms of sale
in connection with the exercise of the Agent's rights hereunder. Each Grantor
waives, to the extent permitted by applicable law, any bonds, security or
sureties required by the Agent with respect to any of the Collateral. Each
Grantor also waives any damages (direct, consequential or otherwise) occasioned
by the enforcement of the Agent's rights under this Agreement or any other Loan
Document, including, the taking of possession of any Collateral or the giving of
notice to any Account Debtor or the collection of any Receivable, all to the
extent that such waiver is permitted by law. Each Grantor also consents that the
Agent, in connection with the
29
enforcement of the Agent's rights and remedies under this Agreement, may enter
upon any premises owned by or leased to it without obligations to pay rent or
for use and occupancy, through self-help, without judicial process and without
having first obtained an order of any court. These waivers and all other waivers
provided for in this Agreement and the other Loan Documents have been negotiated
by the parties and each Borrower acknowledges that it has been represented by
counsel of its own choice and has consulted such counsel with respect to its
rights hereunder.
SECTION 7.8 Governing Law, Entire Agreement, etc. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.9 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR ANY GRANTOR SHALL BE BROUGHT AND
MAINTAINED IN THE FEDERAL AND STATE COURTS LOCATED IN THE BOROUGH OF MANHATTAN
OF THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY SHALL BE BROUGHT, AT THE AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH SUCH LITIGATION SUBJECT TO ANY RIGHTS OF APPEAL OF
ANY JUDGMENT RENDERED BY THE HIGHEST COURT IN THE STATE OF NEW YORK OR THE
UNITED STATES DISTRICT COURT FOR THE STATE OF NEW YORK, AS THE CASE MAY BE. EACH
GRANTOR FURTHER IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK.
EACH GRANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
30
IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GRANTOR HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH
GRANTOR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 7.10 Waiver of Jury Trial. THE LENDER PARTIES AND EACH GRANTOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER
PARTIES OR ANY GRANTOR. EACH GRANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. IN NO EVENT SHALL ANY LENDER PARTY
BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY.
31
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
U.S. AUTOMOTIVE MANUFACTURING, INC.
By: _______________________________
Name:
Title:
QUALITY AUTOMOTIVE COMPANY
By: _______________________________
Name:
Title:
US AUTOMOTIVE FRICTION, INC.
By: _______________________________
Name:
Title:
VIRECO, INC.
By: _______________________________
Name:
Title:
Acknowledged and Accepted:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as Agent
By: ______________________________
Name:
Title:
32
SCHEDULE I
TO
SECURITY AGREEMENT
Item A. Location of Equipment
Grantor Mailing Address County State
------- --------------- ------ -----
Item B. Location of Inventory
Grantor Mailing Address County State
------- --------------- ------ -----
Item C. Principal Place of Business/Chief Executive Office
Grantor Mailing Address County State
------- --------------- ------ -----
Item D. Trade Names
Grantor Trade Names
------- -----------
SCHEDULE II
TO
SECURITY AGREEMENT
Item A. Patents
Issued Patents
Grantor Country Patent No. Issue Date Inventor(s) Title
------- ------- ---------- ---------- ----------- -----
Pending Patent Applications
Grantor Country Serial No. Filing Date Inventor(s) Title
------- ------- ---------- ----------- ----------- -----
Patent Applications in Preparation
Expected
Grantor Country Docket No. Filing Date Inventor(s) Title
------- ------- ---------- ----------- ----------- -----
Item B. Patent Licenses
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Date Matter
--------- -------- -------- ---- ---- ---- ------
SCHEDULE III
TO
SECURITY AGREEMENT
Item A. Trademarks
Registered Trademarks
Grantor Country Trademark Registration No. Registration Date
------- ------- --------- ---------------- -----------------
Pending Trademark Applications
Grantor Country Trademark Serial No. Filing Date
------- ------- --------- ---------- -----------
Trademark Applications in Preparation
Expected Products/
Grantor Country Trademark Docket No. Filing Date Services
------- ------- --------- ---------- ----------- --------
Item B. Trademark Licenses
Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
--------- --------- -------- -------- ---- ----
SCHEDULE IV
TO
SECURITY AGREEMENT
Item A. Copyrights
Registered Copyrights
Grantor Country Registration No. Registration Date Author(s) Title
------- ------- ---------------- ----------------- --------- -----
Copyrights Pending Registration Applications
Grantor Country Serial No. Filing Date Author(s) Title
------- ------- ---------- ----------- --------- -----
Copyright Registration Applications in Preparation
Expected
Grantor Country Docket No. Filing Date Author(s) Title
------- ------- ---------- ----------- --------- -----
Item B. Copyright Licenses
Country or Effective Expiration Subject
Grantor Territory Licensor Licensee Date Date Matter
------- --------- -------- -------- ---- ---- ------
SCHEDULE V
TO
SECURITY AGREEMENT
Trade Secret or Know-How Licenses
Country or Effective Expiration Subject
Grantor Territory Licensor Licensee Date Date Matter
------- --------- -------- -------- ---- ---- ------
SCHEDULE VI
TO
SECURITY AGREEMENT
Assigned Agreements
SCHEDULE VII
TO
SECURITY AGREEMENT
Vehicles
Title and Registration
with Department of
Make Motor Vehicles License No. Registration No.
---- -------------- ----------- ----------------
Owned
-----
Leased
------
EXHIBIT A
TO
SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the granting
of a security interest in favor of IBJ Whitehall Business Credit Corporation, as
agent (together with any successor(s) thereto in such capacity, the "Agent") for
certain financial institutions, pursuant to the Security Agreement, dated as of
July 30, 1999 (as amended, supplemented or otherwise modified, the "Security
Agreement"), by U.S. Automotive Manufacturing, Inc., a Delaware corporation,
Quality Automotive Company, a Delaware corporation, US Automotive Friction,
Inc., a Delaware corporation (collectively, the "Borrowers"), and certain other
persons (the Borrowers and such other persons are collectively referred to as
the "Grantors" and individually as a "Grantor"), and hereby agrees with the
Agent that, upon the receipt of a written notice from the Agent that it is
exercising its rights under the __________ Agreement, dated _______________,
19__ (the "Assigned Agreement"):
(a) The undersigned will make all payments to be made by it under or
in connection with the Assigned Agreement directly to Agent or as otherwise
specified by the Agent. All such payments shall be made by the undersigned
irrespective of, and without deduction for, any counterclaim, defense,
recoupment or set-off and shall be final, and the undersigned will not seek
to recover from the Agent or any person it is acting on behalf of for any
reason any such payment once made.
(b) The Agent shall be entitled to exercise any and all rights and
remedies of the Grantor under the Assigned Agreement in accordance with the
terms of the Security Agreement, and the undersigned shall comply in all
respects with such exercise.
(c) The undersigned will not, without the prior written consent of the
Agent, cancel or terminate the Assigned Agreement or consent to or accept
any cancellation or termination thereof (whether as a result of a
bankruptcy or insolvency proceeding in respect of the Grantor, or
otherwise)[, provided that the Grantor (or the Agent or its representatives
on behalf of the Grantor) continues to perform its obligations under the
Assigned Agreement].
This Consent and Agreement shall be binding upon the undersigned and its
successors and assigns, and shall inure to the benefit of the Agent and its
successors, transferees and assigns. This Consent and Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.
Dated: _______________, 19__ [NAME OF OBLIGEE]
By: _______________________
Name:
Title:
EXHIBIT B
TO
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
_______________, 19___
IBJ Whitehall Business Credit Corporation,
as Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Security Agreement, dated as of July 30, 1999 (as
amended, supplemented or otherwise modified, the "Security Agreement"; the terms
defined therein being used herein as therein defined), by U.S. Automotive
Manufacturing, Inc., a Delaware corporation, Quality Automotive Company, a
Delaware corporation and US Automotive Friction, Inc., a Delaware corporation
(collectively, the "Borrowers") and each of the other Persons listed on the
signature pages thereto (such other Persons, together with the Additional
Collateral Grantors, and the Borrowers, are collectively referred to as the
"Grantors" and individually as a "Grantor"), in favor of IBJ Whitehall Business
Credit Corporation, as agent (together with any successor(s) thereto in such
capacity, the "Agent") for each of the Lender Parties.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to a "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Agent for its benefit and
the ratable benefit of the Lender Parties, and hereby grants to the Agent for
its benefit and the ratable benefit of the Lender Parties, as collateral for the
Secured Obligations, a pledge and assignment of, and a security interest in, all
of the right, title and interest of the undersigned in and to its Collateral,
whether now owned or hereafter acquired, subject to all of the terms and
provisions of the Security Agreement, as if such Collateral of the undersigned
had been subject to the Security Agreement on the date of its original
execution.
The undersigned has attached hereto supplements to Schedules I through VI
to the Security Agreement, and the undersigned hereby certifies that such
supplements have been prepared by the undersigned in substantially the form of
the Schedules to the Security Agreement and are accurate and complete as of the
date first above written.
The undersigned hereby makes each representation and warranty set forth in
Article III of the Security Agreement as to itself and as to its Collateral to
the same extent as each other Grantor and hereby agrees to be bound as a Grantor
by all of the terms and provisions of the Security Agreement to the same extent
as all other Grantors.
This letter shall be governed by and construed in accordance with the laws
of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
By: ___________________________________
Name:
Title:
Address: ______________________________
Acknowledged and Accepted:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as Agent
By: ______________________________
Name:
Title:
EXHIBIT J
GUARANTY
(Corporate)
GUARANTY, dated as of July 30, 1999 (as amended, supplemented, restated or
otherwise modified from time to time, this "Guaranty"), made by each of the
Persons (such capitalized term, and all other capitalized terms used in these
recitals without definition, to have the meanings assigned to such terms in
Article I) as are or may from time to time become parties to this Guaranty
pursuant to clause (b) of Section 4.8 (herein individually referred to as a
"Guarantor" and collective as the "Guarantors"), in favor of IBJ WHITEHALL
BUSINESS CREDIT CORPORATION, as agent (in such capacity, the "Agent") for the
various financial institutions (collectively, the "Lenders") which are, or may
from time to time become, parties to the Credit Agreement (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, dated as of the date hereof (as
amended, supplemented, restated or otherwise modified from time to time, the
"Credit Agreement"), among U.S. Automotive Manufacturing, Inc., a Delaware
corporation, Quality Automotive Company, a Delaware corporation, US Automotive
Friction, Inc., a Delaware corporation (each a "Borrower" and collectively, the
"Borrowers"), the Lenders, and the Agent, the Lenders have extended the
Revolving Loan Commitment to make Credit Extensions to the Borrowers; and
WHEREAS, each Guarantor is a Subsidiary of a Borrower;
WHEREAS, as a condition precedent to the making of the initial Credit
Extension under the Credit Agreement, each Guarantor is required to execute and
deliver this Guaranty; and
WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guaranty and will receive direct and indirect benefits by
reason of the availability of the Revolving Loan Commitment and the making of
Credit Extensions from time to time to the Borrowers by the Lenders;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in order to induce the Lenders
to make Credit Extensions (including the initial Credit Extension) to the
Borrowers pursuant to the Credit Agreement, each Guarantor hereby agrees with
the Agent, for its benefit and the benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not underscored)
when used in this Guaranty, including its preamble and recitals, shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):
"Agent" is defined in the preamble.
"Borrower" and "Borrowers" are defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guaranteed Obligations" is defined in Section 2.1.
"Guarantor" and "Guarantors" are defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender Party" means, as the context may require, any Lender, any Issuer or
the Agent and each of its respective successors, transferees and assigns.
"Lenders" is defined in the preamble.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Guaranty, including its
preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE II
GUARANTY
SECTION 2.1 Guaranty. Each Guarantor hereby jointly and severally
unconditionally and irrevocably guarantees the full and prompt payment when due,
whether at stated maturity, by acceleration or otherwise (including, without
limitation, all amounts which would have become due but for the operation of the
automatic stay under Section 362(a) of the Federal Bankruptcy Code, 11 U.S.C.
362(a)), of the following (collectively, the "Guaranteed Obligations"),
(a) all Obligations of each Borrower and each other Obligor to each
Lender Party now or hereafter existing under the Credit Agreement and each
other Loan Document (including this Guaranty), whether for principal,
interest, fees, expenses or otherwise; and
(b) any and all costs and expenses (including reasonable fees and
expenses of legal counsel) incurred by each Lender Party in enforcing any
of its rights under this Guaranty.
This Guaranty constitutes a guaranty of payment when due and not merely of
collection, and each Guarantor specifically agrees that it shall not be
necessary or required that any Lender
Party exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower, any other Obligor or any Collateral before or
as a condition to the obligations of each Guarantor hereunder. Notwithstanding
the foregoing, the obligations of each Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render such
Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law.
SECTION 2.2 Acceleration of Guaranty. Each Guarantor agrees that, if any
Event of Default under Section 8.1.9 of the Credit Agreement shall occur at a
time when any of the Guaranteed Obligations are not then due and payable, each
Guarantor will pay to the Lender Parties forthwith the full amount which would
be payable hereunder by such Guarantor if all such Guaranteed Obligations were
then due and payable.
SECTION 2.3 Guaranty Absolute. This Guaranty is a continuing, absolute,
unconditional and irrevocable guarantee of payment and shall remain in full
force and effect until all the Guaranteed Obligations have been indefeasibly
paid in full in cash and the Revolving Loan Commitment shall have permanently
terminated. Each Guarantor guarantees that the Guaranteed Obligations will be
paid strictly in accordance with the terms of the agreement under which they
arise, regardless of any law, regulation or order now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of any Lender Party
with respect thereto. The liability of each Guarantor under this Guaranty shall
be absolute and unconditional irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, the Notes, any other Loan Document or any other agreement or
instrument relating to any thereof;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations, or any compromise,
renewal, extension, acceleration or release with respect thereto, or any
other amendment or waiver of or any consent to departure from the Credit
Agreement, the Notes or any other Loan Document;
(c) any addition, exchange, release, impairment or non-perfection of
any collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) the failure of any Lender Party
(i) to assert any claim or demand or to enforce any right or
remedy against any Borrower, any other Obligor or any other Person
(including any other guarantor) under the provisions of the Credit
Agreement, any Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any of the Guaranteed Obligations;
3
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document;
(f) any defense, set-off or counterclaim which may at any time be
available to or be asserted by any Borrower or any other Obligor against
any Lender Party;
(g) any reduction, limitation, impairment or termination of the
Guaranteed Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to
(and each Guarantor hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, the
Guaranteed Obligations or otherwise; or
(h) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any of the Borrowers,
any other Obligor or any Guarantor.
SECTION 2.4 Reinstatement, etc. Each Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Guaranteed Obligations is
rescinded or must otherwise be restored by any Lender Party, upon the
insolvency, bankruptcy or reorganization of any Borrower, any other Obligor or
otherwise, all as though such payment had not been made.
SECTION 2.5 Waiver. Each Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that any Lender Party protect,
secure, perfect or insure any Lien or any property subject thereto or exhaust
any right or take any action against any Borrower, any other Obligor or any
other Person (including any other guarantor) or any collateral securing the
Guaranteed Obligations.
SECTION 2.6 Waiver of Subrogation. Each Guarantor hereby irrevocably waives
any claim or other rights which it may now or hereafter acquire against any
Borrower or any other Obligor that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under this Guaranty
or any other Loan Document, including any right of subrogation, reimbursement,
exoneration or indemnification, any right to participate in any claim or remedy
of any Lender Party against any of the Borrowers or any other Obligor or any
collateral which any Lender Party now has or hereafter acquires, whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including the right to take or receive from any of the Borrowers or
any other Obligor, directly or indirectly, in cash or other property or by
set-off or in any manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence, such amount shall be deemed to have been paid to such
Guarantor for the benefit of, and held in trust for, the Lender Parties, and
shall forthwith be paid to the Agent on behalf of the Lender Parties to be
credited and applied against the Guaranteed Obligations, whether matured or
unmatured. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit Agreement
and that the waiver set forth in this Section is knowingly made in contemplation
of such benefits.
4
SECTION 2.7 Successors, Transferees and Assigns; Transfers of Notes, etc.
This Guaranty shall:
(a) be binding upon each Guarantor and its successors, transferees and
assigns; and
(b) inure to the benefit of and be enforceable by the Agent for the
benefit of each Lender Party.
Without limiting the generality of clause (b), any Lender Party may assign
or otherwise transfer (in whole or in part) any Note held by it to any other
Person, and such other Person shall thereupon become vested with all rights and
benefits in respect thereof granted to such Lender Party under any Loan Document
(including this Guaranty) or otherwise, subject, however, to the provisions of
Section 10.11 of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND COVENANTS
SECTION 3.1 Representations and Warranties. Each Guarantor hereby
represents and warrants to the Agent and each other Lender Party as follows:
(a) such Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation,
and has full corporate power and authority to enter into this Guaranty and
the other Loan Documents to which it is a party and to carry out the
transactions contemplated hereby and thereby;
(b) the execution and delivery by such Guarantor of this Guaranty and
the other Loan Documents to which it is a party and the consummation by
such Guarantor of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action of such Guarantor.
This Guaranty and such other Loan Documents to which such Guarantor is a
party have each been duly executed and delivered by such Guarantor and each
constitutes the legal, valid and binding obligation of such Guarantor
enforceable against such Guarantor in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium or similar
laws at the time in effect affecting the rights of creditors generally and
subject to the effects of general principles of equity (regardless of
whether considered in a proceeding in law or equity); and
(c) the execution and delivery of this Guaranty and the other Loan
Documents to which such Guarantor is a party and the consummation by such
Guarantor of the transactions contemplated hereby do not (i) contravene or
result in a default under such Guarantor's Organic Documents, (ii)
contravene or result in a default under any material contractual
restriction, law or governmental regulation or court decree or order
binding on such Guarantor, (iii) require any filings, consents or
authorizations which have not been duly obtained or (iv) result in the
creation or imposition of any Lien on such Guarantor's properties (other
than on behalf of the Agent).
5
SECTION 3.2 Covenants. Each Guarantor agrees to comply with all the
covenants contained in the Credit Agreement and the other Loan Documents that
are applicable to it.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Article X thereof.
SECTION 4.2 Binding on Successors, Transferees and Assigns; Assignment. In
addition to, and not in limitation of, Section 2.7, this Guaranty shall be
binding upon each Guarantor and its successors, transferees and assigns and
shall inure to the benefit of and be enforceable by the Agent and each other
Lender Party and their respective successors, transferees and assigns; provided,
however, that no Guarantor may assign any of its obligations hereunder without
the prior written consent of the Agent.
SECTION 4.3 Amendments, Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any Guarantor therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Agent and, in the case of any such amendment, each Guarantor, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 4.4 Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing or by facsimile transmission and, if
to any Guarantor, mailed, given by facsimile transmission or delivered to it
care of USAM at the address provided for in the Credit Agreement, and if to the
Agent, mailed, given by facsimile transmission or delivered to it, at the
address provided for in the Credit Agreement, or as to any such party at such
other address as shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this Section. Any notice,
if mailed and properly addressed with postage prepaid, shall be deemed given
three Business Days after posting; any notice sent by prepaid overnight express
mail shall be deemed delivered on the next following Business Day; and any
notice, if transmitted by facsimile transmission or delivery, shall be deemed
given upon electronic confirmation of transmission by the sender thereof.
SECTION 4.5 No Waiver; Remedies. No failure on the part of the Agent or any
other Lender Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The Agent and each other Lender Party shall have
all remedies available at law or equity, including without limitation, the
remedy of specific performance for any breach of any provision hereof. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or equity.
SECTION 4.6 Right to Set-Off. Upon the occurrence and during the
continuance of any Default of the nature referred to in Section 8.1.9 of the
Credit Agreement or any Event of Default, the Agent and each other Lender Party
are hereby authorized at any time and from time
6
to time, to the fullest extent permitted by law, to setoff and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Agent or any such Lender
Party, as the case may be, to or for the credit or the account of any Guarantor
against any and all of the Guaranteed Obligations of such Guarantor now or
hereafter existing under this Guaranty, irrespective of whether the Agent or any
such Lender Party shall have made any demand under this Guaranty. The Agent and
each other Lender Party agrees promptly to notify USAM and the Agent (if
applicable) after any such set-off and application made by the Agent or any such
Lender Party, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Agent or and each
other Lender Party, under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which the
Agent or any of the other Lender Parties may have.
SECTION 4.7 Severability. Any provision of this Guaranty which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Guaranty or affecting the validity
or enforceability of such provisions in any other jurisdiction.
SECTION 4.8 Counterparts; Additional Guarantors.
(a) This Guaranty may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of
which shall constitute but one and the same agreement.
(b) Upon the execution and delivery by any Person of the Guaranty
Supplement in substantially the form of Exhibit A hereto, such Person shall
become a Guarantor hereunder and all references to a Guarantor hereunder
shall include such Person.
SECTION 4.9 Governing Law; Entire Agreement. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT. IN NO EVENT SHALL THE AGENT OR ANY LENDER BE LIABLE
FOR ANY CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 4.10 Waiver of Jury Trial. EACH GUARANTOR AND LENDER PARTY HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS GUARANTY OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF THE AGENT, THE
LENDERS, OR ANY GUARANTOR. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE
THE ENTIRE UNDERSTANDING
7
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE
ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 4.11 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE AGENT, ANY LENDER OR ANY GUARANTOR SHALL BE BROUGHT AND
MAINTAINED IN THE FEDERAL AND STATE COURTS OF THE STATE OF NEW YORK LOCATED IN
THE BOROUGH OF MANHATTAN. EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GUARANTOR FURTHER
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID,
OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GUARANTOR
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT ANY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH GUARANTOR HEREBY, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY.
SECTION 4.12 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NO GUARANTOR SHALL ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST
THE AGENT, EACH LENDER AND EACH ISSUER ON ANY THEORY OF LIABILITY FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL
DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS GUARANTY OR
ANY INSTRUMENT CONTEMPLATED HEREBY.
8
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
VIRECO, INC.
By: ________________________________
Name:
Title:
Acknowledged and Accepted:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as Agent
By: ________________________________________
Name:
Title:
9
EXHIBIT A
to
GUARANTY
(Corporate)
FORM OF GUARANTY SUPPLEMENT
______________, 19__
IBJ Whitehall Business Credit Corporation,
as Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Guaranty (Corporate), dated as of July 30, 1999
(as amended, supplemented, restated or otherwise modified from time to time, the
"Corporate Guaranty"; the terms defined therein being used herein as therein
defined), by each of the Persons listed on the signature pages thereto (together
with such Persons executing an agreement in substantially the form hereof, each
as "Guarantor" and collectively the "Guarantors"), in favor of IBJ Whitehall
Business Credit Corporation, as agent (together with any successor(s) thereto in
such capacity, the "Agent") for each of the Lenders.
The undersigned hereby agrees, as of the date first above written, to
become a Guarantor under the Corporate Guaranty as if it were an original party
thereto and agrees that each reference in the Corporate Guaranty to a Guarantor
shall also mean and include the undersigned.
The undersigned hereby jointly and severally (together with each other
Guarantor) unconditionally and irrevocably guarantees the full and prompt
payment when due, whether at stated maturity, by acceleration or otherwise, all
the Obligations, subject to all the terms of the Corporate Guaranty.
The undersigned hereby makes each representation and warranty set forth in
Article III of the Corporate Guaranty as to itself to the same extent as each
other Guarantor, and hereby agrees to be bound as a Guarantor by all of the
terms and provisions of the Corporate Guaranty to the same extent as all the
other Guarantors.
This letter shall be governed by and construed in accordance with the laws
of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL GUARANTOR]
By: ____________________________
Name:
Title:
Acknowledged and Accepted:
IBJ WHITEHALL BUSINESS CREDIT CORPORATION,
as Agent
By: _____________________________________
Name:
Title:
2