Exhibit 10.4
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$70,000,000
CREDIT AGREEMENT
dated as of October 21, 2003,
among
NORCRAFT COMPANIES, L.P.,
as Borrower,
NORCRAFT HOLDINGS, L.P.
and
THE OTHER GUARANTORS PARTY HERETO,
as Guarantors,
THE LENDERS PARTY HERETO
and
UBS SECURITIES LLC, as Bookmanager and Lead Arranger,
WACHOVIA BANK, NATIONAL ASSOCIATION, as Syndication Agent,
WACHOVIA CAPITAL MARKETS, LLC, as Co-Arranger,
CIT LENDING SERVICES CORPORATION,
as Documentation Agent,
UBS LOAN FINANCE LLC, as Swingline Lender,
and
UBS AG, STAMFORD BRANCH,
as Issuing Bank, Administrative Agent and Collateral Agent
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TABLE OF CONTENTS
Section Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms..................................................2
SECTION 1.02. Classification of Loans and Borrowings........................33
SECTION 1.03. Terms Generally...............................................33
SECTION 1.04. Accounting Terms; GAAP........................................33
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments...................................................33
SECTION 2.02. Loans.........................................................34
SECTION 2.03. Borrowing Procedure...........................................35
SECTION 2.04. Evidence of Debt; Repayment of Loans..........................35
SECTION 2.05. Fees..........................................................36
SECTION 2.06. Interest on Loans.............................................37
SECTION 2.07. Termination and Reduction of Commitments......................37
SECTION 2.08. Interest Elections............................................38
SECTION 2.09. Amortization of Term Borrowings...............................39
SECTION 2.10. Optional and Mandatory Prepayments of Loans...................39
SECTION 2.11. Alternate Rate of Interest....................................42
SECTION 2.12. Increased Costs...............................................43
SECTION 2.13. Breakage Payments.............................................44
SECTION 2.14. Payments Generally; Pro Rata Treatment; Sharing of Setoffs....44
SECTION 2.15. Taxes.........................................................45
SECTION 2.16. Mitigation Obligations; Replacement of Lenders................47
SECTION 2.17. Swingline Loans...............................................48
SECTION 2.18. Letters of Credit.............................................49
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers..........................................54
SECTION 3.02. Authorization; Enforceability.................................54
SECTION 3.03. Governmental Approvals; No Conflicts..........................54
SECTION 3.04. Financial Statements..........................................55
SECTION 3.05. No Claims.....................................................55
SECTION 3.06. Properties....................................................55
SECTION 3.07. Intellectual Property.........................................56
SECTION 3.08. Condition and Maintenance of Equipment........................57
SECTION 3.09. Equity Interests and Subsidiaries.............................57
SECTION 3.10. Litigation; Compliance with Laws..............................57
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Section Page
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SECTION 3.11. Agreements....................................................57
SECTION 3.12. Federal Reserve Regulations...................................58
SECTION 3.13. Investment Company Act; Public Utility Holding Company Act....58
SECTION 3.14. Use of Proceeds...............................................58
SECTION 3.15. Taxes.........................................................58
SECTION 3.16. No Material Misstatements.....................................58
SECTION 3.17. Labor Matters.................................................59
SECTION 3.18. Solvency......................................................59
SECTION 3.19. Employee Benefit Plans........................................59
SECTION 3.20. Environmental Matters.........................................60
SECTION 3.21. Insurance.....................................................61
SECTION 3.22. Security Documents............................................61
SECTION 3.23. Acquisition Documents; Representations and Warranties in
Agreement..................................................62
SECTION 3.24. Subordination of Senior Subordinated Notes....................62
ARTICLE IV
CONDITIONS TO CREDIT EXTENSIONS
SECTION 4.01. Conditions to Initial Credit Extension........................62
SECTION 4.02. Conditions to All Credit Extensions...........................67
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements, Reports, etc............................68
SECTION 5.02. Litigation and Other Notices..................................70
SECTION 5.03. Existence; Businesses and Properties..........................71
SECTION 5.04. Insurance.....................................................71
SECTION 5.05. Obligations and Taxes.........................................72
SECTION 5.06. Employee Benefits.............................................73
SECTION 5.07. Maintaining Records; Access to Properties and Inspections.....73
SECTION 5.08. Use of Proceeds...............................................73
SECTION 5.09. Compliance with Environmental Laws; Environmental Reports.....73
SECTION 5.10. Additional Collateral; Additional Guarantors..................74
SECTION 5.11. Security Interests; Further Assurances........................75
SECTION 5.12. Information Regarding Collateral..............................75
ARTICLE VI
NEGATIVE COVENANTS
SECTION 6.01. Indebtedness..................................................76
SECTION 6.02. Liens.........................................................77
SECTION 6.03. Sale and Leaseback Transactions...............................80
SECTION 6.04. Investment, Loan and Advances.................................80
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.....81
SECTION 6.06. Dividends.....................................................82
SECTION 6.07. Transactions with Affiliates..................................83
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Section Page
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SECTION 6.08. Financial Covenants...........................................84
SECTION 6.09. Prepayments of Other Indebtedness; Modifications of
Organizational Documents and Other Documents, etc..........85
SECTION 6.10. Limitation on Certain Restrictions on Subsidiaries............86
SECTION 6.11. Limitation on Issuance of Capital Stock.......................86
SECTION 6.12. Limitation on Creation of Subsidiaries........................86
SECTION 6.13. Business......................................................87
SECTION 6.14. Limitation on Accounting Changes..............................87
SECTION 6.15. Fiscal Year...................................................87
SECTION 6.16. Lease Obligations.............................................87
SECTION 6.17. No Further Negative Pledge....................................87
SECTION 6.18. Limitation on Finance Subsidiary..............................87
ARTICLE VII
GUARANTEE
SECTION 7.01. The Guarantee.................................................88
SECTION 7.02. Obligations Unconditional.....................................88
SECTION 7.03. Reinstatement.................................................89
SECTION 7.04. Subrogation; Subordination....................................89
SECTION 7.05. Remedies......................................................89
SECTION 7.06. Instrument for the Payment of Money...........................90
SECTION 7.07. Continuing Guarantee..........................................90
SECTION 7.08. General Limitation on Guarantee Obligations...................90
SECTION 7.09. Release of Guarantors.........................................90
ARTICLE VIII
EVENTS OF DEFAULT
ARTICLE IX
COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS
SECTION 9.01. Collateral Account............................................93
SECTION 9.02. Proceeds of Destruction, Taking and Collateral Dispositions...94
SECTION 9.03. Application of Proceeds.......................................94
ARTICLE X
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
SECTION 10.01. Appointment..................................................95
SECTION 10.02. Agent in Its Individual Capacity.............................95
SECTION 10.03. Exculpatory Provisions.......................................95
SECTION 10.04. Reliance by Agent............................................96
SECTION 10.05. Delegation of Duties.........................................96
SECTION 10.06. Successor Agent..............................................96
SECTION 10.07. Non-Reliance on Agent and Other Lenders......................96
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Section Page
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SECTION 10.08. No Other Administrative Agent................................97
SECTION 10.09. Indemnification..............................................97
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices......................................................97
SECTION 11.02. Waivers; Amendment...........................................98
SECTION 11.03. Expenses; Indemnity.........................................100
SECTION 11.04. Successors and Assigns......................................101
SECTION 11.05. Survival of Agreement.......................................103
SECTION 11.06. Counterparts; Integration; Effectiveness....................104
SECTION 11.07. Severability................................................104
SECTION 11.08. Right of Setoff.............................................104
SECTION 11.09. Governing Law; Jurisdiction; Consent to Service of Process..104
SECTION 11.10. Waiver of Jury Trial........................................105
SECTION 11.11. Headings....................................................105
SECTION 11.12. Confidentiality.............................................105
SECTION 11.13. Interest Rate Limitation....................................106
SECTION 11.14. Lender Addendum.............................................106
SECTION 11.15. Obligations Absolute........................................106
ANNEXES
Annex I Applicable Margin
Annex II Amortization Table
SCHEDULES
Schedule 1.01(a) Mortgaged Property
Schedule 1.01(b) Refinancing Indebtedness To Be Repaid
Schedule 1.01(c) Subsidiary Guarantors
Schedule 3.03 Governmental Approvals; Compliance with Laws
Schedule 3.06(b) Real Property
Schedule 3.07(c) Violations or Proceedings
Schedule 3.09(a) Subsidiaries
Schedule 3.09(c) Corporate Organizational Chart
Schedule 3.11(c) Material Agreements
Schedule 3.20 Environmental Matters
Schedule 3.21 Insurance
Schedule 3.23 Acquisition Documents
Schedule 4.01(f) Local Counsel
Schedule 4.01(m)(vi) Landlord Access Agreements
Schedule 4.01(n)(iii) Title Insurance Amounts
Schedule 6.01(b) Existing Indebtedness
Schedule 6.02(c) Existing Liens
Schedule 6.04(b) Existing Investments
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EXHIBITS
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Interest Election Request
Exhibit E Form of Joinder Agreement
Exhibit F Form of Landlord Access Agreement
Exhibit G Form of Mortgage
Exhibit H-1 Form of Term Note
Exhibit H-2 Form of Revolving Note
Exhibit H-3 Form of Swingline Note
Exhibit I-1 Form of Perfection Certificate
Exhibit I-2 Form of Perfection Certificate Supplement
Exhibit J-1 Form of U.S. Security Agreement
Exhibit J-2 Form of Canadian Security Agreement
Exhibit J-3 Form of Canadian Pledge Agreement
Exhibit K-1 Form of Opinion of Company Counsel
Exhibit K-2 Form of Opinion of Local Counsel
Exhibit L Form of Intercompany Note
Exhibit M Form of Solvency Certificate
Exhibit N Form of Lender Addendum
Exhibit O Form of Compliance Certificate
Exhibit P Form of LC Request
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CREDIT AGREEMENT
This CREDIT AGREEMENT (this "Agreement") dated as of October 21, 2003,
among NORCRAFT COMPANIES, L.P., a Delaware limited partnership ("Borrower"),
NORCRAFT HOLDINGS, L.P., a Delaware limited partnership ("Holdings"), the
Subsidiary Guarantors (such term and each other capitalized term used but not
defined herein having the meaning given to it in Article I), the Lenders, UBS
SECURITIES LLC, as bookmanager and lead arranger (in such capacity, the "Lead
Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as syndication agent (in such
capacity, the "Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as
co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in
such capacity, the "Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing Bank
(as defined below), as administrative agent for the Lenders (in such capacity,
the "Administrative Agent") and as collateral agent for the Secured Parties and
the Issuing Bank (in such capacity, the "Collateral Agent"), and CIT LENDING
SERVICES CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent").
WITNESSETH:
WHEREAS, Holdings and Borrower have entered into a unit purchase agreement,
dated as of August 29, 2003 and amended as of October 3, 2003 (as further
amended, supplemented or otherwise modified from time to time in accordance with
the provisions hereof and thereof, the "Acquisition Agreement"), with the
unitholders of Borrower (collectively, "Seller"), whereby Holdings will acquire
(the "Acquisition") all of the outstanding Equity Interests of Borrower, and
Borrower will thereby become a direct Wholly Owned Subsidiary of Holdings.
WHEREAS, the Equity Financing shall be consummated simultaneously herewith.
WHEREAS, Borrower has requested the Lenders to extend credit in the form of
(a) Term Loans on the Closing Date, in an aggregate principal amount not in
excess of $45,000,000 and (b) Revolving Loans at any time and from time to time
prior to the Revolving Maturity Date, in an aggregate principal amount at any
time outstanding not in excess of $25,000,000, of which no more than $5.0
million may be drawn on the Closing Date.
WHEREAS, Borrower has requested the Swingline Lender to make Swingline
Loans, at any time and from time to time prior to the Revolving Maturity Date,
in an aggregate principal amount at any time outstanding not in excess of $5.0
million.
WHEREAS, Borrower has requested the Issuing Bank to issue letters of
credit, in an aggregate face amount at any time outstanding not in excess of
$10.0 million.
WHEREAS, the proceeds of the Loans are to be used in accordance with
Section 3.14.
NOW, THEREFORE, the Lenders are willing to extend such credit to Borrower
and the Issuing Bank is willing to issue letters of credit for the account of
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, is used when such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.
"ABR Revolving Borrowing" shall mean a Borrowing comprised of ABR Revolving
Loans.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Acquisition" shall have the meaning assigned to such term in the first
recital hereto.
"Acquisition Agreement" shall have the meaning assigned to such term in the
first recital hereto.
"Acquisition Consideration" shall mean the purchase consideration for any
Permitted Acquisition and all other payments by Holdings or any of its
Subsidiaries in exchange for, or as part of, or in connection with, any
Permitted Acquisition, whether paid in cash or by exchange of Equity Interests
or of assets or otherwise and whether payable at or prior to the consummation of
such Permitted Acquisition or deferred for payment at any future time, whether
or not any such future payment is subject to the occurrence of any contingency,
and includes any and all payments representing the purchase price and any
assumptions of Indebtedness, "earn-outs" and other agreements to make any
payment the amount of which is, or the terms of payment of which are, in any
respect subject to or contingent upon the revenues, income, cash flow or profits
(or the like) of any person or business; provided that any such future payment
that is subject to a contingency shall only be considered Acquisition
Consideration to the extent of the reserve, if any, required under GAAP at the
time of such sale to be established in respect thereof by Holdings or any of its
Subsidiaries.
"Acquisition Documents" shall mean the collective reference to the
Acquisition Agreement, and the other documents listed on Schedule 3.23.
"Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar Borrowing
for any Interest Period, (a) an interest rate per annum (rounded upward, if
necessary, to the next 1/100th of 1%) determined by the Administrative Agent to
be equal to the LIBOR Rate for such Eurodollar Borrowing in effect for such
Interest Period divided by (b) 1 minus the Statutory Reserves (if any) for such
Eurodollar Borrowing for such Interest Period.
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"Administrative Agent" shall have the meaning assigned to such term in the
preamble hereto and includes each other person appointed as the successor
pursuant to Article X.
"Administrative Agent Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative Questionnaire
in the form of Exhibit A, or such other form as may be supplied from time to
time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified; provided, however, that, for purposes of Section 6.07, the term
"Affiliate" shall also include (i) any person that directly or indirectly owns
more than 10% of any class of Equity Interests of the person specified or (ii)
any person that is an executive officer or director of the person specified.
"Agents" shall mean the Lead Arranger, Co-Arranger, Syndication Agent,
Administrative Agent, Collateral Agent and Documentation Agent.
"Agreement" shall have the meaning assigned to such term in the preamble
hereto.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the
Base Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 0.50%. If the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any reason, including
the inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms of the definition thereof, the Alternate
Base Rate shall be determined without regard to clause (b) of the preceding
sentence until the circumstances giving rise to such inability no longer exist.
Any change in the Alternate Base Rate due to a change in the Base Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Base Rate or the Federal Funds Effective Rate, respectively.
"Annualization Factor" shall mean (i) four, in the case of the Test Period
ending December 31, 2003, (ii) two, in the case of the Test Period ending March
31, 2004 and (iii) 4/3, in the case of the Test Period ending June 30, 2004.
"Applicable Fee" shall mean, for any day, with respect to any Term Loan or
Revolving Loan, as the case may be, the applicable percentage set forth in Annex
I under the caption "Applicable Fee".
"Applicable Margin" shall mean, for any day, for the Term Loans, the
Revolving Loans and the Swingline Loans, the applicable percentage set forth in
the immediately succeeding table:
Eurodollar Loans ABR Loans
---------------- ---------
Term Loans 3.25% 2.25%
Revolving Loans 2.75% 1.75%
; provided that after the date of delivery to the Administrative Agent of the
financial statements and certificates required by Section 5.01(a) or (b) and
Section 5.01(c) for the fiscal period ending March 31, 2004, the Applicable
Margin shall be determined in accordance with Annex I.
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"Arranger" shall have the meaning assigned to such term in the preamble
hereto.
"Asset Sale" shall mean (a) any conveyance, sale, lease, sublease,
assignment, transfer or other disposition (including by way of merger or
consolidation and including any Sale and Leaseback Transaction) of any property
(including stock of any Subsidiary of Holdings by the holder thereof but
excluding sales of inventory and dispositions of cash equivalents, in each case,
in the ordinary course of business) by Holdings or any of its Subsidiaries and
(b) any issuance or sale by any Subsidiary of Holdings of its Equity Interests,
in each case, to any person other than (i) Borrower, (ii) any Subsidiary
Guarantor or (iii) other than for purposes of Section 6.05, any other
Subsidiary.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent,
substantially in the form of Exhibit B, or such other form as shall be approved
by the Administrative Agent.
"Base Rate" shall mean, for any day, a rate per annum that is equal to the
corporate base rate of interest established by the Administrative Agent from
time to time; each change in the Base Rate shall be effective on the date such
change is effective. The corporate base rate is not necessarily the lowest rate
charged by the Administrative Agent to its customers.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States.
"Board of Directors" shall mean, with respect to any person, (i) in the
case of any corporation, the board of directors of such person, (ii) in the case
of any limited liability company, the board of managers of such person, (iii) in
the case of any partnership, the Board of Directors of the general partner of
such person and (iv) in any other case, the functional equivalent of the
foregoing.
"Borrower" shall have the meaning assigned to such term in the preamble
hereto.
"Borrowing" shall mean (a) Loans of the same Class and Type, made,
converted or continued on the same date and, in the case of Eurodollar Loans, as
to which a single Interest Period is in effect or (b) a Swingline Loan.
"Borrowing Request" shall mean a request by Borrower in accordance with the
terms of Section 2.03 and substantially in the form of Exhibit C, or such other
form as shall be approved by the Administrative Agent.
"▇▇▇▇▇▇ Employment" shall mean the employment of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ as
president and chief executive officer of Holdings and Borrower.
"▇▇▇▇▇▇ Investment" shall mean the $15.5 million (which amount shall be
reduced by the value of the Winnipeg Contribution) in cash common equity
investments in Holdings made by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and members of his family on the
terms and conditions set forth in the Acquisition Documents.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Canadian Pledge Agreement" shall mean the pledge agreement substantially
in the form of Exhibit J-3 between Borrower and the Collateral Agent for the
benefit of the Secured Parties.
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"Canadian Security Agreement" shall mean the collective reference to (i)
the security agreement substantially in the form of Exhibit J-2 between Norcraft
Canada Corporation and the Collateral Agent for the benefit of the Secured
Parties and (ii) the Canadian Pledge Agreement.
"Capital Expenditures" shall mean, with respect to any person, for any
period, without duplication, the increase during that period in the gross
property, plant or equipment account reflected in the consolidated balance sheet
of such person and its Consolidated Subsidiaries, in conformity with GAAP, but
excluding expenditures made in connection with the replacement, substitution or
restoration of property (a) to the extent financed from insurance proceeds paid
on account of the loss of or damage to the property being replaced or restored,
(b) with awards of compensation arising from the taking by eminent domain or
condemnation of the property being replaced or (c) with regard to equipment that
is purchased simultaneously with the trade-in of existing equipment, fixed
assets or improvements, the credit granted by the seller of such equipment for
the trade-in of such equipment, fixed assets or improvements; provided that
Capital Expenditures shall in any event exclude any portion of such increase
attributable solely to acquisitions of property, plant and equipment in
connection with Permitted Acquisitions.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Equivalents" shall mean, as to any person: (a) securities issued, or
directly, unconditionally and fully guaranteed or insured, by the United States
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof) having maturities of
not more than one year from the date of acquisition by such person; (b) time
deposits and certificates of deposit of any Lender or any commercial bank
having, or which is the principal banking subsidiary of a bank holding company
organized under the laws of the United States, any state thereof or the District
of Columbia or any foreign country having capital and surplus aggregating in
excess of $500.0 million and a rating of "A" (or such other similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) with maturities
of not more than one year from the date of acquisition by such person; (c)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (b) above, which repurchase
obligations are secured by a valid perfected security interest in the underlying
securities; (d) commercial paper issued by any person incorporated in the United
States rated at least A2 or the equivalent thereof by Standard & Poor's Rating
Service or at least P2 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service,
Inc., and in each case maturing not more than one year after the date of
acquisition by such person; (e) investments in money market funds substantially
all of whose assets are comprised of securities of the types described in
clauses (a) through (d) above; and (f) demand deposit accounts maintained in the
ordinary course of business.
"Casualty Event" shall mean, with respect to any property (including Real
Property) of any person, any loss of title with respect to such property or any
loss of or damage to or destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, such property for which such
person or any of its Subsidiaries receives insurance proceeds or proceeds of a
condemnation award or other compensation. "Casualty Event" shall include but not
be limited to any taking of all or any part of any Real Property of any person
or any part thereof, in or by condemnation or other eminent domain proceedings
pursuant to any law, or by reason of the temporary requisition of the use or
occupancy of all or any part of any Real Property of any person or any part
thereof by any Governmental Authority, civil or military.
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"CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.
A "Change in Control" shall be deemed to have occurred if: (a) Holdings at
any time ceases to own 100% of the Equity Interests of Borrower; (b) at any time
a change of control occurs under and as defined in any documentation relating to
any Material Indebtedness; (c) prior to an IPO, (i) the Permitted Holders cease
to own, or to have the power to vote or direct the voting of, Voting Stock of
Holdings representing a majority of the voting power of the total outstanding
Voting Stock of Holdings or (ii) the Permitted Holders cease to own Equity
Interests representing a majority of the total economic interests of the Equity
Interests of Holdings; (d) following an IPO, (i) the Permitted Holders shall
fail to own, or to have the power to vote or direct the voting of, Voting Stock
of Holdings representing more than 25% of the voting power of the total
outstanding Voting Stock of Holdings, (ii) the Permitted Holders cease to own
Equity Interests representing more than 25% of the total economic interests of
the Equity Interests of Holdings or (iii) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act, except that in no
event shall the parties to the LP Agreement be deemed a "group" solely by virtue
of being parties to the LP Agreement), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that for purposes of this clause such person or group
shall be deemed to have "beneficial ownership" of all securities that any such
person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
Voting Stock of Holdings representing more than 30% of the voting power of the
total outstanding Voting Stock of Holdings; or (e) following an IPO, during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of Holdings (together with any new directors
whose election to such Board of Directors or whose nomination for election was
approved by a majority of the voting power of the members of the Board of
Directors of Holdings, which members comprising such majority are then still in
office and were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of Holdings.
"Change in Law" shall mean (a) the adoption of any law, treaty, order, rule
or regulation after the date of this Agreement, (b) any change in any law,
treaty, order, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or Issuing Bank (or for purposes of Section 2.12(b), by
any lending office of such Lender or by such Lender's or Issuing Bank's holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Charges" shall have the meaning assigned to such term in Section 11.13.
"Class", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term
Loans or Swingline Loans and, when used in reference to any Commitment, refers
to whether such Commitment is a Revolving Commitment, Term Loan Commitment or
Swingline Commitment.
"Closing Date" shall mean October 21, 2003, the date of the initial Credit
Extension hereunder.
"Co-Arranger" shall have the meaning assigned to such term in the preamble
hereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
-6-
"Collateral" shall mean, collectively, all of the Security Agreement
Collateral, the Mortgaged Property and all other property of whatever kind and
nature pledged as collateral under any Security Document.
"Collateral Account" shall mean a collateral account or sub-account in the
form of a deposit account established and maintained by the Collateral Agent for
the benefit of the Secured Parties, in accordance with the provisions of Section
9.01.
"Collateral Agent" shall have the meaning assigned to such term in the
preamble hereto.
"Commercial Letter of Credit" shall mean any letter of credit or similar
instrument issued for the account of Borrower for the benefit of Borrower or any
of its Subsidiaries, for the purpose of providing credit support in connection
with the purchase of materials, goods or services by Borrower or any of its
Subsidiaries in the ordinary course of their businesses.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Commitment, Term Loan Commitment and Swingline Commitment.
"Commitment Fee" shall have the meaning assigned to such term in Section
2.05(a).
"Companies" shall mean Holdings and its Subsidiaries; and "Company" shall
mean any one of them.
"Compliance Certificate" shall mean a certificate of a Financial Officer
substantially in the form of Exhibit O.
"Confidential Information Memorandum" shall mean that certain confidential
information memorandum dated October 2003.
"Consolidated Amortization Expense" for any period means the amortization
expense of Borrower and its Consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, including, to the
extent in accordance with GAAP, the amortization of capitalized store displays.
"Consolidated Companies" shall mean Holdings and its Consolidated
Subsidiaries.
"Consolidated Current Assets" shall mean, at any date of determination, the
total assets (other than cash or Cash Equivalents) of Borrower and its
Consolidated Subsidiaries which may properly be classified as current assets on
a consolidated balance sheet of Borrower and its Consolidated Subsidiaries in
accordance with GAAP.
"Consolidated Current Liabilities" shall mean, as at any date of
determination, the total liabilities of Borrower and its Consolidated
Subsidiaries which may properly be classified as current liabilities (other than
the current portion of any Indebtedness) on a consolidated balance sheet of
Borrower and its Consolidated Subsidiaries in accordance with GAAP.
"Consolidated Depreciation Expense" for any period means the depreciation
expense of Borrower and its Consolidated Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
-7-
"Consolidated EBITDA" shall mean, for any period, Consolidated Net Income
for such period, adjusted by (x) adding thereto, in each case only to the extent
(and in the same proportion) deducted in determining such Consolidated Net
Income (and with respect to the portion of Consolidated Net Income attributable
to any Subsidiary of Borrower only if a corresponding amount would be permitted
at the date of determination to be distributed to Borrower by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its Organizational Documents and all agreements, instruments, judgments,
decrees, orders, statutes, rules and regulations applicable to such Subsidiary
or its equityholders):
(a) Consolidated Interest Expense,
(b) Consolidated Amortization Expense,
(c) Consolidated Depreciation Expense,
(d) dividends paid to Holdings pursuant to Section 6.06(d) plus,
without duplication, any other provision for taxes based on income for
Borrower and its Consolidated Subsidiaries,
(e) costs and expenses incurred in connection with the Transactions
(for the avoidance of doubt, including the payment by Borrower of bonus and
severance payments to Mr. Hank Key and all other success bonuses paid by
Borrower to employees of Borrower upon and in connection with the
consummation of the Acquisition) and the Exchange Offer pursuant to the
Registration Rights Agreement (including amortization of debt issuance
costs, debt discount or premium and other financing fees and expenses
directly relating thereto),
(f) the amount of any payments made in accordance with Section 6.07(d)
and any management fees paid in the ordinary course by Borrower to its
former financial sponsor during the period from and including October 1,
2003 to and excluding the Closing Date and
(g) all other non-cash items reducing Consolidated Net Income
(including non-cash write-offs of goodwill, intangibles and long-lived
assets and non-cash items resulting from purchase accounting, but excluding
any non-cash charge that results in an accrual of a reserve for cash
charges in any future period) for such period and
(y) subtracting therefrom the aggregate amount of all non-cash items, determined
on a consolidated basis, to the extent such items increased Consolidated Net
Income (other than the accrual of revenue, recording of receivables or the
reversal of reserves in the ordinary course of business) for such period.
Other than for purposes of calculating Excess Cash Flow, Consolidated
EBITDA shall be calculated on a Pro Forma Basis to give effect to the
Acquisition, any Permitted Acquisition and Asset Sales (other than any Asset
Sale pursuant to Section 6.05(b)(ii) or (d) and other dispositions in the
ordinary course of business) consummated during the fiscal period of Borrower
ended on the Test Period thereof as if each such Permitted Acquisition had been
effected on the first day of such period and as if each such Asset Sale had been
consummated on the day prior to the first day of such period. Notwithstanding
anything else contained in this definition, calculated on a Pro Forma Basis to
give effect to the Acquisition, Consolidated EBITDA for the first, second and
third quarters of 2003 shall be deemed to be $10,056,000, $12,003,000 and
$12,876,000, respectively.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any Test Period,
the ratio of (a) Consolidated EBITDA for such Test Period to (b) Consolidated
Fixed Charges for such Test Period.
-8-
"Consolidated Fixed Charges" shall mean, for any period, the sum, without
duplication, of
(a) Consolidated Interest Expense for such period, to the extent paid
or payable in cash,
(b) the amount of all Capital Expenditures made by Borrower and its
Subsidiaries during such period (other than to the extent financed by
Excluded Issuances),
(c) all dividends paid pursuant to Section 6.06(d) during such period
plus, without duplication, all cash payments in respect of income taxes in
respect of Borrower or any of its Subsidiaries, and
(d) the scheduled principal amount of all amortization payments on all
Indebtedness (including the principal component of all Capital Lease
Obligations) of Borrower and its Subsidiaries for such period (as
determined on the first day of the respective period), except that for any
Test Period in 2004 or 2003, the amount of the scheduled principal amount
of amortization payments on the Term Loans during such Test Period shall be
deemed to be the amount of all such amortization payments to be made in
2004;
provided that for any Test Period ending on or before June 30, 2004, the amount
of any items referred to in clause (a) or (c) of this definition shall be equal
to, subject to the succeeding proviso, (i) the amount of such items for the
period from and after October 1, 2003 times (ii) the Annualization Factor for
such Test Period; provided, further, that the amount of such items for the
fiscal quarter ending December 31, 2003 shall be equal to (x) the amount of such
items for the period from and after the Closing Date to and including December
31, 2003 times (y) the Full Quarter Factor.
"Consolidated Indebtedness" shall mean, as at any date of determination,
the aggregate amount of all Indebtedness (but including in any event the then
outstanding principal amount of all Loans, all Capital Lease Obligations and all
LC Exposure) of Borrower and its Consolidated Subsidiaries on a consolidated
basis as determined in accordance with GAAP.
"Consolidated Interest Coverage Ratio" shall mean, for any Test Period, the
ratio of (x) Consolidated EBITDA for such Test Period to (y) Consolidated
Interest Expense for such Test Period, to the extent paid or payable in cash;
provided that for any Test Period ending on or before June 30, 2004, such
Consolidated Interest Expense shall be equal to, subject to the succeeding
proviso, (i) Consolidated Interest Expense (to the extent paid or payable in
cash) for the period from and after October 1, 2003 times (ii) the Annualization
Factor for such Test Period; provided, further, that for the fiscal quarter
ending December 31, 2003, such Consolidated Interest Expense shall be equal to
(x) Consolidated Interest Expense (to the extent paid or payable in cash) for
the period from and after the Closing Date to and including December 31, 2003
times (y) the Full Quarter Factor.
"Consolidated Interest Expense" shall mean, for any period, to the total
consolidated interest expense of Borrower and its Consolidated Subsidiaries for
such period determined in accordance with GAAP plus, without duplication:
(a) imputed interest on Capital Lease Obligations of Borrower and its
Consolidated Subsidiaries for such period,
(b) commissions, discounts and other fees and charges owed by Borrower
or any of its Consolidated Subsidiaries with respect to letters of credit
securing financial obligations, bankers' acceptance financing and
receivables financings,
-9-
(c) amortization of debt issuance costs, debt discount or premium and
other financing fees and expenses incurred by Borrower or any of its
Consolidated Subsidiaries,
(d) cash contributions to any employee stock ownership plan or similar
trust made by Borrower or any of its Consolidated Subsidiaries to the
extent such contributions are used by such plan or trust to pay interest or
fees to any person (other than Borrower or a Wholly Owned Subsidiary) in
connection with Indebtedness incurred by such plan or trust,
(e) all interest paid or payable with respect to discontinued
operations of Borrower or any of its Consolidated Subsidiaries,
(f) the interest portion of any deferred payment obligations of
Borrower or any of its Consolidated Subsidiaries,
(g) all interest on any Indebtedness of Borrower or any of its
Subsidiaries of the type described in clause (f) or (j) of the definition
of "Indebtedness," and
(h) any other non-cash interest expense of Borrower and its
Consolidated Subsidiaries for such period;
provided that (a) to the extent directly related to the Transactions or the
Exchange Offer pursuant to the Registration Rights Agreement, debt issuance
costs, debt discount or premium and other financing fees and expenses shall be
excluded from the calculation of Consolidated Interest Expense and (b)
Consolidated Interest Expense of Borrower and its Subsidiaries shall be
calculated after giving effect to Interest Rate Agreements (including associated
costs), but excluding unrealized gains and losses with respect to Interest Rate
Agreements.
Consolidated Interest Expense shall be calculated on a Pro Forma Basis to
give effect to any Indebtedness incurred, assumed or permanently repaid or
extinguished during the relevant Test Period in connection with any Permitted
Acquisitions and Asset Sales (other than any Asset Sale pursuant to Section
6.05(b)(ii) or (d) and other dispositions in the ordinary course of business) as
if such incurrence, assumption, repayment or extinguishing had been effected on
the first day of such period.
"Consolidated Net Income" shall mean, for any period, the consolidated net
income (or loss) of Borrower and its Consolidated Subsidiaries determined in
accordance with GAAP; provided that there shall be excluded from such net income
(to the extent otherwise included therein), without duplication:
(a) the net income (or loss) of any person (other than a Consolidated
Subsidiary of Borrower) in which any person other than Borrower and its
Consolidated Subsidiaries has an ownership interest, except to the extent
that cash in an amount equal to any such income has actually been received
by Borrower or (subject to clause (c) below) any of its Consolidated
Subsidiaries during such period,
(b) except to the extent includible in the Consolidated Net Income of
Borrower pursuant to the foregoing clause (a), the net income (or loss) of
any person that accrued prior to the date that (1) such person becomes a
Consolidated Subsidiary of Borrower or is merged into or consolidated with
Borrower or any of its Consolidated Subsidiaries or (2) the assets of such
person are acquired by Borrower or any of its Consolidated Subsidiaries,
(c) the net income of any Consolidated Subsidiary of Borrower during
such period to the extent that the declaration or payment of dividends or
similar distributions by such ▇▇▇▇▇▇▇-
-10-
dated Subsidiary of that income is not permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Consolidated
Subsidiary during such period, except that Borrower's equity in a net loss
of any such Consolidated Subsidiary for such period shall be included in
determining Consolidated Net Income,
(d) any gain (or loss), together with any related provisions for taxes
on any such gain (or the tax effect of any such loss), realized during such
period by Borrower or any of its Consolidated Subsidiaries upon (x) the
acquisition of any securities, or the extinguishment of any Indebtedness,
of Borrower or any Consolidated Subsidiary of Borrower or (y) any Asset
Sale (other than any Asset Sale pursuant to Section 6.05(b)(i) or (d), and
other dispositions in the ordinary course of business) by Borrower or any
Consolidated Subsidiary of Borrower,
(e) gains and losses due solely to fluctuations in currency values and
the related tax effects according to GAAP,
(f) earnings resulting from any reappraisal, revaluation or write-up
of assets,
(g) unrealized gains and losses with respect to Hedging Obligations
and
(h) any extraordinary or nonrecurring gain (or extraordinary or
nonrecurring loss), together with any related provision for taxes on any
such gain (or the tax effect of any such loss), recorded or recognized by
Borrower or any of its Consolidated Subsidiaries during such period.
For purposes of this definition of "Consolidated Net Income," (1) "nonrecurring"
means any gain or loss as of any date that is not reasonably likely to recur
within the two years following such date; provided that if there was a gain or
loss similar to such gain or loss within the two years preceding such date, such
gain or loss shall not be deemed nonrecurring and (2) Consolidated Net Income
shall be reduced (to the extent not already reduced thereby) by the amount of
any payments to or on behalf of Holdings made pursuant to Sections 6.06(c) and
(d).
"Consolidated Subsidiary" shall mean, as to any person, all Subsidiaries of
such person which are consolidated with such person for financial reporting
purposes in accordance with GAAP.
"Contested Collateral Lien Conditions" shall mean, with respect to any
Permitted Lien of the type described in clauses (a), (b), (e) and (f) of Section
6.02, the following conditions:
(a) Borrower shall cause any proceeding instituted contesting such
Lien to stay the sale or forfeiture of any portion of the Collateral on
account of such Lien; and
(b) such Lien shall in all respects be subject and subordinate in
priority to the Lien and security interest created and evidenced by the
Security Documents, except if and to the extent that the law or regulation
creating, permitting or authorizing such Lien provides that such Lien is or
must be superior to the Lien and security interest created and evidenced by
the Security Documents.
"Contingent Obligation" shall mean, as to any person, any obligation,
agreement, understanding or arrangement of such person guaranteeing or intended
to guarantee any Indebtedness, leases, dividends or other obligations ("primary
obligations") of any other person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of such
person, whether or not contingent, (a) to purchase any such primary obligation
or any property constituting direct or indirect se-
-11-
curity therefor; (b) to advance or supply funds (i) for the purchase or payment
of any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor; (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation; (d) with respect to bankers' acceptances, letters of credit and
similar credit arrangements, until a reimbursement obligation arises (which
reimbursement obligation shall constitute Indebtedness); or (e) otherwise to
assure or hold harmless the holder of such primary obligation against loss in
respect thereof; provided, however, that the term "Contingent Obligation" shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business or any product warranties. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such person may be liable, whether severally or jointly,
pursuant to the terms of the instrument evidencing such Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such person is required to perform thereunder) as
determined by such person in good faith.
"Control" shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlled" and "Controlling" shall have a meaning correlative
thereto.
"Control Agreement" shall have the meaning assigned to such term in the
U.S. Security Agreement.
"Control Investment Affiliate" means, as to any person, any other person
(a) which directly or indirectly, is in Control of, is Controlled by, or is
under common Control with, such person and is organized by such person (or any
person Controlling such person) primarily for making equity or debt investments
in Holdings, Borrower or other portfolio companies or (b) as to which such
person has the right to exercise the rights in all of the Voting Stock held by
such other person, directly or indirectly, in Borrower.
"Credit Extension" shall mean, as the context may require, (i) the making
of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the
amendment, extension or renewal of any existing Letter of Credit, by the Issuing
Bank.
"Currency Agreement" shall mean any foreign exchange contract, currency
swap agreement or other similar agreement.
"Debt Issuance" shall mean the incurrence by Holdings or any of its
Subsidiaries of any Indebtedness after the Closing Date (other than as permitted
by Section 6.01).
"Default" shall mean any event, occurrence or condition which is, or upon
notice, lapse of time or both would constitute, an Event of Default.
"Disqualified Capital Stock" shall mean any Equity Interest which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (a) matures (excluding
any maturity as the result of an optional redemption by the issuer thereof) or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary of the Term Loan Maturity Date, (b) is
convertible into or exchangeable (unless at the sole option of the issuer
thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a)
above, in each case at any time on or prior to the
-12-
first anniversary of the Term Loan Maturity Date, or (c) contains any repurchase
obligation which may come into effect prior to payment in full of all
Obligations.
"Dividend" with respect to any person shall mean that such person has (i)
declared or paid a dividend or returned any equity capital to the holders of its
Equity Interests or authorized or made any other distribution, payment or
delivery of property (other than Qualified Capital Stock of such person) or cash
to the holders of its Equity Interests as such, or redeemed, retired, purchased
or otherwise acquired, directly or indirectly, for a consideration any shares of
any class of its Equity Interests outstanding (or any options or warrants issued
by such person with respect to its Equity Interests), or set aside any funds for
any of the foregoing purposes, or shall have permitted any of its Subsidiaries
to purchase or otherwise acquire for a consideration any shares of any class of
Equity Interests of such person outstanding (or any options or warrants issued
by such person with respect to its Equity Interests) or (ii) made any payment on
or in respect of any Holdings Employee Note. Without limiting the foregoing,
"Dividends" with respect to any person shall also include all payments made or
required to be made by such person with respect to any stock appreciation
rights, plans, equity incentive or achievement plans or any similar plans or
setting aside of any funds for the foregoing purposes.
"dollars" or "$" shall mean lawful money of the United States.
"Domestic Subsidiary" shall mean any Subsidiary that is organized or
existing under the laws of the United States, any state thereof or the District
of Columbia.
"Environment" shall mean ambient air, surface water and groundwater
(including, without limitation, potable water, navigable water and wetlands),
the land surface or subsurface strata, natural resources, the workplace or as
otherwise defined in any Environmental Law.
"Environmental Claim" shall mean any claim, notice, demand, order, action,
suit, proceeding or other communication alleging liability for investigation,
remediation, removal, cleanup, response, corrective action, damages to natural
resources, personal injury, property damage, fines, penalties or other costs
resulting from, related to or arising out of (i) the presence, Release or
threatened Release in or into the Environment of Hazardous Material at any
location or (ii) any violation of Environmental Law, and shall include, without
limitation, any claim seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from, related to or
arising out of the presence, Release or threatened Release of Hazardous Material
or alleged injury or threat of injury to health, safety or the Environment.
"Environmental Law" shall mean any and all applicable present and future
treaties, laws, statutes, ordinances, regulations, rules, decrees, orders,
judgments, consent orders, consent decrees or other binding requirements, and
the common law, relating to protection of public health or the Environment, the
Release or threatened Release of Hazardous Material, natural resources or
natural resource damages, or occupational safety or health.
"Environmental Permit" shall mean any permit, license, approval, consent or
other authorization required by or from a Governmental Authority under
Environmental Law.
"Equity Financing" shall mean common equity investments in Holdings of not
less than $133.0 million, consisting of the aggregate of the cash invested by
the Equity Investors on the terms and conditions set forth in the Acquisition
Documents, the Rollover Equity, equity issued to management as consideration for
cash, the Winnipeg Contribution and the ▇▇▇▇▇▇ Investment.
-13-
"Equity Interest" shall mean, with respect to any person, any and all
shares, interests, participations or other equivalents, including membership
interests (however designated, whether voting or non-voting), of equity of such
person, including, if such person is a partnership, partnership interests
(whether general or limited) and any other interest or participation that
confers on a person the right to receive a share of the profits and losses of,
or distributions of assets of, such partnership, whether outstanding on the date
hereof or issued after the Closing Date, but excluding debt securities
convertible or exchangeable into such equity.
"Equity Investors" shall mean the Sponsors, their Controlled Investment
Affiliates and one or more investors reasonably satisfactory to the
Administrative Agent and the Arranger.
"Equity Issuance" shall mean, without duplication, any issuance or sale by
Holdings after the Closing Date of (a) any Equity Interests in Holdings
(including any Equity Interests issued upon exercise of any warrant or option)
or any warrants or options to purchase Equity Interests in Holdings or (b) any
other security or instrument representing an Equity Interest (or the right to
obtain any Equity Interest) in Holdings; provided, however, that an Equity
Issuance shall not include (i) any Preferred Stock Issuance or Debt Issuance,
(ii) any such sale or issuance by Holdings to directors, officers or employees
of any Company and (iii) any Excluded Issuance.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event," as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan
(other than an event for which the 30-day notice period is waived by
regulation); (b) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived, the failure to make by its due date a required
installment under Section 412(m) of the Code with respect to any Plan or the
failure to make any required contribution to a Multiemployer Plan; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by any Company or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a
plan administrator of any notice relating to the intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan, or the occurrence of
any event or condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (f) the incurrence by any Company or any of its ERISA
Affiliates of any liability with respect to the withdrawal from any Plan or
Multiemployer Plan; (g) the receipt by any Company or its ERISA Affiliates of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA; (h) the making of any
amendment to any Plan which could result in the imposition of a lien or the
posting of a bond or other security; and (i) the occurrence of a nonexempt
prohibited transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could reasonably be expected to result in liability
to any Company.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
-14-
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or Eurodollar
Term Loan.
"Eurodollar Revolving Borrowing" shall mean a Borrowing comprised of
Eurodollar Revolving Loans.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest
at a rate determined by reference to the Adjusted LIBOR Rate in accordance with
the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised of Eurodollar
Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Adjusted LIBOR Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in Article
VIII.
"Excess Amount" shall have the meaning assigned to such term in Section
2.10(h)(ii).
"Excess Cash Flow" shall mean, for any fiscal year of Borrower, the sum,
without duplication, of
(a) Consolidated EBITDA for such fiscal year, plus
(b) cash gains excluded from Consolidated Net Income for such fiscal
year, plus
(c) reductions to non-cash working capital of Borrower and its
Consolidated Subsidiaries for such fiscal year (i.e., the decrease, if any,
in Consolidated Current Assets minus Consolidated Current Liabilities from
the beginning to the end of such fiscal year), minus
(d) the amount of any cash income taxes paid or payable by Borrower
and its Consolidated Subsidiaries with respect to such fiscal year, net of
any cash tax refunds received or receivable by Borrower or any of its
Consolidated Subsidiaries in such fiscal year, plus, without duplication,
Dividends paid pursuant to Section 6.06(d) in such fiscal year, minus
(e) Consolidated Interest Expense, to the extent paid or payable in
cash paid during such fiscal year, minus
(f) Capital Expenditures made in cash in accordance with Section
6.08(d) during such fiscal year, to the extent funded from internally
generated funds (for the avoidance of doubt, Capital Expenditures, to the
extent financed with one or more Excluded Issuances, shall not be deemed
funded from internally generated funds), minus
(g) permanent repayments and prepayments of Indebtedness made by
Borrower and its Consolidated Subsidiaries during such fiscal year, to the
extent funded with internally generated funds, minus
(h) amounts referred to in clauses (e) and (f) of the definition of
Consolidated EBITDA, to the extent paid in cash in such fiscal year, minus
(i) cash losses excluded from the calculation of Consolidated Net
Income for such fiscal year, minus
-15-
(j) additions to noncash working capital for such fiscal year (i.e.,
the increase, if any, in Consolidated Current Assets minus Consolidated
Current Liabilities from the beginning to the end of such fiscal year),
minus
(k) the amount of Acquisition Consideration (exclusive of any amounts
financed by Excluded Issuances) expended in cash during such fiscal year;
provided that, to the extent otherwise included therein, the Net Cash Proceeds
of Asset Sales and Casualty Events shall be deducted in calculating Excess Cash
Flow.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Offer" shall have the meaning assigned to such term in the
Registration Rights Agreement.
"Excluded Issuance" shall mean an issuance and sale of Qualified Capital
Stock of Holdings, to the extent such Qualified Capital Stock is used, or the
Net Cash Proceeds thereof shall be, within 45 days of the consummation of such
issuance and sale, used, without duplication, to finance Capital Expenditures or
one or more Permitted Acquisitions.
"Excluded Taxes" shall mean, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States or any
political subdivision thereof or by the jurisdiction under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable lending office is located (other
than franchise taxes imposed in lieu of income taxes, whether or not such
franchise taxes are actually measured by income), and (b) in the case of a
Foreign Lender (other than an assignee pursuant to a request by Borrower under
Section 2.16), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.15(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from Borrower
with respect to such withholding tax pursuant to Section 2.15(a) (it being
understood and agreed, for the avoidance of doubt, that any withholding tax
imposed on a Foreign Lender as a result of a Change in Law or regulation or
interpretation thereof occurring after the time such Foreign Lender became a
party to this Agreement shall not be an Excluded Tax, so long such lender
complies (if such Lender is legally able to comply) with Section 2.15(e)).
"Existing Lien" shall have the meaning assigned to such term in Section
6.02(c).
"Federal Funds Effective Rate" shall mean, for any day, 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 on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the average of
the quotations for the day for such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.
"Fee Letter" shall mean the confidential Fee Letter, dated August 29, 2003,
among Norcraft Holdings, L.L.C., UBS AG, Cayman Islands Branch and UBS
Securities LLC.
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"Fees" shall mean the Commitment Fees, the Administrative Agent Fees, the
LC Participation Fees and the Fronting Fees.
"Finance Subsidiary" shall mean Norcraft Finance Corp., a Delaware
corporation.
"Financial Officer" of any person shall mean the chief financial officer,
principal accounting officer, treasurer or controller of such person.
"FIRREA" shall mean the Federal Institutions Reform, Recovery and
Enforcement Act of 1989.
"Foreign Lender" shall mean any Lender that is not, for United States
federal income tax purposes, (i) a citizen or resident of, or otherwise subject
to taxation by, the United States, (ii) a corporation or entity treated as a
corporation created or organized in or under the laws of the United States, or
any political subdivision thereof, (iii) an estate the income of which is
subject to U.S. federal income taxation regardless of its source or (iv) a trust
if a court within the United States is able to exercise primary supervision over
the administration of such trust and one or more United States persons have the
authority to control all substantial decisions of such trust.
"Foreign Plan" shall mean any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to by any Company with
respect to employees employed outside the United States.
"Foreign Subsidiary" shall mean a Subsidiary that is organized under the
laws of a jurisdiction other than the United States or any state thereof or the
District of Columbia.
"Fronting Fees" shall have the meaning assigned to such term in Section
2.05(c).
"Full Quarter Factor" means the quotient obtained by dividing (a) the
number of days in the fourth quarter of 2003 (i.e., 92) by (b) the number of
days in the period from and including the Closing Date to and including the last
day of the fourth fiscal quarter of 2003 (i.e., 72).
"GAAP" shall mean generally accepted accounting principles in the United
States applied on a consistent basis.
"General Partner" means Norcraft GP, L.L.C., a Delaware limited liability
company, or any successor sole general partner or managing general partner of
Borrower or Holdings.
"Governmental Authority" shall mean any federal, state, local or foreign
court, central bank or governmental agency, authority, instrumentality or
regulatory body.
"Governmental Real Property Disclosure Requirements" shall mean any
Requirement of Law of any Governmental Authority requiring notification of the
buyer, lessee, mortgagee, assignee or other transferee of any Real Property,
facility, establishment or business, or notification, registration or filing to
or with any Governmental Authority, in connection with the sale, lease,
mortgage, assignment or other transfer (including, without limitation, any
transfer of control) of any Real Property, facility, establishment or business,
of the actual or threatened presence or Release in or into the Environment, or
the use, disposal or handling of Hazardous Material on, at, under or near the
Real Property, facility, establishment or business to be sold, leased,
mortgaged, assigned or transferred.
"Guaranteed Obligations" shall have the meaning assigned to such term in
Section 7.01.
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"Guarantees" shall mean the guarantees issued pursuant to Article VII by
Holdings and the Subsidiary Guarantors.
"Guarantors" shall mean Holdings and the Subsidiary Guarantors.
"Hazardous Materials" shall mean the following: hazardous substances;
hazardous wastes; polychlorinated biphenyls ("PCBs") or any substance or
compound containing PCBs; asbestos or any asbestos-containing materials in any
form or condition; radon or any other radioactive materials including any
source, special nuclear or by-product material; petroleum, crude oil or any
fraction thereof; and any other pollutant or contaminant or chemicals, wastes,
materials, compounds, constituents or substances, subject to regulation or which
can give rise to liability under any Environmental Laws.
"Hedging Obligations" of any person means the obligations of such person
under swap, cap, collar, forward purchase or similar agreements or arrangements
dealing with interest rates, currency exchange rates or commodity prices, either
generally or under specific contingencies.
"Holdings" shall have the meaning assigned to such term in the preamble
hereto.
"Holdings Employee Notes" means promissory notes issued by Holdings to
officers, directors or employees of any Company or former officers, directors or
employees (or their transferees, estates or beneficiaries under their estates)
of any Company as consideration for the repurchase or redemption of Qualified
Capital Stock of Holdings held by such persons upon their death, disability,
retirement, severance or termination of employment or service; provided that the
Indebtedness evidenced by such promissory notes shall (i) be subordinated to the
Obligations pursuant to subordination provisions similar to those set forth in
the form of Intercompany Note attached hereto as Exhibit L and (ii) be
unsecured.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or advances; (b) all obligations
of such person evidenced by bonds, debentures, notes or similar instruments; (c)
all obligations of such person upon which interest charges are customarily paid
or accrued; (d) all obligations of such person under conditional sale or other
title retention agreements relating to property purchased by such person; (e)
all obligations of such person issued or assumed as the deferred purchase price
of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business on normal trade terms);
(f) all Indebtedness of others secured by any Lien on property owned or acquired
by such person, whether or not the obligations secured thereby have been
assumed, but limited to the fair market value of such property; (g) all Capital
Lease Obligations and Purchase Money Obligations of such person; (h) all net
Hedging Obligations to the extent required to be reflected on a balance sheet of
such person; (i) all obligations of such person for the reimbursement of any
obligor in respect of letters of credit, letters of guaranty, bankers'
acceptances and similar credit transactions; and (j) all Contingent Obligations
of such person in respect of Indebtedness or obligations of others of the kinds
referred to in clauses (a) through (i) above. The Indebtedness of any person
shall include the Indebtedness of any other entity (including any partnership in
which such person is a general partner) to the extent such person is liable
therefor as a result of such person's ownership interest in or other
relationship with such entity, except to the extent that terms of such
Indebtedness provide that such person is not liable therefor.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnitee" shall have the meaning assigned to such term in Section
11.03(b).
"Independent Director" means, with respect to any transaction, a member of
the Board of Directors of Holdings who is independent with respect to such
transaction.
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"Information" shall have the meaning assigned to such term in Section
11.12.
"Insurance Policies" means the insurance policies and coverages required to
be maintained by each Loan Party which is an owner of Mortgaged Property with
respect to the applicable Mortgaged Property pursuant to Section 5.04 and all
renewals and extensions thereof.
"Insurance Requirements" means, collectively, all provisions of the
Insurance Policies, all requirements of the issuer of any of the Insurance
Policies and all orders, rules, regulations and any other requirements of the
National Board of Fire Underwriters (or any other body exercising similar
functions) binding upon each Loan Party which is an owner of Mortgaged Property
and applicable to the Mortgaged Property or any use or condition thereof.
"Intellectual Property" shall have the meaning assigned to such term in
Section 3.07(c).
"Intercompany Note" shall mean a promissory note substantially in the form
of Exhibit L.
"Interest Election Request" shall mean a request by Borrower to convert or
continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.08(b), substantially in the form of Exhibit D.
"Interest Payment Date" shall mean (a) with respect to any ABR Loan
(including Swingline Loans), the last Business Day of each March, June,
September and December to occur during any period in which such Loan is
outstanding, (b) with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Eurodollar Loan with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
(c) with respect to any Revolving Loan or Swingline Loan, the Revolving Maturity
Date and (d) with respect to any Term Loan, the Term Loan Maturity Date.
"Interest Period" shall mean, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, if each affected Lender so agrees, nine months) thereafter, as Borrower may
elect; provided that (a) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (b) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of a Borrowing initially shall be the date on which
such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing; provided, however, that an
Interest Period shall be limited to the extent required under Section 2.03(e).
"Interest Rate Agreement" shall mean any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or similar agreement
or arrangement.
"internally generated funds" shall mean funds not constituting the proceeds
of any Loan, Debt Issuance (without regard to the parenthetical phrase in the
definition thereof), Preferred Stock Issuance (without regard to the
parenthetical phrase in the definition thereof), Equity Issuance (without regard
to the proviso in the definition thereof), Asset Sale, insurance, eminent
domain, condemnation or other similar recovery or Indebtedness.
-19-
"Investments" shall have the meaning assigned to such term in Section 6.04.
"IPO" shall mean the first underwritten public offering by Holdings of its
Equity Interests after the Closing Date pursuant to a registration statement
filed with the Securities and Exchange Commission in accordance with the
Securities Act.
"Issuing Bank" shall mean, as the context may require, (a) UBS AG, Stamford
Branch, with respect to Letters of Credit issued by it; (b) any other Lender
that may become an Issuing Bank pursuant to Section 2.18(i), with respect to
Letters of Credit issued by such Lender; or (c) collectively, all of the
foregoing.
"Joinder Agreement" shall mean that certain joinder agreement substantially
in the form of Exhibit E.
"Landlord Access Agreement" shall mean each Landlord Access Agreement,
substantially in the form of Exhibit F or such other form as may reasonably
acceptable to the Administrative Agent.
"LC Commitment" shall mean the commitment of the Issuing Bank to issue
Letters of Credit pursuant to Section 2.18.
"LC Disbursement" shall mean a payment or disbursement made by the Issuing
Bank pursuant to a Letter of Credit.
"LC Exposure" shall mean at any time the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
principal amount of all Reimbursement Obligations outstanding at such time. The
LC Exposure of any Revolving Lender at any time shall mean its Pro Rata
Percentage of the aggregate LC Exposure at such time.
"LC Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"LC Request" shall mean a request by Borrower in accordance with the terms
of Section 2.18(b) and substantially in the form of Exhibit P, or such other
form as shall be approved by the Administrative Agent.
"LC Sub-Account" shall have the meaning assigned to such term in Section
9.01(d).
"Lead Arranger" has the meaning assigned in the preamble.
"Leases" shall mean any and all leases, subleases, tenancies, options,
concession agreements, rental agreements, occupancy agreements, franchise
agreements, access agreements and any other agreements (including all
amendments, extensions, replacements, renewals, modifications and/or guarantees
thereof), whether or not of record and whether now in existence or hereafter
entered into, affecting the use or occupancy of all or any portion of any Real
Property.
"Lender Addendum" shall mean with respect to any Lender on the Closing
Date, a lender addendum in the form of Exhibit N to be executed and delivered by
such Lender on the Closing Date as provided in Section 11.14.
"Lender Affiliate" shall mean with respect to any Lender that is a fund
that invests in bank loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Lender or by an
Affiliate of such advisor.
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"Lenders" shall mean (a) the financial institutions that have become a
party hereto pursuant to a Lender Addendum (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance. Unless the context clearly indicates
otherwise, the term "Lenders" shall include the Swingline Lender.
"Letter of Credit" shall mean any (i) Standby Letter of Credit and (ii)
Commercial Letter of Credit, in each case, issued or to be issued by an Issuing
Bank for the account of Borrower pursuant to Section 2.18.
"Letter of Credit Expiration Date" shall mean the date which is fifteen
days prior to the Revolving Maturity Date.
"Leverage Ratio" shall mean, at any date of determination, the ratio of
Consolidated Indebtedness on such date to Consolidated EBITDA for the Test
Period then most recently ended.
"LIBOR Rate" shall mean, with respect to any Eurodollar Borrowing for any
Interest Period therefor, the rate per annum determined by the Administrative
Agent to be the arithmetic mean (rounded to the nearest 1/100th of 1%) of the
offered rates for deposits in dollars with a term comparable to such Interest
Period that appears on the Telerate British Bankers Assoc. Interest Settlement
Rates Page (as defined below) at approximately 11:00 a.m., London, England time,
on the second full Business Day preceding the first day of such Interest Period;
provided, however, that (i) if no comparable term for an Interest Period is
available, the LIBOR Rate shall be determined using the weighted average of the
offered rates for the two terms most nearly corresponding to such Interest
Period and (ii) if there shall at any time no longer exist a Telerate British
Bankers Assoc. Interest Settlement Rates Page, "LIBOR Rate" shall mean, with
respect to each day during each Interest Period pertaining to Eurodollar
Borrowings comprising part of the same Borrowing, the rate per annum equal to
the rate at which the Administrative Agent is offered deposits in dollars at
approximately 11:00 a.m., London, England time, two Business Days prior to the
first day of such Interest Period in the London interbank market for delivery on
the first day of such Interest Period for the number of days comprised therein
and in an amount comparable to its portion of the amount of such Eurodollar
Borrowing to be outstanding during such Interest Period. "Telerate British
Bankers Assoc. Interest Settlement Rates Page" shall mean the display designated
as Page 3750 on the Telerate System Incorporated Service (or such other page as
may replace such page on such service for the purpose of displaying the rates at
which dollar deposits are offered by leading banks in the London interbank
deposit market).
"Lien" shall mean, with respect to any property, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation,
security interest or encumbrance of any kind or any filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
notice or recording statute of any Governmental Authority, including any
easement, right-of-way or other encumbrance on title to Real Property, in each
of the foregoing cases whether voluntary or imposed by law, and any agreement to
give any of the foregoing; (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such property; and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Notes (if any), the Security Documents, each Hedging Obligation relating to the
Loans entered into with any counterparty that was a Lender or an Affiliate of a
Lender at the time such Hedging Obligation was entered into and, solely for the
purposes of paragraph (e) of Article VIII, the Fee Letter.
-21-
"Loan Parties" shall mean Holdings, Borrower and the Subsidiary Guarantors.
"Loans" shall mean, as the context may require, a Revolving Loan, a Term
Loan or a Swingline Loan.
"LP Agreement" means the amended and restated agreement of limited
partnership of Holdings dated as of October 21, 2003, as such agreement may be
amended from time to time in accordance with the provisions hereof and thereof.
"Management and Monitoring Agreement" means the management and monitoring
agreement dated as of the Closing Date among ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, LLC,
Trimaran Fund Management, L.L.C. and Borrower, as such agreement may be amended
from time to time in accordance with the provisions hereof and thereof.
"Margin Stock" shall have the meaning assigned to such term in Regulation
U.
"Material Adverse Effect" shall mean (a) a material adverse effect on the
business, property, results of operations, prospects or condition, financial or
otherwise of Borrower and its Subsidiaries, taken as a whole; (b) material
impairment of the ability of the Loan Parties to legally perform fully and on a
timely basis any of their obligations under any Loan Document; or (c) material
impairment of the rights of or benefits or remedies available to the Lenders or
the Collateral Agent under any Loan Document.
"Material Indebtedness" shall mean (a) the Senior Subordinated Notes and
the Senior Subordinated Guarantees and (b) any other Indebtedness (other than
the Loans and Letters of Credit), or one or more Hedging Obligations, of any
Loan Party evidencing an aggregate outstanding principal amount exceeding $5.0
million. For purposes of determining Material Indebtedness, the "principal
amount" in respect of any Hedging Obligations of any Loan Party at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that such Loan Party would be required to pay if such Hedging Obligations were
terminated at such time.
"Maximum Rate" shall have the meaning assigned to such term in Section
11.13.
"Mortgage" shall mean an agreement, including, but not limited to, a
mortgage, deed of trust or any other document, creating and evidencing a Lien on
a Mortgaged Property, which (i) in the case of Real Property owned in fee, shall
be in substantially in the form of Exhibit G and (ii) in the case of leased Real
Property, shall be in a form reasonably satisfactory to the Collateral Agent, in
each case, with such schedules and including such provisions as shall be
necessary to conform such document to applicable local or foreign law or as
shall be customary under applicable local or foreign law.
"Mortgaged Property" shall mean (a) each Real Property identified on
Schedule 1.01(a) hereto and (b) each Real Property, if any, which shall be
subject to a Mortgage delivered after the Closing Date pursuant to Section
5.10(c).
"Multiemployer Plan" shall mean a multiemployer plan within the meaning of
Section 4001(a)(3) or Section 3(37) of ERISA (a) to which any Company or any
ERISA Affiliate is then making or accruing an obligation to make contributions;
(b) to which any Company or any ERISA Affiliate has within the preceding five
plan years made contributions; or (c) with respect to which any Company could
incur liability.
-22-
"Net Cash Proceeds" shall mean:
(a) with respect to any Asset Sale (other than any Asset Sale
described in clause (b) of the definition thereof), the cash proceeds
received by any Loan Party (including cash proceeds subsequently received
(as and when received by any Loan Party) in respect of noncash
consideration initially received) net of (i) selling expenses (including
reasonable brokers' fees or commissions, legal, accounting and other
professional and transactional fees, transfer and similar taxes and
Borrower's good faith estimate of income taxes paid or payable in
connection with such sale); (ii) amounts provided as a reserve, in
accordance with GAAP, against (x) any liabilities under any indemnification
obligations associated with such Asset Sale or (y) any other liabilities
retained by any Loan Party associated with the assets sold in such Asset
Sale (provided that, to the extent and at the time any such amounts are
released from such reserve, such amounts shall constitute Net Cash
Proceeds); (iii) Borrower's good faith estimate of payments required to be
made with respect to unassumed liabilities relating to the assets sold
within 360 days of such Asset Sale (provided that, to the extent such cash
proceeds are not used to make payments in respect of such unassumed
liabilities within 360 days of such Asset Sale, such cash proceeds shall
constitute Net Cash Proceeds); and (iv) the principal amount, premium or
penalty, if any, interest and other amounts on any Indebtedness for
borrowed money which is secured by a Lien on the asset sold in such Asset
Sale (so long as such Lien was permitted to encumber such asset under the
Loan Documents at the time of such sale) and which is repaid with such
proceeds (other than any such Indebtedness assumed by the purchaser of such
asset);
(b) with respect to any Debt Issuance or any issuance or sale of
Equity Interests, the cash proceeds thereof, net of customary fees,
commissions, costs and other expenses incurred in connection therewith; and
(c) with respect to any Casualty Event, the cash insurance proceeds,
condemnation awards and other compensation received in respect thereof, net
of all reasonable costs and expenses incurred in connection with the
collection of such proceeds, awards or other compensation in respect of
such Casualty Event.
"Notes" shall mean any notes evidencing the Term Loans, Revolving Loans or
Swingline Loans issued pursuant to this Agreement, if any, substantially in the
form of Exhibit ▇-▇, ▇-▇ ▇▇ ▇-▇.
"Obligations" shall mean (a) obligations of Borrower and any and all of the
other Loan Parties from time to time arising under or in respect of the due and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by Borrower and any and all of
the other Loan Parties under this Agreement in respect of any Letter of Credit,
when and as due, including payments in respect of Reimbursement Obligations,
interest thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of Borrower and any and all of the other Loan
Parties under this Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and liabilities
of Borrower and each Loan Party under or pursuant to this Agreement and the
other Loan Documents, (c) the due and punctual payment and performance of all
obligations of Borrower and any and all of the other Loan Parties under each
Hedging Obligation relating to the Loans and up to $50 million of Senior
Subordinated Notes entered into with any counterparty that was
-23-
a Lender or an Affiliate of a Lender at the time such Hedging Obligation was
entered into and (d) the due and punctual payment and performance of all
obligations in respect of overdrafts and related liabilities owed to any Lender,
any Affiliate of a Lender, the Administrative Agent or the Collateral Agent
arising from treasury, depositary and cash management services or in connection
with any automated clearinghouse transfer of funds.
"Offering Memorandum" means the offering memorandum dated October 10, 2003
pursuant to which the Senior Subordinated Notes are being offered.
"Officers' Certificate" shall mean a certificate executed by the chairman
of the Board of Directors of Borrower (if an officer of Borrower), the chief
executive officer or the president of Borrower and one of the Financial
Officers, each in his or her official (and not individual) capacity.
"Organizational Documents" shall mean, with respect to any person, (i) in
the case of any corporation, the certificate of incorporation and by-laws (or
similar documents) of such person, (ii) in the case of any limited liability
company, the certificate of formation and operating agreement (or similar
documents) of such person, (iii) in the case of any limited partnership, the
certificate of formation and limited partnership agreement (or similar
documents) of such person, (iv) in the case of any general partnership, the
partnership agreement (or similar document) of such person and (v) in any other
case, the functional equivalent of the foregoing.
"Other Taxes" shall mean any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
(including interest, fines, penalties and additions to tax) arising from any
payment made or required to be made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"Participant" shall have the meaning assigned to such term in Section
11.04(e).
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.
"Perfection Certificate" shall mean a certificate in the form of Exhibit
I-1 or any other form approved by the Collateral Agent, as the same shall be
supplemented from time to time by a Perfection Certificate Supplement or
otherwise.
"Perfection Certificate Supplement" shall mean a certificate supplement in
the form of Exhibit I-2 or any other form approved by the Collateral Agent.
"Permitted Acquisition" shall mean, with respect to Borrower or any
Subsidiary Guarantor, any transaction or series of related transactions for the
direct or indirect (a) acquisition of all or substantially all of the property
of any other person, or of any business or division of any other person; (b)
acquisition of in excess of 50% of the Equity Interests of any other person, or
otherwise causing any other person to become a Subsidiary of such person; or (c)
merger or consolidation or any other combination with any other person, if each
of the following conditions are met:
(i) no Default then exists or would result therefrom;
(ii) after giving effect to such acquisition on a Pro Forma Basis, (A)
Borrower shall be in compliance with all covenants set forth in Section
6.08 as of the most recent Test Period (assuming, for purposes of Section
6.08, that such acquisition, and all other Permitted Acquisitions
consummated since the first day of the relevant Test Period for each of the
financial covenants set forth in Section 6.08 ending on or prior to the
date of such acquisition, had occurred on
-24-
the first day of such relevant Test Period), and (B) unless expressly
approved by the Administrative Agent, Borrower shall have generated
positive cash flow for the Test Period most recently ended prior to the
date of consummation of such acquisition;
(iii) no Company shall, in connection with any such acquisition,
assume or remain liable with respect to any Indebtedness of the related
seller or the business, person or assets acquired, except to the extent
permitted under Section 6.01;
(iv) the acquired person shall be engaged in a business of the type
that Borrower and the Subsidiaries are permitted to be engaged in under
Section 6.13 and the property acquired in connection with any such
acquisition shall be made subject to the Lien of the Security Documents and
shall be free and clear of any Liens, other than Permitted Liens;
(v) the Board of Directors of the person to be acquired shall not have
indicated publicly its opposition to the consummation of such acquisition;
(vi) all transactions in connection therewith shall be consummated in
accordance with all applicable laws of all applicable Governmental
Authorities;
(vii) with respect to any acquisition involving Acquisition
Consideration of more than $10.0 million, unless the Administrative Agent
shall otherwise agree, Borrower shall have provided the Administrative
Agent and the Lenders with (A) historical financial statements for the last
three fiscal years of the person or business to be acquired (audited if
available without undue cost or delay) and unaudited financial statements
thereof for the most recent interim period which are available, (B)
reasonably detailed projections for the succeeding five years pertaining to
the person or business to be acquired and updated projections for Borrower
after giving effect to such acquisition, (C) a reasonably detailed
description of all material information relating thereto and copies of all
material documentation pertaining to such acquisition, and (D) all such
other information and data relating to such acquisition or the person or
business to be acquired as may be reasonably requested by the
Administrative Agent or the Required Lenders;
(viii) at least 10 Business Days prior to the proposed date of
consummation of the acquisition, Borrower shall have delivered to the
Agents and the Lenders an Officers' Certificate certifying that (A) such
acquisition complies with this definition (which shall have attached
thereto reasonably detailed backup data and calculations showing such
compliance), and (B) such acquisition could not reasonably be expected to
result in a Material Adverse Effect; and
(ix) the Acquisition Consideration (exclusive of any amount financed
by an Excluded Issuance) for such acquisition shall not exceed $15.0
million, and the aggregate amount of the Acquisition Consideration
(exclusive of any amounts financed by Excluded Issuances) for all Permitted
Acquisitions since the Closing Date shall not exceed $40.0 million;
provided that any Equity Interests constituting all or a portion of such
Acquisition Consideration shall not have a cash dividend requirement on or
prior to Term Loan Maturity Date.
"Permitted Collateral Liens" means (i) Contested Liens (as defined in the
Security Agreements) and (ii) Permitted Liens (other than any Lien pursuant to
Section 6.02(l)).
"Permitted Holders" shall mean (a) SKM Equity Fund III, L.P. and its
Control Investment Affiliates, (b) Trimaran Fund II, L.L.C. and its Control
Investment Affiliates, (c) ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and his Related Parties and (d) for
so long as Borrower or Holdings shall be a limited partnership, the General
Partner.
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"Permitted Liens" shall have the meaning assigned to such term in Section
6.02.
"Permitted Tax Distributions" means
(1) in the event that Borrower is treated as a corporation for federal
income tax purposes, payments, dividends or distributions to Holdings in
order to pay consolidated or combined federal, state or local taxes to the
extent that such taxes are attributable to the income of Borrower and its
Subsidiaries; or
(2) in the event that Borrower is not treated as a corporation for
federal income tax purposes, payments, dividends or distributions to the
then current or former equity holders of Borrower in an amount equal to,
with respect to any taxable year of Borrower, the product of (x) the
highest combined federal, state (or provincial) and local statutory tax
rate (after taking into account the deductibility of state (or provincial)
and local income tax for federal income tax purposes) applicable to any
direct (or, where the direct equity holder is a pass-through entity,
indirect) equity holder of Borrower multiplied by (y) the taxable income of
Borrower and its Subsidiaries determined on the basis that Borrower is a
partnership for federal income tax purposes for such year; provided,
however, that the combined tax rate in clause (x) of this paragraph shall
not exceed the highest combined tax rate that shall be applicable to a
direct (or, where the direct equity holder is a pass-through entity,
indirect) equity holder of Borrower residing only in the United States for
tax purposes;
minus, in the case of clauses (1) and (2) of this definition, any federal, state
and local income taxes paid or payable by Borrower and its Subsidiaries directly
to taxing authorities on behalf of their direct or indirect equity holders in
respect of the income tax liability of such equity holders, if any.
"person" shall mean any natural person, corporation, business trust, joint
venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof, in any case, whether
acting in a personal, fiduciary or other capacity.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA which is maintained or contributed to by
any Company or its ERISA Affiliate.
"Preferred Stock" shall mean, with respect to any person, any and all
preferred or preference Equity Interests (however designated) of such person
whether now outstanding or issued after the Closing Date.
"Preferred Stock Issuance" shall mean the issuance or sale by Holdings or
any of its Subsidiaries of any Preferred Stock after the Closing Date (other
than (x) as permitted by Section 6.11 or (y) any Excluded Issuance).
"Premises" shall have the meaning assigned thereto in the applicable
Mortgage.
"Pro Forma Basis" shall mean on a basis in accordance with GAAP and
Regulation S-X and otherwise reasonably satisfactory to the Administrative
Agent.
"Pro Rata Percentage" of any Revolving Lender at any time shall mean the
percentage of the total Revolving Commitments of all Revolving Lenders
represented by such Lender's Revolving Commitment.
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"property" shall mean any right, title or interest in or to property or
assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including Equity Interests or other ownership
interests of any person and whether now in existence or owned or hereafter
entered into or acquired, including, without limitation, all Real Property.
"Purchase Money Obligation" shall mean, for any person, the obligations of
such person in respect of Indebtedness (including capital leases) incurred for
the purpose of financing all or any part of the purchase price of any property
(including Equity Interests of any person) or the cost of installation,
construction or improvement of any property or assets and any refinancing
thereof; provided, however, that such Indebtedness is incurred within 180 days
after such acquisition of such property by such person.
"Qualified Capital Stock" of any person shall mean any Equity Interests of
such person that are not Disqualified Capital Stock.
"Real Property" shall mean, collectively, all right, title and interest
(including any leasehold estate) in and to any and all parcels of or interests
in real property owned, leased or operated by any person, whether by lease,
license or other means, together with, in each case, all easements,
hereditaments and appurtenances relating thereto, all improvements and
appurtenant fixtures and equipment, all general intangibles and contract rights
and other property and rights incidental to the ownership, lease or operation
thereof.
"Refinancing" shall mean the repayment in full and the termination of any
commitment to make extensions of credit under all of the outstanding
indebtedness of Holdings and its Subsidiaries listed on Schedule 1.01(b).
"Register" shall have the meaning assigned to such term in Section
11.04(c).
"Registration Rights Agreement" means the registration rights agreement
dated as of the Closing Date among Borrower, Finance Subsidiary, UBS Securities
LLC and Wachovia Capital Markets, LLC.
"Regulation D" shall mean Regulation D of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation S-X" shall mean Regulation S-X promulgated under the Securities
Act.
"Regulation T" shall mean Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Reimbursement Obligations" shall mean Borrower's obligations under Section
2.18(e) to reimburse LC Disbursements.
"Related Party" means any family member of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ or any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners or owners of which are ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and/or any members of his
family.
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"Release" shall mean any spilling, leaking, seepage, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the Environment.
"Required Lenders" shall mean, at any time, Lenders having Loans, LC
Exposure and unused Revolving and Term Loan Commitments representing more than
50% of the sum of all Loans outstanding, LC Exposure and unused Revolving and
Term Loan Commitments at such time.
"Requirements of Law" shall mean, collectively, any and all requirements of
any Governmental Authority including any and all laws, ordinances, rules,
regulations or similar statutes or case law.
"Response" shall mean (a) "response" as such term is defined in CERCLA, 42
U.S.C. (S) 9601(24), and (b) all other actions required by any Governmental
Authority or voluntarily undertaken to: (i) clean up, remove, treat, ▇▇▇▇▇ or in
any other way address any Hazardous Material in the environment; (ii) prevent
the Release or threat of Release, or minimize the further Release, of any
Hazardous Material; or (iii) perform studies and investigations in connection
with, or as a precondition to, clause (i) or (ii) above.
"Responsible Officer" of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof with responsibility for the administration of the obligations of such
person in respect of this Agreement.
"Revolving Availability Period" shall mean the period from and including
the Closing Date to but excluding the earlier of the Business Day preceding the
Revolving Maturity Date and the date of termination of the Revolving
Commitments.
"Revolving Borrowing" shall mean a Borrowing comprised of Revolving Loans.
"Revolving Commitment" shall mean, with respect to each Lender, the
commitment, if any, of such Lender to make Revolving Loans hereunder up to the
amount set forth on Schedule I to the Lender Addendum executed and delivered by
such Lender, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Revolving Commitment, as applicable, as the same may be (a) reduced
from time to time pursuant to Section 2.07 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to Section
11.04. The aggregate amount of the Lenders' Revolving Commitments on the Closing
Date is $25,000,000.
"Revolving Exposure" shall mean, with respect to any Lender at any time,
the aggregate principal amount at such time of all outstanding Revolving Loans
of such Lender, plus the aggregate amount at such time of such Lender's LC
Exposure, plus the aggregate amount at such of such Lender's Swingline Exposure.
"Revolving Lender" shall mean a Lender with a Revolving Commitment.
"Revolving Loans" shall mean a Loan made by the Lenders to Borrower
pursuant to Section 2.01(b). Each Revolving Loan shall either be an ABR
Revolving Loan or a Eurodollar Revolving Loan.
"Revolving Maturity Date" shall mean the fifth anniversary of the Closing
Date, or if such day is not a Business Day, the immediately preceding Business
Day.
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"Rollover Equity" shall mean the common equity interests to be exchanged by
members of management of Borrower for common equity interests in Holdings in an
amount not less than $3.0 million on the terms and conditions set forth in the
Acquisition Documents.
"Sale and Leaseback Transaction" has the meaning assigned to such term in
Section 6.03.
"Secured Parties" shall mean, collectively, the Administrative Agent, the
Collateral Agent, each other Agent, the Lenders and each party to a Hedging
Obligation relating to the Loans if at the date of entering into such Hedging
Obligation such person was a Lender or an Affiliate of a Lender and such person
executes and delivers to the Administrative Agent a letter agreement in form and
substance acceptable to the Administrative Agent pursuant to which such person
(i) appoints the Collateral Agent as its agent under the applicable Loan
Documents and (ii) agrees to be bound by the provisions of Sections 10.03 and
10.09.
"Securities Act" shall mean the Securities Act of 1933.
"Securities Collateral" has the meaning assigned to such term in the
Security Agreements.
"Security Agreement Collateral" shall mean all property pledged or granted
as collateral pursuant to the Security Agreements delivered on the Closing Date
or thereafter pursuant to Section 5.10.
"Security Agreements" means the collective reference to the U.S. Security
Agreement and the Canadian Security Agreement.
"Security Documents" shall mean the Security Agreements, the Mortgages and
each other security document or pledge agreement delivered in accordance with
applicable local or foreign law to grant a valid, perfected security interest in
any property as Collateral for the Obligations, and all UCC or other financing
statements or instruments of perfection required by this Agreement, the Security
Agreements, any Mortgage or any such other security document or pledge agreement
to be filed with respect to the security interests in property and fixtures
created pursuant to the Security Agreements or any Mortgage and any other
document or instrument utilized to pledge as collateral for the Obligations any
property of whatever kind or nature.
"Seller" shall have the meaning assigned to such term in the first recital
hereto.
"Senior Subordinated Note Agreement" shall mean any indenture, note
purchase agreement or other agreement pursuant to which the Senior Subordinated
Notes are issued, as in effect on the Closing Date and thereafter amended from
time to time in accordance with the requirements of this Agreement.
"Senior Subordinated Note Documents" shall mean the Senior Subordinated
Notes, the Senior Subordinated Note Agreement, the Senior Subordinated Note
Guarantees and all other documents executed and delivered with respect to the
Senior Subordinated Notes or the Senior Subordinated Note Agreement.
"Senior Subordinated Note Guarantees" shall mean the guarantees of Holdings
and the Subsidiary Guarantors (other than Finance Subsidiary) pursuant to the
Senior Subordinated Note Agreement.
"Senior Subordinated Notes" shall mean (i) the $150 million in aggregate
principal amount of 9% senior subordinated notes due 2011 issued by Borrower and
Finance Subsidiary pursuant to the Senior Subordinated Note Agreement and (ii)
any registered notes issued by Borrower and Finance Subsidiary in exchange for
the notes referred to in clause (i) of this definition.
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"Sponsors" shall mean, collectively, SKM Equity Fund III, L.P. and Trimaran
Fund II, L.L.C.
"Standby Letter of Credit" shall mean any standby letter of credit or
similar instrument issued for the purpose of supporting (a) workers'
compensation liabilities of Borrower or any of its Subsidiaries (or, in the case
of the Standby Letter of Credit to be issued on the Closing Date (as such Letter
of Credit may be renewed, extended or replaced in accordance with the provisions
of the Loan Documents), to the extent Borrower is jointly and severally liable
therefor, workers' compensation liabilities of Barjan Products, L.L.C. in
respect of occurrences on or prior to June 30, 2003), (b) the obligations of
third-party insurers of Borrower or any of its Subsidiaries arising by virtue of
the laws of any jurisdiction requiring third-party insurers to obtain such
letters of credit, (c) performance, payment, deposit or surety obligations of
Borrower or any of its Subsidiaries if required by law or governmental rule or
regulation or in accordance with custom and practice in the industry or (d)
Indebtedness of Borrower or any of its Subsidiaries permitted to be incurred
under Section 6.01.
"Statutory Reserves" shall mean, for any Interest Period for any Eurodollar
Borrowing, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during such
Interest Period under Regulation D by member banks of the United States Federal
Reserve System in New York City with deposits exceeding one billion dollars
against "Eurodollar liabilities" (as such term is used in Regulation D).
Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and
to be subject to such reserve requirements without benefit of or credit for
proration, exceptions or offsets which may be available from time to time to any
Lender under Regulation D.
"Subordinated Indebtedness" means Indebtedness of Borrower or any Guarantor
that is by its terms subordinated in right of payment to the Obligations of
Borrower and such Guarantor, as applicable, including the Senior Subordinated
Notes.
"Subsidiary" shall mean, with respect to any person (the "parent") at any
date, (i) any person the accounts of which would be consolidated with those of
the parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, (ii) any other
corporation, limited liability company, association or other business entity of
which securities or other ownership interests representing more than 50% of the
voting power of all Equity Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of the Board of Directors thereof
are, as of such date, owned, controlled or held by the parent and/or one or more
subsidiaries of the parent, (iii) any partnership (a) the sole general partner
or the managing general partner of which is the parent or a subsidiary of the
parent or (b) the only general partners of which are the parent and/or one or
more subsidiaries of the parent and (iv) any other person that is otherwise
Controlled by the parent and/or one or more subsidiaries of the parent. Unless
the context requires otherwise, "Subsidiary" refers to a Subsidiary of Borrower.
"Subsidiary Guarantor" shall mean each Subsidiary listed on Schedule
1.01(c), and each other Subsidiary that is or becomes a party to this Agreement
pursuant to Section 5.10.
"Successful Syndication" shall have the meaning given to such term in the
Fee Letter.
"Survey" shall mean a survey of any Mortgaged Property (and all
improvements thereon) which is (a)(i) prepared by a surveyor or engineer
licensed to perform surveys in the state where such Mortgaged Property is
located, (ii) dated (or redated) not earlier than six months prior to the date
of delivery thereof unless there shall have occurred within six months prior to
such date of delivery any exterior construction on the site of such Mortgaged
Property, in which event such survey shall be dated (or redated) after the
completion of such construction or if such construction shall not have been
completed as of such date of
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delivery, not earlier than 20 days prior to such date of delivery, (iii)
certified by the surveyor (in a manner reasonably acceptable to the
Administrative Agent) to the Administrative Agent, the Collateral Agent and the
Title Company, (iv) complying in all respects with the minimum detail
requirements of the American Land Title Association as such requirements are in
effect on the date of preparation of such survey and (v) sufficient for the
Title Company to remove all standard survey exceptions from the title insurance
policy (or commitment) relating to such Mortgaged Property and issue the
endorsements of the type required by Section 4.01(n)(iii) or (b) otherwise
acceptable to the Collateral Agent.
"Swingline Commitment" shall mean the commitment of the Swingline Lender to
make loans pursuant to Section 2.17, as the same may be reduced from time to
time pursuant to Section 2.07 or Section 2.17.
"Swingline Exposure" shall mean at any time the aggregate principal amount
at such time of all outstanding Swingline Loans. The Swingline Exposure of any
Revolving Lender at any time shall equal its Pro Rata Percentage of the
aggregate Swingline Exposure at such time.
"Swingline Lender" shall have the meaning assigned to such term in the
preamble hereto.
"Swingline Loan" shall mean any loan made by the Swingline Lender pursuant
to Section 2.17.
"Syndication Agent" shall have the meaning assigned to such term in the
preamble hereto.
"Tax Return" shall mean all returns, statements, filings, attachments and
other documents or certifications required to be filed in respect of Taxes.
"Taxes" shall mean (i) any and all present or future taxes, duties, levies,
imposts, assessments, deductions, withholdings or other similar charges, whether
computed on a separate, consolidated, unitary, combined or other basis and any
and all liabilities (including interest, fines, penalties or additions to tax)
with respect to the foregoing, and (ii) any transferee, successor, joint and
several, contractual or other liability (including, without limitation,
liability pursuant to Treasury Regulation (S)1.1502-6 (or any similar provision
of state, local or non-U.S. law)) in respect of any item described in clause
(i).
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment, if any, of such Lender to make a Term Loan hereunder on the Closing
Date in the amount set forth on Schedule I to the Lender Addendum executed and
delivered by such Lender. The initial aggregate amount of the Lenders' Term Loan
Commitments is $45,000,000.
"Term Loan Lender" shall mean a Lender with a Term Loan Commitment or an
outstanding Term Loan.
"Term Loan Maturity Date" shall mean the sixth anniversary of the Closing
Date, or if such day is not a Business Day, the immediately preceding Business
Day.
"Term Loan Repayment Date" shall have the meaning assigned to such term in
Section 2.09(a).
"Term Loans" shall mean the term loans made to Borrower pursuant to Section
2.01(a). Each Term Loan shall be either an ABR Term Loan or a Eurodollar Term
Loan.
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"Test Period" shall mean, at any time, the four consecutive fiscal quarters
of Borrower then last ended (in each case taken as one accounting period) for
which financial statements have been or are required to be delivered pursuant to
Section 5.01(a) or (b).
"Title Company" shall mean any title insurance company as shall be retained
by Borrower and reasonably acceptable to the Administrative Agent.
"Title Policy" shall have the meaning assigned to such term in Section
4.01(o).
"Transaction Documents" shall mean the Acquisition Documents, the Senior
Subordinated Note Documents and the Loan Documents.
"Transactions" shall mean, collectively, the transactions to occur on or
prior to the Closing Date pursuant to the Transaction Documents, including (a)
the consummation of the Acquisition; (b) the execution, delivery and performance
of the Loan Documents and the initial borrowings hereunder; (c) the Refinancing;
(d) the Equity Financing; (e) the exchange of the Rollover Equity; (f) the
effectiveness of the ▇▇▇▇▇▇ Employment; (g) the making of the ▇▇▇▇▇▇ Investment;
(h) the consummation of the Winnipeg Contribution; and (i) the payment of all
fees and expenses to be paid on or prior to the Closing Date and owing in
connection with the foregoing.
"Transferred Guarantor" shall have the meaning assigned to such term in
Section 7.09.
"Type," when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in any applicable state or jurisdiction.
"United States" shall mean the United States of America.
"U.S. Security Agreement" shall mean a security agreement substantially in
the form of Exhibit J-1 among each Loan Party that is incorporated or organized
in a jurisdiction that is the United States, any State thereof or the District
of Columbia and Collateral Agent for the benefit of the Secured Parties.
"Voting Stock" shall mean, with respect to any person, any class or classes
of Equity Interests pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect a majority of the Board of
Directors of such person.
"Wholly Owned Subsidiary" shall mean, as to any person, (a) any corporation
100% of whose capital stock (other than directors' qualifying shares) is at the
time owned by such person and/or one or more Wholly Owned Subsidiaries of such
person and (b) any partnership, association, joint venture, limited liability
company or other entity in which such person and/or one or more Wholly Owned
Subsidiaries of such person have a 100% equity interest at such time.
"Winnipeg Contribution" the contribution by ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ and his family
(or entities controlled by them) to Borrower of all of the Equity Interests of
Norcraft Canada Corporation, the owner of the manufacturing facility being built
by such persons that is under construction in Winnipeg, Canada in exchange for
common Equity Interests in Holdings.
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"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving
Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified and referred to
by Class (e.g., a "Revolving Borrowing", "Term Loan Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar
Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The term "manifest
error" shall be deemed to include any clearly demonstrable error whether or not
obvious on the face of document containing such error. The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (a) any definition of or reference to any Loan
Document, agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any person shall be construed to include such person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all financial statements to be delivered pursuant to this
Agreement shall be prepared in accordance with GAAP as in effect from time to
time and all terms of an accounting or financial nature shall be construed and
interpreted in accordance with GAAP, as in effect on the date hereof unless
otherwise agreed to by Borrower and the Required Lenders.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly:
(a) to make a Term Loan to Borrower on the Closing Date in a principal
amount not to exceed its Term Loan Commitment; and
(b) to make Revolving Loans to Borrower, at any time and from time to
time after the Closing Date until the earlier of the Revolving Maturity
Date and the termination of the Commitment of such Lender in accordance
with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in such Lender's Revolving Exposure
exceeding such Lender's Revolving Commitment.
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Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
Within the limits set forth in clause (b) above and subject to the terms,
conditions and limitations set forth herein, Borrower may borrow, pay or prepay
and reborrow Revolving Loans.
SECTION 2.02. Loans. (a) Each Loan (other than Swingline Loans) shall be
made as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their applicable Commitments; provided that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). Except for Loans deemed made pursuant to Section
2.18(e), Loans comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of $500,000 and not less than $1,000,000
or (ii) equal to the remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.11 and 2.12, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as Borrower may request pursuant to
Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing
any domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of
Borrower to repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time; provided
that Borrower shall not be entitled to request any Borrowing that, if made,
would result in more than ten Eurodollar Borrowings outstanding hereunder at any
one time. For purposes of the foregoing, Borrowings having different Interest
Periods, regardless of whether they commence on the same date, shall be
considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.18(e), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 1:00 p.m.,
New York City time, and the Administrative Agent shall promptly credit the
amounts so received to an account as directed by Borrower in the applicable
Borrowing Request maintained with the Administrative Agent or, if a Borrowing
shall not occur on such date because any condition precedent herein specified
shall not have been met, return the amounts so received to the respective
Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above, and the Administrative Agent may, in
reliance upon such assumption, make available to Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, each of such Lender and Borrower
severally agrees to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is repaid
to the Administrative Agent at (i) in the case of Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation. If such Lender shall repay to the Administrative
Agent such corresponding amount, such amount shall constitute such Lender's Loan
as part of such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, Borrower shall
not be entitled to request, or to elect to convert or continue, any Borrowing if
the Interest Period requested with respect thereto would end after the Revolving
Maturity Date or the Term Loan Maturity Date, as applicable.
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SECTION 2.03. Borrowing Procedure. To request a Revolving Borrowing or Term
Borrowing, Borrower shall deliver, by hand delivery or telecopy, a duly
completed and executed Borrowing Request to the Administrative Agent (i) in the
case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before the date of the proposed Borrowing or (ii) in the
case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the
date of the proposed Borrowing. Each Borrowing Request shall be irrevocable and
shall specify the following information in compliance with Section 2.02:
(a) whether the requested Borrowing is to be a Revolving Borrowing or
Term Loan Borrowing;
(b) the aggregate amount of such Borrowing;
(c) the date of such Borrowing, which shall be a Business Day;
(d) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(e) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period"; provided that at any time on or
before the earlier of (x) the date on which the Lead Arranger shall have
notified Borrower that a Successful Syndication has been achieved and (y)
the thirtieth day following the Closing Date, the Interest Period shall be
seven days;
(f) the location and number of Borrower's account to which funds are
to be disbursed, which shall comply with the requirements of Section 2.02;
and
(g) that the conditions set forth in Sections 4.02(b)-(e) are
satisfied as of the date of the notice.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then Borrower shall be
deemed to have selected an Interest Period of one month's duration (subject to
the proviso in clause (e) above). Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender's Loan to be
made as part of the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the account
of each Term Loan Lender, the principal amount of each Term Loan of such Term
Loan Lender as provided in Section 2.09, (ii) to the Administrative Agent for
the account of each Revolving Lender, the then unpaid principal amount of each
Revolving Loan of such Lender on the Revolving Maturity Date and (iii) to the
Swingline Lender the then unpaid principal amount of each Swingline Loan on the
earlier of the Revolving Maturity Date and the first date after such Swingline
Loan is made that is the 15th or last day of a calendar month and is at least
two Business Days after such Swingline Loan is made; provided that on each date
that a Revolving Borrowing is made, Borrower shall repay all Swingline Loans
that were outstanding on the date such Borrowing was requested.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
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(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type and Class thereof
and the Interest Period applicable thereto; (ii) the amount of any principal or
interest due and payable or to become due and payable from Borrower to each
Lender hereunder; and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) above shall, in the absence of manifest error, be prima facie evidence
of the existence and amounts of the obligations therein recorded; provided that
the failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligations of Borrower
to repay the Loans in accordance with their terms.
(e) Any Lender may request that Loans of any Class made by it be evidenced
by a promissory note. In such event, Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) in the form
of Exhibit ▇-▇, ▇-▇ ▇▇ ▇-▇, as the case may be. Thereafter, the Loans evidenced
by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 11.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.05. Fees.
(a) Commitment Fee. Borrower agrees to pay to the Administrative Agent for
the account of each Lender a commitment fee (a "Commitment Fee"), equal to the
Applicable Fee per annum on the average daily unused amount of each Commitment
of such Lender during the period from and including the Closing Date to but
excluding the date on which such Commitment terminates. Accrued Commitment Fees
shall be payable in arrears (i) on the last day of March, June, September and
December of each year (or if such last day is not a Business Day, the Business
Day immediately preceding such last day), commencing on the first such date to
occur after the date hereof, and (ii) on the date on which the Revolving
Commitments terminate. All Commitment Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). For purposes of computing
Commitment Fees, a Revolving Commitment of a Lender shall be deemed to be used
to the extent of the outstanding Revolving Loans and LC Exposure of such Lender
(and the Swingline Exposure of such Lender shall be disregarded for such
purpose).
(b) Administrative Agent Fees. Borrower agrees to pay to the Administrative
Agent, for its own account, the administrative fees set forth in the Fee Letter
or such other fees payable in the amounts and at the times separately agreed
upon between Borrower and the Administrative Agent (the "Administrative Agent
Fees").
(c) LC and Fronting Fees. Borrower agrees to pay (i) to the Administrative
Agent for the account of each Revolving Lender a participation fee ("LC
Participation Fee") with respect to its participations in Letters of Credit,
which shall accrue at a rate equal to the Applicable Margin from time to time
used to determine the interest rate on Eurodollar Revolving Loans pursuant to
Section 2.06 on the average daily amount of such Lender's LC Exposure (excluding
any portion thereof attributable to Reimbursement Obligations) during the period
from and including the Closing Date to but excluding the later of the date on
which such Lender's Revolving Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting
fee ("Fronting Fee"), which shall accrue at the rate of 0.25% per annum on the
average daily amount of the LC Exposure (excluding any portion thereof
attributable to Reimbursement Obligations) during the period from and including
the Closing Date to but excluding the later of the date of termination of the
Revolving Commitments and the
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date on which there ceases to be any LC Exposure, as well as the Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. LC Participation Fees
and Fronting Fees shall be payable in arrears (i) on the last day of March,
June, September and December of each year (or if such last day is not a Business
Day, the Business Day immediately preceding such last day), commencing on the
first such date to occur after the date hereof, and (ii) on the date on which
the Revolving Commitments terminate and any such fees accruing after the date on
which the Revolving Commitments terminate shall be payable on demand. Any other
fees payable to the Issuing Bank pursuant to this paragraph shall be payable
within 10 days after demand. All LC Participation Fees and Fronting Fees shall
be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that Borrower shall pay the Fronting Fees directly to
the Issuing Bank. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of Section
2.06(c), the Loans comprising each ABR Borrowing, including each Swingline Loan,
shall bear interest at a rate per annum equal to the Alternate Base Rate plus
the Applicable Margin in effect from time to time.
(b) Subject to the provisions of Section 2.06(c), the Loans comprising each
Eurodollar Borrowing shall bear interest at a rate per annum equal to the
Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin in effect from time to time.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by Borrower hereunder is not paid when
due, whether at stated maturity, upon acceleration or otherwise, such overdue
amount shall, to the extent permitted by applicable law, bear interest, after as
well as before judgment, at a rate per annum equal to (i) in the case of overdue
principal of any Loan, 2% plus the rate otherwise applicable to such Loan as
provided in the preceding paragraphs of this Section or (ii) in the case of any
other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in
paragraph (a) of this Section 2.06.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
pursuant to Section 2.06(c) shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan or a Swingline Loan, in each case, prior to the end of the Revolving
Availability Period), accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.
All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The applicable Alternate
Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent
in accordance with the provisions of this Agreement and such determination shall
be conclusive absent manifest error.
SECTION 2.07. Termination and Reduction of Commitments. (a) The Term Loan
Commitments shall automatically terminate at 5:00 p.m., New York City time, on
the Closing Date. The Re-
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volving Commitments, the Swingline Commitment, and the LC Commitment shall
automatically terminate on the Revolving Maturity Date.
(b) Borrower may at any time terminate, or from time to time reduce, the
Commitments of any Class; provided that (i) each reduction of the Commitments of
any Class shall be in an amount that is an integral multiple of $500,000 and not
less than $1,000,000 and (ii) the Revolving Commitments shall not be terminated
or reduced if, after giving effect to any concurrent prepayment of the Revolving
Loans in accordance with Section 2.10, the sum of the Revolving Exposures would
exceed the aggregate amount of Revolving Commitments.
(c) Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section 2.07(c)
at least three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by Borrower pursuant to
this Section 2.07(c) shall be irrevocable. Any termination or reduction of the
Commitments of any Class shall be permanent. Each reduction of the Commitments
of any Class shall be made ratably among the Lenders in accordance with their
respective Commitments of such Class.
SECTION 2.08. Interest Elections. (a) Each Revolving Borrowing and Term
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, Borrower may
elect to convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods
therefor, all as provided in this Section. Borrower may elect different options
with respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing. Notwithstanding anything to the contrary,
Borrower shall not be entitled to request any conversion or continuation that,
if made, would result in more than ten Eurodollar Borrowings outstanding
hereunder at any one time. This Section 2.08 shall not apply to Swingline
Borrowings, which may not be converted or continued.
(b) To make an election pursuant to this Section, Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if Borrower were requesting a
Revolving Borrowing or Term Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request substantially in the form of Exhibit D.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, or if outstanding Borrowings are being combined, allocation to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
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(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period"; provided that at any time on or before the earlier
of (x) the date on which the Lead Arranger shall have notified Borrower
that a Successful Syndication has been achieved and (y) the thirtieth day
following the Closing Date, the Interest Period shall be seven days.
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then Borrower shall be deemed to have selected
an Interest Period of one month's duration (subject to the proviso in clause
(iv) above).
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If an Interest Election Request with respect to a Eurodollar Borrowing
is not timely delivered prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to an ABR Borrowing.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and the Administrative Agent, at the request of the
Required Lenders, so notifies Borrower, then, after the occurrence and during
the continuance of such Event of Default (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.09. Amortization of Term Borrowings. (a) Borrower shall pay to
the Administrative Agent, for the account of the Lenders, on the dates set forth
on Annex II, or if any such date is not a Business Day, on the immediately
preceding Business Day (each such date being a "Term Loan Repayment Date"), a
principal amount of the Term Loans (as adjusted from time to time pursuant to
Section 2.10(h)) equal to the amount set forth on Annex II for such date,
together in each case with accrued and unpaid interest on the principal amount
to be paid to but excluding the date of such payment.
(b) To the extent not previously paid, all Term Loans shall be due and
payable on the Term Loan Maturity Date.
SECTION 2.10. Optional and Mandatory Prepayments of Loans.
(a) Optional Prepayments. Borrower shall have the right at any time and
from time to time to prepay any Borrowing, in whole or in part, subject to the
requirements of this Section 2.10; provided that each partial prepayment shall
be in an amount that is an integral multiple of $500,000 and not less than
$1,000,000.
(b) Revolving Loan Prepayments. (i) In the event of the termination of all
the Revolving Commitments, Borrower shall, on the date of such termination,
repay or prepay all its outstanding Revolving Borrowings and all outstanding
Swingline Loans and replace all outstanding Letters of Credit and/or deposit an
amount equal to the LC Exposure in the LC Sub-Account.
(ii) In the event of any partial reduction of the Revolving Commitments,
then (x) at or prior to the effective date of such reduction, the Administrative
Agent shall notify Borrower and the Revolving Lenders of the sum of the
Revolving Exposures after giving effect thereto and (y) if the sum of the Re-
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volving Exposures would exceed the aggregate amount of Revolving Commitments
after giving effect to such reduction, then Borrower shall, on the date of such
reduction, first, repay or prepay Swingline Loans, second, repay or prepay
Revolving Borrowings and third, replace or cash collateralize outstanding
Letters of Credit in accordance with the procedures set forth in Section
2.18(i), in an amount sufficient to eliminate such excess.
(iii) In the event that the sum of all Lenders' Revolving Exposures exceeds
the Revolving Commitments then in effect, Borrower shall, without notice or
demand, immediately first, repay or prepay Swingline Loans, second, repay or
prepay Revolving Borrowings, and third, replace or cash collateralize
outstanding Letters of Credit in accordance with the procedures set forth in
Section 2.18(i).
(iv) In the event that the aggregate LC Exposure exceeds the LC Commitment
then in effect, Borrower shall, without notice or demand, immediately replace or
cash collateralize outstanding Letters of Credit in accordance with the
procedures set forth in Section 2.18(i).
(c) Asset Sales. Not later than five Business Days following the receipt of
any Net Cash Proceeds of any Asset Sale, Borrower shall apply 100% of the Net
Cash Proceeds received with respect thereto to make prepayments in accordance
with Sections 2.10(h) and (i); provided that:
(i) no such prepayment shall be required under this Section 2.10(c)(i)
with respect to (A) the disposition of assets which constitutes a Casualty
Event or (B) Asset Sales for fair market value resulting in no more than
$100,000 in Net Cash Proceeds per Asset Sale (or series of related Asset
Sales) and less than $1.0 million in Net Cash Proceeds in any fiscal year;
provided that clause (B) shall not apply in the case of any Asset Sale
described in clause (b) of the definition thereof; and
(ii) so long as no Default shall then exist or would arise therefrom
and the aggregate of such Net Cash Proceeds of Asset Sales shall not exceed
$10.0 million in any fiscal year of Borrower, such proceeds shall not be
required to be so applied on such date to the extent that (A) Borrower
shall have delivered an Officers' Certificate to the Administrative Agent
on or prior to such date stating that such Net Cash Proceeds shall be used
to, to the extent permitted by Section 6.13(b), purchase assets or acquire
100% of the Equity Interests of any person that owns such assets no later
than 360 days following the date of such Asset Sale (which Officers'
Certificate shall set forth the estimates of the proceeds to be so
expended); and (B) all such Net Cash Proceeds in excess of $2.5 million in
the aggregate at any time shall be held in the Collateral Account and
released therefrom only in accordance with the provisions of Article IX;
provided that if any portion of such Net Cash Proceeds not required to be
applied to make prepayments shall not be utilized to purchase replacement
assets or acquire such Equity Interests within such 360-day period, such
unused portion shall be applied on the last day of such period as a
mandatory prepayment as provided in this Section 2.10(c); and provided,
further, that if the property subject to such Asset Sale constituted
Collateral, then all property purchased with the Net Cash Proceeds thereof
pursuant to this subsection shall be made subject to the Lien of the
applicable Security Documents in favor of the Collateral Agent, for its
benefit and for the benefit of the other Secured Parties in accordance with
Sections 5.10 and 5.11.
(d) Debt Issuance or Preferred Stock Issuance. Upon any Debt Issuance or
Preferred Stock Issuance after the Closing Date, Borrower shall make prepayments
in accordance with Sections 2.10(h) and (i) in an aggregate principal amount
equal to 100% of the Net Cash Proceeds of such Debt Issuance or Preferred Stock
Issuance, as the case may be.
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(e) Equity Issuance. Upon any Equity Issuance after the Closing Date,
Borrower shall make prepayments in accordance with Sections 2.10(h) and (i) in
an aggregate principal amount equal to 50% of the Net Cash Proceeds of such
Equity Issuance.
(f) Casualty Events. Not later than five Business Days following the
receipt of any Net Cash Proceeds from a Casualty Event with respect to any
property of Holdings or any of its Subsidiaries, Borrower shall apply an amount
equal to 100% of such Net Cash Proceeds to make prepayments in accordance with
Sections 2.10(h) and (i); provided that:
(i) so long as no Default shall then exist or arise therefrom, such
proceeds shall not be required to be so applied on such date to the extent
that (A) in the event such Net Cash Proceeds shall not exceed $10.0
million, Borrower shall have delivered an Officers' Certificate to the
Administrative Agent on or prior to such date stating that such proceeds
shall be used; or (B) in the event that such Net Cash Proceeds exceed $10.0
million, the Administrative Agent has elected by notice to Borrower on or
prior to such date to require such proceeds to be used, in each case, to
repair, replace or restore any property in respect of which such Net Cash
Proceeds were paid no later than 360 days following the date of receipt of
such proceeds (which Officers' Certificate shall set forth the estimates of
the proceeds to be so expended); provided that if the property subject to
such Casualty Event constituted Collateral under the Security Documents,
then all property purchased with the Net Cash Proceeds thereof pursuant to
this subsection shall be made subject to the Lien of the applicable
Security Documents in favor of the Collateral Agent, for its benefit and
for the benefit of the other Secured Parties in accordance with Sections
5.10 and 5.11;
(ii) all such Net Cash Proceeds in excess of $2.5 million in the
aggregate shall be held in the Collateral Account and released therefrom
only in accordance with the provisions of Article IX; and
(iii) if any portion of such Net Cash Proceeds shall not be so applied
within such 360-day period, such unused portion shall be applied on the
last day of such period as a mandatory prepayment as provided in this
Section 2.10(f).
(g) Excess Cash Flow. No later than the earlier of (i) 100 days after the
end of each fiscal year of Borrower, commencing with the fiscal year ending on
December 31, 2004, and (ii) the date on which the financial statements with
respect to such period are delivered pursuant to Section 5.01(a), Borrower shall
make prepayments in accordance with Sections 2.10(h) and (i) in an aggregate
principal amount equal to 50% of Excess Cash Flow for the fiscal year then
ended.
(h) Application of Prepayments. (i) Prior to any optional or mandatory
prepayment of Borrowings hereunder, Borrower shall select the Borrowing or
Borrowings to be prepaid and shall specify such selection in the notice of such
prepayment pursuant to paragraph (i) of this Section 2.10, subject to the
provisions of this Section 2.10(h). Any prepayments of Term Loans pursuant to
Section 2.10(c), (d), (e), (f) or (g) shall be applied to reduce scheduled
payments required under Section 2.09(a) on a pro rata basis among the payments
due on each Term Loan Repayment Date based on the payments then remaining to be
made on each such Term Loan Repayment Date and prepayments of Term Loans
pursuant to Section 2.10(a) shall be applied to reduce scheduled prepayments
required under Section 2.09(a), first, to such scheduled payments due with the
12 months following such prepayment and, second, on a pro rata basis among the
payments remaining to be made on each Term Loan Repayment Date. After
application of mandatory prepayments described above in this paragraph (h) and
to the extent there are mandatory prepayment amounts remaining after such
application, the Revolving Commitments shall be permanently reduced ratably
among the Revolving Lenders in accordance with their applicable Revolving
Commitments in an aggregate amount equal to such excess, and Borrower shall
comply with Section 2.10(b).
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(ii) Amounts to be applied pursuant to this Section 2.10 to the prepayment
of Term Loans and Revolving Loans shall be applied, as applicable, first to
reduce outstanding ABR Term Loans and ABR Revolving Loans, respectively. Any
amounts remaining after each such application shall be applied to prepay
Eurodollar Term Loans or Eurodollar Revolving Loans, as applicable.
Notwithstanding the foregoing, if the amount of any prepayment of Loans required
under this Section 2.10 shall be in excess of the amount of the ABR Loans at the
time outstanding (an "Excess Amount"), only the portion of the amount of such
prepayment as is equal to the amount of such outstanding ABR Loans shall be
immediately prepaid and, at the election of Borrower, the balance of such
required prepayment shall be either (A) deposited in the Collateral Account and
applied to the prepayment of Eurodollar Loans on the last day of the then
next-expiring Interest Period for Eurodollar Loans (with all interest accruing
thereon for the account of Borrower) or (B) prepaid immediately, together with
any amounts owing to the Lenders under Section 2.13; provided that (i) interest
in respect of such Excess Amount shall continue to accrue thereon at the rate
provided hereunder for the Loans which such Excess Amount is intended to repay
until such Excess Amount shall have been used in full to repay such Loans and
(ii) at any time while a Default has occurred and is continuing, the
Administrative Agent may, and upon written direction from the Required Lenders
shall, apply any or all proceeds then on deposit in the Collateral Account to
the payment of such Loans in an amount equal to such Excess Amount.
(i) Notice of Prepayment. Borrower shall notify the Administrative Agent
(and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time,
on the date of prepayment. Each such notice shall be irrevocable. Each such
notice shall specify the prepayment date, the principal amount of each Borrowing
or portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment. Promptly
following receipt of any such notice (other than a notice relating solely to
Swingline Loans), the Administrative Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Borrowing shall be in an amount
that would be permitted in the case of an advance of a Borrowing of the same
Type as provided in Section 2.02, except as necessary to apply fully the
required amount of a mandatory prepayment. Each prepayment of a Borrowing shall
be applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.06.
SECTION 2.11. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBOR Rate for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their
Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Bor-
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rowing shall be ineffective and (ii) if any Borrowing Request requests a
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.12. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBOR Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans
made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender, such
Lender's holding company or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or the Issuing Bank hereunder (whether of principal,
interest or otherwise), then Borrower will pay to such Lender or the Issuing
Bank, as the case may be, such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered, it being understood that, to the extent
duplicative of the provisions of Section 2.15, this Section 2.12 shall not apply
to Taxes.
(b) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have reasonably achieved but for such Change in Law
(taking into consideration such Lender's or the Issuing Bank's policies and the
policies of such Lender's or the Issuing Bank's holding company with respect to
capital adequacy), then from time to time Borrower will pay to such Lender or
the Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section 2.12 shall be delivered to Borrower and shall be conclusive absent
manifest error. Borrower shall pay such Lender or the Issuing Bank, as the case
may be, the amount shown as due on any such certificate within 20 days after
receipt thereof.
(d) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section 2.12 shall not constitute a waiver
of such Lender's or the Issuing Bank's right to demand such compensation;
provided that Borrower shall not be required to compensate a Lender or the
Issuing Bank pursuant to this Section 2.12 for any increased costs or reductions
incurred more than 180 days prior to the date that such Lender or the Issuing
Bank, as the case may be, notifies Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided, further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall not begin earlier than the date of
effectiveness of the Change in Law.
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SECTION 2.13. Breakage Payments. In the event of (a) the payment or
prepayment, whether optional or mandatory, of any principal of any Eurodollar
Loan earlier than the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Revolving
Loan or Term Loan on the date specified in any notice delivered pursuant hereto
or (d) the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by Borrower pursuant
to Section 2.16, then, in any such event, Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBOR Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section 2.13 shall be
delivered to Borrower and shall be conclusive absent manifest error. Borrower
shall pay such Lender the amount shown as due on any such certificate within 20
days after receipt thereof.
SECTION 2.14. Payments Generally; Pro Rata Treatment; Sharing of Setoffs.
(a) Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.12,
2.13 or 2.15, or otherwise) on or before the time expressly required hereunder
or under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 2:00 p.m., New York City time), on the date when
due, in immediately available funds, without setoff or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, except payments to be made directly to the
Issuing Bank or Swingline Lender as expressly provided herein and except that
payments pursuant to Sections 2.12, 2.13, 2.15 and 11.03 shall be made directly
to the persons entitled thereto and payments pursuant to other Loan Documents
shall be made to the persons specified therein. The Administrative Agent shall
distribute any such payments received by it for the account of any other person
to the appropriate recipient promptly following receipt thereof. If any payment
under any Loan Document shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable for
the period of such extension. All payments under each Loan Document shall be
made in dollars.
(b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, Reimbursement
Obligations, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and Reimbursement Obligations then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and Reimbursement
Obligations then due to such parties.
(c) If any Lender shall, by exercising any right of setoff or counterclaim
or otherwise (including by exercise of its rights under Section 9.1(a)(viii) of
the U.S. Security Agreement), obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations
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in LC Disbursements or Swingline Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans,
Term Loans and participations in LC Disbursements and Swingline Loans and
accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Revolving Loans, Term Loans and participations in
LC Disbursements and Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans; provided that (i) if any such participations
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to Borrower or
any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Borrower consents to the foregoing and agrees, to the
extent it may effectively do so under applicable law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of Borrower in the amount of such
participation.
(d) Unless the Administrative Agent shall have received notice from
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that Borrower
will not make such payment, the Administrative Agent may assume that Borrower
has made such payment on such date in accordance herewith and may, in reliance
upon such assumption, distribute to the Lenders or the Issuing Bank, as the case
may be, the amount due. In such event, if Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or Issuing Bank with interest thereon, for
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.02(c), 2.14(d), 2.17(d), 2.18(d), 2.18(e) or 11.03(d),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of Borrower hereunder or under any other Loan Document shall be made
without set-off, counterclaim or other defense and free and clear of and without
deduction or withholding for any and all Indemnified Taxes; provided that if
Borrower shall be required by law to deduct any Indemnified Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions or withholdings applicable
to additional sums payable under this Section 2.15) the Administrative Agent,
Lender or Issuing Bank (as the case may be) receives an amount equal to the sum
it would have received had no such deductions or withholdings been made, (ii)
Borrower shall make such deductions or withholdings and (iii) Borrower shall pay
the full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
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(c) Borrower shall indemnify the Administrative Agent, each Lender and the
Issuing Bank, within 10 Business Days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent, such Lender or the Issuing Bank, as the case may be, on or with respect
to any payment by or on account of any obligation of Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 2.15) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority; provided,
however, that the provisions of this sentence shall not require Borrower to
indemnify against any interest or penalties that result from the failure by the
Administrative Agent, any Lender or the Issuing Bank to timely file any tax
return relating to Indemnified Taxes or to pay when due the taxes shown on such
tax return; provided, further, however, that nothing in this sentence shall be
construed as preventing Borrower from contesting any tax which it believes was
wrongfully imposed so long as Borrower shall have first complied with the
provisions of this sentence. A certificate as to the amount of such payment or
liability delivered to Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by Borrower to a Governmental Authority, Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by Borrower as will permit such payments to be made without
withholding or at a reduced rate. In the case of a U.S. Borrower, each Foreign
Lender either (1) (i) agrees to furnish either U.S. Internal Revenue Service
Form W-8ECI or U.S. Internal Revenue Service Form W-8BEN (or successor form) and
(ii) agrees (for the benefit of Borrower and the Administrative Agent), to the
extent it may lawfully do so at such times, upon reasonable request by Borrower
or the Administrative Agent, to provide a new Form W-8ECI or Form W-8BEN (or
successor form) upon the expiration or obsolescence of any previously delivered
form to reconfirm any complete exemption from, or any entitlement to a reduction
in, U.S. federal withholding tax with respect to any interest payment hereunder
or (2) in the case of any such Foreign Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (i) agrees to furnish either (a) a
"Non-Bank Certificate" in a form acceptable to the Administrative Agent and
Borrower and two accurate and complete original signed copies of U.S. Internal
Revenue Service Form W-8BEN (or successor form) or (b) a U.S. Internal Revenue
Service Form W-8ECI (or successor form), certifying (in each case) to such
Foreign Lender's legal entitlement to an exemption or reduction from U.S.
federal withholding tax with respect to all interest payments hereunder and (ii)
agrees (for the benefit of Borrower and the Administrative Agent) to the extent
it may lawfully do so at such times, upon reasonable request by Borrower or the
Administrative Agent, to provide a new Form W-8BEN or W-8ECI (or successor form)
upon the expiration or obsolescence of any previously delivered form to
reconfirm any complete exemption from, or any entitlement to a reduction in,
U.S. federal withholding tax with respect to any interest payment hereunder.
(f) If the Administrative Agent or a Lender (or an assignee) determines in
its reasonable discretion that it has received a refund or credit in respect
thereof of any Indemnified Taxes or Other Taxes as to which it has been
indemnified by Borrower or with respect to which Borrower has paid additional
amounts pursuant to this Section 2.15, it shall pay over such refund to Borrower
(but only to the extent of
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indemnity payments made, or additional amounts paid, by Borrower under this
Section 2.15 with respect to the Indemnified Taxes or the Other Taxes giving
rise to such refund), net of all out-of-pocket expenses of the Administrative
Agent or such Lender (or assignee) and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such refund);
provided, however, that Borrower, upon the request of the Administrative Agent
or such Lender (or assignee), agrees to repay the amount paid over to Borrower
to the Administrative Agent or such Lender (or assignee) within a reasonable
time (not to exceed 20 days) after receipt of written notice that the
Administrative Agent or such Lender (or assignee) is required to repay such
refund to such Governmental Authority. Nothing contained in this Section 2.15(f)
shall require the Administrative Agent or any Lender (or assignee) to make
available its tax returns or any other information which it deems confidential
to Borrower or any other person. Notwithstanding anything to the contrary, in no
event will any Lender be required to pay any amount to Borrower the payment of
which would place such Lender in a less favorable net after-tax position than
such Lender would have been in had the additional amounts giving rise to such
refund of any Indemnified Taxes or Other Taxes never been paid in the first
place.
SECTION 2.16. Mitigation Obligations; Replacement of Lenders.
(a) Mitigation of Obligations. If any Lender requests compensation under
Section 2.12, or if Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.15, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the reasonable judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.12 or 2.15, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under
Section 2.12, or if Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.15, or if any Lender defaults in its obligation to fund Loans
hereunder, then Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 11.04), all of its interests, rights and obligations under
this Agreement to an assignee selected by Borrower that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) Borrower shall have received the prior written
consent of the Administrative Agent (and, if a Revolving Commitment is being
assigned, the Issuing Bank and Swingline Lender), which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans and participations in LC
Disbursements and Swingline Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder (assuming for this purpose that the
Loans of such Lender were being prepaid), from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.12 or payments required
to be made pursuant to Section 2.15, such assignment will result in a material
reduction in such compensation or payments. A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling Borrower to
require such assignment and delegation cease to apply.
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SECTION 2.17. Swingline Loans.
(a) Swingline Commitment. Subject to the terms and conditions set forth
herein, the Swingline Lender agrees to make Swingline Loans to Borrower from
time to time during the Revolving Availability Period, in an aggregate principal
amount at any time outstanding that will not result in (i) the aggregate
principal amount of outstanding Swingline Loans exceeding $5.0 million or (ii)
the sum of the total Revolving Exposures exceeding the total Revolving
Commitments; provided that the Swingline Lender shall not be required to make a
Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing
limits and subject to the terms and conditions set forth herein, Borrower may
borrow, repay and reborrow Swingline Loans.
(b) Swingline Loans. To request a Swingline Loan, Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 2:00 p.m., New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested Swingline Loan. Each
Swingline Loan shall be an ABR Loan. The Administrative Agent will promptly
advise the Swingline Lender of any such notice received from Borrower. The
Swingline Lender shall make each Swingline Loan available to Borrower by means
of a credit to the general deposit account of Borrower with the Swingline Lender
(or, in the case of a Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.18(e), by remittance to the Issuing Bank)
by 3:00 p.m., New York City time, on the requested date of such Swingline Loan.
Borrower shall not request a Swingline Loan if at the time of and immediately
after giving effect to such request a Default has occurred and is continuing.
Swingline Loans shall be made in minimum amounts of $100,000 and integral
multiples of $50,000 above such amount.
(c) Prepayment. Borrower shall have the right at any time and from time to
time to repay any Swingline Loan, in whole or in part, upon giving written or
telecopy notice (or telephone notice promptly confirmed by written, or telecopy
notice) to the Swingline Lender and to the Administrative Agent before 12:00
(noon), New York City time on the date of repayment at the Swingline Lender's
address for notices specified in the Swingline Lender's Administrative
Questionnaire. All principal payments of Swingline Loans shall be accompanied by
accrued interest on the principal amount being repaid to the date of payment.
(d) Participations. The Swingline Lender may by written notice given to the
Administrative Agent not later than 12:00 noon, New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will participate. Promptly upon receipt of such notice, the Administrative Agent
will give notice thereof to each Revolving Lender, specifying in such notice
such Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each
Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of
notice as provided above, to pay to the Administrative Agent, for the account of
the Swingline Lender, such Lender's Pro Rata Percentage of such Swingline Loan
or Loans. Each Revolving Lender acknowledges and agrees that its obligation to
acquire participations in Swingline Loans pursuant to this paragraph is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever (provided that such
payment shall not cause such Lender's Revolving Exposure to exceed such Lender's
Revolving Commitment). Each Revolving Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds, in the
same manner as provided in Section 2.02(c) with respect to Loans made by such
Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment
obligations of the Revolving Lenders), and the Administrative Agent shall
promptly pay to the Swingline
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Lender the amounts so received by it from the Revolving Lenders. The
Administrative Agent shall notify Borrower of any participations in any
Swingline Loan acquired pursuant to this paragraph, and thereafter payments in
respect of such Swingline Loan shall be made to the Administrative Agent and not
to the Swingline Lender. Any amounts received by the Swingline Lender from
Borrower (or other party on behalf of Borrower) in respect of a Swingline Loan
after receipt by the Swingline Lender of the proceeds of a sale of
participations therein shall be promptly remitted to the Administrative Agent;
any such amounts received by the Administrative Agent shall be promptly remitted
by the Administrative Agent to the Revolving Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve Borrower of any default in the
payment thereof.
SECTION 2.18. Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, Borrower
may request the Issuing Bank, and the Issuing Bank agrees, to issue Letters of
Credit for its own account or the account of a Subsidiary in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time during the Revolving Availability Period (provided that
Borrower shall be a co-applicant, and be jointly and severally liable, with
respect to each Letter of Credit issued for the account of or in favor of a
Subsidiary). The Issuing Bank shall have no obligation to issue, and Borrower
shall not request the issuance of, any Letter of Credit at any time if after
giving effect to such issuance, the LC Exposure would exceed the LC Commitment
or the total Revolving Exposure would exceed the total Revolving Commitments. In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by Borrower to, or entered into by
Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.
(b) Request for Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit or the amendment,
renewal or extension of an outstanding Letter of Credit, Borrower shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Bank) an LC Request to the
Issuing Bank and the Administrative Agent not later than 11:00 a.m. on the third
Business Day preceding the requested date of issuance, amendment, renewal or
extension (or such later date and time as is acceptable to the Issuing Bank).
A request for an initial issuance of a Letter of Credit shall specify in
form and detail satisfactory to the Issuing Bank:
(i) the proposed issuance date of the requested Letter of Credit
(which shall be a Business Day);
(ii) the amount thereof;
(iii) the expiry date thereof (which shall not be later than the close
of business 15 days prior to the Revolving Maturity Date);
(iv) the name and address of the beneficiary thereof;
(v) whether the Letter of Credit is to be issued for its own account
or for the account of one if its Subsidiaries (provided that Borrower shall
be a co-applicant, and therefore jointly and severally liable, with respect
to each Letter of Credit issued for the account of a Subsidiary);
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(vi) the documents to be presented by such beneficiary in connection
with any drawing thereunder;
(vii) the full text of any certificate to be presented by such
beneficiary in connection with any drawing thereunder; and
(viii) such other matters as the Issuing Bank may require.
A request for an amendment, renewal or extension of any outstanding Letter
of Credit shall specify in form and detail satisfactory to the Issuing Bank:
(i) the Letter of Credit to be amended, renewed or extended;
(ii) the proposed date of amendment, renewal or extension thereof
(which shall be a Business Day);
(iii) the nature of the proposed amendment, renewal or extension; and
(iv) such other matters as the Issuing Bank may require.
If requested by the Issuing Bank, Borrower also shall submit a letter of
credit application on the Issuing Bank's standard form in connection with any
request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i)
the LC Exposure shall not exceed $10.0 million and (ii) the total Revolving
Exposures shall not exceed the total Revolving Commitments. Unless the Issuing
Bank shall agree otherwise, no Letter of Credit shall be in an initial amount
less than $100,000, in the case of a Commercial Letter of Credit, or $500,000,
in the case of a Standby Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) in the case of a Standby Letter of
Credit, (x) the date which is one year after the date of the issuance of such
Standby Letter of Credit (or, in the case of any renewal or extension thereof,
one year after such renewal or extension) and (y) the Letter of Credit
Expiration Date and (ii) in the case of a Commercial Letter of Credit, (x) the
date that is 180 days after the date of issuance of such Commercial Letter of
Credit (or, in the case of any renewal or extension thereof, 180 days after such
renewal or extension) and (y) the Letter of Credit Expiration Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
irrevocably grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Revolving Lender's Pro Rata Percentage of the aggregate amount available
to be drawn under such Letter of Credit. In consideration and in furtherance of
the foregoing, each Revolving Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the Issuing Bank,
such Revolving Lender's Pro Rata Percentage of each LC Disbursement made by the
Issuing Bank and not reimbursed by Borrower on the date due as provided in
paragraph (e) of this Section 2.18, or of any reimbursement payment required to
be refunded to Borrower for any reason. Each Revolving Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance
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of a Default or reduction or termination of the Commitments, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
respect of a Letter of Credit, Borrower shall reimburse such LC Disbursement by
paying to the Issuing Bank an amount equal to such LC Disbursement not later
than 2:00 p.m., New York City time, on the date that such LC Disbursement is
made, if Borrower shall have received notice of such LC Disbursement prior to
11:00 a.m., New York City time, on such date, or, if such notice has not been
received by Borrower prior to such time, on such date, then not later than 2:00
p.m., New York City time on (i) the Business Day that Borrower receives such
notice, if such notice is received prior to 11:00 a.m., New York City time, on
the day of receipt, or (ii) the Business Day immediately following the day that
Borrower receives such notice, if such notice is not received prior to such time
on the day of receipt; provided that Borrower may, subject to the conditions to
borrowing set forth herein, request in accordance with Section 2.03 that such
payment be financed with an ABR Revolving Borrowing in an equivalent amount and,
to the extent so financed, Borrower's obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing.
If Borrower fails to make such payment when due, the Issuing Bank shall
notify the Administrative Agent and the Administrative Agent shall notify each
Revolving Lender of the applicable LC Disbursement, the payment then due from
Borrower in respect thereof and such Revolving Lender's Pro Rata Percentage
thereof. Each Revolving Lender shall pay by wire transfer of immediately
available funds to the Administrative Agent on such date (or, if such Revolving
Lender shall have received such notice later than 12:00 noon on any day, not
later than 11:00 a.m. on the immediately following Business Day), an amount
equal to such Revolving Lender's Pro Rata Percentage of the unreimbursed LC
Disbursement in the same manner as provided in Section 2.02(c) with respect to
Revolving Loans made by such Revolving Lender, and the Administrative Agent will
promptly pay to the Issuing Bank the amounts so received by it from the
Revolving Lenders. The Administrative Agent will promptly pay to the Issuing
Bank any amounts received by it from Borrower pursuant to the above paragraph
prior to the time that any Revolving Lender makes any payment pursuant to the
preceding sentence; any such amounts received by the Administrative Agent
thereafter will be promptly remitted by the Administrative Agent to the
Revolving Lenders that shall have made such payments and to the Issuing Bank, as
appropriate.
If any Revolving Lender shall not have made its Pro Rata Percentage of such
LC Disbursement available to the Administrative Agent as provided above, each of
such Revolving Lender and Borrower severally agrees to pay interest on such
amount, for each day from and including the date such amount is required to be
paid in accordance with the foregoing to but excluding the date such amount is
paid, to the Administrative Agent for the account of the Issuing Bank at (i) in
the case of Borrower, the rate per annum set forth in Section 2.18(h) and (ii)
in the case of such Lender, at a rate determined by the Administrative Agent in
accordance with banking industry rules or practices on interbank compensation.
(f) Obligations Absolute. The Reimbursement Obligation of Borrower as
provided in Section 2.18(e) shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
under any and all circumstances whatsoever and irrespective of (i) any lack of
validity or enforceability of any Letter of Credit or this Agreement, or any
term or provision therein; (ii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(iii) payment by the Issuing Bank under a Letter of Credit against presentation
of a draft or other document that fails to comply with the terms of such Letter
of Credit; (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 2.18, constitute a legal or equitable discharge of, or provide a right
of setoff against, the obligations of Borrower hereunder; (v) the fact that a
Default or Event of Default shall have occurred and be continu-
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ing; and (vi) any adverse change in the business, assets, property, results of
operations, prospects or condition, financial or otherwise, of Borrower and its
Subsidiaries. None of the Agents, the Lenders, the Issuing Bank or any of their
Affiliates, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by Borrower to the extent permitted by applicable law) suffered by Borrower that
are caused by the Issuing Bank's failure to exercise due care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, the Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and Borrower by telephone (confirmed by telecopy) of such
demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve Borrower of its Reimbursement Obligation to the
Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement
(other than with respect to the timing of such Reimbursement Obligation set
forth in Section 2.18(e)).
(h) Interim Interest. If the Issuing Bank shall make any LC Disbursement,
then, unless Borrower shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest
payable on demand, for each day from and including the date such LC Disbursement
is made to but excluding the date that Borrower reimburses such LC Disbursement,
at the rate per annum as determined pursuant to Section 2.06(c). Interest
accrued pursuant to this paragraph shall be for the account of the Issuing Bank,
except that interest accrued on and after the date of payment by any Revolving
Lender pursuant to paragraph (e) of this Section 2.18 to reimburse the Issuing
Bank shall be for the account of such Lender to the extent of such payment.
(i) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, Borrower shall deposit in the LC Sub-Account, in the
name of the Collateral Agent and for the benefit of the Revolving Lenders, an
amount in cash equal to the LC Exposure as of such date plus any accrued and
unpaid interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to Borrower described in
paragraph (g) or (h) of Article VIII. Each such deposit shall be held by the
Collateral Agent
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as collateral for the payment and performance of the obligations of Borrower
under this Agreement. The Collateral Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Collateral Agent and at
the risk and expense of Borrower, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Collateral Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the satisfaction
of the reimbursement obligations of Borrower for the LC Exposure at such time
or, if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Lenders with LC Exposure representing greater than
two-thirds of the total LC Exposure), be applied to satisfy other Obligations of
Borrower under this Agreement. If Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount plus any accrued interest or realized profits of such amounts (to
the extent not applied as aforesaid) shall be returned to Borrower within three
Business Days after all Events of Default have been cured or waived.
(j) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign
as Issuing Bank hereunder at any time upon at least 30 days' prior notice to the
Lenders, the Administrative Agent and Borrower. The Issuing Bank may be replaced
at any time by written agreement among Borrower, each Agent, the replaced
Issuing Bank and the successor Issuing Bank. The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank or any such
additional Issuing Bank. At the time any such resignation or replacement shall
become effective, Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.05(c). From and after the
effective date of any such resignation or replacement or addition, as
applicable, (i) the successor or additional Issuing Bank shall have all the
rights and obligations of the Issuing Bank under this Agreement with respect to
Letters of Credit to be issued by it thereafter and (ii) references herein to
the term "Issuing Bank" shall be deemed to refer to such successor or such
addition or to any previous Issuing Bank, or to such successor or such addition
and all previous Issuing Banks, as the context shall require. After the
resignation or replacement of an Issuing Bank hereunder, the replaced Issuing
Bank shall remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement with respect to Letters of
Credit issued by it prior to such resignation or replacement, but shall not be
required to issue additional Letters of Credit. If at any time there is more
than one Issuing Bank hereunder, Borrower may, in its discretion, select which
Issuing Bank is to issue any particular Letter of Credit.
(k) Additional Issuing Banks. Borrower may, at any time and from time to
time with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld) and such Revolving Lender, designate one or more
additional Revolving Lenders to act as an issuing bank under the terms of this
Agreement, with the consent of the Administrative Agent (which consent shall not
be unreasonable withheld), the Issuing Bank and such Revolving Lender. Any
Lender designated as an issuing bank pursuant to this paragraph (k) shall be
deemed (in addition to being a Revolving Lender) to be the Issuing Bank with
respect to Letters of Credit issued or to be issued by such Revolving Lender,
and all references herein and in the other Loan Documents to the term "Issuing
Bank" shall, with respect to such Letters of Credit, be deemed to refer to such
Revolving Lender in its capacity as Issuing Bank, as the context shall require.
The Issuing Bank shall be under no obligation to issue any Letter of Credit
if:
(i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuing
Bank from issuing such Letter of Credit, or any law applicable to the
Issuing Bank or any request or directive (whether or not having the force
of law) from any Governmental Authority with jurisdiction over the Issuing
Bank shall prohibit, or request that the Issuing Bank refrain from, the
issuance of letters of credit generally or
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such Letter of Credit in particular or shall impose upon the Issuing Bank
with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the Issuing Bank is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the
Issuing Bank any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the Issuing Bank in good ▇▇▇▇▇
▇▇▇▇▇ material to it; or
(ii) the issuance of such Letter of Credit would violate one or more
policies of the Issuing Bank.
The Issuing Bank shall be under no obligation to amend any Letter of Credit
if (A) the Issuing Bank would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the
beneficiary of such Letter of Credit does not accept the proposed amendment to
such Letter of Credit.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders (with references to
the Companies being references thereto after giving effect to the Transactions
unless otherwise expressly stated) that:
SECTION 3.01. Organization; Powers. Each Company (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to carry on its business as now conducted and
to own and lease its property and (c) is qualified and in good standing (to the
extent such concept is applicable in the applicable jurisdiction) to do business
in every jurisdiction where such qualification is required, except in such
jurisdictions where the failure to so qualify or be in good standing,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.02. Authorization; Enforceability. The Transactions to be entered
into by each Loan Party are within such Loan Party's powers and have been duly
authorized by all necessary action. This Agreement has been duly executed and
delivered by each Loan Party and constitutes, and each other Loan Document to
which any Loan Party is to be a party, when executed and delivered by such Loan
Party, will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. Except as set forth on
Schedule 3.03, the Transactions (a) do not require any consent or approval of,
registration or filing with, or any other action by, any Governmental Authority,
except (i) such as have been obtained or made and are in full force and effect,
(ii) filings necessary to perfect Liens created by the Loan Documents and (iii)
consents, approvals, registrations, filings or actions the failure of which to
obtain or perform could not reasonably be expected to result in a Material
Adverse Effect, (b) will not violate the Organizational Documents of any Company
or any order of any Governmental Authority, (c) will not violate, result in a
default or require any consent or approval under any applicable law or
regulation, indenture, agreement or other instrument binding upon any Company or
its assets, or give rise to a right thereunder to require any payment to be made
by any Company, except for violations, defaults or the creation of such rights
that
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could not reasonably be expected to result in a Material Adverse Effect, and (d)
will not result in the creation or imposition of any Lien on any property of any
Company, except Liens created by the Loan Documents and Permitted Liens.
SECTION 3.04. Financial Statements. (a) Borrower has heretofore furnished
to the Lenders the consolidated balance sheets and related statements of income,
members' equity and cash flows of Borrower (i) as of and for the fiscal years
ended December 31, 2001 and 2002, audited by and accompanied by the unqualified
opinion of PricewaterhouseCoopers LLP, independent public accountants and (ii)
(a) as of and for the six-month periods ended June 30, 2003 and 2002 and (b) as
of August 31, 2003 and for the two and eight months ended August 31, 2002 and
2003, certified by the chief financial officer of Borrower. Such financial
statements have been prepared, in the case of clauses (i) and (ii)(a), in
accordance with GAAP consistently applied and, in the case of clauses (i),
(ii)(a) and (ii)(b), present fairly in all material respects the financial
condition, results of operations and cash flows of Borrower as of such dates and
for such periods, subject, in the case of the financial statements referred to
in clause (ii) of this Section 3.04, to normal year-end audit adjustments and
the absence of footnotes. Except as set forth in such financial statements,
there are no liabilities of any Company of any kind, whether accrued,
contingent, absolute, determined, determinable or otherwise, which could
reasonably be expected to result in a Material Adverse Effect, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability, other than liabilities under the Loan
Documents and the Senior Subordinated Note Documents.
(b) Borrower has heretofore delivered to the Lenders Borrower's unaudited
pro forma consolidated balance sheets and statements of income and pro forma
EBITDA as of June 30, 2003 and September 30, 2003, and for the fiscal year ended
December 31, 2002 and the six months and twelve months ended June 30, 2003 and
twelve months ended September 30, 2003, in each case, prepared on a basis
consistent with the one described in the Offering Memorandum under "Unaudited
pro forma financial information." Such pro forma financial statements have been
prepared in good faith by the Loan Parties, based on the assumptions stated
therein (which assumptions are believed by the Loan Parties to be reasonable),
are based on the best information available to the Loan Parties as of the date
of delivery thereof, accurately reflect all adjustments required to be made to
give effect to the transactions described in the Offering Memorandum under
"Unaudited pro forma financial information", and, other than pro forma EBITDA,
in accordance with Regulation S-X, and present fairly in all material respects
on a pro forma basis the consolidated financial position and results of
operations of Borrower as of and for such dates, assuming that the Transactions
had actually occurred at such dates.
Since December 31, 2002, there has been no event, change or occurrence
that, individually or in the aggregate, has had or could reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.05. No Claims. Each Company owns or has rights to use all of the
Collateral and all rights with respect to any of the foregoing used in,
necessary for or material to each Company's business as currently conducted. The
use by each Company of such Collateral and all such rights with respect to the
foregoing do not infringe on the rights of any person other than such
infringement which would not, individually or in the aggregate, result in a
Material Adverse Effect. No claim has been made and remains outstanding that any
Company's use of any Collateral does or may violate the rights of any third
person that would individually, or in the aggregate, have a Material Adverse
Effect.
SECTION 3.06. Properties. (a) Each Company has good title to, or valid
leasehold interests in, all its property material to its business, free and
clear of all Liens except for (x) Permitted Collateral Liens and (y) minor
irregularities or deficiencies in title that, individually or in the aggregate,
do not interfere with its ability to conduct its business as currently conducted
or to utilize such property for its in-
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tended purpose. The property of the Companies, taken as a whole, (i) is in good
operating order, condition and repair (ordinary wear and tear excepted) (except
to the extent that the failure to be in such condition could not reasonably be
expected to result in a Material Adverse Effect) and (ii) constitutes all the
property which is required for the business and operations of the Companies as
presently conducted.
(b) Schedule 3.06(b) contains a true and complete list of each interest in
Real Property owned by any Company as of the date hereof and describes the type
of interest therein held by such Company. Schedule 3.06(b) contains a true and
complete list of each Real Property leased, subleased or otherwise occupied or
utilized by any Company, as lessee, sublessee, franchisee or licensee, as of the
date hereof and describes the type of interest therein held by such Company and
whether such lease, sublease or other instrument requires the consent of the
landlord thereunder or other parties thereto to the Transactions.
(c) (i) No Company has received any notice of, nor has any knowledge of,
the occurrence or pendency or contemplation of any Casualty Event affecting all
or any material portion of its property and (ii) unless flood insurance shall
have been obtained in accordance with Section 5.04, no Mortgage encumbers
improved Real Property that is located in an area that has been identified by
the Secretary of Housing and Urban Development as an area having special flood
hazards and with respect to which flood insurance has been made available under
the National Flood Insurance Act of 1968.
SECTION 3.07. Intellectual Property.
(a) Ownership/No Claims. Each Loan Party owns, or is licensed to use, all
patents, patent applications, trademarks, trade names, servicemarks, copyrights,
technology, trade secrets, proprietary information, domain names, know-how and
processes necessary for the conduct of its business as currently conducted (the
"Intellectual Property"), except for those the failure to own or license which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. No claim has been asserted and is pending by any
person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does any
Loan Party know of any valid basis for any such claim. The use of such
Intellectual Property by each Loan Party does not infringe the rights of any
person, except for such claims and infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(b) Registrations. Except pursuant to licenses and other user agreements
entered into by each Loan Party in the ordinary course of business that are
listed in Schedules 15(a) and 15(b) annexed to the Perfection Certificate, on
and as of the date hereof (i) each Loan Party owns and possesses the right to
use, and has done nothing to authorize or enable any other person to use, any
Copyright, Patent or Trademark (as such terms are defined in the U.S. Security
Agreement) listed in Schedules 15(a) and 15(b) annexed to the Perfection
Certificate and (ii) all registrations listed in Schedules 15(a) and 15(b)
annexed to the Perfection Certificate are valid and in full force and effect.
(c) No Violations or Proceedings. Except as set forth on Schedule 3.07(c),
to each Loan Party's knowledge, on and as of the date hereof, (i) there is no
material violation by others of any right of such Loan Party with respect to any
Copyright, Patent or Trademark listed in Schedules 15(a) and 15(b) annexed to
the Perfection Certificate, respectively, pledged by it under the name of such
Loan Party, (ii) such Loan Party is not infringing upon any Copyright, Patent or
Trademark of any other person other than such infringement that, individually or
in the aggregate, would not (or would not reasonably be expected to) result in a
Material Adverse Effect on the value or utility of the Intellectual Property or
any portion thereof material to the use and operation of the Collateral and
(iii) no proceedings have been instituted or are pending against such Loan Party
or threatened, and no claim against such Loan Party has been received by such
Loan Party, alleging any such violation.
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SECTION 3.08. Condition and Maintenance of Equipment. The Equipment of each
Company is in good repair, working order and condition, reasonable wear and tear
excepted. Each Company shall cause the Equipment to be maintained and preserved
in good repair, working order and condition, reasonable wear and tear excepted,
and shall as quickly as commercially practicable make or cause to be made all
repairs, replacements and other improvements which are necessary in the conduct
of each Company's business.
SECTION 3.09. Equity Interests and Subsidiaries. (a) Schedule 3.09(a) sets
forth a list of (i) all the Subsidiaries of Borrower and their jurisdiction of
organization as of the Closing Date and (ii) the number of shares of each class
of its Equity Interests authorized, and the number outstanding, on the Closing
Date and the number of shares covered by all outstanding options, warrants,
rights of conversion or purchase and similar rights at the Closing Date. All
Equity Interests of each Company (other than Holdings) are duly and validly
issued and are fully paid and non-assessable and are owned by Holdings or
Borrower, directly or indirectly through Wholly Owned Subsidiaries, and all
Equity Interests of Borrower are owned directly by Holdings. Each Loan Party is
the record and beneficial owner of, and has good and marketable title to, the
Equity Interests pledged by it under any Security Agreement, free of any and all
Liens, rights or claims of other persons, except the security interest created
by the Security Agreements, and there are no outstanding warrants, options or
other rights to purchase, or shareholder, voting trust or similar agreements
outstanding with respect to, or property that is convertible into, or that
requires the issuance or sale of, any such Equity Interests.
(b) No consent of any person including any other general or limited
partner, any other member of a limited liability company, any other shareholder
or any other trust beneficiary is necessary in connection with the creation,
perfection or first priority status of the security interest of the Collateral
Agent in any Equity Interests pledged to the Collateral Agent for the benefit of
the Secured Parties under the Security Agreements or the exercise by the
Collateral Agent of the voting or other rights provided for in the Security
Agreements or the exercise of remedies in respect thereof.
(c) An accurate organization chart, showing the ownership structure of
Holdings, Borrower and each Subsidiary on the Closing Date, and after giving
effect to the Transactions, is set forth on Schedule 3.09(c).
SECTION 3.10. Litigation; Compliance with Laws. (a) There are no actions,
suits or proceedings at law or in equity by or before any Governmental Authority
now pending or, to the knowledge of any Company, threatened against or affecting
any Company or any business, property or rights of any such person (i) that
involve any Loan Document or any of the Transactions or (ii) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
(b) Except for matters covered by Section 3.20, no Company or any of its
property is in violation of, nor will the continued operation of its property as
currently conducted violate, any Requirements of Law (including any zoning or
building ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting the Real Property or is in
default with respect to any judgment, writ, injunction, decree or order of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.11. Agreements. (a) No Company is a party to any agreement or
instrument or subject to any corporate or other constitutional restriction that
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
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(b) No Company is in default in any manner under any provision of any
indenture or other agreement or instrument evidencing Indebtedness, or any other
agreement or instrument to which it is a party or by which it or any of its
property are or may be bound, where such default could reasonably be expected to
result in a Material Adverse Effect.
(c) Schedule 3.11(c) accurately and completely lists all material
agreements (other than leases of Real Property set forth on Schedule 3.06(b)) to
which any Company is a party which are in effect on the date hereof in
connection with the operation of the business conducted thereby and Borrower has
delivered to the Administrative Agent complete and correct copies of all such
material agreements, including any amendments, supplements or modifications with
respect thereto.
SECTION 3.12. Federal Reserve Regulations. (a) No Company is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of, or that is inconsistent
with, the provisions of the regulations of the Board, including Regulation T, U
or X. The pledge of the Securities Collateral pursuant to the Security
Agreements does not violate such regulations.
SECTION 3.13. Investment Company Act; Public Utility Holding Company Act.
No Company is (a) an "investment company" or a company "controlled" by an
"investment company," as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended, or (b) a "holding company," an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
SECTION 3.14. Use of Proceeds. Borrower will used the proceeds of (a) the
Revolving Loans in an aggregate amount not to exceed $5.0 million and all of the
Term Loans to finance the Transactions (including the working capital purchase
price adjustment pursuant to the Acquisition Agreement) and pay related fees and
expenses and (b) the Revolving Loans after the Closing Date for general
corporate purposes (including to effect Permitted Acquisitions).
SECTION 3.15. Taxes. Each Company has (a) timely filed or caused to be
timely filed all federal Tax Returns and all material, state, local and foreign
Tax Returns or materials required to have been filed by it and all such Tax
Returns are true and correct in all material respects and has (b) duly and
timely paid or caused to be duly and timely paid all Taxes (whether or not shown
on any Tax Return) due and payable by it and all assessments received by it,
except Taxes (i) that are being contested in good faith by appropriate
proceedings and for which such Company shall have set aside on its books
adequate reserves in accordance with GAAP or (ii) which could not, individually
or in the aggregate, have a Material Adverse Effect; provided that any such
contest of Taxes with respect to Collateral shall also satisfy the Contested
Collateral Lien Conditions. Each Company has made adequate provision in
accordance with GAAP for all Taxes not yet due and payable. Each Company is
unaware of any proposed or pending tax assessments, deficiencies or audits that
could be reasonably expected to, individually or in the aggregate, result in a
Material Adverse Effect.
SECTION 3.16. No Material Misstatements. No information, report, financial
statement, exhibit or schedule furnished by or on behalf of any Company to the
Administrative Agent or any Lender in connection with the negotiation of any
Loan Document or included therein or delivered pursuant thereto (including the
Confidential Information Memorandum), taken as a whole, contained or contains
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any material misstatement of fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading as of the date such
information is dated or certified; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, each Company represents only that it acted
in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.17. Labor Matters. As of the date hereof and the Closing Date,
there are no strikes, lockouts or slowdowns against any Company pending or, to
the knowledge of any Company, threatened. The hours worked by and payments made
to employees of any Company have not been in violation of the Fair Labor
Standards Act or any other applicable federal, state, local or foreign law
dealing with such matters in any manner which could reasonably be expected to
result in a Material Adverse Effect. All payments due from any Company, or for
which any claim may be made against any Company, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of such Company except where the failure to
do so could not reasonably be expected to result in a Material Adverse Effect.
The consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which any Company is bound.
SECTION 3.18. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan, (a) the fair value of the assets of each Loan Party (individually and on a
consolidated basis with its Subsidiaries) will exceed its debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of each Loan Party (individually and on a consolidated basis with
its Subsidiaries) will be greater than the amount that will be required to pay
the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (c) each Loan Party (individually and on a consolidated basis with its
Subsidiaries) will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (d) each Loan Party (individually and on a consolidated basis with
its Subsidiaries) will not have unreasonably small capital with which to conduct
its business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.
SECTION 3.19. Employee Benefit Plans. (a) Each Company and each Plan to
which any Company contributes any assets is in compliance in all material
respects with the applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder. No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in material
liability of any Company or the imposition of a Lien on any of the assets of a
Company. The present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$5,000,000 the fair market value of the assets of all such underfunded Plans.
Using actuarial assumptions and computation methods consistent with subpart 1 of
subtitle E of Title IV of ERISA, the aggregate liabilities of each Company or
its ERISA Affiliates to all Multiemployer Plans in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Multiemployer Plan, could not reasonably be expected to result in a
Material Adverse Effect.
(b) To the extent applicable, each Foreign Plan has been maintained in
substantial compliance with its terms and with the requirements of any and all
applicable laws, statutes, rules, regulations and orders and has been
maintained, where required, in good standing with applicable regulatory
authori-
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ties. No Company has incurred any material obligation in connection with the
termination of or withdrawal from any Foreign Plan.
SECTION 3.20. Environmental Matters. (a) Except as set forth in Schedule
3.20 and except as, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect:
(1) The Companies and their businesses, operations and Real Property
are and in the last six years have been in compliance with, and the
Companies have no liability under, Environmental Law;
(2) The Companies have obtained all Environmental Permits required for
the conduct of their businesses and operations, and the ownership,
operation and use of their assets, under Environmental Law, all such
Environmental Permits are valid and in good standing and, under the
currently effective business plan of the Companies, no expenditures or
operational adjustments will be required in order to renew or modify such
Environmental Permits during the next five years;
(3) There has been no Release or threatened Release of Hazardous
Material on, at, under or from any Real Property or facility presently or
formerly owned, leased or operated by the Companies or their predecessors
in interest that could result in liability by the Companies under
Environmental Law;
(4) There is no Environmental Claim pending or, to the knowledge of
the Companies, threatened against the Companies, or relating to the Real
Property currently or formerly owned, leased or operated by the Companies
or relating to the operations of the Companies, and there are no actions,
activities, circumstances, conditions, events or incidents that could form
the basis of such an Environmental Claim; and
(5) No person with an indemnity or contribution obligation to the
Companies relating to compliance with or liability under Environmental Law
is in default with respect to such obligation.
(b) Except as set forth in Schedule 3.20:
(1) No Company is obligated to perform any action or otherwise incur
any material expense under Environmental Law pursuant to any order, decree,
judgment or agreement by which it is bound or has assumed by contract or
agreement, and no Company is conducting or financing any material Response
pursuant to any Environmental Law with respect to any Real Property or any
other location;
(2) No Real Property or facility owned, operated or leased by the
Companies and, to the knowledge of the Companies, no Real Property or
facility formerly owned, operated or leased by the Companies or any of
their predecessors in interest is (i) listed or proposed for listing on the
National Priorities List promulgated pursuant to CERCLA or (ii) listed on
the Comprehensive Environmental Response, Compensation and Liability
Information System promulgated pursuant to CERCLA or (iii) included on any
similar list maintained by any Governmental Authority including, without
limitation, any such list relating to petroleum;
(3) No Lien has been recorded or, to the knowledge of any Company,
threatened under any Environmental Law with respect to any Real Property or
assets of the Companies;
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(4) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not require any
notification, registration, filing, reporting, disclosure, investigation,
remediation or cleanup pursuant to any Governmental Real Property
Disclosure Requirements or any other Environmental Law; and
(5) The Companies have made available to Lenders all material records
and files in the possession, custody or control of, or otherwise reasonably
available to, the Companies concerning compliance with or liability under
Environmental Law including, without limitation, those concerning the
existence of Hazardous Material at real property or facilities currently or
formerly owned, operated, leased or used by the Companies.
SECTION 3.21. Insurance. Schedule 3.21 sets forth a true, complete and
correct description of all insurance maintained by each Company as of the
Closing Date. All insurance maintained by the Companies is in full force and
effect, all premiums have been duly paid, the Loan Parties have not received
notice of violation or cancellation thereof, the Premises, and the use,
occupancy and operation thereof, comply in all material respects with all
Insurance Requirements and there exists no default under any Insurance
Requirement. Each Company has insurance in such amounts and covering such risks
and liabilities as are customary for companies of a similar size engaged in
similar businesses in similar locations.
SECTION 3.22. Security Documents. (a) The Security Agreements are effective
to create in favor of the Collateral Agent for the benefit of the Secured
Parties, legal, valid and enforceable security interests in and Liens on the
Security Agreement Collateral and (i) when financing statements and other
filings in appropriate form are filed in the offices specified on Schedule 7 to
the Perfection Certificate and (ii) upon the taking of possession or control by
the Collateral Agent of the Security Agreement Collateral with respect to which
a security interest may be perfected only by possession or control (which
possession or control shall be given to the Collateral Agent to the extent
possession or control by the Collateral Agent is required by the Security
Agreements), the Liens created by the Security Agreements shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the grantors thereunder in the Security Agreement Collateral other than
Intellectual Property (as defined in the U.S. Security Agreement), in each case
subject to no Liens other than Permitted Collateral Liens.
(b) When the U.S. Security Agreement or a short form thereof is filed in
the United States Patent and Trademark Office and the United States Copyright
Office, the Lien created by the U.S. Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors thereunder in the Intellectual Property (as defined in such
Security Agreement), in each case subject to no Liens other than Permitted
Collateral Liens.
(c) Each Mortgage executed and delivered as of the Closing Date is, or, to
the extent any Mortgage is duly executed and delivered thereafter by the
relevant Loan Party, will be, effective to create, in favor of the Collateral
Agent, for its benefit and the benefit of the Secured Parties, subject only to
Permitted Collateral Liens or other Liens acceptable to the Collateral Agent, a
legal, valid and enforceable first priority Lien on and security interest in all
of the Loan Parties' right, title and interest in and to the Mortgaged
Properties thereunder and the proceeds thereof, and when the Mortgages are filed
in the offices specified on Schedule 1.01(a) (or, in the case of any Mortgage
executed and delivered after the date thereof in accordance with the provisions
of Sections 5.10 and 5.11, when such Mortgage is filed in the offices specified
in the local counsel opinion delivered with respect thereto in accordance with
the provisions of Sections 5.10 and 5.11), the Mortgages shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the Loan Parties in the Mortgaged Properties and the proceeds thereof, in each
case prior and superior in right to any other person, other than Permitted
Collateral Liens or other Liens acceptable to the Collateral Agent.
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(d) Each Security Document delivered pursuant to Sections 5.10 and 5.11
will, upon execution and delivery thereof, be effective to create in favor of
the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in and Lien on all of the Loan Parties' right,
title and interest in and to the Collateral thereunder, and when all appropriate
filings or recordings are made in the appropriate offices as may be required
under applicable law, such Security Document will constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the Loan
Parties in such Collateral, in each case subject to no Liens other than the
applicable Permitted Collateral Liens.
SECTION 3.23. Acquisition Documents; Representations and Warranties in
Agreement. (a) Schedule 3.23 lists (i) each agreement relating to the Equity
Financing, the Rollover Equity, the ▇▇▇▇▇▇ Investment and the ▇▇▇▇▇▇ Employment,
(ii) each exhibit, schedule, annex or other attachment to the Acquisition
Agreement or any agreement referred to in clause (i) and (iii) each material
agreement, certificate, instrument, letter or other document contemplated by the
Acquisition Agreement or any item referred to in clause (i) or (ii) to be
entered into, executed or delivered or to become effective in connection with
the Acquisition. The Lenders have been furnished true and complete copies of
each Acquisition Document to the extent executed and delivered on or prior to
the Closing Date.
(b) All representations and warranties of each Company set forth in the
Acquisition Agreement were true and correct in all material respects as of the
time such representations and warranties were made and shall be true and correct
in all material respects as of the Closing Date as if such representations and
warranties were made on and as of such date, unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respects as of such earlier date.
SECTION 3.24. Subordination of Senior Subordinated Notes. The Obligations
are "Senior Debt," the Guaranteed Obligations are "Guarantor Senior Debt" and
the Obligations and Guaranteed Obligations are "Designated Senior Debt," in each
case, within the meaning of the Senior Subordinated Note Documents.
ARTICLE IV
CONDITIONS TO CREDIT EXTENSIONS
SECTION 4.01. Conditions to Initial Credit Extension. The obligation of
each Lender and, if applicable, each Issuing Bank to fund the initial Credit
Extension requested to be made by it shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 4.01.
(a) Loan Documents. All legal matters incident to this Agreement, the
Credit Extensions hereunder and the other Loan Documents shall be
satisfactory to the Lenders, to the Issuing Bank and to the Administrative
Agent and there shall have been delivered to the Administrative Agent an
executed counterpart of each of the Loan Documents, including this
Agreement, the Security Agreements, each Mortgage, the Perfection
Certificate and each other applicable Loan Document.
(b) Corporate Documents. The Administrative Agent shall have received:
(i) a certificate of the secretary or assistant secretary of each
Loan Party dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of each Organizational Document of
such Loan Party, certified (to the extent appli-
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cable) as of a recent date by the Secretary of State of the state of
its organization, (B) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of such
Loan Party authorizing the execution, delivery and performance of the
Loan Documents to which such person is a party and, in the case of
Borrower, the borrowings hereunder, and that such resolutions have not
been modified, rescinded or amended and are in full force and effect
and (C) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party (together with a
certificate of another officer as to the incumbency and specimen
signature of the secretary or assistant secretary executing the
certificate in this clause (i);
(ii) a certificate as to the good standing of each Loan Party (in
so-called "long form," if available) as of a recent date, from such
Secretary of State; and
(iii) such other documents as the Lenders, the Issuing Bank or
the Administrative Agent may reasonably request.
(c) Officers' Certificate. The Administrative Agent shall have
received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of Borrower, confirming
compliance with the conditions precedent set forth in this Section 4.01 and
paragraphs (b), (c) and (d) of Section 4.02.
(d) Financings and Other Transactions, Etc. (i) The Transactions shall
have been consummated or shall be consummated simultaneously on the Closing
Date, in each case in all material respects in accordance with the terms
hereof and the terms of the Transaction Documents, without the waiver or
amendment of any such terms not approved by the Administrative Agent and
the Arranger other than any waiver or amendment thereof that is not
materially adverse to the interests of the Lenders.
(ii) Borrower shall have received not less than $150 million in gross
proceeds from the issuance and sale of the Senior Subordinated Notes, and
the Senior Subordinated Note Agreement shall be in form and substance
reasonably satisfactory to the Lenders and the Senior Subordinated Note
Documents shall be certified by Borrower's chief financial officer as
current.
(iii) The Equity Financing shall have been consummated. The terms of
the Equity Financing and the Rollover Equity shall not require any payments
or other distributions of cash or property in respect thereof, or any
purchases, redemptions or other acquisitions thereof for cash or property,
prior to the payment in full of all obligations under the Loan Documents,
except as permitted by the Loan Documents.
(iv) The ▇▇▇▇▇▇ Investment shall have been consummated in accordance
with the Acquisition Documents, without any amendment or waiver thereof
(other than any waiver or amendment thereof that is not adverse to the
Lenders).
(v) The Winnipeg Contribution shall have been consummated in
accordance with the Acquisition Documents, without any amendment or waiver
thereof (other than any waiver or amendment thereof that is not adverse to
the Lenders).
(vi) The ▇▇▇▇▇▇ Employment shall have become effective in accordance
with the Acquisition Documents, without any amendment or waiver thereof
(other than any waiver or amendment thereof that is not adverse to the
Lenders).
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(vii) The Refinancing shall have been consummated in full to the
satisfaction of the Lenders with all liens in favor of the existing lenders
being unconditionally released; the Administrative Agent shall have
received a "pay-off" letter with respect to all debt being refinanced in
the Refinancing; the Administrative Agent shall have received from any
person holding any Lien securing any such debt, such UCC termination
statements, mortgage releases, releases of assignments of leases and rents
and other instruments, in each case in proper form for recording, as the
Administrative Agent shall have reasonably requested to release and
terminate of record the Liens securing such debt.
(viii) Borrower shall be the sole direct Subsidiary of Holdings,
owning directly or indirectly all of the equity of Holdings' Subsidiaries
(other than Borrower), on terms and conditions satisfactory to the Lenders.
(e) Indebtedness and Minority Interests. After giving effect to the
Transactions and the other transactions contemplated hereby, (x) neither
Borrower nor any of its Subsidiaries shall have outstanding any
Indebtedness, preferred stock or minority interests other than (i) the
Loans and Credit Extensions hereunder, (ii) the Senior Subordinated Notes
and (iii) Indebtedness owed to Borrower or any Guarantor and (y) Holdings
shall have no Indebtedness or Disqualified Capital Stock outstanding.
(f) Opinions of Counsel. The Administrative Agent shall have received,
on behalf of itself, the other Agents, the Arranger, the Lenders and the
Issuing Bank, a favorable written opinion of Ropes & ▇▇▇▇ LLP, special
counsel for the Loan Parties, substantially in the form attached as Exhibit
K-1, and each local and Canadian counsel listed on Schedule 4.01(f),
substantially to the effect set forth in Exhibit K-2, in each case (A)
dated the Closing Date, (B) addressed to the Agents, the Issuing Bank and
the Lenders and (C) covering such other matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall reasonably
request, and (iii) a copy of each legal opinion delivered under the other
Transaction Documents, and Borrower shall use its best efforts to deliver
reliance letters from the party delivering such opinion authorizing the
Agents, Lenders and the Issuing Bank to rely thereon as if such opinion
were addressed to them.
(g) Solvency Certificate. The Administrative Agent shall have received
a solvency certificate in the form of Exhibit M, dated the Closing Date and
signed by the chief financial officer of Borrower.
(h) Requirements of Law. The Lenders shall be satisfied that the
Transactions shall be in full compliance with all material Requirements of
Law, including without limitation Regulations T, U and X of the Board. The
Lenders shall have received satisfactory evidence of compliance with all
applicable Requirements of Law, including all Environmental Laws.
(i) Consents. The Lenders shall be satisfied that all requisite
Governmental Authorities and third parties shall have approved or consented
to the Transactions, and there shall be no governmental or judicial action,
actual or threatened, that has or would have, singly or in the aggregate, a
reasonable likelihood of restraining, preventing or imposing burdensome
conditions on the Transactions or the other transactions contemplated
hereby.
(j) Litigation. There shall be no litigation, public or private, or
administrative proceedings, governmental investigation or other legal or
regulatory developments, actual or threatened, that, singly or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect, or could materially and adversely affect the ability of Holdings,
Borrower and the
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Subsidiaries to fully and timely perform their respective obligations under
the Transaction Documents, or the ability of the parties to consummate the
financings contemplated hereby or the other Transactions.
(k) Sources and Uses. The sources and uses of the Loans shall be as
set forth in Section 3.14.
(l) Fees. The Arranger and Administrative Agent shall have received
all Fees and other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses (including the reasonable legal fees and expenses of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, special counsel to the Agents, and the fees
and expenses of any local counsel, appraisers, consultants and other
advisors) required to be reimbursed or paid by Borrower hereunder or under
any other Loan Document.
(m) Personal Property Requirements. The Collateral Agent shall have
received:
(i) all certificates, agreements or instruments representing or
evidencing the Securities Collateral accompanied by instruments of
transfer and stock powers endorsed in blank;
(ii) Intercompany Notes executed by and among Holdings and each
of its Subsidiaries, accompanied by instruments of transfer endorsed
in blank;
(iii) all other certificates, agreements, including control
agreements, or instruments necessary to perfect the Collateral Agent's
security interest in all Chattel Paper, all Instruments, all Deposit
Accounts and all Investment Property (as each such term is defined in
the Security Agreements and to the extent required by Section 3.3 of
the Security Agreements) of each Loan Party;
(iv) UCC financing statements in appropriate form for filing
under the UCC, filings with the United States Patent, Trademark and
Copyright offices and such other documents under applicable
Requirements of Law in each jurisdiction as may be necessary to
perfect the Liens created, or purported to be created, by the Security
Documents and, with respect to all UCC financing statements required
to be filed pursuant to the Loan Documents, evidence satisfactory to
the Administrative Agent that Borrower has retained, at its sole cost
and expense, a service provider acceptable to the Administrative Agent
for the tracking of all such financing statements and notification to
the Administrative Agent, of, among other things, the upcoming lapse
or expiration thereof;
(v) certified copies of UCC, tax and judgment lien searches,
bankruptcy and pending lawsuit searches or equivalent reports or
searches, each of a recent date listing all effective financing
statements, lien notices or comparable documents that name any Loan
Party as debtor and that are filed in those state and county
jurisdictions in which any property of any Loan Party is located and
the state and county jurisdictions in which any Loan Party is
organized or maintains its principal place of business and such other
searches that are necessary in the reasonable judgment of the
Collateral Agent, none of which encumber the Collateral covered or
intended to be covered by the Security Documents (other than Permitted
Collateral Liens or any other Liens acceptable to the Collateral
Agent);
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(vi) with respect to each Real Property set forth on Schedule
4.01(m)(vi), a Landlord Access Agreement, to the extent obtained by
the Loan Party that is the lessee thereof after using all commercially
reasonable efforts to do so; and
(vii) evidence acceptable to the Collateral Agent of payment by
the Loan Parties of all applicable recording taxes, fees, charges,
costs and expenses required for the recording of the Security
Documents.
(n) Real Property Requirements. The Collateral Agent shall have
received:
(i) a Mortgage encumbering each Mortgaged Property in favor of
the Collateral Agent, for the benefit of the Secured Parties, duly
executed and acknowledged by each Loan Party that is the owner of or
holder of any interest in such Mortgaged Property, and otherwise in
form for recording in the recording office of each political
subdivision where each such Mortgaged Property is situated, together
with such certificates, affidavits, questionnaires or returns as shall
be required in connection with the recording or filing thereof to
create a lien under applicable law, and such UCC financing statements,
all of which shall be in form and substance reasonably satisfactory to
Collateral Agent, and any other instruments necessary to grant a
mortgage lien under the laws of any applicable jurisdiction;
(ii) with respect to each Mortgaged Property, such consents,
approvals, amendments, supplements, estoppels, tenant subordination
agreements or other instruments as necessary or required to consummate
the Transactions or as shall reasonably be deemed necessary by the
Collateral Agent in order for the owner or holder of the fee or
leasehold interest constituting such Mortgaged Property to grant the
Lien contemplated by the Mortgage with respect to such Mortgaged
Property;
(iii) with respect to each Mortgage, a policy (or commitment to
issue a policy) of title insurance insuring (or committing to insure)
the Lien of such Mortgage as a valid first mortgage Lien on the
Mortgaged Property and fixtures described therein in the amount set
forth on Schedule 4.01(n)(iii) hereto with respect to such Mortgaged
Property 115% of the fair market value of such Mortgaged Property
which policy (or commitment) (each, a "Title Policy") shall (A) be
issued by the Title Company, (B) to the extent necessary, include such
reinsurance arrangements (with provisions for direct access, if
necessary) as shall be reasonably acceptable to the Collateral Agent,
(C) contain a "tie-in" or "cluster" endorsement (if available under
applicable law) (i.e., policies which insure against losses regardless
of location or allocated value of the insured property up to a stated
maximum coverage amount), (D) have been supplemented by such
endorsements (or where such endorsements are not available, opinions
of special counsel, architects or other professionals reasonably
acceptable to the Collateral Agent to the extent that such opinions
can be obtained at a cost which is reasonable with respect to the
value of the Mortgaged Property subject to such Mortgage) as shall be
reasonably requested by the Collateral Agent (including, without
limitation, endorsements on matters relating to usury, first loss,
last dollar, zoning, contiguity, revolving credit, doing business,
non-imputation, public road access, survey, variable rate,
environmental lien and so-called comprehensive coverage over covenants
and restrictions), and (E) contain no exceptions to title other than
exceptions acceptable to the Collateral Agent;
(iv) with respect to each Mortgaged Property, such affidavits,
certificates, information (including financial data) and instruments
of indemnification (including, with-
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out limitation, a so-called "gap" indemnification) as shall be
required to induce the Title Company to issue the Title Policy/ies (or
commitment) and endorsements contemplated in subparagraph (iii) above;
(v) evidence reasonably acceptable to the Collateral Agent of
payment by Borrower of all Title Policy premiums, search and
examination charges, and related charges, mortgage recording taxes,
fees, charges, costs and expenses required for the recording of the
Mortgages and issuance of the Title Policies referred to subparagraph
(iii) above;
(vi) with respect to each Real Property or Mortgaged Property,
copies of all Leases in which Borrower or any Subsidiary holds the
lessor's interest or other agreements relating to possessory
interests, if any. To the extent any of the foregoing affect any
Mortgaged Property, such agreement shall be subordinate to the Lien of
the Mortgage to be recorded against such Mortgaged Property, either
expressly by its terms or pursuant to a subordination, non-disturbance
and attornment agreement, and shall otherwise be acceptable to the
Collateral Agent;
(vii) with respect to each Mortgaged Property, Borrower and each
Subsidiary shall have made all notifications, registrations and
filings, to the extent required by, and in accordance with, all
Governmental Real Property Disclosure Requirements applicable to such
Mortgaged Property; and
(viii) Surveys with respect to each Mortgaged Property.
(o) Insurance. The Administrative Agent shall have received a copy of,
or a certificate as to coverage under, the insurance policies required by
Section 5.04 and the applicable provisions of the Security Documents, each
of which shall be endorsed or otherwise amended to include a "standard" or
"New York" lender's loss payable or mortgagee endorsement (as applicable)
and to name the Collateral Agent, on behalf of the Secured Parties, as
additional insured, in form and substance satisfactory to the
Administrative Agent.
SECTION 4.02. Conditions to All Credit Extensions. The obligation of each
Lender and each Issuing Bank to make any Credit Extension (including the initial
Credit Extension) shall be subject to, and to the satisfaction of, each of the
conditions precedent set forth below.
(a) Notice. The Administrative Agent shall have received a Borrowing
Request as required by Section 2.03 (or such notice shall have been deemed
given in accordance with Section 2.03) if Loans are being requested or, in
the case of the issuance, amendment, extension or renewal of a Letter of
Credit, the Issuing Bank and the Administrative Agent shall have received a
notice requesting the issuance, amendment, extension or renewal of such
Letter of Credit as required by Section 2.18(b) or, in the case of the
Borrowing of a Swingline Loan, the Swingline Lender and the Administrative
Agent shall have received a notice requesting such Swingline Loan as
required by Section 2.17(b).
(b) No Default. Each of Borrower and each other Loan Party shall be in
compliance in all material respects with all the terms and provisions set
forth herein and in each other Loan Document on its part to be observed or
performed, and, at the time of and immediately after such Credit Extension,
no Default shall have occurred and be continuing on such date or after
giving effect to the Credit Extension requested to be made on such date.
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(c) Representations and Warranties. Each of the representations and
warranties made by any Loan Party set forth in Article III hereof or in any
other Loan Document shall be true and correct in all material respects
(except that any representation and warranty that is qualified as to
"materiality" or "Material Adverse Effect" shall be true and correct in all
respects) on and as of the date of such Credit Extension with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(d) No Material Adverse Effect. There has been no event, condition
and/or contingency that has had or is reasonable likely to have a Material
Adverse Effect.
(e) No Legal Bar. No order, judgment or decree of any Governmental
Authority shall purport to restrain any Lender from making any Loans to be
made by it. No injunction or other restraining order shall have been
issued, shall be pending or noticed with respect to any action, suit or
proceeding seeking to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans hereunder.
Each of the delivery of a Borrowing Request or notice requesting the
issuance, amendment, extension or renewal of a Letter of Credit and the
acceptance by Borrower of the proceeds of such Credit Extension shall constitute
a representation and warranty by Borrower and each other Loan Party 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
conditions contained in this Section 4.02 have been satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired or been fully cash
collateralized and all amounts drawn thereunder have been reimbursed in full,
unless the Required Lenders shall otherwise consent in writing, each Loan Party
will, and will cause each of its Subsidiaries to:
SECTION 5.01. Financial Statements, Reports, etc. In the case of Holdings
and Borrower, furnish to the Administrative Agent (with a copy for each Lender):
(a) Annual Reports. Within 90 days after the end of each fiscal year
(but no later than the date on which Holdings or Borrower would be required
to file a Form 10-K under the Exchange Act if it were subject to Section 15
and 13(d) of the Exchange Act), (i) the condensed balance sheet of Holdings
(parent company only) as of the end of such fiscal year, prepared in
accordance with Rule 12-04 of Regulation S-X (and any other financial
statements of Holdings for such fiscal year delivered to any direct or
indirect equity holder thereof pursuant to the LP Agreement), (ii) the
consolidated balance sheet of Borrower and its Subsidiaries as of the end
of such fiscal year and related consolidated statements of income, cash
flows and members' equity for such fiscal year, in comparative form with
such financial statements as of the end of, and for, the preceding fiscal
year, and notes thereto, all prepared in accordance with Regulation S-X and
accompanied by an opinion of PricewaterhouseCoopers LLP or other
independent public account-
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ants of recognized national standing reasonably satisfactory to the
Administrative Agent (which opinion shall not be qualified as to scope or
contain any going concern or other qualification), stating that such
financial statements fairly present, in all material respects, the
consolidated financial condition, results of operations, cash flows and
changes in members' equity of Borrower and its Subsidiaries as of such
dates and for such periods in accordance with GAAP consistently applied,
(iii) a management report in a form reasonably satisfactory to the
Administrative Agent setting forth results of operations and cash flows of
Borrower and its Subsidiaries as of the end of and for such fiscal year, as
compared to budgeted amounts and (iv) a management's discussion and
analysis of the financial condition and results of operations for such
fiscal year, as compared to the previous fiscal year;
(b) Quarterly Reports. Within 45 days (or, with respect to the fiscal
quarter ended September 30, 2003, within 45 days of the Closing Date) after
the end of each of the first three fiscal quarters of each fiscal year (but
no later than the date on which Holdings or Borrower would be required to
file a Form 10-Q under the Exchange Act if it were subject to Section 15
and 13(d) of the Exchange Act), (i) the condensed balance sheet of Holdings
(parent company only) as of the end of such fiscal quarter, prepared in
accordance with Rule 12-04 of Regulation S-X (and any other financial
statements of Holdings for such fiscal quarter delivered to any direct or
indirect equity holder thereof pursuant to the LP Agreement), (ii) the
consolidated balance sheet of Borrower and its Subsidiaries as of the end
of such fiscal quarter and related consolidated statements of income and
cash flows for such fiscal quarter and for the then elapsed portion of the
fiscal year, in comparative form with the consolidated statements of income
and cash flows for the comparable periods in the previous fiscal year, and
notes thereto, all prepared in accordance with Regulation S-X and
accompanied by a certificate of a Financial Officer stating that such
financial statements fairly present, in all material respects, the
consolidated financial condition, results of operations and cash flows of
Borrower and its Subsidiaries as of such date and for such periods in
accordance with GAAP consistently applied, and on a basis consistent with
the financial statements referred to in clause (a)(ii) of this Section
5.01, subject to normal year-end audit adjustments and the absence of
footnotes, (iii) a management report in a form reasonably satisfactory to
the Administrative Agent setting forth results of operations and cash flows
of Borrower and its Subsidiaries as of the end of and for such fiscal
quarter and for the then elapsed portion of the fiscal year, as compared to
budgeted amounts and (iv) a management's discussion and analysis of the
financial condition and results of operations for such fiscal quarter and
the then elapsed portion of the fiscal year, as compared to the comparable
periods in the previous fiscal year;
(c) Financial Officer's Certificate. (i) Concurrently with any
delivery of financial statements under paragraphs (a) or (b) above, a
Compliance Certificate certifying that no Default has occurred or, if such
a Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto; (ii)
concurrently with any delivery of financial statements under subparagraph
(a) or (b) above, a Compliance Certificate setting forth computations in
reasonable detail satisfactory to the Administrative Agent demonstrating
compliance with Sections 6.05(f) and 6.08 (including the aggregate amount
of Excluded Issuances for such period and the uses therefor) and, in the
case of paragraph (a) above, setting forth Borrower's calculation of Excess
Cash Flow; and (iii) in the case of paragraph (a) above, a report of the
accounting firm opining on or certifying such financial statements stating
that, while such audit was conducted with respect to accounting matters and
was not specifically directed at determining the existence of a Default, in
the course of its regular audit of the financial statements of Holdings and
its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge
that any Default has occurred or, if in the opinion of such accounting firm
such a Default has occurred, specifying the nature and extent thereof;
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(d) Financial Officer's Certificate Regarding Collateral. Concurrently
with any delivery of financial statements under paragraph (a) above, a
certificate of a Financial Officer setting forth the information required
pursuant to the Perfection Certificate Supplement or confirming that there
has been no change in such information since the date of the Perfection
Certificate or latest Perfection Certificate Supplement;
(e) Public Reports. Promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and other
materials filed by any Company with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
to holders of its Indebtedness pursuant to the terms of the documentation
governing such Indebtedness (or any trustee, agent or other representative
therefor), as the case may be;
(f) Management Letters. Promptly after the receipt thereof by any
Company, a copy of any "management letter" received by any such person from
its certified public accountants and the management's responses thereto;
(g) Budgets. No later than 30 days after the first day of each fiscal
year of Borrower, a consolidated budget in form reasonably satisfactory to
the Administrative Agent (including sources and uses of cash and balance
sheets) prepared by Borrower for (i) each fiscal quarter of such fiscal
year prepared in detail and (ii) each of the five years immediately
following such fiscal year prepared in summary form, in each case, of
Borrower and its Subsidiaries, with appropriate presentation and discussion
of the principal assumptions upon which such budgets are based, accompanied
by the statement of a Financial Officer of Borrower to the effect that the
budget of Borrower is a reasonable estimate for the period covered thereby;
(h) Annual Meetings with Lenders. Within 120 days after the close of
each fiscal year of Holdings, Holdings and Borrower shall, at the request
of the Administrative Agent or Required Lenders, hold a meeting (at a
mutually agreeable location and time) with all Lenders who choose to attend
such meeting at which meeting shall be reviewed the financial results of
the previous fiscal year and the financial condition of the Companies and
the budgets presented for the current fiscal year of the Companies; and
(i) Other Information. Promptly, from time to time, such other
information regarding the operations, business affairs and financial
condition of any Company, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably request.
SECTION 5.02. Litigation and Other Notices. Furnish to the Administrative
Agent and each Lender prompt written notice of the following (after the same
shall have come to the attention of a Responsible Officer):
(a) any Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect
thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity by or before any Governmental
Authority, (i) against any Company or any Affiliate thereof that could
reasonably be expected to result in a Material Adverse Effect or (ii) with
respect to any Loan Document;
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(c) any development that has resulted in, or could reasonably be
expected to result in a Material Adverse Effect;
(d) the occurrence of a Casualty Event; and
(e) the incurrence of any material Lien (other than a Permitted
Collateral Lien) on any of the Collateral.
SECTION 5.03. Existence; Businesses and Properties. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under Section 6.05
or, in the case of any Subsidiary, where the failure to perform such
obligations, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect.
(b) Do or cause to be done all things necessary to obtain, preserve, renew,
extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated; comply
with all applicable Requirements of Law (including any and all zoning, building,
Environmental Law, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Real Property) and decrees
and orders of any Governmental Authority, whether now in effect or hereafter
enacted, except where the failure to comply, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect; pay and
perform its obligations under all Leases and Acquisition Documents, except where
the failure to do so could not reasonably be expected to result in a Material
Adverse Effect; and at all times maintain and preserve all property material to
the conduct of such business and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all needful
and proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times; provided that nothing in this Section 5.03(b)
shall prevent (i) sales of assets, consolidations or mergers by or involving any
Company in accordance with Section 6.05; (ii) the withdrawal by any Company of
its qualification as a foreign corporation in any jurisdiction where such
withdrawal, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect; or (iii) the abandonment by any Company
of any rights, franchises, licenses, trademarks, trade names, copyrights or
patents that such person reasonably determines are not useful to its business.
SECTION 5.04. Insurance. (a) Keep its insurable property adequately insured
at all times by financially sound and reputable insurers; maintain such other
insurance, to such extent and against such risks as is customary with companies
in the same or similar businesses operating in the same or similar locations,
including insurance with respect to Mortgaged Properties and other properties
material to the business of the Loan Parties and their respective Subsidiaries
against such casualties and contingencies and of such types and in such amounts
with such deductibles as is customary in the case of similar businesses
operating in the same or similar locations (including, without limitation, (i)
physical hazard insurance on an "all risk" basis, (ii) commercial general
liability against claims for bodily injury, death or property damage covering
any and all insurable claims, (iii) explosion insurance in respect of any
boilers, machinery or similar apparatus constituting Collateral, (iv) business
interruption insurance, (v) worker's compensation insurance as may be required
by any Requirement of Law and (vi) such other insurance against risks as the
Administrative Agent may from time to time require); maintain such other
insurance as may be required by law (such policies to be in such form and
amounts and having such coverage as may be reasonably satisfactory to the
Administrative Agent and the Collateral Agent); and with respect to physical
hazard insurance neither Collateral Agent nor the Borrower (or the applicable
Loan Party) shall agree to the adjustment of any claim thereunder without the
consent of the other (such consent not to be
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unreasonably withheld or delayed, and such consent of Borrower (or the
applicable Loan Party) not to be required following the occurrence and during
the continuance of an Event of Default).
(b) All such insurance shall (i) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be effective
until at least 30 days after receipt by the Collateral Agent of written notice
thereof, (ii) name the Collateral Agent as mortgagee (in the case of property
insurance) or additional insured on behalf of the Secured Parties (in the case
of liability insurance) or loss payee (in the case of property insurance), as
applicable, (iii) if reasonably requested by the Collateral Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Collateral Agent.
(c) Notify the Administrative Agent and the Collateral Agent immediately
whenever any separate insurance concurrent in form or contributing in the event
of loss with that required to be maintained under this Section 5.04 is taken out
by any Company; and promptly deliver to the Administrative Agent and the
Collateral Agent a duplicate original copy of such policy or policies.
(d) With respect to each Mortgaged Property, obtain flood insurance in such
total amount as the Administrative Agent or the Required Lenders may from time
to time require, if at any time the area in which any improvements located on
any Mortgaged Property is designated a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), and otherwise comply with the National Flood Insurance
Program as set forth in the Flood Disaster Protection Act of 1973, as amended
from time to time.
(e) Deliver to the Administrative Agent and the Collateral Agent and the
Lenders a report of a reputable insurance broker with respect to such insurance
and such supplemental reports with respect thereto as the Administrative Agent
or the Collateral Agent may from time to time reasonably request.
(f) No Loan Party that is an owner of Mortgaged Property shall take any
action that is reasonably likely to be the basis for termination, revocation or
denial of any insurance coverage required to be maintained under such Loan
Party's respective Mortgage or that could be the basis for a defense to any
claim under any Insurance Policy maintained in respect of the Premises, and each
Loan Party shall otherwise comply in all material respects with all Insurance
Requirements in respect of the Premises; provided, however, that each Loan Party
may, at its own expense and after written notice to the Administrative Agent,
(i) contest the applicability or enforceability of any such Insurance
Requirements by appropriate legal proceedings, prosecution of which does not
constitute a basis for cancellation or revocation of any insurance coverage
required under this Section 5.04 or (ii) cause the Insurance Policy containing
any such Insurance Requirement to be replaced by a new policy complying with the
provisions of this Section 5.04.
SECTION 5.05. Obligations and Taxes. (a) Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all Taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien other than a Permitted Lien upon such properties or any part
thereof; provided that such payment and discharge shall not be required with
respect to any such Tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings, the applicable Company shall have set aside on its books adequate
reserves with respect thereto in accordance with GAAP, such contest operates to
suspend collection of the contested obligation, Tax, assessment or charge and
enforcement of a Lien other than a Permitted Lien and, in the case of
Collateral, the applicable Company shall have otherwise complied with the
Contested Collateral Lien Conditions.
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(b) Timely file all material Tax Returns required to be filed by it.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects with
the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent (x) as soon as possible after, and in any event within 10
days after any Responsible Officer of the Companies or their ERISA Affiliates
knows that, any ERISA Event has occurred that, alone or together with any other
ERISA Event could reasonably be expected to result in liability of the Companies
or their ERISA Affiliates in an aggregate amount exceeding $1,000,000 or the
imposition of a Lien, a statement of a Financial Officer of Holdings setting
forth details as to such ERISA Event and the action, if any, that the Companies
propose to take with respect thereto, and (y) upon request by the Administrative
Agent, copies of: (i) each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) filed by any Company or any ERISA Affiliate with the
Internal Revenue Service with respect to each Plan; (ii) the most recent
actuarial valuation report for each Plan; (iii) all notices received by any
Company or any ERISA Affiliate from a Multiemployer Plan sponsor or any
governmental agency concerning an ERISA Event; and (iv) such other documents or
governmental reports or filings relating to any Plan (or employee benefit plan
sponsored or contributed to by any Company) as the Administrative Agent shall
reasonably request.
SECTION 5.07. Maintaining Records; Access to Properties and Inspections.
Keep proper books of record and account in which entries in conformity with GAAP
and all Requirements of Law are made of all dealings and transactions in
relation to its business and activities. Each Company will permit any
representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the property of such Company, upon
reasonable notice, at reasonable times and as often as reasonably requested and
to make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of any Company with the officers thereof and
independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and request
the issuance of Letters of Credit only for the purposes set forth in Section
3.14.
SECTION 5.09. Compliance with Environmental Laws; Environmental Reports.
(a) Comply, and use commercially reasonably efforts to cause all lessees and
other persons occupying Real Property owned, operated or leased by any Company
to comply, in all material respects with all Environmental Laws and
Environmental Permits applicable to its operations and Real Property; obtain and
renew all material Environmental Permits applicable to its operations and Real
Property; and conduct any Response in accordance with Environmental Laws;
provided that no Company shall be required to undertake any Response to the
extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect to
such circumstances in accordance with GAAP.
(b) If a Default caused by reason of a breach of Section 3.20 or Section
5.09(a) shall have occurred and be continuing for more than 20 days without the
Companies commencing activities reasonably likely to cure such Default, at the
written request of the Required Lenders through the Administrative Agent,
provide to the Lenders within 45 days after such request, at the expense of
Borrower, an environmental assessment report regarding the matters which are the
subject of such Default, including where appropriate, any soil and/or
groundwater sampling, prepared by an environmental consulting firm and in the
form and substance reasonably acceptable to the Administrative Agent and
indicating the presence or absence of Hazardous Materials and the estimated cost
of any compliance or Response to address them.
(c) Each Loan Party that is an owner of Mortgaged Property shall not
install nor permit to be installed in the Mortgaged Property any Hazardous
Materials, other than in compliance with applicable Environmental Laws.
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SECTION 5.10. Additional Collateral; Additional Guarantors. (a) Subject to
this Section 5.10, with respect to any property acquired after the Closing Date
by Borrower or any other Loan Party that is intended to be subject to the Lien
created by any of the Security Documents but is not so subject (but, in any
event, excluding any property described in Section 5.10(b)) promptly (and in any
event within 30 days after the acquisition thereof): (i) execute and deliver to
the Administrative Agent and the Collateral Agent such amendments or supplements
to the relevant Security Documents or such other documents as the Administrative
Agent or the Collateral Agent shall deem necessary to grant to the Collateral
Agent, for its benefit and for the benefit of the other Secured Parties, a Lien
on such property subject to no Liens other than Permitted Collateral Liens, and
(ii) take all actions necessary to cause such Lien to be duly perfected to the
extent required by such Security Document in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be reasonably requested by the
Administrative Agent. Borrower shall otherwise take such actions and execute
and/or deliver to the Collateral Agent such documents as the Administrative
Agent or the Collateral Agent shall require to confirm the validity, perfection
and priority of the Lien of the Security Documents against such after-acquired
properties or assets.
(b) With respect to any person that is or becomes a Subsidiary after the
Closing Date, promptly (and in any event within 30 days after such person
becomes a Subsidiary) (i) deliver to the Collateral Agent the certificates, if
any, representing all of the Equity Interests of such Subsidiary, together with
undated stock powers or other appropriate instruments of transfer executed and
delivered in blank by a duly authorized officer of such Subsidiary's parent, as
the case may be; and all intercompany notes owing from such Subsidiary to any
Loan Party together with instruments of transfer executed and delivered in blank
by a duly authorized officer of such Loan Party and (ii) cause such new
Subsidiary (A) to execute a Joinder Agreement or such comparable documentation
to become a Subsidiary Guarantor and a joinder agreement to the applicable
Security Agreement in the form annexed thereto, and (B) to take all actions
necessary or advisable in the opinion of the Administrative Agent or the
Collateral Agent to cause the Lien created by the applicable Security Agreement
to be duly perfected to the extent required by such agreement in accordance with
all applicable Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be reasonably requested by the
Administrative Agent or the Collateral Agent. Notwithstanding the foregoing, (1)
the Equity Interests required to be delivered to the Collateral Agent pursuant
to clause (i) of this Section 5.10(b) shall not include any Equity Interests of
a Foreign Subsidiary created or acquired after the Closing Date and (2) no
Foreign Subsidiary shall be required to take the actions specified in clause
(ii) of this Section 5.10(b), if, in the case of either clause (1) or (2), doing
so would constitute an investment of earnings in United States property under
Section 956 (or a successor provision) of the Code, which investment would or
could reasonably be expected to trigger an increase in the net income of a
United States shareholder of such Subsidiary pursuant to Section 951 (or a
successor provision) of the Code, as reasonably determined in good faith by the
Board of Directors of Borrower; provided that this exception shall not apply to
(A) Voting Stock of any Subsidiary which is a first-tier controlled foreign
corporation (as defined in Section 957(a) of the Code) representing 66% of the
total voting power of all outstanding Voting Stock of such Subsidiary and (B)
100% of the Equity Interests not constituting Voting Stock of any such
Subsidiary, except that any such Equity Interests constituting "stock entitled
to vote" within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall
be treated as Voting Stock for purposes of this Section 5.10(b).
(c) Each Loan Party will promptly grant to the Collateral Agent, within 60
days of the acquisition thereof, a security interest in and Mortgage on (i) each
Real Property owned in fee by such Loan Party as is acquired by such Loan Party
after the Closing Date and that, together with any improvements thereon,
individually has a fair market value of at least $2,000,000, and (ii) unless the
Collateral Agent otherwise consents, each leased Real Property of such Loan
Party which lease individually has a fair market value of at least $2,000,000,
in each case, as additional security for the Obligations (unless the subject
property is already mortgaged to a third party to the extent permitted by
Section 6.02). Such Mortgages
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shall be granted pursuant to documentation reasonably satisfactory in form and
substance to the Administrative Agent and the Collateral Agent and shall
constitute valid and enforceable perfected Liens subject only to Permitted
Collateral Liens or other Liens acceptable to the Collateral Agent. The
Mortgages or instruments related thereto shall be duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the Collateral Agent required to be granted
pursuant to the Mortgages and all taxes, fees and other charges payable in
connection therewith shall be paid in full. Such Loan Party shall otherwise take
such actions and execute and/or deliver to the Collateral Agent such documents
as the Administrative Agent or the Collateral Agent shall require to confirm the
validity, perfection and priority of the Lien of any existing Mortgage or new
Mortgage against such after-acquired Real Property (including, without
limitation, a Title Policy, a Survey and local counsel opinion (in form and
substance reasonably satisfactory to the Administrative Agent and the Collateral
Agent) in respect of such Mortgage).
SECTION 5.11. Security Interests; Further Assurances. Promptly, upon the
reasonable request of the Administrative Agent or the Collateral Agent, at
Borrower's expense, execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate governmental
office, any document or instrument supplemental to or confirmatory of the
Security Documents or otherwise deemed by the Administrative Agent or the
Collateral Agent reasonably necessary for the continued validity, perfection and
priority of the Liens on the Collateral covered thereby superior to and prior to
the rights of all third persons other than the holders of Permitted Collateral
Liens and subject to no other Liens except as permitted by the applicable
Security Document, or obtain any consents as may be necessary in connection
therewith. Deliver or cause to be delivered to the Administrative Agent and the
Collateral Agent from time to time such other documentation, consents,
authorizations, approvals and orders in form and substance reasonably
satisfactory to the Administrative Agent and the Collateral Agent as the
Administrative Agent and the Collateral Agent shall reasonably deem necessary to
perfect or maintain the Liens on the Collateral pursuant to the Security
Documents. Upon the exercise by the Administrative Agent, the Collateral Agent
or any Lender of any power, right, privilege or remedy pursuant to any Loan
Document which requires any consent, approval, registration, qualification or
authorization of any Governmental Authority, execute and deliver all
applications, certifications, instruments and other documents and papers that
the Administrative Agent, the Collateral Agent or such Lender may so require. If
the Administrative Agent, the Collateral Agent or the Required Lenders determine
that they are required by law or regulation to have appraisals prepared in
respect of the Real Property of any Loan Party constituting Collateral, Borrower
shall provide to the Administrative Agent appraisals that satisfy the applicable
requirements of the Real Estate Appraisal Reform Amendments of FIRREA and are
otherwise in form and substance satisfactory to the Administrative Agent and the
Collateral Agent.
SECTION 5.12. Information Regarding Collateral. (a) With respect to any
change (i) in any Loan Party's legal name, (ii) in the location of any Loan
Party's chief executive office, (ii) in any Loan Party's identity or
organizational structure, (iii) in any Loan Party's Federal Taxpayer
Identification Number or organizational identification number, if any or (iv) in
any Loan Party's jurisdiction of organization (in each case, including, without
limitation, by merging with or into any other entity, reorganizing, dissolving,
liquidating, reorganizing or organizing in any other jurisdiction), such Loan
Party shall not effect such change until (A) it shall have given the Collateral
Agent and the Administrative Agent not less than 30 days' prior written notice
(in the form of an Officers' Certificate), or such lesser notice period agreed
to by the Collateral Agent, of its intention so to do, clearly describing such
change and providing such other information in connection therewith as the
Collateral Agent or the Administrative Agent may reasonably request and (B) with
respect to such change, such Loan Party shall have taken all action reasonably
satisfactory to the Collateral Agent to maintain the perfection and priority of
the security interest of the Collateral Agent for the benefit of the Secured
Parties in the Collateral, if applicable. Each Loan Party agrees to promptly
provide the Collateral Agent with certified Organizational Documents reflecting
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any of the changes described in the preceding sentence. Upon the request of the
Collateral Agent, but, unless a Default has occurred and is continuing, not more
often than once every three months, such Loan Party also agrees to promptly
notify the Collateral Agent of any change in the location of any office in which
it maintains material books or records relating to Collateral owned by it or any
office or facility at which Collateral owned by it (including the establishment
of any such new office or facility), other than changes in location to a
Mortgaged Property or a leased property subject to a Landlord Access Agreement.
Borrower also agrees promptly to notify the Administrative Agent and the
Collateral Agent if any material portion of the Collateral is subject to a
Casualty Event.
(b) Each year, at the time of delivery of annual financial statements with
respect to the preceding fiscal year pursuant to Section 5.01(a), deliver to the
Administrative Agent and the Collateral Agent a Perfection Certificate
Supplement and a certificate of a Financial Officer and the chief legal officer
of Borrower certifying that all UCC 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
necessary to protect and perfect the security interests and Liens under the
Security Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).
ARTICLE VI
NEGATIVE COVENANTS
Each Loan Party covenants and agrees with each Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document have been paid in full and all
Letters of Credit have been canceled or have expired or been fully cash
collateralized and all amounts drawn thereunder have been reimbursed in full,
unless the Required Lenders shall otherwise consent in writing, no Loan Party
will, nor will they cause or permit any Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist,
directly or indirectly, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Loan Documents;
(b) (i) Indebtedness actually outstanding on the Closing Date and
listed on Schedule 6.01(b), (ii) refinancings or renewals thereof; provided
that (A) any such refinancing Indebtedness is in an aggregate principal
amount not greater than the aggregate principal amount of the Indebtedness
being renewed or refinanced, plus the amount of any premiums required to be
paid thereon and fees and expenses associated therewith, (B) such
refinancing Indebtedness has a later or equal final maturity and longer or
equal weighted average life than the Indebtedness being renewed or
refinanced and (C) the covenants, events of default, subordination and
other provisions thereof (including any guarantees thereof) shall be, in
the aggregate, no less favorable to the Lenders than those contained in the
Indebtedness being renewed or refinanced and (iii) the Senior Subordinated
Notes and Senior Subordinated Note Guarantees (including any notes and
guarantees issued in exchange therefor in accordance with the registration
rights document entered into in connection with the issuance of the Senior
Subordinated Notes and Senior Subordinated Note Guarantees);
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(c) Indebtedness under Hedging Obligations that are designed to
protect against fluctuations in interest rates, foreign currency exchange
rates or commodity prices or to exchange fixed rate Indebtedness for
floating rate Indebtedness, in each case not entered into for speculative
purposes; provided that if such Hedging Obligations relate to interest
rates, (a) such Hedging Obligations relate to payment obligations on
Indebtedness otherwise permitted to be incurred by the Loan Documents and
(b) the notional principal amount of such Hedging Obligations at the time
incurred does not exceed the principal amount of the Indebtedness to which
such Hedging Obligations relate;
(d) intercompany Indebtedness of the Companies outstanding to the
extent permitted by Section 6.04(h);
(e) Indebtedness in respect of Purchase Money Obligations, and
refinancings and renewals thereof, in an aggregate amount not to exceed
$10.0 million at any time outstanding;
(f) Indebtedness of Foreign Subsidiaries in an aggregate amount not to
exceed $5.0 million at any time outstanding;
(g) Indebtedness in respect of bid, performance or surety bonds issued
for the account of any Company in the ordinary course of business,
including guarantees or obligations of any Company with respect to letters
of credit supporting such bid, performance or surety obligations (in each
case other than for an obligation for money borrowed);
(h) Contingent Obligations of any Loan Party in respect of
Indebtedness otherwise permitted under Section 6.01;
(i) Capital Lease Obligations resulting from Sale and Leaseback
Transactions incurred by any Loan Party in an aggregate amount not to
exceed $5.0 million at any time outstanding;
(j) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within five Business Days of incurrence;
(k) Indebtedness arising in connection with endorsement of instruments
for deposit in the ordinary course of business;
(l) Holdings Employee Notes in an aggregate amount not to exceed $7.5
million at any time outstanding; and
(m) other Indebtedness of any Company in an aggregate amount not to
exceed $15.0 million at any time outstanding; provided that except for up
to $10.0 million of Capital Lease Obligations resulting from Sale and
Leaseback Transactions, all Indebtedness incurred and outstanding under
this Section 6.01(m) shall be unsecured.
SECTION 6.02. Liens. Create, incur, assume or permit to exist, directly or
indirectly, any Lien on any property now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, except (the
"Permitted Liens"):
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(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or delinquent and Liens for taxes,
assessments or governmental charges or levies, which (i) are being
contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, which proceedings
(or orders entered in connection with such proceedings) have the effect of
preventing the forfeiture or sale of the property or assets subject to any
such Lien or (ii) in the case of any such charge or claim which has or may
become a Lien against any of the Collateral, such Lien and the contest
thereof shall satisfy the Contested Collateral Lien Conditions.
(b) Liens in respect of property of any Company imposed by law, which
were incurred in the ordinary course of business and do not secure
Indebtedness for borrowed money, such as carriers', warehousemen's,
materialmen's, landlords', workmen's, suppliers', repairmen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business, and (i) which do not in the aggregate materially detract from the
value of the property of the Companies, taken as a whole, and do not
materially impair the use thereof in the operation of the business of the
Companies, taken as a whole, (ii) which, if they secure obligations that
are then due and unpaid, are being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance
with GAAP, which proceedings (or orders entered in connection with such
proceedings) have the effect of preventing the forfeiture or sale of the
property or assets subject to any such Lien and (iii) in the case of any
such Lien which has or may become a Lien against any of the Collateral,
such Lien and the contest thereof shall satisfy the Contested Collateral
Lien Conditions.
(c) any Lien in existence on the Closing Date and set forth on
Schedule 6.02(c) and any Lien granted as a replacement or substitute
therefor; provided that any such replacement or substitute Lien (i) except
as permitted by Section 6.01(b)(ii)(A), does not secure an aggregate
principal amount of Indebtedness, if any, greater than that secured on the
Closing Date and (ii) does not encumber any property other than the
property subject thereto on the Closing Date (any such Lien, an "Existing
Lien");
(d) easements, rights-of-way, restrictions (including zoning
restrictions), covenants, encroachments, protrusions and other similar
charges or encumbrances, and minor title deficiencies on or with respect to
any Real Property, in each case whether now or hereafter in existence, not
(i) securing Indebtedness, (ii) individually or in the aggregate materially
impairing the value or marketability of such Real Property and (iii)
individually or in the aggregate materially interfering with the conduct of
the business of the Companies at such Real Property;
(e) Liens arising out of judgments or awards not resulting in a
Default, in respect of which such Company shall in good faith be
prosecuting an appeal or proceedings for review in respect of which there
shall be secured a subsisting stay of execution pending such appeal or
proceedings and, in the case of any such Lien which has or may become a
Lien against any of the Collateral, such Lien and the contest thereof shall
satisfy the Contested Collateral Lien Conditions; provided that the
aggregate amount of all such judgments or awards (and any cash and the fair
market value of any property subject to such Liens) does not exceed
$2,500,000 at any time outstanding;
(f) Liens (other than any Lien imposed by ERISA) (i) imposed by law or
deposits made in connection therewith in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, (ii) incurred in the ordinary course of business
to secure the performance of tenders, statutory obligations (other than
excise taxes), surety, stay, customs and appeal bonds, statutory bonds,
bids, leases, government
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contracts, trade contracts, performance and return of money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money) or (iii) arising by virtue of deposits made in the ordinary course
of business to secure liability for premiums to insurance carriers;
provided that (w) with respect to clauses (i), (ii) and (iii) of this
paragraph (f), such Liens are for amounts not yet due and payable or
delinquent or, to the extent such amounts are so due and payable, such
amounts are being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP,
which proceedings (or orders entered in connection with such proceedings)
have the effect of preventing the forfeiture or sale of the property or
assets subject to any such Lien, (x) to the extent such Liens are not
imposed by law, such Liens shall in no event encumber any property other
than cash and Cash Equivalents, (y) in the case of any such Lien against
any of the Collateral, such Lien and the contest thereof shall satisfy the
Contested Collateral Lien Conditions and (z) the aggregate amount of
deposits at any time pursuant to clause (ii) and clause (iii) of this
paragraph (f) shall not exceed $3.0 million in the aggregate;
(g) Leases of the assets or properties of any Company, in each case
entered into in the ordinary course of such Company's business, so long as
such Leases are subordinate in all respects to the Liens granted and
evidenced by the Security Documents and do not, individually or in the
aggregate, (i) interfere in any material respect with the ordinary conduct
of the business of any Company or (ii) materially impair the use (for its
intended purposes) or the value of the property subject thereto;
(h) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
any Company in the ordinary course of business;
(i) Liens securing Indebtedness incurred pursuant to Section 6.01(e);
provided that (i) the Indebtedness secured by any such Lien (including
refinancings thereof) does not exceed 100% of the cost of the property
being acquired or leased at the time of the incurrence of such Indebtedness
and (ii) any such Liens attach only to the property being financed pursuant
to such Indebtedness and do not encumber any other property of any Company;
(j) rights of setoff and other similar Liens existing solely with
respect to cash and cash equivalents on deposit in one or more accounts
maintained by any Company, in each case granted in the ordinary course of
business in favor of the bank or banks with which such accounts are
maintained, securing amounts owing to such bank with respect to cash
management and operating account arrangements, including those involving
pooled accounts and netting arrangements; provided that, unless such Liens
are non-consensual and arise by operation of law, in no case shall any such
Liens secure (either directly or indirectly) the repayment of any
Indebtedness;
(k) Liens on property of a person existing at the time such person is
acquired or merged with or into or consolidated with any Company to the
extent permitted hereunder (and not created in anticipation or
contemplation thereof); provided that such Liens do not extend to property
not subject to such Liens at the time of acquisition (other than
improvements thereon) and are no more favorable to the lienholders than
such existing Lien;
(l) Liens securing Indebtedness incurred in reliance on Section
6.01(f); provided that (i) such Liens do not extend to, or encumber,
property which constitutes Collateral and (ii) such Liens extend only to
the property (or Equity Interests) of the Foreign Subsidiary incurring such
Indebtedness;
(m) Liens granted pursuant to the Security Documents;
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(n) the filing of financing statements solely as a precautionary
measure in connection with operating leases or consignment of goods;
(o) Liens securing Capital Lease Obligations permitted by Section
6.01(i) or (m), so long as such Liens do not extend to property other than
the property subject to the Sale and Leaseback Transactions to which such
Capital Lease Obligations relate;
(p) the existence of the "equal and ratable" clause in the Senior
Subordinated Note Documents (but not any security interests granted
pursuant thereto); and
(q) Liens incurred in the ordinary course of business of any Company
with respect to obligations that do not in the aggregate exceed $1.0
million at any time outstanding, so long as such Liens, to the extent
covering any Collateral, are junior to the Liens granted pursuant to the
Security Documents;
provided, however, that no consensual Liens shall be permitted to exist,
directly or indirectly, on any Securities Collateral, other than Liens granted
pursuant to the Security Documents.
SECTION 6.03. Sale and Leaseback Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred (a "Sale and Leaseback Transaction") unless
(i) the sale of such property is permitted by Section 6.05 and (ii) any Liens
arising in connection with its use of such property are permitted by Section
6.02.
SECTION 6.04. Investment, Loan and Advances. Directly or indirectly, lend
money or credit or make advances to any person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any other person, or purchase or own a futures contract
or otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract (all of the
foregoing, collectively, "Investments"), except that the following shall be
permitted:
(a) the Companies may consummate the Transactions on the Closing Date
in accordance with the provisions of the Transaction Documents;
(b) Investments outstanding on the Closing Date and identified on
Schedule 6.04(b);
(c) the Companies may (i) acquire and hold accounts receivables owing
to any of them if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary terms, (ii)
acquire and hold cash and Cash Equivalents, (iii) endorse negotiable
instruments for collection in the ordinary course of business or (iv) make
lease, utility and other similar deposits in the ordinary course of
business;
(d) Hedging Obligations incurred pursuant to Section 6.01(c);
(e) loans and advances to directors, employees and officers of
Borrower and the Subsidiaries for bona fide business purposes and to
purchase Equity Interests of Holdings, not in excess of an aggregate of
$2.0 million at any one time outstanding;
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(f) Borrower and the Subsidiaries may sell or transfer accounts to the
extent permitted by Section 6.05;
(g) Borrower may establish (i) Wholly Owned Subsidiaries to the extent
permitted by Section 6.12 and (ii) non-Wholly Owned Subsidiaries and/or
joint ventures to the extent that Investments in such non-Wholly Owned
Subsidiaries and/or joint ventures shall not exceed $10.0 million at any
time outstanding, after giving effect to amounts returned to Borrower in
cash (including upon disposition);
(h) Investments (i) by Borrower in any Subsidiary Guarantor, (ii) by
any Company in Borrower or any Subsidiary Guarantor, (iii) by a Subsidiary
Guarantor in another Subsidiary Guarantor and (iv) by a Subsidiary that is
not a Subsidiary Guarantor in any other Subsidiary that is not a Subsidiary
Guarantor; provided that any Investment in the form of a loan or advance
shall be evidenced by the Intercompany Note and, in the case of a loan by a
Loan Party, pledged by such Loan Party as Collateral pursuant to the
Security Documents;
(i) Investments in securities of trade creditors or customers in the
ordinary course of business that are received in settlement of bona fide
disputes or pursuant to any plan of reorganization or liquidation or
similar arrangement upon the bankruptcy or insolvency of such trade
creditors or customers;
(j) Investments made by Borrower or any Subsidiary as a result of
consideration received in connection with an Asset Sale made in compliance
with Section 6.05; and
(k) Investments in Subsidiaries of Borrower that are not Guarantors in
an aggregate amount not to exceed $5.0 million at any time outstanding
(with each such Investment being valued as of the date made and without
regard to subsequent changes in value).
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.
Wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, engage in any Asset Sale or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets of any person (or agree to do any of the foregoing at any future time),
except that the following shall be permitted:
(a) Capital Expenditures by Borrower and the Subsidiaries to the
extent permitted by Section 6.08(d);
(b) (i) purchases and other acquisitions of inventory, materials,
equipment and intangible assets in the ordinary course of business, (ii)
subject to Section 2.10(c), Asset Sales of used, worn out, obsolete or
surplus property by any Loan Party in the ordinary course of business and
the abandonment or other Asset Sale of Intellectual Property that is, in
the reasonable judgment of Borrower, no longer economically practicable to
maintain or useful in the conduct of the business of the Companies taken as
a whole and (iii) subject to Section 2.10(c), the sale, lease or other
disposal of any assets; provided that the aggregate consideration received
in respect of all Asset Sales pursuant to this clause (b)(iii) shall not
exceed $10.0 million in any four consecutive fiscal quarters of Borrower
(notwithstanding the foregoing $10.0 million limitation, Sale and Leaseback
Transactions of up to $15.0 million at any time outstanding shall be
permitted);
(c) Investments in compliance with Section 6.04;
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(d) Borrower and the Subsidiaries may lease (as lessee or lessor) real
or personal property and may guaranty such lease, in each case, in the
ordinary course of business;
(e) the Transactions as contemplated by the Transaction Documents;
(f) Borrower and the Subsidiaries may consummate Permitted
Acquisitions;
(g) any Company may merge or consolidate with or into Borrower or any
Subsidiary Guarantor (as long as Borrower or a Subsidiary Guarantor is the
surviving person in such merger or consolidation and remains a Wholly Owned
Subsidiary of Holdings); provided that the Lien on and security interest in
such property granted or to be granted in favor of the Collateral Agent
under the Security Documents shall be maintained or created in accordance
with the provisions of Section 5.10 or Section 5.11, as applicable; and
(h) any Subsidiary may dissolve, liquidate or wind up its affairs at
any time; provided that such dissolution, liquidation or winding-up, as
applicable, could not reasonably be expected to have a Material Adverse
Effect.
To the extent the Required Lenders waive the provisions of this Section 6.05
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 6.05, such Collateral (unless sold to a Company) shall
be sold free and clear of the Liens created by the Security Documents, and the
Agents shall take all actions deemed appropriate in order to effect the
foregoing.
SECTION 6.06. Dividends. Authorize, declare or pay, directly or indirectly,
any Dividends with respect to any Company, except that the following shall be
permitted:
(a) any Subsidiary of Borrower may pay cash Dividends to Borrower or
any Guarantor that is a Wholly Owned Subsidiary of Borrower;
(b) payments to Holdings to permit Holdings, and the subsequent use of
such payments by Holdings, to repurchase or redeem Qualified Capital Stock
of Holdings held by officers, directors or employees or former officers,
directors or employees (or their transferees, estates or beneficiaries
under their estates) of any Company, upon their death, disability,
retirement, severance or termination of employment or service or pay
interest or principal in respect of Holdings Employee Notes; provided that
the aggregate cash consideration paid for all such redemptions and payments
shall not exceed, in any calendar year the sum of (x) $3.0 million (and up
to 50% of such $3 million not used in any calendar year may be carried
forward to the next succeeding (but no other) calendar year), plus (y) the
amount of any Net Cash Proceeds received by or contributed to Borrower from
the issuance and sale since the Issue Date of Qualified Capital Stock of
Holdings to officers, directors or employees of Holdings or any of its
Subsidiaries that have not been used to make any repurchases, redemptions
or payments under this clause (b), plus (z) the net cash proceeds of any
"key-man" life insurance policies of Holdings, Borrower or any Subsidiary
that have not been used to make any repurchases, redemptions or payments
under this clause (b);
(c) (A) to the extent actually used by Holdings or another direct or
indirect parent company of Borrower to pay such taxes, costs and expenses,
payments by Borrower to or on behalf of Holdings in an amount sufficient to
pay franchise taxes and other fees required to maintain the legal existence
of Holdings or another direct or indirect parent corporation of Borrower
and (B) payments by Borrower to or on behalf of Holdings in an amount
sufficient to pay out-of-pocket legal, accounting and filing costs and
other expenses in the nature of overhead in the ordi-
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nary course of business of Holdings or another direct or indirect parent
corporation of Borrower, in the case of clauses (A) and (B) in an aggregate
amount not to exceed $750,000 in any calendar year; and
(d) the making by Borrower of Dividends to Holdings constituting
Permitted Tax Distributions, and the subsequent distribution by Holdings of
all or a portion thereof to the its direct or indirect equity holders.
SECTION 6.07. Transactions with Affiliates. Enter into, directly or
indirectly, any transaction or series of related transactions, whether or not in
the ordinary course of business, with any Affiliate of any Company (other than
between or among Borrower and one or more Subsidiary Guarantors), other than on
terms and conditions at least as favorable to such Company as would reasonably
be obtained by such Company at that time in a comparable arm's-length
transaction with a person other than an Affiliate, except that the following
shall be permitted:
(a) Dividends may be paid to the extent provided in Section 6.06;
(b) loans may be made and other transactions may be entered into
between and among any Company and its Affiliates to the extent permitted by
Sections 6.01 and 6.04;
(c) reasonable and customary director, officer and employee
compensation (including bonuses) and other benefits (including retirement,
health, stock option and other benefit plans) and indemnification
arrangements, in each case approved by a majority of the Independent
Directors;
(d) payments to ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, LLC and Trimaran Fund
Management, L.L.C. under the Management and Monitoring Agreement as in
effect on the Closing Date or as thereafter amended or supplemented in any
manner that, taken as a whole, is not more adverse to the interests of the
Lenders in any material respect than the Management and Monitoring
Agreement as in effect on the Closing Date;
(e) transactions with customers, clients, suppliers, joint venture
partners or purchasers or sellers of goods and services, in each case in
the ordinary course of business and otherwise not prohibited by the Loan
Documents;
(f) (x) any agreement in effect on the Closing Date and disclosed in
the Offering Memorandum, as in effect on the Closing Date or as thereafter
amended or replaced in any manner, that, taken as a whole, is not more
adverse to the interests of the Lenders in any material respect than such
agreement as it was in effect on the Closing Date or (y) any transaction
pursuant to any agreement referred to in the immediately preceding clause
(x);
(g) the existence of, and the performance by any Loan Party of its
obligations under the terms of, any limited liability company, limited
partnership or other Organizational Document or securityholders agreement
(including any registration rights agreement or purchase agreement related
thereto) to which it is a party on the Closing Date and which is described
in the Offering Memorandum, as in effect on the Closing Date, and similar
agreements that it may enter into thereafter; provided, however, that the
existence of, or the performance by any Loan Party of obligations under,
any amendment to any such existing agreement or any such similar agreement
entered into after the Closing Date shall only be permitted by this Section
6.07(g) to the extent not more adverse to the interest of the Lenders in
any material respect, when taken as a whole, than any of such documents and
agreements as in effect on the Closing Date;
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(h) sales of Qualified Capital Stock to Affiliates of Borrower not
otherwise prohibited by the Loan Documents and the granting of registration
and other customary rights in connection therewith;
(i) any transaction with an Affiliate where the only consideration
paid by any Loan Party is Qualified Capital Stock; and
(j) the Transactions may be effected.
SECTION 6.08. Financial Covenants.
(a) Maximum Leverage Ratio. Permit the Leverage Ratio, as of the last day
of any Test Period ending during any period set forth in the table below, to
exceed the ratio set forth opposite such period in the table below:
--------------------------------------------------------------------------------
Test Period Leverage Ratio
--------------------------------------------------------------------------------
Closing Date - December 31, 2003 5.70 to 1.00
--------------------------------------------------------------------------------
January 1, 2004 - June 30, 2004 5.40 to 1.00
--------------------------------------------------------------------------------
July 1, 2004 - December 31, 2004 5.10 to 1.00
--------------------------------------------------------------------------------
January 1, 2005 - June 30, 2005 4.80 to 1.00
--------------------------------------------------------------------------------
July 1, 2005 - December 31, 2005 4.40 to 1.00
--------------------------------------------------------------------------------
January 1, 2006 - December 31, 2006 3.80 to 1.00
--------------------------------------------------------------------------------
January 1, 2007 - December 31, 2007 3.60 to 1.00
--------------------------------------------------------------------------------
January 1, 2008 - Term Loan Maturity Date 3.30 to 1.00
--------------------------------------------------------------------------------
(b) Minimum Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio, for any Test Period ending during any period set forth in the
table below, to be less than the ratio set forth opposite such period in the
table below:
--------------------------------------------------------------------------------
Interest Coverage
Test Period Ratio
--------------------------------------------------------------------------------
Closing Date - December 31, 2004 2.00 to 1.00
--------------------------------------------------------------------------------
January 1, 2005 - June 30, 2005 2.10 to 1.00
--------------------------------------------------------------------------------
July 1, 2005 - December 31, 2005 2.25 to 1.00
--------------------------------------------------------------------------------
January 1, 2006 - December 31, 2006 2.50 to 1.00
--------------------------------------------------------------------------------
January 1, 2007 - December 31, 2007 2.75 to 1.00
--------------------------------------------------------------------------------
January 1, 2008 - December 31, 2008 2.90 to 1.00
--------------------------------------------------------------------------------
January 1, 2009 - Term Loan Maturity Date 3.00 to 1.00
--------------------------------------------------------------------------------
(c) Minimum Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
Charge Coverage Ratio, for any Test Period from and after the Closing Date, to
be less than 1.10 to 1.0.
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(d) Limitation on Capital Expenditures. Permit the aggregate amount of
Capital Expenditures made in any period set forth below, to exceed the amount
set forth opposite such period below:
--------------------------------------------------------------------------------
Period Amount (in millions)
--------------------------------------------------------------------------------
January 1, 2003 - December 31, 2003 $ 9.0
--------------------------------------------------------------------------------
January 1, 2004 - December 31, 2004 $10.50
--------------------------------------------------------------------------------
January 1, 2005 - December 31, 2005 $10.75
--------------------------------------------------------------------------------
January 1, 2006 - December 31, 2006 $11.00
--------------------------------------------------------------------------------
January 1, 2007 - December 31, 2007 $12.00
--------------------------------------------------------------------------------
January 1, 2008 - December 31, 2008 $13.00
--------------------------------------------------------------------------------
January 1, 2009 - Term Loan Maturity Date $14.00
--------------------------------------------------------------------------------
; provided, however, that (x) if the aggregate amount of Capital Expenditures
made in any fiscal year shall be less than the maximum amount of Capital
Expenditures permitted under this Section 6.08(d) for such fiscal year (before
giving effect to any carryover), then an amount of such shortfall not exceeding
50% of such maximum amount (without giving effect to clause (z) below) may be
added to the amount of Capital Expenditures permitted under this Section 6.08(d)
for the immediately succeeding (but not any other) fiscal year, (y) in
determining whether any amount is available for carryover, the amount expended
in any fiscal year shall first be deemed to be from the amount allocated to such
fiscal year (before giving effect to any carryover) and (z) the amount set forth
in the table above for any period may be increased by the amount of Net Cash
Proceeds of Excluded Issuances designated for Capital Expenditures for such
period during such period.
SECTION 6.09. Prepayments of Other Indebtedness; Modifications of
Organizational Documents and Other Documents, etc. Directly or indirectly
(a) make (or give any notice in respect thereof) any voluntary or
optional payment or prepayment on or redemption or acquisition for value
of, or any prepayment or redemption as a result of any asset sale, change
of control or similar event of, any Indebtedness outstanding under the
Senior Subordinated Notes or any other Subordinated Indebtedness, except as
otherwise permitted by this Agreement;
(b) amend or modify, or permit the amendment or modification of, any
provision of any Transaction Document in any manner that is adverse in any
material respect to the interests of the Lenders;
(c) amend, modify or change any of its Organizational Documents
(including by the filing or modification of any certificate of designation)
or any agreement to which it is a party with respect to its Equity
Interests (including any shareholders' agreement), or enter into any new
agreement with respect to its Equity Interests, other than any such
amendments, modifications or changes or such new agreements which are not
adverse in any material respect to the interests of the Lenders; provided
that Holdings may issue such Equity Interests, so long as such issuance is
not prohibited by Section 6.11 or any other provision of this Agreement,
and may amend its Organizational Documents to authorize any such Equity
Interests; or
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(d) cause or permit any other obligation (other than the Obligations
and the Guaranteed Obligations) to constitute Designated Senior Debt (as
defined in the Senior Subordinated Note Documents).
SECTION 6.10. Limitation on Certain Restrictions on Subsidiaries. Directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by Borrower or any Subsidiary, or
pay any Indebtedness owed to Borrower or a Subsidiary, (b) make loans or
advances to Borrower or any Subsidiary or (c) transfer any of its properties to
Borrower or any Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) applicable law; (ii) this Agreement and the
other Loan Documents; (iii) the Senior Subordinated Note Documents; (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of a Subsidiary; (v) customary provisions restricting
assignment of any agreement entered into by a Subsidiary in the ordinary course
of business; (vi) any holder of a Lien permitted by Section 6.02 restricting the
transfer of the asset or assets subject thereto; (vii) restrictions which are
not more restrictive than those contained in this Agreement contained in any
documents governing any Indebtedness incurred after the Closing Date in
accordance with the provisions of this Agreement; (viii) customary restrictions
and conditions contained in any agreement relating to the sale of any property
permitted under Section 6.05 pending the consummation of such sale; (ix) any
agreement in effect at the time such Subsidiary becomes a Subsidiary of
Borrower, so long as such agreement was not entered into in contemplation of
such person becoming a Subsidiary of Borrower; (x) in the case of any joint
venture which is not a Loan Party in respect of any matters referred to in
clauses (b) and (c) above, restrictions in such person's Organizational
Documents or pursuant to any joint venture agreement or stockholders agreements
solely to the extent of the Equity Interests of or assets held in the subject
joint venture or other entity; or (xi) any encumbrances or restrictions imposed
by any amendments or refinancings that are otherwise permitted by the Loan
Documents of the contracts, instruments or obligations referred to in clauses
(i) through (x) above; provided that such amendments or refinancings are, in the
good faith judgment of Holdings' Board of Directors, no more materially
restrictive with respect to such encumbrances and restrictions than those prior
to such amendment or refinancing.
SECTION 6.11. Limitation on Issuance of Capital Stock. (a) With respect to
Holdings, issue any Equity Interest that is not Qualified Capital Stock.
(b) Borrower will not, and will not permit any Subsidiary to, issue any
Equity Interest (including by way of sales of treasury stock) or any options or
warrants to purchase, or securities convertible into, any Equity Interest,
except (i) for stock splits, stock dividends and additional issuances of Equity
Interests which do not decrease the percentage ownership of Borrower or any
Subsidiaries in any class of the Equity Interest of such Subsidiary; (ii)
Subsidiaries of Borrower formed after the Closing Date in accordance with
Section 6.12 may issue Equity Interests to Borrower or the Subsidiary of
Borrower which is to own such Equity Interests; and (iii) Borrower may issue
common stock that is Qualified Capital Stock to Holdings. All Equity Interests
issued in accordance with this Section 6.11(b), shall, to the extent required by
Sections 5.10 and 5.11 or any Security Agreement, be delivered to the Collateral
Agent for pledge pursuant to the applicable Security Agreement.
SECTION 6.12. Limitation on Creation of Subsidiaries. Establish, create or
acquire any additional Subsidiaries without the prior written consent of the
Required Lenders; provided that, without such consent, Borrower may (i)
establish or create one or more Wholly Owned Subsidiaries of Borrower, (ii)
establish, create or acquire one or more Subsidiaries in connection with an
Investment made pursuant to Section 6.04(g) or 6.04(k) or (iii) acquire one or
more Subsidiaries in connection with a Permitted Acquisition, so long as, in
each case, Section 5.10(b) shall be complied with.
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SECTION 6.13. Business. (a) With respect to Holdings, engage in any
business activities or have any assets or liabilities, other than (i) its
ownership of the Equity Interests of Borrower, (ii) obligations under the Loan
Documents and the LP Agreement, (iii) the issuance of Holdings Employee Notes
and (iv) activities and assets incidental to the foregoing clauses (i) through
(iii).
(b) With respect to Borrower and the Subsidiaries, engage (directly or
indirectly) in any business other than those businesses in which Borrower and
its Subsidiaries are engaged on the Closing Date (or which are substantially
related thereto or are reasonable extensions thereof).
SECTION 6.14. Limitation on Accounting Changes. Make or permit any change
in accounting policies or reporting practices, without the consent of the
Required Lenders, which consent shall not be unreasonably withheld, except
changes that, in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect or are required by GAAP.
SECTION 6.15. Fiscal Year. Change its fiscal year-end to a date other than
December 31.
SECTION 6.16. Lease Obligations. Create, incur, assume or suffer to exist
any obligations as lessee for the rental or hire of real or personal property of
any kind under leases or agreements to lease having an original term of one year
or more that would cause the direct and contingent liabilities of Borrower and
its Subsidiaries, on a consolidated basis, in respect of all such obligations
(other than Capital Lease Obligations) to exceed $3.0 million payable in any
period of 12 consecutive months.
SECTION 6.17. No Further Negative Pledge. Enter into any agreement,
instrument, deed or lease which prohibits or limits the ability of any Loan
Party to create, incur, assume or suffer to exist any Lien upon any of their
respective properties, assets or revenues, whether now owned or hereafter
acquired, or which requires the grant of any security for an obligation if
security is granted for another obligation, except the following: (1) this
Agreement and the other Loan Documents; (2) covenants in documents creating
Liens permitted by Section 6.02 prohibiting further Liens on the assets
encumbered thereby; (3) the Senior Subordinated Note Documents, (4) any other
agreement that does not restrict in any manner (directly or indirectly) Liens
created pursuant to the Loan Documents on any Collateral securing the Loans or
any Interest Rate Agreement and does not require the direct or indirect granting
of any Lien securing any Indebtedness or other obligation by virtue of the
granting of Liens on or pledge of property of any Loan Party to secure the
Obligations, (5) any prohibition or limitation that (a) exists pursuant to
applicable law, (b) consists of customary restrictions and conditions contained
in any agreement relating to the sale of any property permitted under Section
6.05 pending the consummation of such sale, (c) restricts subletting or
assignment of any lease governing a leasehold interest of Borrower or a
Subsidiary, (d) is not more restrictive than those contained in this Agreement
contained in any documents governing any Indebtedness incurred after the Closing
Date in accordance with the provisions of this Agreement, (e) exists in any
agreement in effect at the time such Subsidiary becomes a Subsidiary of
Borrower, so long as such agreement was not entered into in contemplation of
such person becoming a Subsidiary or (f) are imposed by any amendments or
refinancings that are otherwise permitted by the Loan Documents of the
contracts, instruments or obligations referred to in clauses (1) through (5);
provided that such amendments and refinancings are, in the good faith judgment
of Holdings' Board of Directors, no more materially restrictive with respect to
such prohibitions and limitations than those prior to such amendment or
refinancing.
SECTION 6.18. Limitation on Finance Subsidiary. Finance Subsidiary may not
hold any material assets, become liable for any material obligations, engage in
any trade or business, or conduct any business activity, other than (1) the
issuance of its Equity Interests to Borrower or any Wholly-Owned Subsidiary of
Borrower, (2) the incurrence of Indebtedness as a co-obligor or guarantor, as
the case may be, of the Senior Subordinated Notes, the Loan Documents and any
other Indebtedness that is
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permitted to be incurred by Borrower under the Loan Documents; provided that the
net proceeds of such Indebtedness are retained by Borrower or loaned to or
contributed as capital to one or more of Subsidiaries other than Finance
Subsidiary and (3) activities incidental thereto. Neither Borrower nor any
Subsidiary shall engage in any transactions with Finance Subsidiary in violation
of the immediately preceding sentence.
ARTICLE VII
GUARANTEE
SECTION 7.01. The Guarantee. The Guarantors hereby jointly and severally
guarantee as a primary obligor and not as a surety to each Secured Party and
their respective successors and assigns the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest (including any interest, fees, costs or charges that would accrue
but for the provisions of the Title 11 of the United States Code after any
bankruptcy or insolvency petition under Title 11 of the United States Code) on
the Loans made by the Lenders to, and the Notes held by each Lender of,
Borrower, and all other Obligations from time to time owing to the Secured
Parties by any Loan Party under any Loan Document, in each case strictly in
accordance with the terms thereof (such obligations being herein collectively
called the "Guaranteed Obligations"). The Guarantors hereby jointly and
severally agree that if Borrower or other Guarantor(s) shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Guarantors will promptly pay the same, without any
demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
SECTION 7.02. Obligations Unconditional. The obligations of the Guarantors
under Section 7.01 shall constitute a guaranty of payment and, to the fullest
extent permitted by applicable law, are absolute, irrevocable and unconditional,
joint and several, irrespective of the value, genuineness, validity, regularity
or enforceability of the Guaranteed Obligations of Borrower under this
Agreement, the Notes, if any, or any other agreement or instrument referred to
herein or therein, or any substitution, release or exchange of any other
guarantee of or security for any of the Guaranteed Obligations, and,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or Guarantor
(except for payment in full). Without limiting the generality of the foregoing,
it is agreed that the occurrence of any one or more of the following shall not
alter or impair the liability of the Guarantors hereunder which shall remain
absolute, irrevocable and unconditional under any and all circumstances as
described above:
(i) at any time or from time to time, without notice to the
Guarantors, the time for any performance of or compliance with any of the
Guaranteed Obligations shall be extended, or such performance or compliance
shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Agreement or the Notes, if any, or any other agreement or instrument
referred to herein or therein shall be done or omitted;
(iii) the maturity of any of the Guaranteed Obligations shall be
accelerated, or any of the Guaranteed Obligations shall be amended in any
respect, or any right under the Loan Documents or any other agreement or
instrument referred to herein or therein shall be amended or
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waived in any respect or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part or otherwise dealt with;
(iv) any lien or security interest granted to, or in favor of, Issuing
Bank or any Lender or Agent as security for any of the Guaranteed
Obligations shall fail to be perfected; or
(v) the release of any other Guarantor pursuant to Section 7.09.
The Guarantors hereby expressly waive diligence, presentment, demand of
payment, protest and all notices whatsoever, and any requirement that any
Secured Party exhaust any right, power or remedy or proceed against Borrower
under this Agreement or the Notes, if any, or any other agreement or instrument
referred to herein or therein, or against any other person under any other
guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors
waive any and all notice of the creation, renewal, extension, waiver,
termination or accrual of any of the Guaranteed Obligations and notice of or
proof of reliance by any Secured Party upon this Guarantee or acceptance of this
Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred in reliance upon this
Guarantee, and all dealings between Borrower and the Secured Parties shall
likewise be conclusively presumed to have been had or consummated in reliance
upon this Guarantee. This Guarantee shall be construed as a continuing,
absolute, irrevocable and unconditional guarantee of payment without regard to
any right of offset with respect to the Guaranteed Obligations at any time or
from time to time held by Secured Parties, and the obligations and liabilities
of the Guarantors hereunder shall not be conditioned or contingent upon the
pursuit by the Secured Parties or any other person at any time of any right or
remedy against Borrower or against any other person which may be or become
liable in respect of all or any part of the Guaranteed Obligations or against
any collateral security or guarantee therefor or right of offset with respect
thereto. This Guarantee shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantors and the
successors and assigns thereof, and shall inure to the benefit of the Lenders,
and their respective successors and assigns, notwithstanding that from time to
time during the term of this Agreement there may be no Guaranteed Obligations
outstanding.
SECTION 7.03. Reinstatement. The obligations of the Guarantors under this
Article VII shall be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of Borrower or other Loan Party in respect of
the Guaranteed Obligations is rescinded or must be otherwise restored by any
holder of any of the Guaranteed Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise.
SECTION 7.04. Subrogation; Subordination. Each Guarantor hereby agrees that
until the indefeasible payment and satisfaction in full in cash of all
Guaranteed Obligations and the expiration and termination of the Commitments of
the Lenders under this Agreement it shall not exercise any right or remedy
arising by reason of any performance by it of its guarantee in Section 7.01,
whether by subrogation or otherwise, against Borrower or any other Guarantor of
any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations. Any Indebtedness of any Loan Party permitted pursuant to Section
6.01(d) shall be subordinated to such Loan Party's Obligations in the manner set
forth in the Intercompany Note evidencing such Indebtedness.
SECTION 7.05. Remedies. The Guarantors jointly and severally agree that, as
between the Guarantors and the Lenders, the obligations of Borrower under this
Agreement and the Notes, if any, may be declared to be forthwith due and payable
as provided in Article VIII (and shall be deemed to have become automatically
due and payable in the circumstances provided in said Article VIII) for purposes
of Section 7.01, notwithstanding any stay, injunction or other prohibition
preventing such declaration (or such obligations from becoming automatically due
and payable) as against Borrower and that, in the event
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of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable
by Borrower) shall forthwith become due and payable by the Guarantors for
purposes of Section 7.01.
SECTION 7.06. Instrument for the Payment of Money. Each Guarantor hereby
acknowledges that the guarantee in this Article VII constitutes an instrument
for the payment of money, and consents and agrees that any Lender or Agent, at
its sole option, in the event of a dispute by such Guarantor in the payment of
any moneys due hereunder, shall have the right to bring a motion-action under
New York CPLR Section 3213.
SECTION 7.07. Continuing Guarantee. The guarantee in this Article VII is a
continuing guarantee of payment, and shall apply to all Guaranteed Obligations
whenever arising.
SECTION 7.08. General Limitation on Guarantee Obligations. In any action or
proceeding involving any state corporate, limited partnership or limited
liability company law, or any applicable state, federal or foreign bankruptcy,
insolvency, reorganization or other law affecting the rights of creditors
generally, if the obligations of any Guarantor under Section 7.01 would
otherwise be held or determined to be void, voidable, invalid or unenforceable,
or subordinated to the claims of any other creditors, on account of the amount
of its liability under Section 7.01, then, notwithstanding any other provision
to the contrary, the amount of such liability shall, without any further action
by such Guarantor, any Loan Party or any other person, be automatically limited
and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
SECTION 7.09. Release of Guarantors. If, in compliance with the terms and
provisions of the Loan Documents, all or substantially all of the Equity
Interests or assets of any Guarantor are sold or otherwise transferred (a
"Transferred Guarantor") to a person or persons, none of which is Borrower or a
Subsidiary, such Transferred Guarantor shall, upon the consummation of such sale
or transfer, be released from its obligations under this Agreement (including
under Section 11.03 hereof) and its obligations to pledge and grant any
Collateral owned by it pursuant to any Security Document and, in the case of a
sale of all or substantially all of the Equity Interests of the Transferred
Guarantor, the pledge of such Equity Interests to the Collateral Agent pursuant
to the Security Agreements shall be released, and the Collateral Agent shall
take such actions as are necessary to effect each release described in this
Section 7.09 in accordance with the relevant provisions of the Security
Documents.
ARTICLE VIII
EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) default shall be made in the payment of any principal of any Loan
or any Reimbursement Obligation when and as the same shall become due and
payable, whether at the due date thereof (including a Term Loan Repayment
Date) or at a date fixed for prepayment thereof or by acceleration thereof
or otherwise;
(b) default shall be made in the payment of any interest on any Loan
or any Fee or any other amount (other than an amount referred to in
paragraph (a) above) due under any Loan
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Document, when and as the same shall become due and payable, and such
default shall continue unremedied for a period of three Business Days;
(c) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of Letters
of Credit hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(d) default shall be made in the due observance or performance by any
Company of any covenant, condition or agreement contained in Section 5.02,
5.03(a) or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by any
Company of any covenant, condition or agreement contained in any Loan
Document (other than those specified in (a), (b) or (d) immediately above)
and such default shall continue unremedied or shall not be waived for a
period of 30 days after written notice thereof from the Administrative
Agent or any Lender to Borrower;
(f) any Company shall (i) fail to pay any principal or interest,
regardless of amount, due in respect of any Indebtedness (other than the
Obligations), when and as the same shall become due and payable beyond any
applicable grace period or (ii) fail to observe or perform any other term,
covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness, if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a trustee or other representative on its or
their behalf to cause, such Indebtedness to become due prior to its stated
maturity; provided that it shall not constitute an Event of Default
pursuant to this paragraph (f) unless the aggregate amount of all such
Indebtedness referred to in clauses (i) and (ii) exceeds $2,500,000 at any
one time;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Company or the General Partner, or of a
substantial part of the property or assets of any Company or the General
Partner, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other federal, state or foreign bankruptcy,
insolvency, receivership or similar law; (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for any Company or the General Partner or for a substantial part of the
property or assets of any Company or the General Partner; or (iii) the
winding-up or liquidation of any Company or the General Partner; and such
proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;
(h) any Company or the General Partner shall (i) voluntarily commence
any proceeding or file any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
federal, state or foreign bankruptcy, insolvency, receivership or similar
law; (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in clause (g) above; (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for any Company or the General Partner or for a substantial part of the
property or assets of any Company or the General Partner; (iv) file an
answer admitting the material allegations of a petition filed against it in
any such proceeding; (v) make a general assignment for the benefit of
creditors; (vi) become unable, admit in writing its inability or fail
generally to pay its debts as
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they become due; (vii) take any action for the purpose of effecting any of
the foregoing; or (viii) wind up or liquidate;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $2,500,000 shall be rendered against any Company or any
combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively stayed,
or any action shall be legally taken by a judgment creditor to levy upon
assets or properties of any Company to enforce any such judgment;
(j) an ERISA Event or noncompliance with respect to Foreign Plans
shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other such ERISA Events and noncompliance with
respect to Foreign Plans that have occurred, could reasonably be expected
to result in liability of any Company and its ERISA Affiliates in an
aggregate amount exceeding $2,500,000 (excluding any liability to make
payments to a Multi-Employer Plan resulting from an ERISA Event described
in clauses (f) and (g) of the definition thereof to the extent that such
payments do not exceed in any year the average payments made in the two
years prior to such ERISA Event) or the imposition of a Lien on any assets
of a Company;
(k) any security interest and Lien purported to be created by any
Security Document shall cease to be in full force and effect, or shall
cease to give the Collateral Agent, for the benefit of the Secured Parties,
the Liens, rights, powers and privileges purported to be created and
granted under such Security Documents (including a perfected first priority
security interest in and Lien on, all of the Collateral thereunder (except
as otherwise expressly provided in such Security Document)) in favor of the
Collateral Agent, or shall be asserted by Borrower or any other Loan Party
not to be, a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) security
interest in or Lien on the Collateral covered thereby;
(l) any Guarantee shall cease to be in full force effect;
(m) any Loan Document or any material provisions thereof shall at any
time and for any reason be declared by a court of competent jurisdiction to
be null and void, or a proceeding shall be commenced by any Loan Party or
any other person, or by any Governmental Authority, seeking to establish
the invalidity or unenforceability thereof, or any Loan Party shall
repudiate or deny that it has any liability or obligation for the payment
of principal or interest or other obligations purported to be created under
any Loan Document;
(n) there shall have occurred a Change in Control; or
(o) the Acquisition shall not have occurred on the Closing Date in
accordance with the terms and conditions of the Acquisition Agreement;
then, and in every such event (other than an event with respect to Holdings,
Borrower or the General Partner described in paragraph (g) or (h) above), and at
any time thereafter during the continuance of such event, the Administrative
Agent may, and at the request of the Required Lenders shall, by notice to
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate forthwith the Commitments and (ii) declare the Loans and
Reimbursement Obligations then outstanding to be forthwith due and payable, in
whole or in part, whereupon the principal of the Loans and Reimbursement
Obligations so declared to be due and payable, together with accrued interest
thereon and any unpaid and accrued Fees and all other liabilities of Borrower
accrued hereunder and under any other Loan Document, shall become forthwith due
and payable, without presentment, demand, protest or any other notice of any
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kind, all of which are hereby expressly waived by Borrower and the Guarantors,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to Holdings, Borrower or the
General Partner described in paragraph (g) or (h) above, the Commitments shall
automatically terminate and the principal of the Loans and Reimbursement
Obligations then outstanding, together with accrued interest thereon and any
unpaid and accrued Fees and all other liabilities of Borrower accrued hereunder
and under any other Loan Document, shall automatically become due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by Borrower and the Guarantors, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
ARTICLE IX
COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS
SECTION 9.01. Collateral Account. (a) The Collateral Agent is hereby
authorized to establish and maintain at its office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in the name of the Collateral Agent and pursuant to
a Control Agreement, a restricted deposit account designated "Norcraft
Companies, L.P. Collateral Account". Each Loan Party shall deposit into the
Collateral Account from time to time (i) the cash proceeds of any of the
Collateral (including pursuant to any disposition thereof) to the extent
contemplated by Sections 2.10(c)(ii) and 2.10(f)(iii), (ii) the cash proceeds of
any Casualty Event with respect to Collateral, to the extent contemplated herein
or in any other Loan Document, and (iii) any cash such Loan Party is required to
pledge as additional collateral security hereunder pursuant to the Loan
Documents.
(b) The balance from time to time in the Collateral Account shall
constitute part of the Collateral and shall not constitute payment of the
Obligations until applied as hereinafter provided. So long as no Event of
Default has occurred and is continuing or will result therefrom, the Collateral
Agent shall within two Business Days of receiving a request of the applicable
Loan Party for release of cash proceeds (i) from the Collateral Account
constituting Net Cash Proceeds relating to any Casualty Event or Asset Sale
remit such cash proceeds on deposit in the Collateral Account to or upon the
order of such Loan Party, so long as such Loan Party has satisfied the
conditions relating thereto set forth in Section 9.02 and (ii) with respect to
the LC Sub-Account, remit such Net Cash Proceeds on deposit in the LC
Sub-Account to or upon the order of such Loan Party (x) at such time as all
Letters of Credit shall have been terminated and all of the liabilities in
respect of the Letters of Credit have been paid in full or (y) otherwise in
accordance with Section 2.18(i). At any time following the occurrence and during
the continuance of an Event of Default, the Collateral Agent may (and, if
instructed by the Required Lenders as specified herein, shall) in its (or their)
discretion apply or cause to be applied (subject to collection) the balance from
time to time outstanding to the credit of the Collateral Account to the payment
of the Obligations in the manner specified in Section 9.03 hereof subject,
however, in the case of amounts deposited in the LC Sub-Account, to the
provisions of Sections 2.18(i) and 9.03. The Loan Parties shall have no right to
withdraw, transfer or otherwise receive any funds deposited in the Collateral
Account except to the extent specifically provided herein.
(c) Amounts on deposit in the Collateral Account shall be invested from
time to time in Cash Equivalents as the applicable Loan Party (or, after the
occurrence and during the continuance of an Event of Default, the Collateral
Agent) shall determine, which Cash Equivalents shall be held in the name and be
under the control of the Collateral Agent (or any sub-agent); provided that at
any time after the occurrence and during the continuance of an Event of Default,
the Collateral Agent may (and, if instructed by the Required Lenders as
specified herein, shall) in its (or their) discretion at any time and from time
to
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time elect to liquidate any such Cash Equivalents and to apply or cause to be
applied the proceeds thereof to the payment of the Obligations in the manner
specified in Section 9.03 hereof, subject, however, in the case of amounts
deposited in the LC Sub-Account, to the provisions of Section 2.18(i).
(d) Amounts deposited into the Collateral Account as cover for liabilities
in respect of Letters of Credit under any provision of this Agreement requiring
such cover shall be held by the Administrative Agent in a separate sub-account
designated as the "LC Sub-Account" (the "LC Sub-Account") and, subject to
Section 2.18(i), all amounts held in the LC Sub-Account shall constitute
collateral security first for the liabilities in respect of Letters of Credit
outstanding from time to time and second for the other Obligations hereunder (x)
until such time as all Letters of Credit shall have been terminated and all of
the liabilities in respect of Letters of Credit have been paid in full or (y) as
otherwise provided in Section 2.18(i).
SECTION 9.02. Proceeds of Destruction, Taking and Collateral Dispositions.
So long as no Event of Default shall have occurred and be continuing, in the
event the applicable Loan Party elects to reinvest Net Cash Proceeds in respect
of any Asset Sale or Casualty Event in accordance with the provisions of
Sections 2.10(c) and 2.10 (f) as applicable, the Collateral Agent shall receive
at least 10 days' prior notice of each request for payment and shall not release
any part of such Net Cash Proceeds, until the applicable Loan Party has
furnished to the Collateral Agent (i) an Officers' Certificate setting forth:
(A) a brief description of the reinvestment to be made, (B) the dollar amount of
the expenditures to be made, or costs incurred by such Loan Party in connection
with such reinvestment and (C) evidence that the properties or assets acquired
in connection with such reinvestment have a fair market value at least equal to
the amount of such Net Cash Proceeds requested to be released from the
Collateral Account and (ii) all security agreements and Mortgages and other
items required by the provisions of Sections 5.10 and 5.11 to, among other
things, subject such reinvestment properties or assets to the Lien of the
Security Documents in favor of the Collateral Agent, for its benefit and for the
benefit of the other Secured Parties.
SECTION 9.03. Application of Proceeds. The proceeds received by the
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the Collateral pursuant to the exercise by the
Collateral Agent of its remedies shall be applied, together with any other sums
then held by the Collateral Agent pursuant to this Agreement, promptly by the
Collateral Agent as follows:
(a) First, to the payment of all reasonable costs and expenses, fees,
commissions and taxes of such sale, collection or other realization
including, without limitation, compensation to the Collateral Agent and its
agents and counsel, and all expenses, liabilities and advances made or
incurred by the Collateral Agent in connection therewith, together with
interest on each such amount at the highest rate then in effect under this
Agreement from and after the date such amount is due, owing or unpaid until
paid in full;
(b) Second, to the payment of all other reasonable costs and expenses
of such sale, collection or other realization including, without
limitation, compensation to the other Secured Parties and their agents and
counsel and all costs, liabilities and advances made or incurred by the
other Secured Parties in connection therewith, together with interest on
each such amount at the highest rate then in effect under this Agreement
from and after the date such amount is due, owing or unpaid until paid in
full;
(c) Third, without duplication of amounts applied pursuant to clauses
(a) and (b) above, to the indefeasible payment in full in cash, pro rata,
of (i) interest, principal and other amounts constituting Obligations
(other than Hedging Obligations), in each case equally and ratably in
accordance with the respective amounts thereof then due and owing and (ii)
Hedging Obligations in accordance with the terms thereof; and
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(d) Fourth, the balance, if any, to the person lawfully entitled
thereto (including the applicable Loan Party or its successors or assigns).
In the event that any such proceeds are insufficient to pay in full the
items described in clauses (a) through (e) of this Section 9.03, the Loan
Parties shall remain liable for any deficiency.
ARTICLE X
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
SECTION 10.01. Appointment. Each Lender hereby irrevocably designates and
appoints each of the Administrative Agent and the Collateral Agent as an agent
of such Lender under this Agreement and the other Loan Documents. Each Lender
irrevocably authorizes each Agent, in such capacity, through its agents or
employees, to take such actions on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such actions and powers as
are reasonably incidental thereto.
SECTION 10.02. Agent in Its Individual Capacity. Each person serving as an
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not an
Agent, and such person and its Affiliates may accept deposits from, lend money
to and generally engage in any kind of business with Borrower or any Subsidiary
or other Affiliate thereof as if it were not an Agent hereunder.
SECTION 10.03. Exculpatory Provisions. No Agent shall have any duties or
obligations except those expressly set forth in the Loan Documents. Without
limiting the generality of the foregoing, (a) no Agent shall be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) no Agent shall have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated by the Loan Documents that such Agent is required
to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 11.02), and (c) except as expressly set forth in the Loan
Documents, no Agent shall have any duty to disclose or shall be liable for the
failure to disclose, any information relating to Borrower or any of its
Subsidiaries that is communicated to or obtained by the bank serving as such
Agent or any of its Affiliates in any capacity. No Agent shall be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 11.02) or in the
absence of its own gross negligence or willful misconduct. No Agent shall be
deemed to have knowledge of any Default unless and until written notice thereof
is given to such Agent by Borrower or a Lender, and no Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii)
the contents of any certificate, report or other document delivered thereunder
or in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document. In the event that the Administrative Agent receives such notice, the
Administrative Agent shall give notice thereof to the Lenders.
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SECTION 10.04. Reliance by Agent. Each Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by a proper person. Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by a proper person, and shall not incur any liability
for relying thereon. Each Agent may consult with legal counsel (who may be
counsel for Borrower), independent accountants and other advisors selected by
it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or advisors.
SECTION 10.05. Delegation of Duties. Each Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by such Agent. Each Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Affiliates. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Affiliates of each Agent and any
such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as Agent.
SECTION 10.06. Successor Agent. Each Agent may resign as such at any time
upon at least 30 days' prior notice to the Lenders, the Issuing Bank and
Borrower. Upon any such resignation, the Required Lenders shall have the right,
with, if no Default shall have occurred and be continuing, the consent of
Borrower (such consent not to be unreasonably withheld, conditioned or delayed),
to appoint a successor Agent from among the Lenders. If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders and the
Issuing Bank, appoint a successor Agent, which successor shall be a commercial
banking institution organized under the laws of the United States (or any State
thereof) or a United States branch or agency of a commercial banking
institution, in each case, having combined capital and surplus of at least $250
million; provided that if such retiring Agent is unable to find a commercial
banking institution which is willing to accept such appointment and which meets
the qualifications set forth above, the retiring Agent's resignation shall
nevertheless thereupon become effective, and the Lenders shall assume and
perform all of the duties of the Agent hereunder until such time, if any, as the
Required Lenders appoint a successor Agent.
Upon the acceptance of its appointment as an Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by Borrower to a successor Agent shall be the same as those payable to
its predecessor unless otherwise agreed between Borrower and such successor.
After an Agent's resignation hereunder, the provisions of this Article X and
Section 11.03 shall continue in effect for the benefit of such retiring Agent,
its sub-agents and their respective Affiliates in respect of any actions taken
or omitted to be taken by any of them while it was acting as Agent.
SECTION 10.07. Non-Reliance on Agent and Other Lenders. Each Lender
acknowledges that it has, independently and without reliance upon the any Agent
or any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any other Loan Document or related agreement or any document furnished hereunder
or thereunder.
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SECTION 10.08. No Other Administrative Agent. The Lenders from time to time
party to this Agreement shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders. The Syndication Agent and the Documentation Agent shall not have any
right, power, obligation, liability, responsibility or duty under this
Agreement, except as expressly provided herein. Without limiting the foregoing,
neither the Syndication Agent nor the Documentation Agent shall have or be
deemed to have a fiduciary relationship with any Lender. Each Lender hereby
makes the same acknowledgments with respect to the Syndication Agent and the
Documentation Agent as it makes with respect to the Administrative Agent or any
other Lender in this Article X. Notwithstanding the foregoing, the parties
hereto acknowledge that the Documentation Agent and the Syndication Agent hold
such titles in name only, and that such titles confer no additional rights or
obligations relative to those conferred on any Lender hereunder.
SECTION 10.09. Indemnification. The Lenders severally agree to indemnify
each Agent in its capacity as such (to the extent not reimbursed by Borrower or
the Guarantors and without limiting the obligation of Borrower or the Guarantors
to do so), ratably according to their respective outstanding Loans and
Commitments in effect on the date on which indemnification is sought under this
Section 10.09 (or, if indemnification is sought after the date upon which all
Commitments shall have terminated and the Loans and Reimbursement Obligations
shall have been paid in full, ratably in accordance with such outstanding Loans
and Commitments as in effect immediately prior to such date), from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that
may at any time (whether before or after the payment of the Loans and
Reimbursement Obligations) be imposed on, incurred by or asserted against such
Agent in any way relating to or arising out of, the Commitments, this Agreement,
any of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent's gross negligence or willful misconduct. The agreements in this
Section 10.09 shall survive the payment of the Loans and all other amounts
payable hereunder.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to any Loan Party, to Borrower at:
c/o Norcraft Companies, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
c/o Trimaran Capital Partners, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Managing Partner
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Administrative Agent or the Collateral Agent, to it at:
UBS AG, Stamford Branch
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇; and
(c) if to a Lender, to it at its address (or telecopy number) set
forth on the applicable Lender Addendum or in the Assignment and Acceptance
pursuant to which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or by certified or registered mail, in each case delivered, sent or
mailed (properly addressed) to such party as provided in this Section 11.01 or
in accordance with the latest unrevoked direction from such party given in
accordance with this Section 11.01 and failure to deliver courtesy copies of
notices and other communications shall in no event affect the validity or
effectiveness of such notices and other communications.
SECTION 11.02. Waivers; Amendment. (a) No failure or delay by any Agent,
the Collateral Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of each Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by any Loan Party
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section 11.02, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether any Agent, any Lender or the Issuing Bank may
have had notice or knowledge of such Default at the time.
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(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except, in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by
Borrower and the Required Lenders or, in the case of any other Loan Document,
pursuant to an agreement or agreements in writing entered into by the
Administrative Agent and the Loan Party or Loan Parties that are parties
thereto, in each case with the written consent of the Required Lenders; provided
that no such agreement shall:
(i) increase the Commitment of any Lender without the written consent
of such Lender;
(ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any Fees payable hereunder,
without the written consent of each Lender affected thereby;
(iii) postpone or extend the maturity of any Loan, or any scheduled
date of payment of or the installment otherwise due on the principal amount
of any Term Loan under Section 2.09, or the required date of payment of any
Reimbursement Obligation, or any date for the payment of any interest or
fees payable hereunder, or reduce the amount of, waive or excuse any such
payment, or postpone the scheduled date of expiration of any Commitment or
postpone the scheduled date of expiration of any Letter of Credit beyond
the Revolving Maturity Date, without the written consent of each Lender
affected thereby;
(iv) change Section 2.14(b) or (c) in a manner that would alter the
pro rata sharing of payments or setoffs required thereby, without the
written consent of each Lender;
(v) change the percentage set forth in the definition of "Required
Lenders" or any other provision of any Loan Document (including this
Section 11.02) specifying the number or percentage of Lenders (or Lenders
of any Class) required to waive, amend or modify any rights thereunder or
make any determination or grant any consent thereunder, without the written
consent of each Lender (or each Lender of such Class, as the case may be);
(vi) release Holdings or any Subsidiary Guarantor from its Guarantee
(except as expressly provided in Article VII), or limit its liability in
respect of such Guarantee, without the written consent of each Lender;
(vii) release all or substantially all of the Collateral from the
Liens of the Security Documents or alter the relative priorities of the
Obligations entitled to the Liens of the Security Documents (except in
connection with securing additional Obligations equally and ratably with
the other Obligations), in each case without the written consent of each
Lender; or
(viii) without the consent of the Required Lenders and Term Loan
Lenders holding more than 50% of the principal amount of the outstanding
Term Loans, reduce the amount of, or extend the date of, any scheduled
payment on the Term Loans required to be made under Section 2.09, change
the order of application of prepayments among Term Loans and Revolving
Commitments under Section 2.10(h) or change the application of prepayments
of Term Loans set forth in Section 2.10(h) to the remaining scheduled
amortization payments to be made thereon under Section 2.09;
provided, further, that (1) no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent, the Collateral Agent,
the Issuing Bank or the Swingline Lender without the prior written consent of
the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case
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may be, (2) any waiver, amendment or modification of this Agreement that by its
terms affects the rights or duties under this Agreement of the Revolving Lenders
(but not the Term Loan Lenders), or the Term Loan Lenders (but not the Revolving
Lenders) may be effected by an agreement or agreements in writing entered into
by Borrower and requisite percentage in interest of the affected Class of
Lenders that would be required to consent thereto under this Section 11.02 if
such Class of Lenders were the only Class of Lenders hereunder at the time and
(3) any waiver, amendment or modification prior to the achievement of a
Successful Syndication may not be effected without the written consent of UBS
Loan Finance LLC, as a Lender.
(c) If, in connection with any proposed change, waiver, discharge or
termination of the provisions of this Agreement as contemplated by Section
11.02(b) (other than clause (iii) of such Section), the consent of the Required
Lenders is obtained but the consent of one or more of such other Lenders whose
consent is required is not obtained, then Borrower shall have the right to
replace all, but not less than all, of such non-consenting Lender or Lenders (so
long as all non-consenting Lenders are so replaced) with one or more persons
pursuant to Section 2.16 so long as at the time of such replacement each such
new Lender consents to the proposed change, waiver, discharge or termination;
provided, however, that Borrower shall not have the right to replace a Lender
solely as a result of the exercise of such Lender's rights (and the withholding
of any required consent by such Lender) pursuant to clause (iii) of Section
11.02(b).
SECTION 11.03. Expenses; Indemnity. (a) Borrower and Holdings agree,
jointly and severally, to promptly pay all reasonable out-of-pocket costs and
expenses (including but not limited to expenses incurred in connection with due
diligence and travel, courier, reproduction, printing and delivery expenses)
incurred by the Agents, the Swingline Lender and the Issuing Bank in connection
with the syndication of the credit facilities provided for herein and the
preparation, execution, delivery and administration of this Agreement and the
other Loan Documents and the perfection and maintenance of the Liens securing
the Collateral or in connection with any action, suit or other proceeding
affecting the Collateral or any part thereof commenced, in which action, suit or
proceeding the Administrative Agent is made a party or participates or in which
the right to use the Collateral or any part thereof is threatened, or in which
it becomes necessary in the reasonable judgment of the Administrative Agent to
defend or uphold the Liens granted by the Security Documents (including, without
limitation, any action, suit or proceeding to establish or uphold the compliance
of the Collateral with any Requirements of Law) or in connection with any
amendments, consents, enforcement costs, documentary taxes or waivers of the
provisions hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Agents or any Lender in
connection with the enforcement or protection of, or any rights in connection
with, this Agreement and the other Loan Documents or in connection with the
Loans made or Letters of Credit issued hereunder and the collection of the
Obligations (including in connection with any work-out or restructuring of the
Obligations), including the fees, charges and disbursements of ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel for the Administrative Agent and the Collateral Agent, and
any auditors, accountants, consultants, appraisers or other advisors and, in
connection with any such enforcement or protection, the fees, charges and
disbursements of any other counsel for the Agents or any Lender.
(b) The Loan Parties agree, jointly and severally, to indemnify the Agents,
each Lender, the Issuing Bank and the Swingline Lender, each Affiliate of any of
the foregoing persons and each of their respective partners, controlling
persons, directors, officers, trustees, employees and agents (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, all reasonable out-of-pocket costs and any and all losses, claims,
damages, liabilities, penalties, judgments, suits and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution, delivery, performance, administration or
enforcement of the Loan Documents, (ii) any actual or proposed use of the
proceeds of the Loans or issuance of Letters of Credit, (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto, or (iv) any
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actual or alleged presence or Release or threatened Release of Hazardous
Materials, on, at, under or from any property owned, leased or operated by any
Company, or any Environmental Claim related in any way to any Company; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted solely from the gross negligence or willful misconduct
of such Indemnitee.
(c) The provisions of this Section 11.03 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans or Reimbursement Obligations, the release of all or a portion of any
Collateral, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Agents, the Issuing Bank or any Lender. All amounts due under this
Section 11.03 shall be payable on written demand therefor accompanied by
reasonable documentation with respect to any reimbursement, indemnification or
other amount requested.
(d) To the extent that Borrower fails to promptly pay any amount required
to be paid by it to the Agents, the Issuing Bank or the Swingline Lender under
paragraph (a) or (b) of this Section 11.03, each Lender severally agrees to pay
to the Agents, the Issuing Bank or the Swingline Lender, as the case may be,
such Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against any of the Agents, the Issuing Bank or the Swingline Lender in its
capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total Revolving Exposure,
outstanding Term Loans and unused Commitments at the time.
SECTION 11.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Agents and each Lender (and any attempted
assignment or transfer by Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any person (other than the parties hereto, their respective successors and
assigns permitted hereby (including any Affiliate of the Issuing Bank that
issues any Letter of Credit) and, to the extent expressly contemplated hereby,
the other Indemnitees) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender shall have the right at any time to assign to one or more
banks, insurance companies, investment companies or funds or other institutions
(other than Borrower, Holdings or any Affiliate or Subsidiary thereof) all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(i) except in the case of an assignment to a Lender, an Affiliate of a Lender or
a Lender Affiliate, each of the Administrative Agent and, after the achievement
of a Successful Syndication, Borrower (and, in the case of an assignment of all
or a portion of a Revolving Commitment or any Lender's obligations in respect of
its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline
Lender) must give their prior written consent to such assignment (which consent
shall not be unreasonably withheld or delayed), (ii) except in the case of an
assignment to a Lender, an Affiliate of a Lender or a Lender Affiliate, any
assignment made in connection with the primary syndication of the Commitment and
Loans by the Arranger or an assignment of the entire remaining amount of the
assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Administra-
-101-
tive Agent) shall not be less than $1.0 million, unless each of Borrower and the
Administrative Agent otherwise consent, (iii) each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement, except that this clause (iii) shall
not be construed to prohibit the assignment of a proportionate part of all the
assigning Lender's rights and obligations in respect of one Class of Commitments
or Loans, (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance in the form of Exhibit B,
together with a processing and recordation fee of $3,500, and (v) the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; and provided, further that (i) any consent of
Borrower otherwise required under this paragraph shall not be required if a
Default has occurred and is continuing and (ii) in the case of an assignment to
an Affiliate or a Lender Affiliate of the assigning Lender, such assignment
shall be effective between such Lender and its Affiliate or Lender Affiliate
immediately without compliance with the conditions for assignment under this
Section 11.04(b) or Section 11.04(d), but shall not be effective with respect to
Borrower, the Administrative Agent, the Issuing Bank, the Swingline Lender or
any Lender, and Borrower, the Administrative Agent, the Issuing Bank, the
Swingline Lender and each Lender shall be entitled to deal solely with such
assigning Lender under any such assignment, in each case, until the conditions
for assignment under this Section 11.04(b) and Section 11.04(d) have been
complied with. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section 11.04, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement (provided that any
liability of Borrower to such assignee under Section 2.12, 2.13 or 2.15 shall be
limited to the amount, if any, that would have been payable thereunder by
Borrower in the absence of such assignment, except to the extent any such
amounts are attributable to a Change in Law occurring after the date of such
assignment), and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.12, 2.13, 2.15 and 11.03).
(c) The Administrative Agent, acting for this purpose as an agent of
Borrower, shall maintain at one of its offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof
from time to time (the "Register"). The entries in the Register shall be
conclusive in the absence of manifest error, and Borrower, the Administrative
Agent, the Issuing Bank and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by Borrower, the Issuing Bank, the
Collateral Agent, the Swingline Lender and any Lender (with respect to its own
interest only), at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance executed
by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section
11.04 and any written consent to such assignment required by paragraph (b) of
this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender shall have the right at any time, without the consent of
Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender,
sell participations to one or more banks or other entities (a "Participant") in
all or a portion of such Lender's rights and obligations under this Agreement
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(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents;
provided that such agreement or instrument may provide that such Lender will
not, without the consent of the Participant, agree to any amendment,
modification or waiver described in clause (i), (ii) or (iii) of the first
proviso to Section 11.02(b) that affects such Participant. Subject to paragraph
(f) of this Section, Borrower agrees that each Participant shall be entitled to
the benefits of Sections 2.12, 2.13 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section 11.04. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 11.08 as though it were a Lender;
provided that such Participant agrees to be subject to Section 2.14(c) as though
it were a Lender. Each Lender shall, acting for this purpose as an agent of
Borrower, maintain at one of its offices a register for the recordation of the
names and addresses of its Participants, and the amount and terms of its
participations; provided that no Lender shall be required to disclose or share
the information contained in such register with Borrower or any other party,
except as required by applicable law.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.12, 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the prior
written consent of Borrower. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 2.15 unless
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of Borrower, to comply with Section 2.15(e)
and (f) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto. In the case of any
Lender that is a fund that invests in bank loans, such Lender may, without the
consent of Borrower or the Administrative Agent, collaterally assign or pledge
all or any portion of its rights under this Agreement, including the Loans and
Notes or any other instrument evidencing its rights as a Lender under this
Agreement, to any holder of, trustee for, or any other representative of holders
of, obligations owed or securities issued, by such fund, as security for such
obligations or securities.
SECTION 11.05. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties 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 Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Agents, the
Issuing Bank 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, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.12, 2.14, 2.15 and 11.03 and Article X shall survive
and remain in full force and effect regardless of the consummation of the
transactions
-103-
contemplated hereby, the repayment of the Loans, the payment of the
Reimbursement Obligations, the expiration or termination of the Letters of
Credit and the Commitments or the termination of this Agreement or any provision
hereof.
SECTION 11.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and the Fee Letter constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 11.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 11.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates are hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of Borrower
against any and all of the obligations of Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section 11.08
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
SECTION 11.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York, without regard to conflicts of law principles that
would require the application of the laws of another jurisdiction.
(b) Each Loan Party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against any Loan Party or its properties in the courts of any jurisdiction.
-104-
(c) Each Loan Party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section 11.09. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
Each party to this Agreement irrevocably consents to service of process in
any action or proceeding arising out of or relating to any Loan Document in the
manner provided for notices in Section 11.01. Nothing in this Agreement or any
other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by applicable law.
SECTION 11.10. Waiver of Jury Trial. Each party hereto hereby waives, to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in any legal proceeding directly or indirectly arising out of or
relating to this Agreement, any other Loan Document or the transactions
contemplated hereby (whether based on contract, tort or any other theory). Each
party hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 11.10.
SECTION 11.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 11.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' and Lender Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential pursuant to the terms hereof), (b) to the extent
requested by any regulatory authority, (c) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process, (d) to any
other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or any other Loan Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section 11.12, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to Borrower and its
obligations, (g) with the consent of Borrower or (h) to the extent such
Information (i) is publicly available at the time of disclosure or becomes
publicly available other than as a result of a breach of this Section 11.12 or
(ii) becomes available to the Administrative Agent, the Issuing Bank or any
Lender on a non-confidential basis from a source other than Borrower or any
Subsidiary. For the purposes of this Section 11.12, "Information" means all
information received from Borrower or any Subsidiary relating to Borrower or any
Subsidiary or its business that is clearly identified at the time of delivery as
confidential, other than any such information that is available to the
Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to disclosure by Borrower or any Subsidiary. Any person required to
maintain the confidentiality of Information as provided in this Section 11.12
shall be considered to have complied with its obligation to do so if such person
has exercised the same degree of care to maintain the confidentiality of such
Information as such person would accord to its own confidential information.
-105-
Notwithstanding the foregoing, and notwithstanding any other express or
implied agreement or understanding to the contrary, each of the parties hereto
and their and their Affiliates' respective employees, representatives, and other
agents are authorized to disclose the tax treatment and tax structure of these
transactions to any and all persons, without limitation of any kind. Each of the
parties hereto may disclose all materials of any kind (including opinions or
other tax analyses) insofar as they relate to the tax treatment and tax
structure of the transactions contemplated by the Loan Documents. This
authorization is retroactively effective to the commencement of the first
discussions between or among any of the parties regarding the transactions
contemplated hereby and by the other Loan Documents, but does not extend to
disclosure of any other information including (without limitation) (a) the
identities of participants or potential participants in the transactions, (b)
the existence or status of any negotiations, (c) any pricing or other financial
information or (d) any other term or detail not related to the tax treatment and
tax structure of the transactions contemplated by the Loan Documents.
SECTION 11.13. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively, the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section 11.13 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 11.14. Lender Addendum. Each Lender to become a party to this
Agreement on the date hereof shall do so by delivering to the Administrative
Agent a Lender Addendum duly executed by such Lender, Borrower and the
Administrative Agent.
SECTION 11.15. Obligations Absolute. To the fullest extent permitted by
applicable law, all obligations of the Loan Parties hereunder shall be absolute
and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Loan Party;
(b) any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto against any other Loan
Party;
(c) 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 other amendment or
waiver of or any consent to any departure from any Loan Document or any
other agreement or instrument relating thereto;
(d) any exchange, release or non-perfection of any other Collateral,
or any release or amendment or waiver of or consent to any departure from
any guarantee, for all or any of the Obligations;
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect hereof or any Loan Document; or
-106-
(f) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, the Loan Parties.
[Signature Pages Follow]
-107-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
NORCRAFT COMPANIES, L.P.,
as Borrower
By: NORCRAFT GP, L.L.C., its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Person
NORCRAFT HOLDINGS, L.P.,
as a Guarantor
By: NORCRAFT GP, L.L.C., its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Person
NORCRAFT FINANCE CORP.,
as a Subsidiary Guarantor
By: /s/ ▇▇▇▇▇ ▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇
Title: Vice President
NORCRAFT CANADA CORPORATION,
as a Subsidiary Guarantor
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
UBS SECURITIES LLC, as Bookmanager and
Lead Arranger
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: ED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
Title: Director
UBS AG, STAMFORD BRANCH, as Issuing Bank,
Administrative Agent and Collateral Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. Saint
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Saint
Title: Associate Director, Banking
Products Service
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Associate Director, Banking
Products Services, US
UBS LOAN FINANCE LLC, as
Swingline Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. Saint
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Saint
Title: Associate Director, Banking
Products Services, US
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Associate Director, Banking
Products Services, US
WACHOVIA CAPITAL MARKETS, LLC,
as Co-Arranger
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Syndication Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
CIT LENDING SERVICES CORPORATION,
as Documentation Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
Title: Vice President
Annex I
Applicable Margin for Revolving Loans
-------------------------------------
Leverage Ratio Eurodollar Loans ABR Loans Applicable Fee
-------------- ---------------- --------- --------------
Level I 2.75% 1.75% 0.500%
=>4.0:1.0
Level II 2.50% 1.50% 0.500%
<4.0:1.0 but
=>3.5:1.0
Level III 2.25% 1.25% 0.375%
<3.5:1.0 but
=>3.0:1.0
Level IV 2.00% 1.00% 0.375%
<3.0:1.0
Applicable Margin for Term Loans
--------------------------------
Leverage Ratio Eurodollar Loans ABR Loans
-------------- ---------------- ---------
Level I 3.25% 2.25%
=>3.75:1.0
Level II 3.00% 2.00%
<3.75:1.0
Each change in the Applicable Margin or Applicable Fee resulting from a
change in the Leverage Ratio shall be effective with respect to all Loans and
Letters of Credit outstanding on and after the date of delivery to the
Administrative Agent of the financial statements and certificates required by
Section 5.01(a) or (b) and Section 5.01(c), respectively, indicating such change
until the date immediately preceding the next date of delivery of such financial
statements and certificates indicating another such change. Notwithstanding the
foregoing, the Leverage Ratio shall be deemed to be in Level I in each of the
above tables (A) from the Closing Date to the date of delivery to the
Administrative Agent of the financial statements and certificates required by
Section 5.01(a) or (b) and Section 5.01(c) for the fiscal period ending March
31, 2004 and (B) at any time (i) during which Borrower has failed to deliver the
financial statements and certificates required by Section 5.01(a) or (b) and
Section 5.01(c), respectively and (ii) during the existence of an Event of
Default.
Amortization Table
-------------------------------------
Term
Date Loan Amount
-------------------------------------
March 31, 2004 $1,250,000
-------------------------------------
June 30, 2004 $1,250,000
-------------------------------------
September 30, 2004 $1,250,000
-------------------------------------
December 31, 2004 $1,250,000
-------------------------------------
March 31, 2005 $1,250,000
-------------------------------------
June 30, 2005 $1,250,000
-------------------------------------
September 30, 2005 $1,250,000
-------------------------------------
December 31, 2005 $1,250,000
-------------------------------------
March 31, 2006 $1,875,000
-------------------------------------
June 30, 2006 $1,875,000
-------------------------------------
September 30, 2006 $1,875,000
-------------------------------------
December 31, 2006 $1,875,000
-------------------------------------
March 31, 2007 $1,875,000
-------------------------------------
June 30, 2007 $1,875,000
-------------------------------------
September 30, 2007 $1,875,000
-------------------------------------
December 31, 2007 $1,875,000
-------------------------------------
March 31, 2008 $2,500,000
-------------------------------------
June 30, 2008 $2,500,000
-------------------------------------
September 30, 2008 $2,500,000
-------------------------------------
December 31, 2008 $2,500,000
-------------------------------------
March 31, 2009 $2,500,000
-------------------------------------
June 30, 2009 $2,500,000
-------------------------------------
September 30, 2009 $2,500,000
-------------------------------------
Term Loan Maturity Date $2,500,000
-------------------------------------
Credit Agreement Rider
Schedule 1.01(a)
Mortgaged Property
------------------
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Property Location
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ County
-- ----------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ County
--
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ County
--
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ County
-------------------------------
▇▇▇ ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
El Paso County
-------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lynchburg County
-------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇
-------------------------------
1
Schedule 1.01(b)
Refinancing Indebtedness To Be Repaid
Credit Agreement, dated as of June 16, 1998 between Norcraft Companies, L.L.C.
as Borrower and ▇▇▇▇▇▇ Financial, Inc. as Agent and Lender, as amended.
2
Schedule 1.01(c)
Subsidiary Guarantors
Norcraft Finance Corp.
Norcraft Canada Corporation
3
Schedule 3.03
Governmental Approvals; Compliance with Laws
None.
4
Schedule 3.06(b)
Real Property
-----------------------------------------------------------------------------------------------------------------------
Owned /
Property Location Leased Landlord Lease Agreement Consents Required
-----------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ Leased OPUS Indenture of Lease Required consents obtained.
Avenue Northwest, dated September 18,
Suite 100 L.L.C. 1998 by and between
Eagan, MN OPUS Northwest,
L.L.C.and Norcraft
Companies, L.L.C.
-----------------------------------------------------------------------------------------------------------------------
2601 Minnesota Leased PAL, Inc. Lease dated May 9, Landlord consent is required
Avenue 2003 by and between upon change in control of
Suite 105 Pal, Inc. and Norcraft owner, provided no consent is
Sioux Falls, SD Companies, L.L.C. required in connection with a
57105 d/b/a Kitchen and transfer of all or substantially
Bath Ideas. all of the voting capital stock or
controlling ownership interest
upon a sale to another person.
-----------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Leased ▇▇▇▇▇▇'▇ Frame Lease dated June 23, Landlord consent required to
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Shop 2003 by and between encumber the lease.
▇▇▇▇▇▇'▇ Frame Shop
and Ultracraft
Company.
-----------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ Leased Copperwood Lease dated April 17, Landlord consent is required to
Suite 1L Partners, L.P. 2002 by and between mortgage or encumber Lessee's
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Copperwood Partners, interest in the property.
L.P. and Norcraft
Companies, L.L.C.
-----------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Leased AMB-SGP CIF- Industrial Multi- Required consents obtained.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ I, LLC Tenant Lease, dated
November 1, 2002 by
and between AMB-
SGP CIF-I and
Norcraft Companies.
-----------------------------------------------------------------------------------------------------------------------
9861 ▇▇▇▇▇▇ ▇▇▇▇▇ Leased Tampa East Lease dated August Required consents obtained
Drive Flexpace, ltd. 31, 2001 between
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Tampa East
Flexxpace, Ltd. and
Norcraft Companies,
L.L.C.
-----------------------------------------------------------------------------------------------------------------------
5
------------------------------------------------------------------------------------------------------------------------------
Owned /
Property Location Leased Landlord Lease Agreement Consents Required
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Leased PS Business Lease dated April 25, Landlord consent is required to
Drive #133 Parks L.P. 2000 between PS mortgage or encumber Lessee's
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Business Parks L.P. interest in the property.
and Norcraft
Companies, L.L.C.
------------------------------------------------------------------------------------------------------------------------------
1925 ▇. ▇▇▇▇▇▇▇ Leased Bullseye / Lease dated December No provisions.
Blvd. Providence 24, 2002 between
Suite A Square, Inc. Bullseye/Providence
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Square, Inc. and
Norcraft Companies,
L.L.C.
------------------------------------------------------------------------------------------------------------------------------
Pinellas County Idea Leased Encor Associates Lease Agreement Notice must be given to
Ctr. Ltd. Partnership dated September 11, Landlord if Tenant is a non-
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ by and between publicly held corporation and
N Encor Associates Ltd. the corporate shares are
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Partnership and SMI transferred.
Retail Corp. d/b/a
Kitchen & Bath Ideas.
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ Leased Mohave Lease made as of Required consents obtained.
▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Holdings, LLC October 21, 2003
between Mohave
Holdings, LLC and
Norcraft Companies,
L.L.C.
------------------------------------------------------------------------------------------------------------------------------
Highway 64 E. Leased J&S Rental, Lease dated June 1, No provision.
Building 4675-14 L.L.C. 2002 between J&S
Asheboro, NC Rentals, L.L.C. and
UltraCraft Company.
------------------------------------------------------------------------------------------------------------------------------
Sioux Falls , SD Leased ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Lease dated August No provision.
Bargain Center 1997 between
▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ StarMark.
57104
------------------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇▇ ▇/▇▇/ ▇▇▇▇▇▇ Owned Not applicable. Not applicable. Not applicable.
North
▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ Owned Not applicable. Not applicable. Not applicable.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
6
-------------------------------------------------------------------------------------------------------------------------------
Owned /
Property Location Leased Landlord Lease Agreement Consents Required
------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Owned Not applicable. Not applicable. Not applicable.
Road
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
--
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇ Owned Not applicable. Not applicable. Not applicable.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Owned Not applicable. Not applicable. Not applicable.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
One Mill Race Drive Owned Not applicable. Not applicable. Not applicable.
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
------------------------------------------------------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Owned Not applicable. Not applicable. Not applicable.
Road Rural
Municipality of
Springfield, MB,
Canada
------------------------------------------------------------------------------------------------------------------------------
7
Schedule 3.07(c)
Violations or Proceedings
None.
8
Schedule 3.09(a)
Subsidiaries
------------------------------------------------------------------------------------------------------------------------------
Name of Jurisdiction of Equity Interests Equity Interests Outstanding Rights
Subsidiary Organization Authorized Outstanding on Closing to the Securities
Date
------------------------------------------------------------------------------------------------------------------------------
Norcraft Finance Delaware 100 shares common 100 shares issued to None.
Corp. stock, par value $.01 Norcraft Companies,
L.P.
------------------------------------------------------------------------------------------------------------------------------
Norcraft Canada Nova Scotia 1,000,000,000 3,903,060 None.
Corporation shares, no par value
------------------------------------------------------------------------------------------------------------------------------
9
Schedule 3.09(c)
Corporate Organizational Chart
Trimaran
SKM Cabinet Norcraft
Norcraft Corp. GP,
Corp. L.L.C.
Class 0% ▇▇
▇▇▇▇▇▇ A LP 0% GP
Investors Units Norcraft
Individually Holdings,
L.P.
Managers
100% LP Norcraft
Companies,
L.P.
Norcraft
Norcraft Finance
Canada Corp.
Corporation
10
Schedule 3.11(c)
Material Agreements
Indenture dated as of October 21, 2003 among Norcraft Companies, L.P., Norcraft
Finance Corp., and each of the Guarantors named therein, and U.S. Bank National
Association.
Registration Rights Agreement dated as of October 21, 2003, by and among
Norcraft Companies, L.P., Norcraft Finance Corp. and each of the Guarantors
named therein, and UBS Securities LLC and Wachovia Capital Markets, LLC.
Unit Purchase Agreement, dated August 29, 2003, by and among Norcraft Holdings,
L.L.C., Norcraft Companies, L.L.C., Goense, Bounds & Partners B, L.P. and the
Sellers listed on the schedules thereto (the "Unit Purchase Agreement").
Escrow Agreement, dated August 29, 2003 by and among ▇▇▇▇▇▇▇▇▇ Partners, LLC, GB
Management, L.P., Norcraft Holdings, L.L.C. and Bank One, National Association,
attached as Exhibit H to the Unit Purchase Agreement.
Lease, dated October 21, 2003 between Mohave Holdings, LLC and Norcraft
Companies, L.L.C., attached as Exhibit I to the Unit Purchase Agreement.
Amendment and Waiver, dated as of October 2, 2003 by and among Norcraft
Companies, L.L.C., Norcraft Holdings, L.L.C., ▇▇▇▇▇▇▇▇▇ Partners, L.L.C., GB
Management, L.P. and the other signatories thereto to the Unit Purchase
Agreement dated as of August 29, 2003 amongst the same parties.
Norcraft Holdings, L.L.C. Limited Liability Company Agreement dated as of August
21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇, dated
as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇▇, dated
as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇▇,
dated as of October 21, 2003.
Contribution Agreement, dated as of October 21, 2003, by and among Norcraft
Holdings, L.P., ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, HEB Norcraft Holdings Corp. and HMB Norcraft Corp.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
11
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇, dated as of October
21, 2003.
Norcraft GP, L.L.C., Amended and Restated Limited Liability Company Agreement,
dated as of the Closing date among SKM Blocker Corp., TCP Blocker Corp., ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
Norcraft Holdings, L.P., Agreement of Limited Partnership, dated September 30,
2003.
Norcraft Holdings, L.P., Amended and Restated Agreement of Limited Partnership,
dated October 21, 2003.
Norcraft Companies, L.P. Agreement of Limited Partnership, dated October 21,
2003
Management and Monitoring Agreement between ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ and Trimaran
Capital Partners and Norcraft Companies, L.P.
12
Schedule 3.20
Environmental Matters
None.
13
Schedule 3.21
Insurance
------------------------------------------------------------------------------------------
Line of Coverage Named Insureds Policy Period Insurer/Policy Number
------------------------------------------------------------------------------------------
Property/ Norcraft GP, L.L.C. 10/21/03- Affiliated FM
Boiler & Machinery Norcraft Holdings, L.P. 10/21/04 TBD
Norcraft Companies, L.P.
Norcraft Finance Corp.
Norcraft Canada Corporation
------------------------------------------------------------------------------------------
General Liability Norcraft GP, L.L.C. 10/21/03- Travelers Ins.
Norcraft Holdings, L.P. 10/21/04 Co. of America
Norcraft Companies, L.P.
Norcraft Finance Corp. TC2J-UB-118D2182-03
------------------------------------------------------------------------------------------
Automobile Norcraft GP, L.L.C. 10/21/03- Travelers Indemnity
Norcraft Holdings, L.P. 10/21/04 Company of America
Norcraft Companies, L.P.
Norcraft Finance Corp. TC2J-UB-118D2169-03
------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Retroactive Premium
Adjustments/Loss Sharing
Line of Coverage Scope of Coverage Arrangements Agent
-------------------------------------------------------------------------------------------------------------------------
Property/ Occurrence Form - All Risk - DEDUCTIBLES: ▇▇▇▇ Companies
Boiler & Machinery Per Occurrence Blanket Limit $50,000 Deductible except ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
$40,000,000 with sublimits for $100,000 Flood; Earthquake Suite 250
various locations and coverages 5% of Value; $100,000 Minimum: Wind ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
including flood, quake, extra for FL locations 414.443.0000
expense etc. Florida locations Excluded: CA Earthquake
subject to 120% of reported 72 Hours: Off-premises Power
values. Flood and Earthquake: 48 Hours; $50,000: EDP
$2,500,000 per occurrence and ADVx1: Boiler
aggregate. See proposal for ADVx5: Machinery breakdown - Printers
additional sublimits. ADVx10: Machinery breakdown -Veneer
machines and plywood presses
--------------------------------------------------------------------------------------------------------------------------
General Liability Occurrence Form $1,000,000 $50,000 Deductible including Allocated ▇▇▇▇ Companies
per occurrence limit with Loss Adjustment Expense per accident ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
$2,000,000 aggregate on both a adjusted monthly Suite 250
general and products ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
completed-operations basis. Maximum Loss Content: Unlimited 414.443.0000
Employee Benefits Liability is
included in the form with Claim Handling adjusted monthly
$1,000,000 per occ. $2,000,000 -------------------------------
agg. Limit. $695 Each Claim
Rate: $.44 per Audited Sales
--------------------------------------------------------------------------------------------------------------------------
Automobile Occurrence Form - $1,000,000 $25,000 Deductible: Including Allocated ▇▇▇▇ Companies
limit with coverage for Hired Loss Adjustment Expense (per accident) ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
and Non-owned liability ▇▇▇▇▇ ▇▇▇
included. Sublimits apply to ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
coverages including Personal Maximum Loss Content: Unlimited 414.443.0000
Injury Protection, Medical Rate: $2,295 per
Payments, Uninsured and audited power unit - Tractors;
Underinsured Motorists etc. $900 per audited power unit -
Other than Tractors
--------------------------------------------------------------------------------------------------------------------------
14
------------------------------------------------------------------------------------------
Line of Coverage Named Insureds Policy Period Insurer/Policy Number
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Workers' Norcraft Companies, L.P. 10/21/03- Travelers Indemnity
Compensation 10/21/04 Company of Illinois
(AZ, WI)
TRJ-UB-118D2157-03
------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
Retroactive Premium
Adjustments/Loss Sharing
Line of Coverage Scope of Coverage Arrangements Agent
----------------------------------------------------------------------------------------------------------------------------
Claim Handling
--------------
.095 x Total Incurred
Adjusted Monthly
----------------------------------------------------------------------------------------------------------------------------
Workers' Workers Compensation $250,000 Deductible: including ▇▇▇▇ Companies
Compensation coverage A on a statutory Allocated Loss Adjustment Expense, ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
(AZ, WI) basis. Coverage B each accident adjusted monthly Suite 250
$1,000,000 for Bodily ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Injury - Each Accident, Maximum Loss Content: $6.1018 per 414.443.0000
$1,000,000 for Disease - $100 payroll Not less than $3,000,000
Policy limit and
$1,000,000 for Disease - Charges other than Claim Handling: -
Each Employee Deductible Admin. Expense: $.8339 per
$100 Payroll
Work Comp Ded. Premium: $.0814 per
$100 Payroll
Claim Handling
--------------
.095 x Total Incurred, adjusted monthly
Collateral
----------
Letter of Credit: $1,300,000 in addition
to $2,450,000 in place
----------------------------------------------------------------------------------------------------------------------------
15
-------------------------------------------------------------------------------------------------------
Policy Insurer/Policy Scope of
Line of Coverage Named Insureds Period Number Coverage
-------------------------------------------------------------------------------------------------------
Workers' Norcraft 10/21/03- Travelers Indemnity Workers Compensation
Compensation Companies, L.P. 10/21/04 Company of America coverage A on a statutory basis.
(All Other States) Coverage B $1,000,000 for
TH-UB-118D2145-03 Bodily Injury - Each Accident,
$1,000,000 for Disease - Policy
limit and $1,000,000 for
Disease - Each Employee
-------------------------------------------------------------------------------------------------------
Canadian General Norcraft Canada 10/21/03- Travelers
Liability, Employee Corporation 10/21/04
Benefits Liability, TBD
Employers Liability
and Non-owned Auto
Liability
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Retroactive Premium
Adjustments/Loss Sharing
Line of Coverage Arrangements Agent
-------------------------------------------------------------------------------------
Workers' $250,000 Deductible: including ▇▇▇▇ Companies
Compensation Allocated Loss Adjustment Expense, ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
(All Other States) each accident adjusted monthly ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Maximum Loss Content: $6.1018 per 414.443.0000
$100 payroll Not less than $3,000,000
Charges other than Claim Handling: -
Deductible Admin. Expense: $.8339 per
$100 Payroll
Work Comp Ded. Premium: $.0814 per
100 Payroll
Claim Handling
.095 x Total Incurred, adjusted
Monthly
Collateral
▇▇▇▇▇ of Credit: $1,300,000
ALL OF ABOVE ARE
INCLUDED WITH ALL
OTHER STATES
PROGRAM
-------------------------------------------------------------------------------------
Canadian General ▇▇▇▇ Companies and
Liability, Employee ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Benefits Liability, & ▇▇▇▇▇▇ Limited
Employers Liability (local broker)
and Non-owned Auto ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇
-------------------------------------------------------------------------------------
16
---------------------------------------------------------------------------------------------------------------------
Policy Insurer/Policy Scope of
Line of Coverage Named Insureds Period Number Coverage
---------------------------------------------------------------------------------------------------------------------
Umbrella Norcraft GP, L.L.C. 10/21/03- Great American Occurrence Form - Bodily
Norcraft Holdings, L.P. 10/21/04 Insurance Company Injury and Property Damage
Norcraft Companies, L.P. combined single limit of
Norcraft Finance Corp. TUU 557 57 71 $35,000,000 per occurrence
Norcraft Canada Corporation & aggregate
---------------------------------------------------------------------------------------------------------------------
Excess Liability Norcraft GP, L.L.C. 10/21/03- National Surety Corp Occurrence Form - Bodily
Norcraft Holdings, L.P. 10/21/04 Injury and Property Damage
Norcraft Companies, L.P. XTM76206473 combined single limit of
Norcraft Finance Corp. $15,000,000 per occurrence
Norcraft Canada Corporation & aggregate
---------------------------------------------------------------------------------------------------------------------
Fiduciary Norcraft GP, L.L.C. 10/21/03- Federal Insurance Co. / $3,000,000 Limit of Liaiblity
Norcraft Holdings, L.P. 10/21/04 Claims Made, Pay on Behalf of,
Norcraft Companies, L.P. Insured's Duty to Defend
---------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Rectroactive Premium
Adjustments/Loss Sharing
Line of Coverage Arrangements Agent
----------------------------------------------------------------------------------
Umbrella Self-Insured Retention: $10,000 ▇▇▇▇ Companies
▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
----------------------------------------------------------------------------------
Excess Liability Underlying Coverage: Great American ▇▇▇▇ Companies
$35,000,000 Umbrella ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
----------------------------------------------------------------------------------
Fiduciary $0 Retention ▇▇▇▇ Companies
▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
----------------------------------------------------------------------------------
17
------------------------------------------------------------------------------------------------------------------------------------
Retroactive Premium
Line of Policy Insurer/ Adjustment/Loss
Coverage Name Insureds Period Policy Number Scope of Coverage Sharing Arrangements Agent
------------------------------------------------------------------------------------------------------------------------------------
Crime Norcraft GP, L.L.C. 10/21/03- Federal $1,000,000 Limit per $10,000 Deductible ▇▇▇▇ Companies
Norcraft Holdings, L.P. 10/21/04 Insurance Co./ Occurrence, Loss ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Norcraft Companies, L.P. Discovered ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
Directors & Norcraft GP, L.L.C. 10/21/03- Houston $10,000,000 - D&O Retentions: ▇▇▇▇ Companies
Officers/ Norcraft Holdings, L.P. 10/21/04 Casualty Co./ $5,000,000 - EPL $100,000 - D&O ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Employment Norcraft Companies, L.P. 14-MG-03-A2737 Claims Made, Pay on $100,000 - EPL Suite 250
Practices Behalf of, Insured's ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Liability Duty to Defend 414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
18
------------------------------------------------------------------------------------------------------------------------------------
Retroactive
Premium
Adjustments/
Policy Insurer/Policy Scope of Loss Sharing
Line of Coverage Named Insureds Period Number Coverage Arrangements Agent
------------------------------------------------------------------------------------------------------------------------------------
Excess Directors and Norcraft GP, L.L.C. 10/21/03- St. ▇▇▇▇ Mercury $10,000,000 Excess N/A ▇▇▇▇ Companies
Officers Liability Norcraft Holdings, L.P. 10/21/04 Insurance Company / $10,000,000, ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Norcraft Companies, L.P. 563CM1223 Follow Form Excess ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
Excess Directors and Norcraft GP, L.L.C. 10/21/03- Travelers / $5,000,000 Excess N/A ▇▇▇▇ Companies
Officers Liability Norcraft Holdings, L.P. 10/21/04 $20,000,000, ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Norcraft Companies, L.P. Follow Form Excess ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
19
------------------------------------------------------------------------------------------------------------------------------------
Retroactive
Premium
Adjustments/
Policy Insurer/Policy Scope of Loss Sharing
Line of Coverage Named Insureds Period Number Coverage Arrangements Agent
------------------------------------------------------------------------------------------------------------------------------------
Directors' and Norcraft Companies, 12/31/03 to Great American / $5,000,000, Claims $25,000 ▇▇▇▇ Companies
Officers' Liability L.L.C. and its 12/31/09 Made, Pay on Behalf Retention ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Run-off Coverage subsidiaries of, Insurer's Duty Suite 250
to Defend ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
Employment Practices Norcraft Companies, 12/31/03 to Federal Insurance $1,000,000, Claims $100,000 ▇▇▇▇ Companies
Liability Run-off L.L.C.and its 12/31/09 Co./ Made, Pay on Behalf Retention ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Coverage subsidiaries of,Insurer's Duty Suite 250
to Defend ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
20
------------------------------------------------------------------------------------------------------------------------------------
Retroactive
Premium
Adjustments/
Policy Insurer/Policy Scope of Loss Sharing
Line of Coverage Named Insureds Period Number Coverage Arrangements Agent
------------------------------------------------------------------------------------------------------------------------------------
Excess Employment Norcraft Companies, L.L.C. 12/31/03- Great American / $2,000,000 excess N/A ▇▇▇▇ Companies
Practices Liability and its subsidiaries 12/31/09 $1,000,000, Follow ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Form Excess ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
Fiduciary Liability Norcraft Companies, L.L.C. 12/31/03 to Federal Insurance $3,000,000 Limit, $0 ▇▇▇▇ Companies
Run-off and its subsidiaries 12/31/09 Co/ Claims Made, Pay on ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇
Behalf of, Insurer's Suite 250
Duty to Defend ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
414.443.0000
------------------------------------------------------------------------------------------------------------------------------------
21
Schedule 3.23
Acquisition Documents
Unit Purchase Agreement, dated August 29, 2003, by and among Norcraft Holdings,
L.L.C., Norcraft Companies, L.L.C., Goense, Bounds & Partners B, L.P. and the
Sellers listed on the schedules thereto (the "Unit Purchase Agreement").
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ opinion attached as Exhibit A to the Unit Purchase
Agreement.
Terms of the Allstate Legal opinion attached as Exhibit B to the Unit
Purchase Agreement.
Financing Commitment letters attached as Exhibit C to the Unit Purchase
Agreement.
Norcraft Companies, L.L.C. Certificate attached as Exhibit D to the Unit
Purchase Agreement.
Ropes & ▇▇▇▇, LLP opinion attached as Exhibit E to the Unit Purchase
Agreement.
Norcraft Holdings, L.L.C. Certificate attached as Exhibit F to the Unit
Purchase Agreement.
Equity Commitment Letters attached as Exhibit G to the Unit Purchase
Agreement.
Escrow Agreement, dated October 21, 2003 by and among ▇▇▇▇▇▇▇▇▇ Partners, LLC,
GB Management, L.P., Norcraft Holdings, L.L.C. and Bank One, National
Association, attached as Exhibit H to the Unit Purchase Agreement.
Lease, dated October 21, 2003 between Mohave Holdings, LLC and Norcraft
Companies, L.L.C., attached as Exhibit I to the Unit Purchase Agreement.
Amendment and Waiver, dated as of October 2, 2003 by and among Norcraft
Companies, L.L.C., Norcraft Holdings, L.L.C., ▇▇▇▇▇▇▇▇▇ Partners, L.L.C., GB
Management, L.P. and the other signatories thereto to the Unit Purchase
Agreement dated as of August 29, 2003 amongst the same parties.
Norcraft Holdings, L.L.C. Limited Liability Company Agreement dated as of August
21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇, dated
as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇▇, dated
as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇▇,
dated as of October 21, 2003.
22
Contribution Agreement, dated as of October 21, 2003, by and among Norcraft
Holdings, L.P., ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, HEB Norcraft Holdings Corp. and HMB Norcraft Corp.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇, dated as of October
21, 2003.
Norcraft GP, L.L.C., Amended and Restated Limited Liability Company Agreement,
dated as of the Closing date among SKM Blocker Corp., TCP Blocker Corp., ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
Norcraft Holdings, L.P., Agreement of Limited Partnership, dated September 30,
2003.
Norcraft Holdings, L.P., Amended and Restated Agreement of Limited Partnership,
dated October 21, 2003.
Norcraft Companies, L.P. Agreement of Limited Partnership, dated October 21,
2003
Management and Monitoring Agreement between ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ and Trimaran
Capital Partners and Norcraft Companies, L.P.
23
Schedule 4.01(f)
Local Counsel
----------------------------------------------------------------------
Jurisdiction Counsel
----------------------------------------------------------------------
Canada ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇/▇▇/ ▇▇▇▇▇, Commodity Exchange Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
----------------------------------------------------------------------
Colorado ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
Seventeenth Street Plaza Building
▇▇▇▇ ▇▇/▇▇/ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------
Minnesota ▇▇▇▇▇▇ & Whitney LLP
Suite 1500, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------
Missouri ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------
North Carolina The Law Offices of ▇▇▇▇▇ & Associates
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------
South Dakota ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Solay & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, Battle & ▇▇▇▇▇▇
One ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
----------------------------------------------------------------------
24
Schedule 4.01(m)(vi)
Landlord Access Agreements
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
25
Schedule 4.01(n)(iii)
Title Insurance Amounts
---------------------------------------------------------------------
Property Title Commitment
---------------------------------------------------------------------
Cottonwood, MN $ 3,507,500
---------------------------------------------------------------------
Liberty, NC $ 5,924,800
---------------------------------------------------------------------
Lynchburg, VA $ 4,745,015
---------------------------------------------------------------------
Newton, KS $10,955,728
---------------------------------------------------------------------
Sioux Falls, SD $ 900,820
---------------------------------------------------------------------
Colorado Springs, CO $ 1,321,350
---------------------------------------------------------------------
26
Schedule 6.01(b)
Existing Indebtedness
None.
27
Schedule 6.02(c)
Existing Liens
Each of the liens and other encumbrances excepted as being prior to the Lien of
the Mortgages as set forth in (a) Schedule B to the marked Pro Forma Policies
issued by Chicago Title Insurance Corporation dated as of the date hereof and
delivered to Collateral Agent, bearing Chicago Title Insurance Corporation
reference number (i) CTIC #LC 10-03-5579R, (ii) CTIC #PT2003-04247, (iii) CTIC
#2378-01064, (iv) CTIC #22501, (v) CTIC #7091T and (vi) CTIC #1376641 and (b) in
the opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as Canadian Counsel to the Collateral Agent,
delivered to the Collateral Agent on the date hereof, in each case relating to
the real property described in the Mortgages.
------------------------------------------------------------------------------------------------
Secured
Debtor Jurisdiction Filing Party Description
------ ------------ ------ ----- -----------
------------------------------------------------------------------------------------------------
NORCRAFT COMPANIES
------------------
------------------------------------------------------------------------------------------------
Norcraft Arizona, Maricopa Local judgment Hidden Lakes $4,111.97
Companies, Inc. County Homeowners
(co-defendant) Association
(Plaintiff)
------------------------------------------------------------------------------------------------
Norcraft Companies California, State tax lien State of $1,256.39
Alameda County California Board
See below of Equalization
------------------------------------------------------------------------------------------------
Norcraft Companies California, Pending Suit ▇▇▇▇▇▇ Case
(Cross Defendant) Alameda Superior settled.
Court Formal lien
release in
process.
------------------------------------------------------------------------------------------------
Norcraft Delaware UCC-1 Case Credit Office
Companies, L.L.C. Secretary of State Corporation equipment
(operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Delaware UCC-1 ▇▇▇▇▇▇▇ Systems Pneumatic
Companies, L.L.C. Secretary of State Corp tools
and Norcraft (operating
Companies lease)
------------------------------------------------------------------------------------------------
Norcraft Delaware UCC-1 ▇▇▇▇▇▇▇ Systems Pneumatic
Companies, Inc. Secretary of State Corp tools
(operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Kansas Secretary UCC-1 Green Tree Certain
Companies, L.L.C. of State Vendor Services equipment
Group (operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Kansas Secretary UCC Assignment ▇▇▇▇▇ Fargo Certain
Companies, L.L.C. of State Financial equipment
Leasing Inc. (operating
lease)
[as assignee of
Green Tree
Vendor Services
Group]
------------------------------------------------------------------------------------------------
Norcraft Companies Kansas Secretary UCC-1 ▇▇▇▇▇▇▇▇▇ Certain
of State Associates. Inc. equipment
(operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Kansas Secretary UCC-1 ▇▇▇▇▇ Fargo Certain
Companies, L.L.C. of State Financial equipment
Leasing Inc. (operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Kansas, ▇▇▇▇▇▇ Pending suit ▇▇▇▇▇ ▇. Case
Companies, L.L.C. District Court re: wrongful ▇▇▇▇▇▇▇▇ dismissed.
(Defendant) termination (Plaintiff) Formal lien
release in
process.
------------------------------------------------------------------------------------------------
28
------------------------------------------------------------------------------------------------
Secured
Debtor Jurisdiction Filing Party Description
------ ------------ ------ ----- -----------
------------------------------------------------------------------------------------------------
Norcraft Companies Minnesota UCC-1 Herc-U-Lift, Inc. Forklift
Secretary of State (operating
lease)
------------------------------------------------------------------------------------------------
Norcraft South Dakota UCC-1 Cas ▇▇▇▇▇▇▇▇ Certain
Companies, L.L.C. Secretary of State d/b/a ▇▇▇▇▇▇▇▇ equipment
Implement (operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Minnesota UCC-1 ▇▇▇▇▇▇▇▇▇ Particle
Companies, L.L.C. Secretary of State Associates, Inc. board (supply
inventory)
------------------------------------------------------------------------------------------------
Norcraft Company Minnesota UCC-1 Herc-U-Lift, Inc. Forklift
Secretary of State (operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Company Minnesota UCC-1 Herc-U-Lift, Inc. Forklift
Secretary of State (operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Minnesota UCC-1 Associates Forklift
Companies, L.L.C. Secretary of State Leasing, Inc. (operating
lease)
------------------------------------------------------------------------------------------------
Norcraft Minnesota UCC-1 Citicorp North Forklift
Companies, L.L.C. Secretary of State America, Inc. (operating
lease)
------------------------------------------------------------------------------------------------
29
Schedule 6.04(b)
Existing Investments
See Schedule 3.09(a)
30
EXHIBIT A
[Form of]
ADMINISTRATIVE QUESTIONNAIRE
ADMINISTRATIVE QUESTIONNAIRE--NORCRAFT COMPANIES, L.P.
-----------------------------------------------------------------------------------------------------
Lending Institution:
--------------------------------------------------------------------------------
Name for Signature Pages:
---------------------------------------------------------------------------
Will sign Credit Agreement: [ ]
Will come via Assignment: [ ] Number of Days post-closing:
--------------
Name for Signature Blocks:
--------------------------------------------------------------------------
Name for Publicity:
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
Main Telephone:
--------------------------------------------------------------------------
Telex No./Answer back:
--------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
CONTACT-Credit Name:
---------------------------------------------------------------------
Address:
---------------------------------------------------------------------
---------------------------------------------------------------------
Telephone:
---------------------------------------------------------------------
Fax:
---------------------------------------------------------------------
CONTACT-Operations Name:
---------------------------------------------------------------------
Address:
---------------------------------------------------------------------
---------------------------------------------------------------------
Telephone:
---------------------------------------------------------------------
Fax:
---------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
PAYMENT INSTRUCTIONS
-----------------------------------------------------------------------------------------------------
Bank Name:
-------------------------------------------------------------------------------
ABA/Routing No.:
-------------------------------------------------------------------------------
Account Name:
-------------------------------------------------------------------------------
Account No.:
-------------------------------------------------------------------------------
For further credit:
-------------------------------------------------------------------------------
Account No.:
-------------------------------------------------------------------------------
Attention:
-------------------------------------------------------------------------------
Reference:
-------------------------------------------------------------------------------
A-1
--------------------------------------------------------------------------------
UBS AG, STAMFORD BRANCH, ADMINISTRATIVE DETAILS
--------------------------------------------------------------------------------
UBS AG, Stamford Branch Account Administrator Secondary Contact
--------------------- -----------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Attn: [ ] Attn: [ ]
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Tel: [ ] Tel: [ ]
Main Telephone: (▇▇▇)▇▇▇-▇▇▇▇ Fax: [ ] Fax: [ ]
Wire Instructions: The Agent's wire instructions will be
disclosed at the time of closing.
A-1
EXHIBIT B
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of October 21, 2003,
among Norcraft Companies, L.P., a Delaware limited partnership ("Borrower"),
Norcraft Holdings, L.P., a Delaware limited partnership ("Holdings"), the
Subsidiary Guarantors (such term and each other capitalized term used but not
defined herein having the meaning given to it in Article I of the Credit
Agreement), the Lenders, UBS SECURITIES LLC, as bookmanager and lead arranger
(in such capacity, the "Lead Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as
syndication agent (in such capacity, the "Syndication Agent"), WACHOVIA CAPITAL
MARKETS, LLC, as co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as
swingline lender (in such capacity, the "Swingline Lender"), UBS AG, STAMFORD
BRANCH, as Issuing Bank, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") and as collateral agent for the Secured
Parties and the Issuing Bank (in such capacity, the "Collateral Agent") and CIT
LENDING SERVICES CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent").
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Closing Date set forth below (but not prior to
the registration of the information contained herein in the Register pursuant to
Section 11.04(d) of the Credit Agreement except as otherwise provided in the
Credit Agreement), the interests set forth below (the "Assigned Interest") in
the Assignor's rights and obligations under the Credit Agreement and the other
Loan Documents, including, without limitation, the Swingline Commitment,
Revolving Commitment and the Term Loans, Swingline Loans, Revolving Loans and
participations held by the Assignor in Letters of Credit which are outstanding
on the Closing Date. From and after the Closing Date (a) the Assignee shall be a
party to and be bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the
rights and obligations of a Lender thereunder and under the Loan Documents and
(b) the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
2. The Assignor (a) warrants that it is the legal and beneficial owner of
the interest being assigned hereby free and clear of any adverse claim and that
its Commitment, and the outstanding balances of its Revolving Loans, without
giving effect to assignments thereof which have not become effective, are as set
forth in such Assignment and Acceptance and (b) except as set forth in (a)
above, the Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any other Loan Document or any other instrument or document furnished
pursuant thereto, or the financial condition of Holdings, Borrower or any
Subsidiary or the performance or observance by Holdings, Borrower or any
Subsidiary of any of its obligations under the Credit Agreement, any other Loan
Document or any other instrument or document furnished pursuant thereto
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance, (b) confirms that it has received
a copy of the Credit Agreement, and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance, (c) agrees that it will, independently and
without reliance upon the Assignor, the Administrative Agent, the Collateral
Agent or any other Lender and based on
B-1
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto, (d) appoints and authorizes the
Administrative Agent and the Collateral Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent and the Collateral Agent, respectively, by the terms thereof, together
with such powers as are incidental thereto and (e) agrees that it will be bound
by the provisions of the Credit Agreement and will perform in accordance with
its terms all the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Lender.
4. This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, the forms specified
in Section 2.15(e) of the Credit Agreement, duly completed and executed by such
Assignee, (ii) if the Assignee is not already a Lender under the Credit
Agreement, an Administrative Questionnaire in the form of Exhibit A to the
Credit Agreement and (iii) a processing and recordation fee of $3,500.
5. This Assignment and Acceptance shall be construed in accordance with and
governed by the law of the State of New York without regard to conflicts of law
principles that would require the application of the laws of another
jurisdiction.
6. Date of Assignment:
7. Legal Name of Assignor:
8. Legal Name of Assignee:
9. Assignee's Address for Notices:
10. Closing Date of Assignment (may not be fewer than 5 Business Days after
the Date of Assignment unless the Assignee is an Affiliate or a Lender Affiliate
of the Assignor or the Administrative Agent shall otherwise agree):
11. Percentage Assigned of Applicable Loan/Commitment:
Percentage Assigned of
Applicable Loan/Commitment
(set forth, to at least 8 decimals,
as a percentage of the Loan and
Principal Amount the aggregate Commitments of
Loan/Commitment Assigned all Lenders thereunder)
----------------- ---------------- -----------------------------------
Term Loans $ %
Revolving Loans $ %
Letters of Credit $ %
Swingline Loans $ %
[Signature Page Follows.]
B-2
The terms set forth above are hereby
agreed to:
[ ],
---------------------
as Assignor
By:
------------------------------------
Name:
Title:
[ ],
---------------------
as Assignee
By:
------------------------------------
Name:
Title:
Accepted:*
NORCRAFT COMPANIES, L.P.
By: NORCRAFT GP, L.L.C., its General Partner
By:
------------------------------------
Name:
Title:
B-3
UBS AG, STAMFORD BRANCH,
as Administrative Agent, Collateral
Agent and Issuing Bank
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
UBS LOAN FINANCE LLC,
as Swingline Lender
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
----------
* To be completed to the extent consent is required under Section 11.04(b) of
the Credit Agreement.
B-4
EXHIBIT C
[Form of]
BORROWING REQUEST
UBS AG, Stamford Branch,
as Administrative Agent for
the Lenders referred to below,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
-----------------
Re: Norcraft Companies, L.P. and its Subsidiaries
------------,-----
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of October 21, 2003,
among Norcraft Companies, L.P., a Delaware limited partnership ("Borrower"),
Norcraft Holdings, L.P., a Delaware limited partnership ("Holdings"), the
Subsidiary Guarantors (such term and each other capitalized term used but not
defined herein having the meaning given to it in Article I of the Credit
Agreement), the Lenders, UBS SECURITIES LLC, as bookmanager and lead arranger
(in such capacity, the "Lead Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as
syndication agent (in such capacity, the "Syndication Agent"), WACHOVIA CAPITAL
MARKETS, LLC, as co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as
swingline lender (in such capacity, the "Swingline Lender"), UBS AG, STAMFORD
BRANCH, as Issuing Bank, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") and as collateral agent for the Secured
Parties and the Issuing Bank (in such capacity, the "Collateral Agent") and CIT
LENDING SERVICES CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent"). Borrower hereby gives you notice pursuant to Section
2.03 of the Credit Agreement that it requests a Borrowing under the Credit
Agreement, and in that connection sets forth below the terms on which such
Borrowing is requested to be made:
(A) Class of Borrowing Revolving Borrowing
Term Borrowing
(B) Principal amount of
Borrowing/a/ ------------------------------
(C) Date of Borrowing
(which is a Business Day) ------------------------------
[ABR] [Eurodollar] [Swingline]
(D) Type of Borrowing
----------
/a/ Loans (other than Swingline Loans) must be in an amount that is at least
$1,000,000 and an integral multiple of $500,000 or equal to the remaining
available balance of the applicable Commitments. Swingline Loans must be in
an amount that is at least $100,000 and an integral multiple of $50,000
above such amount.
C-1
(E) Interest Period and the last day thereof/b/
----------------------------
(F) Funds are requested to be disbursed to Borrower's account with UBS AG,
Stamford Branch (Account No. ).
--------
Borrower hereby represents and warrants that the conditions to lending
specified in Sections 4.02(b), (c) and (d) of the Credit Agreement are satisfied
as of the date hereof.
[Signature Page Follows.]
----------
/b/ Shall be subject to the definition of "Interest Period" in the Credit
Agreement.
C-2
NORCRAFT COMPANIES, L.P.
By: NORCRAFT GP, L.L.C., its
General Partner
By:
---------------------------
Name:
Title: [Responsible Officer]
C-3
EXHIBIT D
[Form of]
INTEREST ELECTION REQUEST
UBS AG, Stamford Branch,
as Administrative Agent
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
-----------------
------------,-----
Re: Norcraft Companies, L.P.
Ladies and Gentlemen:
This Interest Election Request is delivered to you pursuant to Section 2.08
of the Credit Agreement dated as of October 21, 2003, among Norcraft Companies,
L.P., a Delaware limited partnership ("Borrower"), Norcraft Holdings, L.P., a
Delaware limited partnership ("Holdings"), the Subsidiary Guarantors (such term
and each other capitalized term used but not defined herein having the meaning
given to it in Article I of the Credit Agreement), the Lenders, UBS SECURITIES
LLC, as bookmanager and lead arranger (in such capacity, the "Lead Arranger"),
WACHOVIA BANK, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the
"Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as co-arranger (the
"Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, the
"Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and as
collateral agent for the Secured Parties and the Issuing Bank (in such capacity,
the "Collateral Agent") and CIT LENDING SERVICES CORPORATION, as documentation
agent (in such capacity, the "Documentation Agent").
Borrower hereby requests that on /a/ (the "Interest Election
-------------
Date"),
1. $ of the presently outstanding principal amount of the
----------
Loans originally made on ,
--------
2. and all presently being maintained as [ABR Loans] [Eurodollar
Loans],
----------
/a/ Shall be a Business Day that is (a) the date hereof in the case of a
conversion into ABR Loans to the extent this Interest Election Request is
delivered to the Administrative Agent prior to 11:00a.m. New York City time
on the date hereof, otherwise the Business Day following the date of
delivery hereof, and (b) at least three Business Days following to the date
hereof in the case of a conversion into/continuation of Eurodollar Loans to
the extent this Interest Election Request is delivered to the
Administrative Agent prior to 11:00 a.m. New York City time on the date
hereof, otherwise the third Business Day following the date of delivery
hereof.
D-1
3. be [converted into] [continued as],
4. [Eurodollar Loans having an Interest Period of [one/two/three/six
months] [ABR Loans].
The undersigned hereby certifies that the following statements are true on
the date hereof, and will be true on the proposed Interest Election Date, both
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) the foregoing [conversion] [continuation] complies with the terms
and conditions of the Credit Agreement (including, without limitation,
Section 2.08 of the Credit Agreement);
(b) no Default has occurred and is continuing, or would result from
such proposed [conversion] [continuation].
[Signature Page Follows.]
D-2
Borrower has caused this Interest Election Request to be executed and
delivered by its duly authorized officer as of the date first written above.
NORCRAFT COMPANIES, L.P.
By: NORCRAFT GP, L.L.C., its
General Partner
By:
----------------------------
Name:
Title:
D-3
EXHIBIT E
[Form of]
JOINDER AGREEMENT
Reference is made to the Credit Agreement, dated as of October 21, 2003,
among Norcraft Companies, L.P., a Delaware limited partnership ("Borrower"),
Norcraft Holdings, L.P., a Delaware limited partnership ("Holdings"), the
Subsidiary Guarantors (such term and each other capitalized term used but not
defined herein having the meaning given to it in Article I of the Credit
Agreement), the Lenders, UBS SECURITIES LLC, as bookmanager and lead arranger
(in such capacity, the "Lead Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as
syndication agent (in such capacity, the "Syndication Agent"), WACHOVIA CAPITAL
MARKETS, LLC, as co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as
swingline lender (in such capacity, the "Swingline Lender"), UBS AG, STAMFORD
BRANCH, as Issuing Bank, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") and as collateral agent for the Secured
Parties and the Issuing Bank (in such capacity, the "Collateral Agent") and CIT
LENDING SERVICES CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent").
W I T N E S S E T H:
WHEREAS, the Guarantors have entered into the Credit Agreement and the U.S.
Security Agreement in order to induce the Lenders to make the Loans and issue
Letters of Credit to or for the benefit of Borrower;
WHEREAS, pursuant to Section 5.10(b) of the Credit Agreement and Section
3.5 of the U.S. Security Agreement, each Subsidiary (other than any Foreign
Subsidiary) that was not in existence on the date of the Credit Agreement is
required to become a Guarantor under the Credit Agreement and a Guarantor and
Pledgor under the U.S. Security Agreement by executing a Joinder Agreement. The
undersigned Subsidiary (the "New Guarantor") is executing this joinder agreement
("Joinder Agreement") to the Credit Agreement in order to induce the Lenders to
make additional Revolving Loans and issue Letters of Credit and as consideration
for the Loans previously made and Letters of Credit previously issued.
NOW, THEREFORE, the Administrative Agent, Collateral Agent and the New
Guarantor hereby agree as follows:
1. Guarantee. In accordance with Section 5.10(b) of the Credit Agreement
and 3.5 of the U.S. Security Agreement, the New Guarantor by its signature below
becomes a Guarantor under the Credit Agreement and a Pledgor under the U.S.
Security Agreement with the same force and effect as if originally named therein
as a Guarantor and a Pledgor.
2. Representations and Warranties. The New Guarantor hereby (a) agrees to
all the terms and provisions of the Credit Agreement and the U.S. Security
Agreement applicable to it as a Guarantor and a Pledgor, respectively,
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor and a Pledgor, respectively, thereunder are
true and correct in all material respects (except that any representation and
warranty that is qualified as to "materiality" or "Material Adverse Effect"
shall be true and correct in all respects) on and as of the date hereof. Each
reference to a Guarantor in the Credit Agreement shall be deemed to include the
New Guarantor. The New Guarantor hereby attaches supplements of each of the
schedules to the Credit Agreement and the U.S. Security Agreement applicable to
it.
E-1
3. Severability. Any provision of this Joinder Agreement 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 hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
4. Counterparts. This Joinder Agreement may be executed in counterparts,
each of which shall constitute an original. Delivery of an executed signature
page to this Joinder Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Joinder Agreement.
5. No Waiver. Except as expressly supplemented hereby, the Credit Agreement
and the Security Agreement shall remain in full force and effect.
6. Notices. All notices, requests and demands to or upon the New Guarantor,
any Agent or any Lender shall be governed by the terms of Section 11.01 of the
Credit Agreement.
7. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT
WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[Signature Pages Follow.]
E-2
IN WITNESS WHEREOF, the undersigned have caused this Joinder Agreement to
be duly executed and delivered by their duly authorized officers as of the day
and year first above written.
[NEW GUARANTOR]
By:
----------------------------
Name:
Title:
Address for Notices:
[Note: Schedules to be attached]
E-3
UBS AG, STAMFORD BRANCH, as
Administrative Agent and
Collateral Agent
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
▇-▇
▇ ▇▇▇▇▇▇▇ ▇
2 [Form of]
3 LANDLORD ACCESS AGREEMENT
4 LANDLORD'S ACCESS AGREEMENT
5 THIS LANDLORD'S ACCESS AGREEMENT (the "Agreement") is made and entered
6 into as of , by and between ,
7 ---------------- ------------------------
8 having an office at ("Landlord") and
9 ------------------------------------
10 UBS AG, STAMFORD BRANCH, as collateral agent for the benefit of the Secured
11 Parties (as defined in the Credit Agreement (as hereinafter defined)),
12 having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
13 (in such capacity, "Collateral Agent").
14 RECITALS:
15 A. Landlord is the record title holder and owner of the real property
16 described in Schedule A attached hereto (the "Real Property").
17 B. Landlord has leased all or a portion of the Real Property (the
18 "Leased Premises") to [ ] ("Lessee") pursuant to a certain
19 ---------------
20 lease agreement or agreements described in Schedule B attached hereto
21 (collectively, and as amended, amended and restated, supplemented or
22 otherwise modified from time to time, the "Lease").
23 C. [ ] ("Borrower") and Collateral Agent, among others, have
24 ----
25 entered into a credit agreement, dated as of , 200[ ], (as
26 --------- -
27 amended, amended and restated, supplemented or otherwise modified from time
28 to time, the "Credit Agreement"; capitalized terms used and not otherwise
29 defined herein shall have the meanings assigned to such terms in the Credit
30 Agreement), pursuant to which the Lenders have agreed to make certain loans
31 to Borrower (collectively, the "Loans").
32 D. [The Lessee is a subsidiary of Borrower.] [Borrower is a subsidiary
33 of the Lessee]/a/
34 E. [The Lessee has, pursuant to the Credit Agreement, guaranteed the
35 obligations of the Borrower under the Credit Agreement and the other
36 documents evidencing and securing the Loans (collectively, the "Loan
37 Documents").]/b/
38 ----------
39 /a/ Include one of these alternatives if Borrower is not the Lessee.
40 /b/ Include if Borrower is not the Lessee
41 -2-
42 F. As security for the payment and performance of Lessee's Obligations
43 under the Credit Agreement and the other [documents evidencing and securing
44 the Loans (collectively, the "Loan Documents")] [Loan Documents],
45 Collateral Agent (for the benefit of the Secured Parties) has or will
46 acquire a security interest in and lien upon all of Lessee's personal
47 property, inventory, accounts, goods, machinery, equipment, furniture and
48 fixtures (together with all additions, substitutions, replacements and
49 improvements to, and proceeds of, the foregoing, collectively, the
50 "Personal Property")
51 G. Collateral Agent has requested that Landlord execute this Agreement
52 as [a condition precedent to the making of the Loans under the Credit
53 Agreement] [part of Borrower's continuing obligations under the Credit
54 Agreement].
55 AGREEMENT:
56 NOW, THEREFORE, for and in consideration of the premises and other
57 good and valuable consideration, the receipt and sufficiency of which are
58 hereby acknowledged, Landlord hereby represents, warrants and agrees in
59 favor of Collateral Agent, as follows:
60 1. Landlord certifies that (i) Landlord is the landlord under the
61 Lease described in Schedule B attached hereto and (ii) the Lease is in full
62 force and effect and has not been amended, modified or supplemented except
63 as set forth in Schedule B hereto.
64 2. Landlord agrees that Collateral Agent has the right to remove the
65 Personal Property from the Leased Premises at any time in accordance with
66 the terms of the Loan Documents; provided that Collateral Agent shall
67 repair any damage arising from such removal. Landlord further agrees that
68 it will not hinder Collateral Agent's actions in removing Personal Property
69 from the Leased Premises or Collateral Agent's actions in otherwise
70 enforcing its security interest in the Personal Property. Collateral Agent
71 shall not be liable for any diminution in value of the Leased Premises
72 caused by the absence of Personal Property actually removed or by the need
73 to replace the Personal Property after such removal. Landlord acknowledges
74 that Collateral Agent shall have no obligation to remove the Personal
75 Property from the Leased Premises.
76 3. Landlord acknowledges and agrees that Lessee's granting of a
77 security interest in the Personal Property in favor of the Collateral Agent
78 (for the benefit of the Secured Parties) shall not constitute a default
79 under the Lease nor permit Landlord to terminate the Lease or re-enter or
80 repossess the Leased Premises or otherwise be the basis for the exercise of
81 any remedy by Landlord and Landlord hereby expressly consents to the
82 granting of such security interest.
83 4. The terms and provisions of this Agreement shall inure to the
84 benefit of and be binding upon the successors and assigns of Landlord
85 (including, without limitation, any successor owner of the Real Property)
86 and Collateral Agent. Landlord will disclose the terms and conditions of
87 this Agreement to any purchaser or successor to Landlord's interest in the
88 Leased Premises.
89 5. All notices to any party hereto under this Agreement shall be in
90 writing and sent to such party at its respective address set forth above
91 (or at such other address as shall be designated by
-3-
92 such party in a written notice to the other party complying as to delivery
93 with the terms of this Section 7) by certified mail, postage prepaid,
94 return receipt requested or by overnight delivery service.
95 6. The provisions of this Agreement shall continue in effect until
96 Landlord shall have received Collateral Agent's written certification that
97 the Loans have been paid in full and all of Borrower's other Obligations
98 under the Credit Agreement and the other Loan Documents have been
99 satisfied.
100 7. THE INTERPRETATION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT
101 SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK,
102 WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
103 8. Landlord agrees to execute, acknowledge and deliver such further
104 instruments as Collateral Agent may request to allow for the proper
105 recording of this Agreement (including, without limitation, a revised
106 landlord's access agreement in form and substance sufficient for recording)
107 or to otherwise accomplish the purposes of this Agreement.
108 IN WITNESS WHEREOF, Landlord and Collateral Agent have caused this
109 Agreement to be duly executed and delivered by their duly authorized
110 officers as of the date first above written.
111 ---------------------------------------,
112 as Landlord
113 By:
114 ------------------------------------
115 Name:
116 Title:
▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ as Collateral Agent
119 By:
120 ------------------------------------
121 Name:
122 Title:
123 By:
124 ------------------------------------
125 Name:
126 Title:
Schedule A
Description of Real Property
F-1
EXHIBIT G
[Form of]
MORTGAGE
================================================================================
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
BY
NORCRAFT COMPANIES, L.P.,
as Grantor,
TO
[ ], a [ ] corporation, having an address of [ ]
------------- -------- -------------
as Trustee for the benefit of
UBS AG, STAMFORD BRANCH,
as Collateral Agent, Beneficiary
Dated as of October 21, 2003
Relating to Premises in:
[ ]
------------
================================================================================
This instrument prepared by and, after recording,
please return to:
Athy ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
G-1
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND
FIXTURE FILING (the "Deed of Trust"), dated as of October 21, 2003, made by
Norcraft Companies, L.P., a Delaware limited partnership having an office at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as mortgagor, assignor and debtor (in such
capacities and together with any successors in such capacities, the "Grantor"),
successor in interest to Norcraft Companies, L.L.C., also index as "grantor", to
[ ], having an address of [ ], as
--------------------- ---------------------
trustee ("Trustee"), index as "grantee", in favor of UBS AG, STAMFORD BRANCH, a
Swiss banking corporation having an office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, in its capacity as collateral agent for Secured
Parties (as hereinafter defined), as beneficiary, assignee and secured party (in
such capacities and together with any successors in such capacities, the
"Beneficiary"), index as "grantee".
R E C I T A L S :
A. Pursuant to that certain credit agreement, dated as of October 21,
2003 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Credit Agreement"), among Norcraft Companies, L.P., a
Delaware limited partnership ("Borrower"), Norcraft Holdings, L.P., a Delaware
limited partnership ("Holdings"), the Subsidiary Guarantors (such term and each
other capitalized term used but not defined herein having the meaning given to
it in Article I of the Credit Agreement), the Lenders, UBS SECURITIES LLC, as
bookmanager and lead arranger (in such capacity, the "Lead Arranger"), WACHOVIA
BANK, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the
"Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as co-arranger (the
"Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, the
"Swingline Lender"), and UBS AG, STAMFORD BRANCH, as Issuing Bank, as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent") and as collateral agent for the Secured Parties and the Issuing Bank (in
such capacity, the "Collateral Agent"), the Lenders have agreed to make to or
for the account of the Borrower certain Loans and issue certain Letters of
Credit.
B. Each Original Guarantor (as defined in the Credit Agreement) has,
pursuant to the Credit Agreement, among other things, unconditionally guaranteed
the obligations of the Borrower under the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement).
C. The Grantor is or will be the legal and/or beneficial owner of the
Trust Property.
D. It is a condition to the obligations of the Lenders to make the
Loans under the Credit Agreement and issue the Letters of Credit that the
Grantor execute and deliver the applicable Loan Documents, including this Deed
of Trust.
-2-
E. This Deed of Trust is given by the Grantor to the Trustee in favor
of the Collateral Agent, as Beneficiary, for its benefit and the benefit of the
other Secured Parties to secure the payment and performance of all of the
Secured Obligations.
A G R E E M E N T :
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Grantor hereby covenants and agrees with the Beneficiary as
follows:
ARTICLE I.
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions. (a) Capitalized terms used but not otherwise
defined herein that are defined in the Credit Agreement shall have the meanings
given to them in the Credit Agreement, including the following:
"Administrative Agent"; "Affiliate"; "Agent"; "Business Day";
"Commitment"; "Environmental Law"; "Event of Default"; "GAAP";
"Guarantors"; "Hazardous Materials"; "Letter of Credit"; "Lenders"; "Lien";
"Loan Documents"; "Loan Parties"; "Loans"; "Net Cash Proceeds"; "Notes";
"Officers' Certificate"; "Permitted Liens"; "Person"; "Secured Parties";
"Security Agreement"; "Security Documents"; and "Subsidiary".
(b) The following terms in this Deed of Trust shall have the following
meanings:
"Alterations" shall mean any and all alterations, installations,
improvements, additions, modifications or changes of a structural nature.
"Beneficiary" shall have the meaning assigned to such term in the
Preamble hereof.
"Charges" shall mean any and all real estate, property and other
taxes, assessments and special assessments, levies, fees, all water and sewer
rents and charges and all other governmental charges imposed upon or assessed
against, and all claims (including, without limitation, claims for landlords',
carriers', mechanics', workmens', repairmens', laborers', materialmens',
suppliers' and warehousemens' Liens and other claims arising by operation of
law) against, all or any portion of the Trust Property.
"Contested Liens" shall mean, collectively, any Liens incurred in
respect of any Charges to the extent that the amounts owing in respect thereof
are not yet delinquent or are being contested and otherwise comply with the
provisions of Section 9.1 hereof; provided, however, that such Liens shall in
all respects be subject and subordinate in priority to the Liens and security
interests created and evidenced by this Deed of Trust, except if and to the
extent that the
-3-
law or regulation creating, permitting or authorizing such Lien provides that
such Lien(s) must be superior to the Liens and security interests created and
evidenced hereby.
"Contracts" shall mean, collectively, any and all right, title and
interest of the Grantor in and to any and all contracts and other general
intangibles relating to the Trust Property and all reserves, deferred payments,
deposits, refunds and claims of every kind, nature or character relating
thereto.
"Credit Agreement" shall have the meaning assigned to such term in
Recital A hereof.
"Deed of Trust" shall have the meaning assigned to such term in the
Preamble hereof.
"Default Rate" shall mean the rate of interest payable during a
default pursuant to the provisions of Section 2.06(b) of the Credit Agreement.
"Destruction" shall mean any and all damage to, or loss or destruction
of, the Premises or any part thereof.
"Fixtures" shall mean all machinery, apparatus, equipment, fittings,
fixtures, improvements and articles of personal property of every kind,
description and nature whatsoever now or hereafter attached or affixed to the
Land or any other Improvement used in connection with the use and enjoyment of
the Land or any other Improvement or the maintenance or preservation thereof,
which by the nature of their location thereon or attachment thereto are fixtures
under the UCC or any other applicable law including, without limitation, all
utility systems, fire sprinkler and security systems, drainage facilities,
lighting facilities, all water, sanitary and storm sewer, drainage, electricity,
steam, gas, telephone and other utility equipment and facilities, pipes,
fittings and other items of every kind and description now or hereafter attached
to or located on the Land which by the nature of their location thereon or
attachment thereto are real property under applicable law, HVAC equipment,
boilers, electronic data processing, telecommunications or computer equipment,
refrigeration, electronic monitoring, water or lighting systems, power,
sanitation, waste removal, elevators, maintenance or other systems or equipment.
"Governmental Authority" shall mean any Federal, state, local, foreign
or other governmental, quasi-governmental or administrative (including
self-regulatory) body, instrumentality, department, agency, authority, board,
bureau, commission, office of any nature whatsoever or other subdivision
thereof, or any court, tribunal, administrative hearing body, arbitration panel
or other similar dispute-resolving body, whether now or hereafter in existence,
or any officer or official thereof, having jurisdiction over the Grantor or the
Trust Property or any portion thereof.
"Grantor" shall have the meaning assigned to such term in the Preamble
hereof.
"Grantor's Interest" shall have the meaning assigned to such term in
Section 2.2 hereof.
"Improvements" shall mean all buildings, structures and other
improvements of every kind or description and any and all Alterations now or
hereafter located, attached or
-4-
erected on the Land, including, without limitation, (i) all Fixtures, (ii) all
attachments, railroad tracks, foundations, sidewalks, drives, roads, curbs,
streets, ways, alleys, passages, passageways, sewer rights, parking areas,
driveways, fences and walls and (iii) all materials now or hereafter located on
the Land intended for the construction, reconstruction, repair, replacement,
alteration, addition or improvement of or to such buildings, Fixtures,
structures and improvements, all of which materials shall be deemed to be part
of the Improvements immediately upon delivery thereof on the Land and to be part
of the Improvements immediately upon their incorporation therein.
"Insurance Policies" means the insurance policies and coverages
required to be maintained by the Grantor with respect to the Trust Property
pursuant to the Credit Agreement and all renewals and extensions thereof.
"Land" shall mean the land described in Schedule A annexed to this
Deed of Trust, together with all of the Grantor's reversionary rights in and to
any and all easements, rights-of-way, strips and gores of land, waters, water
courses, water rights, mineral, gas and oil rights and all power, air, light and
other rights, estates, titles, interests, privileges, liberties, servitudes,
licenses, tenements, hereditaments and appurtenances whatsoever, in any way
belonging, relating or appertaining thereto, or any part thereof, or which
hereafter shall in any way belong, relate or be appurtenant thereto.
"Landlord" shall mean any landlord, lessor, franchisor, licensor or
grantor, as applicable.
"Leases" shall mean, collectively, any and all interests of the
Grantor, as Landlord, in all leases and subleases of space, tenancies, franchise
agreements, licenses, occupancy or concession agreements now existing or
hereafter entered into, whether or not of record, affecting the use and/or
occupancy of all or any portion of the Premises and any and all amendments,
modifications, supplements, replacements, extensions and renewals of any
thereof, whether now in effect or hereafter coming into effect.
"Permit" shall mean any and all permits, certificates, approvals,
authorizations, consents, licenses, variances, franchises or other instruments,
however characterized, of any Governmental Authority (or any person acting on
behalf of a Governmental Authority) now or hereafter acquired or held, together
with all amendments, modifications, extensions, renewals and replacements of any
thereof issued or in any way furnished in connection with the Trust Property
including, without limitation, building permits, certificates of occupancy,
environmental certificates, industrial permits or licenses and certificates of
operation.
"Premises" shall mean, collectively, the Land and the Improvements.
"Prior Liens" shall mean, collectively, the Liens identified in
Schedule B annexed to this Deed of Trust.
"Proceeds" shall mean, collectively, any and all cash proceeds and
noncash proceeds and shall include all (i) proceeds of the conversion, voluntary
or involuntary, of any of the Trust Property or any portion thereof into cash or
liquidated claims, (ii) proceeds of any insurance, indemnity, warranty, guaranty
or claim payable to the Beneficiary or to the Grantor from
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time to time with respect to any of the Trust Property, (iii) payments (in any
form whatsoever) made or due and payable to the Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any portion of the Trust Property by any Governmental
Authority (or any person acting on behalf of a Governmental Authority), (iv)
products of the Trust Property and (v) other amounts from time to time paid or
payable under or in connection with any of the Trust Property including, without
limitation, refunds of real estate taxes and assessments, including interest
thereon.
"Property Material Adverse Effect" shall mean, as of any date of
determination and whether individually or in the aggregate, (a) any event,
circumstance, occurrence or condition which has caused or resulted in (or would
reasonably be expected to cause or result in) a material adverse effect on the
business or operations of the Grantor as presently conducted at the Trust
Property; (b) any event, circumstance, occurrence or condition which has caused
or resulted in (or would reasonably be expected to cause or result in) a
material adverse effect on the value or utility of the Trust Property; or (c)
any event, circumstance, occurrence or condition which has caused or resulted in
(or would reasonably be expected to cause or result in) a material adverse
effect on the legality, priority or enforceability of the Lien created by this
Deed of Trust or the rights and remedies of the Beneficiary hereunder.
"Prudent Operator" shall mean a prudent operator of property similar
in use and configuration to the Premises and located in the locality where the
Premises are located.
"Records" shall mean, collectively, any and all right, title and
interest of the Grantor in and to any and all drawings, plans, specifications,
file materials, operating and maintenance records, catalogues, tenant lists,
correspondence, advertising materials, operating manuals, warranties,
guarantees, appraisals, studies and data relating to the Trust Property or the
construction of any Alteration or the maintenance of any Permit.
"Rents" shall mean, collectively, any and all rents, additional rents,
royalties, cash, guaranties, letters of credit, bonds, sureties or securities
deposited under any Lease to secure performance of the Tenant's obligations
thereunder, revenues, earnings, profits and income, advance rental payments,
payments incident to assignment, sublease or surrender of a Lease, claims for
forfeited deposits and claims for damages, now due or hereafter to become due,
with respect to any Lease, any indemnification against, or reimbursement for,
sums paid and costs and expenses incurred by the Grantor under any Lease or
otherwise, and any award in the event of the bankruptcy of any Tenant under or
guarantor of a Lease.
"Requirements of Law" shall mean, collectively, any and all
requirements of any Governmental Authority including, without limitation, any
and all orders, decrees, determinations, laws, treaties, ordinances, rules,
regulations or similar statutes or case law.
"Restoration" shall mean the repair, replacement or restoration of all
or any portion of the Premises after a Destruction or Taking.
"Secured Obligations" shall mean all obligations (whether or not
constituting future advances, obligatory or otherwise) of the Grantor and any
and all of the other Loan Parties from time to time arising under or in respect
hereof or of the Credit Agreement, the Notes, the
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Letters of Credit, the other Loan Documents (including, without limitation, the
obligations to pay principal, interest and all other charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and other payments related to
or in respect of the obligations contained in this Deed of Trust, the Credit
Agreement, the Notes, the Letters of Credit, the other Loan Documents, in each
case whether (i) such obligations are direct or indirect, secured or unsecured,
joint or several, absolute or contingent, reduced to judgment or not, liquidated
or unliquidated, disputed or undisputed, legal or equitable, due or to become
due whether at stated maturity, by acceleration or otherwise, (ii) arising in
the regular course of business or otherwise, (iii) for payment or performance,
(iv) discharged, stayed or otherwise affected by any bankruptcy, insolvency,
reorganization or similar proceeding with respect to any Loan Party or any other
person and/or (v) now existing or hereafter arising (including, without
limitation, interest and other obligations arising or accruing after the
commencement of any bankruptcy, insolvency, reorganization or similar proceeding
with respect to any Loan Party or any other person, or which would have arisen
or accrued but for the commencement of such proceeding, even if such obligation
or the claim therefor is not enforceable or allowable in such proceeding).
"Taking" shall mean any taking of the Trust Property or any part
thereof, in or by condemnation or other eminent domain proceedings pursuant to
any law, general or special, or by reason of the temporary requisition of the
use or occupancy of the Trust Property or any part thereof, by any Governmental
Authority, civil or military.
"Tax Escrow Fund" shall have the meaning assigned to such term in
Section 7.2 hereof.
"Tenant" shall mean any tenant, lessee, sublessee, franchisee,
licensee, grantee or obligee, as applicable.
"Trust Property" shall have the meaning assigned to such term in
Section 2.1 hereof.
"UCC" shall mean the Uniform Commercial Code as in effect on the date
hereof in the jurisdiction in which the Premises are located; provided, however,
that if by reason of mandatory provisions of law, the perfection or the effect
of perfection or non-perfection of the security interest in any item or portion
of the Trust Property is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than the jurisdiction in which the Premises are located,
"UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.
SECTION 1.2. Interpretation. In this Deed of Trust, unless otherwise
specified, (i) singular words include the plural and plural words include the
singular, (ii) words importing any gender include the other gender, (iii)
references to any person include such person's successors and assigns and in the
case of an individual, the word "successors" includes such person's heirs,
devisees, legatees, executors, administrators and personal representatives, (iv)
references to any statute or other law include all applicable rules, regulations
and orders adopted or made thereunder and all statutes or other laws amending,
consolidating or replacing the statute or law referred to, (v) the words
"consent," "approve" and "agree," and derivations thereof or
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words of similar import, mean the prior written consent, approval or agreement
of the Person in question, (vi) the words "include" and "including," and words
of similar import, shall be deemed to be followed by the words "without
limitation," (vii) the words "hereto," "herein," "hereof" and "hereunder," and
words of similar import, refer to this Deed of Trust in its entirety, (viii)
references to Articles, Sections, Schedules, Exhibits, subsections, paragraphs
and clauses are to the Articles, Sections, Schedules, Exhibits, subsections,
paragraphs and clauses hereof, (ix) the Schedules and Exhibits to this Deed of
Trust, in each case as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with the provisions hereof, are
incorporated herein by reference, (x) the titles and headings of Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and clauses are inserted
as a matter of convenience only and shall not affect the constructions of any
provision hereof and (xi) all obligations of the Grantor hereunder shall be
satisfied by the Grantor at the Grantor's sole cost and expense.
SECTION 1.3. Resolution of Drafting Ambiguities. The Grantor
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., Beneficiary) shall not be employed in the interpretation
hereof.
ARTICLE II.
GRANTS AND SECURED OBLIGATIONS
SECTION 2.1. Grant of Trust Property. The Grantor hereby grants,
mortgages, bargains, sells, assigns, transfers and conveys to the Trustee, in
TRUST FOREVER, with power of sale, for the benefit of the Beneficiary, for the
benefit of the Secured Parties, a security interest in and upon all of the
Grantor's estate, right, title and interest in, to and under the following
property, whether now owned or held or hereafter acquired from time to time
(collectively, the "Trust Property"):
(i) Land;
(ii) Improvements;
(iii) Leases;
(iv) Rents;
(v) Permits;
(vi) Contracts;
(vii) Records; and
(viii) Proceeds;
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Notwithstanding the foregoing provisions of this Section 2.1, Trust
Property shall not include a grant of any of the Grantor's right, title or
interest in (i) any Contract to which the Grantor is a party or any of its
rights or interests thereunder to the extent, but only to the extent, that such
a grant would, under the terms of such Contract, result in a breach or
termination of the terms of, or constitute a default under or termination of
such Contract and (ii) any Permit to the extent, but only to the extent that,
such grant shall constitute or result in abandonment, invalidation or rendering
unenforceable any right, title or interest of the Grantor therein; provided,
however, that at such time as any Contract or Permit described in clauses (i)
and (ii) of this sentence is no longer subject to such restriction, such
applicable Contract or Permit shall (without any act or delivery by any person)
constitute Trust Property hereunder.
TO HAVE AND TO HOLD the Trust Property, in TRUST FOREVER, with power of sale,
together with all estate, right, title and interest of the Grantor and anyone
claiming by, through or under the Grantor in and to the Trust Property and all
rights and appurtenances relating thereto, unto the Trustee, its successors and
assigns, for the benefit of the Beneficiary for the benefit of the Secured
Parties, for the purpose of securing the payment and performance in full of all
the Secured Obligations.
SECTION 2.2. Assignment of Leases and Rents. As additional security
for the payment and performance in full of all the Secured Obligations and
subject to the provisions of Article VI hereof, the Grantor absolutely,
presently, unconditionally and irrevocably assigns, transfers and sets over to
the Trustee for the benefit of the Beneficiary for the benefit of the Secured
Parties, and grants to the Beneficiary, all of the Grantor's estate, right,
title, interest, claim and demand, as Landlord, under any and all of the Leases
including, without limitation, the following (such assigned rights, the
"Grantor's Interest"):
(i) the immediate and continuing right to receive and collect Rents
payable by the Tenants pursuant to the Leases;
(ii) all claims, rights, powers, privileges and remedies of the
Grantor, whether provided for in the Leases or arising by statute or at law
or in equity or otherwise, consequent on any failure on the part of the
Tenants to perform or comply with any term of the Leases;
(iii) all rights to take all actions upon the happening of a default
under the Leases as shall be permitted by the Leases or by law including,
without limitation, the commencement, conduct and consummation of
proceedings at law or in equity; and
(iv) the full power and authority, in the name of the Grantor or
otherwise, to enforce, collect, receive and receipt for any and all of the
foregoing and to take all other actions whatsoever which the Grantor, as
Landlord, is or may be entitled to take under the Leases.
SECTION 2.3. Secured Obligations. This Deed of Trust secures, and the
Trust Property is collateral security for, the payment and performance in full
when due of the Secured Obligations.
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SECTION 2.4. Future Advances. This Deed of Trust shall secure future
advances whenever hereafter made. The maximum aggregate amount of all advances
of principal under the Credit Agreement (which advances are obligatory to the
extent the conditions set forth in the Credit Agreement relating thereto are
satisfied) that may be outstanding hereunder at any time is $70,000,000 (SEVENTY
MILLION DOLLARS), plus interest thereon, collection costs, sums advanced for the
payment of taxes, assessments, maintenance and repair charges, insurance
premiums and any other costs incurred to protect the security encumbered hereby
or the lien hereof, expenses incurred by the Trustee and/or Beneficiary by
reason of any default by the Grantor under the terms hereof, together with all
other sums secured hereby.
SECTION 2.5. No Release. Nothing set forth in this Deed of Trust shall
relieve the Grantor from the performance of any term, covenant, condition or
agreement on the Grantor's part to be performed or observed under or in respect
of any of the Trust Property or from any liability to any Person under or in
respect of any of the Trust Property or shall impose any obligation on the
Beneficiary, Trustee, or any other Secured Party to perform or observe any such
term, covenant, condition or agreement on the Grantor's part to be so performed
or observed or shall impose any liability on the Beneficiary, Trustee, or any
other Secured Party for any act or omission on the part of the Grantor relating
thereto or for any breach of any representation or warranty on the part of the
Grantor contained in this Deed of Trust or any other Loan Document, or under or
in respect of the Trust Property or made in connection herewith or therewith.
The obligations of the Grantor contained in this Section 2.5 shall survive the
termination hereof and the discharge of the Grantor's other obligations under
this Deed of Trust and the other Loan Documents.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF GRANTOR
SECTION 3.1. Incorporation of Credit Agreement. The Grantor represents
and warrants that each of the representations, warranties, covenants, negative
covenants and other agreements of the Grantor (as a Loan Party) under and as
contained in the Credit Agreement are hereby incorporated herein in their
entirety by this reference.
SECTION 3.2. Warranty of Title. The Grantor represents and warrants
that:
(i) it has good and marketable fee simple title to the Premises and
the Landlord's interest and estate under or in respect of the Leases and
good title to the interest it purports to own or hold in and to each of the
Permits, the Contracts and the Records, in each case subject to no Liens,
except for Prior Liens and Liens in favor of the Beneficiary pursuant to
the Security Documents;
(ii) it has good title to the interest it purports to own or hold in
and to all rights and appurtenances to or that constitute a portion of the
Trust Property;
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(iii) it is in compliance in all material respects with each term,
condition and provision of any obligation of the Grantor which is secured
by the Trust Property or the noncompliance with which may result in the
imposition of a Lien on the Trust Property.
SECTION 3.3. Condition of Trust Property. The Grantor represents and
warrants that:
(i) there has been issued and there remains in full force and effect
subject to no revocation, suspension, forfeiture or modification, each and
every material Permit necessary for the present and contemplated use,
operation and occupancy of the Premises by the Grantor and its Tenants and
the conduct of their respective businesses and all required zoning,
building code, land use, environmental and other similar Permits, except to
the extent that a failure to have such Permits would not result in a
Property Material Adverse Effect;
(ii) the Premises and the present and contemplated use and occupancy
thereof comply in all material respects with all applicable zoning
ordinances, building codes, land use laws, setback or other development and
use requirements of Governmental Authorities and with all private
restrictions and agreements affecting the Trust Property whether or not
recorded;
(iii) the Premises are served by all utilities (including, without
limitation, public water and sewer systems) reasonably necessary for the
present and contemplated use thereof, and all utility services are provided
by public utilities and the Premises have accepted or are equipped to
accept such utility services and the Grantor has not received notice of
termination of such utility service;
(iv) the Grantor has access to the Premises from one or more fully
dedicated public roads and, to the extent applicable, public or private
rail or waterway, sufficient to allow the Grantor and its Tenants and
invitees to conduct their respective businesses at the Premises in
accordance with sound commercial practices and the Grantor has not received
notice of termination of such access;
(v) the Grantor has not received written notice of any Taking or the
commencement or pendency of any action or proceeding therefor;
(vi) there has not occurred any Destruction of the Premises or any
portion thereof as a result of any fire or other casualty which has not
previously been repaired or replaced;
(vii) to the best of its knowledge, there are no disputes regarding
boundary lines, location, encroachments or possession of any portions of
the Trust Property and no state of facts exists which could give rise to
any such claim;
(viii) all liquid and solid waste disposal, septic and sewer systems
located on the Premises are in a good and safe condition and repair and in
compliance in all material respects with all Requirements of Law;
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(ix) no portion of the Premises is located in an area identified by
the Federal Emergency Management Agency or any successor thereto as an area
having special flood hazards pursuant to the Flood Insurance Acts or, if
any portion of the Premises is located within such area, the Grantor has
obtained the insurance prescribed in Section 5.04(d) of the Credit
Agreement;
(x) the Premises are assessed for real estate tax purposes as one or
more wholly independent tax lot or lots, separate from any adjoining land
or improvements not constituting a portion of such lot or lots, and no
other land or improvement is assessed and taxed together with the Premises
or any portion thereof; and
(xi) there are no options or rights of first refusal to purchase or
acquire all or any portion of the Trust Property.
SECTION 3.4. Leases. The Grantor represents and warrants that there
are no Leases affecting the Premises as of the date hereof.
SECTION 3.5. Charges. The Grantor represents and warrants that all
Charges imposed upon or assessed against the Trust Property as of the date
hereof have been paid and discharged except to the extent such Charges
constitute Prior Liens.
ARTICLE IV.
CERTAIN COVENANTS OF GRANTOR
SECTION 4.1. Payment. The Grantor shall pay as and when the same shall
become due, whether at its stated maturity, by acceleration or otherwise, each
and every amount payable by the Grantor under the Loan Documents.
SECTION 4.2. Preservation of Partnership Existence. The Grantor shall
preserve and maintain in full force and effect its qualification to transact
business and good standing in the state in which the Trust Property is located.
SECTION 4.3. Title. The Grantor shall:
(i) (A) keep in effect all rights and appurtenances to or that
constitute a part of the Trust Property and (B) protect, preserve and
defend its interest in the Trust Property and title thereto;
(ii) (A) comply with each of the terms, conditions and provisions of
any obligation of the Grantor which is secured by the Trust Property or the
noncompliance with which may result in the imposition of a Lien on the
Trust Property, subject to Sections 6.02(a), (b) and (e) of the Credit
Agreement, (B) forever warrant and defend to the Trustee and Beneficiary
the Lien and security interests created and evidenced hereby and the
validity and priority hereof in any action or proceeding against the claims
of any and all Persons whomsoever affecting or purporting to affect the
Trust Property or any of the
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rights of the Trustee and Beneficiary hereunder and (C) maintain a valid
and enforceable first priority Lien on the Trust Property and, to the
extent any of the Trust Property shall consist of Fixtures, a first
priority security interest in the Trust Property, which first priority Lien
and security interest shall be subject only to Permitted Liens of type
described in Sections 6.02(a), (b), (d), (e), (f), (g) and (m) of the
Credit Agreement and the Prior Liens; and
(iii) immediately upon obtaining knowledge of the pendency of any
proceedings for the eviction of the Grantor from the Trust Property or any
part thereof by paramount title or otherwise questioning the Grantor's
right, title and interest in, to and under the Trust Property as warranted
in this Deed of Trust, or of any condition that could give rise to any such
proceedings, notify the Beneficiary thereof. The Trustee and/or Beneficiary
may participate in such proceedings and the Grantor will deliver or cause
to be delivered to the Trustee and Beneficiary all instruments requested by
the Beneficiary to permit such participation. In any such proceedings, the
Trustee and Beneficiary may be represented by counsel satisfactory to the
Trustee and Beneficiary at the expense of the Grantor. If, upon the
resolution of such proceedings, the Grantor shall suffer a loss of the
Trust Property or any part thereof or interest therein and title insurance
proceeds shall be payable in connection therewith, such proceeds are hereby
assigned to and shall be paid to the Beneficiary to be applied as Net Cash
Proceeds to the payment of the Secured Obligations or otherwise in
accordance with the provisions of Section 2.10 of the Credit Agreement.
SECTION 4.4. Maintenance and Use of Trust Property; Alterations.
(i) Maintenance. The Grantor shall cause the representations and
warranties set forth in Section 3.3(i), (ii), (iii), (iv), (viii), (ix) and
(x) hereof to continue to be true in each and every respect except where
the failure so to be true would not result in a Property Material Adverse
Effect.
(ii) Maintenance of Premises. The Grantor shall not commit or suffer
any waste on the Premises. The Grantor shall, at all times, comply with the
terms of Section 5.03 of the Credit Agreement with respect to the
maintenance and repair of the Premises. The Grantor shall not remove,
demolish or alter the structural character of any Improvement now or
hereafter erected upon all or any portion of the Premises, or permit any
such removal, demolition or material alteration, without the prior written
consent of the Beneficiary.
(iii) Permits. The Grantor shall maintain, or cause to be maintained,
in full force and effect all Permits contemplated by Section 3.3(i) hereof.
Unless and to the extent contested by the Grantor in accordance with the
provisions of Article IX hereof, the Grantor shall comply in all material
respects with all requirements set forth in the Permits and all
Requirements of Law applicable to all or any portion of the Trust Property
or the condition, use or occupancy of all or any portion thereof or any
recorded deed of restriction, declaration or covenant running with the land
or otherwise, now or hereafter in force, except to the extent that a
failure to comply would not result in a Property Material Adverse Effect.
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(iv) Zoning. The Grantor shall not initiate, join in or consent to any
change in the zoning or any other permitted use classification of the
Premises that would have a Property Material Adverse Effect without the
prior written consent of the Beneficiary.
SECTION 4.5. Access to Trust Property, Books and Records; Other
Information. Upon request to the Grantor, the Beneficiary, its agents,
accountants and attorneys shall have full and free access to visit and inspect
the Trust Property in accordance with Section 5.07 of the Credit Agreement.
SECTION 4.6. Limitation on Liens; Transfer Restrictions. Except for
Permitted Liens of type described in Sections 6.02(a), (b), (d), (e), (f), (g)
and (m) of the Credit Agreement, the Grantor may not, without the prior written
consent of the Beneficiary, further mortgage, encumber, hypothecate, sell,
convey or assign all or any part of the Trust Property or suffer or allow any of
the foregoing to occur by operation of law or otherwise.
SECTION 4.7. Insurance. The Grantor shall obtain and keep in full
force and effect the Insurance Policies required by the Credit Agreement
pursuant to the terms thereof.
ARTICLE V.
LEASES
SECTION 5.1. Grantor's Affirmative Covenants with Respect to Leases.
With respect to each Lease, if any, the Grantor shall:
(i) observe and perform in all material respects all the obligations
imposed upon the Landlord under such Lease;
(ii) promptly send copies to the Beneficiary of all notices of default
which the Grantor shall send or receive thereunder; and
(iii) enforce all of the material terms, covenants and conditions
contained in such Lease upon the part of the Tenant thereunder to be
observed or performed.
SECTION 5.2. Grantor's Negative Covenants with Respect to Leases. With
respect to each Lease, the Grantor shall not, without the prior written consent
of the Beneficiary:
(i) receive or collect, or permit the receipt or collection of, any
Rent under such Lease more than one (1) month in advance of the respective
period in respect of which such Rent is to accrue, except:
(A) in connection with the execution and delivery of such Lease
(or of any amendment to such Lease), Rent thereunder may be
collected and received in advance in an amount not in excess
of one (1) month's Rent;
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(B) the amount held by Landlord as a reasonable security deposit
thereunder; and
(C) any amount received and collected for escalation and other
charges in accordance with the terms of such Lease;
(ii) assign, transfer or hypothecate (other than to the Beneficiary
hereunder) any Rent under such Lease whether then due or to accrue in the
future or the interest of the Grantor as Landlord under such Lease;
(iii) enter into any amendment or modification of such Lease if the
same would not comply with Section 6.02(g) of the Credit Agreement;
(iv) terminate (whether by exercising any contractual right of the
Grantor to recapture leased space or otherwise) or permit the termination
of such Lease or accept surrender of all or any portion of the space
demised under such Lease prior to the end of the term thereof or accept
assignment of such Lease to the Grantor unless the same would not cause a
Property Material Adverse Effect; or
(v) waive, excuse, condone or in any manner discharge or release any
Tenants of or from the obligations of such Tenants under their respective
Leases or guarantors of Tenants from obligations under any guarantees of
the Leases except as the same would be done by a Prudent Operator with due
regard for the security afforded the Beneficiary thereby unless the same
would not cause a Property Material Adverse Effect.
ARTICLE VI.
CONCERNING ASSIGNMENT OF LEASES AND RENTS
SECTION 6.1. Present Assignment; License to the Grantor. Section 2.2
of this Deed of Trust constitutes a present, absolute, effective, irrevocable
and complete assignment by Grantor to Trustee and Beneficiary of the Leases and
Rents and the right, subject to applicable law, to collect all sums payable to
Grantor thereunder and apply the same as Beneficiary may, in its sole
discretion, determine to be appropriate (including the payment of reasonable
costs and expenses in connection with the maintenance, operation, improvement,
insurance, taxes and upkeep of the Trust Property), which is not conditioned
upon Beneficiary or Trustee being in possession of the Premises. The Trustee and
Beneficiary hereby grant to the Grantor, however, a license to collect and apply
the Rents and to enforce the obligations of Tenants under the Leases.
Immediately upon the occurrence of and during the continuance of any Event of
Default, the license granted in the immediately preceding sentence shall cease
and terminate, with or without any notice, action or proceeding or the
intervention of a receiver appointed by a court.
SECTION 6.2. Collection of Rents by the Beneficiary.
(i) Upon the occurrence and during the continuance of an Event of Default,
any Rents receivable by the Trustee and Beneficiary hereunder, after payment of
all proper costs and
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expenses as Beneficiary may, in its sole discretion, determine to be appropriate
(including the payment of reasonable costs and expenses in connection with the
maintenance, operation, improvement, insurance, taxes and upkeep of the Trust
Property), shall be applied in accordance with the provisions of Section 11.2 of
this Deed of Trust. The Beneficiary shall be accountable to the Grantor only for
Rents actually received by the Beneficiary. The collection of such Rents and the
application thereof shall not cure or waive any Event of Default or waive,
modify or affect notice of Event of Default or invalidate any act done pursuant
to such notice.
(ii) The Grantor hereby irrevocably authorizes and directs Tenant under
each Lease to rely upon and comply with any and all notices or demands from the
Beneficiary for payment of Rents to the Beneficiary and the Grantor shall have
no claim against Tenant for Rents paid by Tenant to the Beneficiary pursuant to
such notice or demand.
SECTION 6.3. No Release. Neither this Deed of Trust nor any action or
inaction on the part of the Beneficiary or the Trustee shall release the Tenant
under any Lease, any guarantor of any Lease or the Grantor from any of their
respective obligations under such Leases or constitute an assumption of any such
obligation on the part of the Beneficiary. No action or failure to act on the
part of the Grantor shall adversely affect or limit the rights of the Trustee
and Beneficiary under this Deed of Trust or, through this Deed of Trust, under
such Leases. Nothing contained herein shall operate or be construed to (i)
obligate the Beneficiary or the Trustee to perform any of the terms, covenants
or conditions contained in any Lease or otherwise to impose any obligation upon
the Beneficiary or the Trustee with respect to such Lease (including, without
limitation, any obligation arising out of any covenant of quiet enjoyment
contained in such Lease in the event that Tenant under such Lease shall have
been joined as a party defendant in any action by which the estate of such
Tenant shall be terminated) or (ii) place upon the Beneficiary or the Trustee
any responsibility for the operation, control, care, management or repair of the
Premises.
SECTION 6.4. Irrevocable Interest. All rights, powers and privileges
of the Beneficiary and Trustee herein set forth are coupled with an interest and
are irrevocable, subject to the terms and conditions hereof, and the Grantor
shall not take any action under the Leases or otherwise which is inconsistent
with this Deed of Trust or any of the terms hereof and any such action
inconsistent herewith or therewith shall be void.
SECTION 6.5. Amendment to Leases. Each Lease, including, without
limitation, all amendments, modifications, supplements, replacements, extensions
and renewals thereof, shall continue to be subject to the provisions hereof
without the necessity of any further act by any of the parties hereto.
ARTICLE VII.
TAXES AND CERTAIN STATUTORY LIENS
SECTION 7.1. Payment of Charges. Unless and to the extent contested by
the Grantor in accordance with the provisions of the Credit Agreement, the
Grantor shall pay and discharge, or cause to be paid and discharged, from time
to time prior to same becoming ▇▇▇▇▇-
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quent, all Charges. The Grantor shall, upon the Beneficiary's request, deliver
to the Beneficiary receipts evidencing the payment of all such Charges.
SECTION 7.2. Certain Statutory Liens. Unless and to the extent
contested by the Grantor in accordance with the provisions of Sections 6.02(a)
and (b) of the Credit Agreement, the Grantor shall timely pay, or cause to be
paid, all lawful claims and demands of mechanics, materialmen, laborers,
government agencies administering worker's compensation insurance, old age
pensions and social security benefits and all other claims, judgments, demands
or amounts of any nature which, if unpaid, might result in, or permit the
creation of, a Lien on the Trust Property or any part thereof, or which might
result in forfeiture of all or any part of the Trust Property.
SECTION 7.3. Stamp and Other Taxes. Unless and to the extent contested
by the Grantor in accordance with the provisions of Article IX hereof, the
Grantor shall pay any United States documentary stamp taxes, with interest and
fines and penalties, and any mortgage recording taxes, with interest and fines
and penalties, that may hereafter be levied, imposed or assessed under or upon
or by reason hereof or the Secured Obligations or any instrument or transaction
affecting or relating to either thereof and in default thereof the Beneficiary
may advance the same and the amount so advanced shall be payable by the Grantor
to the Beneficiary in accordance with the provisions of Section 11.03 of the
Credit Agreement.
SECTION 7.4. Certain Tax Law Changes. In the event of the passage
after the date hereof of any law deducting from the value of real property, for
the purpose of taxation, amounts in respect of any Lien thereon or changing in
any way the laws for the taxation of mortgages or debts secured by mortgages for
state or local purposes or the manner of the collection of any Charges, and
imposing any Charges, either directly or indirectly, on this Deed of Trust or
any other Loan Document, the Grantor shall promptly pay to the Beneficiary such
amount or amounts as may be necessary from time to time to pay any such Charges.
SECTION 7.5. Proceeds of Tax Claim. In the event that the proceeds of
any tax claim are paid after the Beneficiary has exercised its right to
foreclose the Lien hereof, such proceeds shall be paid to the Beneficiary to
satisfy any deficiency remaining after such foreclosure. The Beneficiary shall
retain its interest in the proceeds of any tax claim during any redemption
period. The amount of any such proceeds in excess of any deficiency claim of the
Beneficiary shall in a reasonably prompt manner be released to the Grantor.
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ARTICLE VIII.
[INTENTIONALLY OMITTED]
ARTICLE IX.
CONTESTING OF PAYMENTS
SECTION 9.1. Contesting of Taxes and Certain Statutory Liens. The
Grantor may at its own expense contest in good faith by appropriate proceedings
the validity, amount or applicability of any Charges as provided in Sections
6.02(a), (b) and (e) of the Credit Agreement.
ARTICLE X.
DESTRUCTION, CONDEMNATION AND RESTORATION
SECTION 10.1. Destruction, Condemnation and Restoration. If there
shall occur any Destruction (in excess of $100,000), the Grantor shall promptly
send to the Beneficiary a written notice setting forth the nature and extent of
such Destruction. The proceeds of any insurance payable in respect of such
Destruction are hereby assigned and shall be paid to the Beneficiary. All such
proceeds shall constitute Net Cash Proceeds under the Credit Agreement and shall
be applied in accordance with the provisions of Section 2.10 of the Credit
Agreement.
SECTION 10.2. Condemnation. If there shall occur any Taking or the
commencement of any proceeding therefor, the Grantor shall immediately notify
the Beneficiary upon receiving notice of such Taking or commencement of
proceedings therefor. The Beneficiary and Trustee may, at their option,
participate in any proceedings or negotiations which might result in any Taking,
and the Grantor shall deliver or cause to be delivered to the Beneficiary and
Trustee all instruments requested by it to permit such participation. The
Beneficiary and Trustee may be represented by counsel satisfactory to it in
connection with any such participation. The Grantor shall pay all reasonable
fees, costs and expenses incurred by the Beneficiary and Trustee in connection
with any Taking and in seeking and obtaining any award or payment on account
thereof. Any proceeds, award or payment in respect of any Taking are hereby
assigned and shall be paid to the Beneficiary. The Grantor shall take all steps
necessary to notify the condemning authority of such assignment. All such
proceeds, net of all reasonable costs and expenses incurred in connection with
the collection of such awards, shall constitute Net Cash Proceeds under the
Credit Agreement and shall be applied in accordance with the provisions of
Section 2.10 of the Credit Agreement.
SECTION 10.3. Restoration. In the event the Grantor is permitted or
required to perform any Restoration in accordance with the provisions of Section
2.10 of the Credit Agreement, the proceeds of any award payable in respect of a
Destruction or Taking, net of all reasonable costs and expenses incurred in
connection with the collection of such awards, shall constitute Net Cash
Proceeds and the Beneficiary shall release such proceeds to the Grantor in
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compliance with the applicable provisions of Section 2.10 of the Credit
Agreement and Grantor shall complete the Restoration in accordance with the
provisions of Section 2.10 of the Credit Agreement. In the event that there
shall be any surplus after application of such proceeds to Restoration of the
Improvements, such surplus shall be applied as Net Cash Proceeds in accordance
with Section 2.10(f)(iii) of the Credit Agreement.
ARTICLE XI.
EVENTS OF DEFAULT AND REMEDIES
SECTION 11.1. Events of Default. It shall be an Event of Default
hereunder if there shall have occurred and be continuing an Event of Default
under the Credit Agreement.
SECTION 11.2. Remedies in Case of an Event of Default. If any Event of
Default shall have occurred and be continuing, the Beneficiary may at its
option, in addition to any other action permitted under this Deed of Trust or
the Credit Agreement or by law, statute or in equity, take one or more of the
following actions to the fullest extent permitted by local law:
(i) by written notice to the Grantor, declare the entire unpaid amount
of the Secured Obligations to be due and payable immediately;
(ii) personally, or by its agents or attorneys, and where applicable
law so requires, with the Trustee, (A) enter into and upon and take
possession of all or any part of the Premises together with the books,
records and accounts of the Grantor relating thereto and, exclude the
Grantor, its agents and servants wholly therefrom, (B) use, operate, manage
and control the Premises and conduct the business thereof, (C) maintain and
restore the Premises, (D) make all necessary or proper repairs, renewals
and replacements and such useful Alterations thereto and thereon as the
Beneficiary may deem advisable, (E) manage, lease and operate the Premises
and carry on the business thereof and exercise all rights and powers of the
Grantor with respect thereto either in the name of the Grantor or otherwise
or (F) collect and receive all Rents. The Beneficiary and the Trustee shall
be under no liability for or by reason of any such taking of possession,
entry, removal or holding, operation or management except that any amounts
so received by the Beneficiary shall be applied in accordance with the
provisions of Section 9.03 of the Credit Agreement;
(iii) with or without entry, personally or by its agents or attorneys,
or by the Trustee (as so required by applicable law), (A) sell the Trust
Property and all estate, right, title and interest, claim and demand
therein at one or more sales in one or more parcels, in accordance with the
provisions of Section 11.3 or (B) institute and prosecute proceedings for
the complete or partial foreclosure of the Lien and security interests
created and evidenced hereby; or
(iv) with or without Trustee (as so required by applicable law), take
such steps to protect and enforce its rights whether by action, suit or
proceeding at law or in equity for the specific performance of any
covenant, condition or agreement in the Credit
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Agreement and the other Loan Documents, or in aid of the execution of any
power granted in this Deed of Trust, or for any foreclosure hereunder, or
for the enforcement of any other appropriate legal or equitable remedy or
otherwise as the Beneficiary shall elect.
SECTION 11.3. Sale of Trust Property if Event of Default Occurs;
Proceeds of Sale.
(i) If any Event of Default shall have occurred and be continuing, the
Beneficiary and/or Trustee (as so required by applicable law) may institute
an action to foreclose this Deed of Trust or take such other action as may
be permitted and available to the Beneficiary and Trustee at law or in
equity for the enforcement of the Credit Agreement and realization on the
Trust Property and proceeds thereon through power of sale (if then
available under applicable law) or to final judgment and execution thereof
for the Secured Obligations, and in furtherance thereof the Beneficiary
and/or Trustee (as so required by applicable law) may sell the Trust
Property at one or more sales, as an entirety or in parcels, at such time
and place, upon such terms and after such notice thereof as may be required
or permitted by law or statute or in equity. The Beneficiary and/or Trustee
(as so required by applicable law) may execute and deliver to the purchaser
at such sale a conveyance of the Trust Property in fee simple and an
assignment or conveyance of all the Grantor's Interest in the Leases and
the Trust Property, each of which conveyances and assignments shall contain
recitals as to the Event of Default upon which the execution of the power
of sale herein granted depends, and the Grantor hereby constitutes and
appoints the Beneficiary and/or Trustee (as so required by applicable law)
the true and lawful attorney(s) in fact of the Grantor to make any such
recitals, sale, assignment and conveyance, and all of the acts of the
Beneficiary and/or Trustee as such attorney(s) in fact are hereby ratified
and confirmed. The Grantor agrees that such recitals shall be binding and
conclusive upon the Grantor and that any assignment or conveyance to be
made by the Beneficiary or Trustee shall divest the Grantor of all right,
title, interest, equity and right of redemption, including any statutory
redemption, in and to the Trust Property. The power and agency hereby
granted are coupled with an interest and are irrevocable by death or
dissolution, or otherwise, and are in addition to any and all other
remedies which the Beneficiary and Trustee may have hereunder, at law or in
equity. So long as the Secured Obligations, or any part thereof, remain
unpaid, the Grantor agrees that possession of the Trust Property by the
Grantor, or any person claiming under the Grantor, shall be as tenant, and,
in case of a sale under power or upon foreclosure as provided in this Deed
of Trust, the Grantor and any person in possession under the Grantor, as to
whose interest such sale was not made subject, shall, at the option of the
purchaser at such sale, then become and be tenants holding over, and shall
forthwith deliver possession to such purchaser, or be summarily
dispossessed in accordance with the laws applicable to tenants holding
over. In case of any sale under this Deed of Trust by virtue of the
exercise of the powers herein granted, or pursuant to any order in any
judicial proceeding or otherwise, the Trust Property may be sold as an
entirety or in separate parcels in such manner or order as the Beneficiary
or Trustee, as applicable, in their sole discretion, may elect. One or more
exercises of powers herein granted shall not extinguish or exhaust such
powers, until the entire Trust Property is sold or all amounts secured
hereby are paid in full.
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(ii) In the event of any sale made under or by virtue of this Article
XI, the entire principal of, and interest in respect of the Secured
Obligations, if not previously due and payable, shall, at the option of the
Beneficiary, immediately become due and payable, anything in this Deed of
Trust to the contrary notwithstanding.
(iii) The proceeds of any sale made under or by virtue of this Article
XI, together with any other sums which then may be held by the Beneficiary
under this Deed of Trust, whether under the provisions of this Article XI
or otherwise, shall be applied in accordance with the provisions of Section
9.03 of the Credit Agreement, unless otherwise required by applicable law.
(iv) The Beneficiary (on behalf of any Secured Party or on its own
behalf) or any Lender or any of their respective Affiliates may bid for and
acquire the Trust Property or any part thereof at any sale made under or by
virtue of this Article XI and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting against the purchase price
the unpaid amounts (whether or not then due) owing to the Beneficiary, or
such Lender, in respect of the Secured Obligations, after first paying any
obligations having priority under Virginia Code Annotated Section 55-59.4.
(v) The Beneficiary and/or Trustee (as so required by applicable law)
may adjourn from time to time any sale by it to be made under or by virtue
hereof by announcement at the time and place appointed for such sale or for
such adjourned sale or sales, and, the Beneficiary and/or Trustee (as so
required by applicable law), without further notice or publication, except
as may be required by applicable law, may make such sale at the time and
place to which the same shall be so adjourned.
(vi) If the Premises is comprised of more than one parcel of land, the
Beneficiary and/or Trustee (as so required by applicable law) may take any
of the actions authorized by this Section 11.3 in respect of any or a
number of individual parcels.
SECTION 11.4. Additional Remedies in Case of an Event of Default.
(i) The Beneficiary shall be entitled to recover judgment as aforesaid
either before, after or during the pendency of any proceedings for the
enforcement of the provisions hereof, and the right of the Beneficiary to
recover such judgment shall not be affected by any entry or sale hereunder,
or by the exercise of any other right, power or remedy for the enforcement
of the provisions hereof, or the foreclosure of, or absolute conveyance
pursuant to, this Deed of Trust. In case of proceedings against the Grantor
in insolvency or bankruptcy or any proceedings for its reorganization or
involving the liquidation of its assets, the Beneficiary shall be entitled
to prove the whole amount of principal and interest and other payments,
charges and costs due in respect of the Secured Obligations to the full
amount thereof without deducting therefrom any proceeds obtained from the
sale of the whole or any part of the Trust Property; provided, however,
that in no case shall the Beneficiary receive a greater amount than the
aggregate of such principal, interest and such other payments, charges and
costs (with interest at the Default Rate) from the proceeds of the sale of
the Trust Property and the distribution from the estate of the Grantor.
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(ii) Any recovery of any judgment by the Beneficiary and any levy of
any execution under any judgment upon the Trust Property shall not affect
in any manner or to any extent the Lien and security interests created and
evidenced hereby upon the Trust Property or any part thereof, or any
conveyances, powers, rights and remedies of the Beneficiary hereunder, but
such conveyances, powers, rights and remedies shall continue unimpaired as
before.
(iii) Any monies collected by the Beneficiary under this Section 11.4
shall be applied in accordance with the provisions of Section 11.3(iii).
SECTION 11.5. Legal Proceedings After an Event of Default.
(i) After the occurrence of any Event of Default and immediately upon
the commencement of any action, suit or legal proceedings to obtain
judgment for the Secured Obligations or any part thereof, or of any
proceedings to foreclose the Lien and security interest created and
evidenced hereby or otherwise enforce the provisions hereof or of any other
proceedings in aid of the enforcement hereof, the Grantor shall enter its
voluntary appearance in such action, suit or proceeding.
(ii) Upon the occurrence and during the continuance of an Event of
Default, the Beneficiary and/or the Trustee shall be entitled forthwith as
a matter of right, concurrently or independently of any other right or
remedy hereunder either before or after the Beneficiary declaring the
Secured Obligations or any part thereof to be due and payable, to the
appointment of a receiver without giving notice to any party and without
regard to the adequacy or inadequacy of any security for the Secured
Obligations or the solvency or insolvency of any person or entity then
legally or equitably liable for the Secured Obligations or any portion
thereof. The Grantor hereby consents to the appointment of such receiver.
Notwithstanding the appointment of any receiver, the Beneficiary shall be
entitled as pledgee to the possession and control of any cash, deposits or
instruments at the time held by or payable or deliverable under the terms
of the Credit Agreement to the Beneficiary.
(iii) The Grantor shall not (A) at any time insist upon, or plead, or
in any manner whatsoever claim or take any benefit or advantage of any stay
or extension or moratorium law, any exemption from execution or sale of the
Trust Property or any part thereof, wherever enacted, now or at any time
hereafter in force, which may affect the covenants and terms of performance
hereof, (B) claim, take or insist on any benefit or advantage of any law
now or hereafter in force providing for the valuation or appraisal of the
Trust Property, or any part thereof, prior to any sale or sales of the
Trust Property which may be made pursuant to this Deed of Trust, or
pursuant to any decree, judgment or order of any court of competent
jurisdiction or (C) after any such sale or sales, claim or exercise any
right under any statute heretofore or hereafter enacted to redeem the
property so sold or any part thereof. To the fullest extent permitted by
applicable law, the Grantor hereby expressly (A) waives all benefit or
advantage of any such law or laws, including, without limitation, any
statute of limitations applicable to this Deed of Trust, (B) waives any and
all rights to trial by jury in any action or proceeding related to the
enforcement hereof, (C) waives any objection which it may now or hereafter
have to the laying of venue of
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any action, suit or proceeding brought in connection with this Deed of
Trust and further waives and agrees not to plead that any such action, suit
or proceeding brought in any such court has been brought in an inconvenient
forum and (D) covenants not to hinder, delay or impede the execution of any
power granted or delegated to the Beneficiary and Trustee by this Deed of
Trust but to suffer and permit the execution of every such power as though
no such law or laws had been made or enacted. The Beneficiary and Trustee
shall not be liable for any incorrect or improper payment made pursuant to
this Article XI in the absence of gross negligence or willful misconduct.
SECTION 11.6. Remedies Not Exclusive. No remedy conferred upon or
reserved to the Beneficiary and/or Trustee by this Deed of Trust is intended to
be exclusive of any other remedy or remedies, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given under
this Deed of Trust or now or hereafter existing at law or in equity. Any delay
or omission of the Beneficiary or Trustee to exercise any right or power
accruing on any Event of Default shall not impair any such right or power and
shall not be construed to be a waiver of or acquiescence in any such Event of
Default. Every power and remedy given by this Deed of Trust may be exercised
from time to time concurrently or independently, when and as often as may be
deemed expedient by the Beneficiary in such order and manner as the Beneficiary,
in its sole discretion, may elect. If the Beneficiary accepts any monies
required to be paid by the Grantor under this Deed of Trust after the same
become due, such acceptance shall not constitute a waiver of the right either to
require prompt payment, when due, of all other sums secured by this Deed of
Trust or to declare an Event of Default with regard to subsequent defaults. If
the Beneficiary accepts any monies required to be paid by the Grantor under this
Deed of Trust in an amount less than the sum then due, such acceptance shall be
deemed an acceptance on account only and on the condition that it shall not
constitute a waiver of the obligation of the Grantor to pay the entire sum then
due, and the Grantor's failure to pay the entire sum then due shall be and
continue to be a default hereunder notwithstanding acceptance of such amount on
account.
ARTICLE XII.
SECURITY AGREEMENT AND FIXTURE FILING
SECTION 12.1. Security Agreement. To the extent that the Trust
Property includes personal property or items of personal property which are or
are to become fixtures under applicable law, this Deed of Trust shall also be
construed as a security agreement under the UCC; and, upon and during the
continuance of an Event of Default, the Beneficiary shall be entitled with
respect to such personal property to exercise all remedies hereunder, all
remedies available under the UCC with respect to fixtures and all other remedies
available under applicable law. Without limiting the foregoing, such personal
property may, at the Beneficiary's option, (i) be sold hereunder together with
any sale of any portion of the Trust Property or otherwise, (ii) be sold
pursuant to the UCC, or (iii) be dealt with by the Beneficiary in any other
manner permitted under applicable law. The Beneficiary may require the Grantor
to assemble such personal property and make it available to the Beneficiary at a
place to be designated by the Beneficiary. The Grantor acknowledges and agrees
that a disposition of the personal property in accor-
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dance with the Beneficiary's rights and remedies in respect to the Trust
Property as heretofore provided is a commercially reasonable disposition
thereof; provided, however, that the Beneficiary shall give the Grantor not less
than ten (10) days' prior notice of the time and place of any intended
disposition.
SECTION 12.2. Fixture Filing. To the extent that the Trust Property
includes items of personal property which are or are to become fixtures under
applicable law, and to the fullest extent permitted under applicable law, the
filing hereof in the real estate records of the city or county in which such
Trust Property is located shall also operate from the time of filing as a
fixture filing with respect to such Trust Property, and the following
information is applicable for the purpose of such fixture filing, to wit:
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Name and Address of the debtor: Name and Address of the secured
party:
The Grantor having the address described in The Beneficiary having the address
the Preamble hereof. described in the Preamble hereof.
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This Financing Statement covers the following types or items of property:
The Trust Property.
This instrument covers goods or items of personal property which are or are to
become fixtures upon the property (which is described in Schedule A hereto).
The name of the record owner of the property on which such fixtures are or are
to be located is the Grantor.
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In addition, Grantor authorizes the Beneficiary to file appropriate financing
and continuation statements under the UCC in effect in the jurisdiction in which
the Trust Property is located as may be required by law in order to establish,
preserve and protect the liens and security interests intended to be granted to
the Beneficiary pursuant to this Deed of Trust in the Trust Property.
ARTICLE XIII.
FURTHER ASSURANCES
SECTION 13.1. Recording Documentation To Assure Security. The Grantor
shall, forthwith after the execution and delivery hereof and thereafter, from
time to time, cause this Deed of Trust and any financing statement, continuation
statement or similar instrument relating to any thereof or to any property
intended to be subject to the Lien hereof to be filed, registered and recorded
in such manner and in such places as may be required by any present or future
law in order to publish notice of and fully to protect the validity and priority
thereof or the Lien hereof purported to be created upon the Trust Property and
the interest and rights of the Beneficiary and Trustee therein. The Grantor
shall pay or cause to be paid all taxes and fees incident to such filing,
registration and recording, and all expenses incident to the preparation,
execution and acknowledgment thereof, and of any instrument of further
assurance, and all Federal or state
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stamp taxes or other taxes, duties and charges arising out of or in connection
with the execution and delivery of such instruments.
SECTION 13.2. Further Acts. The Grantor shall, at the sole cost and
expense of the Grantor, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, mortgages, assignments, notices of assignment,
transfers, financing statements, continuation statements, instruments and
assurances as the Beneficiary or Trustee shall from time to time request, which
may be necessary in the judgment of the Beneficiary or Trustee from time to time
to assure, perfect, convey, assign, mortgage, transfer and confirm unto the
Beneficiary and Trustee, the property and rights hereby conveyed or assigned or
which the Grantor may be or may hereafter become bound to convey or assign to
the Beneficiary and Trustee or for carrying out the intention or facilitating
the performance of the terms hereof or the filing, registering or recording
hereof, provided that such requirements shall not materially adversely affect
this Deed of Trust. Without limiting the generality of the foregoing, in the
event that the Beneficiary or Trustee desires to exercise any remedies,
consensual rights or attorney-in-fact powers set forth in this Deed of Trust and
determines it necessary to obtain any approvals or consents of any Governmental
Authority or any other Person therefor, then, upon the reasonable request of the
Beneficiary or Trustee, the Grantor agrees to use its best efforts to assist and
aid the Beneficiary and/or Trustee to obtain as soon as practicable any
necessary approvals or consents for the exercise of any such remedies, rights
and powers. In the event the Grantor shall fail after demand to execute any
instrument or take any action required to be executed or taken by the Grantor
under this Section 13.2, the Beneficiary and/or Trustee may execute or take the
same as the attorney-in-fact for the Grantor, such power of attorney being
coupled with an interest and is irrevocable.
SECTION 13.3. Additional Security. Without notice to or consent of the
Grantor and without impairment of the Lien and rights created by this Deed of
Trust, the Beneficiary and/or Trustee may accept (but the Grantor shall not be
obligated to furnish) from the Grantor or from any other Person, additional
security for the Secured Obligations. Neither the giving thereof nor the
acceptance of any such additional security shall prevent the Beneficiary or
Trustee from resorting, first, to such additional security, and, second, to the
security created by this Deed of Trust without affecting the Beneficiary's Lien
and the Beneficiary's and Trustee's rights under this Deed of Trust.
ARTICLE XIV.
MISCELLANEOUS
SECTION 14.1. Covenants To Run with the Land. All of the grants,
covenants, terms, provisions and conditions in this Deed of Trust shall run with
the Land and shall apply to, and bind the successors and assigns of, the
Grantor. If there shall be more than one grantor with respect to the Trust
Property, the covenants and warranties hereof shall be joint and several.
SECTION 14.2. No Merger. The rights and estate created by this Deed of
Trust shall not, under any circumstances, be held to have merged into any other
estate or interest now
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owned or hereafter acquired by the Beneficiary unless the Beneficiary shall have
consented to such merger in writing.
SECTION 14.3. Concerning Beneficiary.
(i) The Beneficiary has been appointed as Collateral Agent pursuant to the
Credit Agreement. The actions of the Beneficiary hereunder are subject to the
provisions of the Credit Agreement. The Beneficiary shall have the right
hereunder to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking action (including,
without limitation, the release or substitution of the Trust Property), in
accordance with this Deed of Trust and the Credit Agreement. The Beneficiary may
employ agents and attorneys-in-fact in connection herewith and shall not be
liable for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith. The Beneficiary may resign and a successor
Beneficiary may be appointed in the manner provided in the Credit Agreement.
Upon the acceptance of any appointment as the Beneficiary by a successor
Beneficiary, that successor Beneficiary shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Beneficiary under this Deed of Trust, and the retiring Beneficiary shall
thereupon be discharged from its duties and obligations under this Deed of
Trust. After any retiring Beneficiary's resignation, the provisions hereof shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Deed of Trust while it was the Beneficiary.
(ii) The Beneficiary shall be deemed to have exercised reasonable care in
the custody and preservation of the Trust Property in its possession if such
Trust Property is accorded treatment substantially equivalent to that which the
Beneficiary, in its individual capacity, accords its own property consisting of
similar instruments or interests, it being understood that neither the
Beneficiary nor any of the Secured Parties shall have responsibility for taking
any necessary steps to preserve rights against any Person with respect to any
Trust Property.
(iii) The Beneficiary shall be entitled to rely upon any written notice,
statement, certificate, order or other document or any telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person, and, with respect to all matters pertaining to this Deed
of Trust and its duties hereunder, upon advice of counsel selected by it.
(iv) With respect to any of its rights and obligations as a Lender, the
Beneficiary shall have and may exercise the same rights and powers hereunder.
The term "Lenders," "Lender" or any similar terms shall, unless the context
clearly otherwise indicates, include the Beneficiary in its individual capacity
as a Lender. The Beneficiary may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with the
Grantor or any Affiliate of the Grantor to the same extent as if the Beneficiary
were not acting as Collateral Agent.
(v) If any portion of the Trust Property also constitutes collateral
granted to the Beneficiary under any other deed of trust, mortgage, security
agreement, pledge or instrument of any type, in the event of any conflict
between the provisions hereof and the provisions of such other deed of trust,
mortgage, security agreement, pledge or instrument of any type in respect of
such collateral, the Beneficiary, in its sole discretion, shall select which
provision or provisions shall control.
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SECTION 14.4. Beneficiary May Perform; Beneficiary Appointed
Attorney-in-Fact. If the Grantor shall fail to perform any covenants contained
in this Deed of Trust (including, without limitation, the Grantor's covenants to
(i) pay the premiums in respect of all required insurance policies hereunder or
under the Credit Agreement, (ii) pay Charges, (iii) make repairs, (iv) discharge
Liens or (v) pay or perform any obligations of the Grantor under any Trust
Property) or if any warranty on the part of the Grantor contained herein shall
be breached, the Beneficiary may (but shall not be obligated to), after notice
to Grantor, do the same or cause it to be done or remedy any such breach, and
may expend funds for such purpose; provided, however, that the Beneficiary shall
in no event be bound to inquire into the validity of any tax, lien, imposition
or other obligation which the Grantor fails to pay or perform as and when
required hereby and which the Grantor does not contest in accordance with the
provisions of Article IX hereof. Any and all amounts so expended by the
Beneficiary shall be paid by the Grantor in accordance with the provisions of
Section 11.03 of the Credit Agreement. Neither the provisions of this Section
14.4 nor any action taken by the Beneficiary pursuant to the provisions of this
Section 14.4 shall prevent any such failure to observe any covenant contained in
this Deed of Trust nor any breach of warranty from constituting an Event of
Default. The Grantor hereby appoints the Beneficiary and Trustee its
attorneys-in-fact, with full authority in the place and stead of the Grantor and
in the name of the Grantor, or otherwise, from time to time in the Beneficiary's
and Trustee's discretion to take any action and to execute any instrument
consistent with the terms hereof and the other Loan Documents which the
Beneficiary and Trustee may deem necessary or advisable to accomplish the
purposes hereof. The foregoing grant of authority is a power of attorney coupled
with an interest and such appointment shall be irrevocable for the term hereof.
The Grantor hereby ratifies all that such attorney shall lawfully do or cause to
be done by virtue hereof.
SECTION 14.5. Continuing Security Interest; Assignment. This Deed of
Trust shall create a continuing Lien on and security interest in the Trust
Property and shall (i) be binding upon the Grantor, its successors and assigns
and (ii) inure, together with the rights and remedies of the Beneficiary and
Trustee hereunder, to the benefit of the Beneficiary for the benefit of the
Secured Parties and each of their respective successors, transferees and
assigns. No other Persons (including, without limitation, any other creditor of
any Loan Party) shall have any interest herein or any right or benefit with
respect hereto. Without limiting the generality of the foregoing clause (ii),
any Lender may assign or otherwise transfer any indebtedness held by it secured
by this Deed of Trust to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender,
herein or otherwise, subject, however, to the provisions of the Credit
Agreement.
SECTION 14.6. Termination; Release. When all the Secured Obligations
(other than the Secured Obligations described in the last sentence of Section
11.05 of the Credit Agreement) have been paid in full and the Commitments of the
Lenders to make any Loan or to issue any Letter of Credit under the Credit
Agreement shall have expired or been sooner terminated, this Deed of Trust shall
terminate. Upon termination hereof or any release of the Trust Property or any
portion thereof in accordance with the provisions of the Credit Agreement, the
Beneficiary and/or Trustee (as so required by applicable law) shall, upon the
request and at the sole cost and expense of the Grantor, forthwith assign,
transfer and deliver to the Grantor, against receipt and without recourse to or
warranty by the Beneficiary or Trustee, such of the Trust Property to be
released (in the case of a release) as may be in possession of the Beneficiary
or Trustee
-27-
and as shall not have been sold or otherwise applied pursuant to the terms
hereof, and, with respect to any other Trust Property, proper documents and
instruments (including UCC-3 termination statements or releases) acknowledging
the termination hereof or the release of such Trust Property, as the case may
be.
SECTION 14.7. Modification in Writing. No amendment, modification,
supplement, termination or waiver of or to any provision hereof, nor consent to
any departure by the Grantor therefrom, shall be effective unless the same shall
be done in accordance with the terms of the Credit Agreement and unless in
writing and signed by the Beneficiary and, if required by applicable law, the
Trustee. Any amendment, modification or supplement of or to any provision
hereof, any waiver of any provision hereof and any consent to any departure by
the Grantor from the terms of any provision hereof shall be effective only in
the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Deed of Trust or any other
Loan Document, no notice to or demand on the Grantor in any case shall entitle
the Grantor to any other or further notice or demand in similar or other
circumstances.
SECTION 14.8. Notices. Unless otherwise provided herein or in the
Credit Agreement, any notice or other communication herein required or permitted
to be given shall be given in the manner and become effective as set forth in
the Credit Agreement, if to the Grantor or the Beneficiary, addressed to it at
the address set forth in the Credit Agreement, or in each case at such other
address as shall be designated by such party in a written notice to the other
party complying as to delivery with the terms of this Section 14.8.
SECTION 14.9. GOVERNING LAW; SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
THIS DEED OF TRUST SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR ITEM OR TYPE OF TRUST PROPERTY ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. GRANTOR AGREES
THAT SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO GRANTOR AT ITS ADDRESS SET FORTH IN THE CREDIT
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE BENEFICIARY SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO. IF ANY AGENT APPOINTED BY GRANTOR REFUSES TO ACCEPT
SERVICE, GRANTOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE
SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF BENEFICIARY TO BRING
PROCEEDINGS AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. THE GRANTOR
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS DEED OF TRUST OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
-28-
SECTION 14.10. Severability of Provisions. Any provision hereof 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 hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 14.11. Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state or Federal,
that are applicable to the transaction of which this Deed of Trust is a part.
All agreements between the Grantor and the Beneficiary whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever shall the amount paid or agreed to be
paid by the Grantor for the use, forbearance or detention of the money to be
loaned under the Credit Agreement or any other Loan Document, or for the payment
or performance of any covenant or obligation contained herein or in the Credit
Agreement or any other Loan Document, exceed the maximum amount permissible
under applicable Federal or state usury laws. If under any circumstances
whatsoever fulfillment of any such provision, at the time performance of such
provision shall be due, shall involve exceeding the limit of validity prescribed
by law, then the obligation to be fulfilled shall be reduced to the limit of
such validity. If under any circumstances the Grantor shall have paid an amount
deemed interest by applicable law, which would exceed the highest lawful rate,
such amount that would be excessive interest under applicable usury laws shall
be applied to the reduction of the principal amount owing in respect of the
Secured Obligations and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal and any other amounts due
hereunder, the excess shall be refunded to the Grantor. All sums paid or agreed
to be paid for the use, forbearance or detention of the principal under any
extension of credit by the Beneficiary shall, to the fullest extent permitted by
applicable law, and to the extent necessary to preclude exceeding the limit of
validity prescribed by law, be amortized, prorated, allocated and spread from
the date hereof until payment in full of the Secured Obligations so that the
actual rate of interest on account of such principal amounts is uniform
throughout the term hereof.
SECTION 14.12. Business Days. In the event any time period or any date
provided in this Deed of Trust ends or falls on a day other than a Business Day,
then such time period shall be deemed to end and such date shall be deemed to
fall on the next succeeding Business Day, and performance herein may be made on
such Business Day, with the same force and effect as if made on such other day.
SECTION 14.13. Relationship. The relationship of the Beneficiary to
the Grantor hereunder is strictly and solely that of lender and borrower and
beneficiary and grantor and nothing contained in the Credit Agreement, this Deed
of Trust or any other document or instrument now existing and delivered in
connection therewith or otherwise in connection with the Secured Obligations is
intended to create, or shall in any event or under any circumstance be construed
as creating a partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between the Beneficiary and the
Grantor other than as lender and borrower and beneficiary and grantor.
SECTION 14.14. No Credit for Payment of Taxes or Impositions. The
Grantor shall not be entitled to any credit against the principal, premium, if
any, or interest payable under the Credit Agreement, and the Grantor shall not
be entitled to any credit against any other sums
-29-
which may become payable under the terms thereof or hereof, by reason of the
payment of any Charge on the Trust Property or any part thereof.
SECTION 14.15. No Claims Against the Beneficiary. Nothing contained in
this Deed of Trust shall constitute any consent or request by the Beneficiary,
express or implied, for the performance of any labor or services or the
furnishing of any materials or other property in respect of the Premises or any
part thereof, nor as giving the Grantor any right, power or authority to
contract for or permit the performance of any labor or services or the
furnishing of any materials or other property in such fashion as would permit
the making of any claim against the Beneficiary in respect thereof or any claim
that any Lien based on the performance of such labor or services or the
furnishing of any such materials or other property is prior to the Lien hereof.
SECTION 14.16. Last Dollars Secured. This Deed of Trust secures only a
portion of the Indebtedness owing or which may become owing by the Grantor. The
parties agree that any payments or repayments of such Indebtedness by the
Grantor shall be deemed to be applied first to the portion of the Indebtedness
that is not secured hereby, it being the parties' intent that the portion of the
Indebtedness last remaining unpaid shall be secured thereby.
SECTION 14.17. Trustee's Powers and Liabilities . (i) Trustee, by
acceptance hereof, covenants faithfully to perform and fulfill the trusts herein
created, being liable, however, only for gross negligence, bad faith or willful
misconduct, and hereby waives any statutory fee and agrees to accept reasonable
compensation, in lieu thereof, for any services rendered by it in accordance
with the terms hereof. All authorities, powers and discretions given in this
Deed of Trust to Trustee and/or Beneficiary (if permitted by applicable law) may
be exercised by either, without the other, with the same effect as if exercised
jointly.
(ii) Trustee may resign at any time upon giving thirty (30) days'
notice in writing to Grantor and to Beneficiary.
(iii) Beneficiary may remove Trustee at any time or from time to time
and select a successor trustee. In the event of the death, removal, resignation,
refusal to act, inability to act or absence of Trustee from the state in which
the Premises are located, or in its sole discretion for any reason whatsoever,
Beneficiary may, upon notice to the Grantor and without specifying the reason
therefor and without applying to any court, select and appoint a successor
trustee, and all powers, rights, duties and authority of the former trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of his
duties unless required by Beneficiary. Such substitute trustee shall be
appointed by written instrument duly recorded in the city or county where the
Land is located. Grantor hereby ratifies and confirms any and all acts that the
herein named Trustee, or his successor or successors in this trust, shall do
lawfully by virtue hereof. Grantor hereby agrees, on behalf of itself and its
heirs, executors, administrators and assigns, that the recitals contained in any
deed or deeds executed in due form by any Trustee or substitute trustee, acting
under the provisions of this instrument, shall be prima facie evidence of the
facts recited, and that it shall not be necessary to prove in any court,
otherwise than by such recitals, the existence of the facts essential to
authorize the execution and delivery of such deed or deeds and the passing of
title thereby.
-30-
(iv) Trustee shall not be required to see that this Deed of Trust is
recorded, nor liable for its validity or its priority as a first deed of trust,
or otherwise, nor shall Trustee be answerable or responsible for performance or
observance of the covenants and agreements imposed upon Grantor or Beneficiary
by this Deed of Trust or any other agreement. Trustee, as well as Beneficiary,
shall have authority in their respective discretion to employ agents and
attorneys in the execution of this trust and to protect the interest of the
Beneficiary hereunder, and to the fullest extent permitted by law they shall be
compensated and all expenses relating to the employment of such agents and/or
attorneys, including expenses of litigation, shall be paid out of the proceeds
of the sale of the Trust Property conveyed hereby should a sale be had, but if
no such sale be had, all sums so paid out shall be recoverable to the fullest
extent permitted by law by all remedies at law or in equity.
(v) At any time, or from time to time, without liability therefor and
with ten (10) days' prior written notice to Grantor, upon written request of
Beneficiary and without affecting the effect of this Deed of Trust upon the
remainder of the Trust Property, Trustee may (A) reconvey any part of the Trust
Property, (B) consent in writing to the making of any map or plat thereof, so
long as Grantor has consented thereto, (C) join in granting any easement
thereon, so long as Grantor has consented thereto, or (D) join in any extension
agreement or any agreement subordinating the lien or charge hereof.
SECTION 14.18. Local Law Statutory Provisions. This Deed of Trust is
made under and pursuant to the provisions of [ ], as amended,
--------------------
except as herein otherwise restricted, expanded or changed, including, without
limitation, the following rights, duties and obligations described in short
form:
(i) All exemptions are hereby waived.
(ii) Subject to all (call) on default.
(iii) Renewal, extension or reinstatement permitted.
(iv) Substitution of trustees collectively or any of them individually
by the Beneficiary is permitted for any reason or no reason
whatsoever, and any number of times without exhaustion of the
right to do so.
(v) Any trustee may act..
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-31-
IN WITNESS WHEREOF, the Grantor has caused this Deed of Trust to be
duly executed and delivered under seal the day and year first above written.
Norcraft Companies, L.P
By: Norcraft GP, L.L.C., its General Partner
By:
--------------------------------
Print Name:
------------------------
Title:
----------------------
S-1
ACKNOWLEDGMENT
STATE OF
------------------
COUNTY OF
------------------
The foregoing instrument was acknowledged before me this day of October,
--
2003 by , as of Norcraft GP, L.L.C.,
------------------ ------------------
general partner of Norcraft Companies, L.P., on behalf of the partnership.
My commission expires:
---------------------------------------
----------------------------------------------------
Name of Notary Public:
-----------------------------
(NOTARIAL SEAL)
Schedule A- Legal Description
Description of Property
Schedule B
Each of the liens and other encumbrances excepted as being prior to the Lien
hereof as set forth in Schedule B to the marked Pro Forma Policy issued by
Chicago Title Insurance Company, dated as of the date hereof and delivered to
Collateral Agent on the date hereof, bearing Chicago Title Insurance Company
reference number [ ] relating to the real property described in
----------------
Schedule A attached hereto.
EXHIBIT H-1
[Form of]
TERM NOTE
$ New York, New York
----------------
-----------------, ----
FOR VALUE RECEIVED, the undersigned, NORCRAFT COMPANIES, L.P., a Delaware
limited partnership ("Borrower"), hereby promises to pay to the order of
(the "Lender") on the Term Loan Maturity Date (as defined in
-----------------
the Credit Agreement referred to below) in lawful money of the United States and
in immediately available funds, the principal amount of DOLLARS
------------
($ ), or, if less, the aggregate unpaid principal amount of all Term
------------
Loans of the Lender outstanding under the Credit Agreement referred to below,
which sum shall be due and payable in such amounts and on such dates as are set
forth in the Credit Agreement. Borrower further agrees to pay interest in like
money at such office specified in Section 2.14 of the Credit Agreement on the
unpaid principal amount hereof from time to time from the date hereof at the
rates, and on the dates, specified in Section 2.06 of such Credit Agreement.
The holder of this Note may endorse and attach a schedule to reflect the
date, Type and amount of each Term Loan of the Lender outstanding under the
Credit Agreement, the date and amount of each payment or prepayment of principal
hereof, and the date of each interest rate conversion or continuation pursuant
to Section 2.08 of the Credit Agreement and the principal amount subject
thereto; provided that the failure of the Lender to make any such recordation
(or any error in such recordation) shall not affect the obligations of Borrower
hereunder or under the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement dated as
of October 21, 2003 (the "Credit Agreement"), among Borrower, Norcraft Holdings,
L.P., a Delaware limited partnership ("Holdings"), the Subsidiary Guarantors
(such term and each other capitalized term used but not defined herein having
the meaning given to it in Article I of the Credit Agreement), the Lenders, UBS
SECURITIES LLC, as bookmanager and lead arranger (in such capacity, the "Lead
Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as syndication agent (in such
capacity, the "Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as
co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in
such capacity, the "Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing
Bank, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and as collateral agent for the Secured Parties and the
Issuing Bank (in such capacity, the "Collateral Agent") and CIT LENDING SERVICES
CORPORATION, as documentation agent (in such capacity, the "Documentation
Agent").
This Note is secured and guaranteed as provided in the Credit Agreement and
the Security Documents. Reference is hereby made to the Credit Agreement and the
Security Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
guarantees, the terms and conditions upon which the security interest and each
guarantee was granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable all as provided
therein.
H-1-1
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE CREDIT
AGREEMENT.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[Signature Page Follows]
H-1-2
NORCRAFT COMPANIES, L.P.
By: NORCRAFT GP, L.L.C., its General Partner
By:
-----------------------------------------
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
[Form of]
REVOLVING NOTE
$ New York, New York
----------------
-----------------, ----
FOR VALUE RECEIVED, the undersigned, NORCRAFT COMPANIES, L.P., a Delaware
limited partnership ("Borrower"), hereby promises to pay to the order of
(the "Lender") on the Revolving Maturity Date (as defined in
------------------
the Credit Agreement referred to below), in lawful money of the United States
and in immediately available funds, the principal amount of the lesser of (a)
DOLLARS ($ ) and (b) the aggregate unpaid principal
------------ ------------
amount of all Revolving Loans of the Lender outstanding under the Credit
Agreement referred to below. Borrower further agrees to pay interest in like
money at such office specified in Section 2.14 of the Credit Agreement on the
unpaid principal amount hereof from time to time from the date hereof at the
rates, and on the dates, specified in Section 2.06 of such Credit Agreement.
The holder of this Note may endorse and attach a schedule to reflect the
date, Type and amount of each Revolving Loan of the Lender outstanding under the
Credit Agreement, the date and amount of each payment or prepayment of principal
hereof, and the date of each interest rate conversion or continuation pursuant
to Section 2.08 of the Credit Agreement and the principal amount subject
thereto; provided that the failure of the Lender to make any such recordation
(or any error in such recordation) shall not affect the obligations of Borrower
hereunder or under the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement dated as
of October 21, 2003 (the "Credit Agreement"), among Borrower, Norcraft Holdings,
L.P., a Delaware limited partnership ("Holdings"), the Subsidiary Guarantors
(such term and each other capitalized term used but not defined herein having
the meaning given to it in Article I of the Credit Agreement), the Lenders, UBS
SECURITIES LLC, as bookmanager and lead arranger (in such capacity, the "Lead
Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as syndication agent (in such
capacity, the "Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as
co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in
such capacity, the "Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing
Bank, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and as collateral agent for the Secured Parties and the
Issuing Bank (in such capacity, the "Collateral Agent") and CIT LENDING SERVICES
CORPORATION, as documentation agent (in such capacity, the "Documentation
Agent").
This Note is secured and guaranteed as provided in the Credit Agreement and
the Security Documents. Reference is hereby made to the Credit Agreement and the
Security Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
guarantees, the terms and conditions upon which the security interest and each
guarantee was granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
therein.
H-2-1
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE CREDIT
AGREEMENT.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[Signature Page Follows]
H-2-2
NORCRAFT COMPANIES, L.P.
By: NORCRAFT GP, L.L.C., its General Partner
By:
-----------------------------------------
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
[Form of]
SWINGLINE NOTE
$5,000,000 New York, New York
-----------------, ----
FOR VALUE RECEIVED, the undersigned, NORCRAFT COMPANIES, L.P., a Delaware
limited partnership ("Borrower"), hereby promises to pay to the order of UBS
LOAN FINANCE LLC (the "Lender") on the Revolving Maturity Date (as defined in
the Credit Agreement referred to below), in lawful money of the United States
and in immediately available funds, the principal amount of the lesser of (a)
FIVE MILLION DOLLARS ($5,000,000) and (b) the aggregate unpaid principal amount
of all Swingline Loans made by Lender to the undersigned pursuant to Section
2.17 of the Credit Agreement referred to below. Borrower further agrees to pay
interest on the unpaid principal amount hereof in like money at such office
specified in Section 2.14 of the Credit Agreement from time to time from the
date hereof at the rates and on the dates specified in Section 2.06 of the
Credit Agreement.
The holder of this Note may endorse and attach a schedule to reflect the
date, the amount of each Swingline Loan and the date and amount of each payment
or prepayment of principal thereof; provided that the failure of Lender to make
such recordation (or any error in such recordation) shall not affect the
obligations of Borrower hereunder or under the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement, dated as
of October 21, 2003 (the "Credit Agreement"), among Borrower, Norcraft Holdings,
L.P., a Delaware limited partnership ("Holdings"), the Subsidiary Guarantors
(such term and each other capitalized term used but not defined herein having
the meaning given to it in Article I of the Credit Agreement), the Lenders, UBS
SECURITIES LLC, as bookmanager and lead arranger (in such capacity, the "Lead
Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as syndication agent (in such
capacity, the "Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as
co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in
such capacity, the "Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing
Bank, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and as collateral agent for the Secured Parties and the
Issuing Bank (in such capacity, the "Collateral Agent") and CIT LENDING SERVICES
CORPORATION, as documentation agent (in such capacity, the "Documentation
Agent").
This Note is secured and guaranteed as provided in the Credit Agreement and
the Security Documents. Reference is hereby made to the Credit Agreement and the
Security Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
guarantees, the terms and conditions upon which the security interest and each
guarantee was granted and the rights of the holder of this Note in respect
thereof.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note may
become, or may be declared to be, immediately due and payable as provided in the
Credit Agreement.
H-3-1
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE
CREDIT AGREEMENT. TRANSFERS OF THIS NOTE MUST BE RECORDED IN THE REGISTER
MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE CREDIT
AGREEMENT.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
[Signature Page Follows]
H-3-2
NORCRAFT COMPANIES, L.P.
By: NORCRAFT GP, L.L.C., its General Partner
By:
-----------------------------------------
Name:
Title:
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
[Form of]
PERFECTION CERTIFICATE
Reference is hereby made to that certain Credit Agreement dated as of
October 21, 2003 (the "Credit Agreement") by and among Norcraft Companies, L.P.
(the "Company"), Norcraft Holdings, L.P. (the "Parent Guarantor"), Norcraft
Finance Corp. and Norcraft Canada Corporation (the "Subsidiary Guarantors," and
together with the Parent Guarantor, the "Guarantors"), certain other parties
thereto and UBS AG, Stamford Branch, as collateral agent (in such capacity, the
"Collateral Agent"). Capitalized terms used but not defined herein have the
meanings assigned in the Credit Agreement.
The undersigned hereby certify to the Collateral Agent as follows:
1. Names. (a) The exact legal names of the Company and each Guarantor,
as such names appear in their respective certificates of formation or any other
organizational document, is set forth in Schedule 1(a). The Company and the
Guarantors are (i) the type of entities disclosed next to their respective names
in Schedule 1(a) and (ii) are registered organizations except to the extent
disclosed in Schedule 1(a). Also set forth in Schedule 1(a) are the respective
organizational identification numbers, if any, of the Company and the Guarantors
that are each registered organizations, the respective Federal Taxpayer
Identification Numbers of the Company and each of the Guarantors and the
respective states of formation of the Company and each of the Guarantors.
(b) Set forth in Schedule 1(b) hereto are the respective corporate or
organizational names the Company and the Guarantors have had in the past five
years, together with the date of the relevant change.
(c) Set forth in Schedule 1(c) is a list of all other names (including
trade names or similar appellations) used by the Company or any Guarantor, or
any other business or organization to which the Company or any Guarantor became
the successor by merger, consolidation, acquisition, change in form, nature or
jurisdiction of organization or otherwise, now or at any time during the past
five years. Also set forth in Schedule 1(c) is the information required by
Section 1 of this certificate for any other business or organization to which
the Company or any Guarantor became the successor by merger, consolidation,
acquisition, change in form, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years.
2. Current Locations. (a) The respective chief executive offices of
the Company and the Guarantors are located at the addresses set forth in
Schedule 2(a) hereto.
(b) Set forth in Schedule 2(b) are all locations where the Company and
any Guarantor maintains any books or records relating to any Collateral.
(c) Set forth in Schedule 2(c) hereto are all the other places of
business of the Company or any Guarantor.
(d) Set forth in Schedule 2(d) hereto are all other locations where
the Company or any Guarantor maintains any of the Collateral consisting of
inventory or equipment not identified above.
(e) Set forth in Schedule 2(e) hereto are the names and addresses of
all persons or entities other than the Company and the Guarantors, such as
lessees, consignees, warehousemen or pur-
I-1-1
chasers of chattel paper, which have possession or are intended to have
possession of any of the Collateral consisting of instruments, chattel paper,
inventory or equipment.
3. Prior Locations. (a) Set forth in Schedule 3(a) is the information
required by Schedule 2(a), Schedule 2(b) or Schedule 2(c) with respect to each
location or place of business previously maintained by the Company or any
Guarantor at any time during the past four months in a state in which the
Company has previously maintained a location or place of business at any time
during the past four months.
(b) Set forth in Schedule 3(b) is the information required by Schedule
2(d) or Schedule 2(e) with respect to each other location at which, or other
person or entity with which, any of the Collateral consisting of inventory or
equipment has been previously held at any time during the past twelve months.
4. Extraordinary Transactions. Except for those purchases,
acquisitions and other transactions described on Schedule 4 attached hereto, all
of the Collateral has been originated by the Company or the Guarantors in the
ordinary course of business or consists of goods which have been acquired by the
Company or any Guarantor in the ordinary course of business from a person in the
business of selling goods of that kind.
5. File Search Reports. Attached hereto as Schedule 5(a) is a true and
accurate summary of file search reports from (A) the Uniform Commercial Code
filing offices (i) in each jurisdiction identified in Section 1(a), Section 2 or
Section 3 with respect to each legal name set forth in Section 1 and (ii) in
each jurisdiction described in Schedule 1(c) or Schedule 4 relating to any of
the transactions described in Schedule (1)(c) or Schedule 4 with respect to each
legal name of the person or entity from which Borrower or any Guarantor
purchased or otherwise acquired any of the Collateral and (B) each filing
officer in each real estate recording office identified on Schedule 8 with
respect to real estate on which Collateral consisting of fixtures is or is to be
located. Attached hereto as Schedule 5(b) is a true copy of each financing
statement or other filing identified in such file search reports.
6. UCC Filings and IP Filings. Financing statements (duly authorized
by the Company) containing the indications of the Collateral relating to the
Security Agreement or the applicable Mortgage, as have been duly filed in the
filing offices in the jurisdictions identified in Schedule 7 hereof.
7. Schedule of Filings. Attached hereto as Schedule 7 is a schedule
setting forth, with respect to the filings described in Section 6 above, each
filing and the filing office in which such filing is to be made and such other
actions as are required to preserve, protect and perfect the security interests
in the Pledged Collateral (as defined in the U.S. or Canadian Security
Agreement, as applicable)granted to the Collateral Agent pursuant to the
Collateral Documents. No other filings, consents or actions are required to
create, preserve, protect and perfect the security interests in the Pledged
Collateral granted to the Collateral Agent pursuant to the Collateral Documents.
8. Real Property. Attached hereto as Schedule 8 is a list of all real
property owned or leased by the Company and the Guarantors.
9. Termination Statements. A duly signed or otherwise authorized
termination statement has been duly filed in each applicable jurisdiction
identified in Schedule 9(a) hereto with respect to each Lien described therein.
Attached hereto as Schedule 9(b) is a true copy of each filing duly acknowledged
or otherwise identified by the filing officer.
I-1-2
10. No Change. The undersigned knows of no change or anticipated
change in any of the circumstances or with respect to any of the matters
contemplated in Sections 1 through 9 and Sections 12 through 18 of this
Perfection Certificate except as set forth on Schedule 10 hereto.
11. Filing Fees. All filing fees and taxes payable in connection with
the filings described in Sections 6 and 7 above have been paid.
12. Stock Ownership and other Equity Interests. Attached hereto as
Schedule 12 is a true and correct list of all the issued and outstanding stock,
partnership interests, limited liability company membership interests or other
equity interests of the Company and the Guarantors and the record and beneficial
owners of such stock, partnership interests, membership interests or other
equity interests. Also set forth on Schedule 11 is each equity investment of
Borrower or any Guarantor that represents 50% or less of the equity of the
entity in which such investment was made.
13. Instruments and Tangible Chattel Paper. Attached hereto as
Schedule 13 is a true and correct list of all promissory notes, instruments,
tangible chattel paper and other evidence of indebtedness held by the Company or
any Guarantor as of October 21, 2003, including all intercompany notes between
the Company and any Guarantor.
14. Advances. Attached hereto as Schedule 14 is (a) a true and correct
list of all advances made by the Company to any Guarantors or any Guarantor to
the Company or any as of October 21, 2003 (other than those identified on
Schedule 13), which advances will be on and after the date hereof evidenced by
one or more intercompany notes pledged to the Collateral Agent and (b) a true
and correct list of all unpaid intercompany transfers of goods sold and
delivered by or to the Company or any Guarantor as of October 21, 2003.
15. Intellectual Property. Attached hereto as Schedule 15(a) in proper
form for filing with the United States Patent and Trademark Office is a schedule
setting forth all of the Company's and each Guarantor's Patents, Patent
Licenses, Trademarks and Trademark Licenses, including the name of the
registered owner, the registration number and the expiration date of each
Patent, Patent License, Trademark and Trademark License owned the Company or any
Guarantor. Attached hereto as Schedule 15(b) in proper form for filing with the
United States Copyright Office is a schedule setting forth all of the Company's
and each Guarantor's Copyrights and Copyright Licenses, including the name of
the registered owner, the registration number and the expiration date of each
Copyright or Copyright License owned by the Company or any Guarantor.
16. Commercial Tort Claims. Attached hereto as Schedule 16 is a true
and correct list of all Commercial Tort Claims held by the Company or any
Guarantor, including a brief description thereof.
17. Deposit Accounts, Securities Accounts and Commodity Accounts.
Attached hereto as Schedule 17 is a true and complete list of all Deposit
Accounts, Securities Accounts and Commodity Accounts maintained by the Company
and any Guarantor, including the name of each bank where each account is held,
the name of each account and the name of each entity that holds each account.
18. Letter-of-Credit Rights. Attached hereto as Schedule 18 is a true
and correct list of all Letters of Credit issued in favor of the Company or any
Guarantor, as beneficiary thereunder.
19. Motor Vehicles. Attached hereto as Schedule 19 is a true and
correct list of all motor vehicles (covered by Certificates of Title or
ownership) valued at over $50,000, and the owner and approximate value of such
motor vehicles.
I-1-3
IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as
of this day of October, 2003.
---
NORCRAFT COMPANIES, L.P., as Borrower
by: NORCRAFT GP, L.L.C., its General
Partner
By:
------------------------------------
Name:
Title:
NORCRAFT HOLDINGS, L.P., as Parent
Guarantor
by: NORCRAFT GP, L.L.C., its General
Partner
By:
------------------------------------
Name:
Title:
NORCRAFT FINANCE CORP., as a Guarantor
By:
------------------------------------
Name:
Title:
NORCRAFT CANADA CORPORATION, as a
Guarantor
By:
------------------------------------
Name:
Title:
I-1-4
Schedule 1(a)
Legal Names, Etc.
--------------------------------------------------------------------------------------------
Registered Federal Taxpayer
Legal Name Type of Organization Organizational Identification
Entity (Yes/No) Number/a/ Number State of Formation
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
----------
/a/ If none, so state.
I-1-5
Schedule 1(b)
Prior Organizational Names
----------------------------------------
Date of
Company/Guarantor Prior Name Change
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
I-1-6
Schedule 1(c)
Changes in Corporate Identity; Other Names
---------------------------------------------------------------------------------------
List of All Other
Corporate Date State of Names Used During
Company/Guarantor Name of Entity Action of Action Formation Past Five Years
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
[Add Information required by Section 1 to the extent required by Section 1(c) of
the Perfection Certificate]
I-1-7
Schedule 2(a)
Chief Executive Offices
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-1-8
Schedule 2(b)
Location of Books
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-1-9
Schedule 2(c)
Other Places of Business
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-1-10
Schedule 2(d)
Additional Locations of Equipment and Inventory
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-1-11
Schedule 2(e)
Locations of Collateral in Possession of
Persons Other Than Company or the Guarantors
---------------------------------------------------------------------------
Name of Entity in
Possession of
Company/Guarantor Collateral/Capacity Address/Location
of such Entity of Collateral County State
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
I-1-12
Schedule 3(a)
Prior Locations Maintained by Company/Guarantors
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-1-13
Schedule 3(b)
Prior Locations/Other Entities
--------------------------------------------------------------------------------
Prior Locations of Other Entity in Address of Such
Collateral: Address Possession of Other Entity
Company/Guarantor Including County Collateral/Capacity Including County
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
I-1-14
Schedule(4)
Transactions Other Than in the Ordinary Course of Business
------------------------------------------------------------
Description of Transaction Date of
Company/Guarantor Including Parties Thereto Transaction
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
I-1-15
Schedule 5(a)
File Search Reports
--------------------------------------------------------------------
Company/Guarantor Search Report dated Prepared by Jurisdiction
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
See attached.
I-1-16
Schedule 5(b)
Copies of Reported Financing Statements
See attached.
I-1-17
Schedule 6
Copies of Financing Statements To Be Filed
See attached.
I-1-18
Schedule 7
Filings/Filing Offices
----------------------------------------------------------
Type Applicable Collateral
of Document
Filing/a/ Entity (Mortgage) Jurisdictions
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------
/a/ UCC-1 financing statement, fixture filing, mortgage, intellectual property
filing or other necessary filing.
I-1-19
Schedule 8
Real Property
------------------------------------------------------------------------------
Description
Owned Landlord/Owner of Lease
Entity of Record Location Address or Leased if Leased Documents
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
▇-▇-▇▇
▇▇▇▇▇▇▇▇ ▇(▇)
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Filings
------------------------------------------------------------------------------------
UCC-1 UCC-1
Debtor Jurisdiction Secured Party Type of Collateral File Date File Number
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
I-1-21
Schedule 9(b)
Attached hereto is a true copy of each termination statement filing duly
acknowledged or otherwise identified by the filing officer.
I-1-22
Schedule 10
Changes from Circumstances Described in Perfection Certificate
I-1-23
Schedule 12
Stock Ownership and Other Equity Interests
Company/Guarantor:
--------------
---------------------------------------------------------------------------
Current Legal No. Percent
Entities Owned Record Owner Certificate No. Shares/Interest Pledged
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
I-1-24
Schedule 13
Instruments and Tangible Chattel Paper
1. Promissory Notes:
-------------------------------------------------------------
Principal Date of
Entity Amount Issuance Interest Rate Maturity Date
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
2. Chattel Paper:
I-1-25
Schedule 14
Advances
---------------------------------------------------------------
Description and
Date of Unpaid
Description and Intercompany
Date of Advance From To Transfer of Goods From To
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
I-1-26
Schedule 15(a)
Patents, Patent Licenses, Trademarks and Trademark Licenses
PATENTS:
Registrations:
REGISTRATION REGISTRATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ------------ ------------ ------- -----------
Applications:
APPLICATION APPLICATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ------------ ------------ ------- -----------
Licenses:
TRADEMARKS:
Registrations:
REGISTRATION REGISTRATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ------------ ------------ ------- -----------
Applications:
APPLICATION APPLICATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ------------ ------------ ------- -----------
Licenses:
I-1-27
Schedule 15(b)
Copyrights and Copyright Licenses
OWNER DATE COUNTRY DESCRIPTION
----- ---- ------- -----------
I-1-28
Schedule 16
Commercial Tort Claims
I-1-29
Schedule 17
Deposit Accounts, Securities Accounts and Commodity Accounts
I-1-30
Schedule 18
Letter of Credit Rights
I-1-31
Schedule 19
Motor Vehicles
I-1-32
EXHIBIT I-2
[Form of]
PERFECTION CERTIFICATE SUPPLEMENT
This Perfection Certificate Supplement, dated as of [ ], 20[ ] is
------ --
delivered pursuant to Section 5.12(b) of that certain Credit Agreement dated as
of October 21, 2003, among Norcraft Companies, L.P., a Delaware limited
partnership ("Borrower"), Norcraft Holdings, L.P., a Delaware limited
partnership ("Holdings"), the Subsidiary Guarantors (such term and each other
capitalized term used but not defined herein having the meaning given to it in
Article I of the Credit Agreement), the Lenders, UBS SECURITIES LLC, as
bookmanager and lead arranger (in such capacity, the "Lead Arranger"), WACHOVIA
BANK, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the
"Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as co-arranger (the
"Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, the
"Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and as
collateral agent for the Secured Parties and the Issuing Bank (in such capacity,
the "Collateral Agent" and CIT LENDING SERVICES CORPORATION, as documentation
agent (in such capacity, the "Documentation Agent") .
The undersigned, the [ ] of the Company, hereby certifies to the
---------
Collateral Agent and each of the other Secured Parties that, as of the date
hereof, there has been no change in the information described in the Perfection
Certificate delivered on the Closing Date, as supplemented by any perfection
certificate supplements delivered prior to the date hereof (the "Prior
Perfection Certificate"), other than as follows:
1. Names.
(a) Except as listed on Schedule 1(a) attached hereto and made a part
hereof, Schedule 1(a) to the Prior Perfection Certificate sets
forth the exact legal name of the Company and each Guarantor (the
"Guarantor"), as such name appears in its organizational
document, the state and type of organization (together with the
organizational identification number, if any, issued with respect
to the Company and each Guarantor) of the Company and each
Guarantor, and the federal employer identification number of the
Company and each Guarantor.
I-2-1
2. Current Locations.
(a) Except as listed on Schedule 2(a) attached hereto and made a part
hereof, Schedule 2(a) to the Prior Perfection Certificate sets
forth the respective chief executive offices of the Company and
each Guarantor.
(b) Except as listed on Schedule 2(b) attached hereto and made a part
hereof, Schedule 2(b) to the Prior Perfection Certificate sets
forth all locations in which the Company and each Guarantor
maintains any Collateral or any books or records relating to any
of the Collateral.
(c) Except as listed on Schedule 2(c) attached hereto and made a part
hereof, Schedule 2(c) to the Prior Perfection Certificate sets
forth all other places of business of the Company or any
Guarantor.
(d) Except as listed on Schedule 2(d) attached hereto and made a part
hereof, Schedule 2(d) to the Prior Perfection Certificate sets
forth all other locations where the Company or any Guarantor
maintains any material amount of the Col lateral consisting of
inventory or equipment not identified above.
(e) Except as listed on Schedule 2(e) attached hereto and made a part
hereof, Schedule 2(e) to the Prior Perfection Certificate sets
forth the names and addresses of all persons or entities other
than the Company and the Guarantors, such as lessees, consignees,
warehousemen or purchasers of chattel paper, which have
possession or are intended to have possession of any of the
Collateral consisting of instruments, chattel paper, inventory or
equipment.
3. [Reserved].
4. Extraordinary Transactions.
Except for those purchases, acquisitions and other transactions
described on Schedule 4 attached hereto and on Schedule 4 to the
Prior Perfection Certificate, all of the Collateral has been
originated by the Company and each Guarantor in the ordinary
course of business or consists of goods which have been acquired
by the Company or any Guarantor in the ordinary course of
business from a person in the business of selling goods of that
kind.
5. File Search Reports.
Except as listed on Schedule 5(a) attached hereto and made a part
hereof, Schedule 5(a) to the Prior Perfection Certificate sets
forth, with respect to the filings described in Section 5(a) to
the Prior Perfection Certificate, each filing and the filing
office in which such filing is to be made. All such additional
filings have been delivered to the Collateral Agent for filing,
or have been filed contemporaneously with the delivery of this
certificate or shall be filed immediately after the date hereof.
Schedule 5(b) attached hereto is a true copy of each financing
statement or other filing identified in such file search reports.
I-2-2
6. UCC Filings and IP Filings.
Except as listed on Schedule 6 attached hereto and made a part
hereof, Schedule 6 to the Prior Perfection Certificate sets forth
the financing statements and financing jurisdictions relating to
the Security Agreement or the applicable Mortgage.
7. Schedule of Filings.
Except as listed on Schedule 7 attached hereto and made a part
hereof, Schedule 7 to the Prior Perfection Certificate sets
forth, with respect to the filings described in Section 6 above,
each filing and the filing office in which such filing is to be
made and such other actions as are required to preserve, protect
and perfect the security interests in the Pledged Collateral
granted to the Collateral Agent pursuant to the Collateral
Documents
8. Real Property Locations.
Except as listed on Schedule 8 attached hereto and made a part
hereof, Schedule 8 to the Prior Perfection Certificate sets
forth, with respect to real property owned and leased by the
Company and the Guarantors.
9. [Reserved].
10. No Change.
The undersigned knows of no change or anticipated change in any
of the circumstances or with respect to any of the matters
contemplated in Sections 1 through 9 and Section 12 through 18 of
this certificate except as set forth on Schedule 10 hereto.
11. [Reserved].
12. Stock Ownership and other Equity Interests.
Except as listed on Schedule 12 attached hereto and made a part
hereof, Schedule 12 to the Prior Perfection Certificate sets
forth a true and correct list of the issued and outstanding
stock, partnership interests, limited liability company
membership interests or other equity interests of the Company and
the Guarantors and the record and beneficial owners of such
stock, partnership interests, membership interests or other
equity interests; as well as each equity investment of the
Company or any Guarantor that represents 50% or less of the
equity of the entity in which such investment was made.
13. Instruments and Tangible Chattel Paper.
Except as listed on Schedule 13 attached hereto and made a part
hereof, Schedule 13 to the Prior Perfection Certificate sets
forth a true and correct list of all promissory notes,
instruments, tangible chattel paper and other evidence of
indebtedness held by the Company and any Guarantor, including any
intercompany notes between the Company and any Guarantor.
I-2-3
14. Advances.
Except as listed on Schedule 14 attached hereto and made a part
hereof, Schedule 14 to the Prior Perfection Certificate sets
forth (a) a true and correct list of all advances made by the
Company to any Guarantors or any Guarantor to the Company or any
Guarantor (other than those identified on Schedule 13 attached
hereto and Schedule 13 of the Prior Perfection Certificate) and
(b) a true and correct list of all unpaid intercompany transfers
of goods sold and delivered by or to the Company or any
Guarantor.
15. Intellectual Property.
Attached hereto as Schedule 15(a) in proper form for filing with
the United States Patent and Trademark Office is a schedule
setting forth all of the Company's and each Guarantor's Patents,
Patent Licenses, Trademarks and Trademark Licenses acquired since
the date of the Prior Perfection Certificate, including the name
of the registered owner, the registration number and the
expiration date of each Patent, Patent License, Trademark and
Trademark License owned by the Company and each Guarantor.
Attached hereto as Schedule 15(b) in proper form for filing with
the United States Copyright Office is a schedule setting forth
all of the Company's and each Guarantor's Copyrights and
Copyright Licenses acquired since the date of the Prior
Perfection Certificate, including the name of the registered
owner, the registration number and the expiration date of each
Copyright or Copyright License owned by the Company and the
Guarantors.
16. Commercial Tort Claims.
Except as listed on Schedule 16 attached hereto and made a part
hereof, Schedule 16 to the Prior Perfection Certificate sets
forth a true and correct list of commercial tort claims held by
the Company and each Guarantor, including a brief description
thereof.
17. Deposit Accounts, Securities Accounts and Commodities Accounts.
Except as listed on Schedule 17 attached hereto and made a part
hereof, Schedule 17 to the Prior Perfection Certificate sets
forth a true and correct list of the Deposit Accounts, Securities
Accounts and Commodities Accounts held by the Company and each
Guarantor.
18. Letter-of-Credit Rights.
Except as listed on Schedule 18 attached hereto and made a part
hereof, Schedule 18 to the Prior Perfection Certificate sets
forth a true and correct list o the Letters of Credit issued in
favor of the Company or any Guarantor, as beneficiary thereunder.
19. Motor Vehicles.
Except as listed on Schedule 19 attached hereto and made a part
hereof, Schedule 19 to the Prior Perfection Certificate sets
forth a true and correct list of all motor
I-2-4
vehicles (covered by Certificates of Title or ownership) valued
at over $50,000, and the owner and approximate value of such
motor vehicles.
[Signature Page Follows.]
I-2-5
IN WITNESS WHEREOF, we have hereunto signed this Certificate on
, 200 .
----------- --
NORCRAFT COMPANIES, L.P., as Borrower
by: NORCRAFT GP, L.L.C., its General Partner
By:
-----------------------------------------
Name:
Title:
NORCRAFT HOLDINGS, L.P., as Parent Guarantor
by: NORCRAFT GP, L.L.C., its General Partner
By:
-----------------------------------------
Name:
Title:
NORCRAFT FINANCE CORP., as a Guarantor
By:
-----------------------------------------
Name:
Title:
NORCRAFT CANADA CORPORATION, as a Guarantor
By:
-----------------------------------------
Name:
Title:
I-2-6
Schedule 1(a)
Legal Names, Etc.
--------------------------------------------------------------------------------------------
Registered Federal Taxpayer
Type of Organization Organizational Identification
Legal Name Entity (Yes/No) Number/a/ Number State of Formation
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
----------
/a/ If none, so state.
I-2-7
Schedule 2(a)
Chief Executive Offices
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-2-8
Schedule 2(b)
Location of Books
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-2-9
Schedule 2(c)
Other Places of Business
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-2-10
Schedule 2(d)
Additional Locations of Equipment and Inventory
--------------------------------------------
Company/Guarantor Address County State
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
I-2-11
Schedule 2(e)
Locations of Collateral in Possession of
Persons Other Than Company or the Guarantors
---------------------------------------------------------------------------
Name of Entity in
Possession of
Collateral/Capacity Address/Location
Company/Guarantor of such Entity of Collateral County State
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
I-2-12
Schedule (4)
Transactions Other Than in the Ordinary Course of Business
------------------------------------------------------------
Description of Transaction Date of
Company/Guarantor Including Parties Thereto Transaction
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
I-2-13
Schedule 5(a)
File Search Reports
--------------------------------------------------------------------
Company/Guarantor Search Report dated Prepared by Jurisdiction
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
See attached.
I-2-14
Schedule 5(b)
Copies of Reported Financing Statements
See attached.
I-2-15
Schedule 6
Copies of Financing Statements To Be Filed
See attached.
I-2-16
Schedule 7
Filings/Filing Offices
----------------------------------------------------------
Type Applicable Collateral
of Document
Filing/b/ Entity (Mortgage) Jurisdictions
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------
/b/ UCC-1 financing statement, fixture filing, mortgage, intellectual property
filing or other necessary filing.
I-2-17
Schedule 8
Real Property
------------------------------------------------------------------------------
Description
Owned Landlord/Owner of Lease
Entity of Record Location Address or Leased if Leased Documents
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
I-2-18
Schedule 10
Changes from Circumstances Described in Perfection Certificate Supplement
I-2-19
Schedule 12
Stock Ownership and other Equity Interests
Company/Guarantor:
--------------
---------------------------------------------------------------------------
Current Legal No. Percent
Entities Owned Record Owner Certificate No. Shares/Interest Pledged
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
I-2-20
Schedule 13
Instruments and Tangible Chattel Paper
1. Promissory Notes:
-------------------------------------------------------------
Principal Date of
Entity Amount Issuance Interest Rate Maturity Date
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
2. Chattel Paper:
I-2-21
Schedule 14
Advances
-------------------------------------------------------------
Description and
Date of Unpaid
Description and Intercompany Trans-
Date of Advance From To fer of Goods From To
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
I-2-22
Schedule 15(a)
Patents, Patent Licenses, Trademarks and Trademark Licenses
PATENTS:
Registrations:
REGISTRATION REGISTRATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ------------ ------------ ------- -----------
Applications:
APPLICATION APPLICATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ----------- ----------- ------- -----------
Licenses:
TRADEMARKS:
Registrations:
REGISTRATION REGISTRATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ------------ ------------- ------- -----------
Applications:
APPLICATION APPLICATION
OWNER NUMBER DATE COUNTRY DESCRIPTION
----- ----------- ----------- ------- -----------
Licenses:
I-2-23
Schedule 15(b)
Copyrights and Copyright Licenses
OWNER DATE COUNTRY DESCRIPTION
----- ---- ------- -----------
I-2-24
Schedule 16
Commercial Tort Claims
I-2-25
Schedule 17
Deposit Accounts, Securities Accounts and Commodity Accounts
I-2-26
Schedule 18
Letter-of-Credit Rights
I-2-27
Schedule 19
Motor Vehicles
I-2-28
EXHIBIT J-1
[Form of]
U.S. SECURITY AGREEMENT
Incorporated by reference to the Registration Statement (No. 333-114924) filed
on April 27, 2004.
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[Form of]
CANADIAN SECURITY AGREEMENT
Incorporated by reference to Exhibit 10.6 filed herewith.
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[Form of]
CANADIAN PLEDGE AGREEMENT
NORCRAFT COMPANIES, L.P.
PLEDGE AGREEMENT
This Agreement, dated as of October 21, 2003 between NORCRAFT COMPANIES
L.P., a Delaware limited partnership (the "Pledgor"), and UBS AG, STAMFORD
BRANCH, as agent (the "Agent") for itself and the other Lenders under the Credit
Agreement (as defined below). The parties agree as follows:
1. Background; Definitions.
1.1 Background. The Lenders (as defined in the Credit Agreement) are
providing loans and letters of credit to the Pledgor under the Credit Agreement
(as defined below). This Agreement creates the pledge by the Pledgor of all of
its shares in the capital of Norcraft Canada Corporation, an unlimited company
under the laws of Nova Scotia (the "Pledged Corporation") to secure the
performance of the Obligations.
1.2 Reference to Credit Agreement; Definitions. Reference is made to the
Credit Agreement dated as of the 21st day of October, 2003, as amended and as
from time to time in effect (the "Credit Agreement"), among the Pledgor, certain
of its affiliates from time to time party thereto, the Lenders (as defined
therein) and the Agent. Except as the context otherwise explicitly requires, (a)
the capitalized term "Section" refers to sections of this Agreement, (b)
references to a particular Section shall include all subsections thereof and (c)
the word "including" shall be construed as "including without limitation".
Capitalized terms defined used but not otherwise defined herein, but defined in
the Credit Agreement, shall have the meaning assigned thereto in the Credit
Agreement.
2. Pledge.
2.1 Credit Security. As security for the payment and performance of the
Obligations, the Pledgor pledges to the Agent for the benefit of the Lenders and
the holders from time to time of any of the Obligations, and creates a security
interest in favor of the Agent for the benefit of the Lenders and such holders,
in all of its right, title and interest in and to (but none of its obligations
or liabilities with respect to) the shares in the capital of the Pledged
Corporation owned by the Pledgor (the "Pledged Shares").
2.2 Representations, Warranties and Covenants with Respect to Pledged
Shares. The Pledgor represents, warrants and covenants that:
2.2.1 Pledged Shares. All the Pledged Shares are and shall be at all
times duly authorized, validly issued, and fully paid but assessable. The
Pledgor will deliver to the Agent, certificates representing the Pledged
Shares (to the extent it has not previously done so) accompanied by a share
transfer form executed in blank, all in form and substance satisfactory to
the Agent. The Agent may at any time on or after the occurrence and
continuance of an Event of Default, upon giving the Pledgor prior notice in
writing, transfer into its name (or the name of another Person that is
designated in writing by the Agent), as pledgee, any Pledged Shares.
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2.2.2 No Liens. All Pledged Shares shall be free and clear of any
Liens and restrictions on the transfer thereof except for (a) restrictions
on transfer of the Pledged Shares imposed by provincial, federal or other
applicable laws and (b) Liens created hereby or by the Loan Documents. The
Pledgor will not pledge, create or permit to exist any security interest in
any Pledged Shares except for the Liens created hereby or by the Loan
Documents. None of the Pledged Shares is subject to any options to purchase
or similar rights of any Person.
2.2.3 Perfection of Pledged Shares. Upon the Agent's written request
from time to time, the Pledgor will make, execute and deliver all such
instruments and documents, including appropriate financing statements,
transfer powers and notices, and take all such action as the Agent may deem
reasonably necessary to carry out the intent and purposes of this Agreement
and the Loan Documents or for assuring and confirming to the Lenders the
pledge and security interests in the Pledged Shares created hereby.
2.3 Administration of Pledged Shares. The Pledged Shares shall be
administered as follows, and if an Event of Default shall have occurred and be
continuing, Section 2.5 shall also apply.
2.3.1 Dividends.
(a) To the extent permitted by the Credit Agreement, unless an
Event of Default shall occur and be continuing, the Pledgor shall be
entitled to receive all Dividends paid on the Pledged Shares.
(b) If an Event of Default shall occur and be continuing, all
Dividends and other payments with respect to the Pledged Shares shall
be retained by the Agent (or if received by the Pledgor shall be held
by the Pledgor and shall be forthwith paid by it to the Agent in the
original form received, endorsed in blank) as part of the Pledged
Shares or applied by the Agent to the payment of the Obligations in
accordance with the Credit Agreement.
2.3.2 Voting. If an Event of Default shall occur, and if and to the
extent that the Agent shall so notify the Pledgor in writing, only the
Agent (or such other Person that is designated in writing by the Agent)
shall be entitled to vote or consent or take any other action with respect
to the Pledged Shares (and the Pledgor will, if so requested, execute or
cause to be executed, appropriate proxies therefor).
2.3.3 Custody of Pledged Shares. The Agent will use reasonable care in
the custody and physical preservation of any Pledged Shares in its
possession. Except as set forth in the immediately preceding sentence, and
except as provided by applicable law that cannot be waived, the Agent will
have no duty with respect to the custody and protection of the Pledged
Shares, the collection of any part thereof or of any income thereon or the
preservation or exercise of any rights pertaining thereto, including rights
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against prior parties. The Lenders will not be liable or responsible for
any loss or damage to any Pledged Shares, or for any diminution in the
value thereof, by reason of the act or omission of any agent selected by
the Agent, except when the Agent has acted with gross negligence or
willful misconduct in the selection of such agent.
2.4 Modifications to Pledged Shares. Except with the prior written consent
of the Agent, not to be unreasonably withheld, the Pledgor shall not amend or
modify, or waive any of its rights under or with respect to the Pledged Shares
(other than stock splits and stock dividends) if the effect of such amendment,
modification or waiver would be materially to reduce the amount of such item, or
to waive or impair any remedies of the Pledgor or the Lenders under or with
respect to the Pledged Shares.
2.5 Right to Realize upon Pledged Shares. Except to the extent prohibited
by applicable law that cannot be waived, this Section 2.5 shall govern the
Lenders' and the Agent's right to realize upon the Pledged Shares if any Event
of Default shall have occurred and be continuing. The provisions of this Section
2.5 are in addition to any rights and remedies available at law or in equity and
in addition to the provisions of the Loan Documents. In the case of a conflict
between this Section 2.5 and the Loan Documents, this Section 2.5 shall govern.
2.5.1 Marshaling. The Lenders and the Agent shall not be required to
make any demand upon, accelerate, or pursue or exhaust any of their rights
or remedies against the Pledgor, any other Guarantor or any other Person
with respect to the payment of the Obligations, or to pursue or exhaust any
of its rights or remedies with respect to any of the collateral therefor or
any direct or indirect guarantee thereof. The Lenders and the Agent shall
not be required to marshal the Pledged Shares, or any guarantee of the
Obligations or to resort to the Pledged Shares, or any such guarantee in
any particular order, and all of their rights hereunder shall be
cumulative. Without limiting the generality of the foregoing, the Pledgor
agrees that it will not invoke or raise as a defense to any enforcement by
the Agent or any other Lender of its rights and remedies relating to the
Obligations any legal or contractual requirement with which the Agent or
any other Lender may have in good faith failed to comply, the consequence
of which defense would prevent or materially delay or otherwise impede the
enforcement of the Agent's or the Lenders' rights under this Agreement and
hereby waives the same. In addition, the Pledgor waives any right to prior
notice (except to the extent expressly required by this Agreement and to
the extent it may lawfully do so) or judicial hearing in connection with
foreclosure on or disposition of any Pledged Shares, including any such
right which the Pledgor would otherwise have under the laws of Nova Scotia
and the laws of Canada applicable therein, or any other jurisdiction.
2.5.2 Sales of Pledged Shares. Upon an occurrence and continuance of
an Event of Default, all or a portion of the Pledged Shares may be sold for
cash or other value in any number of lots at any commercially reasonable
public or private sale, without demand, advertisement or notice; provided,
however, that the Agent shall give
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the Pledgor 10 Business Days prior written notice of the time and place of
any public sale, or the time after which a private sale may be made, which
notice the Pledgor and the Lenders agree to be reasonable. At any sale of
Pledged Shares (except to the extent prohibited by applicable law that
cannot be waived) the Agent, such other Person that is designated in
writing by the Agent, or any of the Lenders or any of its or their
respective officers acting on its or their behalf, or their assigns, may
bid for and purchase all or any part of the property and rights so sold and
upon compliance with the terms of such sale may hold and dispose of such
property and rights without further accountability to the Pledgor, except
for the proceeds of such sale pursuant to Section 2.5.3. The Pledgor
acknowledges that any such sale will be made by the Agent on an "as is"
basis with disclaimers of all warranties, whether express or implied, to
the extent permitted by applicable law. The Pledgor will execute and
deliver or cause to be executed and delivered such instruments, documents,
assignments, waivers, certificates and affidavits, will supply or cause to
be supplied such further information and will take such further action as
the Agent shall reasonably require in connection with any such sale.
2.5.3 Application of Proceeds. The proceeds of all sales and
collections in respect of any Pledged Shares and all funds collected from
the Pledgor shall be applied as provided for in the Credit Agreement.
2.5.4 Contractual Restrictions. To the extent that the Pledged
Corporation is a party to an agreement, lease, franchise or other
instrument which prohibits assignments by or changes in control of the
parties thereto, then, notwithstanding anything else herein to the
contrary, no action shall be taken by the Agent with respect to such items
until the required consent to or approval of such action by the other
parties thereto has been obtained. The Pledgor covenants that upon the
Agent's reasonable request, it will file such applications and take such
other action as the Agent may request to obtain consent or approval to any
action contemplated by this Agreement and to give effect to the security
interests created by the Loan Documents.
3. Continuing Agreement, etc. This Agreement shall be a continuing agreement,
shall be irrevocable and shall remain in full force and effect until the payment
in full of the Obligations then outstanding in accordance with the terms thereof
at a time when the Lenders' obligations to extend credit under the Loan
Documents shall have been irrevocably terminated (other than indemnity and
similar provisions of the Loan Documents that expressly survive the termination
of such documents). No action which the Pledgor may take or refrain from taking
shall affect the provisions of this Agreement or the obligations of the Pledgor
hereunder. No right of the Lenders or any present or future holder of any of the
Obligations shall at any time be prejudiced or impaired by any act or failure to
act on the part of the Pledgor, or by any noncompliance by the Pledgor with the
terms of this Agreement, regardless of any knowledge thereof which any Lender,
the Agent or any such holder may have or otherwise be charged with.
4. Waivers; Powers, etc.
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4.1 Specific Performance. The Agent is authorized to demand specific
performance of this Agreement at any time when the Pledgor shall have failed to
comply with any provision hereof, and it irrevocably waives any defense based on
the adequacy of a remedy at law which might be asserted as a bar to the remedy
of specific performance hereof in any action brought therefor by the Lenders.
4.2 Power to Modify, etc. Except to the extent prohibited by the provisions
of applicable law that cannot be waived, the Pledgor grants the Agent and the
Lenders full power, in their sole discretion:
4.2.1 To waive compliance with any Default under, and to consent to
any amendment or change or any terms of the Credit Agreement, the Loan
Documents, the Obligations or any guarantee thereof (each as from time to
time in effect);
4.2.2 To grant one or more extensions or renewals of the Obligations
(for any period, no matter how long), and any other indulgence with respect
thereto and to effect any total or partial release (by operation of law or
otherwise), discharge, compromise or settlement with respect to the
obligations of the Pledgor in respect of the Obligations, whether or not
rights against the Pledgor under this Agreement are reserved in connection
therewith;
4.2.3 To take security in any form for the Obligations and to consent
to the addition to or the substitution, exchange, release, failure to
perfect or any other disposition of, and to deal in any other manner with,
to the extent permitted by applicable law that cannot be waived, all or
part of any property which may from time to time secure the Obligations
whether or not the property, if any, received upon the exercise of such
power shall be of a character or value the same as or different from the
character or value of any property disposed of, and to obtain, modify or
release any present or future guarantees of the Obligations and to proceed
against any of the Pledged Shares or such guarantees in any order;
4.2.4 To extend credit under the Credit Agreement, or Loan Documents
or otherwise, in such amount as the Lenders may determine, whether for a
greater or lesser amount than is presently in effect, even though the
financial condition of the Pledgor or any of its affiliates may have
deteriorated since the date hereof; and
4.2.5 To collect or liquidate any of the Obligations or the Pledged
Shares in any manner or to refrain from collecting or liquidating any of
the Obligations or the Pledged Shares.
5. Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of the Lenders and their successors and assigns and shall be binding
upon the Pledgor and its respective successors and assigns. The Agent (or an
Assignee) may from time to time assign or transfer all or any of its rights
under this Agreement to any other Person (the "Assignee"),
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subject to the terms of the Credit Agreement, and the Assignee shall, to the
extent of the interest as assigned or transferred, be entitled to the benefit
of, and the right to enforce such right or rights to the same extent as if such
Person was the Agent. The Pledgor shall not assign all or any part of this
Agreement without the Agent's prior written consent.
6. Notices. Except as otherwise specified in this Agreement, any notice, demand
or other communication (in any of those cases, a "Notice") required to be given
pursuant to this Agreement shall be given in the manner and become effective as
set forth in the Credit Agreement.
A Notice, if addressed to the Pledgor, Agent or other Lender shall be sent
to the address set forth in the Credit Agreement with, in the case of a Notice
sent to a Lender, a copy to the Agent.
7. Defeasance. When all Obligations have been paid, performed and reasonably
determined by the Lenders to have been discharged in full, and if at the time no
Lender continues to be committed to extend any credit to the Pledgor under the
Credit Agreement or under any other Loan Document, this Agreement shall
terminate. Thereupon, on the Pledgor's demand and at its cost and expense, the
Agent shall forthwith execute proper instruments, acknowledging satisfaction of
and discharging this Agreement, and shall redeliver to the Pledgor any Pledged
Shares then in its possession; provided, however, that Sections 8 and 9 shall
survive the termination of this Agreement.
8. Venue: Service of Process. The Pledgor, by its execution hereof:
(a) Irrevocably submits to the nonexclusive jurisdiction of the
courts of the Province of Nova Scotia for the purpose of any suit,
action or other proceeding arising out of or based upon this
Agreement; and
(b) Waives to the extent not prohibited by applicable law, and
agrees not to assert, by way of motion, as a defense or otherwise, in
any such proceeding, any claim that it is not subject personally to
the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that such proceeding is
brought in an inconvenient forum, that the venue of such proceeding is
improper, or that this Agreement, may not be enforced in or by such
court.
9. General. The headings in this Agreement are for convenience of reference only
and shall not limit, alter or otherwise affect the meaning hereof. The
invalidity or unenforceability of any term or provision hereof shall not affect
the validity or enforceability of any other term or provision hereof, and any
invalid or unenforceable provision shall be modified so as to be enforced to the
maximum extent of its validity or enforceability. This Agreement, the Credit
Agreement, and the other Loan Documents constitute the entire understanding of
the parties with respect to the subject matter hereof and thereof and supersede
all prior and current
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understandings and agreements, whether written or oral. This Agreement may be
executed in any number of counterparts, which together shall constitute one
instrument. In the event of a conflict between the terms of this Agreement and
the terms of the U.S. Security Agreement, the U.S. Security Agreement shall take
precedence over this Agreement. This Agreement shall be governed by and
construed in accordance with the laws (other than the conflict of laws rules) of
the Province of Nova Scotia.
[Remainder of Page Intentionally Left Blank]
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
NORCRAFT COMPANIES L.P.
By: NORCRAFT GP, L.L.C.,
as General Partner
By /s/ Illegible
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Title: Authorized Person
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
UBS AG, STAMFORD BRANCH,
as Collateral Agent
By: /s/ Illegible
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Name: Illegible
Title: Associate Director
Banking Products
Services US
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director
Banking Products Services, US
Canadian Pledge Agreement
EXHIBIT K-1
[Form of]
OPINION OF COMPANY COUNSEL
[ ], 2003
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To the Arranger, the other Agents
and each Lender party to the
Credit Agreement referred to below
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to the Credit
Agreement, dated as of the date hereof (the "Credit Agreement"), among Norcraft
Companies, L.P., a Delaware limited partnership (the "Company"), Norcraft
Holdings, L.P., a Delaware limited partnership ("Holdings"), the Subsidiary
Guarantors, the Lenders from time to time party thereto, UBS Securities LLC, as
book manager and lead arranger, Wachovia Bank, National Association, as
syndication agent, Wachovia Capital Markets, LLC, as co-arranger, UBS Loan
Finance, LLC, as swingline lender and UBS AG, Stamford Branch, as Issuing Bank,
administrative agent for the Lenders and as collateral agent for the Secured
Parties, in connection with the closing held this day under the Credit
Agreement. Unless otherwise defined herein, capitalized terms used herein shall
have the meanings set forth in the Credit Agreement.
We have acted as counsel to Holdings, the Company, Norcraft Finance
Corp, a Delaware corporation (the "Delaware Sub") and Norcraft Canada
Corporation, a Nova Scotia unlimited liability company (the "Canadian Sub"), in
connection with the Credit Agreement, the U.S. Security Agreement, the Copyright
Security Agreement (as defined in the U.S. Security Agreement), the Patent
Security Agreement (as defined in the U.S. Security Agreement), the Trademark
Security Agreement (as defined in the U.S. Security Agreement) (which Agreements
are collectively referred to herein as the "Credit Documents") and the Canadian
Pledge Agreement being delivered today pursuant to the Credit Agreement (the
"Canadian Pledge Agreement") and in connection with certain Mortgages (the
"Mortgages") being delivered by the Company contemporaneously herewith.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents and records and have made such
investigation of fact and such examination of law as we have deemed appropriate
in order to enable us to render the opinions set forth herein. In conducting
such investigation, we have relied, without independent verification, upon
certificates of officers of Holdings, the Company and one or more of their
Subsidiaries, public officials and other appropriate persons, and on the
representations and warranties as to matters of fact and on the covenants as to
the application of proceeds contained in the Credit Documents.
In rendering the opinions set forth in paragraph 4 below, we have
relied without independent investigation, upon the opinion to you dated the date
hereof of ▇▇▇▇▇▇, MacAculay & Thorvaldson LLP and of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ with respect
to certain matters governed by Canadian law including the due authorization,
execution and delivery by the Canadian Sub of the Credit Documents and the
Canadian Pledge Agreement to which it is party.
The Arranger, et. al -2- October 21, 2003
The opinions expressed herein are limited to matters governed by the
laws of The Commonwealth of Massachusetts, the State of New York, the General
Corporation Law of the State of Delaware, the Delaware Revised Uniform Limited
Partnership Act, the Delaware Limited Liability Company Act and the federal laws
of the United States of America and in the case of paragraph 12 below, Article 9
of the Delaware Uniform Commercial Code ("Delaware Article 9").
Based upon and subject to the foregoing and subject to the additional
qualifications set forth below, we are of the opinion that:
Each of the Company and Holdings (a) is a limited partnership validly
existing in good standing under the laws of the State of Delaware and the
Delaware Revised Uniform Limited Partnership Act and (b) has the power and
authority under its partnership agreement and the Delaware Revised Uniform
Limited Partnership Act necessary to own its property, to lease, operate and
manage each property that is subject to a Mortgage (in the case of the Company
only), to conduct the business in which it is engaged, to execute and deliver
each of the Credit Documents, the Canadian Pledge Agreement and the Mortgages to
which it is a party and to perform its obligations thereunder.
The Delaware Sub (a) is a corporation validly existing in good standing
under the laws of the State of Delaware and (b) has the corporate power to own
its property, to conduct the business in which it is engaged, to execute and
deliver each of the Credit Documents to which it is a party and to perform its
obligations thereunder.
Each of the Company, Holdings and the Delaware Sub has duly authorized,
executed and delivered each of the Credit Documents to which it is party and
(subject to the qualifications set forth in the unnumbered paragraphs at the end
hereof) each such Credit Document constitutes the legal, valid and binding
obligation of such of the foregoing persons as is party thereto and is
enforceable against each such person in accordance with its terms.
Subject to the qualifications set forth in the unnumbered paragraphs at the
end hereof, each of the Credit Documents to which the Canadian Sub is party
constitutes the legal, valid and binding obligation of the Canadian Sub and is
enforceable against the Canadian Sub in accordance with its terms.
The Canadian Pledge Agreement and each of the Mortgages to which the
Company is party has been duly authorized, executed and delivered by the
Company. Each of the UCC financing statements related to the Mortgages has been
duly authorized by the Company.
The execution and delivery by Holdings and its Subsidiaries of the Credit
Documents, the Canadian Pledge Agreement and the Mortgages to which each such
person is party and the performance by each such person of its obligations
thereunder, including, without limitation, the granting of Liens pursuant to the
U.S. Security Agreement, the Canadian Pledge Agreement and the Mortgages, (a)
will not violate any provision of any Massachusetts, New York or federal law,
statute, rule or regulation or of the General Corporation Law of the State of
Delaware or the Delaware Revised Uniform Limited Partnership Act, (b) will not
result in a breach or violation of, or constitute a default, result in the
creation of a Lien or require the repurchase of securities under, any of the
agreements, instruments, court orders, judgments or decrees listed on Exhibit A
hereto and (c) will not violate or require the repurchase of securities under
the governing documents of the Company, Holdings or the Delaware Sub.
The Arranger, et. al -3- October 21, 2003
Except as may be required in order to perfect the Liens contemplated by the
U.S. Security Agreement, no consent, approval, license or exemption by, or order
or authorization of, or filing, recording or registration with, any governmental
authority under Massachusetts, New York or federal law, the General Corporation
Law of the State of Delaware or the Delaware Revised Uniform Limited Partnership
Act, is required to be obtained by Holdings or its Subsidiaries in connection
with the execution and delivery of the Credit Documents, Canadian Pledge
Agreement or the Mortgages to which such person is party or the performance by
each such person of its obligations thereunder.
To our knowledge, after having made inquiry of officers of the Company and
Holdings but without having made any other investigation, neither Holdings or
any of its Subsidiaries is a party to any action, suit or proceeding which
places in question the validity or enforceability of, or seeks to enjoin the
performance of, the Credit Documents, the Canadian Pledge Agreement or the
Mortgages.
Neither Holdings nor any of its Subsidiaries is 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.
Neither the making of the loans under the Credit Agreement, nor the
application of the proceeds thereof as provided in the Credit Agreement, will
violate Regulations T, U or X of the Board of Governors of the Federal Reserve
System as in effect on the date hereof.
The U.S. Security Agreement creates a valid security interest in favor of
the Collateral Agent in the Collateral described therein to the extent that such
security interest can be created under Article 9 of the New York Uniform
Commercial Code.
The initial financing statements attached as Exhibit B (the "Financing
Statements") are duly authorized by the respective Loan Parties and are in
proper form for filing with the Secretary of State of the State of Delaware.
Under Delaware Article 9, upon the later of the attachment of the security
interest and the filing of the Financing Statements with the Delaware Secretary
of State, the security interests granted by the U.S. Security Agreement which
can be perfected by the filing of financing statements under Delaware Article 9
(including, for the avoidance of doubt, the partnership interests of the Company
held by Holdings) will be perfected, except that a filing must be made in the
office designated for the filing or recording of a mortgage on the related real
property if the collateral is as-extracted collateral or timber to be cut or if
the financing statement is filed as a fixture filing and the collateral is goods
that are or are to become fixtures.
After giving effect to the delivery to the Collateral Agent of the Pledged
Shares (as defined in the U.S. Security Agreement) listed on Exhibit C hereto
and the related stock powers pursuant to the U.S. Security Agreement, and
assuming that neither the Lenders nor the Collateral Agent had "notice of an
adverse claim" (as such term is used in the New York Uniform Commercial Code)
with respect to the Pledged Shares at the time the Pledged Shares are delivered
to the Collateral Agent, the respective security interests created in favor of
the Collateral Agent under the U.S. Security Agreement in such Pledged Shares
constitute perfected security interests in such Pledged Shares, free of any
"adverse claim" (as so defined).
The Arranger, et. al -4- October 21, 2003
After giving effect to the delivery to the Collateral Agent of the
Intercompany Notes (as defined in the U.S. Security Agreement) listed on Exhibit
D hereto and the related assignments pursuant to the U.S. Security Agreement,
the security interests in such Intercompany Notes created in favor of the
Collateral Agent under the U.S. Security Agreement constitute perfected security
interests.
Assuming the due execution and delivery of a Deposit Account Control
Agreement as defined in, and in the form attached to, the U.S. Security
Agreement by the bank party thereto and by the applicable Loan Party and
assuming that such bank is a "bank" and that the deposit account subject to the
Deposit Account Control Agreement is a "deposit account" (as those terms are
defined in the New York Uniform Commercial Code) and that the law applicable to
the perfection of security interests in the deposit accounts referred to in the
Deposit Account Control Agreement is the same as New York law, the security
interests in such deposit accounts will have been perfected by control.
Subject to the qualifications set forth in the unnumbered paragraphs at the
end hereof, the subordination provisions contained in the Senior Subordinated
Note Agreement are enforceable against the Company, and the Obligations are
within the definition of "Senior Debt" included in such subordination
provisions.
Subject to all of the assumptions and qualifications set forth therein, we
confirm to you our opinion dated this date to the initial purchasers of the
Senior Subordinated Notes and agree that you may rely on such opinion as if it
were addressed to you, notwithstanding anything to the contrary contained in
such opinion.
Subject to all of the assumptions and qualifications set forth therein, we
confirm to you our opinion dated this date to the Sellers under the Acquisition
Agreement and agree that you may rely on such opinion as if it were addressed to
you, notwithstanding anything to the contrary contained in such opinion.
Our opinion set forth in paragraph 16 above and our opinion that the
Credit Documents to which the Company, Holdings, the Delaware Sub or the
Canadian Sub are party constitute the legal, valid and binding obligation of
such of the foregoing persons as are party thereto, enforceable against each
such person party thereto in accordance with its terms, is subject to (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws of general application affecting the rights and remedies of
creditors and secured parties, (ii) general principles of equity, and (iii) the
right of a court of competent jurisdiction to make other equitable provisions to
effectuate the subordination provisions set forth in the Senior Subordinated
Note Indenture.
The opinions expressed herein do not purport to cover, and we express
no opinion with respect to, the applicability of Section 548 of the federal
Bankruptcy Code or any comparable provision of state law.
The opinions expressed herein are subject to the qualification that
the enforceability of provisions in the Credit Documents providing for
indemnification or contribution may be limited by public policy considerations.
In addition, we express no opinion as to (i) the extent to which broadly worded
waivers may be enforced, (ii) the enforceability of any provision of the Credit
Documents which purports to grant the right of setoff to an affiliate of a
lender or a purchaser of a participation in the loans outstanding thereunder,
which permits the exercise of a right of setoff against amounts not then due or
which provides for interest on interest or automatic compounding of interest, or
(iii) the extent to which provisions providing for conclusive presumptions or
determinations, non-effectiveness of oral modifications, arbitration,
The Arranger, et. al -5- October 21, 2003
submission to jurisdiction, waiver of or consent to service of process and venue
or waiver of offset or defenses will be enforced.
In addition, certain provisions contained in the U.S. Security
Agreement, including the grant of powers of attorney thereunder, may be
unenforceable in whole or in part but the inclusion of such provisions in the
U.S. Security Agreement does not affect the validity of any of the other
provisions thereof, and the remaining provisions of the U.S. Security Agreement
are sufficient for the practical realization of the benefits intended to be
provided thereby.
We further express no opinion as to the existence of, or as to the
title of any person who has granted a security interest in any Collateral to,
any item of Collateral or as to the priority or (except to the extent set forth
in paragraphs 12, 13, 14 and 15 above) the perfection of any security interest
in the Collateral. For purposes of paragraphs 11 and 12 above, we express no
opinion with respect to (a) security interests in any commercial tort claims or
(b) security interests in goods which are in accession to, or commingled or
processed with other goods to the extent that a security interest is limited by
Section 9-336 of New York Uniform Commercial Code or Delaware Article 9. For
purposes of our opinion in paragraph 11 above, we have assumed that the debtors
listed in the Financing Statements are not organized and have not filed any
certificates of domestication in any jurisdiction other than Delaware. We call
your attention to the fact that your security interest in certain Collateral
described in the U.S. Security Agreement may not be able to be perfected by the
filing of financing statements under Delaware Article 9 and that under certain
circumstances set forth in Delaware Article 9 the filings referred to in
paragraph 12 become ineffective as a result of changes occurring after the date
hereof and will terminate after five years after the original filing date unless
appropriate continuation statements are duly filed. In addition, Section 552 of
the Bankruptcy Code limits the extent to which property acquired by a debtor
after the commencement of a case under the Bankruptcy Code may be subject to a
lien resulting from any security agreement entered into by the debtor before the
commencement of the case.
This opinion is being furnished only to the addressees and is solely
for their benefit and the benefit of their participants and assignees permitted
by the Credit Agreement. This opinion may not be relied upon for any other
purpose or by any other person, without our prior written consent.
Very truly yours,
Exhibit A
Material Agreements
Indenture dated as of October 21, 2003 among Norcraft Companies, L.P., Norcraft
Finance Corp., and each of the Guarantors named therein, and U.S. Bank National
Association.
Registration Rights Agreement dated as of October 21, 2003, by and among
Norcraft Companies, L.P., Norcraft Finance Corp. and each of the Guarantors
named therein, and UBS Securities LLC and Wachovia Capital Markets, LLC.
Unit Purchase Agreement, dated August 29, 2003, by and among Norcraft Holdings,
L.L.C., Norcraft Companies, L.L.C., Goense, Bounds & Partners B, L.P. and the
Sellers listed on the schedules thereto (the "Unit Purchase Agreement").
-----------------------
Escrow Agreement, dated August 29, 2003 by and among ▇▇▇▇▇▇▇▇▇ Partners, LLC, GB
Management, L.P., Norcraft Holdings, L.L.C. and Bank One, National Association,
attached as Exhibit H to the Unit Purchase Agreement.
Lease, dated October ___, 2003 between Mohave Holdings, LLC and Norcraft
Companies, L.L.C., attached as Exhibit I to the Unit Purchase Agreement.
Amendment and Waiver, dated as of October 2, 2003 by and among Norcraft
Companies, L.L.C., Norcraft Holdings, L.L.C., ▇▇▇▇▇▇▇▇▇ Partners, L.L.C., GB
Management, L.P. and the other signatories thereto to the Unit Purchase
Agreement dated as of August 29, 2003 amongst the same parties.
Norcraft Holdings, L.L.C. Limited Liability Company Agreement dated as of
August 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇▇,
dated as of October 21, 2003.
Deferred Compensation Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇▇,
dated as of October 21, 2003.
Contribution Agreement, dated as of October 21, 2003, by and among Norcraft
Holdings, L.P., ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, HEB Norcraft Holdings Corp. and HMB Norcraft Corp.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇▇ ▇▇▇▇▇▇▇, dated as of
October 21, 2003.
Employment Letter from Norcraft Holdings, L.P. to ▇▇▇▇ ▇▇▇▇, dated as of
October 21, 2003.
Norcraft GP, L.L.C., Amended and Restated Limited Liability Company Agreement,
dated as of the Closing date among SKM Blocker Corp., TCP Blocker Corp., ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇.
Norcraft Holdings, L.P., Agreement of Limited Partnership, dated September 30,
2003.
Norcraft Holdings, L.P., Amended and Restated Agreement of Limited Partnership,
dated October 21, 2003.
Norcraft Companies, L.P. Agreement of Limited Partnership, dated October 21,
2003
Management and Monitoring Agreement between ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ and Trimaran
Capital Partners and Norcraft Companies, L.P.
Exhibit B
Financing Statements
[Illegible]
Exhibit C
Pledged Shares
1. Stock Certificate #2 evidencing the ownership of 100 shares of the common
stock, $0.01 par value per share, of Norcraft Finance Corp by Norcraft
Companies, L.P.
2. Stock Certificate #8 evidencing the ownership of 2,536,989 shares of the
common stock, without nominal or par value, of Norcraft Canada Corporation
by Norcraft Companies, L.P.
3. Stock Certificate #9 evidencing the ownership of 1,366,071 shares of the
common stock, without nominal or par value, of Norcraft Canada Corporation
by Norcraft Companies, L.P.
Exhibit D
Intercompany Notes
1. Intercompany Note dated October 21, 2003 among the Loan Parties (other than
Norcraft Canada Corporation).
2. Intercompany Note dated October 21, 2003 between the Company and Norcraft
Canada Corporation.
K-1-1
EXHIBIT K-2
[Form of]
OPINION OF LOCAL AND CANADIAN COUNSEL
Canadian Counsel
October , 2003
--
Dear Sirs:
RE: Norcraft Canada Corporation (the "Corporation")
We have acted on behalf of the Corporation in all legal matters relating to the
issue by the Corporation in favour of UBS AG, Stamford Branch (the "Secured
Party") of the Canadian Security Agreement dated the day of October, 2003 (the
--
"Canadian Security Agreement") and a Mortgage in the principal amount of dated
--
the day of October, 2003 (the "Mortgage") (the Canadian Security Agreement and
--
the Mortgage are hereinafter collectively referred to as the "Agreements").
For the purposes hereof, we have examined the following documentation and made
such other investigations as we consider appropriate:
1. The Agreements;
2. Certificate of Status dated October 17, 2003, issued pursuant to The
Corporations Act (Manitoba), certifying that the Corporation is still in
existence; and
3. Certified copy of the resolution of the Directors of the Corporation
certifying that the said Directors have authorized the Corporation to
borrow money upon the credit of the Corporation and, to evidence and secure
the debt created thereby, to create and issue the Agreements in favour of
the Secured Party
and in examining such documents and the other documents referred to herein
(which includes records, instruments and certificates), we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity with originals of all items submitted to us as
copies (certified or otherwise), and the identity and capacity of all
individuals.
The opinions expressed herein have been furnished at your request and are solely
for your benefit and may not be relied upon by any other person or furnished to
any other person without our prior written consent, and such opinions are
limited to the matters
K-2-1
expressly stated herein, and no opinion is implied or may be inferred beyond the
matters expressly stated herein. The opinions expressed herein are given as of
the date of this letter and we undertake no responsibility to advise you of any
change in any laws or facts which may hereafter occur and which may affect our
opinions.
We are qualified to practice law only in the Province of Manitoba. The opinions
expressed herein are limited to the laws of the Province of Manitoba and the
federal laws of Canada applicable therein. We are not qualified to practise in,
or to express an opinion as to the laws of, any other jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Corporation:
(a) has been duly registered as a body corporate and is validly
existing under the laws of Manitoba;
(b) has the corporate power and capacity to own its property and to
carry on the business carried on by it; and
(c) has the corporate power and capacity to carry out and perform each
and every of its obligations under the Agreements.
2. The making, execution and delivery of the Agreements are within the
corporate power and capacity of the Corporation, each of the Agreements has
been duly authorized by all necessary corporate action on the part of the
Corporation, and the Agreements have each been duly executed and delivered
by the Corporation.
Yours truly,
K-2-2
Local Counsel
K-2-3
Law Offices
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, LLP PHILADELPHIA, PA
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ CAMDEN, NJ
303-292-2400 SALT LAKE CITY, UT
FAX: ▇▇▇-▇▇▇-▇▇▇▇ VOORHEES, NJ
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ WASHINGTON, DC
October 21, 2003
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
Re: $70,000,000.00 Loan (the "Loan") from the financial institutions
("Lenders") party to the Credit Agreement (defined below), to
Norcraft Companies L.P. ("Borrower"), Guaranteed by Norcraft
Holdings, L.P., a Delaware limited partnership ("Parent
Guarantor") and certain Subsidiary Guarantors, with UBS
Securities LLC, as Bookmanager and Lead Arranger, Wachovia Bank,
National Association, as Syndication Agent, Wachovia Capital
Markets, LLC, as Co-Arranger, UBS Loan Finance LLC, as Swingline
Lender, and UBS AG, Stamford Branch, as Issuing Bank,
Administrative Agent for the Lenders, and Collateral Agent
Ladies and Gentlemen:
We have acted as special counsel in the State of Colorado (the
"State") to Borrower for the limited purpose of reviewing the documents
described in Part A, below, and delivering this opinion letter in connection
with the transactions contemplated by: (i) that certain Credit Agreement dated
as of October 21, 2003 (the "Credit Agreement") by and among Borrower, Parent
Guarantor, the "Subsidiary Guarantors" listed on Schedule 1.01(c) to the Credit
Agreement, the parties that have executed the Credit Agreement as "Lenders" (the
"Lenders"), UBS AG, Stamford Branch, as administrative agent for the Lenders and
UBS Securities LLC, as lead arranger and bookmanager; and (ii) the Deed of Trust
and Financing Statements (each as defined below) relating to the Collateral,
naming the Borrower as debtor thereunder and UBS AG, Stamford Branch, as
collateral agent and beneficiary thereunder (the "Collateral Agent").
Capitalized terms used in this letter without further definition have the
meanings give to them in the Credit Agreement.
A. Documents Reviewed. In rendering the opinions set forth below, we have
examined unexecuted, undelivered and undated (unless otherwise noted below)
copies of the following documents:
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 2
(i) Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing, dated as of the date hereof (the "Deed of Trust"), made by
the Borrower in favor of the Public Trustee of El Paso County, Colorado, for the
benefit of Collateral Agent; and
(ii) A UCC-1 Financing Statement for the property listed on Schedule A
attached hereto (the "Financing Statement"), to be filed for such property in
the real property records of El Paso County, Colorado (the "County Records").
Solely for the purpose of reviewing certain definitions and cross
references contained in the Deed of Trust, and the provision regarding
"Governing Law" contained in Section 11.09, we have also examined:
(iii) the Credit Agreement;
We are rendering this opinion to you at the request of our client
pursuant to Section 4.01(f) of the Credit Agreement.
B. Assumptions. For purposes of the opinions expressed herein, we have
assumed, without independent inquiry or investigation, and with your permission:
1. the authenticity and completeness of all documents, records and
instruments submitted to us as originals and the conformity with the original
documents, records and instruments of all such documents, records and
instruments submitted to us as copies;
2. that the executed copies of all documents or forms of documents
reviewed by us have been properly completed, and all appropriate exhibits,
including, without limitation, the proper legal descriptions of real property
referenced in such documents or forms of documents, have been attached to such
documents or forms of documents;
3. that the Documents accurately describe and contain the mutual
understanding of the parties, and there are no oral or written statements or
agreements that modify, amend or vary (or purport to modify, amend or vary) any
of the terms of the Documents;
4. that the Documents have been duly authorized by each of the parties
thereto, and have been duly executed, acknowledged where necessary, and
delivered by each of the parties thereto;
5. that the parties to the Documents are all duly formed, validly
existing, and in good standing under all applicable laws including, without
limitation, that the Borrower is a Delaware limited partnership, duly formed,
validly existing, and in good standing under the laws of the State of Delaware;
6. Lenders and Collateral Agent are corporations, duly formed, validly
existing, and in good standing under the laws of a state or states other than
the State of Colorado,
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 3
are not otherwise qualified to do business in the State of Colorado, and are not
otherwise transacting business in the State of Colorado or carrying out in
Colorado any activities other than creating or acquiring indebtedness,
mortgages, or other security interests in real or personal property, and
securing or collecting debts in their own behalf or enforcing mortgages or
security interests in property securing such debts;
7. the parties to the Documents and the other agreements, instruments
and documents executed in connection therewith, have the power (including,
without limitation, partnership power where applicable) and the authority to
enter into and perform the Documents and such other agreements, instruments and
documents;
8. all statements of fact and all representations, warranties and
covenants contained in the Documents and in certificates and documents of
governmental entities or officials, to the extent they relate to the opinions
expressed herein, are accurate and correct;
9. the Borrower owns the assets described in the Documents, has good
fee title to any such assets that constitute real property and good title to all
other such assets, has "rights" in such assets and such assets exist;
10. the descriptions of the assets in the Documents are sufficiently
accurate to provide notice to third parties of the liens and security interests
provided by the Documents and to create an effective contractual obligation;
11. the fixtures and other personal property that are part of the
security referenced in the Deed of Trust, for which a location is determinable,
are located in the State of Colorado;
12. the Deed of Trust and Financing Statements will be duly filed,
indexed, and recorded among the County Records and the office of the Secretary
of State of Delaware, with all fees, charges, and taxes having been paid;
13. Parent Guarantor and the Subsidiary Guarantors are parents or
affiliates of Borrower and have received and will receive substantial direct and
indirect benefits from Borrower's performance of the transactions contemplated
by the Documents; and
14. Collateral Agent and Lenders have given value to Borrower in
connection with the Documents.
C. Opinions. Based on the foregoing, and subject to the assumptions,
exceptions, qualifications, limitations and exclusions set forth herein, we are
of the opinion that:
1. Deed of Trust.
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 4
(a) The Deed of Trust (i) is enforceable against the Borrower, as
the grantor named therein, in accordance with its terms, and (ii) provided that
the final form bears a one-inch margin on the top and one-half inch margin on
the bottom and sides of each page, is in proper form to be accepted for
recording in the County Records, and, upon recording, to create and constitute a
valid lien on the real property described therein ("Real Property").
(b) The County Records is the only place in which the Deed of
Trust is required to be recorded in order to publish notice thereof.
(c) The provisions of the Deed of Trust are effective to create
enforceable security interests in favor of Collateral Agent (acting for Lenders)
in all of the collateral described therein that is of the type in which a
security interest may be created under Article 9 of the Colorado UCC
(collectively, the "UCC Collateral"). Upon the proper filing of the Financing
Statement in the County Records, the security interest created by the Deed of
Trust in that portion of the UCC Collateral that constitutes fixtures will be
perfected to the extent a security interest may be perfected in such UCC
Collateral under the Colorado UCC only by the filing of a financing statement in
the appropriate County Records.
2. Taxes etc. No intangible or documentary stamp taxes, recording
taxes, transfer taxes or similar charges, are payable to the State of Colorado
or to any jurisdiction therein on account of the execution and delivery of the
Documents or the creation of the indebtedness evidenced or secured by any of the
Documents or the recording or filing of the Financing Statements, except for
nominal filing or recording fees.
3. Concerning Collateral Agent and Lender. The consummation of the
transaction as contemplated by the Documents will not, in and of itself, cause
the Collateral Agent or Lender to be deemed to be doing business in the State of
Colorado under the law relating to the doing of business in Colorado by foreign
corporations. If it were determined that Lender was doing such business in
Colorado, so that any such qualification and filing were required, the validity
of the Documents would not be affected thereby, but if the Collateral Agent or
the Lenders were not qualified, the Collateral Agent, or the Lenders in the
event they institute remedies without the Collateral Agent, as the case may be,
would be subject to the provisions of C.R.S. (S) ▇-▇▇▇-▇▇▇, which would preclude
Collateral Agent and Lender from enforcing their respective rights in the courts
of the State of Colorado until such time as they are qualified to transact
business in the State, which qualification could not be accomplished until all
fees and penalties due under said C.R.S. (S) ▇-▇▇▇-▇▇▇ had been paid.
4. Usury. There is no Colorado civil usury statute that would be
applicable to the Documents. The Documents comply with the Colorado criminal
usury statute, C.R.S. (S) ▇▇-▇▇-▇▇▇, assuming that the effective interest rate
for any Notes and other Secured Obligations (taking into account all sums,
however labeled, that are reserved, charged or taken as an incident to or as a
condition of the extension of credit) will not at any time exceed forty-five
(45%) per annum, calculated on the basis of a year of 365 days (or 366 days, as
applicable).
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 5
5. Remedies.
(a) As the named "Beneficiary" for whose benefit the Deed of
Trust has been granted, under the terms of the Deed of Trust, the Collateral
Agent is permitted under the laws of the State without naming all of the Lenders
in any applicable legal proceeding to exercise remedies under the Deed of Trust
in its own name, as Collateral Agent.
(b) The Deed of Trust contains the terms and provisions necessary
to enable Collateral Agent, following a default thereunder, to exercise the
foreclosure remedies which are customarily available to a beneficiary under a
Deed of Trust in the State of Colorado upon such default.
6. Choice of Law. Section 11.09 of the Credit Agreement states that
the Credit Agreement is governed by and construed in accordance with the laws of
the State of New York. Although there is no Colorado case law dealing directly
with the enforceability of an express choice of law provision, the Colorado
Supreme Court has approved of the Restatement of Conflicts of Law 2d for
contract actions. This approach would support the enforcement of an express
choice of law provision unless (a) the applicable law of the jurisdiction so
chosen would be contrary to a fundamental policy of another jurisdiction that
has a greater interest in the determination of the particular issue and that
would be the jurisdiction of the applicable law in the absence of the express
choice of law provision; or (b) the jurisdiction so chosen has no substantial
relation to the parties or to the transaction. Assuming that no state would be
considered to have an interest in the subject matter of the transactions
contemplated by Credit Agreement greater than the interest of the State of New
York, which state's laws would be applied in the absence of the express choice
of laws thereunder, and which state also has a fundamental policy requiring
application of its law, we are of the opinion that, under current Colorado law,
a court of competent jurisdiction in Colorado would enforce the express choice
of law provisions in the Credit Agreement. In rendering the foregoing opinion,
we have assumed, with the Lenders' and Collateral Agent's permission, that the
State of New York would be deemed to have a substantial relation to the parties
or the transactions contemplated by the Credit Agreement.
D. Qualifications, Limitations, Exceptions And Exclusions. The opinions
expressed in this letter are subject to the following further exceptions and
qualifications:
1. References to Other Documents. The Documents refer to certain
Hedging Agreements, Interest Rate Agreements, and other documents (collectively,
the "Other Documents"). We have not reviewed copies of the Other Documents and
have no knowledge of their terms. Therefore, we give no opinion with respect to
the Other Documents or any of their terms, even if such terms are incorporated
in the terms of the Documents and may be governed by Colorado law. Further, we
give no opinion as to whether the provisions of the Documents are amended,
overruled, impaired, supplemented or affected by the terms of the Other
Documents. Additionally, as noted above, we have reviewed only relevant portions
of the Credit Agreement for the limited purpose of reviewing definitions
applicable to the Deed of Trust and opining on
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 6
the "governing law" provisions contained therein. Therefore, we give only the
opinion expressly set forth herein with respect to the Credit Agreement, and
give no opinion with respect to any other terms of the Credit Agreement, even if
such terms are incorporated in the terms of the remaining Documents, or as to
whether the provisions of the remaining Documents are amended, overruled,
impaired, supplemented or affected by any other terms of the Credit Agreement.
2. Laws Affecting Rights of Creditors and Equitable Remedies. We
express no opinion as to:
(a) the effect of applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally; and
(b) the effect of the exercise of judicial discretion in
accordance with general principles of equity (whether applied by a court of law
or of equity).
3. Other Laws. We express no opinion with respect to the law of
fiduciary obligations, pension and employee benefit law, federal banking
regulations, bulk transfer law, patent, copyright, trademark or other
intellectual property law, racketeering law, health and safety law, labor law,
law with respect to national or local emergency, tax law, zoning, subdivision or
land use law, blue sky law, securities law, antitrust or unfair competition law,
or environmental law.
4. Remedies Limited by Certain Laws. Certain remedies, waivers, and
other provisions of the Documents may not be enforceable or may be limited by
applicable laws governing the same or by Collateral Agent's failure to provide
notice, or, in the case of the Financing Statements, updated information or
continuation statements, as further discussed in ▇▇▇▇▇▇▇▇▇ ▇.▇▇, below. In
particular, the United States Bankruptcy Code (the "Bankruptcy Code") may render
certain provisions of the Documents ineffective, invalid and unenforceable.
Notwithstanding the foregoing, the unenforceability of such remedies, waivers
and other provisions, and the inclusion of such remedial provisions does not, in
our opinion invalidate the Deed of Trust as a whole or make the remedies
provided in the Deed of Trust inadequate for the practical realization of the
benefits intended to be afforded by the Deed of Trust, except for the economic
consequences of procedural or other delay.
5. Cumulative Remedies. We express no opinion as to the enforceability
of cumulative remedies to the extent such cumulative remedies purport to or
would have the effect of compensating the party entitled to the benefits thereof
in amounts in excess of the actual loss suffered by such party or would violate
applicable laws regarding real estate or mixed collateral foreclosures or
election of remedies. Various provisions of the Documents provide that the
remedies for breach thereof are cumulative. To the extent such provisions would
permit multiple recovery, they are ineffective, invalid and unenforceable.
6. Further Limitations on Enforceability. Any court or administrative
body may refuse to enforce (i) provisions relating to indemnification, choice of
law (except as
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 7
expressly set forth in Section C.6), severability, waivers (including but not
limited to waivers of rights of subrogation, redemption or any statute of
limitations), delay or omission of enforcement rights or remedies, the
reasonableness of any notice or the marshalling of assets, waiver of or
disclaimer of fiduciary duties, (ii) any provisions relating to proxies or to
the authorization of a person to execute documents or act on behalf of another
person (whether or not as such person's attorney-in-fact), (iii) provisions
relating to waiver of rights to set-off, counterclaim or to otherwise assert
claims or defenses in the Documents, or provisions limiting the liability of the
Collateral Agent or Lenders for their bad faith, negligence or other fault and
(iv) provisions relating to matters in the control of other parties. We express
no opinion as to the enforceability of provisions contained in the Documents:
(a) allowing any party to take possession of and operate Real Property
immediately upon default, without the consent of the Borrower and without
judicial appointment of a receiver; (b) entitling any party to the appointment
of a receiver, to the extent not permitted by applicable law; (c) purporting to
avoid the doctrine of a mortgagee in possession; (d) providing for the
enforceability of any absolute and unconditional assignment or conveyance in
favor of a lienholder prior to the time that the lienholder obtains possession
of Real Property through foreclosure or appointment of a receiver for such Real
Property, or takes some action which is judicially deemed to be the equivalent
thereof; (e) establishing evidentiary standards for suits or proceedings or
restricting, limiting, or denying access to courts, or purporting to establish
jurisdiction, venue, or the permitted means of service of process; (f) waiving
or limiting rights relating to valuation, appraisal, exculpation,
indemnification, contribution, waiver, or ratification of future acts, trespass,
conversion, negligence, or fraud; or (g) providing for arbitration or appraisal
remedies rights other than in accordance with applicable law.
7. Priority or Title: We express no opinion as to the priority of any
lien, security interest, assignment or other encumbrance intended to be created
by the Deed of Trust or Financing Statement. As to matters of title, (a) we
express no opinion as to the adequacy or accuracy of any legal description
included within the Deed of Trust, and (b) we understand that you are relying
upon a policy of title insurance, and upon such other evidence as you deem
appropriate with respect to title matters and with respect to the appropriate
recordation and indexing of any Deed of Trust. We have not made or undertaken to
make any investigation of the state of title to the real property or the
personal property that is the subject of Deed of Trust and express no opinion
concerning such title.
8. Nonobligatory Advances. The Deed of Trust purports to include sums
which may later be loaned to the Borrower whether or not evidenced by a Note as
part of the "Secured Obligations" to be secured by the Deeds of Trust. Our
opinion is qualified in that C.R.S. (S) ▇▇-▇▇-▇▇▇ provides that the following
advances are secured to the same extent and priority as if disbursed on or
before the day that the mortgage or deed of trust is recorded: (a) all advances,
both obligatory and optional, up to the stated maximum principal amount, but
only before the maximum principal amount has been initially advanced (unless the
mortgage or deed of trust states it is made pursuant to a revolving credit
agreement); and (b) advances for (i) negative amortization or deferred interest,
(ii) taxes, levies or insurance, and (iii) protection of
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 8
the real property from waste, damage or abuse, if when such advances are added
to the principal amount, the total exceeds the maximum stated principal amount.
As to other amounts advanced, the lien created by a deed of trust or mortgage
may be junior to any matter which was of record at the time of such advance.
9. Qualification to Do Business in Colorado. In Section C.3, above, we
state that the consummation of the transaction as contemplated by the Documents
will not cause the Collateral Agent or Lender to be deemed to be doing business
in the State of Colorado under the law relating to the doing of business in
Colorado by foreign corporations. That opinion is based on certain assumptions
stated in Section B, and on the provisions of C.R.S. (S) 7-115-101(2), which
provides that a foreign corporation is not considered to be "transacting
business" in Colorado solely by reason of carrying on in the state any one or
more of certain activities, which activities include:
(a) Creating, as borrower or lender, or acquiring indebtedness,
mortgages, or other security interests in real or personal property;
(b) Securing or collecting debts in its own behalf or enforcing
mortgages or security interests in property securing such debts; or
(c) Owning, without more, real or personal property.
10. Original Evidence of Indebtedness. In Colorado, pursuant to C.R.S.
(S) ▇▇-▇▇-▇▇▇, a secured party must produce and present the original evidence
of debt (whether a promissory note or other debt instrument) secured by and
identified in a deed of trust, to the public trustee of the county where the
Real Property is located in connection with a public trustee foreclosure, and,
pursuant to C.R.S. ▇▇-▇▇-▇▇▇, to such public trustee in connection with the
release or partial release of a deed of trust.
11. Acceleration. C.R.S. (S) ▇▇-▇▇-▇▇▇, as amended, provides that
whenever the default or violation in the terms of a note and deed of trust being
foreclosed is nonpayment of any sums due thereunder, certain parties may prevent
the foreclosure sale and reinstate the deed of trust (in effect, reversing the
acceleration) by paying, on or before noon on the day before the date fixed for
the sale, all delinquent principal and interest payments which would then be due
in the absence of acceleration, plus all costs, expenses, late charges,
attorneys' fees, and other fees incurred in connection with the foreclosure
proceedings. Where the only default under a deed of trust arises from failure of
the borrower to furnish balance sheets or tax returns, the borrower may cure
such default in the manner prescribed by providing adequate evidence of
borrower's financial condition. To the extent any provision of the Deed of Trust
purports to limit such right to reverse the acceleration, it is ineffective,
invalid and unenforceable.
12. Redemption. Under C.R.S. (S)(S) ▇▇-▇▇-▇▇▇ et seq., as amended, the
owner of mortgaged real property, any person who might be liable upon a
deficiency, any lienor with respect to such real property, lessees and others
with an interest in such property, in order of
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 9
succession, may redeem the property sold by paying the sum for which the
property was sold with interest, together with taxes paid and other "proper
charges." Redemption is governed in part by C.R.S. (S) ▇▇-▇▇-▇▇▇, as amended,
which provides for a 75-day redemption period for nonagricultural real estate.
Strict compliance with this and other redemption statutes is required for valid
foreclosures. In addition, in certain cases, a foreclosure sale is not a
perpetual bar.
13. Escrow for Taxes. Under C.R.S. (S) 39-1-119, any mortgagee holding
property tax escrow funds on May 20 of any year in excess of 25% of the total
taxes paid in that year (for the prior year) must refund the excess to the
property owner on or before May 30 of that same year. To the extent the
provisions of the Deed of Trust permit the Collateral Agent or Lenders to retain
property tax payments in excess of the amount permitted by the statute, such
provisions are unenforceable, and any attempt to enforce or exercise such
provisions would subject the Collateral Agent or Lenders to liability for the
statutory penalty.
14. Application of Proceeds. The application of proceeds from a
foreclosure sale in the State of Colorado will be governed by the applicable
Colorado statutes and, to the extent provisions of the Deed of Trust are in
conflict with such statutes, those provisions will be unenforceable. To the
extent the Deed of Trust permits Collateral Agent, in its discretion, to apply
the proceeds from any disposition of Real Property or collateral as the
Collateral Agent may determine, the Deed of Trust may be unenforceable to the
extent such application is contrary to statutory provisions governing same.
15. Accounts and General Intangibles. We express no opinion as to the
validity or perfection of the security interests in any account or general
intangible owing by the United States of America, any state, county, city,
municipality or other governmental body, or any department, agency or
instrumentality thereof, unless such account or general intangible has been
assigned to the Collateral Agent or Lenders pursuant to the Assignment of Claims
Act of 1940, as amended, or any applicable similar state or federal law or
regulation relating to the assignment or pledge thereof.
16. Security Interests in Certain Collateral. We express no opinion as
to any perfection of security interests in crops, timber to be cut, minerals and
accounts, consumer goods or accounts arising from the sale of consumer goods,
farm products and accounts and general intangibles arising from or relating to
the sale of farm products by a ▇▇▇▇▇▇, equipment used in fanning operations,
mobile goods, letters of credit, documents of title, copyrights, other literary
property rights, service marks, patents and trademarks, any beneficial interest
in a trust, governmental licenses, approvals and permits which may not be
assigned or pledged as a matter of law, cash which is not in possession of the
Collateral Agent, certificated or uncertificated securities, certificates of
deposit, know-how, processes, trade secrets, undocumented computer software,
unrecorded and unwritten data and information and rights and licenses
thereunder. We further understand that you are not relying upon our opinion with
regard to the validity or perfection of any lien on personal property in which a
security interest cannot be created or perfected pursuant to the Colorado UCC,
or the creation of a valid lien upon any personal
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 10
property of the Borrower under any Deed of Trust, or of any lien or security
interest that may be created by the Deed of Trust that must be perfected by
control or possession.
17. Security Interests; UCC. The opinions expressed herein are subject
to the limitations on perfection of security interests in proceeds resulting
from the operation of C.R.S. (S) 4-9-315; the limitations on the rights of
Collateral Agent or Lenders to purchase at a private sale any of the Trust
Property consisting of personal property or fixtures as set forth in C.R.S.
(S)(S) 4-9-610, 611, 615, 617, 618 and 624; the limitations with respect to
buyers in the ordinary course of business imposed by C.R.S. (S)(S) 4-9-320, 323
and 330; the limitations with respect to accessions and commingling imposed by
C.R.S. (S)(S) 4-9- 335 and 336; the provisions of C.R.S. (S)(S) 4-9-204 and
4-9-322, 323 and 324, relating to the time of attachment and priority of a
security interest in the items of the property which are not now owned and in
the possession of Borrower; and Sections 554 and 552 of Title 11 of the
Bankruptcy Code with respect to any property acquired by Borrower after
commencement of a case by or against Borrower under the Bankruptcy Code. To the
extent the Documents permit Collateral Agent, in its discretion, to apply the
proceeds from any disposition of collateral as Collateral Agent may determine,
the Documents may be unenforceable to the extent such application is contrary to
statutory provisions governing same.
18. Notices under the UCC. The right to receive notices under C.R.S.
(S)(S) 4-9-610, 611, 615, 617, 618, 620, 621 and 624 may not be waived prior to
default, and the failure to comply with such notice requirements may bar or
limit the recovery of any deficiency remaining after the retention or sale of
repossessed property.
19. Attorney-in-Fact. To the extent the appointment of Collateral
Agent as attorney-in-fact purports to permit Collateral Agent to avoid
compliance with the duties of a secured creditor as set forth in the Colorado
UCC, it is are probably ineffective. We know of no authority considering whether
a secured party may exercise the rights of an owner by invoking its appointment
as an attorney-in-fact, prior to foreclosure of its lien.
20. Further UCC Limitations. Security interests with respect to
proceeds of collateral remain perfected only to the extent that such proceeds
constitute identifiable cash proceeds that are neither commingled nor deposited
in a deposit account with other funds or to the extent that such security
interest in such proceeds is perfected in accordance with the Colorado law
within ten days after receipt of such proceeds. Certain instruments and other
collateral may be perfected by possession or control. With respect to collateral
as to which perfection of the security interests therein is obtained by the
filing of financing statements, the Colorado UCC requires the filing of a
continuation statement within the period of six months prior to the expiration
of five years from the date of the original filing thereof in order to maintain
the effectiveness of such filing.
21. Choice of Law. Except as otherwise expressly stated in Section
C.10, above, our opinion is given as if the laws of the State of Colorado govern
the Documents, without regard to Colorado's laws regarding conflict of laws or
the determination of the Lenders'
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
October 21, 2003
Page 11
or Collateral Agent's jurisdiction under the Colorado UCC. Notwithstanding the
opinion set forth in Paragraph C.10, above, the laws of the State of Colorado
will apply to:
(a) the perfection or non-perfection of any security interest in
collateral intended to be created by the Documents, if the collateral in
question is located in Colorado when the last event occurs on which the
assertion is based that the security interest is perfected or unperfected, and
(b) the remedies available for the enforcement of the Documents
with respect to Colorado collateral.
We express no opinion as to the law of any jurisdiction other than the
federal law of the United States, and the laws of the State of Colorado. Our
opinions are limited to specific issues addressed and are limited in all
respects to laws and facts existing on the date hereof. By rendering our
opinions, we do not undertake to advise you of any changes in such laws or facts
which may occur after the date hereof.
This opinion is furnished to Lenders and Collateral Agent solely for
their benefit in connection with the transaction represented by the Credit
Agreement and, without our express written consent, may not be furnished to or
relied upon by any person or entity other than Collateral Agent, Lenders, and by
any participant, assignee or successor to interests of the Lenders under the
Documents.
Very Truly Yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & INGERSOLL, LLP
[LOGO] ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
October 21, 2003
Tel (▇▇▇) ▇▇▇-▇▇▇▇
Fax (▇▇▇) ▇▇▇-▇▇▇▇
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
Re: Loans (the "Loans" by the Lenders to Norcraft Companies
L.P., a Delaware limited partnership secured by
Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing
Ladies and Gentlemen:
We have acted as special Kansas counsel for Norcraft
Companies, L.P., a Delaware limited partnership (the "Company"),
in connection with the transactions contemplated by the Credit
Agreement, dated as of October 21, 2003 (the "Credit Agreement"),
by and among the Company, Norcraft Holdings, L.P., a Delaware
limited partnership, the Subsidiary Guarantors (such term and
each other capitalized term used but not defined herein having
the meaning given to it in the Credit Agreement), the Lenders,
UBS SECURITIES LLC, as bookmanager and lead arranger, WACHOVIA
BANK, NATIONAL ASSOCIATION, as syndication agent, WACHOVIA
CAPITAL MARKETS, LLC, as co-arranger, UBS LOAN FINANCE LLC, as
swingline lender, and UBS AG, STAMFORD BRANCH, as Issuing Bank,
administrative agent for the Lenders and as collateral agent for
the Secured Parties and the Issuing Bank.
In such capacity, we have reviewed the following unexecuted
documents, dated as of October 21, 2003, unless otherwise
indicated below, in connection with the Loans (collectively
referred to herein as the "Subject Documents"):
The Credit Agreement/1/;
The Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Filing granted by
the Company, as mortgagor, assignor
KANSAS CITY
OMAHA
OVERLAND PARK
PHOENIX
ST. LOUIS
WASHINGTON, D.C.
WICHITA
----------
/1/ Review of the Credit Agreement was limited to the sections
therein specifically referenced in the Mortgage and to the
choice of law section.
October 21, 2003
Page 2
and debtor, in favor of UBS AG, Stamford Branch, in its capacity
as collateral agent for the Secured Parties, as mortgagee,
assignee and secured party (in such capacity, the "Mortgagee"),
relating to certain property located in ▇▇▇▇▇▇ County, Kansas as
therein described and defined (the "Mortgaged Property"); and
UCC-1 financing statement, (the "Financing Statement"), between
the Company, as debtor, and Collateral Agent, as secured party,
to be filed as a fixture filing in the Office of the Register of
Deeds for ▇▇▇▇▇▇ County, Kansas;
We have also examined such other certificates, documents, materials
and other matters of law as we have deemed necessary in order to give the
opinions hereinafter set forth.
In rendering the opinions set forth below, we have made, with your
permission, and without independent investigation on our part, the
following assumptions:
a. (i) All of the Subject Documents have been duly and properly
authorized, executed, acknowledged, delivered and accepted, and sealed and
attested, by each of the parties thereto, (ii) all corporate, partnership,
limited liability company and other action requisite for the execution,
delivery and performance of the Subject Documents by each of the parties
thereto has been duly and effectively taken, (iii) each of the parties to
the Subject Documents has all necessary power and authority (corporate,
partnership and otherwise), to execute, enter into, deliver and perform the
same, (iv) the execution, delivery and performance of the Subject Documents
by each of the parties thereto do not and will not contravene or conflict
with any provision of the charter documents or bylaws of any of such
parties or any partnership agreement or other agreement or instrument which
is binding upon any of such parties or their respective properties, (v) the
Subject Documents are the valid and binding obligations of each of the
parties thereto (excepting the Mortgage and the Financing Statement, as to
the Company), and are enforceable against each such party in accordance
with their respective terms (vi) to the extent the laws of a state or
jurisdiction other than the State of Kansas control or govern any of the
Subject Documents, such Subject Documents are legal, valid, binding and
enforceable in accordance with their terms under the laws of such other
state or jurisdiction.
b. All certifications made to us by public officials concerning
factual matters are accurate and complete.
c. All certifications made to us by the Company are accurate and
complete.
d. The Loans to the Company have been funded, and there is no
circumstance (such as but not limited to fraud in the inducement, duress,
waiver or
October 21, 2003
Page 3
estoppel) extrinsic to the Subject Documents which might give rise to a
defense against enforcement of any of the Subject Documents.
e. (i) All documents submitted to us as certified, conformed, draft,
photostatic or telefacsimilied copies conform to the original documents,
(ii) all such original documents and all documents submitted to us as
originals are authentic, (iii) all unexecuted copies of documents submitted
to us conform to the original executed documents, and (iv) that as to all
of the Subject Documents, in such executed copies all blank spaces have
been or shall be properly completed and all exhibits and schedules referred
to therein have been or shall be attached in their final forms and none of
the completions or attachments are or shall be inconsistent with the forms
which we have reviewed.
f. The transactions contemplated by the Subject Documents that are to
be consummated prior to or on the date hereof have been consummated prior
to or simultaneously with the delivery of this opinion letter.
g. The statements, recitals, representations and warranties as to
matters of fact set forth in the Subject Documents are accurate and
complete.
h. At the time the Mortgage is recorded, the Company will have good
and valid title, of record, to the Mortgaged Property described in the
Mortgage.
i. The transactions evidenced by the Subject Documents are not being
entered into for any personal, family or household purposes.
j. All mortgage registration, recordation and filing fees and taxes
have been paid to permit the registration, recordation and filing of the
Mortgage both as a mortgage and as a fixture filing.
k. There is no agreement, course of dealing or performance or usage of
trade defining, supplementing, amending, modifying, waiving or qualifying
the terms of any of the Subject Documents.
1. The conduct of each of the parties to the Subject Documents has
complied with any requirement of good faith, fair dealing and
conscionability.
m. The opinion recipients have acted in good faith and without notice
of any defense against enforcement of any rights created by, or any adverse
claim to, any property or security interest transferred or created as part
of, or contemplated by, the Subject Documents.
n. The Company is a limited partnership organized under the laws of a
jurisdiction other than the State of Kansas, it is duly formed and validly
existing and in good standing under the laws of such state, and that it is
duly qualified to transact
October 21, 2003
Page 4
business and is in good standing as a foreign limited partnership in the
State of Kansas.
o. None of the Mortgaged Property constituting personal property or
fixtures (hereinafter, the "Collateral") includes (1) goods used or bought
primarily for personal, family or household purposes; (2) timber to be cut;
or (3) as-extracted collateral (as defined in the Applicable Code (as
hereinafter defined).
p. The Company has good and valid title to the Collateral.
q. Each of the Collateral Agent or the Lenders is a bank, banking
corporation, trust company or an insurance company organized under the laws
of a jurisdiction other than the State of Kansas, that each is in good
standing under the laws of the jurisdiction of its organization and that
the none of the Collateral Agents or the Lenders was created, and is not
qualified, to do business under the laws of the State of Kansas.
r. With respect to opinion paragraph 6 below, (i) none of the Lenders
or the Collateral Agent maintains and will not maintain any office or other
place of business in the State of Kansas (ii) none of the Lenders or the
Collateral Agent has and will not have any property of any type or nature
in the State of Kansas, (iii) none of the Lenders or the Collateral Agent
has and will not have any employees or agents within the State of Kansas
other than on a de minimis basis, (iv) none of the Lenders or the
Collateral Agent is currently subject to taxation in the State of Kansas
and the activities of the Lenders and the Collateral Agent in the State of
Kansas are and will continue to be limited to receiving, taking, purchasing
and holding, by mortgage or otherwise, any security interests or liens
executed, given, transferred or intended to represent or secure loans upon
real or personal property situated in the State of Kansas, and to selling,
assigning, transferring, suing upon, foreclosing or otherwise enforcing the
same.
Based upon the foregoing, and subject to the qualifications and
exceptions heretofore and hereinafter set forth, we are of the opinion
that:
1. The Mortgage constitutes the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with its
terms.
2. The Mortgage is in proper form (a) for recording and, (b) upon
recording in the Office of the Register of Deeds for ▇▇▇▇▇▇ County, Kansas,
to create the lien it purports to create on that part of the Mortgaged
Property described therein constituting real property interests in the
maximum principal amount of $10,955,728.00. The recordation of the Mortgage
in the Office of the Register of Deeds for ▇▇▇▇▇▇ County, Kansas, is the
only recordation necessary to publish notice of and to establish of record
the rights of the Mortgagee under the Mortgage, and no other document or
instrument need be recorded, registered or filed in any public office in
the State of Kansas in order to publish notice of the Mortgage or to permit
October 21, 2003
Page 5
the Mortgagee to enforce its rights under the Mortgage in the courts of the
State of Kansas in connection with that part of the Mortgaged Property
constituting real property interests, except for court filings that would
be required to enforce the Mortgage following a default.
3. The only fees or taxes imposed in connection with the execution,
delivery of recording of the Mortgage are the following:
(i) Pursuant to Kan. Stat. ▇▇▇. 79-3101 through 79-3107c (1989 & 1994
Cum. Supp.) before any mortgage of real property may be recorded, a
registration fee of $.26 for each $100 and major fraction thereof of
the principal debt or obligation secured must be paid to the register
of deeds of the county in which the property or any part thereof is
located; provided, however, that if the mortgage states that an amount
less than the entire principal debt or obligation will be secured
thereby, the registration fee is paid on such lesser amount.
(ii) A recording fee for recording the Mortgage in the Office of the
Register of Deeds for ▇▇▇▇▇▇ County, Kansas in the amount of $8.00 for
the first page and $4.00 for each additional page.
4. The security agreement set forth in the Mortgage is in proper form
to create a security interest in the Company's interest in the Collateral
to the extent that a security interest may be created in the Collateral
pursuant to the Applicable Code. Upon the filing of the Financing Statement
as a fixture filing in the Office of the Register of Deeds for ▇▇▇▇▇▇
County, Kansas (the "Filing Office"), and except as hereinafter provided,
the Collateral Agent will have a perfected security interest in the
interest of the Company in the Collateral described in such Financing
Statement, to the extent a security interest in such Collateral can be
perfected by the filing of the Financing Statement in the specified Filing
Office under the Uniform Commercial Code (the "Applicable Code") in effect
in the state in which the Company is located, as determined under Section
9-307 of the Applicable Code.
In order to maintain the perfection of the security interests of
the Collateral Agent in the Collateral described in the Financing
Statement, to the extent required by the Applicable Code, continuation
statements must be filed in a form and manner required thereby. Additional
filings may also be necessary if the Company either changes its name or
business structure; or changes the jurisdiction in which it is located.
With respect to the Collateral covered by the Financing
Statement, the ability to perfect a security interest in the Collateral is
subject to all of the limitations contained in Part 3 of the Applicable
Code, including, without limitation, the specific limitations mentioned
below in this letter. The continuation of perfection in proceeds (as
defined in the Applicable Code) is limited to the degree set forth in
Section 9-315 of the Applicable Code. The validity of a security interest
in accessions (as defined in
October 21, 2003
Page 6
the Applicable Code) is limited to the degree set forth in Section 9-335 of
the Applicable Code, and the validity of a security interest in fixtures
(as defined in the Applicable Code) is limited to the degree set forth in
Section 9-334 of the Applicable Code.
6. Neither any of the Lenders nor the Collateral Agent (i) is
required, solely by reason of the transactions contemplated by the Subject
Documents, to qualify to do business in the State of Kansas or to obtain
any other authorization, approval or action by, give any notice to or make
any filing with, any governmental, administrative or judicial authority or
regulatory body of the State of Kansas in order to carry out the
transactions contemplated by the Subject Documents, or avail itself of the
remedies provided thereby; or (ii) will become subject to franchise,
privilege, income or earnings taxation in the State of Kansas, or to our
knowledge, to any other taxation in the State of Kansas, solely as a result
of holding the liens granted to the Mortgagee under the Mortgage.
7. While the Kansas choice of law rules are not entirely settled, we
believe that a state or federal court sitting in the State of Kansas and
properly applying the choice of law rules of the State of Kansas should
honor the provision of the Subject Documents wherein the parties thereto
agree that such document shall be governed by the laws of the State of New
York, (except as to validity, creation and perfection of the liens,
perfection of security interests, and matters of procedure and remedies as
to which the Subject Documents will be governed by and construed in
accordance with the laws of the State of Kansas) unless either (a) the
State of New York has no substantial relationship to the parties to such
Subject Document or the transactions contemplated by such documents and
there is no other reasonable basis for such parties' choice, or (b)
application of the laws of the State of New York would be contrary to a
fundamental policy of the State of Kansas and the State of Kansas has a
materially greater interest than the State of New York in the determination
of the particular issue.
8. Subject to the qualifications below relating to the effect of a
judicial action to enforce remedies, enforcement of the remedies provided
in the Mortgage will not deprive the Collateral Agent, on behalf of the
Lenders of its right to seek a deficiency judgment with respect to the
Secured Obligations, nor will such enforcement limit the Collateral Agent's
rights to foreclosure on other collateral securing the Secured Obligations.
The Collateral Agent is permitted under the laws of the State of Kansas
without naming all of the Lenders in any applicable legal proceeding to
exercise remedies under the Mortgage for the realization of any of the
Mortgaged Property in its own name, as Collateral Agent.
9. We advise you that Kansas Statutes Annotated (S) 16-207(a) and (b)
(2002 Cum. Supp.) prescribes certain interest rates and limitations that
may be charged in connection with a note or other instrument in writing.
However, (S) 16- 207(f) provides that the interest rates prescribed in (S)
16-207(a) and (b) do not apply to a "business or agricultural loan." That
subsection further provides that "unless a
October 21, 2003
Page7
loan is made primarily for personal, family or household purposes, the loan
shall be considered a business or agricultural loan." Assuming that the
Subject Documents are governed by the laws of the State of Kansas for the
purpose of rendering the opinion set forth in this paragraph, and assuming
that each of the Loans constitutes a "business loan" within the meaning of
Kansas Statutes Annotated (S) 16-207(f), the provisions of the Subject
Documents reviewed by us do not violate any law, statute or regulation of
the State of Kansas relating to usury.
The opinions and statements expressed herein are subject to the
following additional limitations and qualifications:
A. We have not made any independent examination of any applicable
zoning, subdivision or other laws, ordinances or regulations which are or
might be applicable to the Mortgaged Property (including but not limited to
any relating to the use, occupation or operation thereof) nor have we made
any review of easements, reservations, contracts, restrictions, agreements
or other matters regarding title which relate or might relate to the
Mortgaged Property. Therefore, this opinion does not extend to any such
items.
B. We have not reviewed the descriptions of any of the property or the
collateral contained in any of the Subject Documents and we express no
opinion as to the sufficiency, accuracy or correctness of any such
descriptions.
C. We are expressing no opinion with respect to any instrument or
document other than the Subject Documents; further, we are expressing no
opinion as to the validity or enforceability of any provision in the
Subject Documents if the validity or enforceability of such provision is
dependent upon or is in conflict with or is inconsistent with any
instruments or documents other than the Subject Documents.
D. We have made no examinations of title or Uniform Commercial Code
filing searches with respect to any of the real or personal property
constituting a part of the Mortgaged Property and, accordingly, we are
expressing no opinion as to the title thereto.
E. We are expressing no opinion as to the priority of any lien or
security interest created by the Subject Documents.
F. Our opinions and statements expressed herein are restricted to
matters governed by the laws of the State of Kansas.
G. We are expressing no opinion as to the enforceability of any lien
created, or attempted to be created, by the Subject Documents with respect
to real property acquired by the Company after the date of this opinion.
H. The Collateral Agent's rights with respect to the rents, income and
profits from the Mortgaged Property in cases of default may depend upon the
October 21, 2003
Page 8
consummation of foreclosure, obtaining possession of the Mortgaged Property
and the expiration of any redemption rights.
I. In the event of foreclosure under the Subject Documents, the
rights, titles and interests of any purchaser will be subject to statutory
and equitable redemption rights.
J. The enforceability of any of the Subject Documents or any other
instrument referred to herein is subject to (i) applicable bankruptcy,
insolvency, reorganization, receivership, fraudulent transfer, fraudulent
conveyance, moratorium and similar laws relating to or affecting the
enforceability of creditors rights generally, and (ii) general equitable
principles (regardless of whether enforcement is sought in equity or at
law), limitations on the availability of equitable remedies (such as
specific performance), and similar principles governing enforceability,
such as but not necessarily limited to standards of commercial
reasonableness.
K. Particular provisions, rights, waivers and remedies in the Subject
Documents may not be enforceable in accordance with their terms, and the
enforceability of any instrument referred to herein is subject to statutes
and judicial decisions affecting the enforcement of contracts generally;
provided, however, that none of the foregoing will prevent the Collateral
Agent from the practical realization (except for delay thereof) of the
benefits of the security provided by the Subject Documents, subject to each
and all of the other limitations, qualifications and assumptions set forth
herein.
L. Default, acceleration, foreclosure and repossession are all subject
to judicial supervision and, accordingly, accelerations, repossessions or
foreclosures may be limited by a court of competent jurisdiction to
material defaults.
M. Mortgages must be foreclosed by judicial process in accordance with
the laws of the State of Kansas, and accordingly, provisions in the
Mortgage for foreclosure under power of sale are ineffective in the State
of Kansas.
N. We express no opinion as to the statutes, administrative decisions
and rules and regulations of county, municipal and special political
subdivisions.
O. The maximum lien of the Mortgage may not exceed at any time the
amount specified therein.
P. The enforceability of any provision in the Subject Documents for
payment of costs of collection (including attorney fees) is subject to
judicial discretion. Without limiting the generality of the foregoing
qualification, any such provision is unenforceable if either (i) a court
determines that the amount of collection costs provided for or sought is
unreasonable or (ii) the Subject Documents provide for, or a party seeks to
recover, (x) costs incurred by a salaried employee of
October 21, 2003
Page 9
such party or its assignee or (y) payment of both attorney fees and
collection agency fees.
Q. We express no opinion with respect to the enforceabitity of (i) any
waiver contained in the Subject Documents of the right to jury trial, lack
of personal jurisdiction, lack of personal service, statute of limitations,
the right to choice of venue, or the right to assert a counterclaim, (ii)
any provisions of the Subject Documents pursuant to which the Company
grants to the Collateral Agent a power of attorney, agency or authorization
coupled with an interest, (iii) any provisions of the Subject Documents
imposing a contractual statute of limitations or limiting notice in
connection with a sale under the Uniform Commercial Code, (iv) any
provisions of the Subject Documents granting the Collateral Agent the right
to split, or sever parts of, the Subject Documents and create new
documents, (v) any right of set-off in any of the Subject Documents, or
(vi) Section 14.16 of the Mortgage.
R. Provisions contained in the Subject Documents that permit any
person to take action or make determinations, or to benefit from
indemnities or similar understandings, may be subject to requirements that
such action be taken or such determinations be made, or that any action or
inaction by such person that may give rise to a request for payment under
such indemnity or similar understanding be taken or not taken on a
reasonable basis and in good faith. Additionally, indemnities may be
unenforceable or limited to the extent that they (i) violate public policy
considerations, (ii) provide for indemnification for violation of
securities law, or (iii) provide for indemnification or exculpation of
parties with respect to intentional acts or gross negligence.
S. We express no opinion with respect to any environmental laws, rules
or regulations or any laws or regulations governing the sale or issuance of
securities.
T. Except for the specific opinions expressed in opinion paragraph 6,
we express no opinion with respect to the application of any income tax or
other tax laws or with respect to any tax consequences of any of the
transactions relating to any of the Subject Documents.
U. We express no opinion as to the perfection or enforceability of any
security interest in the Mortgaged Property to the extent that the
Mortgaged Property includes copyrights, copyright licenses, patents, patent
licenses, trademarks, trademark licenses, vehicles, insurance policies or
permits or any agreement or instrument, including franchise agreements, to
the extent that such agreement or instrument by its terms requires any
consent (which consent has not been obtained) to create a security interest
therein or permit assignment thereof (or prohibits such security interest
or assignment), and proceeds of any of the foregoing.
V. With respect to the opinion expressed in paragraph 6, there is no
statutory or judicial authority on point in the State of Kansas with
respect to the issue of franchise, privilege, income or earnings tax
jurisdiction. In the past, as a matter of
October 21, 2003
Page 10
administrative practice, the Kansas Department of Revenue has taken the
position that foreign corporations which merely hold security interests in
collateral located within the State of Kansas are not subject to taxes in
the State of Kansas, and in giving the opinion in paragraph 6 we are
relying on such administrative practice. We caution that as federal and
state banking laws are changed to authorize and accommodate greater
interstate activities in the State of Kansas by financial institutions not
organized and existing under the laws of the State of Kansas, these past
administrative practices may be subject to review and change.
W. We express no opinion as to whether, if the Collateral Agent were
to commence foreclosure proceedings with respect to any collateral located
in the State of Kansas, or were to become an owner or operator of any
collateral located in the State of Kansas, or a mortgagee or secured party
in possession, or were to take such actions as would constitute acting as a
fiduciary in the State of Kansas, the Collateral Agent would be required to
qualify to do business in the State of Kansas, or would be deemed to be
engaged in business in the State of Kansas, for any purpose, including
without limitation, qualification to do business as a foreign business
organization, or would be subject to any franchise, privilege, income,
earnings, excise or other tax imposed by the State of Kansas
X. We wish to point out that if the Collateral Agent, by virtue of its
obligations as a collateral agent under the Subject Documents, would be a
"fiduciary" under Kan. Stat. ▇▇▇. (S) 59-1701 (1994), then the requirements
and restrictions of (S) 59-1701 may be applicable, although we are not
aware of any Kansas case that applies the requirements of (S) 59-1701 to
the type of activities that would be carried out by the Collateral Agent
under the Subject Documents. If the provisions of (S) 59-1701 were found to
be applicable, the persons or entities on whose behalf the Collateral Agent
acts in such capacity would be required to appoint or seek court
appointment of a successor to the Collateral Agent who is authorized to act
in such capacity under said (S) 59-1701 (such as, but not necessarily
limited to, a bank organized under the laws of the State of Kansas and
having its principal place of business in the State of Kansas). Although
the matter is not free from doubt and based solely upon what we believe to
be the legislative purpose of (S) 59-1701, in our opinion, it is unlikely
that a Kansas court would apply the requirements of (S) 59-1701 to the type
of activities that would be carried out by the Collateral Agent under the
Subject Documents.
Y. Under Kan. Stat. ▇▇▇. (S) 16-205(a), any contractual provision
requiring the payment of any higher rate of interest or any charge as a
penalty for any default may be unenforceable or void.
Z. Kansas law permits only one foreclosure with respect to a mortgage.
Successive partial foreclosures are not permitted under Kansas law.
AA. Kansas law prohibits the splitting of an action on an indebtedness
and an action to foreclose any mortgage or security agreement securing such
October 21, 2003
Page 11
indebtedness. Based upon concepts of judicial economy, res judicata and
election of remedies, Kansas law requires that all remedies and claims
available by a particular plaintiff against a particular defendant be
raised in the same judicial proceeding. Any remedy or claim not asserted in
such proceeding will be lost. Thus, if the Collateral Agent brings a
judicial action against the Company on any of the indebtedness secured by
the Mortgage, the Collateral Agent is also required to seek foreclosure of
the Mortgage in the judicial proceeding. Likewise, if the Collateral Agent
brings a judicial action against the Company in Kansas to foreclosure the
Mortgage, the Collateral Agent is also required to seek judgment on the
note(s) or other indebtedness secured thereby. While we are unaware of any
Kansas cases on point, such prohibition could be applied in connection with
the judicial enforcement of the indebtedness secured by the Mortgage or
judicial enforcement of remedies in any state other than Kansas such that
it would be necessary to proceed in the Kansas courts before proceeding in
the courts of any other state.
BB. Whenever any opinion or statement herein with respect to the
existence or absence of facts, conditions or circumstances is qualified by
the phrase "known to us" or is based upon our "knowledge" or any similar
phrase, it is intended to indicate that, during the course of our limited
representation of the Company, no information has come to our attention
that would give us actual knowledge of the existence or absence of such
facts, conditions or circumstances. The terms "knowledge," "known to us"
and similar phrases refer to the actual present knowledge of the attorneys
in our firm who have devoted substantive attention to matters for which we
have been engaged by the Company and not to the knowledge of the firm or
its shareholders or employees generally. Moreover, we have made no
independent investigation as to any opinion or statement qualified by the
terms "knowledge," "known to us" or similar phrases.
The foregoing opinions shall not be relied upon by any party other
than the parties to whom this letter is addressed and their successors
and/or assigns and their respective counsel in connection with the
transaction contemplated by the Subject Documents. This opinion is not to
be otherwise used, circulated, quoted or referred to by any other party or
in connection with any other transaction. This opinion is issued only with
respect to the present status of law in the State of Kansas and we
undertake no obligation or responsibility to update or supplement this
opinion in response to subsequent changes in the law or future events
affecting the transactions contemplated by the Subject Documents.
Very truly yours,
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October 21, 2003
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
Ladies and Gentlemen:
We have acted as special counsel in the State of Minnesota (the
"State") to Norcraft Companies, L.P., a Delaware limited partnership (the
"Company"), in connection with the execution and delivery today of and the
consummation of the transactions contemplated by (i) that certain credit
agreement dated as of October 21, 2003 (as at any time amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement;" capitalized terms used herein and not defined have the meanings
assigned to such terms in the Credit Agreement), by and among the Company,
Norcraft Holdings, L.P., a Delaware limited partnership ("Holdings"), the other
Guarantors party thereto, the Lenders, and UBS AG, Stamford Branch, as
administrative agent for the Lenders, among others, and (ii) each of the
Security Documents, including, without limitation, the UCC-1 financing
statements (collectively, the "Financing Statements") relating to the Collateral
naming the Company as debtor thereunder and UBS AG, Stamford Branch, as
collateral agent and secured party thereunder (the "Collateral Agent").
In rendering the opinions hereinafter set forth, we have reviewed
final forms of the following documents (collectively, the "Documents"):
(i) the Credit Agreement; and
(ii) a mortgage, assignment of leases and rents, security agreement and fixture
filing, dated as of the date hereof (as at any time amended, the
"Mortgage"), made by the Company in favor of the Collateral Agent.
We have reviewed the Documents and such other instruments, documents
and agreements as we have deemed necessary or appropriate to enable us to render
the opinions hereinafter set forth. We are rendering this opinion to you at the
request of the Company pursuant to Section 4.01(f) of the Credit Agreement.
Whenever this opinion with respect to the existence or absence of
facts is qualified by the phrase "to the best of our knowledge", it is intended
to indicate that, during the course of our representation of the Company in
connection with the Credit Agreement, and without any independent investigation,
no information has come to the attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the only attorney
in our firm actively involved in the transactions described in the Credit
Agreement, which would give us actual knowledge of the existence or absence of
such facts to the contrary, and no other inference as to our knowledge of the
existence or absence of such facts should be drawn from the fact of our
representation of the Company.
▇▇▇▇▇▇ & WHITNEY LLP . ▇▇▇.▇▇▇▇▇▇.▇▇▇ . T 612.340.2600 . F 612.340.2868
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In rendering the opinions hereinafter set forth, we have assumed, with
your permission and without independent investigation or inquiry, (i) that the
Company owns the Collateral (as defined in the Credit Agreement and the
Mortgage, as applicable) and the Mortgaged Property (as defined in the Mortgage)
pledged by it, and (ii) the following other matters:
(a) (i) The authenticity of all documents submitted to us as originals,
(ii) the genuineness of all signatures on all documents that we examined, and
(iii) the conformity to authentic originals of documents submitted to us as
certified, conformed or photostatic copies.
(b) That the Company is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Delaware, is
qualified to do business in, and is in good standing under the laws of, the
State, and has full power and authority to enter into and perform the
obligations described in the Documents.
(c) That the execution, delivery and performance by the Company of the
Documents have been duly authorized by all necessary action of the Company and
each of said documents has been properly executed and delivered by the Company.
(d) That the execution and delivery of the Documents by the Company do not:
(i) violate the organizational documents the Company; or (ii) violate any law,
statute, rule or regulation (other than those of the State) or any judgment,
decree or order applicable to the Company.
(e) That all natural persons who have executed the Documents have the legal
capacity to do so.
(f) That the execution and delivery of the Documents by all parties
thereto, other than the Company, and the performance of their obligations
thereunder have been duly authorized on the part of said parties, and said
parties have the power and authority to execute, deliver and perform the same.
(g) That the execution and delivery of the Documents by all parties
thereto, other than the Company, do not: (i) violate the organizational
documents of any of said parties; (ii) violate any law, statute, rule or
regulation (other than those of the State) applicable to any of said parties;
(iii) violate any judgment, decree or order; or (iv) result in a breach or
default under any other agreement.
(h) That the Documents constitute the valid, legal and binding obligations
of all parties thereto, other than the Company, enforceable against them in
accordance with their terms under all applicable laws.
(i) That the terms and conditions reflected in the Documents have not been
amended, modified or supplemented by any other agreement or understanding of the
parties or by waiver of any of the material provisions of the Documents.
(j) That the Mortgage will be duly filed, indexed and recorded among the
appropriate official records, as set forth below, with all fees, charges and
taxes, including but not limited to the mortgage registry tax required by
Minnesota Statutes Chapter 287, having been fully and properly paid.
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(k) That there has been no mutual mistake of material fact, and there
exists no fraud, duress, undue influence or criminal activity, with respect to
the transactions described in the Documents.
(l) That the Mortgaged Property is not homestead property or property used
in agricultural production or for agricultural purposes.
(m) That the Mortgage contains the true and correct names of the Company
and the Collateral Agent, respectively, the current address of the Collateral
Agent from which information concerning the security interests can be obtained,
the current mailing address of the Company, the correct organizational status of
the Company, and the correct organizational number and federal taxpayer
identification number for the Company.
(n) That title to none of the "Mortgaged Property" (as defined in the
Mortgage) has been registered pursuant to Minnesota Statutes, Chapter 508
(Torrens Act) and all of the Mortgaged Property is physically located in Lyon
County, Minnesota.
(o) That all representations contained in the Documents are true, correct
and complete; provided, however, that to our knowledge we are aware of no facts
which are contrary to said representations.
Based upon and subject to the foregoing assumptions and the
limitations and qualifications hereinafter set forth, we are of the opinion
that:
1. Mortgage. (a) The Mortgage (i) is enforceable against the mortgagor named
therein in accordance with its terms, (ii) is in proper form under applicable
laws of the State to be accepted for recording by the County Recorder identified
in Schedule A attached hereto and (iii) creates and constitutes (A) a valid
mortgage lien on that portion of the Mortgaged Property that constitutes real
property ("Real Property") and (B) a valid security interest in such of the
Mortgaged Property (as defined in the Mortgage) (the "UCC Property") as is
subject to the provisions of Article 9 of the Uniform Commercial Code as in
effect in the State of Minnesota (the "UCC").
(b) The recording of the Mortgage with the County Recorder identified in
Schedule A attached hereto is the only filing or recording necessary to give
constructive notice of the lien created by the Mortgage to subsequent purchasers
and mortgagees of the Real Property. No other recordings, filings, re-recordings
or refilings other than those identified in Schedule A are necessary in order to
maintain the validity or priority of the lien created by the Mortgage.
(c) Assuming that the Mortgage has been properly filed with the office
identified in Schedule A attached hereto, as a fixture filing, the security
interest, lien or pledge created by the Mortgage in that portion of the
Mortgaged Property which constitutes fixtures and is subject to the provisions
of Article 9 of the UCC (the "Fixtures") is duly perfected, without the filing
of any separate UCC-1 financing statement. The Mortgage adequately identifies
such Mortgaged Property described therein to provide sufficient notice to third
parties of the security interest referenced therein.
(d) The priority of the mortgage lien on the Real Property created by the
Mortgage with respect to any obligatory extension of credit or other obligatory
advance (each, a "Future Advance") secured thereby made or deemed to have been
made after the date of recording of the Mortgage will be the same
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as the priority of the Mortgage applicable on such date of recording, if the
correct amount of mortgage registry tax has been timely paid on such Future
Advance, and such priority will not be affected by the rights in and to the Real
Property of any third party whose interest in the Real Property attached thereto
after the date of such recording but prior to the date of such Future Advance.
2. Taxes etc. The recording taxes, documentary stamp taxes or note or intangible
taxes due and payable in connection with the subject transaction or the
recording of the Documents or the creation of the indebtedness evidenced or
secured by any of the Documents are as follows: (a) the Minnesota mortgage
registry tax imposed by Minn. Stat. (S) 287.035; and (b) nominal recording fees.
Any failure to correctly pay such mortgage registry tax in full or in part (i)
shall result in the imposition of a penalty and interest on any unpaid taxes
against the Collateral Agent, and (ii) shall result in the Mortgage being
ineffective as notice, inadmissible in court and not subject to foreclosure by
action or advertisement until the correct amount of mortgage registry tax is
paid.
3. Concerning Collateral Agent. (a) The execution, delivery, recordation and
performance by the Collateral Agent, the Lenders or the Company of the Documents
to which each is a party (i) will not, to the best of our knowledge, violate any
existing law, governmental rule or regulation of the State and (ii) do not, to
the best of Our knowledge, require any license, permit, authorization, consent
or other approval of, any exemption by, or any registration, recording or filing
with, any court, administrative agency or other governmental authority of the
State, except for the recordings and the filings set forth in Schedule A
attached hereto.
(b) Neither the Collateral Agent nor any of the Lenders is required (i) to be
qualified to transact business, file any designation for service of process,
file any reports (except as noted below) or pay any taxes in the State or (ii)
to comply with any statutory or regulatory requirement applicable only to
financial institutions chartered or qualified to do business in the State, in
each case, solely by reason of the execution and delivery of any of the
Documents or by reason of the participation in any of the transactions under or
contemplated by the Documents, including without limitation the making and
receipt of payments pursuant thereto and the exercise of any remedy thereunder.
If it were determined that any such qualification were required, the validity of
the Documents would not be affected thereby, but if the Collateral Agent or the
Lenders were not qualified, the Collateral Agent or the Lenders, in the event
they institute remedies without the Collateral Agent or the Lender, as the case
may be, so qualifying, would be precluded from enforcing their respective rights
in the courts of the State until such time as they are qualified to transact
business in the State. However, the lack of qualification would not result in
any waiver of rights or remedies pending such qualification. In addition,
Minnesota Statutes (S) 290.371, Subd. 4, provides that any corporation or other
entity taxable as a corporation for purposes of Minnesota corporate income tax
required to file a Notice of Business Activities Report does not have a cause of
action upon which it may bring suit under Minnesota law unless the corporation
has filed a Notice of Business Activities Report and provides that the use of
the courts of the State of Minnesota for all contracts executed and all causes
of action that arose before the end of any period for which a corporation failed
to file a required report is precluded. Insofar as our opinion may relate to the
enforceability of any agreement under Minnesota law or in a Minnesota court, we
have assumed that any party seeking to enforce such agreement has at all times
been, and will continue at all times to be, exempt from the requirement of
filing a Notice of Business Activities Report or, if not exempt, has duly filed,
and will continue to duly file, all required Notice of Business Activities
Reports. Notwithstanding the foregoing, Minnesota Statutes (S) 290.371, Subd.
4(c) provides that a court must excuse the failure to file a Notice of Business
Activities Report, if the entity has paid all taxes, interest and civil
penalties due from it to the State of Minnesota, for all periods, if any.
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4. Usury. Assuming that the Documents are governed by the laws of the State for
the purpose of rendering the opinion set forth in this paragraph, none of the
provisions of the Documents (including, without limitation, the Secured
Obligations as defined in each Document) will violate any law, statute or
regulation of the State relating to usury.
5. Remedies. (a) The Collateral Agent is permitted under the laws of the State
without naming all of the Lenders in any applicable legal proceeding to exercise
remedies under the Documents for the realization of any of the Collateral in
its own name, as Collateral Agent.
(b) The transfer of all or any portion of the Collateral in connection with the
exercise of any remedy under the Mortgage, including, without limitation, by way
of judicial foreclosure, will not restrict, affect or impair the liability of
the Company with respect to the indebtedness secured thereby or the Collateral
Agent's or the other Lenders' rights or remedies to the foreclosure or
enforcement of any other security interest or liens securing such indebtedness;
except that (a) in the event of a foreclosure by advertisement with a six month
redemption period no deficiency judgment will be available, and (b) any amount
of indebtedness bid in at a Minnesota foreclosure sale will be deemed
satisfied. The laws of the State do not require a lienholder to elect to first
pursue its remedies either against mortgaged real property or personal property
where such lienholder holds security interests and liens on both real and
personal property of debtor.
(c) The Mortgage contains the terms and provisions necessary to enable the
Collateral Agent, following a default thereunder, to exercise the remedies
which are customarily available to a mortgage lien holder in the State of
Minnesota.
6. Choice of Law. A state or Federal court in the State applying the State's
choice of law principles will give effect to the provisions in the Documents
which select the laws of the State of New York as the governing law thereof and
will apply such laws, rather than the laws of the State, to the enforceability,
construction and application thereof, provided, however, (a) creation,
perfection and priority of the liens and security interests created thereby, and
(b) enforcement of any remedial provisions contained in the Mortgage must be
exercised or enforced in accordance with the laws of the State, and provided
further that such courts might not give effect to such choice of law provisions
if giving effect to such choice of law provisions were (a) contrary to a
fundamental policy of the State of Minnesota, (b) not entered into in good
faith, or (c) an attempt to evade the law of the State of Minnesota, but we are
not aware of any existing precedent refusing to give effect to a choice of law
provision in a substantial commercial contract on purely public policy grounds.
In addition to the assumptions set forth above and to any other
limitations and qualifications herein, this opinion is also subject to and
limited by the following limitations and qualifications; provided, however, that
such limitations and qualifications will not prevent a practical realization of
the principal benefits and security intended to be provided by the Loan
Documents:
(i) Our opinions are subject to the effect of any applicable bankruptcy,
insolvency, reorganization, liquidation, rearrangement, moratorium, fraudulent
transfer, fraudulent conveyance or other similar laws of general application
relating to or affecting the rights of creditors generally.
(ii) Our opinions are subject to the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation concepts of material-
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ity, reasonableness, good faith and fair dealing, and of other similar doctrines
affecting the enforceability of agreements generally and/or the availability of
equitable remedies, including but not limited to specific performance,
injunctive relief, marshalling of assets and stay, and of the discretion of
courts and administrative bodies in enforcing such remedies.
(iii) We express no opinion as to the enforceability of provisions of the
Mortgage to the extent they contain:
A. forum selection provisions,
B. waivers by the Company of any statutory, procedural or
constitutional rights or remedies, of the right to recover certain types of
damages, or of any statute of limitations,
C. grants to the Collateral Agent of powers of attorney, or the power
to act as attorney or attorney-in-fact on behalf of the Company,
D. cumulative remedies to the extent such cumulative remedies purport
to compensate, or would have the effect of compensating, the party
entitled to benefit therefrom in an amount in excess of the actual loss
suffered by such party,
E. liquidated damages provisions,
F. provisions which purport to render prohibited transfers null and
void or which permit acceleration of the indebtedness secured by the
Mortgage in the event of the sale of an interest in the Company or a lease
of the Mortgaged Property. (However, we are aware of no case, law or
statute stating that such are unenforceable),
G. provisions allowing a party to be indemnified against the
consequences of said party's own negligence, gross negligence or
intentional misconduct,
H. provisions prohibiting amendments of the Mortgage or waivers of
provisions thereof by oral agreement or course of conduct,
I. provisions subjecting after-acquired real property to the lien,
assignment and/or security interests of the Mortgage without amending the
same to expressly describe said real property,
J. provisions requiring the Company to pay a prepayment premium or
reinvestment charge upon payment in full of the indebtedness after an
acceleration thereof for default or in connection with the payment of any
amount due in redemption. (However, we are aware of no case, law or statute
stating that such are unenforceable unless they rise to the level of a
common law penalty),
K. provisions categorizing personal property as real property as they
apply to third parties,
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L. provisions subrogating Collateral Agent to the rights of holders of
liens that have been released of record,
M. provisions permitting forcible entry or removal, and
N. provisions permitting amendment of material terms of the loan
transaction without amending the Mortgage or affecting the priority
thereof. Under Minnesota law, a mortgage must give third parties notice of
the material terms of the secured loan. If said material terms are changed
without amending the Mortgage, and if the Mortgage would then incorrectly
reflect the loan transaction absent the incorporation therein of said
material terms, the priority of the lien of the Mortgage with respect to
intervening liens may be impaired.
However, inclusion of said provisions in the Mortgage will not render the
remainder thereof unenforceable.
(iv) The rights of debtors, obligors and other secured parties to receive
notices under Section 9-602 of the UCC may not be waived; subject to Section
9-624 of the UCC, the failure to comply with such notice requirements may bar or
limit the recovery of any deficiency remaining after the retention or sale of
repossessed collateral; and a secured party may be required to obtain, after
appropriate notice and hearing, a judgment or decree of a court of competent
jurisdiction permitting the secured party to enforce its rights to take
possession and dispose of any of its collateral.
(v) Any foreclosure of the Mortgage must be conducted in accordance with
the applicable provisions of Minnesota Statutes, Chapters 580, 581 and 582, and
with other laws governing the foreclosure of mortgages on real property located
in the State of Minnesota (including but not limited to the provisions thereof
relating to notice, to reinstatement after acceleration, to redemption after
foreclosure sale, to simultaneous exercise of remedies, to the availability of
deficiency judgments, to interest on advances and interest on a judgment in a
foreclosure action, and to limitations on recovery of the mortgagee's attorneys'
fees and costs); any enforcement of remedies under the Mortgage relating to the
rents and income from the Mortgaged Property and/or the appointment and powers
of a receiver therefor must be conducted in accordance with the applicable
provisions of Minnesota Statutes (S)(S) 576.01 and 559.17, and with other laws
governing the enforcement of collateral assignments of rents and income from
real property located in the State of Minnesota; and any enforcement of remedies
against fixtures included in the Mortgaged Property must be conducted in
accordance with the applicable provisions of the UCC. Any provisions of the
Mortgage which are not consistent with such laws and statutes or which purport
to waive or restrict any statutory and legal protection and benefits accorded
the Company, pursuant to such laws and statutes, are probably unenforceable, but
the inclusion of such provisions in the Mortgage should not, in our opinion,
prevent the exercise by the holder of the Mortgage of the remedies for borrower
defaults commonly and customarily available for borrower defaults pursuant to
the laws of the State of Minnesota.
(vi) The enforcement and remedial actions taken with respect to the
Mortgage in Minnesota may have an adverse affect on the enforcement and remedial
action that can be taken with respect to the indebtedness instruments evidencing
the debt, and with respect to the Mortgage or other security instruments as the
same relate to property in other states, and with respect to other lien and
security instruments that also secure the indebtedness secured by the Mortgage;
and the enforcement and remedial actions taken with respect to the indebtedness
instruments evidencing the debt, and other such lien and security
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instruments securing the same or portions of the same indebtedness, may have an
adverse affect on the enforcement and remedial action that can be taken in
Minnesota under the Mortgage. We have not attempted to identify all of those
possible effects, since we are opining only with respect to Minnesota law, we
are not generally familiar with the relevant laws of other states, and we have
not identified or researched the conflict of law questions that might arise in
connection with these issues. However, we are able to identify the following
concerns or possible concerns from a Minnesota perspective:
A. Two methods of mortgage foreclosure are widely used in Minnesota:
foreclosure by action and foreclosure by advertisement. Minnesota Statutes
(S) 580.02 provides as one of the requisites of foreclosure by
advertisement that"... no action or proceeding has been instituted at law
to recover the debt then remaining secured by such mortgage, or any part
thereof, or, if the action or proceeding has been instituted, that the same
has been discontinued, or that an execution upon the judgment rendered
therein has been returned unsatisfied, in whole or in part". This statutory
requirement for foreclosure by advertisement would preclude the use of
foreclosure by advertisement with respect to the Mortgage during the
continuance of any other action or proceeding for recovery of the
unsegregated debt or any portion of the unsegregated debt, whether in,
Minnesota or in any other state.
B. It is clear that under Minnesota law the bidding in of a portion of
the unsegregated debt at a Minnesota foreclosure sale would extinguish the
portion of the unsegregated in debtedness so bid.
C. Although we have not specifically researched the question, we are
not aware of any Minnesota authority providing controlling guidance on the
question of whether Minnesota courts would allow statutory or other debtor
protections available to the Company in other states to influence or
qualify the Minnesota remedies which normally would be available to a
mortgagee because of the unsegregated nature of the indebtedness secured by
the Mortgage.
D. No opinion is expressed herein with respect to the effect of a
Minnesota deficiency judgment (which may not be available in Minnesota in
the case of a foreclosure by advertisement) on the mortgagee's rights and
remedies in states other than Minnesota with respect to the amount included
in the Minnesota judgment.
E. No opinion is expressed herein with respect to the effect of a
failure to obtain a Minnesota deficiency judgment (irrespective of whether
or not a Minnesota deficiency judgment would be available) on the
mortgagee's rights and remedies in states other than Minnesota with respect
to the amount of the unsegregated debt which was not bid in at the
Minnesota foreclosure sale and/or which was not included in a Minnesota
deficiency judgment.
(vii) Future advances will be secured by the Mortgage only to the extent
such advances are obligatory and only to the extent that all applicable mortgage
registry tax has been timely paid with respect thereto.
(viii) We express no opinion concerning the compliance by the Company, the
Mortgaged Property or the transactions described in the Mortgage with, or the
effect, if any, of noncompliance with, any applicable local, state or federal
antitrust, securities, environmental, zoning, subdivision, develop-
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ment, land use, building code, health, safety or similar laws, ordinances or
regulations, or those governing access by the disabled or physically challenged.
(ix) No examination of title to any of the Mortgaged Property has been
undertaken. We express no opinion concerning (i) title to, or the perfection
(except as above expressly stated) or priority of, any security interest,
pledge, lien, mortgage or other interest in, any real or personal property,
whether created by the Mortgage or otherwise, (ii) the adequacy or correctness
of the descriptions of the Real Property set forth in the Mortgage, (iii) the
existence of any liens, charges or encumbrances on the Mortgaged Property, (iv)
the present or future value of any security for the Secured Obligations (as that
term is defined in the Mortgage), or (v) the necessity or existence of any
consent thereto as a result of contractual arrangements with third parties not
expressly disclosed to us.
(x) The opinions set forth herein are limited to the specific issues
addressed and are limited in all respects to the laws and statutes of the State
of Minnesota and the United States of America in effect as of the date of this
letter.
(xi) Our opinions herein, insofar as they relate to the indemnification
provisions set forth in the Mortgage, are subject to the effect of public policy
relating thereto and of federal and state securities and environmental laws.
We disclaim any undertaking to advise you of any change which may
hereafter come to our attention.
We are admitted to practice in the State. We have not examined the
laws of any state other than the State of Minnesota and the laws of the United
States of America. Accordingly, the foregoing opinion applies only insofar as
the laws, rules and regulations of the State of Minnesota and laws, rules and
regulations of the United States of America may be concerned, and we express no
opinion as to matters under or involving the laws of any jurisdiction other than
the laws of the United States and the State of Minnesota.
The foregoing opinions may be relied on by each of you, by any
successors and assigns of the Collateral Agent and by any participant, assignee
or successor to interests of the Lenders under the Documents, but may not be
relied upon by an other person, party or entity.
Very truly yours,
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▇▇▇▇▇▇ & WHITNEY LLP
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Schedule A
The Mortgage must be filed of record in the office of the County Recorder in and
for Lyon County, Minnesota.
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1
2 October 21, 2003
3 UBS AG, Stamford Branch, as Collateral Agent
4 and
5 The Lenders Party to the Credit
6 Agreement Referred to Below
7 Ladies and Gentlemen:
8 We have acted as special counsel in the State of North Carolina
9 (the "State") to Norcraft Companies, L.P., a Delaware limited partnership
10 (the "Company"), in connection with the execution and delivery today of and
11 the consummation of the transactions contemplated by (i) that certain
12 credit agreement dated as of October 21, 2003 (as at any time amended,
13 amended and restated, supplemented or otherwise modified from time to time,
14 the "Credit Agreement;" capitalized terms used herein and not defined have
15 the meanings assigned to such terms in the Credit Agreement), by and among
16 the Company, Norcraft Holdings, L.P., a Delaware limited partnership
17 ("Holdings"), the other Guarantor parties thereto, the Lenders, UBS AG,
18 Stamford Branch, as administrative agent for the Lenders, among others and
19 (ii) each of the Security Documents, including, without limitation, the
20 UCC-1 financing statements (collectively, the "Financing Statements")
21 relating to the Collateral naming the Company as debtor thereunder and UBS
22 AG, Stamford Branch, as collateral agent and secured party thereunder (the
23 "Collateral Agent").
24 In rendering the opinions hereinafter set forth, we have reviewed
25 final forms of the following documents (collectively, the "Documents"):
26 (i) the Credit Agreement;
27 (ii) a deed of trust, assignment of leases and rents, security agreement
28 and fixture filing, dated as of the date hereof (as at any time
29 amended, the "Deed of Trust"), made by the Company in favor of the
30 Collateral Agent;
31 (iii) UCC-1 financing statements identified in Schedule A attached hereto
32 (collectively, the "Financing Statements") relating to the Deed of
33 Trust; and
34 (iv) the other filings identified in Schedule A attached hereto
35 (collectively, the "Other Filings") relating to the Deed of Trust.
36 We have reviewed the Documents and such other instruments,
37 documents and agreements as we have deemed necessary or appropriate to
38 enable us to render the opinions hereinafter set forth. We are rendering
39 this opinion to you at the request of our clients pursuant to Section
40 4.01(F) of the Credit Agreement.
41 We are licensed to practice law in the State. The foregoing
42 opinions apply only insofar as the laws of the State and the United States'
43 federal laws may be concerned and we express no opinion with respect to the
44 laws of any other state or jurisdiction. To the extent that the laws of any
45 other jurisdiction
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46 apply to any of the matters addressed herein, for purposes of this opinion
47 letter we have assumed that the laws of such jurisdiction are identical to
48 the laws of the State. We express no opinion concerning any matter
49 respecting or affected by any laws other than laws that are now in effect
50 and that, in the exercise of reasonable professional judgment, are normally
51 considered in transactions such as those contemplated by the Documents.
52 The examination referred to above and the opinions which follow
53 hereinafter are subject to the following assumptions, limitations and/or
54 qualifications:
55 A. We have assumed the genuineness of all signatures on, and the
56 authenticity of, all documents submitted to us as originals, the legal
57 capacity of natural persons, and the conformity to the originals of all
58 documents submitted to us as copies.
59 B. We have assumed the due authorization and valid execution and
60 delivery of each Document by each party thereto.
61 C. We assume that the Company has or will obtain the ownership of all
62 the Collateral (as described and defined in the Credit Agreement and Deed
63 of Trust) or any other collateral in which a security interest created by
64 the Deed of Trust or any other security instrument is given as and when
65 such Collateral is acquired and located on the Trust Property (as defined
66 in the Deed of Trust).
67 D. Each of the Lenders is duly organized, validly existing and in good
68 standing under the laws of the jurisdiction of its organization, and has
69 all of the necessary right, power and authority to execute and deliver each
70 of the Documents to which it is a party and to enter into and perform its
71 obligations thereunder.
72 E. Each of the Lenders has duly authorized, executed and delivered
73 each of the Documents to which it is a party, and each of the Documents to
74 which it is a party constitutes a valid and binding legal obligation of
75 such Lender, enforceable against such Lender.
76 F. The Company will use the proceeds of the Credit Agreement only for
77 the Company's business purposes and as authorized by the Lenders and the
78 Documents.
79 G. The obligations issued pursuant to the Credit Agreement are issued
80 for value.
81 H. The documents delivered to us as copies are accurate copies of the
82 original documents and have not been subsequently amended.
83 I. The parties will enforce their rights under the Documents in good
84 faith and in circumstances and in a manner in which it is commercially
85 reasonable to do so, including, without limitation, the Lenders' refraining
86 from taking any action that would impair the Lenders' security.
87 J. There has been no mutual mistake of fact or misunderstanding,
88 fraud, duress, or undue influence.
89 K. The conduct of the parties to the transaction has complied with any
90 and all requirements of good faith, fair dealing, and conscionability; and
91 the parties to the Documents have acted in good faith
92 and without notice of any defense against the enforcement of any rights
93 created by, or adverse claims to, any property or security interest
94 transferred, granted, or created by or in connection with the Documents.
95 L. Unless the appropriate Documents contain a statement that all prior
96 agreements and understandings among the parties (written or oral) and all
97 usages of trade and courses of prior dealing between the parties are merged
98 into and or superseded by the Documents, there are no agreements or
99 understandings among the parties, written or oral, and there is no usage of
100 trade or course of prior dealing between the parties, that would, in either
111 case, define, supplement, or qualify the terms of the Documents.
112 M. Each of the parties to the Documents (other than the Deed of Trust)
113 has voluntarily, intelligently, and knowingly consented to the inclusion of
114 any provisions contained in such Documents stating that the laws of New
115 York govern the construction, interpretation, validity, and enforcement
116 thereof, negotiations pertaining to each of such Documents occurred
117 exclusively outside of the State; and each of such Documents was not
118 executed within the State.
119 Whenever any opinion herein with respect to the existence or absence
120 of facts is qualified by the phrase "to our knowledge," "known to us" or
121 "of which we have knowledge," such phrase indicates only that, during the
122 course of our representation of the Company in connection with the
123 transactions contemplated by the Documents, no information has come to our
124 attention which has given us actual knowledge of the existence or absence
125 of any facts, no investigation having been expected of us or performed by
126 us; and no inference as to our knowledge of the existence of such facts
127 should be drawn from the fact of our representation of the Company.
128 Subject to the foregoing assumptions and qualifications, we are
129 of the opinion that:
130 1. Deed of Trust. (a) The Deed of Trust (i) is enforceable against the
131 grantor named therein in accordance with its terms, (ii) is in proper form
132 under applicable laws of the State to be accepted for recording by the
133 County Recorder[s] identified in Schedule A attached hereto and (iii)
134 creates and constitutes (A) a valid deed of trust lien on that portion of
135 the Trust Property that constitutes real property ("Real Property") and (B)
136 a valid security interest in such of the Trust Property (as defined in the
137 Deed of Trust) (the "UCC Property") as is subject to the provisions of
138 Article 9 of the Uniform Commercial Code as in effect in the State of North
139 Carolina (the "UCC").
140 (b) The recording of the Deed of Trust with the County Recorder[s]
141 identified in Schedule A attached hereto is the only filing or recording
142 necessary to give constructive notice of the lien created by the Deed of
143 Trust to subsequent purchasers and securityholders of the Real Property. No
144 other recordings, filings, re-recordings or refilings other than those
145 identified in Schedule A are necessary in order to maintain the validity or
146 priority of the lien created by the Deed of Trust.
147 (c) Assuming that the Financing Statements relating to the Deed of Trust
148 have been properly filed with the offices identified in Schedule A attached
149 hereto, the security interest, lien or pledge created by the Deed of Trust
150 in that portion of the Trust Property which constitutes fixtures and are
151 subject to the provisions of Article 9 of the UCC is duly perfected. Such
152 Financing Statements adequately identify such Trust Property described
153 therein to provide sufficient notice to third parties of the security
154 interest referenced therein.
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155 (d) The priority of the lien on the Real Property created by the Deed of
156 Trust with respect to any extension of credit or other amount (each, a
157 "Future Advance") secured thereby made or deemed to have been made after
158 the date of recording of the Deed of Trust will be the same as the priority
159 of the Deed of Trust applicable on such date of recording and such priority
160 will not be affected by the rights in and to the Real Property of any third
161 party whose interest in the Real Property attached thereto after the date
162 of such recording but prior to the date of such Future Advance.
163 2. Taxes etc. No taxes or other charges, including, without limitation,
164 intangible or documentary stamp taxes, recording taxes, transfer taxes or
165 similar charges, are payable to the State or to any jurisdiction therein on
166 account of the execution and delivery of the Documents or the creation of
167 the indebtedness evidenced or secured by any of the Documents or the
168 recording or filing of the Financing Statements or Other Filings, except
169 for nominal filing or recording fees.
170 3. Concerning Collateral Agent. (a) The execution, delivery, recordation
171 and performance by the Collateral Agent, the Lenders or the Company of the
172 Documents to which each is a party (i) will not violate any existing law,
173 governmental rule or regulation of the State and (ii) do not require any
174 license, permit, authorization, consent or other approval of, any exemption
175 by, or any registration, recording or filing with, any court,
176 administrative agency or other governmental authority of the State, except
177 for the recordings and the filings set forth in Schedule A attached hereto.
178 (b) Neither the Collateral Agent nor any of the Lenders is required (i) to
179 be qualified to transact business, file any designation for service of
180 process, file any reports or pay any taxes in the State or (ii) to comply
181 with any statutory or regulatory requirement applicable only to financial
182 institutions chartered or qualified to do business in the State, in each
183 case, solely by reason of the execution and delivery of any of the
184 Documents or by reason of the participation in any of the transactions
185 under or contemplated by the Documents including, without limitation, the
186 making and receipt of payments pursuant thereto and the exercise of any
187 remedy thereunder. If it were determined that any such qualification and
188 filing were required, the validity of the Documents would not be affected
189 thereby, but if the Collateral Agent or the Lenders were not qualified, the
190 Collateral Agent, or the Lenders in the event they institute remedies
191 without the Collateral Agent, as the case may be, would be precluded from
192 enforcing their respective rights in the courts of the State until such
193 time as they are qualified to transact business in the State. However, the
194 lack of qualification would not result in any waiver of rights or remedies
195 pending such qualification.
196 4. Usury. Assuming that the Documents are governed by the laws of the State
197 for the purpose of rendering the opinion set forth in this paragraph, none
198 of the provisions of the Documents (including, without limitation, the
199 Secured Obligations as defined in each Security Document) will violate any
200 law, statute or regulation of the State relating to usury.
201 5. Remedies. (a) The Collateral Agent is permitted under the laws of the
202 State without naming all of the Lenders in any applicable legal proceeding
203 to exercise remedies under the Security Documents for the realization of
204 any of the Collateral in its own name, as Collateral Agent.
205 (b) The transfer of all or any portion of the Collateral in connection with
206 the exercise of any remedy under the Deed of Trust, including, without
207 limitation, by way of judicial foreclosure, will not restrict, affect or
208 impair the liability of the Pledgors with respect to the indebtedness
209 secured thereby or the beneficiary's rights or remedies to the foreclosure
210 or enforcement of any other security interest or liens securing such
211 indebtedness. The laws of the State do not require a lienholder to elect to
212 pursue its remedies
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213 either against Trust Property or personal property where such lienholder
214 holds security interests and liens on both real and personal property of
215 debtor.
216 (c) The Deed of Trust contains the terms and provisions necessary to enable
217 Collateral Agent, following a default thereunder, to exercise the remedies
218 which are customarily available to secured lenders in the State of North
219 Carolina.
220 6. Choice of Law. Based upon our review of the laws of the State, including
221 the recorded opinions of the courts of the State concerning the
222 construction, interpretation, and enforcement of choice of law provisions
223 contained in contracts, we believe that a state or federal court in the
224 State in a properly reasoned opinion applying the principles heretofore
225 established in prior cases with similar facts and circumstances should give
226 effect to the parties' choice of law applying the laws of the State of New
227 York (rather than those of the State) to the extent provided in the
228 Documents to determine the enforceability of the Documents, except for (a)
229 usury laws in the State which shall apply to determine the enforceability
230 of any liens in favor of the Lenders in real and personal property located
231 in the State, and (b) laws of the State will govern the enforcement of any
232 liens hi favor of the Lenders in real and personal property located in
233 North Carolina.
234 The opinions expressed above are subject to the following
235 qualifications and limitations:
236 (i) Enforceability of the Documents may be limited by bankruptcy,
237 insolvency, reorganization, arrangement, moratoria, fraudulent
238 conveyance or similar state or federal debtor relief laws from
239 time to time in effect and which affect the enforcement of
240 creditors' rights and the collection of debtor's obligations in
241 general.
242 (ii) Enforceability of the Documents is subject to commercial
243 reasonableness and good faith to the extent required of the
244 Lenders by applicable law and to general principles of equity and
245 public policy, the application of which may deny rights and
246 remedies to the Lenders under the Documents, including rights to
247 specific performance and injunctive relief, and may be applied by
248 a court of proper jurisdiction, regardless of whether such
249 enforceability is considered in a proceeding in equity or at law.
250 The right to obtain a receiver is not an absolute right,
251 regardless of contract, and is subject to equitable principles.
252 (iii) Certain remedies and provisions contained in the Documents (such
253 as, without limitation, the exercise of rights to obtain
254 possession of realty or other assets without resort to judicial
255 process, with or without becoming a "mortgagee-in-possession")
256 may not be enforceable; however, we believe that the Documents,
257 taken as a whole, contain adequate provisions for the practical
258 realization of the principal benefits and security purported to
259 be provided thereby.
260 (iv) This opinion does not cover any matters of title, description or
261 location of property or priority of liens or security interests.
262 We have assumed that the Company has title to or ownership of all
263 personal property comprising a part of the Collateral sufficient
264 to satisfy the requirements of the UCC; that value has been given
265 to the Company sufficient to satisfy the requirements of the UCC;
266 that the Documents adequately describe the real and personal
267 property subject to the Documents; and that the Company has legal
268 and equitable title to all real property subject to the
269 Documents. We have made no examination of,
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270 and express no opinion with respect to: (i) what liens,
271 encumbrances or security interests on any real or personal
272 property Collateral are of record; (ii) whether the Collateral
273 described in the Documents is the property intended to be
274 encumbered; or (iii) the perfection of any security interest and
275 proceeds unless perfected by the filing of the Financing
276 Statements pursuant to (S) 9-306 of the UCC.
277 (v) We express no opinion as to the effectiveness of any provision of
278 the Documents purporting to selectively limit, enlarge, or
279 designate the jurisdiction or venue of proceedings under, or to
280 enforce, the Documents, or to consent to service of process in a
281 particular manner. We express no opinion on the effectiveness of
282 any of the provisions of the Documents whereby the Company waives
283 procedural, substantive, or constitutional rights or other legal
284 or equitable rights, or which establishes evidentiary or other
285 standards by which the Documents are to be construed, or
286 provisions related to disclaimers, limitations of liability,
287 discharges of defenses, the exercise of self-help or other
288 remedies without judicial process, waivers of accountings,
289 liability with respect to third parties, releases of other legal
290 or equitable rights, confession of judgment, waiver of jury
291 trial, waiver of consequential or exemplary damages, or
292 liquidated damages. We express no opinion as to the
293 enforceability of any provisions of any of the Documents that
294 appoint any Lender, or any other person or entity as the agent or
295 attorney-in-fact for the Company.
296 (vi) As to any provision in the Documents to the effect that the
297 acceptance by the Lenders of past-due installments or other
298 performance by the Company shall not be deemed a waiver of its
299 right to accelerate the amounts due thereunder, note that the
300 North Carolina Court of Appeals has held that, when the holder of
301 a promissory note regularly accepts late payments, it is deemed
302 to waive its right to accelerate the debt because of late
303 payments until it notifies the maker that prompt payments are
304 again required. Driftwood Manor Investors v. City Federal Savings
305 & Loan Association. 63 N.C. App. 459, 305 S.E.2d 204 (1983).
306 Therefore, we are unable to opine that any contrary provisions
307 contained in the Documents would be enforceable under all
308 circumstances.
309 (vii) We express no opinion as to the enforceability of any provisions
310 of the Documents which impose or grant a right to charge
311 penalties, forfeitures, liquidated damages, "default interest," a
312 higher rate of interest after default than the interest that
313 would otherwise accrue under the Documents, or late charges past
314 due for less than fifteen days or for more than 4% of the amount
315 past due. Courts have generally disfavored penalties and
316 forfeitures under the law and, accordingly, the issue concerning
317 the Lenders' ability to collect penalties, forfeitures,
318 liquidated damages, "default interest," or any such similar
319 charge which might be reposed under the Documents is unclear. See
320 generally N.C.G.S. (S) 24-10.1; Comment, Usury Law in North
321 Carolina, 47 N.C.L. Rev. 761, 786 (1969). Since, N.C. Gen. Stat.
322 (S) 24-10.1 expressly provides for late charges, it is possible
323 that North Carolina courts, when faced specifically with the
324 issue, might rule that said statutory late charges preempt any
325 other charge (such as default interest) by a lender for
326 delinquent payments. We are aware of a 1978 North Carolina Court
327 of Appeals case which addresses this issue, North Carolina
328 National Bank ▇. ▇▇▇▇▇▇▇▇, 38 N.C. App. 120, which in our opinion
329 is of limited value as precedent. While this case did allow
330 interest after default (commencing with the date requested in the
331 complaint) at a rate which appeared to be six percent in excess
332 of pre-default interest, we are unable to determine from the
333 opinion whether the
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258 question was raised as to this being penal in nature; nor does the
259 court address the possible question of the statutory late charge
260 pre-empting a default interest surcharge. Since our Supreme Court has
261 not ruled in a properly presented case raising the foregoing issues we
262 are unwilling to express an opinion that the default rate of interest
263 prescribed in the Documents is enforceable.
264
265 (viii) We express no opinion as to the enforceability of any provisions of
266 the Documents which purport to define and treat certain items and
267 materials now or hereafter located on land as "fixtures" or part of
268 real estate improvements. Under N.C. Gen. Stat. (S) 25-9-313 (Supp.
269 1985), an item is a "fixture" when it becomes "so related to
270 particular real estate" that an interest in that item arises under
271 real estate law. We are aware of no law or decision that permits the
272 parties to a secured transaction to agree that an item which is not
273 otherwise a fixture shall be treated as a fixture. Therefore, we are
274 unable to opine that such provisions would be generally enforceable.
275
276 (ix) N.C. Gen. Stat. (S)(S) 6-21.2 and 32-51 set forth the procedures and
277 limitations applicable to the collection of attorneys' fees pursuant
278 to the Documents; and North Carolina case law requires that attorneys'
279 fees charged to borrowers by lenders and trustees be reasonable in
280 amount. Accordingly, any provisions in the Documents relating to the
281 ability of the Lenders to collect attorneys' fees are subject to those
282 limitations.
283
284 (x) We express no opinion as to matters under or involving the laws of any
285 jurisdiction other than the United States of America and the State,
286 including without limitation the interpretation or enforceability of
287 any of the Documents under the laws of a state other than North
288 Carolina.
289
290 (xi) We express no opinion as to the effectiveness of any provisions of the
291 Documents that provide for the assignment or transfer of, or security
292 interests granted in, any permits, licenses, or similar rights of the
293 Company.
294
295 (xii) We express no opinion as to any provisions of the Documents which
296 specify the survival of obligations after the satisfaction of the
297 amounts due thereunder.
298
299 (xiii) We express no opinion as to the enforceability of any provisions of
300 the Documents granting any reimbursement or indemnification to a
301 person or entity for costs, expenses, other liabilities arising out of
302 said person's or entity's own negligence.
303
304 (xiv) In connection with the opinion set forth in Paragraph l(c) above, we
305 call your attention to the following:
306
307 (i) The perfected security interest of the Lenders in the Collateral
308 requires the filing of continuation statements duly executed by
309 the Lender within the period of six months prior to the
310 expiration of five years from the date of filing of the Financing
311 Statements;
-8-
312
313 (ii) Under certain circumstances described in North Carolina General
314 Statutes (S) 25-9-306, the rights of a secured party to enforce a
315 perfected security interest in proceeds of collateral may be
316 limited;
317
318 (iii) Under certain circumstances described in North Carolina General
319 Statutes (S)(S) 25-9-307 and 25-9-308, purchasers of collateral
320 may take the same free and clear of a perfected security
321 interest; and
322
323 (iv) Pursuant to North Carolina General Statutes (S) 25-9-402(7),
324 perfection of the security interest of the Lenders in the
325 Collateral would be terminated as to any property acquired by the
326 Company more than four months after the date the Company changes
327 its name or identity so as to make the filed Financing Statements
328 seriously misleading unless new appropriate financing statements
329 indicating the new name or identity of the Company are properly
330 filed before the expiration of such four-month period.
331
332 (xv) We express no opinion under the laws of the State as to the
333 enforceability of any provisions contained in the Documents stating
334 that the laws of a state other than North Carolina shall govern with
335 respect to the enforcement of any security interest as to Collateral
336 located in the State.
337
338 (xvi) Certain provisions of the Documents purport to govern rights as
339 between the Company and Lenders with respect to condemnation proceeds.
340 All such provisions relating to condemnation proceeds are subject to
341 the provisions of N.C. Gen. Stat. (S) 40A-1, et. seq. (1984 and Supp.
342 1985) relating to condemnations and the rights of courts to allocate
343 said proceeds to the parties entitled thereto, without any imposition
344 of any prepayment penalty, notwithstanding any agreement to the
345 contrary.
346
347 (xvii) With regard to provisions in the Deed of Trust concerning proceeds
348 arising from disposition of personal property and from foreclosure,
349 N.C. Gen. Stat. (S)(S) ▇▇-▇▇-▇▇▇ and 45-21.31, respectively, specify
350 the order in which proceeds are to be applied. Accordingly, any
351 provisions in the Documents relating to the application of said
352 proceeds are subject to the provisions and limitations contained in
353 said statutes.
354
355 (xviii) We do not express any opinion as to the enforceability of any
356 provisions of the Documents concerning choice of forum or consent to
357 the jurisdiction of courts, venue of actions, or means of service of
358 process.
359
-9-
360 This opinion is based solely on the laws of the State of North
361 Carolina and, where specifically referenced, the federal laws of the United
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, and has been made solely for the benefit of the Lenders,
363 their counsel, subsequent holders of the Note, and regulatory agencies
364 having jurisdiction over them and solely with respect to this transaction.
365 We express no opinion as to the effect of the laws of any other
366 jurisdiction upon the validity or enforceability of any of the Documents or
367 any of the transactions contemplated therein. We have no obligation to
368 update or supplement our opinions on account of events occurring after the
369 date of this letter or on account of any facts of which we may become aware
370 of after the date of this letter.
371
372 Sincerely yours,
373 /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
374 -----------------------------------
375 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
376 SDL/rmk
378 Schedule A
379 Financing Statements relating to the Deed of Trust.
380 UCC Financing Statement to be filed in ▇▇▇▇▇▇▇▇ County, North Carolina
381 and the North Carolina Secretary of State's office.
Law Offices
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*ALSO LICENSED IN WYOMING
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To:
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit
Agreement Referred to Below
Re: Norcraft Companies, L.P. - $70,000,000 Credit Agreement dated as of
October 21, 2003
Ladies and Gentlemen:
We have acted as special counsel in the State of South Dakota (the
"State") to Norcraft Companies, Limited Partnership, a Delaware limited
partnership (the "Company" or "Client"), in connection with the execution and
delivery today of and the consummation of the transactions contemplated by (the
"Transaction") (i) that certain credit agreement dated as of October 21, 2003
(as at any time amended, amended and restated, supplemented or otherwise
modified from time to time, the "Credit Agreement;" capitalized terms used
herein and not defined have the meanings assigned to such terms in the Credit
Agreement), by and among the Company, Norcraft Holdings, Limited Partnership,
Norcraft Financing Corp., and Norcraft Canada Corporation, as guarantors
("Guarantors"), the Lenders, UBS AG, Stamford Branch, as administrative agent
for the Lenders, among others, and (ii) the Documents described below,
including, without limitation, the Financing Statements (as defined below)
relating to the Collateral naming the Company as debtor thereunder and UBS AG,
Stamford Branch, as collateral agent and secured party thereunder (the
"Collateral Agent").
In rendering the opinions hereinafter set forth, we have reviewed
final forms of the following documents (collectively, the "Documents"):
(i) the Credit Agreement;
(ii) a mortgage, assignment of leases and rents, security agreement and fixture
filing, dated as of the date hereof (as at any time amended, the
"Mortgage"), made by the Company in favor of the Collateral Agent;
(iii) UCC-1 financing statements identified in Schedule A attached hereto
(collectively, the "Financing Statements") relating to the Mortgage; and
(iv) the other filings identified in Schedule A attached hereto (collectively,
the "Other Filings") relating to the Mortgage.
UBS AG, Stamford Branch, as Collateral Agent
and The Lenders Party to the Credit Agreement
Page 2
October 21, 2003
We are rendering this opinion to you pursuant to Section 4.01(f)of
the Credit Agreement. We have reviewed the Documents and such other instruments,
documents and agreements as we have deemed necessary or appropriate to enable us
to render the opinions hereinafter set forth. In doing so, we have relied upon,
among other things, the respective representations and warranties made in the
Documents by each party thereto.
In rendering the opinions hereinafter set forth, we have made the
assumptions set forth in paragraph 7 below.
In addition, the opinions contained in Paragraph 1(a)(i) is qualified
to the extent that enforceability of the Mortgage may be limited by (i)
bankruptcy, insolvency, moratorium, reorganization or other laws relating to
creditors' rights generally; (ii) general principles of equity, whether
considered in an action at law or in equity; and (iii) other common
qualifications set forth in Paragraph 8 below.
Subject to the foregoing assumptions and qualifications, we are of the
opinion that:
1. Mortgage. (a) The Mortgage (i) is enforceable against the mortgagor named
therein in accordance with its terms, (ii) is in proper form under applicable
laws of the State to be accepted for recording by the Register of Deeds
identified in Schedule A attached hereto and (iii) creates and constitutes (A) a
valid mortgage lien on that portion of the Mortgaged Property that constitutes
real property ("Real Property") and (B) a valid security interest in such of the
Mortgaged Property (as defined in the Mortgage) that constitutes fixtures (the
"UCC Property") as is subject to the provisions of Article 9 of the Uniform
Commercial Code as in effect in the State of South Dakota (the "UCC").
(b) The recording of the Mortgage with Register of Deeds identified in Schedule
A attached hereto is the only filing or recording necessary to give constructive
notice of the lien created by the Mortgage to subsequent purchasers and
mortgagees of the Real Property. No other recordings, filings, re-recordings or
refilings other than those identified in Schedule A are necessary in order to
maintain the validity or priority of the lien created by the Mortgage.
(c) Assuming (i) that the Financing Statements relating to the Mortgage have
been properly filed with the offices identified in Schedule A attached hereto,
and (ii) that the property described in the Financing Statements are held to be
fixtures under applicable law, then, the security interest, lien or pledge
created by the Mortgage in that portion of the Mortgaged Property which is
described as fixtures and is subject to the provisions of Article 9 of the UCC
is duly perfected. Such Financing Statements adequately identify such Mortgaged
Property described therein to provide sufficient notice to third parties of the
security interest referenced therein.
(d) The priority of the mortgage lien on the Real Property created by the
Mortgage with respect to any extension of credit or other amount (each, a
"Future Advance") secured thereby made or deemed to have been made after the
date of recording of the Mortgage will be the same as the priority of the
Mortgage applicable on such date of recording (but only to the extent of any
dollar amount limit of Future Advances set forth in the Mortgage) and such
priority will not be affected by the rights in and to the Real Property of any
third party whose interest in the Real Property attached thereto after the date
of such recording but prior to the date of such Future Advance.
UBS AG, Stamford Branch, as Collateral Agent
and The Lenders Party to the Credit Agreement
Page 3
October 21, 2003
2. Taxes, etc. No taxes or other charges, including, without limitation,
intangible or documentary stamp taxes, recording taxes, transfer taxes or
similar charges, are payable to the State or to any jurisdiction therein on
account of the execution and delivery of the Documents or the creation of the
indebtedness evidenced or secured by any of the Documents or the recording or
filing of the Financing Statements or Other Filings, except for nominal filing
or recording fees.
3. Concerning Collateral Agent. (a) The execution, delivery, recordation and
performance by the Collateral Agent, the Lenders or the Company of the Documents
to which each is a party (i) will not violate any existing law, governmental
rule or regulation of the State and (ii) do not require any license, permit,
authorization, consent or other approval of, any exemption by, or any
registration, recording or filing with, any court, administrative agency or
other governmental authority of the State, except for the recordings and the
filings set forth in Schedule A attached hereto. Our opinion in this
subparagraph relates only to statutory laws and regulations that we, in the
exercise of customary professional diligence, would reasonably recognize as
being directly applicable to the Company, the Collateral Agent, and the Lenders.
(b) While the matter is not free from doubt, due to the fact that case decisions
with respect to these matters are often determined on an ad hoc basis, based on
current South Dakota law, including, without limitation, ▇▇▇▇▇ v. Fairmont
National Bank, 367 N.W.2d 784 (S.D. 1985), neither the Collateral Agent nor any
of the Lenders is required (i) to be qualified to transact business, file any
designation for service of process, file any reports or pay any taxes in the
State or (ii) to comply with any statutory or regulatory requirement applicable
only to financial institutions chartered or qualified to do business in the
State, in each case, solely by reason of the execution and delivery of any of
the Documents or by reason of the participation in any of the transactions under
or contemplated by the Documents including, without limitation, the making and
receipt of payments pursuant thereto and the exercise of any remedy thereunder.
If it were determined that any such qualification and filing described in (i)
above were required, the validity of the Documents would not be affected
thereby, but if the Collateral Agent or the Lenders were not qualified, the
Collateral Agent, or the Lenders in the event they institute remedies without
the Collateral Agent, as the case may be, would be precluded from enforcing
their respective rights in the courts of the State until such time as they are
qualified to transact business in the State. However, the lack of qualification
would not result in any waiver of rights or remedies pending such qualification.
4. Usury. Assuming that the Documents are governed by the laws of the State for
the purpose of rendering the opinion set forth in this paragraph, none of the
provisions of the Documents (including, without limitation, the Secured
Obligations as defined in each Security Document) will violate any law, statute
or regulation of the State relating to usury.
5. Remedies, (a) Assuming the Credit Agreement grants to the Collateral Agent
such rights, the Collateral Agent is permitted under the laws of the State
without naming all of the Lenders in any applicable legal proceeding to exercise
remedies under the Security Documents for the realization of any of the
Collateral in its own name, as Collateral Agent.
(b) Under SDCL 57A-9-604 of South Dakota's UCC. if a security agreement covers
both personal and real property, a secured party may proceed under the UCC as to
the personal property without
UBS AG, Stamford Branch, as Collateral Agent
and The Lenders Party to the Credit Agreement
Page 4
October 21, 2003
prejudicing any rights with respect to the real property or as to both the
personal property and the real property in accordance with the rights with
respect to the real property, in which case the other provisions of the UCC do
not apply. Furthermore, subject to the right of a prior secured party in
fixtures to remove the collateral from real property, if a security agreement
covers goods that are or become fixtures, a secured party may proceed under the
UCC or in accordance with the rights with respect to real property, in which
case the other provisions of the UCC do not apply.
(c) The Mortgage contains the terms and provisions necessary to enable
Collateral Agent, following a default thereunder, to exercise the remedies which
are customarily available to a mortgage lienholder in the State of South Dakota.
6. Choice of Law. Based on current case law, a state or Federal court in the
State applying the State's choice of law principles will give effect to the
provisions in the Documents which select the laws of the State of New York as
the governing law thereof and will apply such laws, rather than the laws of the
State, to the enforceability, construction and application thereof, subject only
to limitation and invalidation by overriding public policy of the State;
provided, however, that while the matter is not entirely free from doubt due to
the absence of South Dakota case law, we believe that a South Dakota court would
apply (S)(S) 228 and 229 of the Restatement (Second) of Conflict of Laws and
apply the law of the State to determine whether the Mortgage creates an interest
in land and the nature of the interest created, as well as the method for
foreclosure of the Mortgage and the interests in the land resulting from the
foreclosure.
7. Assumptions. In rendering the foregoing opinions, we have relied, without
investigation, upon the assumptions set forth below unless in a given case the
particular assumption states, directly or in practical effect, a legal
conclusion expressed in the opinion:
(a) Natural persons who are involved on behalf of the Client, have sufficient
legal capacity to enter into and perform the Transaction or to carry out their
role in it.
(b) The Client holds the requisite title and rights to any property involved in
the Transaction.
(c) Each party to the Transaction (other than the Client) has satisfied those
legal requirements that are applicable to it to the extent necessary to make the
Transaction Documents enforceable against it.
(d) Each party to the Transaction (other than the Client) has complied with all
legal requirements pertaining to its status as such status relates to its rights
to enforce the Transaction Documents against the Client.
(e) Each document submitted to us for review is accurate and complete, each such
document that is an original is authentic, each such document that is a copy
conforms to an authentic original, and all signatures on each such document are
genuine.
(f) There has not been any mutual mistake of fact or misunderstanding, fraud,
duress or undue influence.
UBS AG, Stamford Branch, as Collateral Agent
and The Lenders Party to the Credit Agreement
Page 5
October 21, 2003
(g) The conduct of the parties to the Transaction has complied with any
requirement of good faith, fair dealing and conscionability.
(h) There are no agreements or understandings among the parties, written or
oral, and there is no usage of trade or course of prior dealing among the
parties that would, in either case, define, supplement or qualify the terms of
the Documents.
(i) The Client will obtain all permits and governmental approvals required in
the future, and take all actions similarly required, relevant to subsequent
consummation of the Transaction or performance of the Documents.
(j) All parties to the Transaction will act in accordance with, and will refrain
from taking any action that is forbidden by, the terms and conditions of the
Transaction Documents.
(k) The Documents to be recorded or filed have been or will be duly recorded
and/or filed in all places necessary (if and to the extent necessary) to create
the lien as provided therein.
(l) The description of the Mortgaged Property is accurate.
8. Common Qualifications. In addition to the qualifications for bankruptcy and
insolvency and general principles of equity, the opinion in Paragraph l(a)(i)
above is subject to the effect of generally applicable rules of law that:
(a) limit or affect the enforcement of provisions of a contract that purport to
require waiver of the obligations of good faith, fair dealing, diligence, and
reasonableness;
(b) provide that forum selection clauses in contracts are not necessarily
binding on the court(s) in the forum selected;
(c) limit the availability of a remedy under certain circumstances where another
remedy has been elected;
(d) limit the right of a creditor to use force or cause a breach of the peace in
enforcing rights;
(e) relate to the sale or disposition of collateral or the requirements of a
commercially reasonable sale, including, without limitation, statutory cure
provisions and rights of reinstatement and limitations on deficiency judgments;
(f) limit the enforceability of provisions releasing, exculpating or exempting a
party from, or requiring indemnification of a party for, liability for its own
action or inaction, to the extent the action or inaction involves gross
negligence, recklessness, willful misconduct or unlawful conduct;
(g) may, where less than all of a contract may be unenforceable, limit the
enforceability of the balance of the contract to circumstances in which the
unenforceable portion is not an essential part of the agreed exchange;
UBS AG, Stamford Branch, as Collateral Agent
and The Lenders Party to the Credit Agreement
Page 6
October 21, 2003
(h) govern and afford judicial discretion regarding the determination of damages
and entitlement to attorneys' fees and other costs;
(i) may, in the absence of a waiver or consent, discharge a guarantor to the
extent that (i) action by a creditor impairs the value of collateral securing
guaranteed debt to the detriment of the guarantor, or (ii) guaranteed debt is
materially modified;
(j) may permit a party who has materially failed to render or offer performance
required by the contract to cure that failure unless (i) permitting a cure would
unreasonably hinder the aggrieved party from making substitute arrangements for
performance, or (ii) it was important in the circumstances to the aggrieved
party that performance occur by the date stated in the contract;
(k) limit or affect the enforceability of a waiver of a right of redemption;
(l) impose limitations on attorneys' or trustees' fees;
(m) limit or affect the enforceability of any provision that purports to prevent
any party from becoming a mortgagee in possession, notwithstanding any
enforcement actions taken under the Documents; and
(n) limit or affect the enforceability of provisions for late charges,
prepayment charges or yield maintenance charges, acceleration of future amounts
due (other than principal) without appropriate discount to present value,
liquidated damages and "penalties."
We are admitted to practice in the State. The opinions expressed
herein are as of the date hereof only, and we assume no obligation to update or
supplement such opinions to reflect any facts or circumstances that may
hereafter come to our attention or any changes in law that may hereafter occur
or become effective. We express no opinion as to matters under or involving the
laws of any jurisdiction other than the laws of the State. Furthermore, unless
explicitly addressed in this opinion letter, the foregoing opinions do not
address any of the following legal issues, and we specifically express no
opinion with respect thereto:
(a) Federal securities laws and regulations administered by the
Securities and Exchange Commission (other than the Public Utility Holding
Company Act of 1935), state "Blue Sky" laws and regulations, and laws and
regulations relating to commodity (and other) futures and indices and other
similar instruments;
(b) Federal Reserve Board margin regulations;
(c) Pension and employee benefit laws and regulations (e.g., ERISA);
(d) Federal and state antitrust and unfair competition laws and
regulations;
(e) Federal and state laws and regulations concerning filing and
notice requirements (e.g., ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ and Exon-▇▇▇▇▇▇);
UBS AG, Stamford Branch, as Collateral Agent
and The Lenders Party to the Credit Agreement
Page 7
October 21, 2003
(f) Compliance with fiduciary duty requirements;
(g) Title to the Mortgaged Property or the accuracy of its
description;
(h) The priority of any lien or security interest created by filing or
recording the Mortgage;
(i) Fraudulent transfer and fraudulent conveyance laws;
(j) Federal and state environmental laws and regulations;
(k) Federal and state land use and subdivision laws and regulations;
(l) Federal and state tax laws and regulations;
(m) Federal patent, copyright and trademark, state trademark, and
other Federal and state intellectual property laws and regulations;
(n) Federal and state racketeering laws and regulations (e.g., RICO);
(o) Federal and state health and safety laws and regulations (e.g.,
OSHA);
(p) Federal and state labor laws and regulations;
(q) Federal and state laws, regulations and policies concerning (i)
national and local emergency, (ii) possible judicial deference to acts of
sovereign states, and (iii) criminal and civil forfeiture laws;
(r) Other Federal and state statutes of general application to the
extent they provide for criminal prosecution {e.g., mail fraud and wire
fraud statutes);
(s) Provisions relating to the waiver of rights or defenses,
including, without limitation, statutes of limitation;
(t) Provisions providing for the consent to jurisdiction of any court,
the waiver of objection of venue of any court, the waiver of or consent to
service of process in any manner other than provided by law, or the waiver
of jury trial;
(u) Provisions which purport to waive any rights to notice or which
purport to establish evidentiary standards;
(v) Enforceability of provisions purporting to define commercial
reasonableness;
(w) Provisions appointing a receiver to the extent that the
appointment of a receiver is governed by applicable statutory requirements
and to the extent that such provisions are not in compliance with such
statutory requirements; and
UBS AG, Stamford Branch, as Collateral Agent
and The Lenders Party to the Credit Agreement
Page 8
October 21, 2003
(x) The ability of the Mortgagee to obtain a deficiency judgment as a
result of a foreclosure without establishing the fair and reasonable value
of the mortgaged premises in accordance with SDCL 21-47-16.
The opinions set forth herein are rendered for the sole benefit of and
may be relied upon only by you, by any successors and assigns of the Collateral
Agent, and by any participant, assignee or successor to interests of the Lenders
under the Documents in connection with and limited to the Transaction
contemplated by the Documents, and may not be quoted, circulated, or published,
in whole or in part, or furnished to or relied upon by any other person without
our prior written consent. Nothing herein shall be construed as or deemed to be
a guaranty or insuring agreement.
Very truly yours,
/s/ Illegible
----------------------------------------
Schedule A
Financing Statements relating to the Mortgage.
UCC-1 to be filed as a fixture filing with the Minnehaha County Register of
Deeds
Place of Recording Mortgage.
Minnehaha County Register of Deeds
McGuireWoods LLP
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McGuireWoods
October 21, 2003
UBS AG, Stamford Branch, as Collateral Agent
and
The Lenders Party to the Credit Agreement
Referred to Below
Norcraft Companies, L.P.
Ladies and Gentlemen:
We have acted as special Virginia counsel to Norcraft Companies, L.P., a
Delaware limited partnership (the "Grantor"), in connection with certain aspects
of the transactions contemplated by (i) that certain credit agreement dated as
of October 21, 2003 (as at any time amended, amended and restated, supplemented
or otherwise modified from time to time, the "Credit Agreement") by and among
the Grantor, Norcraft Holdings, L.P., a Delaware limited partnership, the other
Guarantors (as defined in the Credit Agreement) party thereto, the Lenders, UBS
AG, Stamford Branch, as administrative agent for the Lenders, and among others,
and (ii) the Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated as of October 21, 2003 (the "Deed of Trust") from
Grantor to Alexander Title Agency, Inc., a Virginia corporation, having an
address of ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as Trustee,
for the benefit of USB AG, Stamford Branch, as collateral agent ("Beneficiary").
This opinion is being delivered pursuant to Section 4.01 (f) of the Credit
Agreement. Unless otherwise defined herein, terms used herein have the meanings
provided for in the Deed of Trust. As used herein, "Virginia UCC" means the
Uniform Commercial Code as in effect on the date hereof in the Commonwealth of
Virginia, and "Article 9" means Title 8.9A (Secured Transactions) of the Code of
Virginia of 1950, as amended.
Assumptions Underlying Our Opinions
For all purposes of the opinions expressed herein, we have assumed,
without independent investigation, the following:
(a) Factual Matters. To the extent that we have reviewed and relied
upon representations of the Grantor set forth in the Deed of Trust, all of such
representations are accurate;
(b) Contrary Knowledge of Addressee. No addressee of this opinion
letter has any actual knowledge that any of our factual assumptions is
inaccurate;
Page 2
October 21, 2003
(c) Signatures. The signatures of individuals signing the Deed of
Trust are genuine and authorized;
(d) Authentic and Conforming Document. The Deed of Trust submitted to
us as a copy conforms to the authentic original document;
(e) Capacity of Certain Parties. All parties to the Deed of Trust have
the capacity and full power and authority to execute, deliver and perform the
Deed of Trust and the documents required or permitted to be delivered and
performed thereunder;
(f) Documents Binding on Certain Parties. The Deed of Trust, the
Credit Agreement (as defined in the Deed of Trust), the Notes and the other Loan
Documents and the documents required or permitted to be delivered thereunder
have been duly authorized by all necessary partnership, corporate or other
action on the part of the parties thereto, have been duly executed and delivered
by such parties and (except as to the Grantor with respect to the Deed of Trust,
to the extent the same is governed by Virginia law) are legal, valid and binding
obligations enforceable against such parties in accordance with their terms;
(g) Consents for Certain Parties. All necessary consents,
authorizations, approvals, permits or certificates (governmental and otherwise)
which are required as a condition to the execution and delivery of the Deed of
Trust by the parties thereto and to the consummation by such parties of the
transactions contemplated thereby (other than any such consents, authorizations,
approvals, permits or certificates required under Virginia law as to the
Grantor) have been obtained;
(h) Accurate Description of Parties' Understanding. The Deed of Trust
accurately describes and contains the mutual understanding of the parties, and
there are no oral or written statements or agreements that modify, amend or
vary, or purport to modify, amend or vary, any of the terms thereof;
(i) Existence. The Grantor is a duly converted (from a limited
liability company) and validly existing limited partnership in good standing
under the laws of the State of Delaware;
(j) Land. The Land is located entirely in the City of Lynchburg,
Virginia; a correct and complete description of the Land will be attached to the
Deed of Trust; the exact legal name of Grantor (as indicated on the public
record which shows the limited partnership to have been converted from a limited
liability company) is set forth in the Deed of Trust; the Grantor is and will be
at the time of recordation of the Deed of Trust the owner of record of good and
marketable title to the Land; and all Fixtures (as hereinafter defined) are
located on the Land; and
(k) Value. Value has been given for the liens and security interests
to be created under the Deed of Trust, and the Grantor has rights in the Trust
Property or the power to transfer rights in, the Trust Property sufficient to
▇▇▇▇▇ ▇ ▇▇▇▇ or security interest therein.
Page 3
October 21, 2003
Our Opinions
Based on and subject to the foregoing and the exclusions,
qualifications, limitations and assumptions set forth in this opinion letter, we
are of the opinion that:
1. Validity and Enforceability; Priority. To the extent governed by
Virginia law, the Deed of Trust is the valid, binding and enforceable obligation
of the Grantor. The Deed of Trust contains the provisions required by Va. Code
▇▇▇. Section 55-58.2 in order for it to retain its priority as to future
advances (as is accorded by that statute).
2. Liens. (a) Assuming that all blanks in the Deed of Trust have been
completed and all Exhibits and Schedules attached and that the Deed of Trust is
executed and acknowledged with the notarial seal affixed, the Deed of Trust is
in appropriate form under applicable laws of the Commonwealth of Virginia (i) to
be accepted for recordation, and (ii) to create and constitute, and once
recorded in the Clerk's Office of the Circuit Court of the City of Lynchburg,
Va, a valid deed of trust lien in favor of the Trustee for the benefit of the
Beneficiary in the Grantor's right, title and interest in the Land and in other
portions of the Premises constituting real property in the Commonwealth of
Virginia. Subject to the applicable statute of limitations in Virginia Code
Annotated Sections 8.01-241 and -247, the Deed of Trust need not be re-recorded.
(b) Assuming that all blanks in the Deed of Trust have been completed
and all Exhibits and Schedules attached and that the Deed of Trust is executed,
to the extent governed by Virginia law, the Deed of Trust is in proper form to
create a security interest (the "Article 9 Security Interest") under Article 9
of the Virginia UCC in favor of the Beneficiary in the Grantor's right, title
and interest in and to that portion of the Trust Property in which a security
interest may be created under Article 9 of the Virginia UCC (the "Article 9
Collateral").
(c) Assuming the creation of a valid and enforceable security interest
in the Article 9 Collateral, the Deed of Trust is in proper form to be effective
as a fixture filing with respect to that portion of the Article 9 Collateral
that constitutes goods that are "fixtures" as defined in Section 9-102 the
Virginia UCC {"Fixtures"). Upon recordation of the Deed of Trust in the Clerk's
Office of the Circuit Court of the City of Lynchburg, Virginia, to the extent
that a security interest in the Fixtures may be perfected by filing under
Article 9 of the Virginia UCC, such recordation will result in the perfection of
the Article 9 Security Interest in the Fixtures and no further filings are
required to continue such perfection in the Fixtures.
(d) Assuming that the Grantor has been duly converted to a limited
partnership under the laws of the State of Delaware, (i) under Section 9-307 of
the Virginia UCC, the Grantor is located in the State of Delaware and (ii) under
Section 9-301 of the Virginia UCC, the local law of Delaware governs the
perfection of the Article 9 Security Interest in that portion of the Article 9
Collateral in which a security interest may be perfected by filing, other than
goods in which a security interest is perfected under the Virginia UCC by a
fixture filing.
Page 4
October 21, 2003
3. Noncontravention. Neither the execution, delivery and performance
by the Grantor of the Deed of Trust, nor the compliance by the Grantor with the
terms and provisions thereof, violates any present law, statute or regulation
applicable to the Grantor.
4. Governmental Approvals. No consent, approval or authorization of,
or filing with, any governmental authority that is applicable to the Grantor is
required for (a) the due execution, delivery and performance by the Grantor of
the Deed of Trust or (b) the validity, binding effect or enforceability of the
Deed of Trust, except (i) in each case as have previously been made or obtained,
(ii) filings and recordings which are necessary to perfect the liens and
security interests granted under the Deed of Trust, (iii) filings (including the
filing of Uniform Commercial Code Form UCC-3 termination statements, discharges
and releases of mortgages or deeds of trust and termination agreements in the
appropriate filing offices) which are necessary in order to release liens on the
Trust Property, and (iv) consents, approvals, authorizations or filings as may
be required to be obtained or made by Beneficiary or any Lender as a result of
its involvement in the transactions contemplated by the Credit Agreement.
5. Qualification of Beneficiary and Lenders in Virginia. Under Section
13.1-757.A of the Code of Virginia (1950), as amended (the "Virginia Code"), a
foreign corporation may not transact business in the Commonwealth of Virginia
until it obtains a certificate of authority from the State Corporation
Commission of Virginia. Section 13.1-757.B of the Virginia Code provides in
relevant part:
The following activities, among others, do not constitute transacting
business within the meaning of Subsection A of this Section...
7. Creating or acquiring indebtedness, deeds of trust and
security interest in real or personal property;
8. Securing or collecting debts or enforcing deeds of trust and
security interest in property securing the debts;
9. Owning, without more, real or personal property.
Under this statute, the "creating" of indebtedness is specifically deemed not to
be the transaction of business in Virginia for purposes of qualification. To our
knowledge, no Virginia court has discussed what is involved in the permissible
"creating" of indebtedness; however, the statute would appear to permit direct
lending activities such as the extensions of credit contemplated by the Credit
Agreement. Accordingly, while we cannot predict with certainty the outcome of
any litigation concerning the application of the Virginia foreign corporation
qualification requirements to the Beneficiary or the Lenders, based on the
foregoing analysis, we believe that a Virginia court, if properly presented with
this issue, would hold that in making the extensions of credit contemplated by
the Credit Agreement (without more), none of the Beneficiary or the Lenders
would be transacting business in Virginia so as to require qualification.
However, operation of the Trust Property following foreclosure or deed in lieu
thereof or as a "lender in possession" or pursuant to a similar remedy
potentially subjects the Beneficiary and the Lenders to the requirements of
qualifying in Virginia and the corresponding payment of registration fees.
Page 5
October 21, 2003
A foreign corporation transacting business in Virginia without a
certificate of authority may not maintain a proceeding in any court in Virginia
until it obtains a certificate of authority. Moreover, the successor to a
foreign corporation that transacted business in Virginia without a certificate
of authority and the assignee of a cause of action arising out of that business
may not maintain a proceeding based on that cause of action in any court in
Virginia until the foreign corporation or its successor obtains a certificate of
authority. A court may stay a proceeding commenced by a foreign corporation, its
successor or assignee, until it determines whether the foreign corporation or
its successor requires a certificate of authority. If it so determines, the
court will further stay the proceeding until the foreign corporation or its
successor obtains the certificate. Notwithstanding the foregoing, the failure of
a foreign corporation to obtain a certificate of authority does not impair the
validity of its corporate acts or prevent it from defending any proceeding in
Virginia.
6. Recording Taxes. No state or local tax or other fee (other than
customary and nominal per page and per document filing and recording fees
imposed by law) is required to be paid in Virginia upon the recordation of the
Deed of Trust other than the recording taxes imposed by Sections 58.1-803 and
58.1-814 of the Virginia Code. Such taxes are required to be collected at the
time of recordation of the Deed of Trust. In Luca v. ▇. ▇. ▇▇▇▇▇▇▇ & Co., 76 VA
269 (1882), the court held that if the clerk admitted a deed to record without
payment of the tax, the admission to record was nontheless valid.
7. Deficiency. The foreclosure of the Deed of Trust will not, as the
consequence of any Virginia anti-deficiency or other similar statute (but
without consideration of equitable principles and excepting herefrom Section
9-608 of the Virginia UCC, to the extent any deficiency remains unpaid after
application of the proceeds of such foreclosure) restrict or impair the
liability of the Grantor with respect to the Secured Obligations secured by the
Deed of Trust or the rights and remedies of the Beneficiary to foreclose or
enforce any security interests or liens securing such Secured Obligations under
any other mortgages or deeds of trust securing the Secured Obligations. Subject
to the equitable principle of marshalling, the laws of the Commonwealth of
Virginia do not require a secured party to pursue its remedies either against
real property or personal property where such secured party has a lien on both
real and personal property of a debtor.
8. Choice of Law. A Virginia court or a federal court sitting in
Virginia in a diversity action should, under conflicts of law principles
observed by the courts of Virginia, if properly presented with the issue, give
effect to those provisions of the Credit Agreement and Notes providing that such
documents are to be governed by and construed in accordance with the laws of the
State of New York insofar as such provisions relate to the substantive laws of
the State of New York and to the validity, nature, interpretation and effect of
the documents, except to the extent that (i) federal law applies, (ii)
procedural (as opposed to substantive) laws are involved, (iii) the applicable
laws of the State of New York violate a public policy of Virginia, (iv) the
validity or perfection of any security interests created thereunder or remedies
thereunder are governed by the laws of a jurisdiction other than the State of
New York (whether pursuant to Section 9-301 of the New York Uniform Commercial
Code or otherwise), (v) any such document by its terms provides that the laws of
another state apply, or (vi) the State of New
Page 6
October 21, 2003
York has no substantial relationship to the parties or the transaction
contemplated by the Credit Agreement and Notes, and there is no other reasonable
basis for such parties choice. In connection with the foregoing opinion, we
assume that the Credit Agreement and Notes were negotiated in the State of New
York and that the Beneficiary has multiple offices in such state.
9. Usury. If, notwithstanding the choice of New York law set forth
therein, the Notes were governed by the laws of Virginia, Grantor could not
under any circumstances avail itself of the defense of usury to avoid or defeat
the payment of interest or any other sum due under the Notes.
10. Remedies. The Beneficiary has the power without naming all of the
Lenders to exercise the right of non-judicial foreclosure under the Deed of
Trust.
Matters Excluded From Our Opinion
(a) Indemnification. Any agreement of the Grantor relating to
indemnification, contribution or exculpation from costs, expenses or other
liabilities that is contrary to public policy or applicable law;
(b) Jurisdiction; Venue, etc. Any agreement of the Grantor to submit
to the jurisdiction of any specific federal or state courts, to waive any
objection to the laying of venue, to waive the defense of forum non conveniens
in any action or proceeding referred to therein, to waive trial by jury, to
waive any statute of limitations, to effect service of process in any particular
manner or to establish evidentiary standards and any agreement of the Grantor
regarding the choice of law governing a document (except as otherwise expressly
provided in this opinion letter);
(c) Trust Relationship. The creation of any trust relationship by the
Grantor on behalf of Beneficiary or any Lender;
(d) Certain Laws. Federal securities laws or regulations, state
securities and Blue Sky laws or regulations, federal and state banking laws and
regulations, pension and employee benefit laws and regulations, federal and
state environmental laws and regulations, federal and state tax laws and
regulations, federal and state health and occupational safety laws and
regulations, building code, zoning, subdivision and other laws and regulations
governing the development, use and occupancy of real property, the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 and other federal and state
antitrust and unfair competition laws and regulations, the Assignment of Claims
Act of 1940, and the effect of any of the foregoing on any of the opinions
expressed;
(e) Local Ordinances. The ordinances, statutes, administrative
decisions, orders, rules and regulations of any municipality, city, county,
special district or other political subdivision of the Commonwealth of Virginia;
Page 7
October 21, 2003
(f) Certain Agreements of Grantor. Any agreement of the Grantor
providing for:
(i) specific performance of the Grantor's obligations;
(ii) establishment of a contractual rate of interest payable
after judgment;
(iii) rights of set off and rights of subrogation;
(iv) the granting of any power of attorney;
(v) survival of liabilities and obligations under the Deed
of Trust after release of the Deed of Trust; or
(vi) obligations to make an agreement in the future;
(g) Remedies. Any provision in the Deed of Trust to the effect that
rights or remedies are not exclusive, that every right or remedy is cumulative
and may be exercised in addition to any other right or remedy, that the election
of some particular remedy does not preclude recourse to one or more others or
that failure to exercise or delay in exercising rights or remedies will not
operate as a waiver of any such right or remedy;
(h) UCC Choice of Law. Any provision in the Deed of Trust with respect
to governing law to the extent that such provision purports to affect the choice
of law governing perfection and non-perfection of the security interests;
(i) Sale of Collateral. Any provision in the Deed of Trust relating to
the sale or other disposition of collateral except in compliance with the
Virginia UCC (including any purchase thereof by the Beneficiary);
(j) Custody of Collateral. Any provision in the Deed of Trust
providing for the care of collateral in the possession of the Beneficiary to the
extent inconsistent with Section 9-207 of the Virginia UCC;
(k) Waivers. Any purported waiver, release, variation, disclaimer,
consent or other agreement to similar effect (collectively, a "Waiver") by any
the Grantor to the extent limited by Sections 1-102(3) or 9-602 of the Virginia
UCC or other provisions of applicable law (including judicial decisions), except
to the extent that such Waiver is effective under and is not prohibited by or
void or invalid under Section 9-602 of the Virginia UCC or other provisions of
applicable law (including judicial decisions); and
(l) Title and Priority. Except as noted in paragraph 1 of our opinion,
any person's ownership rights in or title to, or the priority of any lien or
security interest on or with respect to, any property or asset encumbered by the
Deed of Trust.
Page 8
October 21, 2003
(m) Security Interest in Certain Types of Collateral. The creation,
validity, perfection or enforceability of any security interest purported to be
granted in or in respect of the following: (a) equipment used in farming
operations, farm products, crops, timber to be cut, as-extracted collateral,
"know how", copyrights, patents, trademarks, service marks, licenses, trade
secrets, trade names and other intellectual property or rights therein; (b)
policies of insurance, receivables due from any government or agency thereof,
inventory which is subject to any negotiable documents of title (such as
negotiable bills of lading or warehouse receipts), consumer goods, beneficial
interests in a trust, letters of credit or accounts resulting from the sale of
any of the foregoing; or (c) any other property or assets, the creation,
perfection or priority of a security interest in which is excluded from the
coverage of Article 9 of the Virginia UCC or subject to (i) a statute or treaty
of the United States which provides for a national or international registration
or a national or international certificate of title for the perfection or
recordation of a security interest therein or which specifies a place of filing
different from that specified in the Virginia UCC for filing to perfect or
record such security interest, (ii) a certificate of title statute or (iii) the
laws of any jurisdiction other than the Commonwealth of Virginia; and
(n) Enforceability of Lien on Certain Types of Collateral. The
enforceability of any lien on or security interest in any Article 9 Collateral:
(i) consisting of goods of a consignor who has delivered
such goods to the Grantor under a true consignment (as distinguished
from a consignment intended as security);
(ii) as against a "buyer in the ordinary course of business"
(within the meaning of Article 9 of the Virginia UCC) of the Article 9
Collateral; and
(iii) consisting of inventory of the Grantor in the event of
any failure by the Grantor to have fully complied with the Fair Labor
Standards Act of 1932, as amended, including Sections 206 and 207
thereof; and
(o) Security Interests. The creation, validity, perfection or
enforceability of any security interest purported to be granted in or in respect
of any of the Article 9 Collateral other than as expressly provided in our
opinions.
Qualifications And Limitations
The opinions set forth above are subject to the following qualifications
and limitations:
(a) Applicable Law. Our opinions are limited to the laws of the
Commonwealth of Virginia, and we do not express any opinion concerning any other
law.
(b) Bankruptcy. Our opinions are subject to the effect of any
applicable bankruptcy, insolvency (including, without limitation, laws relating
to preferences, fraudulent
Page 9
October 21, 2003
transfers and equitable subordination), reorganization, moratorium and other
similar laws affecting creditors' rights generally.
(c) Equitable Principles. Our opinions are subject to the effect of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law), including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing. In applying such principles, a
court, among other things, might limit the availability of specific equitable
remedies (such as injunctive relief, the remedy of specific performance and
appointment of a receiver), might not allow a creditor to accelerate maturity of
debt or exercise other remedies upon the occurrence of a default deemed
immaterial or for non-credit reasons or might decline to order a debtor to
perform covenants in the Virginia Deed of Trust. Further, a court may refuse to
enforce a covenant if and to the extent that it deems such covenant to be
violative of applicable public policy, including, for example, provisions
requiring indemnification of Beneficiary or any Lender against liability for its
own wrongful or negligent acts.
(d) Unenforceability of Certain Provisions. Certain of the provisions
contained in the Deed of Trust may be unenforceable or ineffective, in whole or
in part. Such provisions include, for example, those which: waive or do not
require notice in connection with the exercise of remedies; authorize a standard
for decision other than commercial reasonableness; characterize any assignment
as "absolute" or authorize the taking of possession of the Premises without
judicial process or otherwise authorize self-help or authorize the Beneficiary
to act on behalf of, or exercise the rights of, the Grantor. The inclusion of
such provisions does not, however, render the Deed of Trust invalid as a whole,
and the Deed of Trust contains, in our opinion, adequate remedial provisions for
the ultimate practical realization of the principal benefits purported to be
afforded by the Deed of Trust, subject to the other qualifications contained in
this opinion letter. We note, however, that the unenforceability of such
provisions may result in delays in enforcement of the rights and remedies of the
Beneficiary under the Deed of Trust, and we express no opinion as to the
economic consequences, if any, of such delays.
(e) Material Changes to Terms. Provisions in the Deed of Trust which
provide that any obligations of the Grantor thereunder will not be affected by
the action or failure to act on the part of Beneficiary or by amendment or
waiver of the provisions contained in another document might not be enforceable
under circumstances in which such action, failure to act, amendment or waiver so
materially changes the essential terms of the guaranteed obligations that, in
effect, a new contract has arisen between the Beneficiary and the Grantor.
(f) Incorporated Documents. Except as specifically set forth in our
opinions, we express no opinion as to the Credit Agreement, Notes or any other
document or instrument (other than the Deed of Trust) notwithstanding its being
referenced in the Deed of Trust or as to the interplay between the Deed of Trust
and such other document or instrument except to the extent that provisions of
the Credit Agreement are referred to in the Deed of Trust.
(g) After-Acquired Real Estate. With respect to after-acquired real
estate, we call to your attention that (i) the Deed of Trust is effective to
create a lien thereon only to the
Page 10
October 21, 2003
extent the description of the real estate satisfies the "reasonable certainty"
test of Section 55-52 of the Virginia Code, and (ii) the Deed of Trust may be
outside the chain of title to after-acquired real estate and thus would not
constitute notice to third parties.
(h) Governmental Approvals. With respect to our opinion expressed in
paragraph 4, such opinion is limited to our review of only those laws and
regulations that, in our experience, are normally applicable to transactions of
the type contemplated by the Deed of Trust.
(i) Security Interest in Proceeds. The continuation and perfection of
the Beneficiary's security interest in the proceeds of Article 9 Collateral is
limited to the extent set forth in Section 9-315 of the Virginia UCC.
(j) Actions to Continue Effectiveness. Except as specifically set
forth in our opinions, we express no opinion as to any actions that may be
required to be taken periodically under the Virginia UCC or any other applicable
law for the effectiveness of any financing statements, or the validity or
perfection of any security interest, to be maintained.
(k) After-Acquired Property. A security interest in any Article 9
Collateral that constitutes after-acquired collateral does not attach until the
Grantor has rights in such after-acquired collateral.
(l) Property Acquired after Commencement of Bankruptcy Case. In the
case of property which becomes part of the Article 9 Collateral after the date
hereof, Section 552 of the Bankruptcy Reform Act of 1978, as amended (the
"Bankruptcy Code"), limits the extent to which property acquired by a debtor
after the commencement of a case under the Bankruptcy Code may be subject to a
security interest arising from a security agreement entered into by the debtor
before the commencement of such case.
(m) After-acquired Property as Voidable Preference. In the case of
property which becomes part of the Article 9 Collateral after the date hereof,
Section 547 of the Bankruptcy Code provides that a transfer is not made until
the debtor has rights in the property transferred, so a security interest in
after-acquired property which is security for other than a contemporaneous
advance may be treated as a voidable preference under the conditions (and
subject to the exceptions) provided by Section 547 of the Bankruptcy Code.
(n) Rights of Third Parties in Certain Article 9 Collateral. The
rights of the Beneficiary with respect to Article 9 Collateral consisting of
accounts, instruments, licenses, leases, contracts or other agreements will be
subject to the claims, rights and defenses of the other parties thereto against
the Grantor.
(o) Licenses or Permits as Article 9 Collateral. In the case of any
Article 9 Collateral consisting of licenses or permits issued by governmental
authorities or other Persons, the Grantor may not have sufficient rights therein
for the security interest of the Beneficiary to attach and, even if the Grantor
has sufficient rights for the security interest of the Beneficiary to
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October 21, 2003
attach, the exercise of remedies may be limited by the terms of the license or
permit or require the consent of the governmental authority issuing such license
or permit.
(p) Fixture Filing. A record of a deed of trust remains effective as a
financing statement filed as a fixture filing until the deed of trust is
released or satisfied of record or its effectiveness otherwise terminates as to
the real property.
(q) Article 9 Collateral Ceasing to be Fixtures. We express no opinion
with respect to the validity, enforceability or perfection of any security
interest in any Article 9 Collateral consisting of Fixtures after the Fixtures
cease to be fixtures (within the meaning of the Virginia UCC) with respect to
the Land or cease to be located thereon.
Miscellaneous
The foregoing opinions are being furnished to the addressees for the
purpose referred to in the first paragraph of this opinion letter, and this
opinion letter is not to be furnished to any other person or used or relied upon
for any other purpose without our prior written consent. The opinions set forth
herein are made as of the date hereof, and we assume no obligation to supplement
this opinion letter if any applicable laws change after the date hereof or if we
become aware after the date hereof of any facts that might change the opinions
expressed herein. Headings in this opinion letter are intended for convenience
of reference only and do not affect its interpretation.
Very truly yours,
/s/ Illegable
------------------------------------------
EXHIBIT L
[Form of]
INTERCOMPANY NOTE
New York, New York
October 21, 2003
FOR VALUE RECEIVED, each of the undersigned, to the extent a borrower from
time to time from any other entity listed on the signature page hereto (each, in
such capacity, a "Payor"), hereby promises to pay on demand to the order of such
other entity listed below (each, in such capacity, a "Payee"), in lawful money
of the United States of America in immediately available funds, at such location
in the United States of America as a Payee shall from time to time designate,
the unpaid principal amount of all loans and advances made by such Payee to such
Payor. Each Payor promises also to pay interest on the unpaid principal amount
of all such loans and advances in like money at said location from the date of
such loans and advances until paid at such rate per annum as shall be agreed
upon from time to time by such Payor and such Payee.
This note ("Note") is an Intercompany Note referred to in the Credit
Agreement dated as of October 21, 2003, among Norcraft Companies, L.P., a
Delaware limited partnership ("Borrower"), Norcraft Holdings, L.P., a Delaware
limited partnership ("Holdings"), the Subsidiary Guarantors (such term and each
other capitalized term used but not defined herein having the meaning given to
it in Article I of the Credit Agreement), the Lenders, UBS SECURITIES LLC, as
bookmanager and lead arranger (in such capacity, the "Lead Arranger"), WACHOVIA
BANK, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the
"Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as co-arranger (the
"Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, the
"Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and as
collateral agent for the Secured Parties and the Issuing Bank (in such capacity,
the "Collateral Agent") and CIT LENDING SERVICES CORPORATION, as documentation
agent (in such capacity, the "Documentation Agent"), and is subject to the terms
thereof, and shall be pledged by each Payee pursuant to the Security Agreement.
Each Payee hereby acknowledges and agrees that the Administrative Agent may
exercise all rights provided in the Credit Agreement and the Security Agreement
with respect to this Note.
Anything in this Note to the contrary notwithstanding, the indebtedness
evidenced by this Note owed by any Payor that is Borrower or a Guarantor to any
Payee other than Borrower shall be subordinate and junior in right of payment,
to the extent and in the manner hereinafter set forth, to all Obligations of
such Payor under the Credit Agreement, including, without limitation, where
applicable, under such Payor's guarantee of the Obligations under the Credit
Agreement (such Obligations and other indebtedness and obligations in connection
with any renewal, refunding, restructuring or refinancing thereof, including
interest thereon accruing after the commencement of any proceedings referred to
in clause (i) below, whether or not such interest is an allowed claim in such
proceeding, being hereinafter collectively referred to as "Senior
Indebtedness"):
(i) In the event of any insolvency or bankruptcy proceedings, and any
receivership, liquidation, reorganization or other similar proceedings in
connection therewith, relative to any Payor or to its creditors, as such,
or to its property, and in the event of any proceedings for voluntary
liquidation, dissolution or other winding up of such Payor, whether or not
involving insolvency or bankruptcy, then (x) the holders of Senior
Indebtedness shall be paid in full in cash in respect of all amounts
constituting Senior Indebtedness before any Payee is entitled to receive
L-1
(whether directly or indirectly), or make any demands for, any payment on
account of this Note and (y) until the holders of Senior Indebtedness are
paid in full in cash in respect of all amounts constituting Senior
Indebtedness, any payment or distribution to which such Payee would
otherwise be entitled (other than debt securities of such Payor that are
subordinated, to at least the same extent as this Note, to the payment of
all Senior Indebtedness then outstanding (such securities being hereinafter
referred to as "Restructured Debt Securities")) shall be made to the
holders of Senior Indebtedness;
(ii) if any default occurs and is continuing with respect to any
Senior Indebtedness (including any Default under the Credit Agreement),
then no payment or distribution of any kind or character shall be made by
or on behalf of the Payor or any other Person on its behalf with respect to
this Note; and
(iii) if any payment or distribution of any character, whether in
cash, securities or other property (other than Restructured Debt
Securities), in respect of this Note shall (despite these subordination
provisions) be received by any Payee in violation of the foregoing clause
(i) or (ii) before all Senior Indebtedness shall have been paid in full in
cash, such payment or distribution shall be paid over or delivered to, the
holders of Senior Indebtedness (or their representatives), ratably
according to the respective aggregate amounts remaining unpaid thereon, to
the extent necessary to pay all Senior Indebtedness in full in cash.
To the fullest extent permitted by law, no present or future holder of
Senior Indebtedness shall be prejudiced in its right to enforce the
subordination of this Note by any act or failure to act on the part of any Payor
or by any act or failure to act on the part of such holder or any trustee or
agent for such holder. Each Payee and each Payor hereby agree that the
subordination of this Note is for the benefit of the Administrative Agent, the
Issuing Bank and the Lenders, the Administrative Agent, the Issuing Bank and the
Lenders are obligees under this Note to the same extent as if their names were
written herein as such and the Administrative Agent may, on behalf of the
itself, the Issuing Bank and the Lenders, proceed to enforce the subordination
provisions herein.
The indebtedness evidenced by this Note owed by any Payor that is not
Borrower or a Guarantor shall not be subordinated to, and shall rank pari passu
in right of payment with, any other obligation of such Payor.
Nothing contained in the subordination provisions set forth above is
intended to or will impair, as between each Payor and each Payee, the
obligations of such Payor, which are absolute and unconditional, to pay to such
Payee the principal of and interest on this Note as and when due and payable in
accordance with its terms, or is intended to or will affect the relative rights
of such Payee and other creditors of such Payor other than the holders of Senior
Indebtedness.
Each Payee is hereby authorized to record all loans and advances made by it
to any Payor (all of which shall be evidenced by this Note), and all repayments
or prepayments thereof, in its books and records, such books and records
constituting prima facie evidence of the accuracy of the information contained
therein.
Each Payor hereby waives presentment, demand, protest or notice of any kind
in connection with this Note. All payments under this Note shall be made without
offset, counterclaim or deduction of any kind.
[Signature Page Follows]
L-2
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
NORCRAFT COMPANIES, L.P.
by: NORCRAFT GP, L.L.C., its General
Partner
By:
------------------------------------
Name:
Title:
NORCRAFT HOLDINGS, L.P.
by: NORCRAFT GP, L.L.C., its General
Partner
By:
------------------------------------
Name:
Title:
NORCRAFT FINANCE CORP.
By:
------------------------------------
Name:
Title:
L-3
EXHIBIT M
[Form of]
SOLVENCY CERTIFICATE
I, the undersigned, Chief Financial Officer of Norcraft Companies, L.P., a
Delaware limited partnership ("Borrower"), DO HEREBY CERTIFY on behalf of
Borrower that:
1. This Certificate is furnished pursuant to Section 4.01(g) of the Credit
Agreement, (as in effect on the date of this Certificate) dated as of October
21, 2003, among Borrower, Norcraft Holdings, L.P., a Delaware limited
partnership ("Holdings"), the Subsidiary Guarantors (such term and each other
capitalized term used but not defined herein having the meaning given to it in
Article I of the Credit Agreement), the Lenders, UBS SECURITIES LLC, as
bookmanager and lead arranger (in such capacity, the "Lead Arranger"), WACHOVIA
BANK, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the
"Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as co-arranger (the
"Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, the
"Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and as
collateral agent for the Secured Parties and the Issuing Bank (in such capacity,
the "Collateral Agent") and CIT LENDING SERVICES CORPORATION, as documentation
agent (in such capacity, the "Documentation Agent").
2. Immediately following the consummation of the Transactions and
immediately following the making of each Loan and after giving effect to the
application of the proceeds of each Loan on the date hereof, (a) the fair value
of the assets of each Loan Party (individually and on a consolidated basis with
its Subsidiaries) exceeds its debts and liabilities, subordinated, contingent or
otherwise, (b) the present fair saleable value of the property of each Loan
Party is greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured, (c)
each Loan Party (individually and on a consolidated basis with its Subsidiaries)
is able to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured and (d) each Loan
Party (individually and on a consolidated basis with its Subsidiaries) does not
have unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be conducted
following the Closing Date.
[Signature Page Follows.]
M-1
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of October,
2003.
NORCRAFT COMPANIES, L.P.
By:
------------------------------------
Name:
Title: Chief Financial Officer
M-2
EXHIBIT N
[Form of]
LENDER ADDENDUM
Reference is made to the Credit Agreement dated as of October 21, 2003,
among Norcraft Companies, L.P., a Delaware limited partnership ("Borrower"),
Norcraft Holdings, L.P., a Delaware limited partnership ("Holdings"), the
Subsidiary Guarantors (such term and each other capitalized term used but not
defined herein having the meaning given to it in Article I of the Credit
Agreement), the Lenders, UBS SECURITIES LLC, as bookmanager and lead arranger
(in such capacity, the "Lead Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as
syndication agent (in such capacity, the "Syndication Agent"), WACHOVIA CAPITAL
MARKETS, LLC, as co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as
swingline lender (in such capacity, the "Swingline Lender"), UBS AG, STAMFORD
BRANCH, as Issuing Bank, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") and as collateral agent for the Secured
Parties and the Issuing Bank (in such capacity, the "Collateral Agent") and CIT
LENDING SERVICES CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent").
Upon execution and delivery of this Lender Addendum by the parties hereto
as provided in Section 11.14 of the Credit Agreement, the undersigned hereby
becomes a Lender thereunder having the Commitment set forth in Schedule 1
hereto, effective as of the Closing Date.
THIS LENDER ADDENDUM SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES
THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
This Lender Addendum may be executed by one or more of the parties hereto
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. Delivery of
an executed signature page hereof by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof.
[Signature Pages Follow.]
N-1
IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum to
be duly executed and delivered by their proper and duly authorized officers as
of this 21st day of October, 2003.
,/a/
------------------------------------
as a Lender
[Please type legal name of Lender above]
By:
------------------------------------
Name:
Title:
[If second signature is necessary:]
By:
------------------------------------
Name:
Title:
----------
/a/ Use this form of signature page if there is a syndicate of lenders to avoid
having to keep track of correct legal names.
N-2
Accepted and agreed:
NORCARFT COMPANIES, L.P., as Borrower
By: NORCARFT GP, L.L.C., its general partner
By:
------------------------------
Name:
Title:
UBS AG, STAMFORD BRANCH, as
Administrative Agent
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
N-3
Schedule 1
COMMITMENTS AND NOTICE ADDRESS
1. Name of Lender:
-----------------
Notice Address:
-----------------
-----------------
Attention:
-----------------
Telephone:
-----------------
Facsimile:
-----------------
2. Commitment:
-----------------
N-4
EXHIBIT O
[Form of]
COMPLIANCE CERTIFICATE
I [We], [ ], the [Financial Officer[s]] of
--------
[BORROWER/HOLDINGS/APPLICABLE SUBSIDIARY GUARANTOR[S]] (in such capacity and not
in [my] [our] individual capacity), hereby certify[ies] that, with respect to
that certain Credit Agreement dated as of October 21, 2003, among Norcraft
Companies, L.P., a Delaware limited partnership ("Borrower"), Norcraft Holdings,
L.P., a Delaware limited partnership ("Holdings"), the Subsidiary Guarantors
(such term and each other capitalized term used but not defined herein having
the meaning given to it in Article I of the Credit Agreement), the Lenders, UBS
SECURITIES LLC, as bookmanager and lead arranger (in such capacity, the "Lead
Arranger"), WACHOVIA BANK, NATIONAL ASSOCIATION, as syndication agent (in such
capacity, the "Syndication Agent"), WACHOVIA CAPITAL MARKETS, LLC, as
co-arranger (the "Co-Arranger"), UBS LOAN FINANCE LLC, as swingline lender (in
such capacity, the "Swingline Lender"), UBS AG, STAMFORD BRANCH, as Issuing
Bank, as administrative agent for the Lenders (in such capacity, the
"Administrative Agent") and as collateral agent for the Secured Parties and the
Issuing Bank (in such capacity, the "Collateral Agent") and CIT LENDING SERVICES
CORPORATION, as documentation agent (in such capacity, the "Documentation
Agent"):
a. Attached hereto as Schedule 1 are detailed calculations
demonstrating compliance by [Borrower] [Holdings] [Subsidiary Guarantor[s]]
with Sections 6.05(f) and 6.08 of the Credit Agreement. [Borrower]
[Holdings] [Subsidiary Guarantors[s]] [is] [are] in compliance with such
Section as of the date hereof. Attached hereto as Schedule 2 are detailed
calculations setting forth Borrower's Excess Cash Flow./a/ Attached hereto
as Schedule 3 is the report of PricewaterhouseCoopers LLP./b/
b. [Borrower] [Holdings] [Subsidiary Guarantor[s]] [was] [were] in
compliance with Sections 6.05(f) and 6.08 of the Credit Agreement at all
times during and since [ ].
-------------
c. No Default has occurred under the Credit Agreement which has not
been previously disclosed, in writing, to the Administrative Agent pursuant
to a Compliance Certificate.
----------
/a/ To accompany annual financial statements only.
/b/ To accompany annual financial statements only. The report must opine that,
while such audit was conducted with respect to accounting matters and was
not specifically directed at determining the existence of a Default, in the
course of its regular audit of the financial statements of Holdings and its
Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, PricewaterhouseCoopers LLP obtained no
knowledge that any Default has occurred or, if in the opinion of
PricewaterhouseCoopers LLP, such a Default has occurred, specifying the
nature and extent thereof.
O-1
[Signature Page Follows]
O-2
Dated this 21st day of October, 2003.
NORCRAFT COMPANIES, L.P.
By: NORCRAFT GP, L.L.C., its General
Partner
By:
------------------------------------
Name:
Title: [Financial Officer]
NORCRAFT HOLDINGS, L.P.
By: NORCRAFT GP, L.L.C., its General
Partner
By:
------------------------------------
Name:
Title: [Financial Officer]
NORCRAFT FINANCE CORP.
By:
------------------------------------
Name:
Title: [Financial Officer]
NORCRAFT CANADA CORPORATION
By:
------------------------------------
Name:
Title: [Financial Officer]
O-3
SCHEDULE 1
Section 6.08(a): Maximum Leverage Ratio
Consolidated Indebtedness as of
[ ], 20[ ]
----- --
---------------
Determination of Consolidated EBITDA for four quarter period
ended [ ], 20[ ]:
-- --
Calculation of Consolidated Net Income for four quarter period
ended [ ], 20[ ]:
-- --
consolidated net income of Borrower and its Subsidiaries
in accordance with GAAP for the four quarter period ended
[ ], 20[ ], minus (or if such item is a loss (as
-- --
indicated by parenthesis around such item), plus) each of
the following items, to the extent such items increased
such net income in such period
---------------
the net income (or loss) of any person (other than a
Consolidated Subsidiary of Borrower) in which any person
other than Borrower and its Consolidated Subsidiaries has
an ownership interest, except to the extent that cash in
an amount equal to any such income has actually been
received by Borrower or (subject to clause (c) below) any
of its Consolidated Subsidiaries during such period
---------------
O-4
except to the extent includible in the Consolidated Net
Income of Borrower pursuant to the foregoing clause (a),
the net income (or loss) of any person that accrued prior
to the date that (1) such person becomes a Consolidated
Subsidiary of Borrower or is merged into or consolidated
with Borrower or any of its Consolidated Subsidiaries or
(2) the assets of such person are acquired by Borrower or
any of its Consolidated Subsidiaries
---------------
the net income of any Consolidated Subsidiary of Borrower
during such period to the extent that the declaration or
payment of dividends or similar distributions by such
Consolidated Subsidiary of that income is not permitted
by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that
Consolidated Subsidiary during such period, except that
Borrower's equity in a net loss of any such Consolidated
Subsidiary for such period shall be included in
determining Consolidated Net Income
---------------
any gain (or loss), together with any related provisions
for taxes on any such gain (or the tax effect of any such
loss), realized during such period by Borrower or any of
its Consolidated Subsidiaries upon (x) the acquisition of
any securities, or the extinguishment of any
Indebtedness, of Borrower or any Consolidated Subsidiary
of Borrower or (y) any Asset Sale (other than any Asset
Sale pursuant to Section 6.05(b)(i) or (d), and other
dispositions in the ordinary course of business) by
Borrower or any Consolidated Subsidiary of Borrower
---------------
gains and losses due solely to fluctuations in currency
values and the related tax effects according to GAAP
---------------
unrealized gains and losses with respect to Hedging
Obligations
---------------
O-5
earnings resulting from any reappraisal, revaluation or
write-up of assets
---------------
any extraordinary or nonrecurring gain (or extraordinary
or nonrecurring loss), together with any related
provision for taxes on any such gain (or the tax effect
of any such loss), recorded or recognized by Borrower or
any of its Consolidated Subsidiaries during such period
---------------
Consolidated Net Income for period ended [ ], 20[ ]
-- -- ---------------
Consolidated Interest Expense calculation:
consolidated interest expense of Borrower and its
Consolidated Subsidiaries in accordance with GAAP for the
four quarter period ended [ ], 20[ ], plus, without
-- --
duplication, each of the following items for such period:
---------------
imputed interest on Capital Lease Obligations of Borrower
and its Consolidated Subsidiaries for such period
---------------
commissions, discounts and other fees and charges owed by
Borrower or any of its Consolidated Subsidiaries with
respect to letters of credit securing financial
obligations, bankers' acceptance financing and
receivables financings
---------------
amortization of debt issuance costs, debt discount or
premium and other financing fees and expenses incurred by
Borrower or any of its Consolidated Subsidiaries
---------------
cash contributions to any employee stock ownership plan
or similar trust made by Borrower or any of its
Consolidated Subsidiaries to the extent such
contributions are used by such plan or trust to pay
interest or fees to any person (other than Borrower or a
Wholly Owned Subsidiary) in connection with Indebtedness
incurred by such plan or trust
---------------
all interest paid or payable with respect to discontinued
operations of Borrower or any of its Consolidated
Subsidiaries
---------------
the interest portion of any deferred payment obligations
O-6
of Borrower or any of its Consolidated Subsidiaries
---------------
all interest on any Indebtedness of Borrower or any of
its Subsidiaries of the type described in clause (f) or
(j) of the definition of "Indebtedness"
---------------
any other non-cash interest expense of Borrower and its
Consolidated Subsidiaries for such period
---------------
minus, to the extent directly related to the Transactions
or the Exchange Offer pursuant to the Registration Rights
Agreement, debt issuance costs, debt discount or premium
and other financing fees and expenses
---------------
any adjustments required to be made in connection with
Interest Rate Agreements (including associated costs),
but excluding unrealized gains and losses with respect to
Interest Rate Agreements
---------------
Consolidated Interest Expense for the four quarter period
ended [ ], 20[ ]
-- -- ---------------
Consolidated EBITDA calculation (on a Pro Forma Basis, if
appropriate):
---------------
Consolidated Net Income, plus, to the extent permitted by
the Credit Agreement and to the extent such items reduced
Consolidated Net Income in the period ended [ ], 20[ ]:
-- -- ---------------
Consolidated Interest Expense
---------------
Consolidated Amortization Expense
---------------
Consolidated Depreciation Expense
---------------
Dividends paid to Holdings pursuant to Section 6.06(d)
plus, without duplication, any other provision for taxes
based on income for Borrower and its Consolidated
Subsidiaries
---------------
Costs and expenses incurred in connection with the
Transactions (for the avoidance of doubt, including the
payment by Borrower of bonus and severance payments to
Mr. Hank Key and all other success bonuses paid by
Borrower to employees of Borrower upon and in connection
with the consummation of
O-7
the Acquisition) and the Exchange Offer pursuant to the
Registration Rights Agreement (including amortization of
debt issuance costs, debt discount or premium and other
financing fees and expenses directly relating thereto)
---------------
O-8
the amount of any payments made in accordance with
Section 6.07(d) and any management fees paid in the
ordinary course by Borrower to its former financial
sponsor during the period from and including October 1,
2003 to and excluding the Closing Date
---------------
all other non-cash items reducing Consolidated Net Income
(including non-cash write-offs of goodwill, intangibles
and long-lived assets and non-cash items resulting from
purchase accounting, but excluding any non-cash charge
that results in an accrual of a reserve for cash charges
in any future period) for such period
---------------
the aggregate amount of all non-cash items, determined on
a consolidated basis, to the extent such items increased
Consolidated Net Income (other than the accrual of
revenue, recording of receivables or the reversal of
reserves in the ordinary course of business) for such
period
---------------
Consolidated EBITDA for the four quarter period ended [ ],
--
20[ ]/c/
-- ---------------
Leverage Ratio:
---------------
Consolidated Indebtedness to Consolidated EBITDA
---------------
Covenant
Requirement:
---------------
Section 6.08(b): Minimum Interest Coverage Ratio
Consolidated EBITDA for the four quarter period ended [ ],
--
20[ ]
--
---------------
Consolidated Interest Expense for the four quarter period
ended [ ], 20[ ]
-- -- ---------------
----------
/c/ Calculated on a Pro Forma Basis to give effect to the Acquisition,
Consolidated EBITDA for the first, second and third quarters of 2003 shall
be deemed to be $10,056,000, $12,003,000 and $12,876,000, respectively.
O-9
Consolidated Interest Coverage Ratio:
Consolidated EBITDA to Consolidated Interest Expense
---------------
Covenant
Requirement:
---------------
Section 6.08(c): Minimum Fixed Charge Coverage Ratio
Consolidated EBITDA for the four quarter period ended [ ],
--
20[ ]
--
---------------
Calculation of Consolidated Fixed Charges:
Consolidated Interest Expense for the four quarter period
ending [ ], 20[ ], to the extent paid or payable in cash,
-- --
plus
---------------
All Capital Expenditures made by Borrower and its
Subsidiaries during such period (other than to the extent
financed by Excluded Issuances), plus
---------------
All dividends paid pursuant to Section 6.06(d) during
such period plus, without duplication, all cash payments
in respect of income taxes in respect of Borrower or any
of its Subsidiaries, plus
---------------
the scheduled principal amount of all amortization
payments on all Indebtedness (including the principal
component of all Capital Lease Obligations) of Borrower
and its Subsidiaries for such period (as determined on
the first day of the respective period), except that for
any Test Period in 2004 or 2003, the amount of the
scheduled principal amount of amortization payments on
the Term Loans during such Test Period shall be deemed to
be the amount of all such amortization payments to be
made in 2004
---------------
Consolidated Fixed Charges for the period ended [ ], 20[ ]
-- -- ---------------
Consolidated Fixed Charge Coverage Ratio:
Consolidated Fixed Charges to Consolidated EBITDA
---------------
Covenant
Require-
O-10
ment:
1.1 to 1.0
Section 6.08(d): Capital Expenditures
Capital Expenditures for the year ending [ ], 20[ ]
-- -- ---------------
Covenant
Requirement:
---------------
Section 6.05(f):
Amount of each Permitted Acquisition made in the quarter
ending:
---------------
Maximum amount
per Permitted
Acquisition:
$15.0 million
Aggregate amount of all Permitted Acquisitions from the
Closing Date last of quarter ending [ ], 20[ ]
-- -- ---------------
Maximum amount
for all
Permitted
Acquisitions:
$40.0 million
O-11
SCHEDULE 2
Excess Cash Flow
Consolidated EBITDA for such fiscal year, plus
---------------
cash gains excluded from Consolidated Net Income for such
fiscal year, plus
---------------
reductions to non-cash working capital of Borrower and
its Consolidated Subsidiaries for such fiscal year (i.e.,
the decrease, if any, in Consolidated Current Assets
minus Consolidated Current Liabilities from the beginning
to the end of such fiscal year), minus
---------------
the amount of any cash income taxes paid or payable by
Borrower and its Consolidated Subsidiaries with respect
to such fiscal year, net of any cash tax refunds received
or receivable by Borrower or any of its Consolidated
Subsidiaries in such fiscal year, plus, without
duplication, Dividends paid pursuant to Section 6.06(d)
in such fiscal year, minus
---------------
Consolidated Interest Expense, to the extent paid or
payable in cash paid during such fiscal year, minus
---------------
Capital Expenditures made in cash in accordance with
Section 6.08(d) during such fiscal year, to the extent
funded from internally generated funds (for the avoidance
of doubt, Capital Expenditures, to the extent financed
with one or more Excluded Issuances, shall not be deemed
funded from internally generated funds), minus
---------------
permanent repayments and prepayments of Indebtedness made
by Borrower and its Consolidated Subsidiaries during such
fiscal year, to the extent funded with internally
generated funds, minus
---------------
amounts referred to in clauses (e) and (f) of the
definition of Consolidated EBITDA, to the extent paid in
cash in such fiscal year, minus
---------------
cash losses excluded from the calculation of Consolidated
Net Income for such fiscal year, minus
---------------
additions to noncash working capital for such fiscal year
(i.e., the increase, if any, in Consolidated Current
Assets minus Consolidated Current Liabilities from the
beginning to the end of such fiscal year), minus
---------------
O-12
the amount of Acquisition Consideration (exclusive of any
amounts financed by Excluded Issuances) expended in cash
during such fiscal year, minus
---------------
Net Cash Proceeds of Asset Sales and Casualty Events
---------------
Excess Cash Flow:
---------------
O-13
SCHEDULE 3
Report of PricewaterhouseCoopers LLP
[To come.]
O-14
EXHIBIT P
[Form of]
LC REQUEST [AMENDMENT]
[LOGO] UBS
UBS AG
_________ _________
677 Washington ____
_________ ___________
Tel. _______________
Date: OCTOBER 20, 2003
SWIFT Address: ▇▇▇▇▇▇▇▇
THE TRAVELERS INDEMNITY COMPANY
CREDIT RISK MGMT.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
IRREVOCABLE STANDBY LETTER OF CREDIT NC: F033292
APPLICANT:
Norcraft Companies L.P.
Gentlemen:
We hereby establish this clean irrevocable Letter of Credit in favor of the The
Travelers Indemnity Company ("Beneficiary") by order of and for the account of
Norcraft for drawings up to United States $3,450,000.00. This Letter of Credit
is issued, presentable and payable at our office at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. This Letter of Credit shall become effective on October 21,
2003 and shall expire with our close of business on December 31, 2003. After the
Letter of Credit has been issued, it cannot be revoked or reduced without the
consent of the Beneficiary.
The term "Beneficiary" includes any successor by operation of law of the named
Beneficiary including, without limitation, any liquidator, rehabilitator,
receiver or conservator.
We hereby undertake to promptly honor your sight draft(s) drawn on us under and
in compliance with, the terms and conditions of this Letter of Credit indicating
our Credit No. F033292. for all or any part of this credit if presented at our
office specified in paragraph one on or before the expiry date or any
automatically extended expiry date. If you so choose, you will be able to draw
on this Letter of Credit more than once, so long as the sum of the amounts which
you have drawn does not exceed the full amount of the Letter of Credit.
This Letter of Credit ___ forth in full the terms of our undertaking, and such
undertaking shall not in any way be modified, amended or amplified by reference
to any note, document, instrument or agreement referred to herein or in which
this Letter of Credit is referred to or to which this Letter of Credit relates
and any such reference shall not be deemed to be incorporated, herein by
reference. The obligation of UBS
P-1
AG under this Letter of Credit is the individual obligation of UBS AG, and is in
no way contingent upon reimbursement with respect thereto. It is a condition of
this Letter of credit that it is deemed to be automatically extended without
amendment for one year from the expiry date hereof, or any future expiration
date, unless at least 9O days prior to any expiration date we notify you by
registered mail or overnight courier that we elect not to consider this Letter
of Credit extended for any such additional period. In that event you may draw
hereunder on or prior to the then relevant expiration date, up to the full
amount then available hereunder, against your sight draft(_) on us, bearing the
number of this Letter of Credit.
This letter of Credit is subject to and governed by the Laws of the State of
Connecticut and the 1993 Revision of the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce (publication No.
500) and, in the event of any conflict, the Laws of the State of Connecticut
will control. If this Credit expires during an interruption of business as
described in Article 17 of said Publication 500, the bank hereby specifically
agrees to effect payment if this Credit is drawn against within 30 days after
the resumption of business.
Very truly yours,
UBS AG
Stamford Branch
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ Illegible
------------------------------- ------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Illegible
Director Associate Director
Operations Operations
P-2