LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") dated as of March 19, 1998, is entered into by
and between IAC HOLDINGS CORP. (the "Borrower"), a Delaware corporation having
its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
and INTERNATIONAL MEZZANINE CAPITAL B.V., having an address at ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (the "Lender").
W I T N E S S E T H :
WHEREAS, the Borrower is purchasing (the "Acquisition") all of the shares
of Common Stock, $.10 par value (the "Common Stock"), of Industrial Acoustics
Company, Inc. (the "Company") owned by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("Seller") pursuant to a
Stock Purchase Agreement dated as of January 26, 1998, as amended (the "Purchase
Agreement"), between the Borrower and Seller and the Common Stock owned by
certain other stockholders of the Company, as set forth on Schedule A to the
Purchase Agreement, pursuant to separate purchase agreements (collectively with
the Purchase Agreement, the "Acquisition Documents");
WHEREAS, the Lender is willing to lend the Borrower sufficient funds to
finance the Acquisition in part; and
WHEREAS, the Borrower desires to borrow funds from the Lender to finance
the Acquisition in part.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the Lender and the Borrower agree as follows:
SECTION 1. LOAN.
1.1 Loan. Subject to and upon the terms and conditions set forth herein,
the Lender agrees to make a loan to the Borrower in an aggregate principal
amount not to exceed $16,918,667 (the "Loan").
1.2 Disbursement of Loan Proceeds. On the Closing Date, and subject to the
satisfaction or waiver of all conditions precedent thereto as set forth in
Section 2, the Lender shall transfer to the Borrower, by wire transfer, in
immediately available funds, the amount of the Loan (net of the fee specified in
Section 3.4(a) and the fees and disbursements of
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▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Lender) to an account designated by the
Borrower or as otherwise instructed by the Borrower.
SECTION 2. CONDITIONS PRECEDENT.
The obligation of the Lender to make the Loan hereunder is subject to the
satisfaction or waiver, in the sole discretion of the Lender and its counsel, of
each of the following conditions on or prior to the Closing Date:
(a) Loan Documents. The Lender shall have received (i) each of the Loan
Documents executed by each of the parties thereto; and (ii) such other
documents, instruments and agreements in connection herewith as the Lender shall
require, executed, certified and/or acknowledged by such parties as the Lender
shall designate;
(b) Charter Documents. The Lender shall have received copies of the
Borrower's By-laws and Certificate or Certificate of Incorporation, as amended,
modified, or supplemented to the Closing Date, certified by the Secretary of the
Borrower;
(c) Good Standing. The Lender shall have received a certificate of
corporate status with respect to the Borrower, dated within ten (10) days of the
Closing Date, by the Secretary of State of the State of Delaware, which
certificate shall indicate that the Borrower is in good standing in such state;
(d) Authorizing Resolutions and Incumbency. The Lender shall have received
a certificate from the Secretary of the Borrower attesting to (i) the adoption
of resolutions of the Borrower's Board of Directors authorizing the borrowing of
money from the Lender and execution and delivery of this Agreement and the other
Loan Documents, and authorizing officers of the Borrower to execute this
Agreement and the other Loan Documents, and (ii) the authenticity of signatures
of such officers;
(e) Fees. The Borrower shall have paid all fees payable by it on the
Closing Date pursuant to this Agreement;
(f) Officers' Certificate. The Lender shall have received a certificate of
the President of the Borrower attesting to the accuracy of each of the
representations and warranties of the Borrower set forth in this Agreement and
the satis-
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faction or waiver of all conditions precedent to the funding of the Loan
hereunder;
(g) Acquisition. The Lender shall have received full, complete and accurate
copies of the Acquisition Documents. The Acquisition Documents shall be
satisfactory to the Lender and each of the Acquisition Documents required to be
executed and delivered prior to the Closing Date shall have been duly
authorized, executed and delivered by each of the parties thereto and shall be
in full force and effect. No term or provision of the Purchase Agreement shall
have been modified, and no condition to the consummation of the transactions
contemplated thereby shall have been waived, in either case, in a manner
detrimental to the Borrower, by any of the parties thereto;
(h) Equity Contribution. The Borrower shall have received a cash equity
contribution of at least $10,170,231;
(i) Representations and Warranties. Each of the representations and
warranties set forth in Section 8 hereof shall be true and correct in all
material respects as of the Closing Date; and
(j) Other Matters. All other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to the
Lender and its counsel.
SECTION 3. INTEREST RATE AND OTHER CHARGES.
3.1 Interest. (a) The Borrower shall pay the Lender interest on the unpaid
principal amount of the Loan for each Interest Period until the Loan has been
paid in full at the rate per annum equal to LIBOR in effect for such Interest
Period plus 3.50%.
(b) Interest shall accrue from and including the Closing Date to but
excluding the date of any repayment and shall be payable, in cash, on the last
day of each Interest Period for the Loan (and, if an Interest Period exceeds
three months in duration, on the last day of each three calendar month interval
during such Interest Period), and upon any prepayment (to the extent accrued on
the amount being prepaid), and at maturity (whether by acceleration or
otherwise).
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(c) The Lender shall determine the interest rate applicable to the Loan on
each Interest Rate Determination Date and promptly after the establishment of
any interest rate provided for herein or any change therein, the Lender will
notify the Borrower thereof; provided, that the failure of the Lender to notify
the Borrower shall not result in any liability of the Lender or affect the
obligations of the Borrower hereunder or under the Note. If, as a result of the
Lender's failure to so advise the Borrower, the Borrower has paid an incorrect
amount of interest, (i) the Borrower shall, in the case of any underpayment of
interest, promptly correct such payment upon request of the Lender or (ii) in
the case of overpayment of interest by the Borrower, the Lender shall promptly
credit the Borrower in the amount of such overpayment of interest.
(d) The Borrower shall give the Lender written notice of the duration of
each Interest Period selected by the Borrower to be applicable to the Loan. Each
written notice shall be irrevocable and shall be effective only if received by
the Lender not later than 11:00 a.m., New York City time, on the date that is
three Eurodollar Business Days prior to the first day of such Interest Period.
(e) All computations of interest hereunder shall be made on the actual
number of days elapsed over a year of 365 days.
(f) (i) Any and all payments by the Borrower hereunder or under the Notes
shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto imposed by any governmental authority,
excluding net income taxes that are imposed as a result of a present or former
connection between the Lender and the jurisdiction or governmental authority
imposing such tax (other than any such connection arising solely from the Lender
having executed, delivered or performed its obligations or received payment
under, or enforced, this Agreement or any Note) (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to the Lender, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.1(f)), the Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such
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deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(ii) Within 30 days after the date of any payment of Taxes, the Borrower
will furnish to the Lender evidence of payment thereof. In the case of any
payment hereunder or under the Notes by the Borrower through an account or
branch outside the United States or on behalf of the Borrower by a payor that is
not a United States person, if the Borrower determines that no Taxes are payable
in respect thereof, the Borrower will furnish, or will cause such payor to
furnish, to the Lender, at such address, an opinion of counsel acceptable to the
Lender stating that such payment is exempt from Taxes. For purposes of this
Section 3.1(f), the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Internal Revenue Code.
(iii) The Lender shall, from time to time if requested in writing by the
Borrower (but only so long as the Lender remains lawfully able to do so),
provide the Borrower with Internal Revenue Service Form W-8, as appropriate (or
any successor form prescribed by the Internal Revenue Service), certifying that
the Lender is a non-U.S. person. If Internal Revenue Service Form W-8 requires
the disclosure of information that the Lender reasonably considers to be
confidential, the Lender shall give notice thereof to the Borrower and shall not
be obligated to include in such form or document such confidential information.
3.2 Default Interest Rate. Upon the occurrence and during the continuance
of an Event of Default, the Borrower shall pay the Lender interest on the daily
outstanding balance of the Loan at a rate per annum which is two percent (2%) in
excess of the rate which would otherwise be applicable thereto pursuant to
Section 3.1.
3.3 Excess Interest. In no event whatsoever shall the interest rate and
other charges charged hereunder exceed the highest rate permissible under any
law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. In the event that a court determines that the Lender has
received interest and other charges hereunder in excess of the highest
permissible rate applicable thereto, the Lender shall promptly apply such excess
to the Obligations in such order as the Lender shall determine in its discretion
or refund the amount thereof to the Borrower, and the provisions
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hereof shall be deemed amended to provide for such permissible rate.
3.4 Funding Fee. On the Closing Date, the Borrower shall pay to the Lender
a Funding Fee in an amount equal to 3.0% of the aggregate principal amount of
the Loan, which shall be deemed fully earned at the time of payment.
SECTION 4. REPORTING REQUIREMENTS.
So long as the Loan shall remain unpaid, the Borrower will furnish to the
Lender:
4.1 Default Notice. As soon as possible and in any event within five
business days after the Borrower obtains knowledge of the occurrence of each
Default continuing on the date of such statement, a statement of the chief
financial officer of the Borrower setting forth the nature of such Default and
the action that the Borrower has taken and/or proposes to take with respect
thereto.
4.2 Quarterly Financials. As soon as available and in any event within 45
days after the end of each quarter, commencing June 30, 1998, (i) Consolidated
and consolidating balance sheets of the Borrower and its Subsidiaries as of the
end of such quarter and Consolidated and consolidating statements of income,
retained earnings and cash flow of the Borrower and its Subsidiaries for the
period commencing at the end of the previous quarter and ending with the end of
such quarter, and commencing at the end of the previous fiscal year and ending
with the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding quarter and year to date period of
the preceding fiscal year, all in reasonable detail and duly certified by the
chief financial officer of the Borrower, and (ii) any additional information
which the Lender may request.
4.3 Annual Financials. As soon as available and in any event within 120
days after the end of each fiscal year of the Borrower, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries, including
therein Consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the end of such fiscal year and Consolidated and
consolidating statements of income, retained earnings and cash flow of the
Borrower and its Subsidiaries for such fiscal year, in each case accompanied by
an opinion reasonably acceptable to the Lender of independent public accountants
of recognized standing reasonably acceptable to the Lender, to-
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gether with (i) a certificate of such accounting firm to the Lender stating that
in the course of the regular audit of the business of the Borrower and its
Subsidiaries, which audit was conducted by such accounting firm in accordance
with generally accepted auditing standards, such accounting firm has obtained no
knowledge that a Default has occurred and is continuing or if, in the opinion of
such accounting firm, a Default has occurred and is continuing, a statement as
to the nature thereof and (ii) a certificate of the chief financial officer of
the Borrower stating that no Default has occurred and is continuing or, if a
Default has occurred and is continuing, a statement as to the nature thereof and
the action that the Borrower has taken and proposes to take with respect
thereto.
4.4 Accountants' Letters and Reports. (i) As soon as available and in any
event prior to December 31 of each fiscal year of the Borrower, a letter from
independent public accountants of recognized standing acceptable to the Lender,
in a form acceptable to the Lender, but only if the Borrower is able to obtain
such letter (as to which the Borrower shall have used its best efforts to so
obtain), to the Lender, acknowledging that the Lender will rely upon the
financial statements of the Borrower examined by, and the related reports of,
such accountants for the succeeding fiscal year in determining whether to take
action or refrain from taking action under the Loan Documents; and (ii) promptly
upon receipt thereof, copies of all reports submitted to the Borrower or any of
its Subsidiaries by any independent public accountants of the Borrower or any
such Subsidiary in connection with each annual, interim or special audit of its
financial statements made by such accountants, including the comment letter
submitted by such accountants to management of the Borrower or any such
Subsidiary in connection with their annual audit and any reports addressing
accounting controls submitted by such accountants with respect to the Borrower
or such Subsidiary.
4.5 Plan Adoptions, Etc. Promptly after (i) the adoption or commitment to
the adoption thereof, a copy of any new Plan, Multiemployer Plan or Welfare Plan
of the Borrower or any of its Subsidiaries and (ii) any amendment or commitment
to any amendment thereof, a copy of such amendment to any Plan, Multiemployer
Plan or Welfare Plan of the Borrower or any of its Subsidiaries.
4.6 ERISA Events and ERISA Reports. (i) Promptly and in any event within
five Business Days after the Borrower or any of its ERISA Affiliates knows or
has reason to know that any ERISA Event has occurred, a statement of the vice
president
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and controller of the Borrower describing such ERISA Event and the action, if
any, that the Borrower or such ERISA Affiliate has taken and proposes to take
with respect thereto and (ii) on the date any records, documents or other
information must be furnished to the PBGC with respect to any Plan pursuant to
Section 4010 of ERISA, a copy of such records, documents and information.
4.7 Plan Terminations. Promptly and in any event within two Business Days
after receipt thereof by the Borrower or any of its ERISA Affiliates, copies of
each notice from the PBGC stating its intention to terminate any Plan or to have
a trustee appointed to administer any such Plan.
4.8 Plan Annual Reports. Promptly and in any event within 30 days after the
filing thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (form 5500 Series) with respect to
each Plan.
4.9 Multiemployer Plan Notices. Promptly and in any event within five
Business Days after receipt thereof by the Borrower or any of its ERISA
Affiliates from the sponsor of a Multiemployer Plan, copies of each notice
concerning (i) the imposition of Withdrawal Liability by any such Multiemployer
Plan, (ii) the reorganization or termination, within the meaning of Title IV of
ERISA, of any such Multiemployer Plan or (iii) the amount of liability incurred,
or that may be incurred, by the Borrower or any of its ERISA Affiliates in
connection with any event described in clause (i) or (ii) above.
4.10 Litigation. Promptly after the commencement thereof, notice of all
actions, suits, claims, investigations (including, without limitation, any
investigation from any regulatory agency and any reports resulting from such
investigation), litigation and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower or any of its Subsidiaries or any of their
properties that (i) could have a Material Adverse Effect or (ii) purport to
affect the legality, validity or enforceability of this Agreement or any other
Loan Document or the consummation of the transactions contemplated hereby or
thereby and any other information available to the Borrower or any of its
Subsidiaries with respect to any of the foregoing that would enable the Lender
to more fully evaluate such action, suit, investigation, litigation or
proceeding.
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4.11 Securities Reports. Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports that the
Borrower or any of its Subsidiaries sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements, that the
Borrower or any of its Subsidiaries files with the Securities and Exchange
Commission or any governmental authority that may be substituted therefor, or
with any national securities exchange.
4.12 Agreement Notices. Promptly upon receipt thereof, copies of all
notices, requests and other documents received by or given to the Borrower or
any of its Subsidiaries under or pursuant to any Acquisition Document and, from
time to time upon request by the Lender, such other information and reports
regarding the Material Contracts as the Lender may reasonably request.
4.13 Revenue Agent Reports. Within 20 days after receipt, copies of all
Revenue Agent Reports (Internal Revenue Service form 886), or other written
proposals of the Internal Revenue Service, that propose, determine or otherwise
set forth positive or negative adjustments to the federal income tax liability
of the affiliated group (within the meaning of Section 1504(a)(1) of the
Internal Revenue Code) of which the Borrower is a member aggregating $100,000 or
more.
4.14 Tax Certificates. Promptly, and in any event within five Business Days
after the due date (with extensions) for filing the final federal income tax
return in respect of each taxable year, a certificate (a "Tax Certificate"),
signed by the chief financial officer of the Borrower, stating that the common
parent of the affiliated group (within the meaning of Section 1504(a)(1) of the
Internal Revenue Code) of which the Borrower is a member has paid to the
Internal Revenue Service or other taxing authority, or to the Borrower, the full
amount that such affiliated group is required to pay in respect of federal
income tax for such year and that the Borrower and its Subsidiaries have
received any amounts payable to them, and have not paid amounts in respect of
taxes (federal, state, local or foreign) in excess of the amount they are
required to pay.
4.15 Environmental Conditions. Promptly and in any event within five
Business Days after the occurrence thereof, notice of any condition or
occurrence that results in noncompliance with any Environmental Law or
Environmental Permit by the Borrower or any of its Subsidiaries or upon the
Borrower
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learning of any such condition or occurrence caused by any Person occupying or
operating any property owned, leased or operated by the Borrower or any of its
Subsidiaries that is reasonably likely to result in Environmental Costs and
Liabilities in excess of $50,000, or form the basis of an Environmental Action
against the Borrower or any of its Subsidiaries that is reasonably likely to
result in Environmental Costs and Liabilities in excess of $50,000, or cause any
property owned, leased or operated by the Borrower or any of its Subsidiaries to
be subject to any restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
4.16 Minutes. Promptly after they are furnished or become available, copies
of all minutes of meetings of the board of directors or any committee of the
board of directors of the Borrower.
4.17 Employment Compensation. Promptly after they are agreed to or entered
into, copies of all compensation arrangements with any officer of the Borrower
or its Subsidiaries.
4.18 Other Information. Such other information with respect to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or any of its Subsidiaries as the Lender
may from time to time reasonably request.
SECTION 5. PRINCIPAL PAYMENTS AND PREPAYMENTS.
5.1 Repayment. The Borrower shall pay to the Lender the principal amount of
the Loan, less any principal prepayments made pursuant to the terms of this
Agreement, on the earlier of (i) the Maturity Date or (ii) the date on which a
Change of Control or Public Offering occurs.
5.2 Prepayments. The Borrower may prepay the Loan in whole or in part at
any time prior to the Maturity Date, without premium; provided, however, that
any partial prepayments must be made in multiples of $1,000,000.00. Prepayments
of the Loan may not be reborrowed. All prepayments of the Loan or any portion
thereof shall be made together with the payment of all interest accrued on the
amount repaid through the date of such prepayment.
5.3 Notices. The Borrower shall give the Lender written notice of each
prepayment of the Loan. Notices of prepayment shall be irrevocable and shall
only be effective if re-
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ceived not later than 11:00 a.m., New York City time, on the date that is two
(2) Business Days prior to the date of the related prepayment. Each notice of
prepayment shall specify the amount of the Loan to be prepaid and the date of
prepayment.
5.4 Payments Without Deductions. The Borrower shall pay principal, interest
and all other amounts payable hereunder, or under any related agreement, without
any deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaims.
SECTION 6. POWER OF ATTORNEY.
The Borrower appoints the Lender and its designees as the Borrower's
attorney, with the power to do all other things the Lender deems necessary or
desirable to carry out the terms of this Agreement. The Borrower hereby
ratifies, confirms and approves all acts of such attorney. Neither the Lender
nor any of its designees will be liable for any acts or omissions or for any
error of judgment or mistake of fact or law acting as the Borrower's attorney,
except those arising from the gross negligence or willful misconduct of the
Lender, its employees, agents or representatives. This power, being coupled with
an interest, is irrevocable until the Obligations have been fully satisfied and
this Agreement and the Loan Documents have been terminated.
SECTION 7. GENERAL REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
7.1 It (i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of its
business requires it to so qualify or be licensed, except where the failure to
so qualify or be licensed could not have a Material Adverse Effect, and (iii)
has all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted. All of the outstanding capital stock of the Borrower has been validly
issued and is fully paid and nonassessable.
7.2 Set forth on Schedule 7.2 hereto is a complete and accurate list of all
Subsidiaries of the Borrower after giving effect to the Acquisition, showing (as
to each such Sub-
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sidiary) the jurisdiction of its incorporation, the number of shares of each
class of capital stock authorized, the number outstanding and the percentage of
the outstanding shares of each such class owned (directly or indirectly) by the
Borrower and the number of shares covered by all outstanding options, warrants,
rights of conversion or purchase and similar rights. All of the outstanding
capital stock of each such Subsidiary has been validly issued and is fully paid
and nonassessable and all of the shares of such Capital Stock owned by the
Borrower and/or one or more of its Subsidiaries specified on Schedule 7.2 are
owned free and clear of all Liens. Each such Subsidiary (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good standing
as a foreign corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed, except where the failure to so qualify or be licensed could not have a
Material Adverse Effect, and (iii) has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted.
7.3 The execution, delivery and performance by the Borrower of this
Agreement and each other Loan Document to which it is or is to be a party, and
the consummation of the Acquisition and the other transactions contemplated
hereby and thereby, are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene the
Borrower's charter or bylaws, (ii) violate any law (including, without
limitation, the Securities Exchange Act of 1934), rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination or
award, (iii) conflict with or result in the breach of, or constitute a default
under, any contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument binding on or affecting the Borrower, any of its
Subsidiaries or any of their properties or (iv) result in or require the
creation or imposition of any Lien upon or with respect to any of the properties
of the Borrower or any of its Subsidiaries. Neither the Borrower nor any of its
Subsidiaries is in violation of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument referred to in the immediately preceding sentence, the violation or
breach of which could have a Material Adverse Effect.
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7.4 No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other third
party, except for those that have been made or obtained, is required for (i) the
due execution, delivery, recordation, filing or performance by the Borrower of
this Agreement or any other Loan Document or for the consummation of the
Acquisition or the other transactions contemplated hereby or thereby or (ii) the
exercise by the Lender of its rights under the Loan Documents.
7.5 This Agreement has been, and each other Loan Document when delivered
hereunder will have been, duly executed and delivered by the Borrower. This
Agreement is, and each other Loan Document when delivered hereunder will be, the
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms.
7.6 The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U issued by the Board of Governors of the Federal Reserve System), and no
proceeds of the Loan will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.
7.7 Neither the Borrower nor any of its Subsidiaries is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. Neither the repayment of the Loan by the
Borrower nor the consummation of the other transactions contemplated hereby will
violate any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
7.8 There exists no Default or Event of Default under this Agreement and no
event occurring and continuing, or resulting from the Acquisition or any other
transaction contemplated hereby or thereby or in connection herewith or
therewith that constitutes a Default or Event of Default.
SECTION 8. COVENANTS.
So long as the Loan shall remain unpaid or any other Obligations owing
hereunder shall remain unpaid, the Borrower agrees that, unless the Lender shall
otherwise consent in writing:
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8.1 Compliance with Laws, Etc. The Borrower will comply, and cause each of
its Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
compliance with ERISA.
8.2 Payment of Taxes, Etc. The Borrower will pay and discharge, and cause
each of its Subsidiaries to pay and discharge, before the same shall become
delinquent (i) all taxes, assessments and governmental charges or levies imposed
upon it or upon its property and (ii) all lawful claims that, if unpaid, might
by law become a Lien upon its property; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to pay or discharge any
such tax, assessment, charge, levy or claim that is being contested in good
faith and by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors; provided that in
any such case an adequate reserve is being maintained on the Borrower's or such
Subsidiary's books in accordance with GAAP.
8.3 Compliance with Environmental Laws. The Borrower will comply, and cause
each of its Subsidiaries and use its best efforts to cause all lessees and other
Persons occupying properties owned, operated or leased by Borrower and its
Subsidiaries to comply, with all Environmental Laws and Environmental Permits
during the term of the Loan; the Borrower will obtain and renew all necessary
Environmental Permits for the operations of the Borrower and its Subsidiaries,
including without limitation their manufacturing and the ownership or leasing of
real property; and as required by any Environmental Law, any federal, state or
local agency acting pursuant to any Environmental Law or at the reasonable
request of the Lender, the Borrower will conduct, and cause each of its
Subsidiaries to conduct, any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action to investigate, remove
and clean up any Release of Hazardous Materials at any properties owned,
operated or leased by the Borrower and its Subsidiaries.
8.4 Maintenance of Insurance. The Borrower will maintain and cause each of
its Subsidiaries to maintain such insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as
is satisfactory to the Lender.
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8.5 Preservation of Corporate Existence, Etc. The Borrower will preserve
and maintain, and cause each of its Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory) and franchises.
8.6 Visitation Rights. The Borrower will, at any time and from time to
time, permit the Lender, or any agents or representatives thereof, to examine
and make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their independent
public accountants.
8.7 Preparation of Environmental Reports. At the reasonable request of the
Lender from time to time during the term of the Loan, upon the acquisition of
any additional properties or operations, or in the event of notification under
Section 4.17 shall provide to the Lender within 60 days after such request, at
the expense of the Borrower, an environmental assessment report, which may, as
relevant, include a Phase I environmental site assessment report and/or Phase II
environmental site assessment as such is requested by the Lender, for all of its
and its Subsidiaries' properties described in such request, prepared by an
environmental consulting firm acceptable to the Lender. Without limiting the
generality of the foregoing, if the Lender determines at any time that any such
environmental assessment report will not be delivered within the time referred
to above or if the quality of such report is not satisfactory to the Lender, the
Lender upon written notice to the Borrower may retain an environmental
consulting firm to prepare such report at the reasonable expense of the
Borrower, and the Borrower hereby grants, and agrees to cause any Subsidiary
that owns any property described in such request to grant, at the time of such
request, to the Lender, such firm and any agents or representatives thereof
authorization, subject only to the rights of tenants other than the Borrower or
any Subsidiary, to enter onto its properties to undertake such an assessment.
8.8 Keeping of Books. The Borrower will keep, and cause each of its
Subsidiaries to keep, proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with generally
accepted accounting principles in effect from time to time.
-16-
8.9 Maintenance of Properties, Etc. The Borrower will maintain and
preserve, and cause each of its Subsidiaries to maintain and preserve, all of
its properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
8.10 Compliance with Terms of Leaseholds. The Borrower will (i) make all
payments and otherwise perform all obligations in respect of all leases of real
property, keep such leases in full force and effect and not allow such leases to
lapse or be terminated or any rights to renew such leases to be forfeited or
cancelled, in each case except to the extent that the failure to so act could
not materially adversely affect the interest or rights of the Borrower or of the
Lender in any manner and (ii) notify the Lender of any default by any party with
respect to such leases and cooperate with the Lender in all respects to cure any
such default, and cause each of its Subsidiaries to do all of the foregoing.
8.11 Performance of Material Contracts. The Borrower will (i) perform and
observe all of the terms and provisions of each Material Contract to be
performed or observed by it, maintain each such Material Contract in full force
and effect and enforce each such Material Contract in accordance with its terms,
in each case except to the extent that the failure to so act could not
materially adversely affect the interest or rights of the Borrower or of the
Lender in any manner, and take all such action to such end as may be from time
to time reasonably requested by the Lender and (ii) upon the reasonable request
of the Lender, make to each other party to each such Material Contract such
demands and requests for information and reports or for action as the Borrower
is entitled to make under such Material Contract, and cause each of its
Subsidiaries to do all of the foregoing.
8.12 Use of Loan Proceeds. The Borrower will use the proceeds of the Loan
to fund the Acquisition and to pay fees and expenses in connection with the
negotiation, drafting and execution of this Agreement, the other Loan Documents,
the Acquisition Documents and the transactions contemplated hereby or thereby[,
and for general corporate purposes].
8.13 Performance Under Loan Documents. The Borrower will comply with all
the terms and provisions of the Loan Documents.
8.14 No Encumbrances. The Borrower shall not create, incur, assume or
suffer to exist, or permit any of its
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Subsidiaries to create, incur, assume or suffer to exist, any Lien on or with
respect to any of their respective properties or assets of any character,
whether now owned or hereafter acquired, including, without limitation, any
capital stock or other equity interest owned by the Borrower or any Subsidiary,
except for Permitted Liens.
8.15 No Charter Amendments. The Borrower shall not amend or restate, or
permit any of its Subsidiaries to amend or restate, its certificate of
incorporation or bylaws if such amendment could be expected to have a Material
Adverse Effect.
8.16 No Accounting Changes. The Borrower shall not make or permit, or
permit any of its Subsidiaries to make or permit, any change in accounting
policies or reporting practices that would be expected to have a Material
Adverse Effect, except as required by GAAP.
SECTION 9. TERM.
9.1 Term. The term of this Agreement commences on the Closing Date and
shall extend through the Maturity Date, unless earlier terminated as provided in
Section 6 or Section 10 or elsewhere in this Agreement.
SECTION 10. EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur and be
continuing:
10.1 the Borrower shall fail to pay any principal of, or interest on, the
Loan, or the Borrower shall fail to make any other payment under any Loan
Document, in each case when the same becomes due and payable; or
10.2 any representation or warranty made by the Borrower (or any of its
officers) under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
10.3 (i) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Section 4, 8.2., 8.3, 8.4, 8.5, 8.6, 8.7, 8.10, 8.11,
8.14, 8.15 or 8.16 of this Agreement or (ii) the Borrower shall fail to perform
any other term, covenant or agreement contained in any Loan Document on its part
to be performed or observed if such failure shall remain unremedied for 30 days
after the earlier of (x) the Borrower becoming aware of such failure and (y)
written
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notice thereof shall have been given to the Borrower by the Lender; or
10.4 the Borrower or any of its Subsidiaries shall fail to pay any
principal of, premium or interest on or any other amount payable in respect of
any Indebtedness that is outstanding in a principal amount of at least $100,000
in the aggregate (but excluding Indebtedness outstanding hereunder) of the
Borrower or such Subsidiary, as the case may be, when the same becomes due and
payable (whether by scheduled maturity required prepayment, acceleration, demand
or otherwise); or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Indebtedness, if the effect of such
event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness or otherwise to cause, or to permit the holder
thereof to cause, such Indebtedness to mature; or any such Indebtedness shall be
declared to be due and payable or required to be prepaid or redeemed (other than
by a regularly scheduled required prepayment or redemption), purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness
shall be required to be made, in each case prior to the stated maturity thereof;
or
10.5 the Borrower or any of its Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower or
any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against it (but not instituted by it)
that is being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 60 days or any of the
actions sought in such proceeding (including, without limitation, the entry of
an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or the Borrower or any of its Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this Section
10.5; or
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10.6 any one or more judgments or orders for the payment of money that,
either individually or in the aggregate, exceed $100,000 shall be rendered
against the Borrower or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced properly by any creditor upon such
judgments or orders or (ii) there shall be any period of 20 consecutive days
during which a stay of enforcement of such judgments or orders, by reason of a
pending appeal or otherwise, shall not be in effect; or
10.7 any nonmonetary judgment or order shall be rendered against the
Borrower or any of its Subsidiaries that could have a Material Adverse Effect,
and there shall be any period of 20 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
10.8 any provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against the Borrower in any material respect
(other than if such cessation shall be caused by the gross negligence or wilful
misconduct of the Lender or a mandatory change of applicable law), or the
Borrower shall so state in writing; or
10.9 any Material Adverse Change occurs;
then, and in any such event, the Lender may, by notice to the Borrower, declare
the Loan, all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the Loan, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under the Federal Bankruptcy Code, the
Loan, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
The Lender shall also have all of its rights and remedies under applicable
law.
SECTION 11. DEFINITIONS.
11.1 Defined Terms. The following terms shall have the definitions set
forth below.
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly controls, is controlled by or is under common control
with such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by' and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the Voting
Stock of such Person or to direct or cause the direction of the management and
policies of such Person, whether through the ownership of Voting Stock, by
contract or otherwise.
"Board of Directors" means, with respect to any Person, the board of
directors of such Person or any duly authorized committee of such board.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City.
Change of Control" shall be deemed to have occurred if (i) all or
substantially all of the assets of the Borrower are sold to any Person or
related group of Persons (other than a Person who is an Affiliate of the
Borrower before giving effect to such transaction) as an entirety or
substantially as an entirety in one transaction or a series of transactions,
(ii) the Borrower is merged or consolidated with or into another corporation or
another corporation is merged into the Borrower with the effect that the
Controlling Shareholders hold less than 50% in the aggregate of the total voting
power entitled to vote in the election of directors, managers or trustees of the
surviving corporation of such merger or consolidation, (iii) at any time the
Controlling Shareholders hold less than 50% in the aggregate of the total voting
power of the Borrower in respect of the matters described in clause (ii) above
or (iv) the Borrower is liquidated or dissolved.
"Claims" has the meaning specified in the definition of "Environmental
Action."
"Closing" means the funding of the Loan by the Lender pursuant to this
Agreement.
"Closing Date" means the date of the Closing.
"Consolidated" refers to the consolidation of accounts in accordance with
GAAP.
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"Controlling Shareholders" means International Mezzanine Investment N.V.
and its Affiliates.
"Default" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of noncompliance or
violation, investigation, proceeding, consent order or consent agreement
involving Borrower or its Subsidiaries relating in any way to any Environmental
Law or any Environmental Permit (collectively, "Claims"), including, without
limitation, (a) any Claim by any governmental or regulatory authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any Environmental Law or (b) any Claim by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment or (c) any
investigation, monitoring, removal or remedial activities by the Borrower or any
of its Subsidiaries, whether or not such activities are carried out voluntarily.
"Environmental Costs and Liabilities" means any and all losses,
liabilities, obligations, damages, fines, penalties, judgments, actions, claims,
costs and expenses incurred by the Borrower or its Subsidiaries (including
without limitation, fees, disbursements, and expenses of legal counsel, experts,
engineers and consultants and the costs of investigation and feasibility
studies, and remedial action arising from or under any Environmental Law,
Environmental Action or any agreement or contract of the Borrower or its
Subsidiaries with any other Person pertaining to any Environmental Law or
Environmental Permit).
"Environmental Law" means any federal, state or local law, statute, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
relating to the environment, health, safety or Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. 1801 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. 1751 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et
seq., the Clean Air Act, 42 U.S.C. 7401
-22-
et seq., the Safe Drinking Water Act, 42 U.S.C. 3803 et seq., the Occupational
Safety and Health Act, 29 U.S.C. 651 et seq., the Oil Pollution Act of 1990, 33
U.S.C. 2701 et seq., the Emergency Planning and the Community Right-to-Know Act
of 1986, 42 U.S.C. 1101 et seq., in each case as amended from time to time.
"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"ERISA Affiliate" means any corporation or trade or business that is or was
(i) a member of the controlled group of the Borrower, or under common control
with the Borrower, within the meaning of Sections 414(b) or (c) of the Internal
Revenue Code or (ii) a member of an affiliated service group within the meaning
of Section 414(m) of the Internal Revenue Code or a member of the controlled
group of the Borrower within the meaning of Title IV of ERISA.
"ERISA Event" means:
(a) (i) the occurrence of a reportable event, within the meaning of
Section 4043(c) of ERISA, with respect to any Plan unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; or (ii)
the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a
contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a
Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of
Section 4043(c) of ERISA is reasonably expected to occur with respect to
such Plan within the following 30 days;
(b) the provision by the administrator of any Plan of a notice of
intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA);
(c) the cessation of operations at a facility of Borrower or any of
its ERISA Affiliates in the circumstances described in Section 4062(e) of
ERISA;
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(d) the complete or partial withdrawal by Borrower or any of its ERISA
Affiliates from a Multiemployer Plan or a Multiple Employer Plan during a
plan year;
(e) the failure by the Borrower or any of its ERISA Affiliates to make
a payment to a Plan required under Section 302(e) of ERISA;
(f) the conditions for imposition of a Lien in favor of a Plan under
Section 302(f)(1) of ERISA shall have been met;
(g) the adoption of an amendment to a Plan requiring the provision of
security to such Plan, pursuant to Section 307 of ERISA; or
(h) the institution by the PBGC of proceedings to terminate a Plan of
such Person or any of its ERISA Affiliates, pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that could constitute grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Eurodollar Business Day" means a Business Day on which dealings in Dollar
deposits are carried out in the relevant Eurodollar interbank market for
determining LIBOR.
"Events of Default" has the meaning specified in Section 10.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time and consistently applied.
"Hazardous Materials" means (a) petroleum or petroleum products, natural or
synthetic gas, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, dielectric fluid containing polychlorinated
biphenyls and radon gas, (b) any substances defined as or included in the
definition of "hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants" or "pollutants", or words of similar import,
under any Environmental Law and (c) any other substance that is regulated under
any Environmental Law.
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"Insufficiency" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Interest Period" means, with respect to the Loan, each period commencing
on and including the Closing Date or the last day of the next preceding Interest
Period with respect to the Loan, and ending on (but excluding) the same day in
the first, third or sixth calendar month thereafter, as the Borrower may select
as provided in Section 3.1(d) of this Agreement (or in the third calendar month
thereafter if the Borrower fails to so select the duration of any Interest
Period), except that each such Interest Period that commences on the last
Eurodollar Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Eurodollar Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (i) each Interest Period that
would otherwise end on a day that is not a Eurodollar Business Day shall end on
the next succeeding Eurodollar Business Day, except that if such next succeeding
Eurodollar Business Day falls in the next succeeding calendar month, such
Interest Period shall end on the next preceding Eurodollar Business Day; and
(ii) no Interest Period shall have a duration of less than one month.
"Interest Rate Determination Date" means the second Eurodollar Business Day
prior to the first day of the relevant Interest Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings issued
thereunder.
"LIBOR" means, with respect to any Interest Period, the rate per annum
equal to the rate at which U.S. Dollar deposits approximately equal in principal
amount to the outstanding principal amount of the Loan on the Interest Rate
Determination Date and for a maturity comparable to such Interest Period are
offered in the London interbank market as set forth on the Reuters Screen LIBO
Page (or any equivalent successor to such page) at approximately 11:00 a.m.,
Lon-
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don time, on the Interest Rate Determination Date; provided that if more than
one such offered rate appears on the Reuters Screen LIBOR Page (or any
equivalent successor to such page), the rate for such Interest Period shall be
the arithmetic mean (rounded upward to the nearest 1/16th of 1.00%) of such
offered rates; provided, however, that if such rate is not available at 11:00
a.m., London time, on the Interest Rate Determination Date for such Interest
Period on the Reuters Screen LIBOR Page (or any equivalent successor to such
page), then LIBOR for such Interest Period shall be the arithmetic mean (rounded
upward to the nearest 1/16th of 1.00%) of the interest rates per annum at which
deposits in amounts approximately equal in principal amount to the outstanding
principal amount of the Loan on the Interest Rate Determination Date and for a
maturity comparable to such Interest Period are offered by the Reference Lender
at approximately 11:00 a.m., London time, on the Interest Rate Determination
Date; and provided, further, that if the Reference Lender is not so quoting
interest rates, then LIBOR for such Interest Period shall be deemed to be the
same as LIBOR for the next preceding Interest Period.
"Lien" means any lien, security interest, mortgage, deed of trust, pledge,
set off or other charge or encumbrance of any kind, or any other type of
preferential arrangement, including, without limitation, the lien or retained
security title of a conditional vendor and any easement, right of way or other
encumbrance on title to real property whether now existing or hereafter created,
acquired or arising.
"Loan Documents" means, collectively, this Agreement, the Note, any other
note or notes executed by the Borrower and payable to Lender, and any other
agreement entered into in connection with this Agreement, together with all
alterations, amendments, changes, extensions, modifications, refinancings,
refundings, renewals, replacements, restatements or supplements of or to any of
the foregoing.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means, with respect to the Borrower or any
Subsidiary, any material adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of such Person,
together with its Subsidiaries, taken as a whole.
"Material Adverse Effect" means, with respect to the Borrower or any
Subsidiary, any material adverse effect on (a) the business, condition
(financial or otherwise), operations, performance, properties or prospects of
such Person, together with its Subsidiaries, taken as a whole, (b) the rights
and remedies of the Lender under any Loan Document or (c) the ability of such
Person to perform its Obligations under any Loan Document to which it is or is
to be a party.
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"Material Contract" means, with respect to any Person, each contract to
which such Person is a party that is material to the business, condition
(financial or otherwise), operations, performance, properties or prospects of
such Person, other than any such contract that may be terminated in the ordinary
course of business and in accordance with its terms by any party thereto upon no
more than 30 days' notice and without penalty of any kind.
"Maturity Date" shall mean the second anniversary of the Closing Date.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower or any of its ERISA Affiliates is
making or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates and at least one other Person or (b) was
so maintained and in respect of which the Borrower or any of its ERISA
Affiliates could have liability under Section 4064 or 4069 of ERISA in the event
such plan has been or was to be terminated.
"Note" shall mean that certain Promissory Note or Notes, dated of even date
herewith, in the form attached hereto as Exhibit A, in the original aggregate
principal amount of $16,918,667, of the Borrower and payable to the Lender,
evidencing amounts outstanding under the Loan, as the same may be amended,
extended, renewed, restated or replaced from time to time.
"Obligations" means all present and future loans, advances, debts,
liabilities, obligations, covenants, duties and indebtedness at any time owing
by the Borrower to the Lender, whether evidenced by this Agreement, any note or
other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by the Lender in
the Borrower's debts owing to others), absolute or contingent, due or to become
due, and all interest, charges, expenses, fees, attorneys' fees and any other
sums chargeable to the Borrower hereunder or under any other agreement with the
Lender.
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for taxes, assessments and governmental charges or levies to
the extent not required to be paid under Section 8.2;
(b) Liens imposed by law, such as warehousemen's, materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar
Liens arising in the ordinary course of business securing obligations that
(i) are not overdue for a period of more than 30 days and (ii) either
individually or when aggregated with all other Liens outstanding on any
date of determination, do not materially affect the use or value of the
property to which they relate;
(c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or statutory
obligations;
(d) easements, rights of way and other encumbrances on title to real
property that do not render title to the property encumbered thereby
unmarketable or materially adversely affect the use of such property for
its present purposes;
(e) Liens of judgment creditors not otherwise constituting an Event of
Default under Section 10.6;
(f) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;
(g) Liens existing on the date hereof; and
(h) purchase money mortgages or security interests securing
indebtedness representing the purchase price of assets acquired after the
date hereof solely for the purpose of financing the acquisition of such
assets, provided that each such Lien shall apply and attach only to the
assets so purchased.
-28-
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Prohibited Transaction" means any transaction described in Section 406 of
ERISA which is not exempt by reason of Section 408 of ERISA, and any transaction
described in Section 4975(c) of the Internal Revenue Code which is not exempt by
reason of Section 4975(c)(2) of the Internal Revenue Code.
"Public Offering" means shares of the Borrower's common stock are sold in
an offering which is registered pursuant to the Securities Act of 1933, as
amended, and such shares are listed on a stock exchange or quoted on a quotation
system, in either case acceptable to the Lender.
"Reference Lender" means the non-United States office or offices or the New
York international banking facility of Citibank, N.A., as the Lender may select.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Release" means any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the indoor or outdoor environment.
"Single Employer Plan" means, with respect to any Person, a single employer
plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of such Person or any of its ERISA Affiliates and no Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4069 of ERISA in the event such plan has been or were to be terminated.
"Subsidiary" of any Person means any corporation, partnership, limited
liability company, joint venture, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
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(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
limited liability company or joint venture or (c) the beneficial interest in
such trust or estate, is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries.
"Tax Certificate" has the meaning specified in Section 4.16.
"Voting Stock" means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even though the right so
to vote has been suspended by the happening of such a contingency.
"Welfare Plan" means, with respect to any Person, a welfare plan, as
defined in Section 3(1) of ERISA.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
11.2 Other Terms. All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with generally accepted accounting principles, consistently applied.
SECTION 12. MISCELLANEOUS.
12.1 Certain Waivers. All Obligations shall be payable by the Borrower as
provided for herein and, in full, at the termination of this Agreement; the
Borrower waives presentment and protest of any instrument and notice thereof,
notice of default and, to the extent permitted by applicable law, all other
notices to which the Borrower might otherwise be entitled.
12.2 No Waiver by the Lender. The Lender's failure to exercise any right,
remedy or option under this Agreement or any supplement or other agreement
between the Lender and the Borrower or delay by the Lender in exercising the
same will not operate as a waiver. No waiver by the Lender will be effective
unless in writing and then only to the extent stated. No
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waiver by the Lender shall affect its right to require strict performance of
this Agreement. The Lender's rights and remedies will be cumulative and not
exclusive.
12.3 Binding on Successor and Assigns. All terms, conditions, promises,
covenants, provisions and warranties shall inure to the benefit of and bind the
Lender's and the Borrower's respective representatives, successors and assigns.
12.4 Severability. If any provision of this Agreement shall be prohibited
or invalid under applicable law, it shall be ineffective only to such extent,
without invalidating the remainder of this Agreement.
12.5 Amendments; Assignments. This Agreement may not be modified, altered
or amended, except by an agreement in writing signed by the Borrower and the
Lender. The Borrower may not sell, assign or transfer any interest in this
Agreement or any other Loan Document, or any portion thereof, including, without
limitation, any of the Borrower's rights, title, interests, remedies, powers and
duties hereunder or thereunder. The Borrower hereby consents to the Lender's
participation, sale, assignment, transfer or other disposition, at any time or
times hereafter, of this Agreement and the Loan, or of any portion hereof or
thereof, including, without limitation, the Lender's rights, title, interests,
remedies, powers and duties hereunder or thereunder. In connection therewith,
the Lender may disclose all documents and information which the Lender now or
hereafter may have relating to the Borrower or the Borrower's business. To the
extent that the Lender assigns its rights and obligations hereunder to a third
party, the Lender shall thereafter be released from such assigned obligations to
the Borrower and such assignment shall effect a novation between the Borrower
and such third party.
12.6 Integration. This Agreement, together with the other Loan Documents,
reflect the entire understanding of the parties with respect to the transactions
contemplated hereby.
12.7 Governing Law; Jurisdiction and Venue. (a) This Agreement and the
legal relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.
(b) Each of the parties to this Agreement agrees that any legal suit,
action or proceeding arising out of or relating to this Agreement shall be
instituted in the United
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ for the Southern District of New York, United States of
America (the "District Court") or, if such court shall not have jurisdiction, a
court of the State of New York, located in the Borough of Manhattan, City of New
York (a "New York Court"), waives any objection which it may have now or
hereafter to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of such courts in any such suit, action
or proceeding. Each of the parties hereby designates CT Corporation System as
its authorized agent to accept and acknowledge on its behalf service of any and
all process which may be served in any such suit, action or proceeding in such
courts and agrees that service of process upon said agent at its office at ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other address in the United
States as such agent may designate by written notice to the parties), and
written notice of said service to such party as provided in Section 12.10 shall
be deemed in every respect effective service of process upon such party in any
such suit, action or proceeding and shall be taken and held to be valid personal
service upon such party, whether or not such party shall then be doing, or at
any time shall have done, business within the State of New York, and that any
such service of process shall be of the same force and validity as if service
were made upon it according to the laws governing the validity and requirements
of such service in such State, and waives all claim of error by reason of any
such service.
12.8 Survival. All of the representations and warranties of the Borrower
contained in this Agreement shall survive the execution, delivery and acceptance
thereof by the parties. No termination of this Agreement or of any guaranty of
the Obligations shall affect or impair the powers, obligations, duties, rights,
representations, warranties or liabilities of the parties hereto and all shall
survive such termination.
12.9 Evidence of Obligations. Each Obligation may, in the Lender's
discretion, be evidenced by notes or other instruments issued or made by the
Borrower to the Lender. If not so evidenced, such Obligation shall be evidenced
solely by entries upon the Lender's books and records.
12.10 Notices. Any notice required hereunder shall be in writing and
addressed to the Borrower and the Lender at their addresses set forth at the
beginning of this Agreement. Notices hereunder shall be deemed received on the
earlier of receipt, whether by mail, personal delivery, facsimile, or otherwise,
or three (3) days after deposit in the United States mail, postage prepaid.
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12.11 Brokerage Fees. The Borrower represents and warrants to the Lender
that, with respect to the financing transaction herein contemplated, no Person
is entitled to any brokerage fee or other commission and the Borrower agrees to
indemnify and hold the Lender harmless against any and all such claims. 12.12
Captions. The Section titles contained in this Agreement are without substantive
meaning and are not part of this Agreement.
12.13 Injunctive Relief. The Borrower recognizes that, in the event the
Borrower fails to perform, observe or discharge any of its Obligations under
this Agreement, any remedy at law may prove to be inadequate relief to the
Lender. Therefore, the Lender, if it so requests, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving actual damages.
12.14 Counterparts; Telecopy Execution. This Agreement may be executed in
any number of separate counterparts, each of which, when taken together, shall
constitute one and the same agreement, admissible into evidence, notwithstanding
the fact that all parties have not signed the same counterpart. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile
shall also deliver a manually executed counterpart of this Agreement, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding affect of this Agreement.
12.15 MUTUAL WAIVER OF RIGHT TO JURY TRIAL. THE LENDER AND THE BORROWER
EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT; OR (ii) ANY
OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN THE LENDER AND THE
BORROWER; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF THE LENDER OR THE BORROWER
OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER
PERSONS AFFILIATED WITH THE LENDER OR THE BORROWER; IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
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Borrower:
IAC HOLDINGS CORP.
By: /s/ ▇▇▇▇▇ ▇. Read
----------------------------------
Name: ▇▇▇▇▇ ▇. Read
Title: President
Lender:
INTERNATIONAL MEZZANINE
CAPITAL B.V.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Attorney-in-Fact
SCHEDULE 7.2
Subsidiaries
Industrial Acoustics Company, Inc.
EXHIBIT A
PROMISSORY NOTE
IAC HOLDINGS CORP.
U.S. $16,918,667 New York, New York
March 19, 1998
FOR VALUE RECEIVED, IAC HOLDINGS CORP., a Delaware corporation (the
"Borrower"), hereby promises to pay to INTERNATIONAL MEZZANINE CAPITAL B.V. (the
"Lender") or its registered assigns, in lawful money of the United States of
America in immediately available funds, on the dates and in the amounts set
forth in the Agreement (as defined below), the aggregate principal sum of
SIXTEEN MILLION NINE HUNDRED EIGHTEEN THOUSAND SIX HUNDRED SIXTY SEVEN U.S.
DOLLARS ($16,918,667).
The Borrower promises to pay interest on the aggregate unpaid principal
amount hereof in like money from the date hereof until paid at the rates and at
the times provided in the Agreement.
This Note is the Promissory Note referred to in the Loan Agreement, dated
as of March 19, 1998 (the "Agreement"), by and between the Borrower and the
Lender, and is entitled to the benefits thereof and shall be subject to the
provisions thereof. This Note is also entitled to the benefits of each of the
Loan Documents (as defined in the Agreement). As provided in the Agreement, this
Note is subject to mandatory and voluntary prepayment, in whole or in part.
If an Event of Default (as defined in the Agreement) shall occur and be
continuing, the principal of and accrued interest on this Note may be declared
to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand for payment, protest, notice
of dishonor, and, except as expressly set forth in the Agreement, any and all
other notices or demands of any kind in connection with the delivery,
performance, default or enforcement of this Note.
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 CONFLICT OF LAWS.
IAC HOLDINGS CORP.
By:
Name:
Title:
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