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LOAN AND SECURITY AGREEMENT
by and among
▇▇▇▇ MICROPRODUCTS INC.
▇▇▇▇ MICROPRODUCTS - FUTURE TECH, INC.
▇▇▇▇▇ DATA, INC.
▇▇▇▇ MICROPRODUCTS CANADA - TENEX DATA ULC
as Borrowers
▇▇▇▇ MICROPRODUCTS CANADA INC.
as Guarantor
and
FIRST UNION NATIONAL BANK
as Principal Agent
and
CONGRESS FINANCIAL CORPORATION (WESTERN)
As Co-Agent and Administrative Agent
and
BANK OF AMERICA, N.A.
as Co-Agent
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders
Dated as of May 14, 2001
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INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Compliance Certificate
Exhibit C Form of RSA Subordination Agreement
Schedule 1.40 List of Existing Lender Agreements
Schedule 1.41 Existing Lenders
Schedule 6.6 Authorized Persons
Schedule 8.1 Subject Subsidiaries
Schedule 8.3 List of Locations
Schedule 8.4 Existing Liens
Schedule 8.6 Pending Litigation
Schedule 8.8 Environmental Matters
Schedule 8.10 List of Bank Accounts
Schedule 8.11 Intellectual Property
Schedule 8.15 Capitalization
Schedule 8.16 Labor Disputes
Schedule 8.17 Corporate Name; Prior Transactions
Schedule 9.9 Existing Indebtedness
Schedule 9.10 Loans, Investments, Guarantees
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement, dated as of May 14, 2001, is entered
into by and among ▇▇▇▇ Microproducts Inc., a California corporation ("Borrower
Agent"), ▇▇▇▇ Microproducts - Future Tech, Inc., a California corporation
("Future Tech"), ▇▇▇▇▇ Data, Inc., a Minnesota corporation ("▇▇▇▇▇"), ▇▇▇▇
Microproducts Canada - Tenex Data ULC, a Nova Scotia unlimited liability company
("Tenex", and together with Borrower Agent, Future-Tech and ▇▇▇▇▇ individually,
a "Borrower" and collectively, "Borrowers"), ▇▇▇▇ Microproducts Canada Inc., a
California corporation ("Guarantor"), the financial institutions from time to
time parties hereto as lenders, whether by execution of this Agreement or an
Assignment and Acceptance (each individually, a "Lender" and collectively,
"Lenders"), First Union National Bank, in its capacity as principal agent for
Lenders (in such capacity, "Principal Agent"), Bank of America, N.A., and
Congress Financial Corporation (Western), a California corporation, in their
respective capacities as agent for Lenders (each, in such capacity, a "Co-Agent"
and together the "Co-Agents"), and Congress Financial Corporation (Western) in
its capacity as administrative, collateral and syndication agent for Lenders (in
such capacity, "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Borrower Agent owns all of the issued and outstanding Capital
Stock (as defined below) of Future Tech, ▇▇▇▇▇ and Guarantor, and Guarantor owns
all of the issued and outstanding Capital Stock of Tenex; and
WHEREAS, Borrowers and Guarantor operate as an integrated business
unit, and the financial success of each of them is dependent upon the financial
success of each other; and
WHEREAS, Borrowers and Guarantor have requested that Principal Agent,
Administrative Agent, Co- Agents and Lenders enter into certain financing
arrangements with Borrowers pursuant to which Lenders may make loans and provide
other financial accommodations to Borrowers; and
WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrowers on a pro
rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein, Principal Agent is willing to act as principal
agent for Lenders, Co-Agents are willing to act as agents for Lenders, and
Administrative Agent is willing to act as administrative, collateral and
syndication agent for Lenders, all on the terms and conditions set forth herein
and in the other Financing Agreements;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
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1.1 "Accounts" shall mean all present and future rights of Borrowers to
payment for goods sold or leased or for services rendered, whether or not
evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "Acquisition Loans" shall have the meaning set forth in Section 2.3
of this Agreement.
1.3 "ACH Transactions" shall mean any cash management or related
services, including the automatic clearing house transfer of funds by either
Co-Agent or any of their respective Affiliates for the account of any of the
Borrowers or Guarantor pursuant to agreement or overdrafts.
1.4 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one percent (1%))
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.
1.5 "Administrative Agent" shall have the meaning set forth in the
introductory paragraph hereof.
1.6 "Affiliates" shall mean, with respect to a specified Person, a
partnership, corporation or any other person which directly or indirectly,
through one or more intermediaries, controls or is controlled by or is under
common control with such Person, and without limiting the generality of the
foregoing, includes (a) any Person which beneficially owns or holds five percent
(5%) or more of any class of voting securities of such Person or other equity
interests in such Person, (b) any Person of which such Person beneficially owns
or holds five percent (5%) or more of any class of voting securities or in which
such Person beneficially owns or holds five percent (5%) or more of the equity
interests and (c) any director or officer of such Person. For the purposes of
this definition, the term "control" (including with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
1.7 "Assignment and Acceptance" shall mean an Assignment and Acceptance
substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Administrative Agent in connection with an
assignment of a Lender's interest hereunder in accordance with the provisions of
Section 13.6 hereof.
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1.8 "Bank Products" shall mean any one or more of the following types
of services of facilities extended to the Borrower by either of the Co-Agents or
any of their respective Affiliates in reliance on such Co-Agent's agreement to
indemnify such Affiliate: (a) credit cards, (b) ACH Transactions, (c) Interest
Rate Transactions, and (d) foreign exchange contracts.
1.9 "Bank Product Reserve" shall mean any and all reserves that the
Administrative Agent may establish from time to time, in its sole discretion,
for the Bank Products then provided and outstanding.
1.10 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.11 "Bonded Inventory" means Inventory held for a specific customer,
which customer is deemed credit-worthy by Administrative Agent in its reasonable
discretion, and is subject to binding customer purchase orders that may not be
cancelled and that provide that the Inventory may not be returned.
1.12 "Borrower" shall have the meaning set forth in the introductory
paragraph hereof.
1.13 "Borrowing Base" shall mean at any time: (a) the sum of: (i)
eighty-five percent (85%) of the Net Amount of the Eligible Accounts of
Borrowers, provided that Revolving Loans made in respect of Eligible Accounts
that are Foreign Accounts shall not exceed Twenty Million Dollars ($20,000,000);
plus (ii) the lowest of (A) fifty percent (50%) multiplied by the Value of the
Eligible Inventory of Borrowers or (B) eighty-five percent (85%) of the Net
Recovery Percentage multiplied by the Value of the Inventory of Borrowers or (C)
the Inventory Loan Limit, minus (b) reserves to reflect outstanding Letter of
Credit Accommodations as provided in Section 2.2 hereof, minus (c) the Dilution
Reserve, minus (d) the Priority Payables Reserve, minus (e) the Bank Products
Reserve, minus (f) all other reserves (including, without limitation, reserves
with respect to security interests or liens of third parties permitted hereunder
or in connection with litigation) which Administrative Agent may, in good faith,
deem necessary or desirable to maintain, including, without limitation, reserves
for any amounts which Administrative Agent or any Lender may need to pay in the
future for the account of any Borrower or Guarantor. Without limiting the
reserves Administrative Agent may establish pursuant to clause (f) above,
Administrative Agent may establish reserves for (u) payments owing to the RSA
and its Affiliates, whether under the RSA Note or otherwise, (v) payments that
may become due and payable by any Borrower under any foreign exchange contract
upon the commencement of any foreign exchange contracts), (w) any exposure of
any Borrower on account of settlements on foreign exchanges, (x) daylight
overdrafts on foreign exchanges, (y) past due trade payables, and (z) book
overdrafts and held checks.
1.14 "Business Day" shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York, the State of California or the State of North
Carolina, and a day on which Administrative Agent and each Lender is open for
the transaction of business, except that if a determination of a Business Day
shall relate to any Eurodollar Rate Loans, the term Business Day shall also
exclude any day on which banks are closed for dealings in dollar deposits in the
London interbank market or other applicable Eurodollar Rate market.
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1.15 "Capital Expenditures" shall mean all expenditures for any fixed
or capital assets or improvements, or for replacements, substitutions or
additions thereto, which have a useful life of more than one (1) year,
including, but not limited to, the direct or indirect acquisition of such assets
by way of increased product service charges, offset items or otherwise and shall
include capitalized lease payments.
1.16 "Capitalized Lease Obligations" shall mean any obligation to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) any property (whether real, personal or mixed) that is required to be
classified and accounted for as a capital lease obligation under GAAP, and, for
the purposes of this Agreement, the amount of such obligation at any date shall
be capitalized amount thereof at such date, determined in accordance with GAAP.
1.17 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations, limited liability company interests or
other equivalents (however designated) of such Person's capital stock at any
time outstanding, and any and all rights, warrants or options exchangeable for
or convertible into such capital stock or interests (but excluding any debt
security that is exchangeable for or convertible into such capital stock).
1.18 "Cash Equivalents" shall mean any of the following: (a) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof; (b) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within one hundred eighty (180) days of the date
of acquisition thereof issued by a bank or trust company which is organized
under the laws of the United States of America, any state thereof or any foreign
country recognized by the United States, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $50,000,000 (or
the foreign currency equivalent thereof) and has outstanding debt which is rated
"A" (or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Exchange Act) or any money-market fund sponsored by a registered
broker dealer or mutual fund distributor; (c) repurchase obligations with a term
of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with a bank meeting the
qualifications described in clause (b) above; (d) investments in commercial
paper, maturing not more than ninety (90) days after the date of acquisition,
issued by a corporation (other than an Affiliate of any Borrower or Guarantor)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to ▇▇▇▇▇'▇ Investor Service, Inc. or "A-1" (or higher) according to Standard &
Poor's Ratings Group, a division of McGraw Hill Companies, Inc.; and (e)
investments in securities with maturities of six (6) months or less from the
date of acquisition issued or fully guaranteed by any State, commonwealth or
territory of the United States of America, or by any political subdivision or
taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings
Group, a division of McGraw Hill Companies, Inc. or "A" by ▇▇▇▇▇'▇ Investor
Service, Inc.
1.19 "Change of Control" shall mean (a) the liquidation or dissolution
of any Borrower or Guarantor or the adoption of a plan by the stockholders of
any Borrower or Guarantor relating to the dissolution or liquidation of such
Borrower or Guarantor; (b) during any period of two (2)
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years, individuals who at the beginning of such period constituted the Board of
Directors of Borrower Agent, any Borrower or Guarantor (together with any new
directors whose nomination for election was approved by a vote of at least a
majority of the directors then still in office who 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 Borrower Agent, any Borrower or Guarantor, as the case may
be, then still in office; and (c) the failure of Borrower Agent to own, directly
or indirectly, fifty-one percent (51%) of the voting power of the total
outstanding voting stock of each other Borrower or Guarantor, other than
pursuant to a transfer of such outstanding voting stock to any Borrower or
Guarantor and other than pursuant to a sale of the voting stock of any Borrower
or Guarantor consented to by Administrative Agent and Required Lenders.
1.20 "Closing Date" shall mean the date of the first to occur of the
making of the initial Loan or the issuance of the initial Letter of Credit
Accommodation.
1.21 "Co-Agent" and "Co-Agents" shall have the meanings set forth in
the introductory paragraph hereof.
1.22 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.23 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.24 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Administrative Agent, from any lessor of
premises to any Borrower or Guarantor, or any other person to whom any
Collateral (including Inventory, Equipment, bills of lading or other documents
of title) is consigned or who has custody, control or possession of any such
Collateral or is otherwise the owner or operator of any premises on which any of
such Collateral is located, pursuant to which such lessor, consignee or other
person, inter alia, acknowledges the first priority security interest of
Administrative Agent in such Collateral, agrees to waive any and all claims such
lessor, consignee or other person may, at any time, have against such
Collateral, whether for processing, storage or otherwise, and agrees to permit
Administrative Agent access to, and the right to remain on, the premises of such
lessor, consignee or other person so as to exercise Administrative Agent's
rights and remedies and otherwise deal with such Collateral and in the case of
any person who at any time has custody, control or possession of any bills of
lading or other documents of title, agrees to hold such bills of lading or other
documents as bailee for Administrative Agent and to follow all instructions of
Administrative Agent with respect thereto.
1.25 "Commitment" shall mean, as to any Lender, the Revolving Loan
Commitment of such Lender.
1.26 "Consolidated Net Worth" shall mean, with respect to any Person at
any time, the remainder at such time, determined on a consolidated basis, in
accordance with GAAP, of (a) the total assets of such Person and its
Subsidiaries, minus (b) the total liabilities of such Person and its
Subsidiaries.
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1.27 "Credit Facility" shall mean the Revolving Credit Facility.
1.28 "Customs Broker" shall mean any person selected by any Borrower
after written notice by such Borrower to Administrative Agent who is reasonably
acceptable to Administrative Agent to perform port of entry services to process
Inventory imported by such Borrower from outside the United States of America
and to supply facilities, labor and materials to such Borrower in connection
therewith, provided that as to each such person (a) Administrative Agent shall
have received a Collateral Access Agreement duly authorized, executed and
delivered by such person, (b) such agreement is in full force and effect and (c)
such person shall be in compliance in all material respects with the terms
thereof.
1.29 "Defaulting Lender" shall have the meaning set forth in Section
6.12 hereof.
1.30 "Dilution" shall mean for any period, the fraction, expressed as a
percentage, the numerator of which is the aggregate amount of non-cash
reductions in the Accounts of any Borrower for such period and the denominator
of which is the aggregate dollar amount of the sales of such Borrower for such
period.
1.31 "Dilution Reserve" shall mean a reserve in amounts reasonably
established by Administrative Agent in good faith to reflect that Dilution with
respect to any category of Eligible Accounts as calculated by Administrative
Agent for any period is or is reasonably anticipated to be greater than five
percent (5%).
1.32 "Disqualified Borrower" shall mean any Borrower with respect to
which an event has occurred or a condition exists that has had or can reasonably
be expected to have a Material Adverse Effect on such Borrower.
1.33 "Dollars" or "$" shall mean United States dollars.
1.34 "Eligible Accounts" shall mean, as to each Borrower, Accounts
created by such Borrower which are and continue to be acceptable to
Administrative Agent (in the exercise of its good faith commercial judgment)
based on the criteria set forth below. In general, Accounts shall be Eligible
Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
(b) such Accounts do not remain unpaid more than sixty (60)
days after the original due date thereof or more than ninety (90) days after the
original invoice date thereof;
(c) such Accounts are owed by an account debtor where less
than fifty percent (50%) of the total Accounts owed by that account debtor and
its Affiliates remain unpaid more than the number of days specified in clause
(b) above;
(d) such Accounts comply with the terms and conditions
contained in Section 7.2(c) of this Agreement;
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(e) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, sale on evaluation, sale of
replacement parts, or other terms under which payment by the account debtor may
be conditioned or contingent;
(f) the chief executive office or other principal office of
the account debtor with respect to such Accounts is located in the United States
of America or Canada (provided that at any time promptly upon Administrative
Agent's request, such Borrower shall execute and deliver, or cause to be
executed and delivered, such other agreements, documents and instruments as may
be reasonably required by Administrative Agent to perfect the security interests
of Administrative Agent in those Accounts of an account debtor with its chief
executive office or principal place of business in Canada in accordance with the
applicable laws of the Province of Canada in which such chief executive office
or principal place of business is located and take or cause to be taken such
other and further actions as Administrative Agent may reasonably request to
enable Administrative Agent as secured party with respect thereto to collect
such Accounts under the applicable Federal or Provincial laws of Canada), or the
Account is a Foreign Account and at least one of the following facts is true:
(A) the account debtor has delivered to such Borrower an irrevocable letter of
credit issued or confirmed by a bank reasonably satisfactory to Administrative
Agent and payable only in the United States of America and in U.S. dollars,
sufficient to cover such Account, in form and substance reasonably satisfactory
to Administrative Agent and if required by Administrative Agent, the original of
such letter of credit has been delivered to Administrative Agent or
Administrative Agent's agent and the issuer thereof notified of the assignment
of the proceeds of such letter of credit to Administrative Agent, or (B) such
Account is subject to credit insurance payable to Administrative Agent issued by
an insurer and on terms and in an amount acceptable to Administrative Agent, or
(C) such Account is otherwise acceptable in all respects to Administrative Agent
(subject to such lending formula with respect thereto as Administrative Agent
may determine);
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts, except the portion of the Accounts of such account debtor in excess of
the amount at any time and from time to time owed by such Borrower to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts;
(h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of an Account or reduce
the amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Administrative Agent (for itself and the ratable
benefit of Lenders) and any goods giving rise thereto are not, and were not at
the time of the sale thereof, subject to any liens except those permitted in
this Agreement;
(j) neither the account debtor nor any officer or employee of
the account debtor with respect to such Accounts is an Affiliate of any Borrower
or Guarantor;
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(k) the account debtors with respect to such Accounts are not
any foreign government, the United States of America, the federal government of
Canada, any State or Province, political subdivision, department, agency or
instrumentality thereof, unless, if the account debtor is the United States of
America, the federal government of Canada, any State or Province, political
subdivision, department, agency or instrumentality thereof, upon Administrative
Agent's request, the Federal Assignment of Claims Act of 1940, as amended, if
applicable, the Financial Administration Act (Canada), if applicable, or any
similar State, provincial or local law, if applicable, has been complied with in
a manner satisfactory to Administrative Agent;
(l) there are no proceedings or actions which are threatened
or pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts of a single account debtor or its affiliates
do not constitute more than fifteen percent (15%) of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of such percentage may
be deemed Eligible Accounts);
(n) such Accounts are not evidenced by any instrument or
chattel paper;
(o) such Accounts are owed by account debtors whose total
indebtedness to such Borrower does not exceed the credit limit with respect to
such account debtors as determined by such Borrower from time to time in the
ordinary course of business, to the extent such credit limits are reasonably
satisfactory to Administrative Agent (but the portion of the Accounts not in
excess of such credit limit which is reasonably satisfactory to Administrative
Agent may be deemed Eligible Accounts);
(p) cash on delivery and credit card Accounts;
(q) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇, ▇▇▇▇
and hold invoices or retainage invoices, except as to ▇▇▇▇ and hold invoices, if
Administrative Agent shall have received a written agreement duly executed and
delivered by the account debtor in form and substance reasonably satisfactory to
Administrative Agent, confirming the unconditional obligation of the account
debtor to take the goods related thereto and pay such invoice; and
(r) such Accounts are owed by account debtors deemed
creditworthy at all times by Administrative Agent, as determined by
Administrative Agent in good faith.
General criteria for Eligible Accounts may be established and revised from time
to time by Administrative Agent in its good faith judgment, based on an event,
condition or other circumstance arising after the date hereof, or existing on
the date hereof to the extent Administrative Agent has no written notice thereof
from a Borrower, which adversely affects or could reasonably be expected to
adversely affect the Accounts in the good faith determination of Administrative
Agent. Any Accounts which are not Eligible Accounts shall nevertheless be part
of the Collateral.
1.35 "Eligible Inventory" shall mean, as to each Borrower, such
Borrower's Inventory consisting of raw materials held for resale or finished
goods held in the United ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇
▇▇
▇▇ ▇▇▇▇▇▇ for resale in the ordinary course of the business of such Borrower
which are reasonably acceptable to Administrative Agent based on the criteria
set forth below, and subject to such reserves as Administrative Agent may from
time to time in the exercise of its commercially reasonable judgment establish,
including without limitation reserves for cost test variances, shrinkage,
warranties, royalties and labor and miscellaneous costs. In general, Eligible
Inventory shall not include (a) work-in-process; (b) raw materials (other than
raw materials held for resale); (c) components which are not part of finished
goods; (d) spare parts for equipment; (e) packaging and shipping materials; (f)
supplies used or consumed in such Borrower's business; (g) Inventory at premises
other than those owned and controlled by such Borrower, except (i) any Inventory
which would otherwise be deemed Eligible Inventory at locations in the United
States of America or Canada which are not owned and operated by such Borrower
may nevertheless be considered Eligible Inventory: (A) as to locations which are
leased by such Borrower if Administrative Agent shall have received a Collateral
Access Agreement from the owner and lessor of such location, duly authorized,
executed and delivered by such owner and lessor, and (B) as to locations owned
and operated by a third person, if Administrative Agent shall have received a
Collateral Access Agreement from such owner and operator with respect to such
location, duly authorized, executed and delivered by such owner and operator
and, in addition, if required by Administrative Agent: (1) UCC or PPSA financing
statements between the owner and operator, as consignee or bailee and such
Borrower, as consignor or ▇▇▇▇▇▇, in form and substance reasonably satisfactory
to Administrative Agent, which are duly assigned to Administrative Agent and (2)
a written notice to any lender to the owner and operator of the first priority
security interest in such Inventory of Administrative Agent and (ii) Inventory
which would otherwise be Eligible Inventory located outside the United States of
America or Canada which is in transit to either the premises of a Customs Broker
in the United States of America or Canada or premises of a Borrower in the
United States of America or Canada, as the case may be, which are either owned
and controlled by such Borrower or leased by such Borrower (but only if
Administrative Agent has received a Collateral Access Agreement duly authorized,
executed and delivered by such Customs Broker or the owner and lessor of such
leased premises, as the case may be), provided that (A) Administrative Agent has
a first priority perfected security interest in and lien and hypothec upon, and
control and possession of, all originals of documents of title with respect to
such Inventory, (B) Administrative Agent has received (1) a Collateral Access
Agreement, duly authorized, executed and delivered by the Customs Broker
handling the shipping and delivery of such Inventory, (2) a copy of the
certificate of marine cargo insurance in connection therewith in which it has
been named as an additional insured and loss payee in a manner acceptable to
Administrative Agent and (3) a copy of the invoice and manifest with respect
thereto, and (C) such Inventory is not subject to any Letter of Credit
Accommodation; (h) Inventory subject to a security interest, lien or hypothec in
favor of any person other than Administrative Agent except those permitted in
this Agreement; (i) ▇▇▇▇ and hold goods; (j) unserviceable Inventory or
Inventory that is obsolete or slow moving in accordance with such Borrower's
historical practices (provided that any Inventory that is held by any Borrower
for more than 90 days shall be considered slow-moving; but provided that for
purposes of the advance rate based on the Net Recovery Percentage multiplied by
the Value of the Inventory of Borrowers specified in Section 1.12(a)(ii)(B) of
this Agreement, such Inventory held by any Borrower for more than 90 days shall
not be excluded from the Value of Inventory to the extent it has been taken into
account as slow moving in the appraisal on which the Net Recovery Percentage is
based), unless such Inventory is Bonded
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Inventory or is subject to price protection or stock rotation arrangements with
the vendor of the Inventory; (k) Inventory which is not subject to the first
priority, valid and perfected security interest, lien or hypothec of
Administrative Agent; (l) returned, evaluation, damaged and/or defective
Inventory; (m) Inventory purchased or sold on consignment; (n) drop shipped
Inventory; (o) Inventory with field technicians; (p) Inventory returned to
vendors; and (q) showroom and production Inventory. General criteria for
Eligible Inventory may be established and revised from time to time by
Administrative Agent in its good faith judgment, based on an event, condition or
other circumstance arising after the date hereof, or existing on the date hereof
to the extent Administrative Agent has no written notice thereof from a
Borrower, which adversely affects or could reasonably be expected to adversely
affect the Inventory in the good faith determination of Administrative Agent.
Any Inventory which is not Eligible Inventory shall nevertheless be part of the
Collateral.
1.36 "Eligible Transferee" shall mean (a) any Lender; (b) any Affiliate
of a Lender; and (c) any other commercial bank, financial institution or
"accredited investor" (as defined in Regulation D under the Securities Exchange
Act) approved by Administrative Agent and, unless an Event of Default has
occurred and is continuing at the time any assignment is effected hereunder,
Borrower Agent, such approval not to be unreasonably withheld, conditioned or
delayed by Borrower Agent, and such approval to be deemed given by Borrower
Agent if no objection from Borrower Agent is received by the assigning Lender
and Administrative Agent within five (5) Business Days after notice of such
proposed assignment has been provided by the assigning Lender or Administrative
Agent to Borrower Agent; provided that neither any Borrower, Guarantor nor any
Affiliate of any Borrower or Guarantor shall qualify as an Eligible Transferee.
1.37 "Environmental Laws" shall mean all foreign, Federal (United
States or Canada), State, provincial and local laws (including common law),
legislation, rules, codes, licenses, permits (including any conditions imposed
therein), authorizations, judicial or administrative decisions, injunctions or
agreements between any Borrower or Guarantor and any Governmental Authority, (a)
relating to pollution and the protection, preservation or restoration of the
environment (including air, water vapor, surface water, ground water, drinking
water, drinking water supply, surface land, subsurface land, plant and animal
life or any other natural resource), or to human health or safety, (b) relating
to the exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous Materials,
or (c) relating to all laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials. The term
"Environmental Laws" includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Safe Drinking Water Act of 1974, and the Canadian
Environmental Protection ▇▇▇ ▇▇▇▇, (ii) applicable state counterparts to such
laws, and (iii) any common law or equitable doctrine that may impose liability
or obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Materials.
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1.38 "Equipment" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter acquired equipment, machinery, computers and
computer hardware and software (whether owned or licensed), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.39 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.40 "ERISA Affiliate" shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.41 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one percent (1%)) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower (or on its behalf by
Borrower Agent) and approved by Administrative Agent and Lenders) on or about
9:00 a.m. (New York time) two (2) Business Days prior to the commencement of
such Interest Period in amounts substantially equal to the principal amount of
the Eurodollar Rate Loans requested by and available to such Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by such Borrower (or on its behalf by Borrower Agent).
1.42 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.43 "Eurodollar Rate Margin" shall mean (a) two and one-quarters
percent (2.25%) if the average daily principal balance of Revolving Loans during
the immediately preceding calendar month is equal to or less than $75,000,000,
(b) two and one half percent (2.5%) if the average daily principal balance of
Revolving Loans during such period is in excess of $75,000,000 but less than or
equal to $150,000,000, and (c) two and three-quarter percent (2.75%) if the
average daily principal balance of Revolving Loans during such period is in
excess of $150,000,000 but less than or equal to $175,000,000. If the Borrower
Agent completes an offering of its equity securities in which the net proceeds
are at least $50,000,000, Borrowers may request that Lenders reduce the
Eurodollar Rate Margin by up to one quarter of one percent (0.25%). Lenders may,
subject to Section 3.3(d), accede to or refuse such request in their sole
discretion.
1.44 "Excess Availability" shall mean the amount, as determined by
Administrative Agent, calculated at any time, equal to: (a) the Borrowing Base,
minus (b) the amount of all then outstanding and unpaid Obligations.
1.45 "Existing Lender Agreements" shall mean the agreements, documents
and instruments by any Borrower or Guarantor with, to or in favor of any
Existing Lender set forth
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on Schedule 1.41 hereto, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
1.46 "Existing Lenders" shall mean, collectively, the persons listed on
Schedule 1.41 hereto.
1.47 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.48 "Fee Letter" shall have the meaning set forth in Section 3.3(a)
hereof.
1.49 "Final Maturity Date" shall mean May 13, 2003.
1.50 "Financing Agreements" shall mean, collectively, this Agreement,
the Fee Letter, and all notes, guarantees, security agreements, hypothecs and
other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by any Borrower or Obligor in connection with this
Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
1.51 "Foreign Accounts" are Accounts with respect to which the chief
executive office or other principal office of the account debtor with respect to
such Accounts is not located in the United States of America or Canada.
1.52 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the Institute
of Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Boards which are applicable to the circumstances
as of the date of determination consistently applied, except that, if any change
in generally accepted accounting principles after the date hereof affects the
calculation of compliance with the financial covenant in Section 9.13 hereof,
Administrative Agent may, or at the request of the Required Lenders shall, by
notice to Borrowers require that such covenant thereafter be calculated in
accordance with generally accepted accounting principles as in effect and
applied by Borrowers immediately before such change in generally accepted
accounting principles occurred. If such notice is given, the financial
statements delivered pursuant to Section 9.6 hereof after such change occurs
shall be accompanied by reconciliations of the difference between the
calculation set forth therein and a calculation made in accordance with
generally accepted accounting principles as in effect from time to time after
such change occurs.
1.53 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.54 "Guarantor" shall have the meaning set forth in the introductory
paragraph hereof.
1.55 "Hedging Obligations" shall mean, with respect to any Person, the
obligations of such Person under any of the following agreements or arrangements
to the extent that the
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primary purpose thereof is the reduction of risk for fluctuations in interest
rates or currency or commodity values relating to its customary business and not
for speculative purposes: (a) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (b) other agreements or
arrangements designed to protect such person against fluctuations in interest
rates or currency or commodity values.
1.56 "Indebtedness" shall mean, with respect to any Person, any
liability (a) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof) or evidenced by bonds, notes, indentures or similar instruments; (b)
representing the balance deferred and unpaid of the purchase price of any
property or services (except any such balance that constitutes an account
payable to a trade supplier in the ordinary course of business of such Person in
connection with obtaining goods, materials or services, to the extent such
balance is not more than ninety (90) days past due); (c) all Capitalized Lease
Obligations; (d) any contractual obligations, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, endorsed (other than for
collection or deposit in the ordinary course of business), co-made or discounted
or sold with recourse by such Person, or in respect of which such Person is
otherwise directly or indirectly liable, including contractual obligations
(contingent or otherwise) arising through any agreement to purchase, repurchase,
or otherwise acquire such indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other financial
condition, or to make payment other than for value received; (e) all obligations
with respect to redeemable stock and redemption or repurchase obligations under
any Capital Stock or other equity securities issued by such Person; (f) all
reimbursement obligations and other liabilities, contingent or otherwise, of
such Person with respect to bonds, letters of credit, banker's acceptances or
similar documents or instruments issued for such Person's account; (g) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any security interest in, or mortgage or lien
upon the interest in any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; and (h) all obligations, liabilities and
indebtedness of such Person (marked to market) constituting Hedging Obligations.
1.57 "Intellectual Property" shall mean, as to each Borrower or
Guarantor, such Borrower's or Guarantor's now owned and hereafter arising or
acquired: patents, patent rights, patent applications, copyrights, works which
are the subject matter of copyrights, copyright registrations, trademarks, trade
names, trade styles, trademark and service ▇▇▇▇ applications, and licenses and
rights to use any of the foregoing; all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing; all
rights to ▇▇▇ for past, present and future infringement of any of the foregoing;
inventions, trade secrets, formulae, processes, compounds, drawings, designs,
blueprints, surveys, reports, manuals, and operating standards; goodwill;
customer and other lists in whatever form maintained; and trade secret rights,
copyright rights, rights in works of authorship, and contract rights relating to
computer software programs, in whatever form created or maintained.
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1.58 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as a
Borrower (or Borrower Agent on behalf of such Borrower) may elect, the exact
duration to be determined in accordance with the customary practice in the
applicable Eurodollar Rate market; provided that no Borrower (and Borrower Agent
on behalf of such Borrower) may elect an Interest Period which will end after
the last day of the then-current term of this Agreement.
1.59 "Interest Rate" shall mean:
(a) Subject to clause (b) below, (i) as to Prime Rate Loans, a
rate per annum equal to the applicable Prime Rate Margin plus the Prime Rate,
and (ii) as to Eurodollar Rate Loans, a rate per annum equal to the applicable
Eurodollar Rate Margin plus the Adjusted Eurodollar Rate (based on the
Eurodollar Rate applicable for the Interest Period selected by a Borrower (or on
its behalf by Borrower Agent) as in effect three (3) Business Days after the
date of receipt by Administrative Agent of the request by or on behalf of such
Borrower for such Eurodollar Rate Loans in accordance with the terms hereof,
whether such rate is higher or lower than any rate previously quoted to such
Borrower or Borrower Agent).
(b) Notwithstanding anything to the contrary contained in
clause (a) above, the Interest Rate shall mean, at Administrative Agent's
option, the rate two percent (2%) more than would otherwise be payable pursuant
to clause (a) above, without notice, (i) for the period (A) from and after the
date of termination hereof until Administrative Agent and Lenders have received
full and final payment of all Obligations (notwithstanding entry of a judgment
against any Borrower) and (B) from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing as
determined by Administrative Agent, and (ii) on the Revolving Loans to any
Borrower at any time outstanding in excess of the Borrowing Base of such
Borrower (whether or not such excess(es), arise or are made with or without
Administrative Agent's or any Lender's knowledge or consent and whether made
before or after an Event of Default).
1.60 "Interest Rate Transactions" shall mean (a) any and all rate swap
transactions, basis swaps, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options, forward bond or forward bond
price or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transaction,
currency options or any other similar transactions or any combination of any of
the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, or (b) any and all transactions of any kind, and the related
confirmations, that are subject to the terms or conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc., or any other master agreement (any such master
agreement, together with any related schedules, as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, a "Master
Agreement"), including but not limited to any such obligations or liabilities
under any Master Agreement.
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1.61 "Inventory" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter existing or acquired raw materials, work in
process, finished goods and all other inventory of whatsoever kind or nature,
wherever located including but not limited to crops, timber, as extracted
collateral and farm products (as each term is defined by the UCC).
1.62 "Inventory Loan Limit" shall mean $87,500,000.
1.63 "Lenders" shall mean the financial institutions who are
signatories hereto as lenders and other persons made a party to this Agreement
as Lenders in accordance with Section 13.6 hereof, and their respective
successors and assigns.
1.64 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Administrative Agent or any Lender for the
account of any Borrower or Obligor or (b) with respect to which Administrative
Agent on behalf of Lenders has agreed to indemnify the issuer or guaranteed to
the issuer the performance by any Borrower or Obligor of its obligations to such
issuer; sometimes being referred to herein individually as a "Letter of Credit
Accommodation."
1.65 "Material Adverse Effect" shall mean, with respect to any Person
or any group, a material adverse effect on (a) the financial condition,
business, performance, operations or properties of such Person or of the group
taken as a whole; (b) the legality, validity or enforceability as to such Person
or such group of this Agreement or any of the other Financing Agreements; (c)
the legality, validity, enforceability, perfection or priority of the security
interests and liens of Administrative Agent or any Lender upon the Collateral or
any other property of such Person or of the group (taken as a whole) that is
security for the Obligations, or the value of the Collateral or such other
property; (d) the ability of such Person or of the group taken as a whole to
repay the Obligations attributable to such Person or group or of any such Person
or of the group taken as a whole to perform its respective obligations under
this Agreement or any of the other Financing Agreements; or (e) the ability of
Administrative Agent or any Lender to enforce the Obligations or realize upon
the Collateral or otherwise with respect to the rights and remedies of
Administrative Agent or any Lender under this Agreement or any of the other
Financing Agreements.
1.66 "Maximum Interest Rate" shall mean the maximum non-usurious rate
of interest under applicable Federal (United States or Canada) or State or
provincial law as in effect from time to time that may be contracted for, taken,
reserved, charged or received in respect of the Obligations.
1.67 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credit and allowances of any nature
at any time issued, owing, granted, outstanding or claimed with respect thereto.
1.68 "Net Recovery Percentage" shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time on an orderly liquidation
value basis as set forth in the most recent acceptable appraisal of Inventory
received by Administrative Agent in accordance with Section
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7.3, net of operating expenses, liquidation expenses and commissions, and (b)
the denominator of which is the original cost of the aggregate amount of the
Inventory subject to such appraisal.
1.69 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by any or all of Borrowers to Administrative
Agent or any Lender and/or any of their Affiliates, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, arising under this
Agreement or any of the other Financing Agreements or arising under or in
connection with any Bank Products, whether now existing or hereafter arising,
whether arising before, during or after the initial or any renewal term of this
Agreement or after the commencement of any case or proceeding with respect to
any Borrower under the United States Bankruptcy Code, the Bankruptcy and
Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada), or
any similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case or proceeding, whether or not such amounts are allowed or allowable in
whole or in part in such case or proceeding), whether direct or indirect,
absolute or contingent, joint or several, due or not due, primary or secondary,
liquidated or unliquidated, secured or unsecured, and however acquired by
Administrative Agent or any Lender.
1.70 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations (including, without
limitation, Guarantor), other than a Borrower.
1.71 "Other Taxes" shall mean any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
of the other Financing Agreements.
1.72 "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.6 of this Agreement governing participations.
1.73 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.74 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Code), limited liability
company, limited liability partnership, business trust, unincorporated
association, joint stock corporation, trust, joint venture or other entity or
any government or any agency or instrumentality or political subdivision
thereof.
1.75 "PPSA" shall mean the Personal Property Security Act (Ontario),
the Personal Property Security Act (Nova Scotia), the Civil Code of Quebec and
any other applicable Canadian or provincial personal property security
legislation as all such legislation now exists or may from time to time
hereafter be amended, modified, recodified, supplemented or replaced, together
with all rules, regulations and interpretations thereunder or related thereto.
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1.76 "Prime Rate" shall mean the rate announced by Reference Bank, or
its successors, from time to time, as its prime rate, whether or not such
announced rate is the best rate available at such bank.
1.77 "Prime Rate Loans" shall mean any Revolving Loans or portion
thereof on which interest is payable based on the Prime Rate in accordance with
the terms thereof.
1.78 "Prime Rate Margin" shall mean (a) zero percent (0%) if the
average daily principal balance of Revolving Loans during the immediately
preceding calendar month equals or is less than $75,000,000, (b) one-quarter of
one percent (0.25%) if the average daily principal balance of Revolving Loans
during such period is in excess of $75,000,000 but less than or equal to
$150,000,000 and (c) one-half of one percent (0.5%) if the average daily
principal balance of Revolving Loans during such period is in excess of
$150,000,000 but less than or equal to $175,000,000. If the Borrower Agent
completes an offering of its equity securities in which the net proceeds are at
least $50,000,000, Borrowers may request that Lenders reduce the Prime Rate
Margin by up to one quarter of one percent (0.25%). Lenders may, subject to
Section 3.3(d), accede to or refuse such request in their sole discretion.
1.79 "Priority Payables Reserve" shall mean, at any time, the full
amount of the liabilities at such time which have a trust imposed to provide for
payment or security interest, lien or charge ranking or capable of ranking
senior to or pari passu with security interests, liens or charges securing the
Obligations on any of the Collateral under federal, provincial, state, county,
municipal, or local law including, but not limited, to claims for unremitted and
accelerated rents, taxes, wages, workers' compensation obligations, vacation
pay, government royalties or pension fund obligations, together with the
aggregate value, determined in accordance with GAAP, of all Eligible Inventory
which Administrative Agent considers may be or may become subject to a right of
a supplier to recover possession thereof under any federal, state or provincial
law, where such supplier's right may have priority over the security interests,
liens or charges securing the Obligations including, without limitation,
Eligible Inventory subject to a right of a supplier to repossess goods pursuant
to Section 81.1 of the Bankruptcy and Insolvency Act (Canada).
1.80 "Principal Agent" shall have the meaning set forth in the
introductory paragraph hereof.
1.81 "Pro Rata Share" shall mean the fraction (expressed as a
percentage) the numerator of which is such Lender's Revolving Loan Commitment
and the denominator of which is the aggregate amount of all of the Revolving
Loan Commitments as adjusted from time to time in accordance with the provisions
of Section 13.6 hereof; provided that if the Revolving Loan Commitments have
been terminated, the numerator shall be the unpaid amount of such Lender's
Revolving Loans and its interest in the Letter of Credit Accommodations and the
denominator shall be the aggregate amount of all unpaid Revolving Loans and
Letter of Credit Accommodations.
1.82 "Real Property" shall mean, as to each Borrower, all now owned and
hereafter acquired real property of such Borrower, including leasehold
interests, together with all
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buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.
1.83 "Records" shall mean, as to each Borrower, all of such Borrower's
present and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of such
Borrower with respect to the foregoing maintained with or by any other person).
1.84 "Reference Bank" shall mean First Union National Bank, its
successors or such other bank as Administrative Agent may from time to time
designate and which shall be reasonably acceptable to the Borrower Agent.
1.85 "Register" shall have the meaning set forth in Section 13.6
hereof.
1.86 "Required Lenders" shall mean, at any time, those Lenders whose
Pro Rata Shares based on their respective Commitments aggregate sixty-six and
two-thirds percent (66 2/3%) or more of the aggregate of the Commitments of all
Lenders, or if the Commitments shall have been terminated, Lenders to whom at
least sixty-six and two-thirds percent (66 2/3%) of the then outstanding
Obligations are owing.
1.87 "Revolving Credit Facility" shall mean the Revolving Loans and
Letter of Credit Accommodations provided to any Borrower pursuant to Sections
2.1, 2.2 and 2.3 hereof.
1.88 "Revolving Loan Commitment" shall mean, at any time, as to each
Lender, the principal amount set forth below such Lender's signature on the
signature pages hereto designated as the Revolving Loan Commitment or on
Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of Section
13.6 hereof, as the same may be adjusted from time to time in accordance with
the terms hereof; sometimes being collectively referred to herein as "Revolving
Loan Commitments".
1.89 "Revolving Loan Limit" shall mean $175,000,000.
1.90 "Revolving Loans" or "Loans" shall mean the loans made to or for
the benefit of any Borrower, with the exception of Tenex, by or on behalf of any
Lender or by Administrative Agent for the ratable account of a Lender, on a
revolving basis pursuant to the Revolving Credit Facility (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.91 "RSA" shall mean The Retirement Systems of Alabama, an
instrumentality of the State of Alabama, as agent for each of Teachers'
Retirement Systems of Alabama, Employees' Retirement Systems of Alabama,
Judicial Retirement Fund, PEIRAF-Deferred Compensation Plan, Public Employees
Individual Retirement Account Fund and State Employees' Health Insurance Fund.
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1.92 "RSA Note" shall mean, collectively, those certain senior
subordinated notes dated July 6, 2000 executed by Borrower Agent to the order of
RSA and its Affiliates in the original aggregate principal sum of $180,000,000,
as the same may be amended from time to time.
1.93 "RSA Securities Purchase Agreement" shall mean that certain
Securities Purchase Agreement dated as of July 6, 2000 between Borrower Agent
and the RSA and its Affiliates executed in connection with the RSA Note .
1.94 "Securities Exchange Act" shall mean the Securities Exchange Act
of 1934, as the same now exists or may hereafter from time to time be amended,
modified, recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.95 "Special Administrative Agent Advances" shall have the meaning set
forth in Section 12.11 hereof.
1.96 "Subject Subsidiary" shall mean all Subsidiaries of the Borrowers
organized under the laws of any state in the United States, any province of
Canada or any political jurisdiction of any country in South America, except any
Subsidiary that is itself a Borrower or Guarantor and except for ▇▇▇▇
Microproducts Europe Inc., a California corporation.
1.97 "Subsidiary" shall mean, with respect to any Person, any
corporation, limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more Subsidiaries of such Person.
1.98 "Taxes" shall mean any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of any Lender, such taxes (including income
taxes, franchise taxes or capital taxes) as are imposed on or measured by such
Lender's net income or capital by any jurisdiction (or any political subdivision
thereof).
1.99 "Target" shall have the meaning set forth in Section 2.3 of this
Agreement.
1.100 "UCC" shall mean the Uniform Commercial Code as in effect in the
State of California as of the date hereof.
1.101 "Value" shall mean, with respect to Inventory of each Borrower,
the lower of (a) cost computed on a first-in-first-out cost basis in accordance
with the historical practices of such Borrower previously disclosed to
Administrative Agent and in accordance with GAAP or (b) market value in
accordance with GAAP, as determined by such Borrower in its good faith judgment
so long as the final determination is acceptable to Administrative Agent in its
commercially reasonable judgment.
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SECTION 2. CREDIT FACILITIES
2.1 Revolving Loan Facility.
(a) Subject to and upon the terms and conditions contained
herein, each Lender severally (and not jointly) agrees to fund its Pro Rata
Share of Revolving Loans to Borrowers, other than a Disqualified Borrower or
Tenex, from time to time in amounts requested by any Borrower other than a
Disqualified Borrower or Tenex (or on its behalf by Borrower Agent), up to the
amount at any time outstanding equal to the Borrowing Base.
(b) Administrative Agent may, in good faith, from time to
time, upon not less than ten (10) days prior notice to Borrower Agent, (i)
reduce the lending formula with respect to Eligible Accounts to the extent that
Administrative Agent determines in its good faith judgment that the likelihood
of collection of such Accounts has decreased or there has been a deterioration
in the performance of such Accounts from historical levels or (ii) reduce the
lending formula(s) with respect to Eligible Inventory to the extent that
Administrative Agent determines in its good faith judgment that: (A) the number
of days of the turnover of the Inventory for any reasonable period as determined
in the good faith judgment of Administrative Agent has changed or (B) the
quality or mix of the Inventory has deteriorated. In determining whether to
reduce the lending formula(s), Administrative Agent may consider events,
conditions, contingencies or risks which are also considered in determining
Eligible Accounts, Eligible Inventory or in establishing reserves. The amount of
any reduction in any lending formula by Administrative Agent pursuant to this
Section 2.1(b) shall have a proportional relationship to the matter described
herein which is the basis for such reduction in the good faith determination of
Administrative Agent. To the extent a reserve shall have been established which
is sufficient to address any event, condition or matter in a manner satisfactory
to Administrative Agent, in its good faith determination, Administrative Agent
shall not exercise its rights under this Section 2.1(b) to reduce the lending
formulas to address such event, condition or matter.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained
herein, at the request of a Borrower other than a Disqualified Borrower or Tenex
(or Borrower Agent on behalf of such Borrower), Administrative Agent agrees, for
the ratable risk of each Lender according to its Pro Rata Share, to provide or
arrange for Letter of Credit Accommodations for the account of such Borrower
containing terms and conditions acceptable to Administrative Agent and the
issuer thereof. Any payments made by Administrative Agent or any Lender to any
issuer thereof and/or related parties in connection with the Letter of Credit
Accommodations shall constitute additional Revolving Loans to such Borrower
pursuant to this Section 2.
(b) In addition to any customary charges, fees or expenses
charged by any bank or issuer in connection with the Letter of Credit
Accommodations, Borrowers shall pay to Administrative Agent, for the benefit of
Lenders, a letter of credit fee at a rate equal to two percent (2.0%) per annum
on the daily outstanding balance of the Letter of Credit Accommodations for the
immediately preceding month (or part thereof), payable in arrears as of the
first day of each succeeding month, except that Administrative Agent may, and
upon the written direction of Required Lenders shall, require Borrowers to pay
to Administrative Agent
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such letter of credit fee at a rate equal to four percent (4.0%) per annum for
(i) the period from and after the date of the termination of this Agreement
until Administrative Agent, for the ratable benefit of Lenders, has received
full and final payment of all Obligations (notwithstanding entry of a judgment
against any Borrower) and (ii) the period from and after the date of the
occurrence of an Event of Default and for so long as such Event of Default is
continuing. Such letter of credit fee shall be calculated on the basis of a
three hundred sixty (360) day year and actual days elapsed and the obligation of
Borrowers to pay such fee shall survive the termination of this Agreement.
(c) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Administrative Agent: (i) the Borrower
requesting such Letter of Credit Accommodation shall have delivered to the
proposed issuer of such Letter of Credit Accommodation at such times and in such
manner as such proposed issuer may require, an application in form and substance
satisfactory to such proposed issuer and Administrative Agent for the issuance
of the Letter of Credit Accommodation and such other documents as may be
required pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit Accommodation shall be satisfactory to Administrative Agent and
such proposed issuer, (ii) as of the date of issuance, no order of any court,
arbitrator or other Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit Accommodation, and no
law, rule or regulation applicable to money center banks generally and no
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over money center banks generally shall
prohibit, or request that the proposed issuer of such Letter of Credit
Accommodation refrain from, the issuance of letters of credit generally or the
issuance of such Letters of Credit Accommodation; and (iii) the Excess
Availability, prior to giving effect to any reserves with respect to such Letter
of Credit Accommodations, on the date of the proposed issuance of any Letter of
Credit Accommodations, shall be equal to or greater than: (A) if the proposed
Letter of Credit Accommodation is for the purpose of purchasing Eligible
Inventory and the documents of title with respect thereto are consigned to or
endorsed in favor of Administrative Agent or its designee, the sum of (1) the
percentage equal to one hundred percent (100%) minus the then applicable
percentage for Eligible Inventory set forth in the definition of the Borrowing
Base multiplied by the Value of such Eligible Inventory, plus (2) freight,
taxes, duty and other amounts which Administrative Agent estimates in good faith
must be paid in connection with such Inventory upon arrival and for delivery to
one of such Borrower's locations for Eligible Inventory within the United States
of America or Canada and (B) if the proposed Letter of Credit Accommodation is
for any other purpose or the documents of title are not consigned to the issuer
in connection with a Letter of Credit Accommodation for the purpose of
purchasing Eligible Inventory, an amount equal to one hundred percent (100%) of
the face amount thereof and all other commitments and obligations made or
incurred by Administrative Agent and Lenders with respect thereto. Effective on
the issuance of each Letter of Credit Accommodation, a reserve shall be
established in the applicable amount set forth in Section 2.2(c)(iii) above.
(d) Except in Administrative Agent's discretion, the amount of
all outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred
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by Administrative Agent or any Lender in connection therewith, shall not at any
time exceed $50,000,000, which shall include but not be limited to a standby
letter of credit in an amount not to exceed $20,000,000 issued in favor of a
bank or any lender who provides a revolving line of credit to Tenex. At any time
an Event of Default exists or has occurred and is continuing, upon the request
of Administrative Agent, Borrowers will either furnish cash collateral to secure
the reimbursement obligations to the issuer in connection with any Letter of
Credit Accommodations or furnish cash collateral to Administrative Agent, for
the ratable benefit of Lenders, for the Letter of Credit Accommodations.
(e) Borrowers shall indemnify and hold Principal Agent,
Administrative Agent, Co-Agents and Lenders harmless from and against any and
all losses, claims, damages, liabilities, costs and expenses which Principal
Agent, Administrative Agent, any Co-Agent or any Lender may suffer or incur in
connection with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including, but not limited to, any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any issuer
(other than Principal Agent, Administrative Agent, any Co-Agent or any Lender)
or correspondent with respect to any Letter of Credit Accommodation. Each
Borrower assumes all risks with respect to the acts or omissions of the drawer
under or beneficiary of any Letter of Credit Accommodation and for such purposes
the drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower
assumes all risks for, and agrees to pay, all foreign, Federal, State,
provincial and local taxes, duties and levies relating to any goods subject to
any Letter of Credit Accommodations or any documents, drafts or acceptances
thereunder. Each Borrower hereby releases and holds Principal Agent,
Administrative Agent, Co-Agents and Lenders harmless from and against any acts,
waivers, errors, delays or omissions, whether caused by such Borrower, by any
issuer or correspondent or otherwise with respect to or relating to any Letter
of Credit Accommodation, except for any losses, claims, damages, liabilities,
costs and expenses suffered by such Borrower as a result of the gross negligence
or willful misconduct of Principal Agent, Administrative Agent, Co-Agents and
Lenders as determined pursuant to final non-appealable order of a court of
competent jurisdiction. The provisions of this Section 2.2(e) shall survive the
payment of Obligations and the termination of this Agreement.
(f) Nothing contained herein shall be deemed or construed to
grant any Borrower any right or authority to pledge the credit of Principal
Agent, Administrative Agent Co-Agents or Lenders in any manner. Principal Agent,
Administrative Agent, Co-Agents and Lenders shall have no liability of any kind
with respect to any Letter of Credit Accommodation provided by an issuer other
than Principal Agent, Administrative Agent, such Co-Agent or such Lender unless
Principal Agent, Administrative Agent, such Co-Agent or such Lender has duly
executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Each Borrower shall be bound by any interpretation made in good faith by
Administrative Agent, or any other issuer or correspondent under or in
connection with any Letter of Credit Accommodation or any documents, drafts or
acceptances thereunder, notwithstanding that such interpretation may be
inconsistent with any instructions of any Borrower. Administrative Agent shall
have the sole and exclusive right and authority to, and Borrowers shall not at
any time an Event of Default exists or has occurred and is continuing, (A)
approve or resolve any questions of non-compliance of documents, (B) give any
instructions as to acceptance or rejection of any documents or goods, (C)
execute any and all applications for steamship or airway guaranties, indemnities
or delivery orders, (D) grant any extensions of the
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maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents, or (E) agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.
Administrative Agent may take such actions either in its own name or in any
Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by any Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Administrative
Agent, for the ratable benefit of Lenders. Any duties or obligations undertaken
by Administrative Agent to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement by Administrative
Agent in favor of any issuer or correspondent required by the issuer for the
issuance of any Letter of Credit Accommodation, shall be deemed to have been
undertaken by such Borrower to Administrative Agent, for the ratable benefit of
Lenders, and to apply in all respects to such Borrower.
2.3 Acquisition Loans. Subject to and upon the terms and conditions
contained herein with respect to Revolving Loans, each Lender severally (and not
jointly) agrees to fund its Pro Rata Share of Revolving Loans to a Borrower,
other than a Disqualified Borrower or Tenex (the "Acquisition Loans"), from time
to time in amounts requested by such Borrower (or on its behalf by Borrower
Agent) upon not less than thirty (30) days prior written notice to
Administrative Agent, to pay the purchase price for the acquisition by such
Borrower of all of the issued and outstanding Capital Stock of another Person,
or of all or substantially all of the assets of another Person or of a division
of another Person (each, a "Target"). The Acquisition Loans shall further be
subject to the prior satisfaction of the following conditions in a manner
reasonably acceptable to Administrative Agent:
(a) The subject Target is substantially consistent with the
business of Borrowers as currently conducted, or as then conducted by Borrowers
and Targets previously acquired in accordance with this Agreement;
(b) Administrative Agent shall have received true and correct
copies of the acquisition agreement and related documents and such financial and
other information regarding the subject Target as it may reasonably request;
(c) The Target and its Capital Stock (if applicable) is (or
will be upon completion of the acquisition) free and clear of any security
interest, mortgage, pledge, lien, charge or other encumbrance, except as
permitted in Section 9.8 of this Agreement;
(d) The total amount of payments by Borrowers in connection
with the acquisitions of Targets shall not exceed $50,000,000 in the aggregate
during the term of this Agreement or $20,000,000 in any one acquisition or
series of related acquisitions, unless otherwise consented to by Administrative
Agent and Required Lenders (provided such consent shall not be unreasonably
withheld, delayed or conditioned);
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(e) During each of the sixty (60) days immediately preceding
the acquisition of the subject Target, and as of the acquisition, and after
giving effect to the acquisition and related payments, the Excess Availability
of Borrowers and the subject Target on a proforma combined basis would not have
been less than $25,000,000;
(f) Administrative Agent shall have received proforma balance
sheets, income statements, statements of cash flow and availability and other
projections with respect to the acquisition of the subject Target, in form and
substance reasonably satisfactory to Administrative Agent;
(g) No event shall have occurred and be continuing or would
result from the acquisition of the subject Target or related payments that could
reasonably be expected to cause a Material Adverse Effect on the Borrower making
the acquisition;
(h) No event shall have occurred and be continuing or would
result from the acquisition of the subject Target or related payments that would
constitute an Event of Default; and
(i) Administrative Agent shall have received such agreements,
documents and instruments from Borrowers, Guarantor and the subject Target as
set forth in Section 9.20 of this Agreement. The subject Target shall, at the
election of Administrative Agent, become a Borrower or a Guarantor under this
Agreement, and Administrative Agent shall have received all agreements,
documents and instruments it deems necessary or desirable to effect the
foregoing. The subject Target, if located wholly within the United States of
America or Canada, may be added as a Borrower hereunder and its Accounts and
Inventory included in Eligible Accounts and Eligible Inventory, respectively,
subject to (i) the approval of Administrative Agent and Required Lenders (which
approval shall not be unreasonably withheld, delayed or conditioned); (ii)
Administrative Agent's receipt and approval of full written appraisals as to the
Inventory of the subject Target in form, scope and methodology reasonable
acceptable to Administrative Agent and by an appraiser reasonably acceptable to
Administrative Agent, addressed to Administrative Agent and Lenders, and upon
which Administrative Agent and Lenders are expressly permitted to rely, (iii)
the completion of a field examination by Administrative Agent of the subject
Target with results reasonably satisfactory to Administrative Agent, and (iv)
such additional terms and conditions substantially consistent with the terms and
conditions hereof as Administrative Agent may reasonably require.
2.4 Commitments. The aggregate amount of each Lender's Pro Rata Share
of the Revolving Loans and Letter of Credit Accommodations shall not exceed the
amount of such Lender's Revolving Loan Commitment, as the same may from time to
time be amended with the written acknowledgment of Administrative Agent and the
Borrower Agent.
2.5 Revolving Loan Limit. Except in Administrative Agent's discretion,
with the consent of all of the Lenders, the aggregate amount of the Revolving
Loans and the Letter of Credit Accommodations outstanding at any time shall not
exceed the Revolving Loan Limit.
2.6 Bank Products. Any Borrower or Guarantor may (but no Borrower or
Guarantor is required to) request that the Administrative Agent or either
Co-Agent provide or arrange for such
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Borrower or Guarantor to obtain Bank Products from the Administrative Agent or
either Co-Agent or any of their respective Affiliates, and the Administrative
Agent or such Co-Agent may, in its sole discretion, provide or arrange for such
Borrower or Guarantor to obtain the requested Bank Products. Any Borrower or
Guarantor that obtains Bank Products shall indemnify and hold Principal Agent,
Administrative Agent, Co-Agents and Lenders harmless from any and all
obligations now or hereafter owing to any other Person by Administrative Agent
or any Co-Agent or any of their respective Affiliates arising from or related to
such Bank Products. Borrowers and Guarantor acknowledge and agree that the
obtaining of Bank Products from the Administrative Agent, either Co-Agent or any
of their respective Affiliates (a) is in the sole discretion of the
Administrative Agent, such Co-Agent or such Affiliates, as the case may be, and
(b) is subject to all rules and regulations of the Person that provides the Bank
Product.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Borrowers shall pay to Administrative Agent, for the
benefit of Lenders, interest on the outstanding principal amount of the Loans at
the Interest Rate. All interest accruing hereunder on and after the date of and
during the continuance of any Event of Default or termination hereof shall be
payable on demand.
(b) Borrowers other than a Disqualified Borrower or Tenex (or
Borrower Agent on behalf of such Borrowers) may from time to time request
Eurodollar Rate Loans or that Prime Rate Loans be converted to Eurodollar Rate
Loans or that any existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from or on behalf of a Borrower shall specify the
amount of the Prime Rate Loans which will constitute Eurodollar Rate Loans
(subject to the limits set forth below) and the Interest Period to be applicable
to such Eurodollar Rate Loans. Subject to the terms and conditions contained
herein, three (3) Business Days after receipt by Administrative Agent of such a
request from or on behalf of a Borrower, such Eurodollar Rate Loans shall be
made or Prime Rate Loans shall be converted to Eurodollar Rate Loans or such
Eurodollar Rate Loans shall continue, as the case may be, provided that (i) no
Event of Default, or act, condition or event which with notice or passage of
time or both would constitute an Event of Default exists or has occurred and is
continuing, (ii) Borrowers shall have complied with such generally applicable
customary procedures as are established by Administrative Agent and specified by
Administrative Agent to a Borrower (or Borrower Agent) from time to time for
requests by Borrowers for Eurodollar Rate Loans, (iii) no more than four (4)
Interest Periods may be in effect at any one time, (iv) the aggregate amount of
the Eurodollar Rate Loans to any Borrower must be in an amount not less than
$1,000,000 or an integral multiple thereof, provided that the first Eurodollar
Rate Loan under this Agreement must be made to a single Borrower in an amount
not less than $5,000,000 or an integral multiple of $1,000,000 in excess
thereof, and (v) Administrative Agent and Lenders shall have determined that the
Interest Period or Adjusted Eurodollar Rate is available to such Lender and can
be readily determined as of the date of the request for such Eurodollar Rate
Loan by a Borrower (or on its behalf by Borrower Agent). Any request by a
Borrower (or by Borrower Agent on behalf of such Borrower) for any Eurodollar
Rate Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to
continue any existing Eurodollar Rate Loans shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Administrative Agent,
Lenders and
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Reference Bank shall not be required to purchase United States Dollar deposits
in the London interbank market or other applicable Eurodollar Rate market to
fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to
apply as if Administrative Agent, Lenders and Reference Bank had purchased such
deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Administrative Agent has received and approved a request to continue such
Eurodollar Rate Loan at least three (3) Business Days prior to such last day in
accordance with the terms hereof. Any Eurodollar Rate Loans shall, at
Administrative Agent's option, upon notice by Administrative Agent to Borrower
Agent, convert to Prime Rate Loans in the event that this Agreement shall
terminate. Borrowers shall pay to Administrative Agent, for the benefit of
Lenders, upon demand by Administrative Agent (or Administrative Agent may, at
its option, charge any loan account of any Borrower) any amounts required to
compensate any Lender or any Participant with any Lender for any loss (including
loss of anticipated profits), cost or expense incurred by such person, as a
result of the conversion of Eurodollar Rate Loans to Prime Rate Loans prior to
the expiration of the applicable Interest Period pursuant to any of the
foregoing.
(d) Interest shall be payable by Borrowers to Administrative
Agent, for the benefit of Lenders, monthly in arrears not later than the first
day of each calendar month and shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed. The interest rate on
non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or
decrease by an amount equal to each increase or decrease in the Prime Rate
effective on the first day of the month after any change in such Prime Rate is
announced based on the Prime Rate in effect on the last day of the month in
which any such change occurs.
(e) No agreements, conditions, provisions or stipulations
contained in this Agreement or any of the other Financing Agreements or any
Event of Default, or the exercise by Administrative Agent or any Lender of the
right to accelerate the payment or the maturity of all or any portion of the
Obligations, or the exercise by Administrative Agent or any Lender of any option
whatsoever contained in this Agreement or any of the other Financing Agreements,
or the prepayment by any Borrower of any of the Obligations, or the occurrence
of any event or contingency whatsoever, shall entitle Administrative Agent and
Lenders to contract for, charge or receive, in any event, interest exceeding the
Maximum Interest Rate. In no event shall Borrowers be obligated to pay interest
exceeding such Maximum Interest Rate. All agreements, conditions or
stipulations, if any, which may in any event or contingency whatsoever operate
to bind, obligate or compel Borrowers to pay a rate of interest exceeding the
Maximum Interest Rate shall be without binding force or effect, at law or in
equity, to the extent of the excess of interest over such Maximum Interest Rate.
In the event any interest is contracted for, charged or received in excess of
the Maximum Interest Rate ("Excess"), each Borrower acknowledges and stipulates
that any such contract, charge or receipt shall be the result of an accident and
bona fide error, and that any Excess received by Administrative Agent or any
Lender shall be applied, first, to the payment of the then outstanding and
unpaid principal hereunder; second, to the payment of the other Obligations then
outstanding and unpaid; and third, returned to such Borrower, it being the
intent of the parties hereto not to enter at any time into a usurious or
otherwise illegal relationship. Each Borrower recognizes that, with fluctuations
in the rate of interest set forth in this Section 3.1 of this Agreement and the
Maximum Interest Rate, such an unintentional result
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could inadvertently occur. By the execution of this Agreement, each Borrower
agrees that (i) the credit or return of any Excess shall constitute the
acceptance by such Borrower of such Excess, and (ii) no Borrower shall seek or
pursue any other remedy, legal or equitable, against Administrative Agent or any
Lender, based in whole or in part upon contracting for, charging or receiving of
any interest in excess of the Maximum Interest Rate. For the purpose of
determining whether or not any Excess has been contracted for, charged or
received by Administrative Agent or any Lender, all interest at any time
contracted for, charged or received by Administrative Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements shall be
amortized, prorated, allocated and spread during the entire term of this
Agreement in accordance with the amounts outstanding from time to time hereunder
and the Maximum Interest Rate from time to time in effect in order to lawfully
charge the maximum amount of interest permitted under applicable law.
(f) Notwithstanding the provisions of this Section 3.1, or any
other provision of this Agreement, in no event shall the aggregate "interest"
(as that term is defined in Section 347 of the Criminal Code (Canada)) exceed
the effective annual rate of interest on the "credit advanced" (as defined
therein) lawfully permitted under Section 347 of the Criminal Code (Canada), if
applicable. The effective annual rate of interest shall be determined in
accordance with generally accepted actuarial practices and principles over the
term of the applicable Loan, and in the event of a dispute, a certificate of a
Fellow of the Canadian Institute of Actuaries appointed by Administrative Agent
will be conclusive for the purposes of such determination.
(g) For greater certainty, whenever any amount is payable
under this Agreement or any Financing Agreement by a Borrower as interest or as
a fee which requires the calculation of an amount using a percentage per annum,
each party to this Agreement acknowledges and agrees that such amount shall be
calculated as of the date payment is due without application of the "deemed
reinvestment principle" or the "effective yield method". As an example, when
interest is calculated and payable monthly, the rate of interest payable per
month is 1/12 of the stated rate of interest per annum.
3.2 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Administrative Agent to Borrower
Agent, convert to Prime Rate Loans in the event that (i) any change in
applicable law or regulation (or the interpretation or administration thereof)
shall either (A) make it unlawful for a Lender, or any Participant to make or
maintain Eurodollar Rate Loans or to comply with the terms hereof in connection
with the Eurodollar Rate Loans, or (B) result in the increase in the costs to a
Lender, or any Participant of making or maintaining any Eurodollar Rate Loans by
an amount deemed by Administrative Agent to be material, or (C) reduce the
amounts received or receivable by any Lender in respect thereof, by an amount
deemed by Administrative Agent to be material or (ii) the cost to a Lender, or
any Participant of making or maintaining any Eurodollar Rate Loans shall
otherwise increase by an amount deemed by Administrative Agent to be material.
Borrowers shall pay to Administrative Agent, for the ratable benefit of Lenders,
upon demand by Administrative Agent (or Administrative Agent may, at its option,
charge any loan account of any Borrower) any amounts required to compensate
Lenders, or any Participant for any loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of the foregoing,
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including, without limitation, any such loss, cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
person to make or maintain the Eurodollar Rate Loans or any portion thereof. A
certificate of Administrative Agent or any Lender setting forth the basis for
the determination and calculation of such amount necessary to compensate such
Lender as aforesaid shall be delivered to Borrower Agent and shall be
conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the
Eurodollar Rate Loans are received by Administrative Agent or any Lender other
than on the last day of the applicable Interest Period (whether pursuant to
acceleration, upon maturity or otherwise), including any payments pursuant to
the application of collections under Section 6.3 or any other payments made with
the proceeds of Collateral, Borrowers shall pay to Administrative Agent, for the
ratable benefit of Lenders, upon demand by Administrative Agent (or
Administrative Agent may, at its option, charge any loan account of any
Borrower) any amounts required to compensate such Lender, or any Participant for
any additional loss (including loss of anticipated profits), cost or expense
incurred by such person as a result of such prepayment or payment, including,
without limitation, any loss, cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such person
to make or maintain such Eurodollar Rate Loans or any portion thereof.
3.3 Fees.
(a) Borrowers shall pay to Administrative Agent, when due, all
of the fees due on the Closing Date and from time to time thereafter as set
forth in a letter agreement regarding fees of even date herewith between
Borrowers, Guarantor and Administrative Agent (the "Fee Letter").
(b) Borrowers shall pay to Administrative Agent, for its own
account, a monthly servicing fee equal to $4,000 in respect of Administrative
Agent's services for each month (or part thereof) while this Agreement remains
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be fully earned as of and payable in advance on the Closing Date
and on the first day of each month thereafter.
(c) Borrowers shall pay to Administrative Agent, for the
benefit of Lenders based upon their respective Pro Rata Shares, a monthly unused
line fee equal to a rate of one-quarter of one percent (0.25%) per annum
calculated upon the amount by which the Revolving Loan Limit exceeds the average
daily principal balance of the outstanding Revolving Loans and Letter of Credit
Accommodations during the immediately preceding month while this Agreement is in
effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears.
(d) If for any reason this Agreement is terminated prior to
the Final Maturity Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Administrative Agent's and Lenders' lost profits as a
result thereof, Borrowers agree to pay to Administrative Agent, for the benefit
of Lenders based upon their respective Pro Rata Shares, upon the effective date
of such termination, an early termination fee equal to one percent (1.0%) of the
Revolving Loan Limit if the effective date of such termination is on or prior to
the first anniversary of the date hereof, and one-half of one (0.5%) percent of
the Revolving Loan Limit if
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the effective date of such termination is after such first anniversary but
before November 14, 2002. Such early termination fee shall be presumed to be the
amount of damages sustained by Administrative Agent and Lenders as a result of
such early termination and Borrowers agree that it is reasonable under the
circumstances currently existing. Administrative Agent and Lenders shall be
entitled to such early termination fee upon the occurrence of any Event of
Default described in Sections 10.1(g) and 10.1(h) hereof, even if Administrative
Agent and Lenders do not exercise their right to terminate this Agreement, but
elect, at their option, to provide financing to Borrowers or permit the use of
cash collateral under the United States Bankruptcy Code or other insolvency law.
Such early termination fee shall be deemed included in the Obligations. Such
early termination fee shall be waived if the effective date of termination is on
or after the first anniversary of the date hereof and either (A) the Obligations
are paid in full from (1) the proceeds of unsecured loans to Borrowers, (2) a
sale of all or substantially all of the assets or Capital Stock of Borrowers in
an arms-length transaction, or (3) a refinancing by First Union National Bank
(or its successors), if such refinancing occurs after Borrower Agent has
completed a sale of its equity securities resulting in net proceeds of at least
$50,000,000 and Lenders have refused a request by Borrowers to reduce the Prime
Rate Margin and the Eurodollar Rate Margin by up to one-quarter of one percent
(0.25%), or (B) the Obligations are paid in part from the entire proceeds of an
asset securitization by Borrowers in a transaction approved by Lenders and the
Revolving Loan Limit is permanently reduced by an amount of at least
$100,000,000.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lenders (or
Administrative Agent on behalf of Lenders) making the initial Loans and
providing the initial Letter of Credit Accommodations hereunder:
(a) Administrative Agent shall have received, in form and
substance reasonably satisfactory to Administrative Agent, all releases,
terminations, discharges and such other documents as Administrative Agent may
request to evidence and effectuate the termination by the Existing Lenders of
their existing credit facilities provided by them to Borrowers and Guarantor and
the repayment in full of all Indebtedness and other obligations of Borrowers and
Guarantor to each of them, duly authorized, executed and delivered by the
Existing Lenders;
(b) Administrative Agent shall have received evidence, in form
and substance reasonably satisfactory to Administrative Agent, that
Administrative Agent, for itself and the ratable benefit of Lenders, has valid
perfected and first priority security interests in and liens and hypothecs upon
the Collateral and any other property which is intended to be security for the
Obligations or the liability of any Obligor in respect thereof, subject only to
the security interests and liens permitted herein or in the other Financing
Agreements;
(c) all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
reasonably satisfactory in form and substance to Administrative Agent, and
Administrative Agent shall have received all information and copies of all
documents, including, without limitation, records of requisite corporate action
and proceedings which Administrative Agent may have requested in connection
therewith, such
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documents where requested by Administrative Agent or its counsel to be certified
by appropriate corporate officers or governmental authorities;
(d) no material adverse change shall have occurred in the
assets, business or prospects of any Borrower or Guarantor since the date of
Administrative Agent's latest field examination and no change or event shall
have occurred which would impair the ability of any Borrower or Obligor to
perform its obligations hereunder or under any of the other Financing Agreements
to which it is a party or of Administrative Agent or Lenders to enforce the
Obligations or realize upon the Collateral;
(e) Administrative Agent shall have completed a field review
of the Records and such other information with respect to the Collateral as
Administrative Agent may require to determine the amount of Loans available to
Borrowers including, without limitation, current agings of receivables, current
perpetual inventory records and/or roll-forwards of Accounts and Inventory
through the Closing Date, together with such supporting documentation as may be
necessary or appropriate, and other documents and information that will enable
Administrative Agent to accurately identify and verify the Collateral, the
results of which shall be reasonably satisfactory to Administrative Agent, not
more than three (3) Business Days prior to the date hereof;
(f) Administrative Agent shall have received and approved
internally prepared financial projections of Borrowers for the fiscal years
ending December 31, 2000, December 31, 2001 and December 31, 2002;
(g) Borrowers shall have established the Blocked Accounts and
Administrative Agent shall have received, in form and substance reasonably
satisfactory to Administrative Agent, all agreements with the depository banks
and Borrowers with respect to such Blocked Accounts as Administrative Agent may
require pursuant to Section 6.3 hereof, duly authorized, executed and delivered
by such depository banks and each Borrower;
(h) the aggregate amount of the Excess Availability of
Borrowers as determined by Administrative Agent, as of the date hereof, shall
not be less than $35,000,000 after giving effect to the initial Loans made or to
be made and Letter of Credit Accommodations issued or to be issued in connection
with the initial transactions hereunder;
(i) Administrative Agent shall have received a Subordination
Agreement in substantially the form of Exhibit C by and among Administrative
Agent and the RSA, acknowledged and agreed to by Borrowers and Guarantor.
Borrowers shall have paid or shall, concurrently with the execution and delivery
of this Agreement, pay $80,000,000 in principal amount of the RSA Note, with
interest accrued through the date of payment;
(j) Administrative Agent shall have received evidence of
insurance and loss payee endorsements required hereunder and under the other
Financing Agreements, in form and substance reasonably satisfactory to
Administrative Agent, and certificates of insurance policies and/or endorsements
naming Administrative Agent as loss payee or additional insured, as applicable;
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(k) Administrative Agent shall have received, in form and
substance reasonably satisfactory to Administrative Agent, the opinion letter of
counsel(s) to Borrowers and Guarantor with respect to the Financing Agreements
and the security interests and liens of Administrative Agent with respect to the
Collateral and such other matters as Administrative Agent may request;
(l) Administrative Agent shall have reviewed and approved
Borrowers' distribution agreements and shall have received, in form and
substance reasonably satisfactory to Administrative Agent, such consents as
Administrative Agent may require with respect thereto, duly authorized, executed
and delivered by the suppliers thereunder;
(m) Administrative Agent shall have received, in form and
substance reasonably satisfactory to Administrative Agent, all consents,
waivers, acknowledgments and other agreements from third persons which
Administrative Agent may deem necessary or desirable in order to permit, protect
and perfect its security interests in and liens upon the Collateral or to
effectuate the provisions or purposes of this Agreement and the other Financing
Agreements, including acknowledgments by lessors, mortgagees and warehousemen of
Administrative Agent's security interests in the Collateral, waivers by such
persons of any security interests, liens or other claims by such persons to the
Collateral and agreements permitting Administrative Agent reasonable access to,
and the right to remain on, the premises to exercise its rights and remedies and
otherwise deal with the Collateral; and
(n) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Administrative Agent, in form and substance reasonably satisfactory to
Administrative Agent.
4.2 Conditions Precedent to All Loans and Letter of Credit
Accommodations. Each of the following is an additional condition precedent to
Loans and Letters of Credit Accommodation to Borrowers, including the initial
Loans and Letter of Credit Accommodations and any future Loans and Letter of
Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as through such representations and warranties had
been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodations and after giving effect thereto,
except to the extent that such representations and warranties expressly related
solely to an earlier date (in which case such representations and warranties
shall have been true and accurate on and as of such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and neither Administrative Agent nor any
Lender shall have received any notice that any action, suit, investigation,
litigation or proceeding is pending or threatened in any court or before any
arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit,
restrain or otherwise affect (A) the making of the Loans or (B) the consummation
of the transactions contemplated pursuant to the terms hereof and of the other
Financing Agreements or (ii) has or could reasonably be expected to have a
Material Adverse Effect on the Borrower requesting the Loan or Letter of Credit
Accommodation; and
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(c) no Event of Default and no act, condition or event which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing on and as of the date of the making of
such Loan or providing each such Letter of Credit Accommodations and after
giving effect thereto.
SECTION 5. SECURITY INTEREST
5.1 To secure payment and performance of all Obligations, each Borrower
hereby grants to Administrative Agent, for itself and the ratable benefit of
Lenders, a continuing security interest in, a lien upon, and a right of set off
against, and hereby assigns to Administrative Agent, for itself and the ratable
benefit of Lenders, as security, the following property and interests in
property of such Borrower, whether now owned or hereafter acquired or existing,
and wherever located (together with all other collateral security for the
Obligations at any time granted to or held by Administrative Agent or any
Lender, collectively, the "Collateral"):
(a) Accounts;
(b) all present and future contract rights, general intangibles
(including, but not limited to, commercial tort claims, payment intangibles (as
each term is defined by the UCC), tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, choses in
action and other claims and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents (whether
negotiable or non-negotiable), instruments, securities, investment property,
letters of credit, proceeds of letters of credit, bankers' acceptances and
guaranties;
(c) all present and future monies, credit balances, deposits,
deposit accounts and other property of such Borrower now or hereafter held or
received by or in transit to Administrative Agent, any Lender or its Affiliates
or at any other depository or other institution from or for the account of such
Borrower, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Accounts and other
Collateral, including, without limitation, (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Accounts or other Collateral, including, without limitation,
returned, repossessed and reclaimed goods, and (iv) deposits by and property of
account debtors or other persons securing the obligations of account debtors;
(d) Inventory;
(e) Equipment;
(f) Real Property;
(g) Records; and
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(h) all products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds and all claims against third
parties for loss or damage to or destruction of any or all of the foregoing.
Notwithstanding the foregoing, Collateral shall not include (a) the last day of
the term of any lease governed by the laws of any Province of Canada (but upon
the enforcement of Administrative Agent's rights hereunder, Administrative Agent
shall stand possessed of such last day in trust to assign the same to any person
acquiring such term), (b) for the purposes of Collateral located in Canada, any
Consumer Goods (as such term is defined in the PPSA), or (c) any shares of stock
or other interest in, or any assets of, any Subsidiary that is not a Borrower,
Guarantor or Subject Subsidiary.
5.2 Notwithstanding anything to the contrary contained in Section 5.1
above, the types or items of Collateral described in such Section shall not
include any rights or interest in any contract, lease, permit, license, charter
or license agreement covering real or personal property of a Borrower, as such,
if under the terms of such contract, lease, permit, license, charter or license
agreement, or applicable law with respect thereto, the valid grant of a security
interest or lien therein to Administrative Agent is prohibited and such
prohibition has not been or is not waived or the consent of the other party to
such contract, lease, permit, license, charter or license agreement has not been
or is not otherwise obtained; provided that the foregoing exclusion shall in no
way be construed (a) to apply if any such prohibition is unenforceable under
Section 9-318 of the UCC or other applicable law or (b) so as to limit, impair
or otherwise affect Administrative Agent's unconditional continuing security
interests in and liens upon any rights or interests of such Borrower in or to
monies due or to become due under any such contract, lease, permit, license,
charter or license agreement (including any Accounts).
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Account. Administrative Agent shall maintain one or
more loan account(s) on its books in which shall be recorded (a) all Loans,
Letter of Credit Accommodations and other Obligations and the Collateral, (b)
all payments made by or on behalf of any Borrower or Guarantor and (c) all other
appropriate debits and credits as provided in this Agreement, including, without
limitation, fees, charges, costs, expenses and interest. All entries in the loan
account(s) shall be made in accordance with Administrative Agent's generally
applicable customary practices as in effect from time to time.
6.2 Statements. Administrative Agent shall render to Borrower Agent each
month a statement setting forth the balance of Borrowers' loan account(s)
maintained by Administrative Agent for Borrowers pursuant to the provisions of
this Agreement, including principal, interest, fees, costs and expenses. Each
such statement shall be subject to subsequent adjustment by Administrative Agent
but shall, absent manifest errors or omissions, be considered correct and deemed
accepted by Borrowers and Guarantor and conclusively binding upon Borrowers and
Guarantor as an account stated except to the extent that Administrative Agent
receives a written notice from Borrower Agent of any specific exceptions of
Borrower Agent thereto within thirty (30) days after the date such statement has
been mailed by Administrative Agent. Until such time as Administrative Agent
shall have rendered to Borrower Agent a written statement as provided above, the
balance in Borrowers' loan account(s) shall be presumptive but rebuttable
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evidence of the amounts due and owing to Administrative Agent and Lenders by
Borrowers and Guarantor.
6.3 Collection of Accounts.
(a) Each Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Administrative Agent may specify, with such banks as are
reasonably acceptable to Administrative Agent into which Borrowers shall
promptly deposit and direct their respective account debtors to directly remit
all payments on Accounts and all payments constituting proceeds of Inventory or
other Collateral in the identical form in which such payments are made, whether
by cash, check or other manner. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance reasonably
satisfactory to Administrative Agent, providing that all items received or
deposited in the Blocked Accounts are the property of Administrative Agent, that
the depository bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to time
on deposit therein and that with respect to the Blocked Accounts, the depository
bank will wire, or otherwise transfer, in immediately available funds, on a
daily basis, all funds received or deposited into such Blocked Accounts to such
bank account of Administrative Agent as Administrative Agent may from time to
time designate for such purpose ("Payment Account"); provided, however, that so
long as the Excess Availability of Borrowers is equal to or greater than
$25,000,000 and no Event of Default has occurred and is continuing, such funds
will not be transferred to the Payment Account and the Borrower owning any such
funds will be entitled to withdraw those funds from the Blocked Accounts for its
own account. Each Borrower agrees that if the Excess Availability of Borrowers
is less than $25,000,000 or an Event of Default has occurred and is continuing,
then all payments made to such Blocked Accounts or other funds received and
collected by Administrative Agent or any Lender, whether in respect of the
Accounts, as proceeds of Inventory or other Collateral or otherwise shall be
treated as payments to Administrative Agent and Lenders in respect of the
Obligations and therefore shall constitute the property of Administrative Agent
and Lenders to the extent of the then outstanding Obligations.
(b) For purposes of calculating the amount of the Revolving Loans
available to Borrowers, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Administrative
Agent of immediately available funds in the Payment Account provided such
payments and notice thereof are received in accordance with Administrative
Agent's usual and customary practices as in effect from time to time and within
sufficient time to credit such Borrower's loan account on such day, and if not,
then on the next Business Day.
(c) If the Excess Availability of Borrowers is less than
$25,000,000, or if an Event of Default has occurred and is continuing (and
without limiting Administrative Agent's and Lenders' other rights and remedies
on account of such Event of Default), each Borrower and all of its directors,
employees, agents, Subsidiaries and other Affiliates shall, acting as trustee
for Administrative Agent and Lenders, receive, as the property of Administrative
Agent and Lenders, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Collateral which come into their possession or
under their control and immediately upon receipt
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thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Administrative Agent and in no event shall the same be commingled with a
Borrower's own funds. Each Borrower agrees to reimburse Administrative Agent and
Lenders on demand for any amounts owed or paid to any bank at which a Blocked
Account is established or any other bank or person involved in the transfer of
funds to or from the Blocked Accounts arising out of Administrative Agent or any
Lender's payments to or indemnification of such bank or person in connection
with such Blocked Account or any amounts received therein or transferred
therefrom in accordance with any Blocked Account Agreement. The obligation of
Borrowers to reimburse Administrative Agent and Lenders for such amounts
pursuant to this Section 6.3 shall survive the termination of this Agreement.
6.4 Payments.
(a) All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Administrative Agent may
designate from time to time. Subject to Section 6.4(b) below, Administrative
Agent shall apply payments received or collected from any Borrower or Guarantor
or for the account of any Borrower or Guarantor that are constitute payment of
specific fees to the payment of such fees. Subject to Section 6.4(b) below,
Administrative Agent shall apply payments received or collected from any
Borrower or Guarantor or for the account of any Borrower or Guarantor
(including, without limitation, the monetary proceeds of collections or of
realization upon any Collateral) that do not relate to the payment of specific
fees to the Obligations, whether or not then due, in the following order: first,
to pay any fees, indemnities or expense reimbursements then due to the
Administrative Agent from Borrowers or Guarantor; second, to pay any fees,
indemnities or expense reimbursements then due to the Lenders from the Borrowers
or Guarantor; third, to pay interest due in respect of all Revolving Loans,
including any Special Administrative Agent Advances; fourth, to pay or prepay
principal of the Special Administrative Agent Advances; fifth, to pay or prepay
principal of the Revolving Loans (other than Special Administrative Agent
Advances); sixth, to pay any amounts (including fees and indemnities) owing with
respect to Bank Products; and seventh, to the payment of any other Obligation
due to the Administrative Agent or any Lender by the Borrowers or the Guarantor.
Notwithstanding anything to the contrary contained in this Agreement, unless so
directed by the Borrower Agent, or unless an Event of Default exists, neither
Administrative Agent nor any Lender shall apply any payments that it receives to
any Eurodollar Rate Loans except on the expiration date of the Interest Period
applicable to such Eurodollar Rate Loan, or in the event, and only to the
extent, that there are no outstanding Prime Rate Loans. Payments and collections
received in any currency other than the currency in which any outstanding
Obligations are denominated will be accepted and applied at the discretion of
Administrative Agent. At Administrative Agent's option, all principal, interest,
fees, costs, expenses and other charges provided for in this Agreement or the
other Financing Agreements may be charged directly to the loan account(s) of any
Borrower. If after receipt of any payment of, or proceeds of Collateral applied
to the payment of, any of the Obligations, Administrative Agent or any Lender is
required to surrender or return such payment or proceeds to any Person for any
reason, then the Obligations intended to be satisfied by such payment or
proceeds shall be reinstated and continue and this Agreement shall continue in
full force and effect as if such payment or proceeds had not been received by
Administrative Agent and such Lender. Each Borrower shall be liable to pay to
Administrative Agent and Lenders, and does hereby indemnify
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and hold Administrative Agent or such Lenders harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4 shall remain
effective notwithstanding any contrary action which may be taken by
Administrative Agent or any Lender in reliance upon such payment or proceeds.
This Section 6.4 shall survive the payment of the Obligations and the
termination of this Agreement.
(b) Except as otherwise provided with respect to Defaulting Lenders,
aggregate principal payments and interest payments shall be apportioned ratably
among the Lenders (according to their applicable Pro Rata Shares) and payments
of the fees (other than fees designated for Administrative Agent's sole account)
shall, as applicable, be apportioned ratably among the Lenders.
6.5 Taxes.
(a) Any and all payments by or on behalf of any Borrower or
Guarantor hereunder and under any other Financing Agreement shall be made, in
accordance with Section 6.4, free and clear of and without deduction for any and
all Taxes, excluding (i) income taxes imposed on the net income of
Administrative Agent or any Lender, and (ii) franchise or similar taxes imposed
on or determined by reference to the net income of Administrative Agent or any
Lender, in each case by the United States of America or by the jurisdiction
under the laws of which Administrative Agent or such Lender (A) is organized or
any political subdivision thereof or (B) has its applicable lending office
located. In addition, Borrowers agree to pay to the relevant Governmental
Authority in accordance with applicable law any Other Taxes.
(b) If any Borrower or Guarantor shall be required by law to deduct
or withhold in respect of any Taxes or Other Taxes from or in respect of any sum
payable hereunder to Administrative Agent or any Lender, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section)
Administrative Agent or such Lender (or Administrative Agent on behalf of such
Lender) receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;
(ii) such Borrower or Guarantor shall make such deductions
and withholdings;
(iii) such Borrower or Guarantor shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) to the extent not paid to Administrative Agent and
Lenders pursuant to clause (i) above, such Borrower or Guarantor shall also pay
to Administrative Agent or any Lender, at the time interest is paid, all
additional amounts which Administrative Agent or any Lender specifies as
necessary to preserve the after-tax yield Administrative Agent or such Lender
would have received if such Taxes or Other Taxes had not been imposed.
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(c) Within thirty (30) days after the date of any payment by any
Borrower or Guarantor of Taxes or Other Taxes, such Borrower or Guarantor shall
furnish to Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment reasonably satisfactory
to Administrative Agent.
(d) Borrowers will indemnify Administrative Agent and each Lender
for the full amount of Taxes and Other Taxes paid by Administrative Agent or
such Lender. If Administrative Agent or such Lender receives a refund in respect
of any Taxes or Other Taxes for which Administrative Agent or such Lender has
received payment from any Borrower or Guarantor hereunder, so long as no Event
of Default, or act, condition or event which with notice or passage of time or
both would constitute an Event of Default, shall exist or have occurred and be
continuing, Administrative Agent or such Lender (as the case may be) shall
credit to the loan account of Borrowers the amount of such refund plus any
interest received (but only to the extent of indemnity payments made, or
additional amounts paid, by Borrowers or Guarantors under this Section 6.5 with
respect to the Taxes or Other Taxes giving rise to such refund). If
Administrative Agent or a Lender claims a tax credit in respect of any Taxes for
which it has been indemnified by Borrowers or Guarantors pursuant to this
Section 6.5, Administrative Agent or such Lender will apply the amount of the
actual dollar benefit received by Administrative Agent or such Lender as a
result thereof, as reasonably calculated by Administrative Agent or such Lender
and net of all expenses related thereto, to the Loans. If Taxes or Other Taxes
were not correctly or legally asserted, Administrative Agent or such Lender
shall, upon Borrower Agent's request and at Borrowers' expense, provide such
documents to Borrower Agent in form and substance satisfactory to Administrative
Agent, as Borrower Agent may reasonably request, to enable Borrowers to contest
such Taxes or Other Taxes pursuant to appropriate proceedings then available to
such Borrower (so long as providing such documents shall not, in the good faith
determination of Administrative Agent, have a reasonable likelihood of resulting
in any liability of Administrative Agent or any Lender).
(e) In the event any Lender is organized under the laws of a
jurisdiction other than the United States, any State thereof or the District of
Columbia (a "Non-U.S. Lender") such Non-U.S. Lender shall deliver to Borrower
Agent two (2) copies of either United States Internal Revenue Service Form 1001
or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
Federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8,
a certificate representing that such Non-U.S. Lender is not a bank for purposes
of Section 881(c) of the Code, is not a ten (10%) percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of any Borrower or Guarantor
and is not a controlled foreign corporation related to any Borrower or Guarantor
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from U.S.
Federal withholding tax on payments by Borrowers or Guarantors under this
Agreement and the other Financing Agreements. Such forms shall be delivered by
any Non-U.S. Lender on or before the date it becomes a party to this Agreement
and on or before the date, if any, such Non-U.S. Lender changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, a Non-U.S. Lender shall upon written notice from Borrower
Agent promptly deliver such new forms as are required by the Code or the
regulations issued thereunder to claim exemption from, or reduction in the rate
of, U.S. Federal withholding tax
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upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender. Notwithstanding any other provision of this Section 6.5(e), a
Non-U.S. Lender shall not be required to deliver any form pursuant to this
Section 6.5(e) that such Non-U.S. Lender is not legally able to deliver.
(f) Borrowers and Guarantors shall not be required to indemnify any
Non-U.S. Lender or to pay any additional amounts to any Non-U.S. Lender, in
respect of United States Federal withholding tax pursuant to subsections (a) or
(d) above to the extent that the (i) the obligation to withhold amounts with
respect to United States Federal withholding tax was applicable on the date such
Non-U.S. Lender became a party to this Agreement or, with respect to payments to
a New Lending Office, the date such Non-U.S. Lender designated such New Lending
Office with respect to a Loan; provided that this subsection (f) shall not apply
(A) to any New Lending Office that becomes a New Lending Office as a result of
an assignment, participation, transfer or designation made at the request of
Borrowers or Guarantors and (B) to the extent the indemnity payment or
additional amounts any Non-U.S. Lender, acting through a New Lending Office,
would be entitled to receive (without regard to this subsection (f)) do not
exceed the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Non-U.S. Lender making the
designation of such New Lending Office, would have been entitled to receive in
the absence of such assignment, participation, transfer or designation, or (ii)
the obligation to pay such additional amounts would not have arisen but for a
failure by such Non-U.S. Lender to comply with the provisions of subsection (e)
above.
6.6 Authorization to Make Loans. Administrative Agent and each Lender is
authorized to make the Loans and provide the Letter of Credit Accommodations
based upon telephonic or other instructions received from anyone purporting to
be any of the persons listed on Schedule 6.6 hereto or such other persons as any
Borrower may at any time and from time to time designate in writing to
Administrative Agent or any Lender to be authorized to request Loans or Letter
of Credit Accommodations or, at the discretion of Administrative Agent or any
Lender, if such Loans are necessary to satisfy any Obligations. The
Administrative Agent and Lenders shall have no duty to verify the identity of
any individual representing himself or herself as one of the officers authorized
by any Borrower to make such requests on its behalf. The Administrative Agent
and Lenders shall make Loans only by depositing funds into one or more deposit
accounts that have been designated in writing by Borrower Agent as operating
accounts of one or more of Borrowers. All requests for Loans or Letter of Credit
Accommodations hereunder shall specify the date on which the requested advance
is to be made or Letter of Credit Accommodations established (which day shall be
a Business Day and, as to Loans, may be the same day as the date the request for
such Loan is deemed to be received by Administrative Agent pursuant to the terms
hereof) and the amount of the requested Loan. Requests received after 10:30 a.m.
Los Angeles time on any day shall be deemed to have been made as of the opening
of business on the immediately following Business Day. All Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed to
have been made to, and at the request of and for the benefit of, Borrowers when
deposited to the credit of any Borrower (or Borrower Agent on its behalf) or
otherwise disbursed or established in accordance with the instructions of any
Borrower (or Borrower Agent on its behalf) or in accordance with the terms and
conditions of this Agreement.
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6.7 Appointment of Borrower Agent for Requesting Loans and Receipts of
Loans and Statements.
(a) Each Borrower hereby irrevocably appoints and constitutes
Borrower Agent as its agent to request and receive Loans and Letter of Credit
Accommodations pursuant to this Agreement and the other Financing Agreements
from Administrative Agent or any Lender in the name or on behalf of such
Borrower. Subject to the terms and conditions contained herein, Administrative
Agent or Lenders may disburse the Loans to such bank account of a Borrower or
otherwise make such Loans to a Borrower and provide such Letter of Credit
Accommodations to a Borrower as Borrower Agent may designate or direct, without
notice to any other Borrower or Obligor.
(b) Borrower Agent hereby accepts the appointment by Borrowers to
act as the agent of Borrowers pursuant to this Section 6.7. Borrower Agent shall
ensure that the disbursement of any Loans to each Borrower requested by or paid
to Borrower Agent, or the issuance of any Letter of Credit Accommodations for a
Borrower hereunder, shall be paid to or for the account of such Borrower.
(c) Each Borrower hereby irrevocably appoints and constitutes
Borrower Agent as agent to receive statements on account and all other notices
from Administrative Agent or any Lender with respect to the Obligations or
otherwise under or in connection with this Agreement and the other Financing
Agreements.
(d) No purported termination of the appointment of Borrower Agent as
agent as aforesaid shall be effective, except after ten (10) days' prior written
notice to Administrative Agent.
6.8 Mandatory Prepayments. In the event that the aggregate amount of the
Revolving Loans made or provided to Borrowers outstanding at any time shall
exceed the Borrowing Base, or the aggregate amount of the outstanding Letter of
Credit Accommodations exceed the sublimit for Letter of Credit Accommodations
set forth in Section 2.2(d), or the aggregate amount of the Revolving Loans and
the Letter of Credit Accommodations outstanding at any time exceed the Revolving
Loan Limit, such event shall not limit, waive or otherwise affect any rights of
Administrative Agent and Lenders in that circumstance or on any future occasions
and Borrowers shall, upon demand by Administrative Agent, which may be made at
any time or from time to time, immediately pay to Administrative Agent, for the
ratable benefit of Lenders, the entire amount of any such excess(es) for which
payment is demanded or provide cash collateral up to such amount as may be
required by Administrative Agent.
6.9 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans
provided by Lenders to Borrowers hereunder only for: (a) payments to each of the
persons listed in the disbursement direction letter furnished by Borrowers to
Administrative Agent on or about the date hereof, (b) payments in an aggregate
principal amount of $80,000,000 together with interest thereon to the RSA, and
(c) costs, expenses and fees in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Financing Agreements. All
other Loans made or Letter of Credit Accommodations provided by or on behalf of
any Lender to any Borrower pursuant to the provisions hereof shall be used by
such Borrower only for
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general operating, working capital and other proper corporate purposes of such
Borrower not otherwise prohibited by the terms hereof. None of the proceeds will
be used, directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Loans to be considered a "purpose
credit" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended.
6.10 Pro Rata Treatment. Except to the extent otherwise provided in this
Agreement: (a) the making and conversion of Revolving Loans shall be made among
the Lenders based on their respective Pro Rata Shares, (b) each payment on
account of any Obligations to or for the account of one or more of Lenders in
respect of any Obligations due on a particular day shall be allocated among the
Lenders entitled to such payments based on their respective Pro Rata Shares and
shall be distributed accordingly.
6.11 Sharing of Payments, Etc.
(a) Borrowers agree that, in addition to (and without limitation of)
any right of setoff, banker's lien or counterclaim any Administrative Agent or
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Administrative Agent and Lenders, to the provisions of Section
12.3(b) hereof), to offset balances held by it for the account of any Borrower
at any of its offices, in dollars or in any other currency, against any
principal of or interest on any Loans owed to such Lender or any other amount
payable to such Lender hereunder, that is not paid when due (regardless of
whether such balances are then due to a Borrower), in which case it shall
promptly notify Borrower Agent and Administrative Agent thereof; provided that
such Lender's failure to give such notice shall not affect the validity thereof.
(b) If any Lender (including Administrative Agent) shall obtain from
any Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any other Financing
Agreement through the exercise of any right of setoff, banker's lien or
counterclaim or similar right or otherwise (other than from Administrative Agent
as provided herein), and, as a result of such payment, such Lender shall have
received more than its Pro Rata Share of the principal of the Loans or more than
its share of such other amounts then due hereunder or thereunder by any Borrower
to such Lender than the percentage thereof received by any other Lender, it
shall promptly pay to Administrative Agent, for the benefit of Lenders, the
amount of such excess and simultaneously purchase from such other Lenders a
participation in the Loans or such other amounts, respectively, owing to such
other Lenders (or such interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all Lenders shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Lender in obtaining or
preserving such excess payment) in accordance with their respective Pro Rata
Shares or as otherwise agreed by Lenders. To such end all Lenders shall make
appropriate adjustments among themselves (by the resale of participation sold or
otherwise) if such payment is rescinded or must otherwise be restored.
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(c) Each Borrower agrees that any Lender so purchasing such a
participation (or direct interest) may exercise, in a manner consistent with
this Section, all rights of setoff, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of Loans or other amounts (as the case may be) owing to such
Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise
any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other
Indebtedness or obligation of any Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section applies, such Lender shall, to the extent
practicable, assign such rights to Administrative Agent for the benefit of
Lenders and, in any event, exercise its rights in respect of such secured claim
in a manner consistent with the rights of Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
6.12 Settlement Procedures.
(a) In order to administer the Credit Facility in an efficient
manner and to minimize the transfer of funds between Administrative Agent and
Lenders, Administrative Agent may, subject to the terms of this Section, make
available, on behalf of Lenders, the full amount of the Loans requested or
charged to any Borrower's loan account(s) or otherwise to be advanced by Lenders
pursuant to the terms hereof, without any requirement of prior notice to Lenders
of the proposed Loans.
(b) With respect to all Revolving Loans made by Administrative Agent
on behalf of Lenders as provided in this Section, the amount of each Lender's
Pro Rata Share of the outstanding Revolving Loans shall be computed weekly, and
shall be adjusted upward or downward on the basis of the amount of the
outstanding Revolving Loans as of 3:00 p.m. California time on the Business Day
immediately preceding the date of each settlement computation; provided that
Administrative Agent retains the absolute right at any time or from time to time
to make the above described adjustments at intervals more frequent than weekly,
but in no event more than twice in any week. Administrative Agent shall deliver
to each of the Lenders after the end of each week, or at such lesser period or
periods as Administrative Agent shall determine, a summary statement of the
amount of outstanding Revolving Loans for such period (such week or lesser
period or periods being hereinafter referred to as a "Settlement Period"). If
the summary statement is sent by Administrative Agent and received by a Lender
prior to 12:00 p.m. California time, then such Lender shall make the settlement
transfer described in this Section by no later than 12:00 p.m. California time
on the next Business Day following the date of receipt. If, as of the end of any
Settlement Period, the amount of a Lender's Pro Rata Share of the outstanding
Revolving Loans is more than such Lender's Pro Rata Share of the outstanding
Revolving Loans as of the end of the previous Settlement Period, then such
Lender shall forthwith (but in no event later than the time set forth in the
preceding sentence) transfer to Administrative Agent by wire transfer in
immediately available funds the amount of the increase. Alternatively, if the
amount of a Lender's Pro Rata Share of the outstanding Revolving Loans in any
Settlement Period is less than the amount of such Lender's Pro Rata Share of the
outstanding Revolving Loans for the previous Settlement Period, Administrative
Agent shall forthwith transfer to such Lender by wire transfer in immediately
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available funds the amount of the decrease. The obligation of each of the
Lenders to transfer such funds and effect such settlement shall be irrevocable
and unconditional and without recourse to or warranty by Administrative Agent.
Each of Administrative Agent and each Lender agrees to ▇▇▇▇ its books and
records at the end of each Settlement Period to show at all times the dollar
amount of its Pro Rate Share of the outstanding Revolving Loans and Letter of
Credit Accommodations. Each Lender shall only be entitled to receive interest on
its Pro Rata Share of the Loans to the extent such Loans have been funded by
such Lender. Because the Administrative Agent on behalf of Lenders may be
advancing and/or may be repaid Revolving Loans prior to the time when Lenders
will actually advance and/or be repaid such Revolving Loans, interest with
respect to Revolving Loans shall be allocated by Administrative Agent in
accordance with the amount of Revolving Loans actually advanced by and repaid to
each Lender and the Administrative Agent and shall accrue from and including the
date such Loans are so advanced to but excluding the date such Loans are either
repaid by any Borrower or actually settled with the applicable Lender as
described in this Section.
(c) To the extent that Administrative Agent has made any such
amounts available and the settlement described above shall not yet have
occurred, upon repayment of any Loans by Borrower, Administrative Agent may
apply such amounts repaid directly to any amounts made available by any
Administrative Agent pursuant to this Section. In lieu of weekly or more
frequent settlements, Administrative Agent may at any time require each Lender
to provide Administrative Agent with immediately available funds representing
its Pro Rata Share of each Loan, prior to Administrative Agent's disbursement of
such Loan to any Borrower. In such event, all Loans under this Agreement shall
be made by the Lenders simultaneously and proportionately to their Pro Rata
Shares. No Lender shall be responsible for any default by any other Lender in
the other Lender's obligation to make a Loan requested hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of the default by
any other Lender in the other Lender's obligation to make a Loan hereunder.
(d) If Administrative Agent is not funding a particular Loan to a
Borrower pursuant to this Section above on any day, Administrative Agent may
assume that each Lender will make available to Administrative Agent such
Lender's Pro Rata Share of the Revolving Loan requested or otherwise made on
such day and Administrative Agent may, in its discretion, but shall not
obligated to, cause a corresponding amount to be made available to such Borrower
on such day. If Administrative Agent makes such corresponding amount available
to such Borrower and such corresponding amount is not in fact made available to
Administrative Agent by such Lender, Administrative Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon for each day from the date such payment was due until the date
such amount is paid to Administrative Agent at the interest rate provided for in
Section 3.1 hereof. During the period in which such Lender has not paid such
corresponding amount to Administrative Agent, notwithstanding anything to the
contrary contained in this Agreement or any of the other Financing Agreements,
the amount so advanced by Administrative Agent to a Borrower shall, for all
purposes hereof, be a Loan made by Administrative Agent for its own account.
Upon any such failure by a Lender to pay Administrative Agent, Administrative
Agent shall promptly thereafter notify such Borrower of such failure and such
Borrower shall immediately pay such corresponding amount to Administrative Agent
for its own account. A Lender who fails to pay Administrative Agent its Pro Rata
Share of any Loans made available by the Administrative Agent on such Lender's
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behalf, or any Lender who fails to pay any other amount owing by its
Administrative Agent, is a "Defaulting Lender". Administrative Agent shall not
be obligated to transfer to a Defaulting Lender any payments made by or on
behalf of any Borrower or any Obligor to Administrative Agent for the Defaulting
Lender's benefit, nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a Defaulting Lender shall instead be
paid to or retained by Administrative Agent. Administrative Agent may hold and,
in its discretion, relend to a Borrower the amount of all such payments received
or retained by it for the account of such Defaulting Lender. For purposes of
voting or consenting to matters with respect to this Agreement and the other
Financing Agreements and determining Pro Rata Shares, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero (0). This Section shall remain effective with respect to a
Defaulting Lender until such default is cured. The operation of this Section
shall not be construed to increase or otherwise affect the Commitment of any
Lender, or relieve or excuse the performance by any Borrower or Obligor of their
duties and obligations hereunder.
(e) Nothing in this Section or elsewhere in this Agreement or the
other Financing Agreements shall be deemed to require Administrative Agent to
advance funds on behalf of any Lender or to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights that
any Borrower may have against any Lender as a result of any default by any
Lender hereunder in fulfilling its Commitment.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting.
(a) Borrowers shall provide Administrative Agent with the following
documents in a form reasonably satisfactory to Administrative Agent:
(i) on a monthly basis, on or before the tenth (10th)
Business Day of the month, for the immediately preceding month, a schedule of
sales made, credits issued and cash received and a schedule of Inventory
(separately showing Inventory covered by non-cancelable, non-returnable purchase
orders and "end of life" Inventory, and the sales of such Inventory); provided
that such schedules will be provided on a weekly basis or more frequently as
Administrative Agent may request if either (A) an Event of Default has occurred
and is continuing, or (B) the Excess Availability as measured as of the last day
of a calendar month is less than $25,000,000 at the end of any January,
February, April, May, July, August, October or November during the Term of this
Agreement or less than $40,000,000 at the end of any March, June, September or
December during the Term of this Agreement;
(ii) on a monthly basis, on or before the tenth (10th)
Business Day of the month or more frequently as Administrative Agent may
reasonably request, for the immediately preceding month, (A) agings of accounts
payable (including the status of payments to owners and lessors of the leased
premises of Borrowers and warehouses and processors used by Borrowers), (B)
agings of accounts receivable (together with a reconciliation to the financial
statement for such month and to its general ledger), and (C) perpetual inventory
reports by category and location;
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(iii) upon Administrative Agent's request in good faith, (A)
copies of customer statements and credit memos, remittance advices and reports,
and copies of deposit slips and bank statements, (B) copies of shipping and
delivery documents, (C) copies of purchase orders, invoices and delivery
documents for Inventory and Equipment acquired by Borrowers, and (D) a statement
of the outstanding loans and payments made, and Accounts owing to, Affiliates as
of the last day of the immediately preceding month; and
(iv) such other reports as to the Collateral as
Administrative Agent or any Lender shall reasonably request from time to time.
(b) If any Borrower's or Guarantor's records or reports of the
Collateral are prepared or maintained by an accounting service, contractor,
shipper or other agent, each Borrower and Guarantor hereby irrevocably
authorizes such service, contractor, shipper or agent to deliver such records,
reports, and related documents to Administrative Agent and to follow
Administrative Agent's instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower shall notify Administrative Agent promptly of: (i)
any material delay in such Borrower's performance of any of its obligations to
any Account Debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any Account Debtor, or any material disputes with Account
Debtors, or any material settlement, adjustment or compromise thereof, (ii) all
material adverse information known to any Borrower relating to the financial
condition of any Account Debtor and (iii) any event or circumstance which, to
such Borrower's knowledge, would be reasonably likely to cause Administrative
Agent to consider any then existing Accounts as no longer constituting Eligible
Accounts. No credit, discount, allowance or extension, or agreement with respect
to any credit, discount, allowance or extension, shall be granted by any
Borrower to any Account Debtor without Administrative Agent's consent, except in
the ordinary course of such Borrower's business consistent with the practices of
such Borrower as of the date hereof and as to any such agreement so long as
Administrative Agent shall have received notice thereof to the extent required
under Section 7.1 above. So long as no Event of Default exists or has occurred
and is continuing, each Borrower in its discretion shall have the right to
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
Account Debtor. At any time that an Event of Default exists or has occurred and
is continuing, Administrative Agent shall, at its option and in the exercise of
its commercially reasonable judgment, have the exclusive right to settle, adjust
or compromise any claim, offset, counterclaim or dispute with Account Debtors or
grant any credits, discounts or allowances.
(b) Without limiting the obligation of Borrowers to deliver any
other information to Administrative Agent, Borrowers shall promptly report to
Administrative Agent any return of Inventory by any one account debtor if the
Inventory so returned in such case has a value in excess of $250,000. At any
time that Inventory is returned, reclaimed or repossessed, the Account (or
portion thereof) which arose from the sale of such returned, reclaimed or
repossessed Inventory shall not be deemed an Eligible Account. In the event any
account debtor returns Inventory when an Event of Default exists or has occurred
and is continuing, Borrowers
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shall, upon Administrative Agent's request, (i) hold the returned Inventory in
trust for Administrative Agent and Lenders, (ii) segregate all returned
Inventory from all of its other property, (iii) dispose of the returned
Inventory solely according to Administrative Agent's instructions in good faith,
and (iv) not issue any credits, discounts or allowances with respect thereto
without Administrative Agent's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice or schedule thereof delivered to Administrative Agent shall be true and
complete (other than as to de minimis amounts), (ii) no payments shall be made
thereon except payments immediately delivered to Administrative Agent pursuant
to the terms of this Agreement, (iii) except as reported to Administrative Agent
in accordance with the terms hereof, no credit, discount, allowance or extension
or agreement for any of the foregoing shall be granted to any account debtor and
except for credits, discounts, allowances or extensions made or given in the
ordinary course of business of Borrowers consistent with the current practices
of Borrowers as of the date hereof, (iv) except as reported to Administrative
Agent in accordance with the terms hereof, there shall be no setoff, deductions,
contras, defenses, counterclaims or disputes existing or asserted with respect
thereto, (v) none of the transactions giving rise thereto will violate any
applicable Federal, State, Provincial, district, county or local laws or
regulations in any material respect, all documentation relating thereto will be
legally sufficient in all material respects under such laws and regulations and
all such documentation will be legally enforceable in accordance with its terms,
subject to bankruptcy laws and general principles of equity.
(d) Administrative Agent shall have the right at any time or times,
in Administrative Agent's name or in the name of a nominee of Administrative
Agent, to verify the validity, amount or any other matter relating to any
Account or other Collateral, by mail, telephone, facsimile transmission or
otherwise.
(e) Except as Administrative Agent may otherwise agree, each
Borrower shall deliver or cause to be delivered to Administrative Agent or such
Lender as Administrative Agent may specify, immediately upon such Borrower's
receipt thereof, with appropriate endorsement and assignment, all chattel paper
and instruments constituting Collateral which such Borrower now owns or may at
any time hereafter acquire (i) prior to an Event of Default, if the aggregate
amount of all such chattel paper and instruments equals or exceeds $250,000 and
(ii) after an Event of Default, all such chattel paper and other instruments
regardless of the amount thereof.
(f) Administrative Agent may, at any time or times that an Event of
Default exists or has occurred and is continuing, (i) notify any or all Account
Debtors or other obligors in respect thereof that the Accounts have been
assigned to Administrative Agent and that Administrative Agent has a security
interest therein and Administrative Agent may direct any or all accounts debtors
to make payment of Accounts directly to Administrative Agent, (ii) in its
commercially reasonable judgment extend the time of payment of, compromise,
settle or adjust for cash, credit, return of merchandise or otherwise, and upon
any terms or conditions, any and all Accounts or other obligations included in
the Collateral and thereby discharge or release the Account Debtor or any other
party or parties in any way liable for payment thereof without affecting any of
the Obligations, (iii) demand, collect or enforce payment of any Accounts or
such other obligations, but without any duty to do so, and Administrative Agent
and Lenders shall not be liable for any failure to collect or enforce the
payment thereof and (iv) take whatever
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other action Administrative Agent may in good ▇▇▇▇▇ ▇▇▇▇ necessary or desirable
for the protection of its or Lenders' interests. At any time that an Event of
Default exists or has occurred and is continuing, at Administrative Agent's
request, all invoices and statements sent to any account debtor or other obligor
shall state that the Accounts and such other obligations have been assigned to
Administrative Agent and are payable directly and only to Administrative Agent
and each Borrower shall deliver to Administrative Agent such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Administrative Agent may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) each Borrower
shall at all times maintain inventory records reasonably satisfactory to
Administrative Agent, keeping in all material respects correct and accurate
records itemizing and describing the kind, type, quality and quantity of
Inventory, the cost therefor and daily withdrawals therefrom and additions
thereto; (b) Borrower Agent and Tenex shall conduct a daily cycle count of their
Inventory, ▇▇▇▇▇ shall conduct a monthly cycle count and annual physical count
of its Inventory, and Future Tech shall conduct a physical count of its
Inventory no less frequently than one (1) time per week (or more often as
Administrative Agent may request on or after an Event of Default and for so long
as the same is continuing), and upon Administrative Agent's request, the
Borrower shall supply Administrative Agent with a report in the form and with
such specificity as may be reasonably satisfactory to Administrative Agent
concerning such counts; (c) each Borrower shall not remove any Inventory from
the locations set forth or permitted herein, without the prior written consent
of Administrative Agent (which will not be unreasonably withheld, delayed or
conditioned), except for sales of Inventory in the ordinary course of such
Borrower's business and except to move Inventory directly from one location of
such Borrower set forth or permitted herein to another such location of such
Borrower or any other Borrower (so long as a financing statement between
Administrative Agent as secured party and such other Borrower, as debtor,
covering such Inventory has previously been recorded in the appropriate
governmental offices of the jurisdiction of such location); (d) Borrowers shall,
at their expense, on a semi-annual basis, but at any time or times as
Administrative Agent may request on or after an Event of Default and for so long
as the same is continuing, deliver or cause to be delivered to Administrative
Agent full written reports or appraisals as to the Inventory in form, scope and
methodology reasonably acceptable to Administrative Agent and by an appraiser
reasonably acceptable to Administrative Agent, addressed to Administrative Agent
and Lenders, and upon which Administrative Agent and Lenders are expressly
permitted to rely, which appraisals shall employ the same methodology as in
prior appraisals unless the appraiser justifies to Administrative Agent, in its
sole discretion, the need to employ a different methodology; provided that
Administrative Agent
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will make reasonable efforts to discuss any proposed change in methodology with
Borrower Agent prior to its implementation, provided, further, that the failure
to discuss such proposed change shall not invalidate such appraisal or limit the
rights of Administrative Agent and Lenders to rely on such appraisal; (e)
Borrowers shall, at their expense, once every two months, deliver or cause to be
delivered to Administrative Agent written desktop appraisals as to Inventory (by
product code as determined by the appraiser) in form, scope and methodology
acceptable to Administrative Agent and by an appraiser reasonably acceptable to
Administrative Agent, addressed to Administrative Agent and Lenders, and upon
which Administrative Agent and Lenders are expressly permitted to rely, which
appraisals shall employ the same methodology as in prior appraisals unless the
appraiser justifies to Administrative Agent, in its sole discretion, the need to
employ a different methodology; provided that Administrative Agent will make
reasonable efforts to discuss any proposed change in methodology with Borrower
Agent prior to its implementation, provided, further, that the failure to
discuss such proposed change shall not invalidate such desktop appraisal or
limit the rights of Administrative Agent and Lenders to rely on such desktop
appraisal; (f) each Borrower shall produce, use, store and maintain the
Inventory, with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with applicable laws
(including, but not limited to, the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders related
thereto); (g) each Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory, except for liabilities incurred by Administrative Agent or a Lender
due to acts or omissions of Administrative Agent or such Lender which constitute
gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction; (h) except as
disclosed in the collateral reports delivered to Administrative Agent under
Section 7.1(a), each Borrower shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate such Borrower to repurchase such Inventory (except for the right of
return of customers for Inventory which is defective or non-conforming); (i)
each Borrower shall keep the Inventory in good and marketable condition (other
than obsolete Inventory); and (j) each Borrower shall not, except as disclosed
in the collateral reports delivered to Administrative Agent under Section
7.1(a), acquire or accept any Inventory on consignment or approval.
7.4 Equipment Covenants. With respect to the Equipment: (a) upon
Administrative Agent's reasonable request, at any time or times an Event of
Default exists or has occurred and is continuing, Borrowers shall, at their
expense, deliver or cause to be delivered to Administrative Agent written
reports or appraisals as to the Equipment in form, scope and methodology
reasonably acceptable to Administrative Agent and by an appraiser reasonably
acceptable to Administrative Agent addressed to Administrative Agent and Lenders
and upon which Administrative Agent and Lenders are expressly permitted to rely;
(b) each Borrower shall keep the Equipment in order, repair, running and
marketable condition (ordinary wear and tear excepted); (c) each Borrower shall
use the Equipment with all reasonable care and caution and in accordance with
applicable standards of any insurance and in conformity with all applicable
laws; (d) the Equipment is and shall be used in Borrower's business and not for
personal, family, household or farming use; (e) each Borrower shall not remove
any Equipment from the locations set forth or permitted herein, except for
laptop computers that employees may use in homes or travel, and except to the
extent necessary to have any Equipment repaired or maintained in the ordinary
course of the business of such Borrower or to move Equipment directly from one
location set forth or permitted herein to another such location and except for
the movement of motor vehicles used by or for the benefit of such Borrower in
the ordinary course of business; (f) the Equipment is now and shall remain
personal property and each Borrower shall not permit any of the Equipment to be
or become a part of the Real Property or a fixture; and (g) each Borrower
assumes all responsibility and liability arising from the use of the Equipment,
except for liabilities arising from acts or omissions of Administrative Agent or
any Lender.
7.5 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Administrative Agent (and all persons designated by Administrative
Agent) as such Borrower's true and lawful attorney-in-fact, and authorizes
Administrative Agent, in such Borrower's or Administrative Agent's name, to: (a)
at any time an Event of Default exists or has occurred and
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is continuing, (i) demand payment on Accounts or other proceeds of Inventory or
other Collateral, (ii) enforce payment of Accounts or other Collateral by legal
proceedings or otherwise, (iii) exercise in good faith all of such Borrower's
rights and remedies to collect any Account or other Collateral, (iv) sell or
assign any Account or other Collateral upon such terms, for such amount and at
such time or times as Administrative Agent deems commercially reasonable, (v)
settle, adjust, compromise, extend or renew an Account upon such terms as
Administrative Agent deems commercially reasonable, (vi) discharge and release
any Account upon such terms as Administrative Agent deems commercially
reasonable, (vii) prepare, file and sign such Borrower's name on any proof of
claim in bankruptcy or other similar document in connection with the Collateral
against an Account Debtor, (viii) notify the post office authorities to change
the address for delivery of such Borrower's mail to an address designated by
Administrative Agent, and open all mail addressed to such Borrower and handle
and store all mail relating to any of the Collateral and make available for
Borrowers to obtain all other mail at the offices of Administrative Agent or
such other reasonable location as Administrative Agent may specify for such
purpose, and (ix) do all acts and things which are necessary, in Administrative
Agent's good faith determination, to fulfill such Borrower's obligations under
this Agreement and the other Financing Agreements and (b) at any time (i) take
control in any manner of any item of payment constituting Collateral or in
respect of Collateral or proceeds thereof received in or for deposit in the
Blocked Accounts or otherwise received by Administrative Agent or any Lender to
the extent that Administrative Agent or Lender has a right thereto under Section
6.3, (ii) have access to any lockbox or postal box into which such Borrower's
mail relating to any of the Collateral or which Administrative Agent believes
may be related to Collateral is deposited, (iii) endorse such Borrower's name
upon any items of payment constituting Collateral or proceeds thereof at any
time received by or on behalf of Administrative Agent or any Lender and deposit
the same in Administrative Agent's or a Lender's account for application to the
Obligations, (iv) endorse such Borrower's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Account or
any goods pertaining thereto or any other Collateral, (v) clear Inventory the
purchase of which was financed with Letter of Credit Accommodations through US
Customs, in such Borrower's name, Administrative Agent's name or the name of
Administrative Agent's designee, and to sign and deliver to customs officials
powers of attorney in such Borrower's name for such purpose, (vi) sign such
Borrower's name on any verification of Accounts and notices thereof to account
debtors and other obligors in respect thereof and (vii) execute in such
Borrower's name and file any PPSA financing statements or UCC financing
statements or amendments thereto. Each Borrower hereby releases Administrative
Agent and each Lender and its officers, employees and designees from any
liabilities arising from any act or acts under this power of attorney and in
furtherance thereof, whether of omission or commission, except as a result of
Administrative Agent's or a Lender's own gross negligence or willful misconduct
as determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Nothing herein shall be deemed to constitute an appointment of any
Person other than Administrative Agent as attorney-in-fact for Borrowers or any
of them.
7.6 Bills of Lading and Other Documents of Title. In the event that any
Inventory that would otherwise be Eligible Inventory is located outside the
United States of America or Canada and is in transit to premises of a Customs
Broker in the United States or Canada or premises of a Borrower in the United
States of America or Canada as described in the definition of Eligible
Inventory, such Inventory may be accepted by Lenders as Eligible Inventory if
(a) each
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Borrower shall cause all bills of lading and other documents of title relating
to goods being purchased by it which are outside the United States or Canada and
in transit to such premises to name such Borrower as consignee, unless and until
Administrative Agent may direct otherwise; (b) at such time and from time to
time as Administrative Agent may direct, such Borrower shall cause
Administrative Agent or such other financial institution or other person as
Administrative Agent may specify to be named as consignee; (c) without limiting
any other rights of Administrative Agent or any Lender hereunder, Administrative
Agent shall have the right to endorse and negotiate on behalf of , and as
attorney-in-fact for, such Borrower any ▇▇▇▇ of lading or other document of
title with respect to such goods naming such Borrower as consignee to
Administrative Agent; (d) there shall be three (3) originals of each of such
▇▇▇▇ of lading or other document of title which unless and until Administrative
Agent shall direct otherwise, shall be delivered as follows: (i) one (1)
original to such Customs Broker as such Borrower may specify (so long as
Administrative Agent has received a Collateral Access Agreement duly authorized,
executed and delivered by such Customs Broker), and (ii) two (2) originals to
Administrative Agent or to such other person as Administrative Agent may
designate for such purpose; (e) such Borrower shall obtain a copy (but not the
originals) of such ▇▇▇▇ of lading or other documents of title from the Customs
Broker and (f) such Borrower shall cause all bills of lading or other documents
of title relating to goods purchased by such Borrower which are outside the
United States or Canada and in transit to the premises of such Borrower or the
premises of a Customs Broker in the United States or Canada to be issued in a
form so as to constitute negotiable documents as such term is defined in the
Uniform Commercial Code.
7.7 Right to Cure. Administrative Agent may, at its option, (a) upon
notice to any Borrower (or Borrower Agent), cure any default by such Borrower
under any material agreement with a third party which affects any Collateral,
the value of such Collateral or the ability of Administrative Agent or any
Lender to collect, sell or otherwise dispose of such Collateral or the rights
and remedies of Administrative Agent or any Lender hereunder or under any of the
other Financing Agreements, (b) pay or bond on appeal any judgment entered
against any Borrower or Guarantor, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral (other than those whose existence is permitted by this
Agreement) and (d) pay any amount, incur any expense or perform any act which,
in Administrative Agent's good faith judgment, is reasonably necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
rights of Administrative Agent and Lenders with respect thereto. Administrative
Agent and Lenders may add any amounts so expended to the Obligations and charge
any loan account with respect to a Borrower maintained by Administrative Agent
so as to increase the amount of Loans outstanding. Administrative Agent and
Lenders shall be under no obligation to effect such cure, payment or bonding and
shall not, by doing so, be deemed to have assumed any obligation or liability of
Borrowers. Any payment made or other action taken by Administrative Agent or any
Lender under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
7.8 Access to Premises. From time to time as requested by Administrative
Agent, at the cost and expense of Borrowers, (a) Administrative Agent or its
designee shall have complete access to all of each Borrower's and Guarantor's
premises during normal business hours and after notice to Borrower Agent, or at
any time and without notice to Borrower Agent if an Event of Default exists or
has occurred and is continuing, for the purposes of inspecting, verifying and
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auditing the Collateral and all of each Borrower's books and records, including,
without limitation, the Records, and (b) each Borrower shall promptly furnish to
such Administrative Agent such copies of such books and records or extracts
therefrom as Administrative Agent may request, and (c) Administrative Agent and
any Lender, or a designee, may use during normal business hours such of any
Borrower's or Guarantor's personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Accounts and realization of
other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each of Borrowers and Guarantor hereby jointly and severally represents
and warrants to Administrative Agent and Lenders the following (which shall
survive the execution and delivery of this Agreement), the truth and accuracy of
which are a continuing condition of the making of Loans and providing Letter of
Credit Accommodations to Borrowers:
8.1 Existence, Power and Authority; Subsidiaries. Each of Borrowers,
Guarantor and the Subject Subsidiaries is a corporation or unlimited liability
company duly organized and in good standing under the laws of its state,
province or other jurisdiction of formation and is duly qualified as a foreign
or extra-provincial corporation or company and in good standing in all states,
provinces or other jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification necessary,
and where the failure to so qualify would have a Material Adverse Effect on such
Borrower, Guarantor or Subject Subsidiary. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within the corporate
or company powers of each Borrower and Guarantor, have been duly authorized and
are not in contravention of law or the terms of the certificate of
incorporation, articles of organization, by-laws, or other organizational
documentation of each Borrower or Guarantor, or any indenture, agreement or
undertaking to which any Borrower or Guarantor is a party or by which any
Borrower or Guarantor or its property are bound. This Agreement and the other
Financing Agreements to which it is a party constitute legal, valid and binding
obligations of each Borrower and Guarantor enforceable in accordance with their
respective terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar law affecting
creditors' rights generally and by general principles of equity. Borrowers and
Guarantor do not have any Subject Subsidiaries except as set forth on Schedule
8.1 hereof.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to Borrowers and Guarantor which have been or may hereafter
be delivered by any Borrower or Guarantor to Administrative Agent or Lenders
have been prepared in accordance with GAAP and fairly present the financial
condition and the results of operation of Borrowers and Guarantor as at the
dates and for the periods set forth therein. Except as disclosed in any interim
financial statements furnished by any Borrower or Guarantor to Administrative
Agent or Lenders prior to the date of this Agreement, there has been no material
adverse change in the assets, liabilities, properties and condition, financial
or otherwise, of any Borrower or Guarantor, since the date of the most recent
audited financial statements of Borrowers and Guarantor, furnished by any
Borrower or Guarantor to Administrative Agent prior to the date of this
Agreement.
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8.3 Chief Executive Office; Collateral Locations. The chief executive
office of each Borrower and Guarantor and each Borrower's Records concerning
Accounts and Inventory are located only at the address set forth on the
signature page hereto and its only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in Schedule 8.3
hereto, subject to the right of each Borrower and Guarantor to establish new
locations in accordance with Section 9.2 hereof. Schedule 8.3 hereto correctly
identifies any of such locations which are not owned by Borrowers or Guarantor
and sets forth the owners and/or operators thereof.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Administrative Agent, for itself and the ratable benefit of
Lenders, under this Agreement and the other Financing Agreements constitute
valid and perfected first priority liens and security interests in and upon the
Collateral subject only to the liens indicated on Schedule 8.4 hereto and the
other liens permitted under Section 9.8 hereof. Each of Borrowers and Guarantor
has good and marketable title to all of its properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Administrative Agent, for itself and the ratable
benefit of Lenders, and such others as are specifically listed on Schedule 8.4
hereto or permitted under Section 9.8 hereof.
8.5 Tax Returns. Each of Borrowers and Guarantor has filed, or caused to
be filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each of
Borrowers and Guarantor has paid or caused to be paid all taxes due and payable
or claimed due and payable in any assessment received by it, and has collected,
deposited and remitted in accordance with all applicable laws, all excise taxes
and all sales and/or use taxes applicable to the conduct of its business, except
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to such Borrower or Guarantor, as
the case may be, and with respect to which adequate reserves have been set aside
on its books. Adequate provision has been made for the payment of all accrued
and unpaid Federal, State, province, county, local, foreign and other taxes
whether or not yet due and payable and whether or not disputed. Each of
Borrowers and Guarantor has collected and remitted to the appropriate tax
authority all excise taxes and sales and/or use taxes applicable to its business
required to be collected and remitted under the laws of the United States or
Canada and each possession or territory thereof, and each State, province or
political subdivision thereof, including any State or province in which such
Borrower or Guarantor owns any Inventory or owns or leases any other property.
8.6 Litigation. There is no action, suit, proceeding or claim by any
Person pending, or to the best knowledge of any Borrower or Guarantor
threatened, against any Borrower or Guarantor seeking to enjoin or otherwise
prohibit this Agreement, any other Financing Agreement or the transactions
contemplated hereby or thereby. Except as set forth on Schedule 8.6 hereto, (i)
there is no present investigation by any Governmental Authority pending, or to
the best of the knowledge of any Borrower or Guarantor threatened, against or
affecting any Borrower or Guarantor or any of their respective assets or
businesses, and (ii) there is no action, suit, proceeding or claim by any Person
pending, or to the best of the knowledge of any Borrower or Guarantor
threatened, against any Borrower or Guarantor or its assets that, if adversely
determined, would have a Material Adverse Effect on such Borrower or Guarantor.
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8.7 Compliance with Other Agreements and Applicable Laws.
(a) Each of Borrowers, Guarantor and the Subject Subsidiaries is not
in default in any respect under, or in violation in any respect of any of the
terms of, any agreement, contract, instrument, lease or other commitment to
which it is a party or by which it or any of its assets are bound, the default
or violation of which would have a Material Adverse Effect on such Borrower,
Guarantor or Subject Subsidiary. Each of Borrowers, Guarantor and the Subject
Subsidiaries is in material compliance with the requirements of all material
applicable laws, rules, regulations and orders of any Governmental Authority
relating to its business, including, without limitation, those set forth in or
promulgated pursuant to the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the Code, as
amended, and the rules and regulations thereunder, and all Environmental Laws
with respect to which the failure to comply would have a Material Adverse
Effect.
(b) Each of Borrowers, Guarantor and the Subject Subsidiaries has
obtained all permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority (the "Permits") required for the
lawful conduct of its business where the failure to obtain such Permit would
have a Material Adverse Effect on such Borrower, Guarantor or Subject
Subsidiary. The Permits constitute all permits, licenses, approvals, consents,
certificates, orders or authorizations necessary for each of Borrowers,
Guarantor and the Subject Subsidiaries to own and operate its business as
presently conducted or proposed to be conducted where the failure to have such
Permits would have a Material Adverse Effect on such Borrower, Guarantor or
Subject Subsidiary. All of the Permits are valid and subsisting and in full
force and effect. There are no actions, claims or proceedings pending or
threatened that seek the revocation, cancellation, suspension or modification of
any of the Permits which would have a Material Adverse Effect on such Borrower,
Guarantor or Subject Subsidiary.
8.8 Environmental Compliance.
(a) Except as set forth on Schedule 8.8 hereto, no Borrower,
Guarantor or any of the Subject Subsidiaries has generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates any applicable Environmental Law where the
violation would have a Material Adverse Effect on such Borrower, Guarantor or
Subject Subsidiary, or violates any license, permit, certificate, approval or
similar authorization issued to any Borrower, Guarantor or such Subject
Subsidiary thereunder where the violation thereof would have a Material Adverse
Effect on such Borrower, Guarantor or Subject Subsidiary. The operations of each
Borrower, Guarantor and the Subject Subsidiaries comply in all respects with all
applicable Environmental Laws and all licenses, permits, certificates, approvals
and similar authorizations thereunder where the failure to comply therewith or
the violation thereof would have a Material Adverse Effect on such Borrower,
Guarantor or Subject Subsidiary.
(b) Except as set forth on Schedule 8.8 hereto, (i) there is no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person pending or, to the best
of the knowledge of any Borrower and Guarantor threatened, with respect to any
non-compliance with or violation of the requirements of any applicable
Environmental Law by any Borrower, Guarantor and the Subject Subsidiaries which
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would have a Material Adverse Effect on such Borrower, Guarantor or Subject
Subsidiary, (ii) to the Borrower's or Guarantor's knowledge, there has not been
any release, spill or discharge of any Hazardous Material on any properties of
any Borrower, Guarantor or such Subject Subsidiary, or releases, spills or
discharges from any properties at which any Borrower, Guarantor or such Subject
Subsidiary has transported, stored or disposed of any Hazardous Materials which
would have a Material Adverse Effect on such Borrower, Guarantor or Subject
Subsidiary, and (iii) to the Borrower's or Guarantor's knowledge, there has not
been any generation, use, storage, treatment, transportation, manufacture,
handling, production or disposal of any Hazardous Materials or any other
environmental matter which affects any Borrower or Guarantor or its business,
operations or assets in any manner which would have a Material Adverse Effect on
such Borrower or Guarantor.
(c) Except as set forth on Schedule 8.8 hereto, no Borrower,
Guarantor or any of the Subject Subsidiaries has any liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials which would have a Material Adverse Effect on such Borrower, Guarantor
or Subject Subsidiary.
(d) Each of Borrowers, Guarantor and the Subject Subsidiaries has
all licenses, certificates, approvals, similar authorizations and other Permits
required to be obtained or filed in connection with the operations of such
Borrower, Guarantor and Subject Subsidiary under any Environmental Law and all
of such licenses, permits, certificates, approvals or similar authorizations and
other Permits are valid and in full force and effect in each case where the
failure to obtain or maintain such licenses, permits, certificates, approvals or
similar authorizations would have a Material Adverse Effect on such Borrower,
Guarantor or Subject Subsidiary.
(e) "Hazardous Materials" shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
8.9 Employee Benefits.
(a) No Borrower or Guarantor has engaged in any transaction in
connection with which any Borrower or Guarantor or any of its ERISA Affiliates
could be subject to either a civil penalty assessed pursuant to ERISA or a tax
imposed by the Code, including any accumulated funding deficiency described in
Section 8.9(c) hereof and any deficiency with respect to vested accrued benefits
described in Section 8.9(d) hereof.
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(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by any Borrower or Guarantor to be incurred with respect to
any employee benefit plan of any Borrower or Guarantor or any of its ERISA
Affiliates. There has been no reportable event (within the meaning of ERISA) or
any other event or condition with respect to any employee benefit plan of any
Borrower or Guarantor or any of its ERISA Affiliates which presents a risk of
termination of any such plan by the Pension Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which any Borrower or
Guarantor or any of its ERISA Affiliates is required under ERISA and the Code to
have paid under the terms of each employee benefit plan as contributions to such
plan as of the last day of the most recent fiscal year of such plan ended prior
to the date hereof, and no accumulated funding deficiency (as defined in ERISA
and the Code), whether or not waived, exists with respect to any employee
pension benefit plan, including any penalty or tax described in Section 8.9(a)
hereof and any deficiency with respect to vested accrued benefits described in
Section 8.9(d) hereof.
(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by any Borrower or Guarantor that are
subject to Title IV of ERISA does not exceed the current value of the assets of
such plans allocable to such vested accrued benefits, including any penalty or
tax described in Section 8.9(a) hereof and any accumulated funding deficiency
described in Section 8.9(d) hereof. The terms "current value" and "accrued
benefit" have the meanings specified in ERISA.
(e) No Borrower, Guarantor or any of its ERISA Affiliates is or has
ever been obligated to contribute to any "multiemployer plan" (as such term is
defined in ERISA) that is subject to Title IV of ERISA.
(f) As to any Canadian Pension Plan of a Borrower or Guarantor: (i)
the Canadian Pension Plans are duly registered under all applicable provincial
pension benefits legislation; (ii) all obligations of such Borrower or Guarantor
(including fiduciary, funding, investment and administration obligations)
required to be performed in connection with the Canadian Pension Plans or the
funding agreements therefor have been performed in a timely fashion, and there
are no outstanding disputes concerning the assets held pursuant to any such
funding agreement; (iii) all contributions or premiums required to be made by
such Borrower or Guarantor to the Canadian Pension Plans have been made in a
timely fashion in accordance with the terms of the Canadian Pension Plans and
applicable laws and regulations; (iv) all employee contributions to the Canadian
Pension Plans required to be made by way of authorized payroll deduction have
been properly withheld by the applicable Borrower and fully paid into the
Canadian Pension Plans in a timely fashion; (v) all reports and disclosures
relating to the Canadian Pension Plans required by any applicable laws or
regulations have been filed or distributed in a timely fashion; (vi) there have
been no improper withdrawals, or applications of, the assets of any of the
Canadian Pension Plans; (vii) No amount is owing by any of the Canadian Pension
Plans under the Income Tax Act (Canada) or any provincial taxation statute;
(viii) the Canadian Pension Plans are fully funded both on an ongoing basis and
on a solvency basis (using actuarial assumptions and methods which are
consistent with the valuations last filed with the applicable governmental
authorities and which are consistent with generally accepted actuarial
principles); and (ix) no Borrower or Guarantor, after diligent inquiry, has any
knowledge, or any grounds for believing, that any of the Canadian Pension Plans
is the subject of
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an investigation, any other proceeding, an action or a claim, and there exists
no state of facts which after notice or lapse of time or both could reasonably
be expected to give rise to any such proceeding, action or claim. "Canadian
Pension Plans" shall mean any plan, program or arrangement that is a pension
plan for the purposes of any applicable pension benefits legislation or any tax
laws of Canada or a Province thereof, whether or not registered under any such
laws, which is sponsored, maintained or contributed to by, or to which there is
or may be an obligation to contribute by, any Borrower or any Obligor in respect
of any Person's employment in Canada with such Borrower or Obligor.
8.10 Bank Accounts. All of the deposit accounts, investment accounts or
other accounts in the name of or used by any Borrower or Guarantor maintained at
any bank or other financial institution are set forth on Schedule 8.10 hereto,
subject to the right of each Borrower and Guarantor to establish new accounts in
accordance with Section 9.17 below.
8.11 Intellectual Property. Each of Borrowers and Guarantor owns or
licenses or otherwise has the right to use all Intellectual Property necessary
for the operation of its business as presently conducted or proposed to be
conducted. As of the date hereof, each of Borrowers and Guarantor does not have
any Intellectual Property registered, or subject to pending applications, in the
United States Patent and Trademark Office, the Canadian Intellectual Property
Office or any similar office or agency in the United States, Canada, any State
or Province thereof, any political subdivision thereof or in any other country,
other than those described in Schedule 8.11 hereto and has not granted any
licenses with respect thereto other than as set forth in Schedule 8.11 hereto.
No event has occurred which permits or would permit after notice or passage of
time or both, the revocation, suspension or termination of such rights. To the
best of the knowledge of each Borrower and Guarantor, no slogan or other
advertising device, product, process, method, substance or other Intellectual
Property or goods bearing or using any Intellectual Property presently
contemplated to be sold by or employed by any Borrower infringes any patent,
trademark, servicemark, tradename, copyright, license or other Intellectual
Property owned by any other Person presently and no claim or litigation is
pending or threatened against or affecting any Borrower or Guarantor contesting
its right to sell or use any such Intellectual Property. Schedule 8.11 sets
forth all of the trademarks, logos, designs, representations or other
Intellectual Property owned by another person that any Borrower or Guarantor has
the right to use under a license or similar arrangement, the name of the
licensor in each case and the dates of expiration of such agreements or other
arrangements. No trademark, servicemark or other Intellectual Property at any
time used by any Borrower or Guarantor which is owned by another person, or
owned by any Borrower subject to any security interest, lien, collateral
assignment, pledge or other encumbrance in favor of any person other than
Lender, is affixed to any Eligible Inventory, except to the extent permitted
under the term of the license agreements listed on Schedule 8.11 hereto. In the
event any Borrower obtains or applies for any material intellectual property
rights or obtains any material licenses with respect thereto, such Borrower
shall immediately notify Administrative Agent thereof and shall provide to
Administrative Agent copies of all written materials including, but not limited
to, applications and licenses with respect to such intellectual property rights.
At Administrative Agent's request, such Borrower shall promptly execute and
deliver to Administrative Agent an intellectual property security agreement
granting to Administrative Agent a perfected security interest in such
intellectual property rights in form and substance reasonably satisfactory to
Administrative Agent.
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8.12 Financial Statements.
(a) None of the financial statements, reports and other information
furnished or to be furnished by any Borrower or Guarantor to Administrative
Agent or any Lender with respect to Borrower Agent and its Subsidiaries contain,
as of their respective dates, any untrue statement of material fact or omit to
state any material fact necessary to make the information therein not
misleading. Such financial statements and reports were and will be prepared in
accordance with GAAP consistently applied (other than those unaudited financial
statements and reports provided to Administrative Agent prior to the date
hereof), and shall fairly present the consolidated and consolidating financial
condition and results of operations of the applicable Persons, as of the dates
and for the periods indicated thereon.
(b) The pro forma balance sheets and future cash flow projections
for Borrower Agent and its Subsidiaries on a consolidated basis (together with
the summaries of assumptions and projected assumptions, based on historical
performance with respect thereto) furnished by any Borrower or Guarantor to
Administrative Agent or any Lender prior to the date of this Agreement represent
the reasonable, good faith opinion of Borrowers, Guarantor and their management
as to the subject matter thereof and the pro forma balance sheets furnished by
any Borrower or Guarantor to Administrative Agent or any Lender were prepared in
accordance with applicable guidelines of the American Institute of Certified
Public Accountants.
8.13 Disclosure.
(a) The information contained in the representations and warranties
of each Borrower and Guarantor set forth in this Agreement, the other Financing
Agreements, or in any other instrument, document, list, certificate, statement,
schedule or exhibit heretofore delivered or to be delivered to Administrative
Agent or any Lender, as contemplated in this Agreement or in the other Financing
Agreements, does not contain and will not contain any untrue statement of a
material fact and does not omit and will not omit to state a material fact
necessary in order to make the information contained herein or therein not
misleading.
(b) After giving effect to the transactions contemplated by this
Agreement, the other Financing Agreements, and the other instruments or
documents delivered in connection herewith and therewith, there does not exist
and there has not occurred any act, condition or event which constitutes an
Event of Default or which, with notice or passage of time or both would
constitute an Event of Default.
8.14 Governmental Authority. No consent, approval or other action of, or
filing with, or notice to any Governmental Authority is required in connection
with the execution, delivery and performance of this Agreement, the other
Financing Agreements or any of the instruments or documents to be delivered
pursuant hereto or thereto, except for those consents or approvals already
obtained by Borrowers and Guarantor which are in full force and effect as of the
date hereof and the filing of UCC and PPSA financing statements.
8.15 Capitalization.
(a) All of the issued and outstanding shares of Capital Stock of
Borrowers (other than the Borrower Agent), Guarantor and the Subject
Subsidiaries are as set forth in
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Schedule 8.15 hereto and all of such shares have been duly authorized and are
fully paid and non-assessable, free and clear of all claims, liens, pledges and
encumbrances of any kind, except in favor of Administrative Agent, for itself
and the ratable benefit of Lenders, and as permitted hereunder.
(b) The Borrowers and Guarantor on a consolidated basis are solvent
and will continue to be solvent after the creation of the Obligations, the
security interests of Administrative Agent, for itself and the ratable benefit
of Lenders, and the other transactions contemplated hereunder, are able to pay
their debts as they mature and have (and have reason to believe they will
continue to have) sufficient capital (and not unreasonably small capital) to
carry on their business and all businesses in which they are about to engage.
The assets and properties of each of Borrowers and Guarantor on a consolidated
basis at a fair valuation and at their present fair salable value are, and will
be, greater than the Indebtedness and other liabilities of such Borrower or
Guarantor (as applicable), and including subordinated and contingent liabilities
computed at the amount which, to the best of the knowledge of each Borrower and
Guarantor, represents an amount which can reasonably be expected to become an
actual or matured liability.
8.16 Labor Disputes.
(a) Set forth on Schedule 8.16 hereto is a list (including dates of
termination) of all collective bargaining or similar agreements between or
applicable to any Borrower or Guarantor and any union, labor organization or
other bargaining agent in respect of the employees of any Borrower or Guarantor
on the date hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against any Borrower or Guarantor or, to the best of the knowledge of
any Borrower or Guarantor, threatened against it, before the National Labor
Relations Board or similar entity in any jurisdiction, and no significant
grievance or significant arbitration proceeding arising out of or under any
collective bargaining agreement is pending on the date hereof against any
Borrower or Guarantor or, to best of the knowledge of any Borrower or Guarantor,
threatened against it, and (ii) no significant strike, labor dispute, slowdown
or stoppage is pending against any Borrower or Guarantor or, to the best of the
knowledge of any Borrower or Guarantor, threatened against any Borrower or
Guarantor.
8.17 Corporate Name; Prior Transactions. Each of Borrowers and Guarantor
has not, during the past five (5) years, been known by or used any other
corporate or fictitious name or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property or assets out of the ordinary course of business, except as set
forth on Schedule 8.17 hereto.
8.18 Restrictions on Subsidiaries. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of the Subject Subsidiaries which prohibit or otherwise restrict (a) the
transfer of cash or other assets (i) between any Borrower or Guarantor and any
of the Subject Subsidiaries or (ii) between any of the Subject Subsidiaries or
(b) the ability of any
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Borrower or Guarantor or any of the Subject Subsidiaries to incur Indebtedness
or grant security interests to Administrative Agent or any Lender in the
Collateral.
8.19 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Administrative Agent and Lenders on the date of each
additional borrowing or other credit accommodation hereunder and shall be
conclusively presumed to have been relied on by Administrative Agent and Lenders
regardless of any investigation made or information possessed by Administrative
Agent and Lenders. The representations and warranties set forth herein shall be
cumulative and in addition to any other representations or warranties which any
Borrower or Guarantor shall now or hereafter give, or cause to be given, to
Administrative Agent and Lenders.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Each of Borrowers and Guarantor shall, and
shall cause any Subject Subsidiary to, at all times preserve, renew and keep in
full force and effect its corporate or company existence and rights and
franchises with respect thereto and maintain in full force and effect all
licenses, trademarks, tradenames, approvals, authorizations, leases, contracts
and Permits necessary to carry on the business as presently or proposed to be
conducted, where the failure to preserve, renew, or keep in full force and
effect any of the foregoing would have a Material Adverse Effect on such
Borrower, Guarantor or Subject Subsidiary. Each of Borrowers and Guarantor
shall, and shall cause any Subject Subsidiary to, give Administrative Agent
thirty (30) days prior written notice of any proposed change in its corporate or
company name, which notice shall set forth the new name and each of Borrowers
and Guarantor shall deliver to Administrative Agent a copy of the amendment to
the Certificate of Incorporation or Articles of Organization of such Borrower,
Guarantor or such Subject Subsidiary providing for the name change certified by
the Secretary of State or province of the jurisdiction of formation of such
Borrower, Guarantor or such Subject Subsidiary as soon as it is available.
9.2 New Collateral Locations. Each of Borrowers and Guarantor may open any
new location within the continental United States or Canada provided such
Borrower or Guarantor (a) gives Administrative Agent twenty (20) days prior
written notice of the intended opening of any such new location and (b) executes
and delivers, or causes to be executed and delivered, to Administrative Agent
such agreements, documents, and instruments as Administrative Agent may deem
reasonably necessary or desirable to protect the interest of Administrative
Agent, for itself and the ratable benefit of Lenders, in the Collateral at such
location, including UCC or PPSA financing statements with respect to the
Collateral.
9.3 Compliance with Laws, Regulations, Etc.
(a) Each of Borrowers and Guarantor shall, and shall cause any
Subject Subsidiary to, at all times, to comply in all respects with all laws,
rules, regulations, licenses, approvals, orders and Permits applicable to it and
duly observe all requirements of any Federal, State, province or local
Governmental Authority, including the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA, the
Code
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and all statutes, rules, regulations, orders, permits and stipulations relating
to environmental pollution and employee health and safety, including all of the
Environmental Laws in each case where the failure to so comply has or would have
a Material Adverse Effect on such Borrower, Guarantor or Subject Subsidiary.
(b) Each of Borrowers and Guarantor shall establish and maintain,
and shall cause the Subject Subsidiaries to establish and maintain, at its
expense, a system to assure and monitor its continued compliance with all
applicable Environmental Laws in all of its operations. Upon the request of
Administrative Agent, copies of any environmental surveys, audits, assessments,
feasibility studies and results of remedial investigations shall be promptly
furnished, or caused to be furnished, by Borrowers and Guarantor to
Administrative Agent. Borrowers and Guarantor shall take prompt and appropriate
action to respond to any material non-compliance with any of the Environmental
Laws and shall regularly report to Administrative Agent on such response.
(c) Each of Borrowers and Guarantor shall give written notice to
Administrative Agent promptly after the receipt by any Borrower or Guarantor of
any notice of, or any Borrower's or Guarantor's otherwise obtaining knowledge
of, (i) the occurrence of any event involving the release, spill or discharge,
threatened or actual, of any Hazardous Material in violation of any
Environmental Law on any property used by Borrowers or Guarantor or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by any Borrower or Guarantor in any material respect or (B)
the release, spill or discharge, threatened or actual, of any Hazardous Material
on any property used by Borrowers or Guarantor or (C) any other environmental,
health or safety matter, which materially adversely effects any Borrower,
Guarantor or its business, operations or assets or any properties at which any
Borrower or Guarantor transported, stored or disposed of any Hazardous
Materials.
(d) Without limiting the generality of the foregoing, whenever
Administrative Agent reasonably determines that there is any non-compliance, or
any condition which requires any action by or on behalf of any Borrower or
Guarantor in order to avoid any non-compliance with any Environmental Law,
Borrowers and Guarantor shall, at Administrative Agent's reasonable request and
Borrowers' expense: (i) cause an independent environmental engineer reasonably
acceptable to Administrative Agent to conduct such tests of the site where such
Borrower's or Guarantor's non-compliance or alleged non-compliance with such
Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Administrative Agent a report as to such non-compliance setting forth
the results of such tests, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof and (ii)
provide to Administrative Agent a supplemental report of such engineer whenever
the scope of such non-compliance, or such Borrower's or Guarantor's response
thereto or the estimated costs thereof, shall change in any material respect.
(e) Each of Borrowers and Guarantor shall indemnify and hold
harmless Administrative Agent, Lenders, their directors, officers, employees,
agents, invitees, representatives, successors and assigns ("Indemnified
Parties"), from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including reasonable attorneys' fees and legal expenses)
arising out of or attributable to the use, generation, manufacture,
reproduction, storage, release, threatened release, spill, discharge, disposal
or presence of a Hazardous Material
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on any of the Real Property, including the costs of any repair, cleanup or other
remedial work required under any Environmental Law or by any governmental
authority with respect to such property of such Borrower or Guarantor and the
preparation and implementation of any closure, remedial or other required plans
except for such losses, claims, damages, liabilities, costs or expenses as a
result of the gross negligence or willful misconduct of such Indemnified Parties
as determined pursuant to a final non-appealable order of a court of competent
jurisdiction. All representations, warranties, covenants and indemnifications in
this Section 9.3 shall survive the payment of the Obligations and the
termination of this Agreement.
9.4 Payment of Taxes and Claims. Each of Borrowers and Guarantor shall,
and shall cause any Subject Subsidiary to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
such Borrower, Guarantor or such Subject Subsidiary, as the case may be, and
with respect to which adequate reserves have been set aside on its books. Each
of Borrowers and Guarantor shall be liable for any tax or penalties imposed on
Administrative Agent or any Lender as a result of the financing arrangements
provided for herein (other than taxes with respect to Administrative Agent's or
Lender's income) and each of Borrowers and Guarantor agrees to indemnify and
hold Administrative Agent and Lenders harmless with respect to the foregoing,
and to repay to Administrative Agent and Lenders on demand the amount thereof,
and until paid by Borrowers or Guarantor such amount shall be added and deemed
part of the Loans. The foregoing indemnity shall survive the payment of the
Obligations and the termination of this Agreement.
9.5 Insurance. Each Borrower and Guarantor shall, and shall cause any
Subject Subsidiary to, at all times, maintain with financially sound and
reputable insurers insurance with respect to the Collateral against loss or
damage and all other insurance of the kinds and in the amounts customarily
insured against or carried by corporations of established reputation engaged in
the same or similar businesses and similarly situated. Such policies of
insurance shall be reasonably satisfactory to Administrative Agent as to form,
amount and insurer. If such policies are cancelled or expire, Borrowers and
Guarantor may obtain new policies from different insurance companies so long as
such policies and insurance company are comparable to the insurance policies and
insurance company existing on the date hereof regarding form, amount and
insurer. Borrowers shall furnish certificates, policies or endorsements to
Administrative Agent as Administrative Agent shall reasonably require as proof
of such insurance, and, if any Borrower fails to do so, Administrative Agent is
authorized, but not required, to obtain such insurance at the expense of
Borrowers. All policies shall provide for at least thirty (30) days prior
written notice to Administrative Agent of any cancellation or reduction of
coverage and that Administrative Agent may act as attorney for each Borrower,
Guarantor or such Subject Subsidiary in obtaining, and at any time an Event of
Default exists or has occurred and is continuing, adjusting, settling, amending
and canceling such insurance as Administrative Agent may determine in its
commercially reasonable judgment. Borrowers and Guarantor shall cause
Administrative Agent to be named as a loss payee and an additional insured (but
without any liability for any premiums) under such insurance policies and
Borrowers and Guarantor shall obtain non-contributory lender's loss payable
endorsements to all insurance policies in form and substance reasonably
satisfactory to Administrative Agent. Such lender's loss payable endorsements
shall specify that the proceeds of such insurance shall be payable to
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Administrative Agent, for the benefit of Lenders, as its interests may appear
and further specify that Administrative Agent shall be paid regardless of any
act or omission by any Borrower, Guarantor or any of its Affiliates.
Administrative Agent shall, at its option, apply any insurance proceeds received
by Administrative Agent at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any
order and in such manner as Administrative Agent may determine or hold such
proceeds as cash collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Each of Borrowers and Guarantor shall, and shall cause its
Subsidiaries to, keep proper books and records in which true and complete
entries shall be made of all dealings or transactions of or in relation to the
Collateral and the businesses of Borrowers, Guarantor and their Subsidiaries (if
any) in accordance with GAAP and Borrowers and Guarantor shall furnish or cause
to be furnished to Administrative Agent: (i) within thirty-five (35) days after
the end of each fiscal month, monthly unaudited consolidated and consolidating
financial statements of Borrower Agent and its Subsidiaries (including in each
case balance sheets, statements of income and loss, and statements of
depreciation and amortization, capital expenditures and debt reduction), all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Borrower Agent and its Subsidiaries as of the end of and
through such fiscal month, certified to be correct by the chief financial
officer of Borrower Agent, subject to normal year-end adjustments, and
accompanied by a compliance certificate substantially in the form of Exhibit B
hereto, along with a schedule in form reasonably satisfactory to Administrative
Agent of the calculations used in determining, as of the end of such month,
whether Borrowers were in compliance with the covenants set forth in Sections
9.13 of this Agreement for such month, (ii) within forty-five (45) days after
the end of each fiscal quarter, quarterly unaudited consolidated financial
statements of Borrower Agent and its Subsidiaries (including balance sheet,
statement of income and loss and statement of cash flow), all in reasonable
detail, fairly presenting the financial position and the results of operations
of Borrower Agent and its Subsidiaries as of the end of and through such fiscal
quarter and (iii) within ninety (90) days after the end of each fiscal year,
audited consolidated financial statements of Borrower Agent and its Subsidiaries
(including balance sheet, statement of income and loss, statement of cash flow
and statements of shareholders' equity), and the accompanying notes thereto, all
in reasonable detail, fairly presenting the financial position and the results
of the operations of Borrower Agent and its Subsidiaries as of the end of and
for such fiscal year, together with the unqualified opinion of independent
certified public accountants, which accountants shall be an independent
accounting firm selected by Borrower Agent and reasonably acceptable to
Administrative Agent, that such audited financial statements have been prepared
in accordance with GAAP, and present fairly the results of operations and
financial condition of Borrower Agent and its Subsidiaries as of the end of and
for the fiscal year then ended.
(b) Borrowers and Guarantor shall promptly notify Administrative
Agent in writing of the details of (i) any loss, damage, investigation, action,
suit, proceeding or claim relating to the Collateral having a value of
$1,000,000 in any one case or $5,000,000 in the aggregate, or which would have a
Material Adverse Effect on any Borrower or Guarantor, and (ii) the occurrence of
any Event of Default or act, condition or event which, with the passage of time
or giving of notice or both, would constitute an Event of Default.
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(c) Borrowers and Guarantor shall promptly after the sending or
filing thereof furnish or cause to be furnished to Administrative Agent copies
of all reports which any Borrower or Guarantor sends to its stockholders
generally and copies of all reports and registration statements which any
Borrower or Guarantor files with the Securities and Exchange Commission, any
national securities exchange, the National Association of Securities Dealers,
Inc. or any provincial securities commission or securities exchange.
(d) Borrowers and Guarantor shall furnish or cause to be furnished
to Administrative Agent such budgets, forecasts, projections and other
information respecting the Collateral and the business of Borrowers and
Guarantor on a combined basis and of Borrower Agent and its Subsidiaries on a
consolidated basis, as Administrative Agent may, from time to time, reasonably
request. Administrative Agent and Lenders are hereby authorized to deliver a
copy of any financial statement or any other information relating to the
business of any Borrower or Guarantor to any court or other Governmental
Authority requiring a copy or to any Participant or assignee or prospective
Participant or assignee. Each Borrower and Guarantor hereby irrevocably
authorize and direct all accountants or auditors to deliver to Administrative
Agent, at Borrowers' expense, copies of the financial statements of Borrowers
and Guarantor and any reports or management letters prepared by such accountants
or auditors on behalf of any Borrower or Guarantor and to disclose to
Administrative Agent such information as they may have regarding the business of
any Borrower or Guarantor. Any documents, schedules, invoices or other papers
delivered to Administrative Agent may be destroyed or otherwise disposed of by
Administrative Agent one (1) year after the same are delivered to Administrative
Agent, except as otherwise designated by Borrowers to Administrative Agent in
writing.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each of
Borrowers and Guarantor shall not, and shall not permit any Subject Subsidiary
to, directly or indirectly:
(a) merge into or with, amalgamate with or consolidate with any
other Person or permit any other Person to merge into or with or consolidate
with it, or
(b) sell, assign, lease, transfer, abandon or otherwise dispose of
any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person, except for:
(i) sales of Inventory in the ordinary course of business;
(ii) the disposition of worn-out or obsolete Equipment so
long as (A) such sales do not involve Equipment having an aggregate fair market
value in excess of $1,000,000 for all such Equipment disposed of in any fiscal
year and (B) all proceeds are paid to Administrative Agent for application to
the Obligations in such order and manner as Administrative Agent may determine;
(iii) sales by any Borrower of assets after the date hereof to
the extent consented to in writing by Administrative Agent and Required Lenders
which consent will not be unreasonably withheld;
(iv) the issuance and sale by Borrower Agent of Common Stock
in an arm's length transaction or upon the exercise of a stock option issued
under an incentive stock option plan or similar employee benefit plan, or the
issuance and sale by Borrower Agent of its
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Capital Stock having dividend rights, liquidation preferences or other rights,
privileges and preferences superior to the common stock, or by any Borrower or
Guarantor of any of its Capital Stock after the date hereof; provided that (A)
Administrative Agent shall have received not less than three (3) Business Days
prior written notice of such issuance and sale, which notice shall specify the
party selling such Capital Stock, the parties to whom such shares are to be
sold, the terms of such sale, the total amount which it is anticipated will be
realized from the issuance and sale of such stock and the net cash proceeds
which it is anticipated will be received by such Borrower or Guarantor from such
sale, (B) such Borrower or Guarantor shall not be required to pay any cash
dividends or repurchase or redeem such Capital Stock or make any other payments
in respect thereof, except that such Borrower or Guarantor may pay cash
dividends in respect of such Capital Stock on terms and conditions and in
amounts acceptable to Administrative Agent so long as Administrative Agent shall
have received, in form and substance satisfactory to Administrative Agent, an
agreement in writing from the holders of such shares of Capital Stock with
respect to the rights to payment and other rights of the holder of such shares,
(C) the terms of such Capital Stock, and the terms and conditions of the
purchase and sale thereof, shall not include any terms that include any
limitation on the right of any Borrower or Guarantor to request or receive Loans
or Letter of Credit Accommodations or the right of any Borrower or Guarantor to
amend or modify any of the terms and conditions of this Agreement or any of the
other Financing Agreements or otherwise in any way relate to or affect the
arrangements of any Borrower or Guarantor with Administrative Agent and Lenders
or are more restrictive or burdensome to any Borrower or Guarantor than the
terms of any Capital Stock of such Borrower or Guarantor in effect on the date
hereof, (D) the purchaser of any such Capital Stock is not an Affiliate of such
Borrower or Guarantor, and the sale is made in an arm's length transaction, and
(E) as of the date of such issuance and sale and after giving effect thereto, no
Event of Default or act, condition or event which with notice or passage of time
or both would constitute an Event of Default shall exist or have occurred; or
(c) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing.
9.8 Encumbrances. Each of Borrowers and Guarantor shall not, and shall not
permit any Subject Subsidiary to, create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, charge or other encumbrance of any
nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except:
(a) liens and security interests of Administrative Agent for itself
and the ratable benefit of Lenders;
(b) liens and security interests of the RSA on the Collateral to
secure the Indebtedness of Borrowers and Guarantor to the RSA permitted under
Section 9.9 hereof, which liens and security interests are, in all respects,
subject and subordinate in priority to the liens and security interests of
Administrative Agent;
(c) liens securing the payment of taxes, either not yet overdue or
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and
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available to such Borrower, Guarantor or such Subject Subsidiary, as the case
may be, and with respect to which adequate reserves have been set aside on its
books;
(d) non-consensual statutory liens (other than liens securing the
payment of taxes) arising in the ordinary course of the business of such
Borrower, Guarantor or such Subject Subsidiary, as the case may be, to the
extent: (i) such liens secure Indebtedness which is not overdue or (ii) such
liens secure Indebtedness relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at the sole risk of
the insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to such Borrower, Guarantor or such Subject
Subsidiary, as the case may be, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(e) liens arising from (i) operating leases and the precautionary
UCC or PPSA financing statement filings in respect thereof and (ii) equipment or
other materials which are not owned by a Borrower located on the premises of
such Borrower (but not in connection with, or as part of, the financing thereof)
from time to time in the ordinary course of business and consistent with current
practices of Borrowers and the precautionary UCC or PPSA financing statement
filings in respect thereof;
(f) zoning restrictions, easements, licenses, covenants and other
restrictions affecting the use of Real Property which do not interfere in any
material respect with the use of such Real Property or ordinary conduct of the
business of any Borrower, Guarantor or any Subject Subsidiary, as the case may
be, as presently conducted thereon or materially impair the value of the Real
Property which may be subject thereto;
(g) purchase money security interests in Equipment (including
capital leases) and purchase money mortgages on Real Property arising after the
date hereof to secure Indebtedness of any Borrower permitted under Section 9.9
hereof so long as such security interests and mortgages do not apply to any
property of such Borrower other than the Equipment or Real Property so acquired,
and the Indebtedness secured thereby does not exceed the cost of the Equipment
or Real Property so acquired, as the case may be;
(h) deposits of cash with the owner or lessor of premises leased and
operated by any Borrower in the ordinary course of the business of such Borrower
to secure the performance by such Borrower of its obligations under the terms of
the lease for such premises;
(i) the liens and security interests set forth on Schedule 8.4
hereto.
9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not
permit any Subject Subsidiary to, incur, create, assume, become or be liable in
any manner with respect to, or permit to exist, any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness arising in the ordinary course of the business of
such Borrower, Guarantor or Subject Subsidiary in connection with worker's
compensation, unemployment
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insurance or other types of social security benefits in each case consistent
with the current practices of such Borrower, Guarantor or Subject Subsidiary as
of the date hereof;
(c) Indebtedness of Borrowers and Guarantor to the RSA and its
Affiliates, provided that:
(i) after the payment required under Section 4.1, such
Indebtedness, whether now existing or hereafter incurred, shall not exceed (1)
$250,000,000, less the aggregate amount of all repayments, repurchases or
redemptions thereof, whether optional or mandatory, plus interest, or (2) at any
time, an amount outstanding that exceeds the sum of the Accounts of Borrowers
and their Affiliates on a consolidated basis, plus the Value of Inventory of
Borrowers and their Affiliates on a consolidated basis, minus the Obligations
hereunder, minus the obligations under any other working capital credit facility
of Borrowers and their Affiliates;
(ii) the terms and conditions of any such Indebtedness issued
after the date hereof that is not subject to the RSA Securities Purchase
Agreement and evidenced by the RSA Note shall be substantially similar to the
terms and conditions set forth in the RSA Note and the RSA Securities Purchase
Agreement;
(iii) such Indebtedness is, in all respects, subject to, and
subordinate in right of payment to, the right of Administrative Agent and
Lenders to receive the prior indefeasible payment and satisfaction in full of
all of the Obligations,
(iv) Borrowers and Guarantor shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness, except that Borrowers and Guarantor may make payments to the
extent expressly permitted in the Subordination Agreement among Borrowers,
Guarantor, Administrative Agent and the RSA, Borrowers and Guarantor may make
payments with the proceeds of sales of assets of Borrowers and Guarantor outside
the ordinary course of business to the extent Administrative Agent and Required
Lenders may so agree,
(v) Borrowers shall not, directly or indirectly, (A) amend,
modify, alter or change any of the material terms of such Indebtedness or the
RSA Note as in effect on the date hereof, except that Borrowers may, after prior
written notice to Administrative Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any payments
in respect thereof, or to forgive or cancel any portion of such Indebtedness
other than pursuant to payments thereof, or to reduce the interest rate or any
fees in connection therewith, or to release any liens or security interests in
any assets or properties of any Borrower or Guarantor, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and
(vi) Borrowers shall furnish to Administrative Agent all
material notices or demands in connection with such Indebtedness either received
by any Borrower, Guarantor or Subsidiary or on its behalf promptly after the
receipt thereof, or sent by any Borrower, Guarantor or Subsidiary or on its
behalf concurrently with the sending thereof, as the case may be;
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(d) Hedging Obligations of a Borrower, Guarantor or Subject
Subsidiary consisting of interest rate protection obligations entered into by a
Borrower, Guarantor or Subject Subsidiary in the ordinary course of the business
of a Borrower, Guarantor or Subject Subsidiary consistent with their current
practices as of the date hereof;
(e) unsecured Indebtedness of any Borrower, Guarantor or Subject
Subsidiary arising pursuant to loans by any Borrower, Guarantor or Subject
Subsidiary to any other Borrower, Guarantor or Subject Subsidiary to the extent
permitted under Section 9.10 hereof;
(f) Indebtedness of any Borrower, Guarantor or Subject Subsidiary
arising after the date hereof owing to any Person (other than any other
Borrower, Guarantor or Subject Subsidiary) to pay the purchase price and related
costs in connection with the acquisition by such Borrower, Guarantor or Subject
Subsidiary of Equipment or any Real Property; provided that as to any such
Indebtedness, each of the following conditions is satisfied as determined in
good faith by Administrative Agent: (i) Administrative Agent shall have received
not less than ten (10) Business Days prior written notice of the intention to
incur such Indebtedness, which notice shall set forth in reasonable detail
satisfactory to Administrative Agent, the amount of such Indebtedness, the
person to whom such Indebtedness will be owed, the interest rate and fees, the
schedule of repayments and maturity date with respect thereto and such other
information with respect thereto as Administrative Agent may reasonably request,
(ii) Administrative Agent shall have received true, correct and complete copies
of all agreements, documents and instruments evidencing or otherwise related to
such Indebtedness, as duly authorized, executed and delivered by the parties
thereof, (iii) Administrative Agent shall have received a mortgagee waiver with
respect to any such Real Estate in form and substance satisfactory to
Administrative Agent, (iv) such Indebtedness shall be incurred by such Borrower,
Guarantor or Subject Subsidiary at commercially reasonable rates and terms in a
bona fide arm's length transaction, (v) such Indebtedness shall not be owed to
any shareholder, officer, director, agent, employee or other Affiliate of any
Borrower, Guarantor or Subject Subsidiary, (vi) as of the date of incurring such
Indebtedness, and after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or both would constitute
an Event of Default, shall exist or have occurred, (vii) the aggregate original
principal amount of all such Indebtedness shall not exceed $10,000,000, (viii)
such Borrower, Guarantor or Subject Subsidiary may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness, (ix) such
Borrower, Guarantor or Subject Subsidiary shall not, directly or indirectly, (A)
amend, modify, alter or change in any material respect the terms of the
agreements with respect to such Indebtedness, except that such Borrower,
Guarantor or Subject Subsidiary may, after prior written notice to
Administrative Agent, amend, modify, alter or change the terms thereof so as to
extend the maturity thereof or defer the timing of any payments in respect
thereof, or to forgive or cancel any portion of such Indebtedness (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or (B) redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, and (x) Borrowers shall furnish to Administrative Agent all
notices or demands in connection with such Indebtedness either received by any
Borrower, Guarantor or Subject Subsidiary or on its behalf promptly after the
receipt thereof, or sent by any Borrower, Guarantor or Subject Subsidiary or on
its behalf, concurrently with the sending thereof, as the case may be; provided
that Borrowers shall not be required to comply with clauses (i), (ii), (ix) and
(x) with
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respect to any transactions that individually involve less than $500,000 unless
the aggregate of all such transactions that are not reported exceeds $4,000,000;
(g) Indebtedness existing as of the date hereof set forth on
Schedule 9.9 hereto, provided that (i) the Borrower, Guarantor or Subject
Subsidiary obligated in respect of such Indebtedness may only make regularly
scheduled payments or mandatory prepayments of principal and interest in respect
of such Indebtedness in accordance with the terms of the agreement or instrument
evidencing or giving rise to such Indebtedness as in effect on the date hereof,
(ii) such Borrower, Guarantor, or Subject Subsidiary shall not, directly or
indirectly, amend, modify, alter or change in any material respect the terms of
the agreements, documents and instruments entered into in connection therewith,
except that such Borrower, Guarantor, or Subject Subsidiary may, after prior
written notice to Administrative Agent, amend, modify, alter or change the terms
thereof so as to extend the maturity thereof or defer the timing of any payments
in respect thereof, or to forgive or cancel any portion of such Indebtedness
(other than pursuant to payments thereof), or to reduce the interest rate or any
fees in connection therewith, (iii) such Borrower, Guarantor, or Subject
Subsidiary shall not, directly or indirectly redeem, retire, defease, purchase
or otherwise acquire such Indebtedness, or set aside or otherwise deposit or
invest any sums for such purpose and (iv) Borrowers shall furnish to
Administrative Agent all notices or demands in connection with such Indebtedness
either received by any Borrower, Guarantor, or Subject Subsidiary or on its
behalf, promptly after the receipt thereof, or sent by any Borrower, Guarantor,
or Subject Subsidiary or on its behalf, concurrently with the sending thereof,
as the case may be;
(h) Indebtedness of Tenex under a credit facility to be secured with
a standby letter of credit as contemplated in Section 2.2(d); and
(i) Other Indebtedness not exceeding $100,000,000 at any time.
9.10 Loans, Investments, Guarantees, Etc. Each Borrower and Guarantor
shall not, and shall not permit any Subject Subsidiary to, directly or
indirectly, make any loans or advance money or property to any Person, or invest
in (by capital contribution, dividend or otherwise) or purchase or repurchase
the Capital Stock or Indebtedness or all or a substantial part of the assets or
property of any Person, or guarantee, assume, endorse, or otherwise become
responsible for (directly or indirectly) the Indebtedness, performance,
obligations or dividends of any Person or hold any cash or Cash Equivalents, or
form or acquire any Subsidiaries, or agree to do any of the foregoing, except:
(a) guarantees by any Borrower or Guarantor of the Obligations in
favor of Administrative Agent and Lenders or of the RSA Note in favor of the
RSA;
(b) the endorsement of instruments for collection or deposit in the
ordinary course of business;
(c) investments in cash or Cash Equivalents so long as such
investments are pledged to Administrative Agent in a manner satisfactory to
Administrative Agent upon Administrative Agent's request;
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(d) the existing equity investments of each Borrower, Guarantor, or
Subject Subsidiary as of the date hereof in their respective Subsidiaries as of
the date hereof or additional equity investments made in compliance with Section
9.7(b)(iv);
(e) stock or obligations issued to a Borrower, Guarantor, or Subject
Subsidiary by any Person (or the representative of such Person) in respect of
Indebtedness of such Person owing to such Borrower, Guarantor, or Subject
Subsidiary in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided that the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Administrative Agent,
upon Administrative Agent's request, together with such stock power, assignment
or endorsement by such Borrower, Guarantor, or Subject Subsidiary as
Administrative Agent may request;
(f) obligations of account debtors to a Borrower or Guarantor,
arising from Accounts which are past due evidenced by a promissory note made by
such account debtor payable to such Borrower or Guarantor; provided that
promptly upon the receipt of the original of any such promissory note by such
Borrower or Guarantor, such promissory note shall be endorsed to the order of
Administrative Agent, for itself and the ratable benefit of Lenders, by such
Borrower or Guarantor and promptly delivered to Administrative Agent as so
endorsed;
(g) loans and advances by any Borrower, Guarantor or any Subject
Subsidiary to employees of such Borrower, Guarantor or Subject Subsidiary not to
exceed the principal amount of $1,000,000 in the aggregate at any time
outstanding for: (i) reasonably and necessary work-related travel or other
ordinary business expenses to be incurred by such employee in connection with
their work for such Borrower, Guarantor or Subject Subsidiary and (ii)
reasonable and necessary relocation expenses of such employees (including home
mortgage financing for relocated employees);
(h) acquisitions of Targets upon the terms and conditions set forth
in Section 2.3 hereof, whether or not an Acquisition Loan is obtained;
(i) loans by any Borrower (other than a Disqualified Borrower) or
Guarantor to any other Borrower (other than a Disqualified Borrower) or
Guarantor after the date hereof, provided that as to each such loan each of the
following conditions is satisfied: (1) each month Borrowers shall provide to
Administrative Agent a report in form and substance satisfactory to
Administrative Agent indicating the amount of such loans made in the immediately
preceding month and any repayments in connection therewith, (2) the Indebtedness
arising pursuant to such loan shall not be evidenced by a promissory note or
other instrument, unless the single original of such note or other instrument is
delivered to Administrative Agent to hold as part of the Collateral, with such
endorsement and/or assignment by the payee of such note or other instrument as
Administrative Agent may require, (3) as of the date of each such loan and after
giving effect thereto, no Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default
shall exist; and any loans by any Borrower (other than a Disqualified Borrower),
Guarantor or Subject Subsidiary to any Subject Subsidiary after the date hereof;
and (4) as of the date of such loan and after giving effect thereto, the
Borrower making such loan (as applicable) shall have Excess Availability of not
less than $10,000,000; provided that the aggregate principal amount outstanding
at any time of all such
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transactions that involve either loans, advances of money and advances of
property to Tenex or the transfer of Inventory to locations with respect to
which Administrative Agent does not have the benefit of an effective access
agreement and waiver of landlord's rights, in form and substance satisfactory to
Administrative Agent, may not exceed $20,000,000;
(j) the existing loans, advances and guarantees by any Borrower,
Guarantor or Subject Subsidiary outstanding as of the date hereof as set forth
on Schedule 9.10 hereto; provided that as to such loans, advances and
guarantees, (i) such Borrower, Guarantor or Subject Subsidiary shall not,
directly or indirectly, (A) amend, modify, alter or change the terms of such
loans, advances or guarantees or any agreement, document or instrument related
thereto, or (B) as to such guarantees, redeem, retire, defease, purchase or
otherwise acquire such guarantee or set aside or otherwise deposit or invest any
sums for such purpose and (ii) Borrowers shall furnish to Administrative Agent
all notices or demands in connection with such loans, advances or guarantees
either received by any Borrower, Guarantor or Subject Subsidiary or on its
behalf, promptly after the receipt thereof, or sent by any Borrower, Guarantor
or Subject Subsidiary or on its behalf, concurrently with the sending thereof,
as the case may be;
(k) guaranties by any Borrower, Guarantor or Subject Subsidiary in
favor of any supplier or other third party engaged in any transaction in the
ordinary course of business with any other Borrower, Guarantor or Subject
Subsidiary; and
(l) any Subsidiaries formed or acquired by Borrower Agent (or any
other Subsidiary of Borrower Agent which is not a Subject Subsidiary) which are
organized under the laws of any country or jurisdiction not located in North or
South America.
9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not,
directly or indirectly, declare or pay any dividends on account of any shares of
class of Capital Stock of such Borrower or Guarantor now or hereafter
outstanding, or set aside or otherwise deposit or invest any sums for such
purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of
any class of Capital Stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than common stock or apply or set
apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or agree to do any of the foregoing
except for (a) consideration consisting of common stock, (b) the payment of
dividends by any Subsidiary of a Borrower to the Borrower that is its parent
corporation and (c) dividends by Borrower Agent not to exceed in the aggregate
$2,000,000 during any fiscal quarter or $5,000,000 during any fiscal year, and
purchases by Borrower Agent of its treasury stock not to exceed in the aggregate
$2,000,000 during any fiscal quarter or $5,000,000 during any fiscal year,
provided that in each case the Excess Availability of all Borrowers would not be
less than $25,000,000 after giving effect to any such dividends or purchases,
and no Event of Default, or act, condition or event which with notice or passage
of time or both would constitute an Event of Default shall exist after giving
effect to any such dividend or purchase.
9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not,
and shall not permit any Subject Subsidiary to, directly or indirectly:
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(a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, employee, shareholder, director, agent or
any other Affiliate, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's, Guarantor's or Subject Subsidiary's
(as the case may be) business and upon fair and reasonable terms no less
favorable to such Borrower, Guarantor or Subject Subsidiary than it would obtain
in a comparable arm's length transaction with a person who is not an Affiliate;
or
(b) make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any officer,
employee, shareholder, director or any other Affiliate of any Borrower,
Guarantor or Subject Subsidiary except (i) reasonable compensation to officers,
employees and directors for services rendered to such Borrower, Guarantor or
Subject Subsidiary, as the case may be, in the ordinary course of business, (ii)
payments by a Borrower, Guarantor or Subject Subsidiary to any other Borrower,
Guarantor or Subject Subsidiary in respect of Indebtedness arising pursuant to
loans made by such Borrower, Guarantor or Subject Subsidiary to the extent
permitted under Section 9.10 hereof, and (iii) payments by a Borrower, Guarantor
or Subject Subsidiary to Borrower Agent for actual and necessary reasonable
out-of-pocket legal and accounting, insurance, marketing, payroll and similar
types of services paid for by Borrower Agent on behalf of the other Borrower,
Guarantor or Subject Subsidiary in the ordinary course of their respective
businesses or as the same may be directly attributable to the other Borrower,
Guarantor or Subject Subsidiary.
9.13 Financial Covenants. Borrower Agent shall at all times maintain
Consolidated Net Worth of not less than the sum of $107,500,000.
9.14 Changes in Business. Each Borrower, Guarantor and the Subject
Subsidiaries shall not engage in any business other than the businesses of such
Borrower, Guarantor or Subject Subsidiary on the date hereof and any businesses
reasonably related, ancillary or complimentary to the businesses in which such
Borrower, Guarantor or Subject Subsidiary are engaged on the date hereof (and
the business of any Target acquired in accordance with this Agreement).
9.15 Sale and Leasebacks. Each Borrower and Guarantor shall not, and shall
not permit any Subject Subsidiary to, enter into any arrangement, directly or
indirectly, with any Person whereby such Borrower, Guarantor or Subject
Subsidiary, as the case may be, 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 which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred (except to the extent of capital leases permitted under Section 9.9
hereof).
9.16 Pension Plans.
(a) Each Borrower and Guarantor shall not, and shall not permit any
Subject Subsidiary to, with respect to any "employee benefit plans" maintained
by any Borrower or Guarantor or any of its ERISA Affiliates: (i) terminate any
of such employee pension plans so as to incur any liability to the Pension
Benefit Guaranty Corporation established pursuant to ERISA, (ii) allow or suffer
to exist any prohibited transaction involving any of such employee benefit plans
or any trust created thereunder which would subject any Borrower, Guarantor or
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such ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under the Code or ERISA, (iii) fail to pay to any such
employee benefit plan any contribution which it is obligated to pay under ERISA,
the Code or the terms of such plan, (iv) allow or suffer to exist any
accumulated funding deficiency, whether or not waived, with respect to any such
employee benefit plan, (v) allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material risk
of termination by the Pension Benefit Guaranty Corporation of any such employee
benefit plan that is a single employer plan, which termination could result in
any liability to the Pension Benefit Guaranty Corporation or (vi) incur any
withdrawal liability with respect to any multiemployer pension plan.
(b) As used in this Section 9.16, the term "employee pension benefit
plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
the Code and ERISA.
(c) With respect to Canadian Pension Plans maintained by any
Borrower or Guarantor: (i) such Borrower or Guarantor shall administer the
Canadian Pension Plans in accordance with the requirements of the applicable
pension plan texts, funding agreements, the Income Tax Act (Canada) and
applicable provincial pension benefits legislation; (ii) such Borrower or
Guarantor shall deliver to Administrative Agent an undertaking of the funding
agent for each of the Canadian Pension Plans stating that the funding agent will
notify Administrative Agent within seven (7) days of such Borrower's failure to
make any required contribution to the applicable Canadian Pension Plan; (iii)
such Borrower or Guarantor shall not accept payment of any amount from any of
the Canadian Pension Plans without the prior written consent of Administrative
Agent; (iv) without the prior written consent of Administrative Agent, such
Borrower or Guarantor shall not terminate, or cause to be terminated, any of the
Canadian Pension Plans, if such plan would have a solvency deficiency on
termination; and (v) such Borrower or Guarantor shall promptly provide
Administrative Agent with any documentation relating to any of the Canadian
Pension Plans as Administrative Agent may reasonably request. Such Borrower or
Guarantor shall notify Administrative Agent within thirty (30) days of (i) a
material increase in the liabilities of any of the Canadian Pension Plans, (ii)
the establishment of a new registered pension plan, and (iii) commencing payment
of contributions to a Canadian Pension Plan to which such Borrower or Guarantor
had not previously been contributing.
9.17 Additional Bank Accounts. Each Borrower and Guarantor shall not,
directly or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other financial
institution, other than the Blocked Accounts and the accounts set forth in
Schedule 8.10 hereto, except: (a) as to any new or additional Blocked Accounts
and other such new or additional accounts which contain any Collateral or
proceeds thereof, with the prior written consent of Administrative Agent and
subject to such conditions thereto as Administrative Agent may establish and (b)
as to any accounts used by any Borrower to make payments of payroll, taxes or
other obligations to third parties, after prior written notice to Administrative
Agent.
9.18 End of Fiscal Years; Fiscal Quarters. Borrower Agent shall, for
financial reporting purposes, cause its, and each of its Subject Subsidiaries'
(a) fiscal years to end on
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December 31 of each year and (b) fiscal quarters to end on March 31, June 30,
September 30 and December 31 of each year.
9.19 Costs and Expenses. Each Borrower and Guarantor shall pay to
Administrative Agent all its costs, expenses, filing fees and taxes paid or
payable in connection with the preparation, negotiation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
the Obligations, the rights of Administrative Agent and Lenders in the
Collateral, this Agreement, the other Financing Agreements and all other
documents related hereto or thereto, including any amendments, supplements or
consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code and PPSA
financing statement filing taxes and fees, documentary taxes and intangibles
taxes, if applicable); (b) all insurance premiums, appraisal fees and search
fees; (c) costs and expenses of remitting loan proceeds, collecting checks and
other items of payment, and establishing and maintaining the Blocked Accounts,
together with Administrative Agent's customary charges and fees with respect
thereto; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and expenses of
preserving and protecting the Collateral; (f) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Administrative Agent, for the ratable benefit of
Lenders, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this Agreement and the other Financing Agreements or
defending any claims made or threatened against Administrative Agent and/or
Lenders arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (g)
all out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Administrative Agent during the course of periodic field
examinations of the Collateral and any Borrower's or Guarantor's operations,
plus a per diem charge at the rate of $750 per person per day for Administrative
Agent's examiners in the field and office (provided that if no Event of Default
exists, Borrowers and Guarantor shall only be obligated to reimburse for four
examinations per year); and (h) the reasonable fees and disbursements of counsel
(including legal assistants) to Administrative Agent in connection with any of
the foregoing.
9.20 Further Assurances. At the request of Administrative Agent or any
Lender at any time and from time to time, each of Borrowers, Guarantor and
Subject Subsidiaries shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements.
Administrative Agent may at any time and from time to time request a certificate
from an officer of Borrower Agent representing that all conditions precedent to
the making of Loans and providing Letter of Credit Accommodations contained
herein are satisfied. In the event of such a request, Administrative Agent and
Lenders may, at the option of Administrative Agent, cease to make any further
Loans or provide any further Letter of Credit Accommodations until
Administrative Agent has received such certificate. Where permitted by law, each
Borrower and Guarantor hereby authorizes Administrative Agent to execute and
file one or more UCC or PPSA financing statements signed only by Administrative
Agent or Administrative Agent's representative.
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9.21 Applications under the Companies' Creditors Arrangement Act. Each
Borrower acknowledges that its business and financial relationships with
Administrative Agent and Lenders are unique from its relationship with any other
of its creditors. Each Borrower agrees that it shall not file any plan of
arrangement under the Companies' Creditors Arrangement Act (Canada) ("CCAA
Plan") which provides for, or would permit directly or indirectly,
Administrative Agent or any Lender to be classified with any other creditor of
Borrower for purposes of such CCAA Plan or otherwise.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay any of the Obligations when due or
(ii) any Borrower or Guarantor fails to perform any of the covenants contained
in Sections 9.3, 9.4, 9.6, 9.14, 9.15, 9.16, 9.17, 9.19 or 9.20 of this
Agreement and such failure shall continue for fifteen (15) days; provided that
such fifteen (15) day period shall not apply in the case of: (A) any failure to
observe any such covenant which is not capable of being cured at all or within
such fifteen (15) day period or which has been the subject of a prior failure
within a three (3) month period or (B) an intentional breach of any Borrower or
Guarantor of any such covenant or (iii) any Borrower or Guarantor fails to
perform any of the terms, covenants, conditions or provisions contained in this
Agreement or any of the other Financing Agreements other than those described in
Sections 10.1(a)(i) and 10.1(a)(ii) above and such failure shall continue for
fifteen (15) days, provided that such fifteen (15) day period shall not apply in
the case of: (A) any failure to observe any such covenant which is not capable
of being cured at all or within such fifteen (15) day period or which has been
the subject of a prior failure within a three (3) month period or (B) an
intentional breach of any Borrower or Guarantor of any such covenant;
(b) any representation, warranty or statement of fact made by any
Borrower or Guarantor to Administrative Agent or any Lender in this Agreement,
the other Financing Agreements or any other agreement, schedule, confirmatory
assignment or otherwise shall when made or deemed made be false or misleading in
any material respect; provided that if the representation, warranty or statement
of fact in question is false or misleading only as to one or more of Borrowers,
but not false or misleading as to all Borrowers, and the true state of facts
does not have a Material Adverse Effect on Borrowers and Guarantor, taken as a
whole, then such misrepresentation shall not be deemed to be an Event of Default
if, within fifteen (15) days after such misrepresentation, Borrowers and
Guarantor do all of the following: (i) make a correct representation, warranty
or statement of fact to Administrative Agent, (ii) identify the affected
Borrower as a Disqualified Borrower, (iii) cause the affected Borrower to repay
all Revolving Loans made on or after the date of the event or condition causing
the Material Adverse Effect, and (iv) cause the affected Borrower to repay all
intercompany transfers made on or after the date of the event or condition
causing the Material Adverse Effect.
(c) Guarantor revokes, terminates or fails to perform any of the
terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Administrative Agent or any Lender;
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(d) any judgment for the payment of money is rendered against any
Borrower or Guarantor in excess of $1,000,000 in any one case or in excess of
$3,000,000 in the aggregate and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against any
Borrower or Guarantor or any of the Collateral having a value in excess of
$1,000,000;
(e) any Borrower or Guarantor dissolves or suspends or discontinues
doing business;
(f) any Borrower or Guarantor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors in connection with a moratorium or adjustment of the Indebtedness due
to them;
(g) a petition, case or proceeding under the bankruptcy laws of the
United States of America or Canada or similar law of any foreign jurisdiction
now or hereafter in effect or under any insolvency, arrangement, reorganization,
receivership, moratorium, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction now or hereafter in effect (whether at law or in
equity) is filed or commenced against any Borrower or Guarantor or all or any
part of its properties and such petition or application is not dismissed within
forty-five (45) days after the date of its filing or any Borrower or Guarantor
shall file any answer admitting or not contesting such petition or application
or indicates its consent to, acquiescence in or approval of, any such action or
proceeding or the relief requested is granted sooner;
(h) a petition, case or proceeding under the bankruptcy laws of the
United States of America or Canada now or hereafter in effect or under any
insolvency, arrangement, reorganization, receivership, moratorium, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction now or
hereafter in effect (whether at a law or equity) is filed by any Borrower or
Guarantor or for all or any part of its property including, without limitation,
if Borrower or any Guarantor shall: (i) apply for or consent to the appointment
of a receiver, trustee or liquidator of it or of all or a substantial part of
its property and assets; (ii) be unable, or admit in writing its inability, to
pay its debts as they mature, or commit any other act of bankruptcy; (iii) make
a general assignment for the benefit of creditors; (iv) file a voluntary
petition or assignment in bankruptcy or a proposal seeking a reorganization,
compromise, moratorium or arrangement with its creditors; (v) take advantage of
any insolvency or other similar law pertaining to arrangements, moratoriums,
compromises or reorganizations, or admit the material allegations of a petition
or application filed in respect of it in any bankruptcy, reorganization or
insolvency proceeding; or (vi) take any corporate action for the purpose of
effecting any of the foregoing; or
(i) (i) any default by any Borrower or Guarantor under any
agreement, document or instrument relating to any Indebtedness for borrowed
money owing to any person other than Administrative Agent or any Lender
(including without limitation the RSA Note), or any Capitalized Lease
Obligations, contingent indebtedness in connection with any guarantee, letter of
credit, indemnity or similar type of instrument in favor of any person other
than Administrative Agent or any Lender, in any case in an amount in excess of
$1,000,000, which
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default continues for more than the applicable cure period, if any, with respect
thereto, or (ii) any default by any Borrower or Guarantor in any material
respect under any material contract, lease, license or other obligation to any
person other than any Administrative Agent or Lender, which default continues
for more than the applicable cure period, if any, with respect thereto, which
has a Material Adverse Effect on Borrowers and Guarantor taken as a whole;
(j) any Change of Control;
(k) the indictment or charging by any Governmental Authority of
which any Borrower, Guarantor or Administrative Agent or any Lender receives
notice, of any Borrower or Guarantor under any criminal statute, or commencement
or charging or threatened commencement of criminal or civil proceedings against
any Borrower or Guarantor, pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of (i) any of the
Collateral or (ii) any other property of such Borrower which is necessary or
material to the conduct of its business, where such forfeiture has a Material
Adverse Effect on Borrowers and Guarantor taken as a whole;
(l) there shall be an act, condition or event which has a Material
Adverse Effect on Borrowers and Guarantor taken as a whole after the date
hereof;
(m) there shall be an event of default under any of the other
Financing Agreements which continues beyond any applicable cure or grace period;
or
(n) a requirement from the Minister of National Revenue for payment
pursuant to Section 224 or any successor section of the Income Tax Act (Canada)
or Section 317, or any successor section or any other Person in respect of any
Borrower of the Excise Tax Act (Canada) or any comparable provision of similar
legislation shall have been received by Administrative Agent, any Lender or any
other Person in respect of any Borrower or otherwise issued in respect of any
Borrower.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Administrative Agent and Lenders shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and remedies may
be exercised without notice to or consent by any Borrower or Obligor, except as
such notice or consent is expressly provided for hereunder or required by
applicable law. All rights, remedies and powers granted to Administrative Agent
and Lenders hereunder, under any of the other Financing Agreements, the UCC, the
PPSA or other applicable law, are cumulative, not exclusive and enforceable, in
Administrative Agent's discretion, alternatively, successively, or concurrently
on any one or more occasions, and shall include, without limitation, the right
to apply to a court of equity for an injunction to restrain a breach or
threatened breach by any Borrower or Obligor of this Agreement or any of the
other Financing Agreements. Subject to Section 12 hereof, Administrative Agent
shall, upon the direction of the Required Lenders, at any time or times an Event
of Default exists or has occurred and is continuing, proceed directly against
any Borrower or Obligor to collect the Obligations without prior recourse to the
Collateral.
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(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Administrative Agent may, and
upon the direction of the Required Lenders, Administrative Agent shall, (i) upon
notice to Borrower Agent, accelerate the payment of all Obligations and demand
immediate payment thereof to Administrative Agent, for the ratable benefit of
Lenders (provided that upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h), all Obligations shall automatically become
immediately due and payable), (ii) with or without judicial process or the aid
or assistance of others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral or complete
processing, manufacturing and repair of all or any portion of the Collateral,
(iii) require Borrowers, at Borrowers' expense, to assemble and make available
to Administrative Agent any part or all of the Collateral at any place and time
designated by Administrative Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Administrative Agent or elsewhere) at
such prices or terms as Administrative Agent may deem commercially reasonable,
for cash, upon credit or for future delivery, with Administrative Agent or any
Lender having the right to purchase the whole or any part of the Collateral at
any such public sale, all of the foregoing being free from any right or equity
of redemption of Borrowers or Guarantor which right or equity of redemption is
hereby expressly waived and released by Borrowers and Guarantor to the extent
permitted by applicable law and/or (vii) upon notice to Borrower Agent,
terminate this Agreement. If any of the Collateral is sold or leased by
Administrative Agent upon credit terms or for future delivery, the Obligations
shall not be reduced as a result thereof until payment therefor is finally
collected by Administrative Agent, for the ratable benefit of Lenders. If notice
of disposition of Collateral is required by law, ten (10) days prior notice by
Administrative Agent to Borrower Agent designating the time and place of any
public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable notice
thereof and each of Borrowers and Guarantor waives any other notice. In the
event Administrative Agent institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy, each of Borrowers
and Guarantor waives the posting of any bond which might otherwise be required.
(c) For the purpose of enabling Administrative Agent and
Lenders to exercise the rights and remedies hereunder, each of Borrowers and
Guarantor hereby grants to Administrative Agent, to the extent assignable, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to Borrowers or Guarantors) to use, assign, license or
sublicense any of the trademarks, service-marks, trade names, business names,
trade styles, designs, logos and other source of business identifiers and other
Intellectual Property now owned or hereafter acquired by any Borrower or
Guarantor, wherever the same may be located, including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.
(d) Administrative Agent shall apply the cash proceeds of
Collateral actually received by it from any sale, lease, foreclosure or other
disposition of the Collateral to payment of the Obligations, in whole or in
part, in the manner set forth in Section 6.4 hereof. Borrowers
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and Guarantor shall remain liable to Administrative Agent and Lenders for the
payment of any deficiency with interest at the highest rate provided for herein
and all costs and expenses of collection or enforcement, including reasonable
attorneys' fees and legal expenses.
(e) Without limiting the foregoing, upon the occurrence of an
Event of Default or an act, condition or event which with notice or passage of
time or both would constitute an Event of Default, Administrative Agent may and,
upon the direction of the Required Lenders, Administrative Agent shall, without
notice, (i) cease making Loans or arranging for Letter of Credit Accommodations
or reduce the lending formulas or amounts of Loans and Letter of Credit
Accommodations available to Borrowers and/or (ii) terminate any provision of
this Agreement providing for any future Loans or Letter of Credit Accommodations
to be made by Administrative Agent or Lenders to Borrowers.
(f) Administrative Agent may appoint, remove and reappoint any
person or persons, including an employee or agent of Administrative Agent to be
a receiver (the "Receiver") which term shall include a receiver and manager of,
or agent for, all or any part of the Collateral. Any such Receiver shall, as far
as concerns responsibility for his acts, be deemed to be the agent of Borrowers
and not of Administrative Agent or Lenders, and Administrative Agent and Lenders
shall not in any way be responsible for any misconduct, negligence or
non-feasance of such Receiver, its employees or agents. Except as otherwise
directed by Administrative Agent, all money received by such Receiver shall be
received in trust for and paid to Administrative Agent. Such Receiver shall have
all of the powers and rights of Administrative Agent and Lenders described in
this Section 10. Administrative Agent may, either directly or through its agents
or nominees, exercise any or all powers and rights of a Receiver.
(g) Borrowers shall pay all costs, charges and expenses
incurred by Administrative Agent, Lenders or any Receiver or any nominee or
agent of Administrative Agent, Lenders or any Receiver, whether directly or for
services rendered (including, without limitation, solicitor's costs on a
solicitor and his own client basis, auditor's costs, other legal expenses and
Receiver remuneration) in enforcing this Agreement or any other Financing
Agreement and in enforcing or collecting Obligations and all such expenses
together with any money owing as a result of any borrowing permitted hereby
shall be a charge on the proceeds of realization and shall be secured hereby.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of California
(without giving effect to principles of conflicts of law), except to the extent
that the law of another jurisdiction is specified in a Financing Agreement to be
governing law for that Financing Agreement.
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(b) Borrowers, Guarantor, Principal Agent, Administrative
Agent, Co-Agents and Lenders irrevocably consent and submit to the non-exclusive
jurisdiction of the Superior Court of Los Angeles County, California and the
United States District Court for the Central District of California and waive
any objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Administrative Agent or
any Lender shall have the right to bring any action or proceeding against any
Borrower or Guarantor or its property in the courts of any other jurisdiction
which Administrative Agent deems necessary or appropriate in order to realize on
the Collateral or to otherwise enforce its rights against such Borrower or
Guarantor or its property).
(c) To the extent permitted by applicable law, each of
Borrowers, Guarantor, Principal Agent, Administrative Agent, Co-Agents and each
Lender hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by certified mail (return
receipt requested) directed to its address set forth on the signature pages
hereof and service so made shall be deemed to be completed ten (10) days after
the same shall have been so deposited in the U.S. mails, or, at the plaintiff's
option, by service upon such party in any other manner provided under the rules
of any such courts. Within thirty (30) days after such service, such party shall
appear in answer to such process, failing which such party shall be deemed in
default and judgment may be entered by plaintiff against such party for the
amount of the claim and other relief requested.
(d) EACH OF BORROWERS, GUARANTOR, PRINCIPAL AGENT,
ADMINISTRATIVE AGENT, CO-AGENTS AND LENDERS HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH OF BORROWERS,
GUARANTOR, PRINCIPAL AGENT, ADMINISTRATIVE AGENT, CO-AGENTS AND LENDERS HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWERS, GUARANTOR,
PRINCIPAL AGENT, ADMINISTRATIVE AGENT, CO-AGENTS OR LENDERS MAY FILE AN ORIGINAL
COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Principal Agent, Administrative Agent, Co-Agents and
Lenders shall not have any liability to Borrowers or Guarantor (whether in tort,
contract, equity or otherwise) for losses suffered by any Borrower or Guarantor
in connection with, arising out of, or in any way related
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to the transactions or relationships contemplated by this Agreement, or any act,
omission or event occurring in connection herewith, unless it is determined by a
final and non-appealable judgment or court order binding on Principal Agent,
Administrative Agent, Co-Agent or such Lender, that the losses were the result
of acts or omissions constituting gross negligence or willful misconduct.
11.2 Waiver of Notices. Each of Borrowers and Guarantor hereby
expressly waives demand, presentment, notice of intent to accelerate, notice of
acceleration, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Borrower or Guarantor which Administrative Agent may elect
to give shall entitle any Borrower or Guarantor to any other or further notice
or demand in the same, similar or other circumstances. Subject to applicable
law, each Borrower hereby expressly waives all rights of notice and hearing of
any kind prior to the exercise of rights by Administrative Agent or any Lender
from and after the occurrence of an Event of Default to repossess the Collateral
with judicial process or to replevy, attach or levy upon the Collateral or other
security for the Obligations. Subject to applicable law, each Borrower waives
the posting of any bond otherwise required of Administrative Agent or any Lender
in connection with any judicial process or proceeding to obtain possession of,
replevy, attach or levy upon the Collateral or other security for the
Obligations, to enforce any judgment or other court order entered in favor of
Administrative Agent or any Lender, or to enforce by specific performance,
temporary restraining order, preliminary or permanent injunction, this Agreement
or any other Financing Agreement.
11.3 Amendments and Waivers.
(a) Neither this Agreement nor any provision hereof shall be
amended, modified, waived or discharged orally or by course of conduct, but only
by a written agreement signed as provided in Section 11.3(b) hereof.
Administrative Agent and Lenders shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of their rights,
powers and/or remedies unless such waiver shall be in writing and signed as
provided in Section 11.3(b) hereof. Any such waiver shall be enforceable only to
the extent specifically set forth therein. A waiver by Administrative Agent or
any Lender of any right, power and/or remedy on any one occasion shall not be
construed as a bar to or waiver of any such right, power/and or remedy which
Administrative Agent or any Lender would otherwise have on any future occasion,
whether similar in kind or otherwise.
(b) Neither this Agreement nor any other Financing Agreement
nor any terms hereof or thereof may be changed, waived, discharged or terminated
unless such change, waiver, discharge or termination is in writing signed by
Administrative Agent and the Required Lenders, and as to amendments to any of
the Financing Agreements, by Borrowers; except that any change, waiver,
discharge or termination with respect to the following shall require the consent
of Administrative Agent and all Lenders:
(i) the extension of the Final Maturity Date,
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(ii) reduction in the interest rate or any fees
or the extension of the time of payment of interest or any fees or reduction in
the principal amount of any Loan or Letter of Credit Accommodations,
(iii) increase in the Commitment of any Lender
over the amount thereof then in effect or provided hereunder (it being
understood that a waiver of any Event of Default shall not constitute a change
in the terms of any Commitment of any Lender),
(iv) the release of any Collateral (except as
expressly required by the Financing Agreements and except as permitted under
Section 12.11(b) hereof),
(v) the amendment, modification or waiver of:
(A) the terms of the following definitions or any provisions relating thereto:
Eligible Accounts, Eligible Inventory, Excess Availability, Final Maturity Date,
Revolving Loan Limit, or (B) any provision of this Section 11.3,
(vi) the reduction of any percentage specified in
the definition of Required Lenders,
(vii) the consent to the assignment or transfer by
any Borrower of any of its rights and obligations under this Agreement, or
(viii) the increase in the advance rates
constituting part of the Borrowing Base.
(c) Notwithstanding anything to the contrary contained in
Section 11.3(b) above, in the event that Borrowers and Guarantor request that
this Agreement or any other Financing Agreements be amended or otherwise
modified in a manner which would require the unanimous consent of Administrative
Agent and of all the Lenders and such amendment or other modification is agreed
to by the Administrative Agent and Required Lenders, then, with the consent of
Borrowers, Guarantor, Administrative Agent and the Required Lenders, Borrowers,
Guarantor, Administrative Agent and the Required Lenders may amend this
Agreement without the consent of the Lender or Lenders which did not agree to
such amendment or other modification (collectively, the "Minority Lenders") to
provide for (i) the termination of the Commitment of each of the Minority
Lenders, (ii) the addition to this Agreement of one or more other Lenders, or an
increase in the Commitment of one or more of the Required Lenders, so that the
Commitments, after giving effect to such amendment, shall be in the same
aggregate amount as the Commitments immediately before giving effect to such
amendment, (iii) if any Loans are outstanding at the time of such amendment, the
making of such additional Loans by such new Lenders or Required Lenders, as the
case may be, as may be necessary to repay in full the outstanding Loans of the
Minority Lenders immediately before giving effect to such amendment and (iv) the
payment of all interest, fees and other Obligations payable or accrued in favor
of the Minority Lenders and such other modifications to this Agreement as
Borrowers, Guarantor, Administrative Agent and the Required Lenders may
determine to be appropriate.
(d) The consent of Administrative Agent shall be required for
any amendment, waiver or consent affecting the rights or duties of
Administrative Agent hereunder or under any
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of the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section.
11.4 Confidentiality. Each Lender agrees that it will use its
reasonable best efforts not to disclose without the prior consent of Borrower
Agent confidential information with respect to any Borrower, Guarantor or any of
its Subsidiaries which is furnished pursuant to this Agreement; provided that
any Lender may disclose any such information (a) to its employees, auditors or
counsel, or to Administrative Agent or another Lender if the disclosing Lender
or such disclosing Lender's holding or parent company in its sole discretion
determines that any such party should have access to such information and such
party agrees to be bound by the provisions of this Section 11.4, (b) as has
become generally available to the public through no fault of Administrative
Agent or Lenders, (c) as may be required or appropriate in any report, statement
or testimony submitted to any Governmental Authority having or claiming to have
jurisdiction over such Lender, (d) as may be required or appropriate in response
to any summons or subpoena or in connection with any litigation, (e) in order to
comply with any statute or regulation, and (f) to any prospective or actual
assignee or Participant in connection with any contemplated transfer or
participation of any of the Commitments or any interest therein by such Lender,
provided that such assignee or Participant has been generally advised as to the
confidentiality of any such confidential information and agrees to be bound by
the provisions of this Section 11.4.
11.5 Indemnification. Each Borrower and Guarantor shall indemnify
and hold each of Principal Agent, Administrative Agent, Co-Agents and each
Lender, and its respective directors, agents, employees and counsel, harmless
from and against any and all losses, claims, damages, liabilities, costs or
expenses imposed on, incurred by or asserted against any of them in connection
with any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any of the other Financing
Agreements, or any undertaking or proceeding related to any of the transactions
contemplated hereby or any act, omission, event or transaction related or
attendant thereto, including, without limitation, amounts paid in settlement,
court costs, and the reasonable fees and expenses of counsel, except for such
losses, claims, damages, liabilities, costs or expenses resulting from the gross
negligence or willful misconduct of Principal Agent, Administrative Agent, a
Co-Agent or a Lender, its respective directors, agents, employees or counsel as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section may be unenforceable because it violates any
law or public policy, Borrowers shall pay the maximum portion which they are
permitted to pay under applicable law to Principal Agent, Administrative Agent,
Co-Agents and Lenders in satisfaction of indemnified matters under this Section.
The foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.
SECTION 12. THE ADMINISTRATIVE AGENT
12.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably designates, appoints and authorizes Administrative Agent to act as
Administrative Agent hereunder and under the other Financing
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Agreements with such powers as are specifically delegated to Administrative
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto.
Administrative Agent (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and in the other Financing Agreements, and
shall not by reason of this Agreement or any other Financing Agreement be a
trustee or fiduciary for any Lender; (b) shall not be responsible to Lenders for
any recitals, statements, representations or warranties contained in this
Agreement or in any other Financing Agreement, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Financing Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Financing Agreement or any other document referred to or provided for
herein or therein or for any failure by any Borrower or Obligor or any other
Person to perform any of its obligations hereunder or thereunder; and (c) shall
not be responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Administrative Agent may deem
and treat the payee of any note as the holder thereof for all purposes hereof
unless and until the assignment thereof pursuant to an agreement (if and to the
extent permitted herein) in form and substance satisfactory to Administrative
Agent shall have been delivered to and acknowledged by Administrative Agent.
12.2 Reliance by Administrative Agent. Administrative Agent shall
be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telecopy, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by
Administrative Agent. As to any matters not expressly provided for by this
Agreement or any other Financing Agreement, Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
thereunder in accordance with instructions given by the Required Lenders or all
of Lenders as is required in such circumstance, and such instructions of such
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all Lenders.
12.3 Events of Default.
(a) Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of an Event of Default or other failure of a
condition precedent to the Loans and Letter of Credit Accommodations hereunder,
unless and until Administrative Agent has received written notice from a Lender,
or any Borrower or Guarantor specifying such Event of Default or any unfulfilled
condition precedent, and stating that such notice is a "Notice of Default or
Failure of Condition". In the event that Administrative Agent receives such a
Notice of Default or Failure of Condition, Administrative Agent shall give
prompt notice thereof to the Lenders. Administrative Agent shall (subject to
Section 12.7) take such action with respect to any such Event of Default or
failure of condition precedent as shall be directed by the Required Lenders;
provided that unless and until Administrative Agent shall have received such
directions, Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to or by reason of such
Event of Default or failure of condition
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precedent, as it shall deem advisable in the best interest of Lenders. Without
limiting the foregoing, and notwithstanding the existence or occurrence and
continuance of an Event of Default or any other failure to satisfy any of the
conditions precedent set forth in Section 4 of this Agreement to the contrary,
Administrative Agent may, but shall have no obligation to, continue to make
Loans and issue or cause to be issued Letter of Credit Accommodations for the
ratable account and risk of Lenders from time to time if Administrative Agent
believes making such Loans or issuing or causing to be issued such Letter of
Credit Accommodations is in the best interests of Lenders.
(b) Except with the prior written consent of Administrative
Agent, no Lender may assert or exercise any enforcement right or remedy in
respect of the Loans, Letter of Credit Accommodations or other Obligations, as
against any Borrower or Obligor or any of the Collateral or other property of
any Borrower or Obligor.
12.4 Administrative Agent in its Individual Capacity. With respect
to its Commitment and the Loans made and Letter of Credit Accommodations issued
or caused to be issued by it (and any successor acting as Administrative Agent),
so long as Administrative Agent shall be a Lender hereunder, it shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as Administrative Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include Administrative
Agent in its individual capacity as Lender hereunder. Administrative Agent (and
any successor acting as Administrative Agent) and its Affiliates may (without
having to account therefor to any Lender) lend money to, make investments in and
generally engage in any kind of business with any Borrower and Guarantor (and
any of their Subsidiaries or Affiliates) as if it were not acting as
Administrative Agent, and Administrative Agent and its Affiliates may accept
fees and other consideration from any Borrower and Guarantor for services in
connection with this Agreement or otherwise without having to account for the
same to Lenders.
12.5 Indemnification. Lenders agree to indemnify Administrative
Agent (to the extent not reimbursed by Borrowers or Guarantor hereunder and
without limiting the Obligations of Borrowers or Guarantor hereunder) ratably,
in accordance with their Pro Rata Shares, for any and all claims of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against
Administrative Agent (including by any Lender) arising out of or by reason of
any investigation in or in any way relating to or arising out of this Agreement
or any other Financing Agreement or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including the costs and expenses that Administrative Agent is obligated to pay
hereunder) or the enforcement of any of the terms hereof or thereof or of any
such other documents, provided that no Lender shall be liable for any of the
foregoing to the extent it arises from the gross negligence or willful
misconduct of the party to be indemnified as determined by a final
non-appealable judgment of a court of competent jurisdiction.
12.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on Administrative
Agent or other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of each Borrower and Guarantor
and has made its own decision to enter into this Agreement and that it will,
independently and without reliance upon Administrative Agent or
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any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Financing
Agreements. Administrative Agent shall not be required to keep itself informed
as to the performance or observance by any Borrower or Guarantor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of any Borrower or Guarantor. Administrative Agent will use
reasonable efforts to provide Lenders with any information received by
Administrative Agent from any Borrower or Guarantor which is required to be
provided to Lenders hereunder and with a copy of any Notice of Default or
Failure of Condition received by Administrative Agent from any Borrower,
Guarantor or any Lender; provided that Administrative Agent shall not be liable
to any Lender for any failure to do so, except to the extent that such failure
is attributable to Administrative Agent's own gross negligence or willful
misconduct as determined by a final non-appealable judgment of a court of
competent jurisdiction. Except for notices, reports and other documents
expressly required to be furnished to Lenders by Administrative Agent hereunder,
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any other credit or other information concerning the affairs,
financial condition or business of any Borrower or Guarantor that may come into
the possession of Administrative Agent.
12.7 Failure to Act. Except for action expressly required of
Administrative Agent hereunder and under the other Financing Agreements,
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from Lenders of their indemnification obligations
under Section 12.5 hereof against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.
12.8 Additional Loans. Administrative Agent shall not make any
Revolving Loans or provide any Letter of Credit Accommodations to a Borrower on
behalf of Lenders intentionally and with actual knowledge that such Loans or
Letter of Credit Accommodations would cause the aggregate amount of the total
outstanding Loans and Letter of Credit Accommodations to such Borrower to exceed
the Borrowing Base of such Borrower, without the prior consent of all Lenders,
except that Administrative Agent may make such additional Loans or provide such
additional Letter of Credit Accommodations on behalf of Lenders, intentionally
and with actual knowledge that such Loans or Letter of Credit Accommodations
will cause the total outstanding Loans and Letter of Credit Accommodations to
any Borrower exceed the Borrowing Base of such Borrower as such Administrative
Agent may deem necessary or advisable in its discretion, provided that: (a) the
total principal amount of the additional Loans or additional Letter of Credit
Accommodations to such Borrower which Administrative Agent may make or provide
after obtaining such actual knowledge that the aggregate principal amount of the
Loans equal or exceed the Borrowing Base of such Borrower shall not exceed the
amount equal to ten (10%) percent of the Borrowing Base of such Borrower at the
time and shall not cause the total principal amount of the Loans and Letter of
Credit Accommodations to exceed the Revolving Loan Limit and (b) without the
consent of all Lenders, Administrative Agent shall not make any such additional
Loans or Letter of Credit Accommodations more than ninety (90) days from the
date of the first such additional Loans or Letter of Credit Accommodations. Each
Lender shall be obligated to pay Administrative Agent the amount of its Pro Rata
Share of any such additional
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Loans or Letter of Credit Accommodations provided that Administrative Agent is
acting in accordance with the terms of this Section 12.8.
12.9 Concerning the Collateral and the Related Financing
Agreements. Each Lender authorizes and directs Administrative Agent to enter
into this Agreement and the other Financing Agreements relating to the
Collateral, for the ratable benefit of Lenders and Administrative Agent. Each
Lender agrees that any action taken by Administrative Agent or Required Lenders
in accordance with the terms of this Agreement or the other Financing Agreements
relating to the Collateral, and the exercise by Administrative Agent or Required
Lenders of their respective powers set forth therein or herein, together with
such other powers that are reasonably incidental thereto, shall be binding upon
all of the Lenders.
12.10 Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:
(a) is deemed to have requested that Administrative Agent
furnish Lender, promptly after it becomes available, a copy of each field audit
or examination report and a report with respect to the Borrowing Base prepared
by Administrative Agent (each field audit or examination report and weekly
report with respect to the Borrowing Base being referred to herein as a "Report"
and collectively, "Reports");
(b) expressly agrees and acknowledges that Administrative
Agent (A) does not make any representation or warranty as to the accuracy of any
Report, or (B) shall not be liable for any information contained in any Report;
provided that nothing contained in this Section 12.10 shall be construed to
limit the liability of Administrative Agent under Section 12.1(c) hereof in the
event of the gross negligence or willful misconduct of Administrative Agent as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Administrative Agent or other party
performing any audit or examination will inspect only specific information
regarding any Borrower and Guarantor and will rely significantly upon Borrowers'
books and records, as well as on representations of Borrowers' personnel; and
(d) agrees to keep all Reports confidential and strictly for
its internal use in accordance with the terms of Section 11.4 hereof, and not to
distribute or use any Report in any other manner.
12.11 Collateral Matters.
(a) Administrative Agent may, at its option, from time to
time, at any time on or after an Event of Default and for so long as the same is
continuing or upon any other failure of a condition precedent to the Loans and
Letter of Credit Accommodations hereunder, make such disbursements and advances
("Special Administrative Agent Advances") which Administrative Agent, in its
sole discretion, deems necessary or desirable either (i) to preserve or protect
the Collateral or any portion thereof or (ii) to pay any other amount chargeable
to any Borrower pursuant to the terms of this Agreement consisting of costs,
fees and expenses and payments to any issuer of Letter of Credit Accommodations.
Special Administrative Agent Advances shall
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be repayable on demand and be secured by the Collateral. Special Administrative
Agent Advances shall not constitute Loans but shall otherwise constitute
Obligations hereunder. Administrative Agent shall notify each Lender and
Borrower Agent in writing of each such Special Administrative Agent Advance,
which notice shall include a description of the purpose of such Special
Administrative Agent Advance. Without limitation of its obligations pursuant to
Section 6.9, each Lender agrees that it shall make available to Administrative
Agent, upon Administrative Agent's demand, in immediately available funds, the
amount equal to such Lender's Pro Rata Share of each such Special Administrative
Agent Advance. If such funds are not made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such funds, on
demand from such Lender together with interest thereon, for each day from the
date such payment was due until the date such amount is paid to Administrative
Agent at the interest rate then payable by Borrowers in respect of the Revolving
Loans as set forth in Section 3.1(a) hereof.
(b) Lenders hereby irrevocably authorize Administrative Agent,
at its option and in its discretion to release any security interest in,
mortgage or lien upon, any of the Collateral (i) upon termination of the
Commitments and payment and satisfaction of all of the Obligations and delivery
of cash collateral to the extent required under Section 13.1 below, or (ii)
constituting property being sold or disposed of if Borrower Agent certifies to
Administrative Agent that the sale or disposition is made in compliance with
Section 9.7 hereof (and Administrative Agent may rely conclusively on any such
certificate, without further inquiry), or (iii) constituting property in which
any Borrower or Guarantor did not own an interest at the time the security
interest, mortgage or lien was granted or at any time thereafter, or (iv) having
a value of less than $5,000,000, or (v) if approved, authorized or ratified in
writing by all of Lenders. Except as provided above, Administrative Agent will
not release any security interest in, mortgage or lien upon, any of the
Collateral without the prior written authorization of all of Lenders (and any
Lender may require that the proceeds from any sale or other disposition of the
Collateral to be so released be applied to the Obligations in a manner
satisfactory to such Lender).
(c) Without any manner limiting Administrative Agent's
authority to act without any specific or further authorization or consent by the
Required Lenders, each Lender agrees to confirm in writing, upon request by
Administrative Agent, the authority to release Collateral conferred upon
Administrative Agent under this Section. Administrative Agent shall (and is
hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the security interest, mortgage or liens
granted to Administrative Agent for itself and the benefit of the Lenders upon
any Collateral to the extent set forth above; provided that (i) Administrative
Agent shall not be required to execute any such document on terms which, in
Administrative Agent's opinion, would expose Administrative Agent to liability
or create any obligations or entail any consequence other than the release of
such security interest, mortgage or liens without recourse or warranty and (ii)
such release shall not in any manner discharge, affect or impair the Obligations
or any security interest, mortgage or lien upon (or obligations of any Borrower
or Guarantor in respect of) the Collateral retained by Borrowers or Guarantor.
(d) Administrative Agent shall have no obligation whatsoever
to any Lender or any other Person to investigate, confirm or assure that the
Collateral exists or is owned by any
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Borrower or Guarantor or is cared for, protected or insured or has been
encumbered, or that any particular items of Collateral meet the eligibility
criteria applicable in respect of the Loans or Letter of Credit Accommodations
hereunder, or whether any particular reserves are appropriate, or that the liens
and security interests granted to Administrative Agent herein or pursuant hereto
or otherwise have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to Administrative Agent in this Agreement or in any of the
other Financing Agreements, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, Administrative
Agent may act in any manner it may deem appropriate, in its discretion, given
Administrative Agent's own interest in the Collateral as a Lender and that
Administrative Agent shall have no duty or liability whatsoever to any other
Lender.
12.12 Agency for Perfection. Administrative Agent and each Lender
hereby appoints each Lender as agent for the purpose of perfecting the security
interests in and liens upon the Collateral of Administrative Agent for itself
and the ratable benefit of Lenders in assets which, in accordance with Article 9
of the UCC can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Administrative Agent
thereof, and, promptly upon Administrative Agent's request therefor shall
deliver such Collateral to Administrative Agent or in accordance with
Administrative Agent's instructions.
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS
13.1 Term.
(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the Final Maturity Date,
unless sooner terminated pursuant to the terms hereof. Upon the effective date
of termination of the Financing Agreements, Borrowers and Guarantor shall pay to
Administrative Agent, for the ratable benefit of Lenders, in full, all
outstanding and unpaid Obligations and shall furnish cash collateral to
Administrative Agent, for the ratable benefit of Lenders, in such amounts as
Administrative Agent determines in good faith are reasonably necessary to secure
Administrative Agent and Lenders from loss, cost, damage or expense, including
reasonable attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Administrative Agent and Lenders have not yet received final and
indefeasible payment. Such payments in respect of the Obligations and cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Administrative Agent, as Administrative Agent may, in its discretion,
designate in writing to Borrower Agent for such purpose. Interest shall be due
until and including the next business day, if the amounts so paid by Borrowers
to the bank account designated by Administrative Agent are received in such bank
account later than 10:30 a.m. California time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and
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covenants under this Agreement or the other Financing Agreements until all
Obligations have been fully and finally discharged and paid, and the continuing
security interest of Administrative Agent, for itself and the ratable benefit of
Lenders, in the Collateral and the rights and remedies of Administrative Agent
and Lenders hereunder, under the other Financing Agreements and applicable law,
shall remain in effect until all such Obligations have been fully and finally
discharged and paid.
13.2 Interpretative Provisions.
(a) All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings given therein
unless otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Borrower, Guarantor, Principal
Agent, Administrative Agent, Co-Agent and Lender pursuant to the definitions set
forth in the recitals hereto, or to any other person herein, shall include their
respective successors and permitted assigns.
(d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall
mean "including, without limitation".
(f) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Administrative Agent, if such Event of
Default is capable of being cured as determined in good faith by Administrative
Agent.
(g) Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrowers and Guarantor most
recently received by Administrative Agent prior to the date hereof.
(h) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including", the
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including".
(i) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other
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Financing Agreement, and (ii) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, recodifying, supplementing or interpreting the statute or
regulation.
(j) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(k) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(l) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Administrative
Agent and Lenders and the other parties, and are the products of all parties.
Accordingly, this Agreement and the other Financing Agreements shall not be
construed against Administrative Agent or Lenders merely because of
Administrative Agent's or any Lender's involvement in their preparation.
13.3 Notices. All notices, requests and demands hereunder shall be
in writing and (a) made to Principal Agent, Administrative Agent and Lenders at
their addresses set forth below and to any Borrower and Guarantor at their
addresses specified as "Address for Notice" set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision, and (b) deemed to have been given or made, and
to be received by the party to whom it is directed: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon electronic confirmation of receipt; if by
nationally recognized overnight courier service with instructions to deliver the
next Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, ten (10) days after mailing, postage prepaid.
13.4 Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
13.5 Successors. This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Lenders, Principal Agent, Administrative
Agent, Co-Agents, Borrowers and Guarantor and their respective successors and
assigns, except that Borrowers and Guarantor may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Administrative Agent
and Lenders. No Lender may assign its rights and obligations under this
Agreement (or any part thereof) without the prior written consent of all Lenders
and Administrative Agent, except as permitted under Section 13.6 hereof. Any
purported assignment by a Lender without such prior express consent or
compliance with Section 13.6 where applicable, shall be void. The terms and
provisions of this Agreement and the other Financing Agreements are for the
purpose of defining the relative rights and obligations of Borrowers, Guarantor,
Principal Agent, Administrative
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Agent, Co-Agents and Lenders with respect to the transactions contemplated
hereby and there shall be no third party beneficiaries of any of the terms and
provisions of this Agreement or any of the other Financing Agreements.
13.6 Assignments; Participations.
(a) Each Lender may (i) assign all or a portion of its rights
and obligations under this Agreement (including, without limitation, a portion
of its Commitment, the Loans owing to it and its rights and obligations as a
Lender with respect to Letters of Credit Accommodations) and the other Financing
Agreements to its parent company and/or any Affiliate of such Lender which is at
least fifty percent (50%) owned by such Lender or its parent company or to one
or more Lenders or (ii) assign all, or if less than all a portion equal to at
least $5,000,000 in the aggregate for the assigning Lender or assigning Lenders,
of such rights and obligations under this Agreement to one or more Eligible
Transferees, each of which assignees shall become a party to this Agreement as a
Lender by execution of an Assignment and Acceptance; provided that (A) the
consent of Administrative Agent shall be required in connection with any
assignment to an Eligible Transferee pursuant to clause (ii) above; and (B) if
the Eligible Transferee is not a bank, Administrative Agent shall receive a
representation in writing by such Eligible Transferee that either (1) no part of
its acquisition of its Loans is made out of assets of any employee benefit plan,
or (2) after consultation, in good faith, with Borrowers and provision by
Borrowers of such information as may be reasonably requested by such Eligible
Transferee, the acquisition and holding of such Commitments and Loans does not
constitute a non-exempt prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code, or (3) such assignment is an "insurance company
general account," as such term is defined in the Department of Labor Prohibited
Transaction Class Exemption 95.60 (issued July 12, 1995) ("PTCE 95-60), and, as
of the date of the assignment, there is no "employee benefit plan" with respect
to which the aggregate amount of such general account's reserves and liabilities
for the contracts held by or on behalf of such "employee benefit plan" and all
other "employee benefit plans" maintained by the same employer (and affiliates
thereof as defined in Section V(a)(1) of PTCE 95-60) or by the same employee
organization (in each case determined in accordance with the provisions of PTCE
95-60) exceeds ten percent (10%) of the total reserves and liabilities of such
general account (as determined under PTCE 95-60) (exclusive of separate account
liabilities) plus surplus as set forth in the National Association of Insurance
Commissioners Annual Statement filed with the state of domicile of such Eligible
Transferee and (C) such transfer or assignment will not be effective until
recorded by the Administrative Agent on the Register. As used in this Section,
the term "employee benefit plan" shall have the meaning assigned to it in Title
I of ERISA and shall also include a "plan" as defined in Section 4975(e)(1) of
the Code.
(b) Administrative Agent shall maintain a register of the
names and addresses of Lenders, their Commitments and the principal amount of
their Loans (the "Register"). Administrative Agent shall also maintain a copy of
each Assignment and Acceptance delivered to and accepted by it and shall modify
the Register to give effect to each Assignment and Acceptance. Upon its receipt
of each Assignment and Acceptance, Administrative Agent will give prompt notice
thereof to Lenders and deliver to each of them a copy of the executed Assignment
and Acceptance. The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and Borrowers, Guarantor, Administrative
Agent and Lenders may treat each Person whose name is recorded in the Register
as a Lender hereunder for all
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purposes of this Agreement. The Register shall be available for inspection by
Borrowers, Guarantor and any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(c) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and (ii)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement.
(d) By execution and delivery of an Assignment and Acceptance,
the assignor and assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrowers, Guarantor or any of their
Subsidiaries or the performance or observance by Borrowers or Guarantor of any
of the Obligations; (iii) such assignee confirms that it has received a copy of
this Agreement and the other Financing Agreements, together with such other
documents and information it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance, (iv) such
assignee will, independently and without reliance upon the assigning Lender,
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes
Administrative Agent to take such action as Administrative Agent on its behalf
and to exercise such powers under this Agreement and the other Financing
Agreements as are delegated to Administrative Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto, and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Financing Agreements are required to be performed by it as a Lender.
Administrative Agent and Lenders may furnish any information concerning
Borrowers, Guarantor or their Subsidiaries in the possession of Administrative
Agent or any Lender from time to time to assignees and Participants.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Accommodations, without the consent of
Administrative Agent or the other Lenders); provided that (i) such Lender's
obligations under this Agreement (including, without limitation, its Commitment
hereunder) and the other
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Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrowers, Guarantor, Administrative Agent 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 and
the other Financing Agreements, (iii) the Participant shall not have any rights
under this Agreement or any of the other Financing Agreements (the Participant's
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by any Borrower or Obligor hereunder
shall be determined as if such Lender had not sold such participation, and (iv)
if such Participant is not a bank, represent that either (A) no part of its
acquisition of its participation is made out of assets of any employee benefit
plan, or (B) after consultation, in good faith, with Borrower Agent and
provision by Borrower Agent of such information as may be reasonably requested
by the Participant, the acquisition and holding of such participation does not
constitute a non-exempt prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code, or (C) such participation is an "insurance company
general account, " as such term is defined in the "PTCE 95-60", and, as of the
date of the transfer there is no "employee benefit plan" with respect to which
the aggregate amount of such general account's reserves and liabilities for the
contracts held by or on behalf of such "employee benefit plan" and all other
"employee benefit plans" maintained by the same employer (and affiliates thereof
as defined in Section V(a)(1) of PTCE 95-60) or by the same employee
organization (in each case determined in accordance with the provisions of PTCE
95-60) exceeds ten percent (10%) of the total reserves and liabilities of such
general account (as determined under PTCE 95-60) (exclusive of separate account
liabilities) plus surplus as set forth in the National Association of Insurance
Commissioners Annual Statement filed with the state of domicile of the
Participant. As used in this Section, the term "employee benefit plan" shall
have the meaning assigned to it in Title I of ERISA and shall also include a
"plan" as defined in Section 4975(e)(1) of the Code. Participants will be
entitled to the benefits of Sections 3.1(c), 3.2 and 6.5 as fully as if they
were Lenders hereunder, provided that any claim by a Participant under any of
the foregoing sections must be made through a Lender.
(f) Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank.
(g) Borrowers and Guarantor shall assist Administrative Agent
or any Lender permitted to sell assignments or participations under this Section
13.6 in whatever manner reasonably necessary in order to enable or effect any
such assignment or participation, including (but not limited to) the execution
and delivery of any and all agreements, notes and other documents and
instruments as shall be requested and the delivery of informational materials,
appraisals or other documents for, and the participation of relevant management
in meetings and conference calls with, potential assignees or Participants.
Borrowers and Guarantor shall certify the correctness, completeness and accuracy
of all descriptions of each Borrower and Guarantor and their affairs provided,
prepared or reviewed by Borrowers and Guarantor that are contained in any
selling materials and all other information provided by them and included in
such materials.
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13.7 Participant's Security Interests. If a Participant shall at
any time participate with any Lender in the Loans and Letter of Credit
Accommodations, each Borrower hereby grants to such Participant and such
Participant shall have and is hereby given, a continuing lien on and security
interest in any money, securities and other property of such Borrower in the
custody or possession of the Participant, including the right of setoff, to the
extent of the Participant's participation in the Obligations, and such
Participant shall be deemed to have the same right of setoff to the extent of
its participation in the Obligations, as it would have if it were a direct
Lender.
13.8 Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written.
13.9 Attachment. The security interest hereby is intended to attach
when this Agreement is executed by each of the Borrowers and delivered to
Administrative Agent.
13.10 Acknowledgment. Each of the Borrowers and Guarantor
acknowledges receipt of a copy of this Agreement.
13.11 Judgment Currency. To the extent permitted by applicable law,
the obligations of Borrowers in respect of any amount due under this Agreement
shall, notwithstanding any payment in any other currency (the "Other Currency")
(whether pursuant to a judgment or otherwise), be discharged only to the extent
of the amount in the currency in which it is due (the "Agreed Currency") that a
Lender may, in accordance with normal banking procedures, purchase with the sum
paid in the Other Currency (after any premium and costs of exchange) on the
Business Day immediately after the day on which such Lender receives the
payment. If the amount in the Agreed Currency that may be so purchased for any
reason falls short of the amount originally due, Borrowers shall pay all
additional amounts, in the Agreed Currency, as may be necessary to compensate
for the shortfall. Any obligation of a Borrower not discharged by that payment
shall, to the extent permitted by applicable law, be due as a separate and
independent obligation and, until discharged as provided in this Section,
continue in full force and effect.
13.12 Execution in Counterparts. This Agreement may be executed and
delivered in any number of counterparts, each of which when executed and
delivered is an original but all of which taken together constitute one and the
same instrument.
13.13 Facsimile. This Agreement may be executed and delivered by
facsimile transmission and the parties may rely on all such facsimile signatures
as though such facsimile signatures were original signatures.
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SECTION 14. JOINT AND SEVERAL LIABILITY AND SURETYSHIP WAIVERS
14.1 Independent Obligations; Subrogation. The Obligations of each
Borrower hereunder are joint and several. To the maximum extent permitted by
law, each Borrower hereby waives any claim, right or remedy which such Borrower
now has or hereafter acquires against any other Borrower that arises hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Administrative Agent or Lenders against any
Borrower or any Collateral which Lender now has or hereafter acquires, whether
or not such claim, right or remedy arises in equity, under contract, by statute,
under common law or otherwise until the Obligations are fully paid and finally
discharged. In addition, each Borrower hereby waives any right to proceed
against the other Borrowers, now or hereafter, for contribution, indemnity,
reimbursement, and any other suretyship rights and claims, whether direct or
indirect, liquidated or contingent, whether arising under express or implied
contract or by operation of law, which any Borrower may now have or hereafter
have as against the other Borrowers with respect to the Obligations until the
Obligations are fully paid and finally discharged. Each Borrower also hereby
waives any rights of recourse to or with respect to any asset of the other
Borrowers until the Obligations are fully paid and finally discharged.
14.2 Authority to Modify Obligations and Security. Each Borrower
authorizes Administrative Agent and Lenders, without notice or demand and
without affecting any Borrowers' liability hereunder, from time to time, whether
before or after any notice of termination hereof or before or after any default
in respect of the Obligations, to: (i) renew, extend, accelerate, or otherwise
change the time for payment of, or otherwise change any other term or condition
of, any document or agreement evidencing or relating to any Obligations as such
Obligations relate to the other Borrowers, including, without limitation, to
increase or decrease the rate of interest thereon; (ii) accept, substitute,
waive, defease, increase, release, exchange or otherwise alter any Collateral,
in whole or in part, securing the other Borrowers' Obligations; (iii) apply any
and all such Collateral and direct the order or manner of sale thereof as
Administrative Agent or Lenders, in their sole discretion, may determine; (iv)
deal with the other Borrowers as Administrative Agent or Lenders may elect; (v)
in Administrative Agent's or Lenders' sole discretion, settle, release on terms
satisfactory to Lender, or by operation of law or otherwise, compound,
compromise, collect or otherwise liquidate any of the other Borrowers'
Obligations and/or any of the Collateral in any manner, and bid and purchase any
of the collateral at any sale thereof; (vi) apply any and all payments or
recoveries from the other Borrowers as Administrative Agent or Lenders, in their
sole discretion, may determine, whether or not such indebtedness relates to the
Obligations; all whether such Obligations are secured or unsecured or guaranteed
or not guaranteed by others; and (vii) apply any sums realized from Collateral
furnished by the other Borrowers upon any of its indebtedness or obligations to
Administrative Agent or Lenders as they in their sole discretion, may determine,
whether or not such indebtedness relates to the Obligations; all without in any
way diminishing, releasing or discharging the liability of any Borrower
hereunder.
14.3 Waiver of Defenses. Upon an Event of Default by any Borrower
in respect of any Obligations, Administrative Agent or Lenders may, at their
option and without additional notice to any Borrower, proceed directly against
any Borrower to collect and recover the full amount of
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the liability hereunder, or any portion thereof, and each Borrower waives any
right to require Administrative Agent or Lenders to: (i) proceed against the
other Borrowers or any other person whomsoever; (ii) proceed against or exhaust
any Collateral given to or held by Administrative Agent or Lenders in connection
with the Obligations; (iii) give notice of the terms, time and place of any
public or private sale of any of the Collateral except as otherwise provided
herein; or (iv) pursue any other remedy in Administrative Agent or any Lender's
power whatsoever. A separate action or actions may be brought and prosecuted
against any Borrower whether or not action is brought against the other
Borrowers and whether the other Borrowers be joined in any such action or
actions; and each Borrower waives the benefit of any statute of limitations
affecting the liability hereunder or the enforcement hereof, and agrees that any
payment of any Obligations or other act which shall toll any statute of
limitations applicable thereto shall similarly operate to toll such statute of
limitations applicable to the liability hereunder.
14.4 Exercise of Administrative Agent's and Lenders' Rights. Each
Borrower hereby authorizes and empowers Administrative Agent and Lenders in
their sole discretion, without any notice or demand to such Borrower whatsoever
and without affecting the liability of such Borrower hereunder, to exercise any
right or remedy which Administrative Agent or Lenders may have available to them
against the other Borrowers.
14.5 Additional Waivers. Each Borrower waives any defense arising
by reason of any disability or other defense of the other Borrowers or by reason
of the cessation from any cause whatsoever of the liability of the other
Borrowers or by reason of any act or omission of Administrative Agent or Lenders
or others which directly or indirectly results in or aids the discharge or
release of the other Borrowers or any Obligations or any Collateral by operation
of law or otherwise. The Obligations shall be enforceable against each Borrower
without regard to the validity, regularity or enforceability of any of the
Obligations with respect to any of the other Borrowers or any of the documents
related thereto or any collateral security documents securing any of the
Obligations. No exercise by Administrative Agent or Lenders of, and no omission
of Administrative Agent or Lenders to exercise, any power or authority
recognized herein and no impairment or suspension of any right or remedy of
Administrative Agent or Lenders against any Borrower or any Collateral shall in
any way suspend, discharge, release, exonerate or otherwise affect any of the
Obligations or any Collateral furnished by the Borrowers or give to the
Borrowers any right of recourse against Administrative Agent or Lenders except
for gross negligence or willful misconduct. Each Borrower specifically agrees
that the failure of Administrative Agent or Lenders: (i) to perfect any lien on
or security interest in any property heretofore or hereafter given any Borrower
to secure payment of the Obligations, or to record or file any document relating
thereto or (ii) to file or enforce a claim against the estate (either in
administration, bankruptcy or other proceeding) of any Borrower shall not in any
manner whatsoever terminate, diminish, exonerate or otherwise affect the
liability of any Borrower hereunder.
14.6 Additional Indebtedness. Additional Obligations may be created
from time to time at the request of any Borrower and without further
authorization from or notice to any other Borrower even though the borrowing
Borrower's financial condition may deteriorate since the date hereof. Each
Borrower waives the right, if any, to require Administrative Agent or Lenders to
disclose to such Borrower any information it may now have or hereafter acquire
concerning the other Borrowers' character, credit, Collateral, financial
condition or other matters. Each
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Borrower has established adequate means to obtain from the other Borrowers on a
continuing basis financial and other information pertaining to such Borrower's
business and affairs, and assumes the responsibility for being and keeping
informed of the financial and other conditions of the other Borrowers and of all
circumstances bearing upon the risk of nonpayment of the Obligations which
diligent inquiry would reveal. Administrative Agent and Lenders need not inquire
into the powers of any Borrower or the authority of any of their respective
officers, directors, partners or agents acting or purporting to act in their
behalf, and any obligations created in reliance upon the purported exercise of
such power or authority is hereby guaranteed. All obligations of each Borrower
to Administrative Agent and Lenders heretofore, now or hereafter created shall
be deemed to have been granted at each Borrower's special insistence and request
and in consideration of and in reliance upon this Agreement.
14.7 Notices, Demands, Etc. Except as expressly provided by this
Agreement, Administrative Agent and Lenders shall be under no obligation
whatsoever to make or give to any Borrower, and each Borrower hereby waives
diligence, all demands, presentments, protests, notices of protests, notices of
protests, notices of nonperformance, notices of dishonor, and all other notices
of every kind or nature, including notice of the existence, creation or
incurring of any new or additional Obligations.
14.8 Subordination. Except as otherwise provided in this Section
14.8, any indebtedness of any Borrower now or hereafter owing to any other
Borrower is hereby subordinated to the Obligations, whether heretofore, now or
hereafter created, and whether before or after notice of termination hereof,
and, following the occurrence and during the continuation of an Event of
Default, no Borrower shall, without the prior consent of Required Lenders, pay
in whole or in part any of such indebtedness nor will any such Borrower accept
any payment of or on account of any such indebtedness at any time while such
Borrower remains liable hereunder. At the request of Administrative Agent, after
the occurrence and during the continuance of an Event of Default, each Borrower
shall pay to Administrative Agent all or any part of such subordinated
indebtedness and any amount so paid to Administrative Agent at its request shall
be applied to payment of the Obligations. Each payment on the indebtedness of
any Borrower to the other Borrowers received in violation of any of the
provisions hereof shall be deemed to have been received by any other Borrower as
trustee for Administrative Agent and Lenders and shall be paid over to
Administrative Agent immediately on account of the Obligations, but without
otherwise affecting in any manner any such Borrower's liability under any of the
provisions of this Agreement. Each Borrower agrees to file all claims against
the other Borrowers in any bankruptcy or other proceeding in which the filing of
claims is required by law in respect of any indebtedness of the other Borrowers
to such Borrower, and Administrative Agent and Lenders shall be entitled to all
of any such Borrower's rights thereunder. If for any reason any such Borrower
fails to file such claim at least thirty (30) days prior to the last date on
which such claim should be filed, Administrative Agent, as such Borrower's
attorney-in-fact, is hereby authorized to do so in Borrowers' name or, in
Administrative Agent's discretion, to assign such claim to, and cause a proof of
claim to be filed in the name of, Administrative Agent's nominee. In all such
cases, whether in administration, bankruptcy or otherwise, the person or persons
authorized to pay such claim shall pay to Administrative Agent the full amount
payable on the claim in the proceeding, and to the full extent necessary for
that purpose any such Borrower hereby assigns to Administrative Agent all such
Borrower's rights to any payments or distributions to which such Borrower
otherwise
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would be entitled. If the amount so paid is greater than any such Borrower's
liability hereunder, Administrative Agent will pay the excess amount to the
party entitled thereto.
14.9 Revival. If any payments of money or transfers of property
made to Administrative Agent or Lenders by any Borrower should for any reason
subsequently be declared to be, or in Administrative Agent's counsel's good
faith opinion be determined to be, fraudulent (within the meaning of any state
or federal law relating to fraudulent conveyances), preferential or otherwise
voidable or recoverable in whole or in part for any reason (hereinafter
collectively called "voidable transfers") under the Bankruptcy Code or any other
federal or state law and Lender is required to repay or restore, or in
Administrative Agent's counsel's good faith opinion may be so liable to repay or
restore, any such voidable transfer, or the amount or any portion thereof, then
as to any such voidable transfer or the amount repaid or restored and all
reasonable costs and expenses (including reasonable attorneys' fees) of
Administrative Agent related thereto, such Borrower's liability hereunder shall
automatically be revived, reinstated and restored and shall exist as though such
voidable transfer had never been made to Administrative Agent and Lenders.
14.10 Understanding of Waivers. Each Borrower warrants and agrees
that the waivers set forth in this Section 14 are made with full knowledge of
their significance and consequences. If any of such waivers are determined to be
contrary to any applicable law or public policy, such waivers shall be effective
only to the maximum extent permitted by law.
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IN WITNESS WHEREOF, Principal Agent, Administrative Agent, Co-Agents,
Lenders, Borrowers and Guarantor have caused these presents to be duly executed
as of the day and year first above written.
BORROWERS
▇▇▇▇ MICROPRODUCTS INC. ▇▇▇▇ MICROPRODUCTS-FUTURE TECH, INC.
By:_____________________________________ By:_____________________________________
Title:__________________________________ Title:__________________________________
Chief Executive Office: Chief Executive Office:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Address for Notice: Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ DATA, INC. ▇▇▇▇ MICROPRODUCTS CANADA-TENEX DATA ULC
By:_____________________________________ By:_____________________________________
Title:__________________________________ Title:__________________________________
Chief Executive Office: Chief Executive Office:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ #▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
Address for Notice: Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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GUARANTOR
▇▇▇▇ MICROPRODUCTS CANADA INC.
By:_____________________________________
Title:__________________________________
Chief Executive Office:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address for Notice:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PRINCIPAL AGENT
FIRST UNION NATIONAL BANK,
as Principal Agent
By:_____________________________________
Title:__________________________________
Address:
________________________________________
________________________________________
Attn:
Fax:
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ADMINISTRATIVE AGENT
CONGRESS FINANCIAL
CORPORATION, (WESTERN), as
Administrative Agent
By:_____________________________________
Title:__________________________________
Address:
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
CO-AGENTS AND LENDERS
CONGRESS FINANCIAL CORPORATION (WESTERN) BANK OF AMERICA, N.A.
By:_____________________________________ By:_____________________________________
Title:__________________________________ Title:__________________________________
Address: Address:
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Revolving Loan Commitment: Revolving Loan Commitment:
$87,500,000 $87,500,000
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS..................................................................................... 1
SECTION 2. CREDIT FACILITIES............................................................................... 19
2.1 Revolving Loan Facility......................................................................... 19
2.2 Letter of Credit Accommodations................................................................. 20
2.3 Acquisition Loans............................................................................... 23
2.4 Commitments..................................................................................... 24
2.5 Revolving Loan Limit............................................................................ 24
2.6 Bank Products................................................................................... 24
SECTION 3. INTEREST AND FEES............................................................................... 25
3.1 Interest........................................................................................ 25
3.2 Changes in Laws and Increased Costs of Loans.................................................... 27
3.3 Fees............................................................................................ 28
SECTION 4. CONDITIONS PRECEDENT............................................................................ 29
4.1 Conditions Precedent to Initial Loans and Letter of Credit Accommodations....................... 29
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations........................... 31
SECTION 5. SECURITY INTEREST............................................................................... 32
SECTION 6. COLLECTION AND ADMINISTRATION................................................................... 33
6.1 Borrowers' Loan Account......................................................................... 33
6.2 Statements...................................................................................... 33
6.3 Collection of Accounts.......................................................................... 34
6.4 Payments........................................................................................ 35
6.5 Taxes........................................................................................... 36
6.6 Authorization to Make Loans..................................................................... 38
6.7 Appointment of Administrative Agent for Requesting Loans and Receipts of Loans and Statements... 38
6.8 Mandatory Prepayments........................................................................... 39
6.9 Use of Proceeds................................................................................. 39
6.10 Pro Rata Treatment.............................................................................. 40
6.11 Sharing of Payments, Etc........................................................................ 40
6.12 Settlement Procedures........................................................................... 41
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 7. COLLATERAL REPORTING AND COVENANTS.............................................................. 43
7.1 Collateral Reporting............................................................................ 43
7.2 Accounts Covenants.............................................................................. 44
7.3 Inventory Covenants............................................................................. 45
7.4 Equipment Covenants............................................................................. 47
7.5 Power of Attorney............................................................................... 47
7.6 Bills of Lading and Other Documents of Title.................................................... 48
7.7 Right to Cure................................................................................... 49
7.8 Access to Premises.............................................................................. 49
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................................................. 49
8.1 Existence, Power and Authority; Subsidiaries.................................................... 50
8.2 Financial Statements; No Material Adverse Change................................................ 50
8.3 Chief Executive Office; Collateral Locations.................................................... 50
8.4 Priority of Liens; Title to Properties.......................................................... 50
8.5 Tax Returns..................................................................................... 51
8.6 Litigation...................................................................................... 51
8.7 Compliance with Other Agreements and Applicable Laws............................................ 51
8.8 Environmental Compliance........................................................................ 52
8.9 Employee Benefits............................................................................... 53
8.10 Bank Accounts................................................................................... 54
8.11 Intellectual Property........................................................................... 55
8.12 Financial Statements............................................................................ 55
8.13 Disclosure...................................................................................... 56
8.14 Governmental Authority.......................................................................... 56
8.15 Capitalization.................................................................................. 56
8.16 Labor Disputes.................................................................................. 57
8.17 Corporate Name; Prior Transactions.............................................................. 57
8.18 Restrictions on Subsidiaries.................................................................... 57
8.19 Survival of Warranties; Cumulative.............................................................. 57
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................. 58
9.1 Maintenance of Existence........................................................................ 58
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TABLE OF CONTENTS
(CONTINUED)
PAGE
9.2 New Collateral Locations........................................................................ 58
9.3 Compliance with Laws, Regulations, Etc.......................................................... 58
9.4 Payment of Taxes and Claims..................................................................... 59
9.5 Insurance....................................................................................... 60
9.6 Financial Statements and Other Information...................................................... 60
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc......................................... 62
9.8 Encumbrances.................................................................................... 63
9.9 Indebtedness.................................................................................... 64
9.10 Loans, Investments, Guarantees, Etc............................................................. 67
9.11 Dividends and Redemptions....................................................................... 69
9.12 Transactions with Affiliates.................................................................... 69
9.13 Financial Covenants............................................................................. 70
9.14 Changes in Business............................................................................. 70
9.15 Sale and Leasebacks............................................................................. 70
9.16 Pension Plans................................................................................... 70
9.17 Additional Bank Accounts........................................................................ 71
9.18 End of Fiscal Years; Fiscal Quarters............................................................ 71
9.19 Costs and Expenses.............................................................................. 71
9.20 Further Assurances.............................................................................. 72
9.21 Applications under the Companies' Creditors Arrangement Act..................................... 72
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.................................................................. 72
10.1 Events of Default............................................................................... 72
10.2 Remedies........................................................................................ 75
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW.................................... 77
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver........................... 77
11.2 Waiver of Notices............................................................................... 78
11.3 Amendments and Waivers.......................................................................... 79
11.4 Confidentiality................................................................................. 80
11.5 Indemnification................................................................................. 81
SECTION 12. THE ADMINISTRATIVE AGENT........................................................................ 81
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TABLE OF CONTENTS
(CONTINUED)
PAGE
12.1 Appointment, Powers and Immunities.............................................................. 81
12.2 Reliance by Administrative Agent................................................................ 82
12.3 Events of Default............................................................................... 82
12.4 Administrative Agent in its Individual Capacity................................................. 82
12.5 Indemnification................................................................................. 83
12.6 Non-Reliance on Administrative Agent and Other Lenders.......................................... 83
12.7 Failure to Act.................................................................................. 84
12.8 Additional Loans................................................................................ 84
12.9 Concerning the Collateral and the Related Financing Agreements.................................. 84
12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders................... 84
12.11 Collateral Matters.............................................................................. 85
12.12 Agency for Perfection........................................................................... 86
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS................................................................ 87
13.1 Term............................................................................................ 87
13.2 Interpretative Provisions....................................................................... 87
13.3 Notices......................................................................................... 88
13.4 Partial Invalidity.............................................................................. 89
13.5 Successors...................................................................................... 89
13.6 Assignments; Participations..................................................................... 89
13.7 Participant's Security Interests................................................................ 92
13.8 Entire Agreement................................................................................ 92
13.9 Attachment...................................................................................... 92
13.10 Acknowledgment.................................................................................. 93
13.11 Judgment Currency............................................................................... 93
13.12 Execution in Counterparts....................................................................... 93
13.13 Facsimile....................................................................................... 93
SECTION 14. JOINT AND SEVERAL LIABILITY AND SURETYSHIP WAIVERS.............................................. 93
14.1 Independent Obligations; Subrogation............................................................ 93
14.2 Authority to Modify Obligations and Security.................................................... 93
14.3 Waiver of Defenses.............................................................................. 94
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TABLE OF CONTENTS
(CONTINUED)
PAGE
14.4 Exercise of Administrative Agent's and Lenders' Rights.......................................... 94
14.5 Additional Waivers.............................................................................. 94
14.6 Additional Indebtedness......................................................................... 95
14.7 Notices, Demands, Etc........................................................................... 95
14.8 Subordination................................................................................... 95
14.9 Revival......................................................................................... 96
14.10 Understanding of Waivers........................................................................ 96
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