EXHIBIT 10.1
EXECUTION COPY
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KATY INDUSTRIES, INC.,
▇▇▇▇▇ INDUSTRIES (CANADA) INC.
AND
CEH LIMITED
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AMENDED AND RESTATED LOAN AGREEMENT
Dated: April 20, 2004
$110,000,000
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FLEET CAPITAL CORPORATION
Individually and as Agent for any Lender which is
or becomes a Party hereto
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▇▇▇▇▇ FARGO FOOTHILL LLC, as Syndication Agent
and
LASALLE BANK NATIONAL ASSOCIATION, as Documentation Agent
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY................................................................1
1.1 Loans.............................................................................2
1.2 Letters of Credit; LC Guaranties..................................................6
1.3 Guarantees; Limitations on U.K. Borrower's and Canadian Borrower's Liability......8
1.4 Conversion to Dollars............................................................11
1.5 Judgment Currency; Contractual Currency..........................................11
1.6 Term Loan........................................................................12
SECTION 2. INTEREST, FEES AND CHARGES....................................................13
2.1 Interest.........................................................................13
2.2 Computation of Interest and Fees.................................................15
2.3 Fee Letter.......................................................................15
2.4 Letter of Credit and LC Guaranty Fees............................................15
2.5 Unused Line Fee..................................................................16
2.6 Fronting Fees and Participation Fees.............................................16
2.7 Examination Fees.................................................................17
2.8 Reimbursement of Expenses........................................................17
2.9 Bank Charges.....................................................................18
2.10 Collateral Protection Expenses...................................................18
2.11 Payment of Charges...............................................................18
2.12 No Deductions....................................................................18
2.13 Allocation of Fees and Expenses..................................................23
SECTION 3. LOAN ADMINISTRATION...........................................................23
3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option..........................23
3.2 Payments.........................................................................28
3.3 Mandatory and Optional Prepayments...............................................30
3.4 Application of Payments and Collections..........................................33
3.5 All Loans to Constitute One Obligation...........................................34
3.6 Loan Accounts; Registration......................................................35
3.7 Statements of Account............................................................35
3.8 Increased Costs..................................................................35
3.9 Basis for Determining Interest Rate Inadequate...................................37
3.10 Sharing of Payments, Etc.........................................................37
3.11 Location of Payments and Notices.................................................38
3.12 Appointment of Borrower Representative...........................................38
3.13 Canadian Revolving Credit Loans Refunding........................................39
3.14 U.K. Revolving Credit Loans Refunding............................................40
3.15 Mitigation Obligations...........................................................41
SECTION 4. TERM AND TERMINATION..........................................................41
4.1 Term of Agreement................................................................41
4.2 Termination......................................................................42
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TABLE OF CONTENTS
(continued)
Page
SECTION 5. COLLATERAL ADMINISTRATION.....................................................42
5.1 General..........................................................................42
5.2 Administration of Accounts.......................................................44
5.3 Administration of Inventory......................................................45
5.4 Administration of Equipment......................................................46
5.5 Payment of Charges...............................................................46
5.6 Lien on Realty...................................................................46
SECTION 6. REPRESENTATIONS AND WARRANTIES................................................47
6.1 General Representations and Warranties...........................................47
6.2 Continuous Nature of Representations and Warranties..............................55
6.3 Survival of Representations and Warranties.......................................55
SECTION 7. COVENANTS AND CONTINUING AGREEMENTS...........................................55
7.1 Affirmative Covenants............................................................55
7.2 Negative Covenants...............................................................58
7.3 Specific Financial Covenants.....................................................66
SECTION 8. CONDITIONS PRECEDENT..........................................................66
8.1 Documentation....................................................................67
8.2 No Default.......................................................................67
8.3 Other Conditions.................................................................67
8.4 Aggregate Availability...........................................................67
8.5 No Litigation....................................................................67
8.6 Material Adverse Effect..........................................................67
8.7 Cash Management..................................................................67
SECTION 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.............................68
9.1 Events of Default................................................................68
9.2 Acceleration of the Obligations..................................................71
9.3 Other Remedies...................................................................71
9.4 Set Off and Sharing of Payments..................................................73
9.5 Remedies Cumulative; No Waiver...................................................73
SECTION 10. AGENT; ASSIGNMENTS; AMENDMENTS................................................74
10.1 Authorization and Action.........................................................74
10.2 Agent's Reliance, Etc............................................................75
10.3 Fleet and Affiliates.............................................................76
10.4 Lender Credit Decision...........................................................76
10.5 Indemnification..................................................................76
10.6 Rights and Remedies to be Exercised by Agent Only................................77
10.7 Agency Provisions Relating to Collateral.........................................77
10.8 Agents' Right to Purchase Commitments............................................77
10.9 Right of Sale, Assignment, Participations........................................78
10.10 Amendment........................................................................79
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TABLE OF CONTENTS
(continued)
Page
10.11 Resignation of Agent; Appointment of Successor...................................80
10.12 Audit and Examination Reports; Disclaimer by Lenders.............................81
10.13 Syndication Agent Agreement......................................................82
SECTION 11. MISCELLANEOUS.................................................................82
11.1 Power of Attorney................................................................82
11.2 Indemnity........................................................................83
11.3 Sale of Interest.................................................................83
11.4 Severability.....................................................................83
11.5 Successors and Assigns...........................................................84
11.6 Cumulative Effect; Conflict of Terms.............................................84
11.7 Execution in Counterparts........................................................84
11.8 Notice...........................................................................84
11.9 Consent..........................................................................85
11.10 Credit Inquiries.................................................................86
11.11 Time of Essence..................................................................86
11.12 Entire Agreement.................................................................86
11.13 Interpretation...................................................................86
11.14 Confidentiality..................................................................86
11.15 GOVERNING LAW; CONSENT TO FORUM..................................................86
11.16 WAIVERS BY BORROWER..............................................................87
11.17 No Novation......................................................................88
11.18 Advertisement....................................................................88
11.19 English Language.................................................................89
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made as of this 20th day of
April, 2004, by and among FLEET CAPITAL CORPORATION ("Fleet"), a Rhode Island
corporation with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, individually as a Lender and as Agent ("Agent") for itself and
any other financial institution which is or becomes a party hereto (each such
financial institution, including Fleet, is referred to hereinafter individually
as a "Lender" and collectively as the "Lenders"), the CANADIAN PARTICIPANTS
party hereto, the U.K. PARTICIPANTS party hereto, FLEET CAPITAL GLOBAL FINANCE,
INC., individually as a Lender and as Canadian Agent ("Canadian Agent"), FLEET
NATIONAL BANK, London U.K. branch, trading as FleetBoston Financial,
individually as a Lender and as U.K. Agent ("U.K. Agent"), ▇▇▇▇▇ FARGO FOOTHILL
LLC, as Syndication Agent, LASALLE BANK NATIONAL ASSOCIATION, as Documentation
Agent, the LENDERS, KATY INDUSTRIES, INC., a Delaware corporation, with its
chief executive office and principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Katy" or "U.S. Borrower"), ▇▇▇▇▇
Industries (Canada) Inc., a Canadian corporation with its chief executive office
and principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇ ▇▇▇
("▇▇▇▇▇ Canada" or "Canadian Borrower") and CEH LIMITED ("CEH" or U.K.
Borrower"), a private limited company incorporated under the laws of England and
Wales and registered with Company No. 4992300 whose registered office is ▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇. Katy, ▇▇▇▇▇ Canada and CEH are
sometimes hereinafter referred to individually as a "Borrower" and collectively
as "Borrowers." Capitalized terms used in this Agreement have the meanings
assigned to them in Appendix A, General Definitions. Accounting terms not
otherwise specifically defined herein shall be construed in accordance with GAAP
consistently applied.
WHEREAS, Borrowers, the lender signatories thereto ("Existing Lenders"),
Canadian Agent, U.K. Agent and Agent entered into a certain Loan Agreement dated
as of January 31, 2003 (said Loan Agreement, as amended from time to time, the
"Original Loan Agreement"); and
WHEREAS, Borrowers, Lenders and Agent desire to amend and restated the
Original Loan Agreement pursuant to the terms hereof.
ACCORDINGLY, the parties hereto agree as follows:
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lenders agree to make a Total Credit Facility of up to $110,000,000
available to Borrowers upon Borrower Representative's request therefor, as
follows:
1.1 Loans.
1.1.1 Revolving Credit Loans.
(a) U.S. Revolver. Each Lender (except the U.K. Lender and
Canadian Lender) agrees, severally and not jointly, for so long as no
Default or Event of Default exists, to make Revolving Credit Loans to U.S.
Borrower (each such loan or extension of credit, a "U.S. Revolving Credit
Loan") from time to time during the period from the date hereof to but not
including the last day of the Term, as requested by Borrower
Representative, on behalf of U.S. Borrower, in the manner set forth in
subsection 3.1.1 hereof, up to a maximum principal amount in Dollar
Equivalents at any time outstanding equal to the lesser of (i) the product
of such Lender's Revolving Loan Percentage and the U.S. Revolving Loan
Commitment minus the product of such Lender's Revolving Loan Percentage
and the U.S. LC Obligations and (ii) the product of such Lender's
Revolving Loan Percentage and an amount equal to the U.S. Borrowing Base
at such time minus the product of such Lender's Revolving Loan Percentage
and the U.S. LC Obligations. The U.S. Revolving Credit Loans made by the
Lenders for the benefit of U.S. Borrower shall be denominated in Dollars.
The U.S. Revolving Credit Loans shall be repayable in accordance with the
terms of the U.S. Revolving Notes and shall be secured by all of the U.S.
Collateral and all of the U.K. Collateral.
(b) U.K. Revolving Loans. As of the U.K. Effective Date, U.K.
Lender agrees, for so long as no Default or Event of Default exists, to
make revolving credit loans and extensions of credit under an overdraft
sub-facility to U.K. Borrower (each such loan or extension of credit, a
"U.K. Revolving Credit Loan") from time to time during the period from the
date hereof to but not including the last day of the Term, as requested by
Borrower Representative, on behalf of U.K. Borrower, in the manner set
forth in subsection 3.1.1 hereof, up to a maximum principal amount at any
time outstanding in Dollar Equivalents equal to the lesser of (i) the U.K.
Sublimit minus the Dollar Equivalent of U.K. LC Obligations and (ii) an
amount equal to the Dollar Equivalent of the U.K. Borrowing Base at such
time minus the Dollar Equivalent of the U.K. LC Obligations. The U.K.
Revolving Credit Loans made by U.K. Lender to U.K. Borrower shall be
denominated in Sterling or Euros. The U.K. Revolving Credit Loans shall be
repayable in accordance with the terms of the Revolving Notes and shall be
secured by all of the U.K. Collateral and all of the U.S. Collateral.
(c) Canadian Revolving Credit Loans. As of the Canadian
Effective Date, Canadian Lender agrees, for so long as no Default or Event
of Default exists, to make Revolving Credit Loans to Canadian Borrower
(each such loan or extension of credit, a "Canadian Revolving Credit
Loan") from time to time during the period from the date hereof to but not
including the last day of the Term, as requested by Borrower
Representative, on behalf of Canadian Borrower, in the manner set forth in
subsection 3.1.1 hereof, up to a maximum principal amount at any time
outstanding in Dollar Equivalents equal to the lesser of (i) the Canadian
Sublimit minus the Dollar Equivalent of the Canadian LC Obligations and
(ii) an amount equal to the Dollar Equivalent of the Canadian Borrowing
Base at such time minus the Dollar Equivalent of the Canadian LC
Obligations. The Canadian Revolving Credit Loans made by Canadian
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Lender for the benefit of Canadian Borrower shall be denominated in
Canadian Dollars. The Canadian Revolving Credit Loans shall be repayable
in accordance with the terms of the Revolving Notes and shall be secured
by all of the Canadian Collateral and the U.S. Collateral.
(d) Aggregate Revolving Loans. Notwithstanding anything in
subsection 1.1.1(a), (b), and (c) to the contrary, no Lender shall make
Revolving Credit Loans to Borrowers if the Dollar Equivalent of the
Revolving Credit Loans outstanding advanced by that Lender after taking
into account the Dollar Equivalent of the contemplated Revolving Credit
Loan would exceed the lesser of (i) such Lender's Revolving Loan
Commitment minus the product of such Lender's Revolving Loan Percentage
and the LC Obligations and (ii) except as provided in subsections 1.1.2
and 1.1.5, the product of such Lender's Revolving Loan Percentage and an
amount equal to the Dollar Equivalent of the Aggregate Borrowing Base at
such time minus the Dollar Equivalent of the LC Amount.
(e) Canadian and U.K. Sublimit. Although Canadian Revolving
Credit Loans will be funded in Canadian Dollars and U.K. Revolving Credit
Loans will be funded in Sterling or Euros, the Canadian Sublimit and U.K.
Sublimit are denominated in Dollars. As of the Closing Date, the Canadian
Sublimit and U.K. Sublimit are allocated as set forth below:
Canadian Sublimit $12,000,000
U.K. Sublimit $11,000,000
(f) Euro Sublimit. U.K. Lender shall not be required to fund
U.K. Revolving Credit Loans in Euros or issue or cause to be issued U.K.
Letters of Credit denominated in Euros if the Dollar Equivalent of the
aggregate principal amount of the U.K. Revolving Credit Loans funded or to
be funded in Euros and the undrawn available amount of outstanding U.K.
Letters of Credit issued or to be issued and denominated in Euros exceeds
$1,000,000.
1.1.2 Overadvances. Insofar as Borrower Representative may request
and Agent or Majority Lenders (as provided below) may be willing in their sole
and absolute discretion to make Revolving Credit Loans to the respective
Borrowers as to which they have Revolving Loan Commitments at a time when the
unpaid balance of Revolving Credit Loans plus the sum of the LC Amount plus the
amount of LC Obligations that have not been reimbursed by Borrowers or funded
with a Revolving Credit Loan, exceeds, or would exceed with the making of any
such Revolving Credit Loan or the incurrence of any LC Obligation, the Canadian,
U.K. or U.S. Borrowing Bases, as applicable, (any such Loan or Loans being
herein referred to individually as an "Overadvance" and collectively, as
"Overadvances"), Agents shall enter such Overadvances as debits in the
applicable Loan Account. All Overadvances shall be repaid on demand, shall be
secured by the Collateral (provided that Overadvances to U.S. Borrower or U.K.
Borrower shall only be secured by the U.S. Collateral and the U.K. Collateral
and Overadvances to Canadian Borrower shall only be secured by the Canadian
Collateral
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and U.S. Collateral) and shall bear interest as provided in this Agreement for
Base Rate Portions of Revolving Credit Loans (for the applicable Borrower)
generally. Any Overadvance made pursuant to the terms hereof shall be made to
the respective Borrowers: (i) with respect to Overadvances to U.S. Borrower, by
all Lenders (except the U.K. Lender and the Canadian Lender) ratably in
accordance with their respective Revolving Loan Percentages, (ii) with respect
to Overadvances to U.K. Borrower, by the U.K. Lender, ratably with respect to
the U.K. Lender and, following a refunding under Section 3.14, the U.K.
Participants and (iii) with respect to Overadvances to the Canadian Borrower, by
the Canadian Lender, ratably with respect to the Canadian Lender and, following
a refunding under Section 3.13, the Canadian Participants. Overadvances in the
aggregate amount of the Dollar Equivalent of $1,000,000 or less may, unless a
Default or Event of Default has occurred and is continuing, be made in the sole
and absolute discretion of Agent. Overadvances in an aggregate amount of more
than the Dollar Equivalent of $1,000,000 but less than the Dollar Equivalent of
$2,500,000 may, unless a Default or an Event of Default has occurred and is
continuing, be made in the sole and absolute discretion of the Majority Lenders.
Overadvances in an aggregate amount of the Dollar Equivalent of $2,500,000 or
more and Overadvances to be made after the occurrence and during the
continuation of a Default or an Event of Default shall require the consent of
all Lenders. The foregoing notwithstanding, in no event, unless otherwise
consented to by all Lenders, (w) shall any Overadvances be outstanding for more
than 60 consecutive days, (x) after all outstanding Overadvances have been
repaid, shall Agents or Lenders make any additional Overadvances unless 60 days
or more have expired since the last date on which any Overadvances were
outstanding, (y) shall Overadvances be outstanding on more than 90 days within
any one 180 day period or (z) shall Agents make Revolving Credit Loans on behalf
of Lenders under this subsection 1.1.2 to the extent such Revolving Credit Loans
would cause a Lender's share of the Revolving Credit Loans to exceed such
Lender's Revolving Loan Commitment minus such Lender's Revolving Loan Percentage
of the LC Amount.
1.1.3 Use of Proceeds. The Revolving Credit Loans and the New Term
Loan shall be used solely for (i) the repayment of loans and advances owed
pursuant to the Original Loan Agreement to any Existing Lender who is not a
Lender in this Agreement; (ii) Borrowers' general operating capital needs
including, but not limited to, Capital Expenditures, in a manner consistent with
the provisions of this Agreement and all applicable laws; (iii) the making of
intercompany loans to any other Loan Party (other than Parent) in accordance
with subsection 7.2.2 for their own general operating capital needs in a manner
consistent with the provisions of this Agreement and all applicable laws; and
(iv) other purposes permitted under this Agreement. On the Closing Date, Agent
shall disburse from the proceeds of Revolving Credit Loans and the New Term Loan
amounts sufficient to repay all principal, interest and fees owed to Existing
Lenders who are not Lenders hereunder pursuant to a schedule agreed upon by
Agent and Borrower Representative.
1.1.4 Swingline Loans. In order to reduce the frequency of transfers
of funds from Lenders to Agent for making Revolving Credit Loans and for so long
as no Default or Event of Default exists, Agent shall be permitted (but not
required) to make Revolving Credit Loans to U.S. Borrower upon request by
Borrower Representative (such Revolving Credit Loans to be designated as
"Swingline Loans") provided that the aggregate amount of Swingline Loans
outstanding at any time will not (i) exceed $5,000,000; (ii) when added to the
principal amount of Agent's other Revolving Credit Loans then outstanding plus
Agent's Revolving Loan
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Percentage of the LC Amount, exceed Agent's Revolving Credit Commitment; or
(iii) when added to the principal amount of all other Revolving Credit Loans
then outstanding plus the LC Amount, exceed the U.S. Borrowing Base. Within the
foregoing limits, U.S. Borrower may borrow, repay and reborrow Swingline Loans.
All Swingline Loans shall be treated as Revolving Credit Loans for purposes of
this Agreement, except that (a) all Swingline Loans shall be Base Rate Revolving
Portions and (b) notwithstanding anything herein to the contrary (other than as
set forth in the next succeeding sentence), all principal and interest paid with
respect to Swingline Loans shall be for the sole account of Agent in its
capacity as the lender of Swingline Loans. Notwithstanding the foregoing, not
more than 2 Business Days after (1) Lenders receive notice from Agent that a
Swingline Loan has been advanced in respect of a drawing under a Letter of
Credit or LC Guaranty or (2) in any other circumstance, demand is made by Agent
during the continuance of an Event of Default, each Lender shall irrevocably and
unconditionally purchase and receive from Agent, without recourse or warranty
from Agent, an undivided interest and participation in each Swingline Loan to
the extent of such Lender's Revolving Loan Percentage thereof, by paying to
Agent, in same day funds, an amount equal to such Lender's Revolving Loan
Percentage of such Swingline Loan.
1.1.5 Agent Loans. Upon the occurrence and during the continuance of
an Event of Default, each Agent, in its sole discretion, may make Revolving
Credit Loans to the Borrowers to which it has a Revolving Loan Commitment on
behalf of the applicable Lender(s) (to (i) U.S. Borrower, in Dollars, (ii) U.K.
Borrower, in Sterling or Euros and (iii) Canadian Borrower, in Canadian
Dollars), so long as the aggregate amount of such Revolving Credit Loans shall
not exceed the Dollar Equivalent of $2,500,000, if Agents, in their reasonable
business judgment, deem that such Revolving Credit Loans are necessary or
desirable (i) to protect all or any portion of the Collateral, (ii) to enhance
the likelihood, or maximize the amount of, repayment of the Loans and the other
Obligations, or (iii) to pay any other amount chargeable to any Borrower
pursuant to this Agreement, including without limitation costs, fees and
expenses as described in Sections 2.9 and 2.10 (such Revolving Credit Loans,
hereinafter, "Agent Loans"); provided that (a) in no event shall the maximum
principal amount of the Revolving Credit Loans and the LC Obligations exceed the
aggregate Revolving Loan Commitments and (b) any Revolving Credit Loans made to
protect all or any portion of the Canadian Collateral shall not be made to U.S.
Borrower or the U.K. Borrower. Each applicable Lender shall be obligated to
advance to the applicable Borrower its Revolving Loan Percentage of each Agent
Loan made in accordance with this subsection 1.1.5. If Agent Loans are made in
accordance with the preceding sentence, then (a) the Aggregate Borrowing Base
U.S. Borrowing Base or Canadian Borrowing Base, as applicable, shall be deemed
increased by the amount of such permitted Agent Loans, but only for so long as
Agents allow such Agent Loans to be outstanding, and (b) all Lenders shall be
bound to make, or permit to remain outstanding, such Agent Loans based upon
their Revolving Loan Percentages in accordance with the terms of this Agreement.
All Agent Loans shall be repaid on demand, shall be secured by the Collateral
(provided that Agent Loans to U.S. Borrower or U.K. Borrower shall only be
secured by the U.S. Collateral and U.K. Collateral and that Agent Loans to the
Canadian Borrower shall only be secured by the Canadian Collateral and the U.S.
Collateral) and shall bear interest at the Default Rate as provided in this
Agreement for Base Rate Portions of Revolving Credit Loans (for the applicable
Borrower) generally.
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1.2 Letters of Credit; LC Guaranties.
(a) U.S. Letters of Credit; U.S. LC Guaranties. Agent agrees,
for so long as no Default or Event of Default exists and if requested by
Borrower Representative on behalf of U.S. Borrower, to (i) issue or cause
to be issued by Bank or another Affiliate of Agent, on the date requested
by Borrower Representative, U.S. Letters of Credit for the account of any
U.S. Loan Party or (ii) execute U.S. LC Guaranties by which Agent, Bank,
or another Affiliate of Agent, on the date requested by Borrower
Representative, shall guaranty the payment or performance by U.S. Loan
Parties of their reimbursement obligations with respect to letters of
credit and letters of credit issued for any U.S. Loan Party's account by
other Persons in support of such U.S. Loan Party's obligations (other than
obligations for the repayment of Money Borrowed); provided that the U.S.
LC Obligations shall not exceed $16,000,000 at any time. Such U.S. Letters
of Credit and U.S. LC Guaranties shall be denominated in Dollars or such
other currency as consented to by Agent in its sole discretion. Unless
otherwise consented to by Agent, no U.S. Letter of Credit or U.S. LC
Guaranty that is a (i) standby letter of credit shall have an expiration
date greater than one year from the date of issuance (provided that any
standby letter of credit with a one-year term may provide for the
customary evergreen renewals thereof for additional one-year periods
(which shall in no event extend beyond the date referred to in the
immediately succeeding sentence, unless cash-collateralized to Agent's
satisfaction)) or (ii) documentary letter of credit shall have an
expiration date greater than 180 days from the date of issuance.
Notwithstanding anything else herein to the contrary, no U.S. Letter of
Credit or U.S. LC Guaranty may have an expiration date after the last day
of the Term, unless cash-collateralized to Agent's satisfaction.
Notwithstanding anything to the contrary contained herein, U.S. Borrower,
Agent and Lenders hereby agree that all U.S. LC Obligations and all
obligations of U.S. Borrower relating thereto shall be satisfied by the
prompt issuance of one or more Revolving Credit Loans in Dollars to U.S.
Borrower that are Base Rate Portions, which U.S. Borrower hereby
acknowledges are requested and Lenders hereby agree to fund. In the event
that Revolving Credit Loans to U.S. Borrower are not, for any reason,
promptly made to satisfy all then existing U.S. LC Obligations, each
Lender hereby agrees to pay to Agent, on demand, an amount equal to such
U.S. LC Obligations multiplied by such Lender's Revolving Loan Percentage,
and until so paid, such amount shall be secured by the U.S. Collateral and
shall bear interest and be payable at the same rate and in the same manner
as Base Rate Portions for Revolving Credit Loans to U.S. Borrower.
Immediately upon the issuance of a U.S. Letter of Credit or a U.S. LC
Guaranty under this Agreement, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from Agent, without
recourse or warranty, an undivided interest and participation therein
equal to the amount of such U.S. Letter of Credit or U.S. LC Guaranty
multiplied by such Lender's Revolving Loan Percentage. The form of any
U.S. Letter of Credit, U.K. Letter of Credit or Canadian Letter of Credit
shall be acceptable to Bank, Agent and Borrower Representative. U.S.
Letters of Credit, U.K. Letters of Credit and Canadian Letters of Credit
shall be issued in accordance with the Uniform Customs and Practice for
Documentary Credits then in effect and adopted by Bank (with respect to
U.S. Letters of Credit), Fleet U.K. (with respect to U.K. Letters of
Credit) or Fleet Canada (with respect to Canadian Letters of Credit).
6
(b) U.K. Letters of Credit; U.K. LC Guaranties. As of the U.K.
Effective Date, U.K. Agent will cause Fleet U.K., and Fleet U.K. agrees,
for so long as no Default or Event of Default exists and if requested by
Borrower Representative on behalf of any U.K. Loan Party, to issue its, or
cause an Affiliate of Fleet U.K. to issue, on the date requested by
Borrower Representative, U.K. Letters of Credit for the account of a U.K.
Borrower in support of such U.K. Loan Party's obligations (other than
obligations for the repayment of Money Borrowed); provided that the U.K.
LC Obligations shall not exceed the Dollar Equivalent of $500,000 at any
time and all U.K. Letters of Credit and U.K. LC Guaranties shall be
denominated in Sterling or Euros. Unless otherwise consented to by Agent,
no U.K. Letter of Credit or U.K. LC Guaranty that is a (i) standby letter
of credit shall have an expiration date greater than one year from the
date of issuance (provided that any standby letter of credit with a
one-year term may provide for customary evergreen renewals (which shall in
no event extend beyond the date referred to in the immediately succeeding
sentence, unless cash-collateralized to Agent's satisfaction)) or (ii)
documentary letter of credit shall have an expiration date greater than
180 days from the date of issuance. Notwithstanding anything else herein
to the contrary, no U.K. Letter of Credit or U.K. LC Guaranty may have an
expiration date after the last day of the Term, unless cash-collateralized
to Agent's satisfaction. Notwithstanding anything to the contrary
contained herein, U.K. Borrower and U.K. Lender hereby agree that all U.K.
LC Obligations and all obligations of U.K. Borrower relating thereto shall
be satisfied by the prompt issuance of one or more Revolving Credit Loans
to U.K. Borrower that are Base Rate Portions, which U.K. Borrower hereby
acknowledges are requested and U.K. Lender hereby agrees to fund. If the
draw on the underlying U.K. Letter of Credit or U.K. LC Guaranty is paid
in Sterling, the applicable Revolving Credit Loan shall be in Sterling. If
the draw amount on the underlying U.K. Letter of Credit or U.K. LC
Guaranty is paid in Euros, the applicable Revolving Credit Loan shall be
in Euros. In the event that Revolving Credit Loans to U.K. Borrower is
not, for any reason, promptly made to satisfy all then existing U.K. LC
Obligations, U.K. Lender hereby agrees to pay to U.K. Agent, on demand, an
amount equal to the Dollar Equivalent of such U.K. LC Obligations (paid in
the currency of such U.K. LC Obligations), and until so paid, such amount
shall be secured by the U.S. Collateral and the U.K. Collateral and shall
bear interest and be payable at the same rate and in the same manner as
Base Rate Portions for Revolving Credit Loans to U.K. Borrower.
Immediately upon the issuance of a U.K. Letter of Credit or a U.K. LC
Guaranty under this Agreement, each U.K. Participant shall be deemed to
have irrevocably and unconditionally purchased and received from U.K.
Agent, without recourse or warranty, an undivided interest and
participation therein equal to such U.K. LC Amount and the Dollar
Equivalent of the U.K. LC Guaranty.
(c) Canadian Letters of Credit; Canadian LC Guaranties. As of
the Canadian Effective Date, Canadian Agent will cause Fleet Canada, and
Fleet Canada agrees, for so long as no Default or Event of Default exists
and if requested by Borrower Representative on behalf of any Canadian Loan
Party, to (i) issue its, or cause an Affiliate of Fleet Canada to issue,
on the date requested by Borrower Representative, Canadian Letters of
Credit for the account of Canadian Borrower or (ii) execute Canadian LC
Guaranties by which Fleet Canada or an Affiliate of Fleet Canada, on the
date requested by Borrower Representative, shall guaranty the payment or
performance by Canadian
7
Borrower of its reimbursement obligations with respect to letters of
credit and letters of credit issued for Canadian Loan Parties' account by
other Persons in support of a Canadian Loan Party's obligations (other
than obligations for the repayment of Money Borrowed); provided that the
Canadian LC Obligations shall not exceed the Dollar Equivalent of $500,000
at any time and all Canadian Letters of Credit and Canadian LC Guaranties
shall be denominated in Canadian Dollars. Unless otherwise consented to by
Agent, no Canadian Letter of Credit or Canadian LC Guaranty that is a (i)
standby letter of credit shall have an expiration date greater than one
year from the date of issuance (provided that any standby letter of credit
with a one-year term may provide for customary evergreen renewals (which
shall in no event extend beyond the date referred to in the immediately
succeeding sentence, unless cash-collateralized to Agent's satisfaction))
or (ii) documentary letter of credit shall have an expiration date greater
than 180 days from the date of issuance. Notwithstanding anything else
herein to the contrary, no Canadian Letter of Credit or Canadian LC
Guaranty may have an expiration date after the last day of the Term,
unless cash-collateralized to Agent's satisfaction. Notwithstanding
anything to the contrary contained herein, Canadian Borrower and Canadian
Lender hereby agree that all Canadian LC Obligations and all obligations
of Canadian Loan Parties relating thereto shall be satisfied by the prompt
issuance of one or more Revolving Credit Loans to Canadian Borrower that
are Base Rate Portions, which Canadian Borrower hereby acknowledges are
requested and Canadian Lender hereby agrees to fund. In the event that
Revolving Credit Loans to Canadian Borrower are not, for any reason,
promptly made to satisfy all then existing Canadian LC Obligations,
Canadian Lender hereby agrees to pay to Canadian Agent, on demand, an
amount equal to the Dollar Equivalent of such Canadian LC Obligations
(paid in the currency of such Canadian LC Obligations), and until so paid,
such amount shall be secured by the Canadian and the U.S. Collateral and
shall bear interest and be payable at the same rate and in the same manner
as Base Rate Portions for Revolving Credit Loans to Canadian Borrower.
Immediately upon the issuance of a Canadian Letter of Credit or a Canadian
LC Guaranty under this Agreement, each Canadian Participant shall be
deemed to have irrevocably and unconditionally purchased and received from
Canadian Agent, without recourse or warranty, an undivided interest and
participation therein equal to such Canadian LC Amount and the Dollar
Equivalent of the Canadian LC Guaranty.
(d) LC Amount. Notwithstanding anything herein to the
contrary, the Dollar Equivalent of the LC Obligations shall not exceed the
lesser of (i) Aggregate Availability or (ii) $16,000,000 at any time.
(e) Sight Draft Letters of Credit. All Letters of Credit to be
issued pursuant to the terms hereof shall only be able to be drawn upon by
presentation of appropriate sight drafts.
1.3 Guarantees; Limitations on U.K. Borrower's and Canadian Borrower's
Liability.
(a) U.S. Borrower hereby absolutely and unconditionally
guarantees to Agents and each Lender and their respective successors and
assigns, the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of the Obligations of U.K.
Borrower and Canadian Borrower hereunder and under all Loan
8
Documents. U.K. Borrower hereby absolutely and unconditionally guarantees
to Agents and Lenders and their respective assigns, the full and prompt
payment (whether at stated maturity, or otherwise) and performance of the
Obligations of U.S. Borrower hereunder and under all Loan Documents.
Notwithstanding any provision herein to the contrary, Canadian Borrower
shall have no liability, direct or indirect, for the Obligations of any
U.S. Loan Party or U.K. Loan Party hereunder or under any Loan Documents
and U.K. Borrower shall have no liability, direct or indirect, for the
Obligations of any Canadian Loan Party hereunder or under any Loan
Documents.
(b) Each of U.S. Borrower and U.K. Borrower agrees that its
guaranty obligation under Section 1.3(a) hereof is a continuing guaranty
of payment and performance and not of collection, that its obligations
under this Section 1.3 shall not be discharged until payment and
performance, in full, of the Obligations has occurred, and that its
obligations under this Section 1.3 shall be absolute and unconditional,
irrespective of, and unaffected by,
(i) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, or any other
Loan Document (including any provision hereof or thereof) or any
other agreement, document or instrument to which any other Borrower
of the Obligations is or may become a party;
(ii) the absence of any action to enforce this Agreement or
any other Loan Document or the waiver or consent by Agents and any
Lender with respect to any of the provisions thereof;
(iii) the existence, value or condition of, or failure to
perfect its Lien against, any security for the Obligations or any
action, or the absence of any action, by Agents and Lenders in
respect thereof (including the release of any such security);
(iv) the insolvency of any Borrower of the Obligations; or
(v) any other action or circumstances that might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor.
Subject to the last sentence of Section 1.3(a), each of U.K
Borrower and U.S. Borrower shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations of the other
Borrowers guaranteed hereunder.
(c) Each of U.K. Borrower and U.S. Borrower expressly waives
all rights it may have now or in the future under any statute, or at
common law, or at law or in equity, or otherwise, to compel Agents or
Lenders to marshal assets or to proceed in respect of the Obligations
guaranteed hereunder against any other Borrower, any other party or
against any security for the payment and performance of the Obligations
before proceeding against, or as a condition to proceeding against, any of
the other Borrowers. U.S. Borrower also expressly waives the benefits of
division and discussion under the Civil Code of Quebec. It is agreed among
U.K. Borrower and U.S. Borrower, Agents
9
and Lenders that the foregoing waivers are of the essence of the
transaction contemplated by this Agreement and the other Loan Documents
and that, but for the provisions of this Section 1.3 and such waivers,
Agents and Lenders would decline to enter into this Agreement.
(d) Subject to the last sentence of Section 1.3(a) and
notwithstanding anything to the contrary in this Agreement or in any other
Loan Document, each of U.K. Borrower and U.S. Borrower agrees that the
provisions of this Section 1.3 are for the benefit of Agents and Lenders
and their respective successors, transferees, endorsees and assigns, and
nothing herein contained shall impair, as among U.K. Borrower and U.S.
Borrower and Agents or Lenders, the obligations of the other Borrowers
under the Loan Documents.
(e) Subject to the last sentence of Section 1.3(a) and
notwithstanding anything to the contrary in this Agreement or in any other
Loan Document, each of U.K. Borrower and U.S. Borrower hereby expressly
and irrevocably subordinates all rights at law or in equity to
subrogation, reimbursement, exoneration, contribution, indemnification or
set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the payment in full of all Obligations and
the termination of the Revolving Loan Commitments. Each of U.K. Borrower
and U.S. Borrower acknowledges and agrees that this subordination is
intended to benefit Agents and Lenders, and their respective successors
and assigns, and shall not limit or otherwise affect their liability
hereunder or the enforceability of this Section 1.3, and that Agents,
Lenders and their respective successors and assigns are intended third
party beneficiaries of the subordinations and agreements set forth in this
Section 1.3.
(f) If Agents or any Lender may, under applicable law, proceed
to realize their benefits under any of the Loan Documents giving Agents or
such Lender a Lien upon any Collateral, whether owned by any Borrower or
by any other Person, either by judicial foreclosure or sale or by
non-judicial sale or enforcement, Agents or any Lender may, at their sole
option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Section 1.3. If, in
the exercise of any of its rights and remedies, Agents or any Lender shall
forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against any Borrower or any other Person, whether
because of any applicable laws pertaining to "election of remedies" or the
like, each of U.K. Borrower and U.S. Borrower hereby consents to such
action by such of the Agents or such Lender and waives any claim based
upon such action, even if such action by Agents or such Lender shall
result in a full or partial loss of any rights of subrogation that either
U.K. Borrower or U.S. Borrower might otherwise have had but for such
action by such of the Agents or such Lender. Any election of remedies that
results in the denial or impairment of the right of Agents or any Lender
to seek a deficiency judgment against any Borrower shall not, subject to
the last sentence of Section 1.3(a), impair any other Borrower's
obligation to pay the full amount of the Obligations. In the event Agents
or any Lender shall bid at any foreclosure or trustee's or receiver's sale
or at any private sale permitted by law or the Loan Documents, Agents or
such Lender may bid all or less than the amount of the Obligations and the
amount of such bid need not be paid by Agents or such Lender but shall be
credited against the Obligations. The amount
10
of the successful bid at any such sale, whether Agent or any Lender or
other party is the successful bidder, shall be conclusively deemed to be
the fair market value of the Collateral and the difference between such
bid amount and the remaining balance of the Obligations shall be
conclusively deemed to be the amount of the Obligations guaranteed under
this Section 1.3, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any
deficiency claim to which Agents or any Lender might otherwise be entitled
but for such bidding at any such sale.
(g) Subject to the last sentence of Section 1.3(a), the
liability of each of U.K. Borrower and U.S. Borrower under this Section
1.3 is in addition to and shall be cumulative with all liabilities of each
Borrower to Agents and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party, without any limitation as to
amount, unless the instrument or agreement evidencing or creating such
other liability specifically provides to the contrary.
1.4 Conversion to Dollars.
(a) All valuations or computations of monetary amounts set
forth in this Agreement shall include the Dollar Equivalent of amounts in
Canadian Dollars, Sterling and Euros. In connection with all Dollar
amounts set forth in this Agreement, and the Aggregate Borrowing Base,
U.S. Borrowing Base, U.K. Borrowing Base and Canadian Borrowing Base
calculations, all Canadian Dollars, Euros and Sterling shall be converted
to Dollars in accordance with the following procedure:
(i) Conversions to Dollars shall occur in accordance with
prevailing exchange rates, as determined by Agent in its reasonable
discretion, on the applicable date; and
(ii) Outstanding Loans denominated in Canadian Dollars,
Sterling and Euros shall be marked to market on the date on which
Borrower Representative is required to deliver to Agent Borrowing
Base Certificates as provided in Section 7.1.4 hereof (or more often
as determined by Agent in its commercially reasonable discretion),
taking into account in each case the Dollar Equivalent of all
Revolving Credit Loans outstanding in Canadian Dollars, Sterling and
Euros.
(b) Unless otherwise specifically set forth in this Agreement,
monetary amounts shall be in Dollars.
1.5 Judgment Currency; Contractual Currency.
(a) If, for the purpose of obtaining or enforcing judgment
against any Borrower in any court in any jurisdiction, it becomes
necessary to convert into any other currency (such other currency being
hereinafter in this Section 1.5 referred to as the "Judgment Currency") an
amount due under any Loan Document in any currency (the "Obligation
Currency") other than the Judgment Currency, the conversion shall be made
at the rate of exchange prevailing on the Business Day immediately
preceding (i) the date of actual payment of the amount due, in the case of
any proceeding in the courts of any jurisdiction that will give effect to
such conversion being made on such date, or (ii) the
11
date on which the judgment is given, in the case of any proceeding in the
courts of any other jurisdiction (the applicable date as of which such
conversion is made pursuant to this Section 1.5 being hereinafter in this
Section 1.5 referred to as the "Judgment Conversion Date").
(b) If, in the case of any proceeding in the court of any
jurisdiction referred to in Section 1.5(a), there is a change in the rate
of exchange prevailing between the Judgment Conversion Date and the date
of actual receipt for value of the amount due, the applicable Borrower
shall pay such additional amount (if any, but in any event not a lesser
amount) as may be necessary to ensure that the amount actually received in
the Judgment Currency, when converted at the rate of exchange prevailing
on the date of payment, will produce the amount of the Obligation Currency
which could have been purchased with the amount of the Judgment Currency
stipulated in the judgment or judicial order at the rate of exchange
prevailing on the Judgment Conversion Date. Any amount due from a Borrower
under this Section 1.5(b) shall be due as a separate debt and shall not be
affected by judgment being obtained for any other amounts due under or in
respect of any of the Loan Documents.
(c) The term "rate of exchange" in this Section 1.5 means the
rate of exchange at which Agent would, on the relevant date at or about
12:00 noon (Chicago time), be prepared to sell the Obligation Currency
against the Judgment Currency.
(d) Any amount received or recovered by Agents in respect of
any sum expressed to be due to them (whether for itself or as trustee for
any other person) from any Borrower under this Agreement or under any of
the other Loan Documents in a currency other than the currency (the
"contractual currency") in which such sum is so expressed to be due
(whether as a result of, or from the enforcement of, any judgment or order
of a court or tribunal of any jurisdiction, the winding-up of a Borrower
or otherwise) shall only constitute a discharge of such Borrower to the
extent of the amount of the contractual currency that the relevant Agent
is able, in accordance with its usual practice, to purchase with the
amount of the currency so received or recovered on the date of receipt or
recovery (or, if later, the first date on which such purchase is
practicable). If the amount of the contractual currency so purchased is
less than the amount of the contractual currency so expressed to be due,
such Borrower shall indemnify the relevant Agent against any loss
sustained by it as a result, including the cost of making any such
purchase.
1.6 Term Loan. On or about January 31, 2003, certain of the Existing
Lenders made a term loan (the "Existing Term Loan") to Katy in the amount of
Twenty Million Dollars ($20,000,000). As of the Closing Date, the outstanding
principal balance of the Existing Term Loan owed to Lenders who are Existing
Lenders is One Million Three Hundred Eighty-Five Thousand Eight Hundred
Ninety-Three and 82/100 Dollars ($1,385,893.82). Subject to the fulfillment or
waiver of all the conditions precedent to the effectiveness of this Agreement,
each U.S. Lender shall make additional term loans (collectively, the "New Term
Loan") to Katy in the aggregate principal amount equal to the amount set forth
below such Lender's name on the signature pages to this Agreement (such Lender's
"New Term Loan Commitment"). The aggregate amount of the New Term Loan
Commitment is Eighteen Million Six Hundred
12
Fourteen Thousand One Hundred Six and 18/100 Dollars ($18,614,106.18). On the
Closing Date, the Existing Term Loan and the New Term Loan shall be combined
into one term loan (the "Term Loan") in the aggregate principal amount of Twenty
Million Dollars ($20,000,000) and the Term Loan shall be evidenced by amended
and restated promissory notes executed and delivered by Katy to each U.S.
Lender, the form of which is attached hereto and made a part hereof as Exhibit
1.2.1 to this Agreement (the "Term Note(s)"), shall bear interest as specified
in Section 2.1 and shall be repayable in accordance with the terms of the Term
Notes. The proceeds of the Term Loan were or shall be used by Katy solely for
the purposes for which the proceeds of the Revolving Credit Loans are authorized
to be used. Upon the closing of the transactions contemplated by this Agreement,
the promissory notes evidencing the Existing Term Loan shall be returned to Katy
marked "Amended and Superceded" or, with respect to promissory notes issued to
Existing Lenders who are not Lenders hereunder, "Paid-In-Full."
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
(a) U.S. Rates of Interest. Interest on Revolving Credit Loans
and the Term Loan to U.S. Borrower shall accrue on the principal amount of
the Base Rate Revolving Portions and Term Loan Portions outstanding at the
end of each day at a fluctuating rate per annum equal to the Applicable
Margin then in effect plus the Base Rate. Said rate of interest shall
increase or decrease by an amount equal to any increase or decrease in the
Base Rate, effective as of the opening of business on the day that any
such change in the Base Rate occurs. If Borrower Representative, on behalf
of U.S. Borrower, exercises its LIBOR Option as provided in Section 3.1,
interest on the Revolving Credit Loans and the Term Loan to U.S. Borrower
shall accrue on the principal amount of the LIBOR Revolving Portions and
LIBOR Term Portions outstanding at the end of each day at a rate per annum
equal to the Applicable Margin then in effect plus the LIBOR applicable to
each LIBOR Portion for the corresponding Interest Period.
(b) U.K. Rates of Interest. Interest on Revolving Credit Loans
in Sterling or Euros to U.K. Borrower shall accrue on the principal amount
of the Base Rate Revolving Portions outstanding at the end of each day at
a fluctuating rate per annum equal to the Applicable Margin then in effect
plus the Base Rate. Said rate of interest shall increase or decrease by an
amount equal to any increase or decrease in the Base Rate, effective as of
the opening of business on the day that any such change in the Base Rate
occurs. If Borrower Representative, on behalf of U.K. Borrower, exercises
its LIBOR Option as provided in Section 3.1, interest on the Revolving
Credit Loans in Sterling or Euros to U.K. Borrower shall accrue on the
principal amount of the LIBOR Revolving Portions outstanding at the end of
each day at a rate per annum equal to the Applicable Margin then in effect
plus the LIBOR applicable to each LIBOR Portion for the corresponding
Interest Period plus Mandatory Costs.
(c) Canadian Rates of Interest. Interest on Canadian Revolving
Credit Loans in Canadian Dollars to Canadian Borrower shall accrue on the
principal amount of the Base Rate Revolving Portions outstanding at the
end of each day at a fluctuating rate
13
per annum equal to the Applicable Margin then in effect plus the Base
Rate. Said rate of interest shall increase or decrease by an amount equal
to any increase or decrease in the Base Rate, effective as of the opening
of business on the day that any such change in the Base Rate occurs. If
Borrower Representative, on behalf of Canadian Borrower, exercises its
option to obtain a Canadian BA Rate Loan as provided in Section 3.1,
interest on Canadian Revolving Credit Loans to Canadian Borrower shall
accrue on the principal amount of Canadian BA Rate Loans outstanding at
the end of each day at a rate per annum equal to the Applicable Margin
then in effect plus the Canadian BA Rate applicable to each Canadian BA
Rate Loan for the corresponding Interest Period.
(d) Unless Borrower Representative is otherwise advised by
Agent, interest and Letter of Credit and LC Guaranty fees shall be payable
solely in the currency in which the underlying Revolving Credit Loan is
made or Letter or Credit or LC Guaranty is issued.
2.1.2 Default Rate of Interest. At the option of Agent or the
Majority Lenders, upon and after the occurrence of an Event of Default, and
during the continuation thereof, the principal amount of all Loans shall bear
interest (or, with respect to LC Obligations, incur fees) at a rate per annum
equal to 2.0% plus the interest or other per annum rate otherwise applicable
thereto (the "Default Rate"). Provided that in accordance with Section 8(1) of
the Interest Act (Canada), it is agreed amongst all of the parties to this
Agreement that the Default Rate as stipulated in this Section 2.1.2. shall not
apply to any security interest securing the Canadian Obligations of the Canadian
Borrower where the security interest constitutes a charge, mortgage,
encumbrance, hypothec or notice on or against any real Property situate in
Canada.
2.1.3 Maximum Interest.
(a) In no event whatsoever shall the aggregate of all amounts
deemed interest hereunder or under the Notes and charged or collected
pursuant to the terms of this Agreement or pursuant to the Notes exceed
the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto (the
"Maximum Rate"). If any provisions of this Agreement or the Notes are in
contravention of any such law, such provisions shall be deemed amended to
conform thereto. If at any time, the amount of interest paid hereunder is
limited by the Maximum Rate, and the amount at which interest accrues
hereunder is subsequently below the Maximum Rate, the rate at which
interest accrues hereunder shall remain at the Maximum Rate, until such
time as the aggregate interest paid hereunder equals the amount of
interest that would have been paid had the Maximum Rate not applied.
(b) Without limiting subsection 2.1.3(a), if any provision of
this Agreement or any of the other Loan Documents would obligate Canadian
Borrower to make any payment of interest under the Canadian Obligations or
other amount in an amount or calculated at a rate which would be
prohibited by law or would result in a receipt by the applicable recipient
of interest under the Canadian Obligations at a criminal rate (as such
terms are construed under the Criminal Code (Canada)) then,
notwithstanding such provision, such amount or rates shall be deemed to
have been adjusted with retroactive effect to the maximum amount or rate
of interest, as the case
14
may be, as would not be so prohibited by law or so result in a receipt by
the applicable recipient of interest under the Canadian Obligations at a
criminal rate, such adjustment to be effected, to the extent necessary, as
follows: (1) firstly, by reducing the amount or rates of interest required
to be paid to the applicable recipient under this subsection 2.1.3(b); and
(2) thereafter, by reducing any fees, commissions, premiums and other
amounts required to be paid to the applicable recipient which would
constitute interest under the Canadian Obligations for purposes of Section
347 of the Criminal Code (Canada). Notwithstanding the foregoing, and
after giving effect to all adjustments contemplated thereby, if the
applicable recipient shall have received an amount in excess of the
maximum permitted by that section of the Criminal Code (Canada), then the
applicable recipient shall be entitled, by notice in writing to Canadian
Agent at the Appropriate Notice Office, to obtain reimbursement from the
applicable recipient in an amount equal to such excess, and pending such
reimbursement, such amount shall be deemed to be an amount payable by the
applicable recipient to Canadian Borrower. Any amount or rate of interest
under the Canadian Obligations referred to in this subsection 2.1.3 shall
be determined in accordance with generally accepted actuarial practices
and principles as an effective annual rate of interest over the term that
any Canadian Revolving Credit Loan to Canadian Borrower remains
outstanding on the assumption that any charges, fees or expenses that fall
within the meaning of "interest" (as defined in the Criminal Code
(Canada)) shall, if they relate to a specific period of time, be pro rated
over that period of time and otherwise be pro rated over the period from
the Closing Date to the date all Obligations have been indefeasibly paid
in full and all Canadian Lender's Revolving Loan Commitments have been
terminated and, in the event of a dispute, a certificate of a Fellow of
the Canadian Institute of Actuaries appointed by Canadian Agent shall be
conclusive for the purposes of such determination.
(c) For purposes of disclosure pursuant to the Interest Act
(Canada), the annual rates of interest or fees to which the rates of
interest or fees provided in this Agreement and the other Loan Documents
for the Canadian Obligations (and stated herein or therein, as applicable,
to be computed on the basis of a 360-day year or any other period of time
less than a calendar year) are equivalent to the rates so determined
multiplied by the actual number of days in the applicable calendar year
and divided by 360 or such other period of time, respectively.
2.2 Computation of Interest and Fees. Interest, Letter of Credit and LC
Guaranty fees and Unused Line Fees hereunder shall be calculated daily and shall
be computed on the actual number of days elapsed over a year of 360 days (except
for the U.K. Obligations denominated in Sterling, which shall be based on a
365-day year). Unless otherwise set forth herein, all fees and interest shall be
paid in the same currency as the Revolving Credit Loan is made or Letter of
Credit or LC Guaranty is issued for which such fee or interest is associated.
2.3 Fee Letter. U.S. Borrower shall pay to Agent certain fees and other
amounts in accordance with the terms of the fee letter between Borrower and
Agent (the "Fee Letter").
2.4 Letter of Credit and LC Guaranty Fees. Each applicable Borrower shall
pay to Agent, Canadian Agent or U.K. Agent, as applicable, for standby and
documentary Letters of Credit and LC Guaranties of standby and documentary
letters of credit issued without
15
duplication, for the ratable benefit of the applicable Lenders, a per annum fee
equal to the Applicable Margin then in effect of the aggregate available amount
of such U.S. Letters of Credit and U.S. LC Guaranties, Canadian Letters of
Credit and Canadian LC Guaranties and U.K. Letters of Credit and U.K. LC
Guaranties, issued for the account of that Borrower and outstanding from time to
time during the term of this Agreement, plus a fronting fee (for the account of
Bank, Agent, Canadian Agent or U.K. Agent, as applicable) equal to 0.125% per
annum of the aggregate available amount of such U.S. Letters of Credit, U.S. LC
Guaranties, U.K. Letters of Credit, U.K. LC Guaranties, Canadian Letters of
Credit and Canadian LC Guaranties, plus all normal and customary charges of the
Agent, Bank, Canadian Agent or U.K. Agent, as applicable, associated with the
issuance and administration thereof, which fees and charges shall be deemed
fully earned upon issuance of each such Letter of Credit or LC Guaranty or as
advised by Agent, Bank or U.K. Agent, as applicable, and shall be due and
payable on the first Business Day of each month in arrears or as advised by
Agent or U.K. Agent, as applicable, and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason.
2.5 Unused Line Fee. U.S. Borrower shall pay to Agent, for the benefit of
each Lender (except the U.K. Lender and the Canadian Lender) in accordance with
its Revolving Loan Percentage, a fee (the "Unused Line Fee") equal to the
Applicable Margin per annum multiplied by the average daily amount by which the
aggregate Revolving Loan Commitments exceed the sum of (i) the Dollar Equivalent
of the outstanding principal balance of the sum of the U.S. Revolving Credit
Loans, U.K. Revolving Credit Loans and Canadian Revolving Credit Loans, plus
(ii) the LC Amount; provided that for purposes of allocating the Unused Line Fee
among Lenders, outstanding Swingline Loans shall not be included as part of the
outstanding balance of the U.S. Revolving Credit Loans for the purposes of
calculating such fees owed to U.S. Lenders other than Agent. The Unused Line Fee
shall be paid in Dollars. The Unused Line Fee shall be payable monthly in
arrears on the first day of each month hereafter.
2.6 Fronting Fees and Participation Fees. When and as interest is
collected on Canadian Revolving Credit Loans and U.K. Revolving Credit Loans and
until the Canadian Revolving Credit Loans and U.K. Revolving Credit Loans are
refunded in accordance with Sections 3.13 and 3.14, Canadian Agent and U.K.
Agent, respectively, shall pay to Canadian Lender and U.K. Lender, respectively,
a fee (with respect to Canadian Lender, the "Canadian Fronting Fee," with
respect to the U.K. Lender, the "U.K. Fronting Fee" and collectively, the
"Fronting Fee") equal to 1/8th of one percent (0.125%) per annum of the
outstanding principal balances of the Canadian Revolving Credit Loans and U.K.
Revolving Credit Loans, respectively, at such time, and Canadian Agent and U.K.
Agent shall pay to each Canadian Participant and U.K. Participant, respectively,
a participation fee (a "Participation Fee") equal to the product of such
Canadian Participant's or U.K. Participant's, as applicable, corresponding
Lender's Revolving Loan Percentage and that portion of interest collected equal
to the sum of Applicable Margins then in effect with respect to each of the
Canadian Revolving Credit Loans and the U.K. Revolving Credit Loans,
respectively, for the relevant interest payment period plus any Default Rate
then in effect, less the product of such Canadian Participant's or U.K.
Participant's Revolving Loan Percentage and the Fronting Fee. If any Borrower
pays less than all of the interest then due and owing by it for any period, that
portion of the interest equating to the Participation Fee shall be deemed to be
the last portion of interest paid or to be paid.
16
2.7 Examination Fees. Borrowers shall pay to Agent, Canadian Agent and/or
U.K. Agent, as applicable, examination fees in accordance with Agent's current
schedule of fees in effect from time to time generally applicable to
examinations and verifications of books and records of borrowers of such party,
in connection with examinations and verifications of the books and records and
Properties of Borrowers and their Subsidiaries and such other matters as Agents
shall deem appropriate in their reasonable credit judgment, plus all reasonable
out-of-pocket expenses incurred by any Agent in connection with such
examinations and verifications, whether such examinations and verifications are
conducted by employees of an Agent or by third parties hired by such Agent;
provided that Canadian Borrower shall not be responsible for such fees and
expenses incurred with respect to U.S. Borrower or U.K. Borrower and U.K.
Borrower shall not be responsible for such fees and expenses incurred with
respect to Canadian Borrower; and provided, further, that Borrowers shall not be
required to pay or reimburse Agents for examination and verification fees and
related expenses for more than two such examinations and verifications per annum
unless an Event of Default exists and is continuing. Such examination and
verification fees and out-of-pocket expenses shall be payable on the first day
of the month following the date of issuance by Agent of a request for payment
thereof to Borrowers. Agents may, in their discretion, provide for the payment
of such amounts by making appropriate Revolving Credit Loans to the applicable
Borrower and charging such Borrower's Loan Account therefor.
2.8 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists: (i) Agents incur legal or
accounting expenses or any other out-of-pocket expenses or costs in connection
with (1) the negotiation and preparation of this Agreement or any of the other
Loan Documents, any amendment of or modification of this Agreement or any of the
other Loan Documents, or (2) the administration of this Agreement or any of the
other Loan Documents and the transactions contemplated hereby and thereby; or
(ii) Agents or any Lender incurs reasonable legal or accounting expenses or any
other out-of-pocket expenses or costs in connection with (1) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by Agents, any
Lender, any Borrower or any other Person) relating to the Collateral, this
Agreement or any of the other Loan Documents or any Borrower's affairs, (2) any
attempt to enforce any rights of Agents or any Lender against Borrowers or any
other Person which may be obligated to Agents or any Lender by virtue of this
Agreement or any of the other Loan Documents, including, without limitation, the
Account Debtors, or (3) any attempt by Agent to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then all such legal and accounting expenses and other
out-of-pocket expenses and costs of Agents or any Lender, as applicable, shall
be charged to the applicable Borrower; provided, that such Borrower shall not be
responsible for such out-of-pocket expenses and costs to the extent incurred
because of the gross negligence or willful misconduct of Agents or any Lender;
and provided, further, that Canadian Borrower shall not be responsible for such
out-of-pocket costs and expenses, incurred with respect to U.S. Borrower or U.K.
Borrower and the U.K. Borrower shall not be responsible for such out-of-pocket
costs and expenses incurred with respect to Canadian Borrower. All amounts
chargeable to Borrowers under this Section 2.8 shall be Obligations secured by
all of the Collateral (provided that amounts chargeable to U.S. Borrower or U.K.
Borrower shall not be secured by Canadian Collateral and that amounts chargeable
to Canadian Borrower shall not be secured by the U.K. Collateral), shall be
payable on demand to Agents or such Lender, as the case may be, and shall bear
interest from the date such demand is made until paid in full at the rate
applicable to Base
17
Rate Revolving Portions (or, in the case of Canadian Agent or Canadian Lender,
Canadian Prime Rate Loans) from time to time. The applicable Borrower shall also
reimburse Agents for expenses incurred by Agents in their administration of the
Collateral to the extent and in the manner provided in Sections 2.9 and 2.10
hereof.
2.9 Bank Charges. Each Borrower shall pay to Agents, on demand, any and
all fees, costs or expenses which Agents or any Lender pays to a bank or other
similar institution arising out of or in connection with (i) the forwarding to
such Borrower or any other Person on behalf of such Borrower, by Agents or any
Lender, of proceeds of Loans made to such Borrower pursuant to this Agreement,
(ii) the depositing for collection by Agents or any Lender of any check or item
of payment received or delivered to Agents or any Lender on account of the
Obligations of such Borrower and (iii) the costs and expenses incurred in
opening and maintaining blocked accounts; provided, that Canadian Borrower shall
not be responsible for such fees and expenses incurred with respect to U.S.
Borrower or U.K. Borrower and U.K. Borrower shall not be responsible for such
fees and expenses incurred with respect to Canadian Borrower.
2.10 Collateral Protection Expenses. All out-of-pocket expenses incurred
in protecting, storing, warehousing, insuring, handling, maintaining and
shipping the Collateral, and any and all excise, property, sales, and use taxes
imposed by any United States, Canadian or United Kingdom state, provincial,
federal, or local authority on any of the Collateral or in respect of the sale
thereof shall be borne and paid by Borrowers; provided, that Canadian Borrower
shall not be liable for any such expenses incurred with respect to U.S. Borrower
or U.K. Borrower and U.K. Borrower shall not be liable for any such expenses
incurred with respect to Canadian Borrower. If Borrowers fail to promptly pay
any portion thereof when due, Agents may, at their option, but shall not be
required to, pay the same and charge the applicable Borrower therefor.
Additionally, from time to time Agent, Canadian Agent and/or U.K. Agent may, at
U.S. Borrower's, U.K. Borrower's or Canadian Borrower's expense, as applicable,
obtain appraisals from appraisers (who may be personnel of an Agent), stating
the then current fair market value of all or any portion of the real or personal
Property of any Borrower, any of its Subsidiaries or any other Loan Party,
including, without limitation, any Inventory of any Borrower, any of its
Subsidiaries or any other Loan Party; provided that unless an Event of Default
exists and is continuing, Borrowers shall not be required to reimburse Agents
for the costs of more than one appraisal of Equipment, real Property and/or
Inventory per annum.
2.11 Payment of Charges. All amounts chargeable to Borrowers under this
Agreement shall be Obligations secured by all of the Collateral (provided that
amounts chargeable to U.S. Borrower shall not be payable by Canadian Borrower
and shall not be secured by Canadian Collateral and that amounts chargeable to
U.K. Borrower shall not be secured by Canadian Collateral). All such Obligations
shall be, unless specifically otherwise provided, payable on demand and shall
bear interest from the date demand was made or such amount is due, as
applicable, until paid in full at the rate applicable to Base Rate Revolving
Portions (or, in the case of Canadian Obligations, Canadian Prime Rate Loans)
from time to time.
2.12 No Deductions. Except as otherwise provided in Sections 2.12(b), (c)
or (d) and in subsection 10.9.4 and as otherwise provided by law, any and all
payments or reimbursements made hereunder or under the other Loan Documents in
respect of Canadian Obligations, U.K. Obligations or U.S. Obligations shall be
made in Dollars, Euros, Canadian Dollars or Sterling, as
18
applicable, free and clear of and without deduction for any and all taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, imposed by (i) the United States of America or any political
subdivision thereof or therein, in the case of U.S. Obligations, (ii) Canada or
any political subdivision thereof or therein, in the case of the Canadian
Obligations, or (iii) the United Kingdom or any political subdivision thereof or
therein, in the case of the U.K. Obligations, excluding, however, the following:
(i) franchise or capital taxes, gross receipt taxes and taxes imposed on the net
income of Agents, or any Lender, Participant or Canadian Participant or U.K.
Participant by the jurisdiction under the laws of which Agents or any Lender,
Participant or Canadian Participant or U.K. Participant is organized or doing
business or any political subdivision thereof, (ii) franchise or capital taxes,
gross receipt taxes and taxes imposed on its net income by the jurisdiction of
Agents' or such Lender's or Participant's or Canadian Participant's or U.K.
Participant's applicable lending office or any political subdivision thereof and
(iii) any and all taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, imposed by a jurisdiction as a result
of the Agent, any Lender, any Participant, any Canadian Participant, or any
United Kingdom Participant being organized under the laws of such jurisdiction,
being engaged in a trade or business in such jurisdiction, or having a permanent
establishment in such jurisdiction (all such non-excluded taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto, herein "Tax Liabilities"). If any Borrower, any Guarantor, any Lender
or any Agent shall be required by law or the administration thereof to deduct
any such Tax Liabilities from or in respect of any sum payable hereunder to any
Agent or any Lender or Participant or Canadian Participant or U.K. Participant,
then the sum payable by the relevant Borrower hereunder or under the relevant
other Loan Document shall be increased as may be necessary so that, after all
required deductions on account of Tax Liabilities are made, the applicable
Agent, any such Lender, Participant, Canadian Participant and U.K. Participant,
as applicable, receives an amount equal to the sum it would have received had no
such deductions been made. Whenever any Tax Liabilities are deducted by any
Borrower, as soon as practicable thereafter, the Borrower Representative shall
send to Agent (or in the case of Canadian Borrower, Canadian Agent, or in the
case of U.K. Borrower, U.K. Agent) for its own account or for the account of the
applicable Lender or Canadian Participant or U.K. Participant a certified copy
of any original official receipt received by any such Borrower showing payment
thereof or other evidence of such payment reasonably satisfactory to the Agent
(or Canadian Agent or U.K. Agent, as the case may be). If any Borrower fails to
pay any Tax Liabilities when due to the appropriate taxing authority or fails to
remit to Agent (or in the case of Canadian Borrower, Canadian Agent, or in the
case of U.K. Borrower, U.K. Agent) the required receipts or other required
documentary evidence, each Borrower shall indemnify Agents and the Lenders and
Canadian Participants and U.K. Participants for any incremental taxes, interest
or penalties that may become payable by Agents and the Lenders and Canadian
Participants and U.K. Participants as a result of any such failure. Without
limiting the foregoing, (x) U.K. Borrower shall also indemnify and hold harmless
(without duplication) U.K. Agent, U.K. Lender and U.K. Participants against any
and all Tax Liabilities imposed by the United Kingdom as a result of
arrangements relating to the refunding pursuant to Section 3.14 of this
Agreement of U.K. Revolving Credit Loans and (y) Canadian Borrower shall also
indemnify and hold harmless (without duplication) Canadian Agent, Canadian
Lender and Canadian Participants against any and all Tax Liabilities imposed by
Canada as a result of arrangements relating to the refunding pursuant to Section
3.13 of this
19
Agreement of Canadian Revolving Credit Loans. The covenants in this Section 2.12
shall survive the termination of this Agreement and payment of the Obligations.
(a) If Agents or a Lender or Canadian Participant or U.K.
Participant during the Term of this Agreement shall become aware that it
is entitled to claim a refund, credit or reduction of tax from the
jurisdiction to which the tax was paid or the jurisdiction in which such
Agent or Lender, as the case may be, is subject to tax, which refund,
credit or reduction in the bona fide discretion of Agents or such Lender
or Canadian Participant or U.K. Participant, is allocable to the payment
of any Tax Liabilities which Borrowers have paid, or indemnified Agents or
such Lender or Canadian Participant or U.K. Participant pursuant to this
Section 2.12, Agents or such Lender or Canadian Participant or U.K.
Participant shall promptly notify Borrowers in writing of the availability
of such refund, credit or reduction claim and shall, within 30 days of
receipt of a written request by Borrowers, make a claim to such
jurisdiction for such refund, credit or reduction at Borrowers' sole
expense. If Agents or a Lender or Canadian Participant or U.K. Participant
receives a refund, credit or reduction of any such Tax Liabilities, it
shall within 30 days from the date of such receipt pay over such amount of
such refund, credit or reduction to Borrowers plus any interest that is
properly attributable to such refund, credit or reduction as will leave
Agents or such Lender or Canadian Participant or U.K. Participant (after
that payment) in the same after-tax position as it would have been in if
the Tax Liabilities had not been paid by, or indemnification had not been
made by, Borrowers.
(b) To the extent that any portion of the Participation Fee is
payable to a Canadian Participant that is non-resident of Canada for
purposes of the tax imposed pursuant to Part XIII of the ITA or any
successor provision thereto (a "Nonresident Canadian Participant"),
Canadian Agent shall deduct and remit such tax to the Receiver General for
Canada within the time payable by law, and shall increase (to the extent
reimbursed by Canadian Borrower) such portion of the Participation Fee as
may be necessary so that after all required deductions of such tax are
made, the Nonresident Canadian Participant receives an amount equal to the
sum it would have received had no such deductions been made. The Canadian
Borrower shall forthwith on demand remit to Canadian Agent the full amount
of the aforesaid increase; provided, however, that no Borrower will make
such payment with respect to any taxes that are not Tax Liabilities and no
such payment shall be required except as contemplated by Section 2.12(d).
Each of Canadian Agent and Canadian Lender represents and warrants to
Canadian Borrower and to Canadian Agent that it is not a non-resident of
Canada within the meaning of the ITA. Provided that no Default or Event of
Default has occurred and is continuing, Canadian Lender covenants and
agrees with Canadian Borrower that (i) it is the only Person that will
extend credit to Canadian Borrower hereunder and (ii) it will not assign,
sell or grant participations in its extensions of credit under this
Agreement to any Person who is a non-resident of Canada within the meaning
of the ITA. Notwithstanding any other provision of this Agreement,
Canadian Borrower shall not be required to make any payment or indemnify
any Person in respect of any Tax Liabilities of any Person incurred as a
result of such Person being a non-resident of Canada unless an Event of
Default has occurred and is continuing in which case Canadian Borrower
shall only be required to make payments in respect of Tax Liabilities
accruing after the date on which the
20
Obligations are declared immediately due and payable pursuant to Section
9.2 of the Agreement. In the event that any of Canadian Agent, Canadian
Lender or any Canadian Participant is or becomes a non-resident of Canada
within the meaning of the ITA, such party shall immediately notify
Canadian Borrower and notwithstanding anything to the contrary herein,
Canadian Borrower shall have the option to prepay that portion of the
Canadian Obligations attributable to such party without the payment of any
prepayment penalty, fee or other amounts.
(c) Limitations on U.K. Tax gross up.
(i) Definitions.
In this Section 2.12(c):
"Qualifying U.K. Lender" means a U.K. Lender which is
beneficially entitled to interest payable to that U.K. Lender in
respect of an advance that it made under a Loan Document and which
is:
(1) a bank (as defined for the purpose of section 349 of
the United Kingdom Income and Corporation Taxes Act 1988) making an
advance under a Loan Document and which U.K. Lender is within the
charge to United Kingdom corporation tax as respects any payments of
interest made in respect of that advance; or
(2) a Treaty Lender.
"Treaty Lender" means a U.K. Lender (including any
assignee from such a U.K. Lender) which:
(1) is treated for the purposes of an applicable double
taxation agreement or convention as resident in a jurisdiction
having a double taxation agreement or convention with the United
Kingdom which makes provision for full exemption from tax imposed by
the United Kingdom on interest; and
(2) does not carry on a business in the United Kingdom
through a permanent establishment with which that U.K. Lender's
participation in a U.K. Loan Document is effectively connected.
(ii) Tax gross up exclusion.
a. U.K. Borrower is not required to pay any
additional amount to a U.K. Lender or U.K. Participant under
this clause 2.12 on account of any Tax Liability imposed by
the United Kingdom if, on the date on which the payment is
made:
i. the payment could have been made to the
relevant U.K. Lender or U.K. Participant without a
deduction or withholding for or on account of any Tax
Liability imposed by the
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ if the U.K. Lender or U.K. Participant
was a Qualifying U.K. Lender, but on that date that U.K.
Lender or U.K. Participant is not or has ceased to be a
Qualifying U.K. Lender other than as a result of any
change after the date it became a U.K. Lender or U.K.
Participant under this Agreement in (or in the
interpretation, administration, or application of) any
law or treaty, or any published practice or concession
of any relevant taxing authority; or
ii. the relevant U.K. Lender or U.K.
Participant is a Treaty Lender and U.K. Borrower can
demonstrate the payment could have been made to the U.K.
Lender or U.K. Participant without the deduction or
withholding for or on account of any Tax Liability had
that U.K. Lender or U.K. Participant complied with its
obligations under paragraph b. below.
b. A Treaty Lender and U.K. Borrower shall
cooperate in completing any procedural formalities on a timely
basis necessary for U.K. Borrower to obtain authorization to
make payments to that Treaty Lender without withholding or
deduction for or on account of any Tax Liability imposed by
the United Kingdom.
(iii) Tax Credit.
If U.K. Borrower makes an additional payment under this
Section 2.12 and the relevant U.K. Lender or U.K. Participant determines
(in its absolute discretion but acting in good faith) that:
(1) a credit against, relief or remission for, or
repayment of any tax is attributable either to an increased payment
of which that additional payment forms part, or to that additional
payment; and
(2) that U.K. Lender has obtained, utilized and retained
that credit, relief, remission or repayment,
the U.K. Lender or U.K. Participant shall pay an amount
to U.K. Borrower which that U.K. Lender or U.K. Participant
determines (in its absolute discretion but acting in good faith)
will leave it (after that payment) in the same after-Tax position as
it would have been in had the additional payment not been required
under this Section 2.12.
(iv) U.K. Lender and U.K. Participant Cooperation. Each U.K.
Lender and U.K. Participant and U.K. Borrower shall cooperate (and
U.K. Agent shall cooperate with the relevant parties) in completing
any procedural formalities on a timely basis necessary for U.K.
Borrower to obtain authorization to make payments to that U.K.
Lender or U.K. Participant without withholding or deduction for or
on account of any Tax Liability or at any applicable reduced rate
22
of withholding or deduction under the terms of any applicable double
taxation agreement or convention.
(v) U.K. Lenders' Warranty. Provided that no Default or Event
of Default has occurred and is continuing, each U.K. Lender
covenants and agrees with U.K. Borrower that it will not assign,
sell or grant participations in its extensions of credit under this
Agreement to any Person who is not a Qualifying U.K. Lender. U.K.
Borrower shall not be required to pay any Tax Liabilities of any
Person incurred as a result of such Person not being a Qualifying
U.K. Lender on contravention of the previous sentence. U.K. Lender
further warrants that it is a Qualifying U.K. Lender at the date of
this Agreement (or, if later, when it becomes a party to this
Agreement) and that it will remain, until it notifies U.K. Lender to
the contrary, a Qualifying U.K. Lender. U.K. Lender undertakes to
notify U.K. Borrower as soon as reasonably practical after it
becomes aware that it is not or will cease to be a Qualify U.K.
Lender.
(d) The foregoing notwithstanding, Borrowers shall only be
required to pay additional amounts for Tax Liabilities resulting from any
Canadian Participant being a non-resident of Canada within the meaning of
the ITA or any U.K. Participant not being a Qualifying U.K. Lender or a
Treaty Lender for interest accruing after the date on which the
Obligations are declared immediately due and payable pursuant to Section
9.2 of the Agreement.
2.13 Allocation of Fees and Expenses. Unless expressly allocated to a
specific Borrower, all fees and expenses paid pursuant to this Agreement shall
be allocated to the Borrower which pays such fees and expenses.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans/LIBOR Option. Borrowings
under the credit facility established pursuant to Section 1 hereof shall be as
follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (a) Borrower
Representative, on behalf of the applicable Borrower, or, in the case of any
request to the Canadian Agent or the U.K. Agent, the Canadian Borrower or the
U.K. Borrower, as applicable, may give Agent, or Canadian Agent or U.K. Agent,
as applicable, with a copy to Agent at the Appropriate Notice Office notice in a
form reasonably acceptable to Agent of such Borrower's intention to borrow, in
which notice Borrower Representative or Canadian Borrower or U.K. Borrower (if
applicable and as the case may be) shall specify the amount of the proposed
borrowing of a Revolving Credit Loan, the currency in which the borrowing is
requested (which shall be Dollars in the case of a U.S. Revolving Credit Loan to
U.S. Borrower, Canadian Dollars in the case of a Canadian Revolving Credit Loan
to Canadian Borrower and Sterling or Euros in the case of a U.K. Revolving
Credit Loan to U.K. Borrower) and the proposed borrowing date, which shall be a
Business Day, no later than 11:00 a.m. (prevailing time in the location of the
Appropriate Notice Office) on the proposed borrowing date (or in accordance with
subsection 3.1.7, 3.1.8 or 3.1.9, as applicable, in the case of a request for a
LIBOR Revolving Portion or Canadian BA Rate Loan), provided,
23
however, that no request for a LIBOR Loan or Canadian BA Rate Loan may be made
at a time when there exists a Default or an Event of Default; and (b) the
becoming due of any amount required to be paid under this Agreement, or the
Notes, whether as interest or for any other Obligation, shall be deemed
irrevocably to be a request for a Revolving Credit Loan by the applicable
Borrower on the due date in the amount required to pay such interest or other
Obligation. With respect to borrowings under the overdraft forming part of the
U.K. Revolving Credit Loans, the prior notice requirements and minimum borrowing
amounts may be waived by U.K. Agent.
3.1.2 Disbursement. Each Borrower hereby irrevocably authorizes
Agent, Canadian Agent or U.K. Agent, as applicable, to disburse the proceeds of
each Loan requested, or deemed to be requested, pursuant to subsection 3.1.1 as
follows: (i) the proceeds of each Revolving Credit Loan requested under
subsection 3.1.1(a) shall be disbursed by Agent in Dollars, as requested by
Borrower Representative (in the case of U.S. Borrower), by Canadian Agent in
Canadian Dollars, as requested by Borrower Representative or Canadian Borrower
(in the case of Canadian Borrower) and by U.K. Agent in Sterling or Euros, as
requested by Borrower Representative or U.K. Borrower (in the case of U.K.
Borrower), as applicable, in immediately available funds, in the case of the
initial borrowing, in accordance with the terms of the written disbursement
letter from Borrower Representative, and in the case of each subsequent
borrowing, by wire transfer to such bank account as may be agreed upon by
Borrower Representative, Canadian Borrower or U.K. Borrower (as the case may be)
and Agent, Canadian Agent or U.K. Agent, as applicable, from time to time or
elsewhere if pursuant to a written direction from Borrower Representative,
Canadian Borrower or U.K. Borrower, as the case may be; and (ii) the proceeds of
each Revolving Credit Loan deemed requested under subsection 3.1.1(b) shall be
disbursed by Agent, Canadian Agent or U.K. Agent, as applicable, by way of
direct payment of the relevant interest or other Obligation. If at any time any
Loan is funded in excess of the amount requested or deemed requested by Borrower
Representative, Canadian Borrower or U.K. Borrower (as the case may be), such
Borrower agrees to repay the excess to Agent, Canadian Agent or U.K. Agent, as
applicable, immediately upon the earlier to occur of (a) such Borrower's
discovery of the error and (b) notice thereof to Borrower Representative,
Canadian Borrower or U.K. Borrower, as the case may be, from Agent, Canadian
Agent or U.K. Agent, as applicable, or any Lender.
3.1.3 Payment by Lenders. Agent, Canadian Agent or U.K. Agent, as
applicable, shall give to each applicable Lender prompt written notice by
facsimile, telex or cable of the receipt from Borrower Representative, Canadian
Borrower or U.K. Borrower of any request for a Revolving Credit Loan. Each such
notice shall specify the requested date and amount of such Revolving Credit
Loan, whether such Revolving Credit Loan shall be subject to the LIBOR Option or
shall be a Canadian BA Rate Loan, the currency of such Revolving Credit Loan,
and the amount of each such Lender's advance thereunder (in accordance with its
applicable Revolving Loan Percentage). Each such Lender shall, not later than
12:00 noon (prevailing time in the location of the Appropriate Notice Office) on
such requested date, wire to a bank designated by Agent, Canadian Agent or U.K.
Agent, as applicable, the amount of that Lender's Revolving Loan Percentage of
the requested Revolving Credit Loan. The failure of any Lender to make the
Revolving Credit Loans to be made by it shall not release any other Lender of
its obligations hereunder to make its Revolving Credit Loan. Neither Agent,
Canadian Agent or U.K. Agent nor any Lender shall be responsible for the failure
of any other Lender to make
24
the Revolving Credit Loan to be made by such other Lender. The foregoing
notwithstanding, Agent, and following a refunding of the Canadian Revolving
Credit Loan and U.K. Revolving Credit Loan in accordance with Sections 3.13 and
3.14, Canadian Agent or U.K. Agent, as applicable, in its sole discretion, may
from its own funds make a Revolving Credit Loan on behalf of the applicable
Lenders. In such event, the Lender on behalf of whom Agent, Canadian Agent or
U.K. Agent made the Revolving Credit Loan shall reimburse Agent, Canadian Agent
or U.K. Agent, as applicable, for the amount of such Revolving Credit Loan made
on its behalf, weekly (or more frequently, as determined by Agents, in their
sole discretion). On each such settlement date, Agent, Canadian Agent or U.K.
Agent, as applicable, will pay to each Lender the net amount owing to such
Lender in connection with such settlement, including without limitation amounts
relating to Loans, fees, interest and other amounts payable hereunder. The
entire amount of interest attributable to such Revolving Credit Loan for the
period from the date on which such Revolving Credit Loan was made on such
Lender's behalf until so reimbursed by such Lender, shall be paid to Agent,
Canadian Agent or U.K. Agent, as applicable, for its own account.
3.1.4 Authorization. U.S. Borrower hereby irrevocably authorizes
Agent, in Agent's sole discretion, to advance to U.S. Borrower, and to charge to
U.S. Borrower's Loan Account hereunder as a U.S. Revolving Credit Loan in
Dollars (which shall be a Base Rate Revolving Portion), a sum sufficient to pay
all interest accrued on the U.S. Obligations when due and to pay all fees, costs
and expenses and other U.S. Obligations at any time owed by such Borrower to
Agent or Lenders hereunder. U.K. Borrower hereby irrevocably authorizes U.K.
Agent, in U.K. Agent's discretion, to advance to U.K. Borrower, and to charge to
such U.K. Borrower's Loan Account hereunder as a U.K. Revolving Credit Loan in
Sterling or Euros, if chosen by U.K. Agent in its discretion, (which shall be a
Base Rate Revolving Portion), a sum sufficient to pay all interest accrued on
the U.K. Obligations when due and to pay all fees, costs and expenses and other
U.K. Obligations at any time owed by U.K. Borrower to U.K. Agent or Lenders
hereunder. Canadian Borrower hereby irrevocably authorizes Canadian Agent, in
Canadian Agent's sole discretion, to advance to Canadian Borrower, and to charge
to Canadian Borrower's Loan Account hereunder as a Canadian Revolving Credit
Loan in Canadian Dollars (which shall be a Base Rate Loan), a sum sufficient to
pay all interest accrued on the Canadian Obligations when due and to pay all
fees, costs and expenses and other Canadian Obligations at any time owed by
Canadian Borrower to Canadian Agent or Canadian Lender hereunder. Agents shall
notify Borrower Representative of all such advances and charges to a Borrower's
Loan Account on a monthly basis as provided in Section 3.7 of the Agreement.
3.1.5 Letter of Credit and LC Guaranty Requests. A request for a
Letter of Credit or LC Guaranty shall be made in the following manner: Borrower
Representative or, in the case of notice to Fleet U.K., U.K. Borrower, may give
Agent and Bank and Fleet U.K. or Fleet Canada, as applicable, a written notice
of its request for the issuance of a Letter of Credit or LC Guaranty, not later
than 11:00 a.m. (prevailing time in the location of the Appropriate Notice
Office), three Business Days before the proposed issuance date thereof, in which
notice Borrower Representative or U.K. Borrower shall specify whether the Letter
of Credit or LC Guaranty is to be issued on behalf of a U.S. Loan Party, a
Canadian Loan Party or a U.K. Loan Party, the issuance date and format and
wording for the Letter of Credit or LC Guaranty being requested (which shall be
satisfactory to Agent and Bank or U.K. Agent, as applicable, and the Person
being asked to issue such Letter of Credit or LC Guaranty); and shall include
the Letter of
25
Credit application of the proposed issuer of the Letter of Credit, duly
completed, provided that no such request may be made at a time when there exists
a Default or Event of Default. Such request shall be accompanied by an executed
application and reimbursement agreement in form and substance satisfactory to
Agents and the Person being asked to issue the Letter of Credit or LC Guaranty
(which shall be Bank or an Affiliate thereof or such other Person as approved by
Agent in its sole discretion), as well as any required resolutions.
3.1.6 Method of Making Requests. As an accommodation to Borrowers,
unless a Default or an Event of Default is then in existence, (i) solely in the
case of U.S. Revolving Credit Loans to U.S. Borrower, Agent shall permit
telephonic or electronic requests for U.S. Revolving Credit Loans to Agent, (ii)
solely in the case of U.S. Letters of Credit and U.S. LC Guaranties, Agent and
Bank may, in their discretion, permit electronic transmittal of requests for
U.S. Letters of Credit and U.S. LC Guaranties to them, and (iii) Agent may, in
Agent's discretion, permit electronic transmittal of instructions,
authorizations, agreements or reports to Agent. All other instructions,
authorizations, agreements or reports must be in written hard copy form
(including by facsimile). Unless Borrower Representative specifically directs
Agent or Bank in writing not to accept or act upon telephonic or electronic
communications from Borrower Representative, neither Agent nor Bank shall have
any liability to the applicable Borrower for any loss or damage suffered by such
Borrower as a result of Agent's or Bank's honoring of any requests, execution of
any instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to Agent or Bank by Borrower, and neither Agent nor Bank shall have any
duty to verify the origin of any such communication or the authority of the
Person sending it. Each telephonic request for a Revolving Credit Loan, Letter
of Credit or LC Guaranty accepted by Agent and Bank, if applicable, hereunder
shall be promptly followed by a written confirmation of such request from
Borrower Representative to Agent and Bank, if applicable.
3.1.7 LIBOR Portions and Canadian BA Rate Loans.
(a) Provided that as of both the date of the LIBOR Request and
the first day of the Interest Period, no Default or Event of Default
exists, in the event any Borrower desires to obtain a LIBOR Portion,
Borrower Representative or U.K. Borrower, as applicable, shall give Agent
or U.K. Agent, as applicable, a LIBOR Request no later than 11:00 a.m.
(prevailing time in the location of the Appropriate Notice Office) on the
third Business Day prior to the requested borrowing date. Each LIBOR
Request shall be irrevocable and binding on the applicable Borrower. In no
event shall Borrowers, in the aggregate, be permitted to have outstanding
at any one time LIBOR Portions with more than seven (7) different Interest
Periods with respect to U.S. Revolving Credit Loans, U.K. Revolving Credit
Loans and Canadian BA Rate Loans. The LIBOR Rate shall be available only
(i) in the case of U.K. Borrower, for borrowings in Sterling and Euros and
(ii) in the case of U.S. Borrower, for borrowings in Dollars.
(b) Provided that as of both the date of the Canadian BA
Request and the first day of the relevant Interest Period, no Default or
Event of Default exists, in the event Canadian Borrower desires to obtain
a Canadian BA Rate Loan, Borrower Representative or Canadian Borrower
shall give Canadian Agent a Canadian BA Request no later than 11:00 a.m.
(prevailing time in the location of the Appropriate Notice Office)
26
on the third Business Day prior to the requested borrowing date. Each
Canadian BA Request shall be irrevocable and binding on Canadian Borrower.
The Canadian BA Rate shall be available only for borrowings in Canadian
Dollars.
3.1.8 Conversion of Base Rate Portions and Canadian Prime Rate Loan
Conversion.
(a) Provided that as of both the date of the LIBOR Request and
the first day of the relevant Interest Period, no Default or Event of
Default exists, Borrower Representative or U.K. Borrower may, on any
Business Day and on behalf of the applicable Borrower, convert any Base
Rate Portion (except with respect to Revolving Credit Loans to Canadian
Borrower) into a LIBOR Portion. If the applicable Borrower desires to
convert a Base Rate Portion, Borrower Representative shall give Agent a
LIBOR Request no later than 11:00 a.m. (prevailing time in the location of
the Appropriate Notice Office) on the third Business Day prior to the
requested conversion date.
(b) Provided that, as of both the date of the Canadian BA
Request and the first day of the relevant Interest Period, no Default or
Event of Default exists, Borrower Representative may, on any Business Day
and on behalf of Canadian Borrower, convert any Canadian Prime Rate Loan
(that constitutes a Base Rate Loan under clause (ii)(b) of the definition
of Base Rate) into a Canadian BA Rate Loan. If Canadian Borrower desires
to convert a Canadian Prime Rate Loan, Borrower Representative shall give
Canadian Agent a Canadian BA Request no later than 11:00 a.m. (prevailing
time in the location of the Appropriate Notice Office) on the third
Business Day prior to the requested conversion date.
3.1.9 Continuation of LIBOR Portions and Canadian BA Rate Loans.
(a) Provided that as of both the date of the LIBOR Request and
the first day of the relevant Interest Period, no Default or Event of
Default exists, Borrower Representative or U.K. Borrower may, on any
Business Day and on behalf of the applicable Borrower, continue any LIBOR
Portions into a subsequent Interest Period of the same or a different
permitted duration. If any Borrower desires to continue a LIBOR Portion,
Borrower Representative shall give Agent and U.K. Agent, as applicable, a
LIBOR Request no later than 11:00 a.m. (prevailing time in the location of
the Appropriate Notice Office) on the third Business Day prior to the
requested continuation date. If Borrower Representative shall fail to give
timely notice of its election to continue any LIBOR Portion or portion
thereof as provided above, or if such continuation shall not be permitted,
such LIBOR Portion or portion thereof, unless such LIBOR Portion shall be
repaid, shall automatically be converted into a Base Rate Portion at the
end of the Interest Period then in effect with respect to such LIBOR
Portion.
(b) Provided that as of both the date of the Canadian BA
Request and the first day of the relevant Interest Period, no Default or
Event of Default exists, Borrower Representative may, on any Business Day
and on behalf of Canadian Borrower, continue any Canadian BA Rate Loan
into another Canadian BA Rate Loan
27
with an Interest Period of the same or a different permitted duration. If
Canadian Borrower desires to continue a Canadian BA Rate Loan, Borrower
Representative or Canadian Borrower shall give Canadian Agent a Canadian
BA Request no later than 11:00 a.m. (prevailing time in the location of
the Appropriate Notice Office) on the third Business Day prior to the
requested continuation date. If Borrower Representative shall fail to give
timely notice of its election to continue any Canadian BA Rate Loan or
portion thereof as provided above, or if such continuation shall not be
permitted, such Canadian BA Rate Loan or portion thereof, unless such
Canadian BA Rate Loan shall be repaid, shall automatically be converted
into a Canadian Prime Rate Loan at the end of the Interest Period then in
effect with respect to such Canadian BA Rate Loan.
3.1.10 Inability to Make LIBOR Portions and Canadian BA Rate Loans.
Notwithstanding any other provision hereof, if any applicable law, treaty,
regulation or directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of this
subsection 3.1.10, the term "Lender" shall include the office or branch where
such Lender or any corporation or bank then controlling such Lender makes or
maintains any LIBOR Portions where no other office or branch is reasonably
available) to make or maintain its LIBOR Portions or Canadian BA Rate Loans, or
if with respect to any Interest Period, Agent, U.K. Agent or Canadian Agent is
unable to determine the LIBOR or Canadian BA Rate relating thereto, or adverse
or unusual conditions in, or changes in applicable law relating to, the London
interbank market or the Canadian BA market, as applicable, make it, in the
reasonable judgment of Agent, U.K. Agent or Canadian Agent, impracticable to
fund therein any of the LIBOR Portions or Canadian BA Rate Loans, or make the
projected LIBOR or Canadian BA Rate unreflective of the actual costs of funds
therefor to any Lender, the obligation of Agent, U.K. Agent, Canadian Agent and
Lenders (in the case of unlawfulness, only the affected Lender(s)) to make or
continue LIBOR Portions or Canadian BA Rate Loans or convert Base Rate Portions
or Canadian Prime Rate Loans to LIBOR Portions or Canadian BA Rate Loans, as
applicable, hereunder shall forthwith be suspended during the pendency of such
circumstances and the applicable Borrower shall, if any affected LIBOR Portions
or Canadian BA Rate Loans are then outstanding, promptly upon request from Agent
or U.K. Agent, convert such affected LIBOR Portions into Base Rate Portions, or
promptly upon request from Canadian Agent, convert such affected Canadian BA
Rate Loans into Canadian Prime Rate Loans.
3.2 Payments. Except where evidenced by notes or other instruments issued
or made by Borrowers to any Lender and accepted by such Lender specifically
containing payment instructions that are in conflict with this Section 3.2 (in
which case the conflicting provisions of said notes or other instruments shall
govern and control), the Obligations shall be payable as follows:
3.2.1 Principal.
(i) Revolving Credit Loans. Principal on account of Revolving
Credit Loans shall be payable by the applicable Borrower to the
applicable Agent for the ratable benefit of the applicable Lenders
at the Appropriate Payment Office immediately upon the earliest of
(i) the receipt by the applicable Agent, U.K. Borrower, U.S.
Borrower or Canadian Borrower, of any proceeds of any of the
Collateral (except as otherwise provided herein), including without
limitation
28
pursuant to subsections 3.3.1 and 5.2.4, to the extent of said
proceeds, subject to such Borrower's rights to reborrow such amounts
in compliance with subsection 1.1.1 hereof; (ii) the occurrence of
an Event of Default in consequence of which Agent or Majority
Lenders elect to accelerate the maturity and payment of the
Obligations in accordance with Sections 9.2 and/or 9.3 of this
Agreement, or (iii) termination of this Agreement pursuant to
Section 4 hereof; provided, however, that, if an Overadvance or an
Agent Loan shall exist at any time, the applicable Borrower shall,
on demand, repay the Overadvance or Agent Loan. Each payment
(including principal prepayment) by Borrowers on account of
principal of the Revolving Credit Loans shall be applied first to
Base Rate Revolving Portions and thereafter, subject to subsection
3.3.4 of the Agreement, to LIBOR Revolving Portions and Canadian BA
Rate Loans, as applicable.
(ii) Term Loan. The aggregate principal amount of the Term
Loan shall be payable in quarterly installments, together with
accrued and unpaid interest thereon, commencing on July 1, 2004 and
continuing on each October 1, January 1, April 1 and July 1
thereafter to and including January 1, 2009 in installments of Seven
Hundred Fourteen Thousand Two Hundred Eighty-Five and 75/100 Dollars
($714,285.75) each. The entire remaining principal amount of the
Term Loan shall be due and payable on April __, 2009.
3.2.2 Interest.
(i) Base Rate Portion. Interest accrued on Base Rate Portions
shall be due and payable by the applicable Borrower to the
applicable Agent for the ratable benefit of the applicable Lenders
on the earliest of (1) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day
of the preceding month, (2) the occurrence of an Event of Default in
consequence of which Agent or Majority Lenders elect to accelerate
the maturity and payment of the Obligations in accordance with
Sections 9.2 and/or 9.3 of this Agreement or (3) termination of this
Agreement pursuant to Section 4 hereof.
(ii) LIBOR Portion and Canadian BA Rate. Interest accrued on
each LIBOR Portion and on Canadian BA Rate Loans shall be due and
payable by the applicable Borrower to the applicable Agent for the
ratable benefit of the applicable Lenders on each LIBOR Interest
Payment Date and on the earlier of (1) the occurrence of an Event of
Default in consequence of which Agent or Majority Lenders elect to
accelerate the maturity and payment of the Obligations in accordance
with Sections 9.2 and/or 9.3 of this Agreement or (2) termination of
this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrowers to Agent, Canadian
Agent or U.K. Agent, as applicable, at the Appropriate Payment Office, as and
when provided in Section 2 or Section 3 hereof, as applicable, to Agent,
Canadian Agent, U.K. Agent or a Lender, as applicable, or to any other Person
designated by Agent, Canadian Agent, U.K. Agent or such Lender in writing.
29
3.2.4 Other Obligations. The balance of the Obligations requiring
the payment of money, if any, shall be payable by Borrowers to Agents for
distribution to Lenders, as appropriate, as and when provided in this Agreement,
the Other Agreements or the Security Documents, or on demand, whichever is
later, in each case at the Appropriate Payment Office.
3.2.5 Prepayment of/Failure to Borrow LIBOR Portions. Borrowers may
prepay a LIBOR Portion and Canadian BA Rate Loans at the Appropriate Payment
Office only upon at least three (3) Business Days prior written notice to Agent,
U.K. Agent or Canadian Agent, as applicable (which notice shall be irrevocable).
Each applicable Borrower shall pay to each applicable Lender, upon request of
such Lender, at the Appropriate Payment Office such amount or amounts as shall
be sufficient (as determined by Agent in a manner consistent with its customs
and practices) to compensate such Lender for any loss, cost, or expense (other
than any taxes that are not Tax Liabilities) incurred as a result of: (i) any
payment of a LIBOR Portion or Canadian BA Rate Loan on a date other than the
last day of the Interest Period for such LIBOR Portion or Canadian BA Rate Loan;
(ii) any failure by the applicable Borrower to borrow a LIBOR Portion or
Canadian BA Rate Loan on the date specified by the Borrower Representative's
LIBOR Request or Canadian BA Request; or (iii) any failure by the applicable
Borrower to pay a LIBOR Portion or Canadian BA Rate Loan on the date for payment
specified in Borrower Representative's written notice. If by reason of an Event
of Default, Agent or Majority Lenders elect to declare the Obligations to be
immediately due and payable, then any amount payable pursuant to this Section
3.2.5 with respect to a LIBOR Portion or Canadian BA Rate Loan shall become due
and payable in the same manner as though Borrowers had exercised such right of
prepayment.
3.3 Mandatory and Optional Prepayments.
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of
Collateral. (a) Except as provided in subsections 5.4.2, 7.2.9 and 3.3.1 (b)
below, if any Borrower or any of its Subsidiaries sells any of the Collateral or
if any of the Collateral is lost or destroyed or taken by condemnation, the
applicable Borrower shall, unless otherwise agreed by Majority Lenders, pay to
the applicable Agent for the ratable benefit of the applicable Lenders as and
when received by the applicable Borrower or such Subsidiary and as a mandatory
prepayment of the Loans, as herein provided, a sum equal to the proceeds
(including insurance payments but net of costs and taxes incurred in connection
with such sale or event and amounts required to remove Permitted Liens that are
prior to the Liens of Agents) received by the applicable Borrower or such
Subsidiary from such sale, loss, destruction or condemnation. To the extent that
the Collateral sold, lost, destroyed or condemned consists of Equipment, real
Property, or other Property of a U.S. Loan Party other than Accounts or
Inventory, then, except as otherwise provided in subsection 7.2.9(vii), the
applicable prepayment shall be applied first to the installments of principal
due under the Term Notes ratably, to be applied to future installment payments
in inverse order of maturity until paid in full, and second to repay outstanding
principal of U.S., Canadian or U.K. Revolving Credit Loans, as applicable, on a
ratable basis. To the extent that the Collateral sold, lost, destroyed or
condemned consists of Accounts or Inventory or any other asset of a Canadian
Loan Party, the applicable prepayment shall be applied to reduce the outstanding
principal balance of the Canadian Revolving Credit Loans but shall not
permanently reduce the Canadian Revolving Loan Commitments. To the extent that
the Collateral sold, lost, destroyed or condemned consists of Accounts or
Inventory or any other
30
asset of a U.K. Loan Party, the applicable prepayment shall be applied to reduce
the outstanding principal balance of the U.K. Revolving Credit Loans (or if the
principal balance of such U.K. Revolving Credit Loans has been reduced to the
Dollar Equivalent of $0, U.S. Revolving Loans), but shall not permanently reduce
the U.K. (or U.S., if applicable) Revolving Loan Commitments. Notwithstanding
the foregoing, if the proceeds of any such condemnation or insurance (in each
case net of costs and taxes incurred) with respect to any condemnation, loss or
destruction of Equipment, Inventory, real Property or other Collateral (i) are
less than $750,000, unless an Event of Default is then in existence, Agent shall
remit such proceeds to the applicable Borrower for use in, reinvestment or, as
appropriate, replacing or repairing the damaged Collateral or (ii) are equal to
or greater than $750,000 and the applicable Borrower has requested that Agent
agree to permit such Borrower or the applicable Subsidiary to apply such
proceeds toward reinvestment or, as appropriate, to repair or replace the
damaged Collateral, such amounts shall be provisionally applied to reduce the
outstanding principal balance of the U.S., Canadian or U.K. Revolving Credit
Loans, as applicable. Such amount shall, unless an Event of Default is in
existence, be remitted to the applicable Borrower for use in such reinvestment
or, as appropriate, in replacing or repairing the damaged Collateral; provided
that such reinvestment, repairs or replacements (as appropriate) are commenced
within 180 days of the date of receipt of such insurance proceeds and diligently
completed thereafter. If such reinvestment, repairs or replacements (as
appropriate) are not commenced within any such 180-day period, then such amount
shall be applied to the Loans in the manner specified in the second or third
sentence, as applicable, of this subsection 3.3.1 until payment thereof in full.
For the avoidance of doubt, in no case will the proceeds from any sale, loss,
destruction or condemnation of the Accounts, Inventory or any other asset of any
Canadian Loan Party be applied to reduce the outstanding balance of the U.S.
Obligations and in no case will the proceeds from any sale, loss, destruction or
condemnation of the Accounts, Inventory or other asset of any Canadian Loan
Party be applied to reduce the outstanding balance of the U.K. Obligations, and
in no case will the proceeds from any sale, loss, destruction or condemnation of
the Accounts, Inventory or other asset of any U.K. Loan Party be applied to
reduce the outstanding balance of the Canadian Obligations.
(b) The foregoing notwithstanding, so long as no Event of Default
exists and is continuing, except as otherwise provided in subsections 5.4.2 and
7.2.9, if any U.S. Loan Party effects an Asset Sale of a complete (or
substantially complete) business or product line, operating division, or
Subsidiary or operating facility, then the applicable U.S. Loan Party shall,
unless otherwise agreed to by Majority Lenders, pay to Agent for the ratable
benefit of U.S. Lenders as and when received by the applicable Loan Party and as
a mandatory prepayment of the Loans, as herein provided, a sum equal to the
proceeds (net of costs and taxes incurred in connection with such sale and
amounts required to remove Permitted Liens that are prior to the Lien of Agent)
received by the applicable Loan Party from such Asset Sale. Such mandatory
prepayment shall be applied to the Loans as follows: first to installments of
principal due under the Term Notes ratably to be applied to future installments
in inverse order of maturity in an aggregate amount equal to the lesser of (x)
the outstanding principal balance of the Term Notes and (y) the sum of seventy
percent (70%) of the Appraised Value of the real Property included within said
Asset Sales plus eighty percent (80%) of the Appraisal Value of the Equipment
included within said Asset Sale, second to repay outstanding principal of U.S.
Revolving Loans in an amount equal to the lesser of (x) the outstanding
principal balance of the U.S. Revolving Credit Loans and (y) the sum of the then
applicable advance rate for Eligible Accounts used in determining the U.S.
Borrowing Base multiplied by the amount of Eligible Accounts included within
said Asset Sale plus the then applicable advance rate for Eligible Inventory
used in
31
determining the U.S. Borrowing Base multiplied by the amount of Eligible
Inventory included within said Asset Sale, third to the installments of
principal due under the Term Notes ratably to be applied to future installment
payments in inverse order of maturity, until paid in full and fourth to repay
outstanding principal of U.S. Revolving Credit Loans, until paid in full.
3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity.
If any Borrower or any other Loan Party, issues any additional Money Borrowed
(other than Money Borrowed permitted by subsection 7.2.3 of the Agreement) or
obtains any additional equity (except from Kohlberg & Company or any of the
investment funds advised thereby, any employee, director or consultant, or
pursuant to inter-company transactions permitted by this Agreement or in
connection with equity issued pursuant to a Permitted Acquisition), in a manner
permitted under this Agreement, such Borrower shall pay, or cause the applicable
Loan Party to pay, to the applicable Agent for the ratable benefit of the
applicable Lenders, when and as received by such Borrower or such Loan Party and
as a mandatory prepayment of the Obligations, a sum equal to 100% of the net
proceeds to such Borrower or such Loan Party of the issuance of such
Indebtedness or equity. Any such prepayment shall be applied to the Loans in the
manner specified (x) in the second sentence of subsection 3.3.1 until payment
thereof in full, if such proceeds are received by a U.S. Loan Party or (y) in
the third sentence of subsection 3.3.1 until payment thereof in full, if such
proceeds are received by a Canadian or U.K. Loan Party.
3.3.3 Excess Cash Flow Recapture. U.S. Borrower shall prepay the
Term Loan in amounts equal to the lesser of (x) Borrowers' Excess Cash Flow with
respect to each fiscal year of Borrower during the Term hereof, commencing with
the fiscal year ending December 31, 2004, minus voluntary prepayments of the
Term Loan made during the applicable fiscal year and (y) the excess (or $0 if
there is no such excess) of the outstanding principal balance of the Term Loan
over $10,000,000, such prepayments to be based upon, and made within 5 Business
Days following the due date for delivery by Borrower to Agent of the annual
financial statements required by subsection 7.1.3(i) hereof and each such
prepayment shall be applied to the Term Loan in the manner specified in the
second sentence of subsection 3.3.1.
3.3.4 LIBOR Portions and Canadian BA Rate Loans. If the application
of any payment made in accordance with the provisions of this Section 3.3 at a
time when no Event of Default has occurred and is continuing would result in
termination of a LIBOR Portion or Canadian BA Rate Loans prior to the last day
of the Interest Period for such LIBOR Portion or Canadian BA Rate Loans, the
amount of such prepayment shall not be applied to such LIBOR Portion or Canadian
BA Rate Loans, but will, at the applicable Borrower's option, (x) be held by
Agent or U.K. Agent, as applicable, in the case of LIBOR Portions, and Canadian
Agent, in the case of Canadian BA Rate Loans, in a non-interest bearing account
at Bank or another bank satisfactory to Agent or U.K. Agent, as applicable, in
the case of LIBOR Portions, and Canadian Agent, in the case of Canadian BA Rate
Loans, in its discretion, which account is in the name of Agent, U.K. Agent or
Canadian Agent, as the case may be, and from which account only Agent, U.K.
Agent or Canadian Agent, as the case may be, can make any withdrawal, or (y)
shall be provisionally applied to outstanding Base Rate Portions or Canadian
Prime Rate Loans, as applicable, in any case to be applied as such amount would
otherwise have been applied under
32
this Section 3.3 at the earlier to occur of (i) the last day of the relevant
Interest Period or (ii) the occurrence of a Default or an Event of Default.
3.3.5 Optional Prepayments. U.S. Borrower may, at its option from
time to time upon not less than 3 days prior written notice to Agent, prepay
installments of the Term Notes, provided that the amount of any such prepayment
is at least $500,000 and in integral multiples of $100,000 above $500,000, and
that such prepayments are made ratably with respect to all Term Notes. Each such
prepayment shall be applied to the installments of principal due under the Term
Notes in inverse order of maturity. Except for charges under subsection 3.2.5
applicable to prepayments of LIBOR Term Portions, such prepayments shall be
without premium or penalty.
3.3.6 Optional Reductions of Revolving Loan Commitments. Borrowers
may, at their option from time to time upon not less than 3 Business Days' prior
written notice to Agent, terminate in whole or permanently reduce ratably in
part, the unused portion of the Revolving Loan Commitments or the U.K. Sublimit
or the Canadian Sublimit; provided, however, that (i) each such partial
reduction shall be in the amount of the Dollar Equivalent of $5,000,000 or
integral multiples of the Dollar Equivalent of $1,000,000 in excess thereof and
(ii) the aggregate of all optional reductions to the Revolving Credit
Commitments may not exceed the Dollar Equivalent of $10,000,000 during any
12-month period during the Term or the Dollar Equivalent of $30,000,000 during
the Term. Except for charges under subsection 3.2.5 applicable to prepayments of
LIBOR Revolving Portions or Canadian BA Rate Loans, there shall be no prepayment
penalty or termination charge payable in connection with any such reduction in
Revolving Loan Commitments, U.K. Sublimit or Canadian Sublimit.
3.4 Application of Payments and Collections.
3.4.1 Collections. All items of payment received at the Appropriate
Payment Office by Agent, Canadian Agent or U.K. Agent by 12:00 noon (prevailing
time at the location of the Appropriate Notice Office), on any Business Day
shall be deemed received on that Business Day. All items of payment received
after 12:00 noon (prevailing time at the location of the Appropriate Notice
Office), on any Business Day shall be deemed received on the following Business
Day. If, as the result of collections of Accounts as authorized by subsection
5.2.4 hereof or otherwise, a credit balance exists in the Loan Accounts, to the
extent permitted by the Loan Documents such credit balance shall not accrue
interest in favor of Borrowers, but shall be disbursed to the applicable
Borrower or otherwise at Borrower Representative's direction in the manner set
forth in subsection 3.1.2, upon Borrower Representative's request (at the
Appropriate Notice Office) at any time, so long as no Default or Event of
Default then exists. Agents may, at their option, offset such credit balance
against any of the Obligations upon and during the continuance of an Event of
Default.
3.4.2 Apportionment, Application and Reversal of Payments. Principal
and interest payments (i) by U.S. Borrower shall be apportioned ratably among
all Lenders (according to the unpaid principal balance of the Loans to which
such payments relate held by each Lender), (ii) by U.K. Borrower shall be
distributed to U.K. Lender subject to Section 2.6 or, following a refunding in
accordance with Section 3.14, apportioned among all U.K. Participants (according
to the unpaid principal balance of the Loans to which such payments relate held
by
33
each U.K. Participant) and (iii) by Canadian Borrower shall be distributed to
Canadian Lender subject to Section 2.6 or, following a refunding in accordance
with Section 3.13, apportioned among all Canadian Participants (according to the
unpaid principal balance of the Loans to which such payments relate held by each
Canadian Participant). All payments of principal and interest on Revolving
Credit Loans shall be remitted to Agent, Canadian Agent or U.K. Agent, as
applicable, at the Appropriate Payment Office and all such payments not relating
to principal or interest of specific Loans, or not constituting payment of
specific fees, and, except as provided in subsection 3.3.1, all proceeds of
Accounts or other Collateral received by Agent, U.K. Agent or Canadian Agent, as
applicable, shall be applied, ratably, subject to the provisions of this
Agreement, first, to pay any fees, indemnities, or expense reimbursements (other
than amounts related to Product Obligations) then due hereunder or under any of
the Loan Documents to Agents or Lenders from the applicable Borrower; second, to
pay interest due from the applicable Borrower in respect of all Loans made to
such Borrower, including Swingline Loans, and Agent Loans; third, to pay or
prepay principal of Swingline Loans and Agent Loans made to such Borrower;
fourth, to pay or prepay principal of the Revolving Credit Loans (other than
Swingline Loans and Agent Loans) and unpaid reimbursement obligations in respect
of LC Obligations of the applicable Borrower; fifth, if an Event of Default
exists and is continuing, to cash-collateralize the U.S. LC Obligations,
Canadian LC Obligations and U.K. LC Obligations of such Borrower by depositing
in a cash collateral account established with the Agent on terms and conditions
satisfactory to the Agent an amount in cash equal to 103% of the aggregate
amount of such Obligations; sixth, to pay or prepay principal of the Term Loan
made to such Borrower; seventh, to the payment of any other Obligation (other
than amounts related to Product Obligations) due to Agents by such Borrower;
eighth, to pay any fees, indemnities or expense reimbursements related to, or
any other amounts owing any Lender or any Agent by the applicable Borrower with
respect to, Product Obligations of such Borrower; and ninth, in the case of (x)
payments by U.K. Borrower, to the payment of any other Obligations due to any
Agent or any Lender by U.S. Borrower and (y) payments by U.S. Borrower, to the
payment of any other Obligations due to Agents or any Lender by U.S. Borrower,
U.K. Borrower or Canadian Borrower, ratably. Except as expressly set forth to
the contrary, payments received (i) from U.S. Borrower shall be applied only to
the U.S. Obligations, (ii) from the U.K. Borrower shall be applied only to the
U.K. Obligations, and (iii) from Canadian Borrower shall be applied only to the
Canadian Obligations; provided that after the U.S. Obligations, U.K. Obligations
or Canadian Obligations are paid in full by U.S. Borrower, U.K. Borrower or
Canadian Borrower, respectively, any such excess payments shall be applied pro
rata to the other Obligations (except that (i) any payments received from
Canadian Borrower shall not be applied to the U.S. Obligations, (ii) any
payments received from U.K. Borrower shall not be applied to the Canadian
Obligations and (iii) any payments received from Canadian Borrower shall not be
applied to the U.K. Obligations). After the occurrence and during the
continuance of an Event of Default, as between Agents and Borrowers, Agents
shall have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Agents
against the Obligations, in such manner as Agents may deem advisable,
notwithstanding any entry by Agents or any Lender upon any of its books and
records. Notwithstanding the preceding sentence, as between Agents and other
Lenders, all such payments shall be applied in the order set forth above.
3.5 All Loans to Constitute One Obligation. Except as set forth in Section
1.3 to the contrary, for the purpose of being ratably secured by Agents' Liens
upon all of the Collateral, the
34
Loans and LC Obligations shall constitute one general Obligation of Borrowers;
provided, however, that (i) the Canadian Collateral shall not secure the U.S.
Obligations, (ii) the U.K. Collateral shall not secure the Canadian Obligations
and (iii) the Canadian Collateral shall not secure the U.K. Obligations.
3.6 Loan Accounts; Registration.
(a) Agent shall enter all Loans and the LC Amount as debits to
a loan account established for each Borrower (each, a "Loan Account" and,
collectively, the "Loan Accounts") and shall also record in the Loan
Accounts all payments made by Borrowers on any Obligations and all
proceeds of Collateral which are finally paid to Agents and may record
therein, in accordance with customary accounting practice, other debits
and credits, including interest and all charges and expenses properly
chargeable to Borrowers.
(b) Agent shall, on behalf of each Borrower, maintain at its
address a copy of each Assignment and Acceptance Agreement delivered to it
and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Revolving Loan Commitment of, and the
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest
error, and Borrowers, the Agent and the Lenders shall treat each Person
whose name is recorded in the Register as the owner of a Loan and any
Notes evidencing the Loan recorded therein for all purposes of this
Agreement. Any assignment or transfer of all or part of a Loan evidenced
by a Note shall be registered on the Register and be effective only upon
surrender for registration of assignment or transfer of the Note
evidencing such Loan, accompanied by a duly executed Assignment and
Acceptance Agreement and thereupon one or more new Notes shall be issued
to the designated assignee. The Register shall be available for inspection
by Borrowers or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
3.7 Statements of Account. Agent will account to Borrower Representative,
on behalf of Borrowers, monthly with a statement of Loans, charges and payments
made pursuant to this Agreement during the immediately preceding month, and such
account rendered by Agent shall be deemed final, binding and conclusive upon
Borrowers absent demonstrable error unless Agent is notified by Borrower
Representative at the Appropriate Notice Office in writing to the contrary
within 30 days of the date each accounting is received by Borrower
Representative. Such notice shall be deemed an objection only to those items
specifically objected to therein.
3.8 Increased Costs. If any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) adopted or implemented after the date of this Agreement and having
general applicability to all banks or finance companies within the jurisdiction
in which any Lender operates (excluding, for the avoidance of doubt, the effect
of and phasing in of capital requirements or other regulations or guidelines
passed prior to the date of this Agreement), or any interpretation or
application thereof by any governmental authority charged with the
interpretation or application thereof, or the compliance of such Lender
therewith, shall:
35
(i) (1) subject such Lender to any tax with respect to this
Agreement (other than (a) any tax based on or measured by net income
or otherwise in the nature of a net income tax, including, without
limitation, any franchise tax or any similar tax based on capital,
net worth or comparable basis for measurement and (b) subject to the
provisions of Section 2.12, any tax collected by a withholding on
payments and which neither is computed by reference to the net
income of the payee nor is in the nature of an advance collection of
a tax based on or measured by the net income of the payee) or (2)
change the basis of taxation of payments to such Lender of
principal, fees, interest or any other amount payable hereunder or
under any Loan Documents (other than in respect of (a) any tax based
on or measured by net income or otherwise in the nature of a net
income tax, including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable basis for
measurement and (b) subject to the provisions of Section 2.12, any
tax collected by a withholding on payments and which neither is
computed by reference to the net income of the payee nor is in the
nature of an advance collection of a tax based on or measured by the
net income of the payee);
(ii) impose, modify or hold applicable any reserve (except any
reserve taken into account in the determination of the applicable
LIBOR), special deposit, assessment or similar requirement against
assets held by, or deposits in or for the account of, advances or
loans by, or other credit extended by, any office of such Lender,
including (without limitation) pursuant to Regulation D of the Board
of Governors of the Federal Reserve System; or
(iii) impose on such Lender or the London interbank market or
the Canadian BA market any other condition with respect to any Loan
Document;
and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining Loans hereunder or the result of any of the
foregoing is to reduce the rate of return on such Lender's capital as a
consequence of its obligations hereunder, or the result of any of the foregoing
is to reduce the amount of any payment (whether of principal, interest or
otherwise) in respect of any of the Loans, then, in any such case, the
applicable Borrower shall pay such Lender, upon demand and certification not
later than sixty (60) days following its receipt of notice of the imposition of
such increased costs, such additional amount as will compensate such Lender for
such additional cost or such reduction (other than any additional cost or
reduction that results from taxes that are not Tax Liabilities), as the case may
be, to the extent such Lender has not otherwise been compensated, with respect
to a particular Loan, for such increased cost as a result of an increase in the
Base Rate, Canadian Prime Rate, the LIBOR or Canadian BA Rate. An officer of the
applicable Lender shall determine the amount of such additional cost or reduced
amount using reasonable averaging and attribution methods and shall certify the
amount of such additional cost or reduced amount to Borrower Representative,
which certification shall include a written explanation of such additional cost
or reduction to such Borrower. Such certification shall be conclusive absent
manifest error. If a Lender claims any additional cost or reduced amount
pursuant to this Section 3.8, then such Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to designate a different
lending office or to file any certificate or document reasonably requested by
Borrower Representative at the Appropriate Notice Office, if the making of such
designation or filing
36
would avoid the need for, or reduce the amount of, any such additional cost or
reduced amount and would not, in the sole discretion of such Lender, be
otherwise disadvantageous to such Lender. The foregoing notwithstanding,
Borrowers shall not be liable for any additional cost or reduced amount
otherwise due pursuant to this Section 3.8, if the applicable Lender does not
notify Borrowers of any such additional cost or reduced amount within 90 days
after the date the applicable Lender becomes aware of any such additional cost
or reduced amount.
3.9 Basis for Determining Interest Rate Inadequate. In the event that
Agent, Canadian Agent or U.K. Agent or any Lender shall have determined that:
(i) reasonable means do not exist for ascertaining the LIBOR
for any Interest Period or the Canadian BA Rate for any term; or
(ii) Sterling, Euro or Dollar deposits in the relevant amount
and for the relevant maturity are not available in the London
interbank market with respect to a proposed LIBOR Portion, or that a
market does not exist for Canadian BA Rate Loans, or a proposed
conversion of a Base Rate Portion into a LIBOR Portion or a Canadian
Prime Rate Loan into a Canadian BA Rate Loan; then
Agent, Canadian Agent, U.K. Agent or such Lender, as applicable, shall give
Borrower Representative prompt written, telephonic or electronic notice of the
determination of such effect. If such notice is given, (i) any such requested
LIBOR Portion (in the affected currency, if not all applicable currencies are
affected) shall be made as a Base Rate Portion, unless Borrower Representative
shall notify Agent at the Appropriate Notice Office no later than 10:00 a.m.
(prevailing time in the location of the Appropriate Notice Office) two (2)
Business Days prior to the date of such proposed borrowing that the request for
such borrowing shall be canceled or made as an unaffected type of LIBOR Portion,
(ii) any Base Rate Portion which was to have been converted to an affected type
of LIBOR Portion shall be continued as or converted into a Base Rate Portion,
or, if Borrower Representative shall notify Agent at the Appropriate Notice
Office, no later than 10:00 a.m. (prevailing time in the location of the
Appropriate Notice Office) two (2) Business Days prior to the proposed
conversion, shall be maintained as an unaffected type of LIBOR Portion, (iii)
any such requested Canadian BA Rate Loan shall be made as a Canadian Prime Rate
Loan, unless Borrower Representative shall notify Canadian Agent at the
Appropriate Notice Office no later than 10:00 a.m. (prevailing time in the
location of the Appropriate Notice Office), two (2) Business Days prior to the
date of such proposed borrowing that the request for such borrowing shall be
canceled and (iv) any Canadian Prime Rate Loan which was to have been converted
to an affected type of Canadian BA Rate Loan shall be continued as or converted
into a Canadian Prime Rate Loans, or, if Borrower Representative shall notify
Canadian Agent at the Appropriate Notice Office, no later than 10:00 a.m.
(prevailing time in the location of the Appropriate Notice Office) two (2)
Business Days prior to the proposed conversion, shall be maintained as an
unaffected type of Canadian BA Rate Loan.
3.10 Sharing of Payments, Etc. If (i) any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of its U.S. Obligations made by it in excess of its
ratable share of payments on account of all U.S. Obligations of all Lenders,
such Lender shall forthwith purchase from each other Lender of such Loan such
participation in such Loan as shall be necessary to cause such purchasing Lender
to
37
share the excess payment ratably with each other Lender; provided, that, if all
or any portion of such excess payment is thereafter recovered from such
applicable purchasing Lender, such purchase from each Lender shall be rescinded
and such Lender shall repay to the purchasing Lenders the purchase price to the
extent of such recovery, together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Subject to Section 2.12, Borrowers agree that
any Lender so purchasing a participation from another Lender pursuant to this
Section 3.10 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
applicable Borrower in the amount of such participation. Notwithstanding
anything to the contrary contained herein, all purchases and repayments to be
made under this Section 3.10 shall be made through Agent.
3.11 Location of Payments and Notices. Notwithstanding anything else
herein to the contrary, all payments made by Borrowers or Borrower
Representative on behalf of Borrowers under this Agreement, whether principal or
interest payments, fees, expenses or other charges hereunder, shall be made at
the Appropriate Payment Office and all notices made by Borrowers or Borrower
Representative on behalf of Borrowers under this Agreement shall be made at the
Appropriate Notice Office.
3.12 Appointment of Borrower Representative. Each Borrower hereby
designates Katy Industries, Inc. as its representative ("Borrower
Representative") and agent on its behalf for the purposes of issuing all notices
(including, without limitation, notices of borrowing), giving instructions with
respect to the disbursement of the proceeds of the Loans, selecting interest
rate options, requesting Letters of Credit or LC Guaranties, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan Documents.
Katy Industries, Inc. hereby accepts such appointment. Agents may regard any
notice or other communications pursuant to any Loan Document from Katy
Industries, Inc. as a notice or communication from all Borrowers, and may give
any notice or communication required or permitted to be given to any Borrower or
Borrowers hereby to Katy Industries, Inc. on behalf of such Borrower or
Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by Katy
Industries, Inc. shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower or
Borrowers, as applicable, to the same extent as if the same had been made
directly by such Borrower or Borrowers, as applicable. Borrowers shall have the
right to designate a replacement Borrower Representative from time to time upon
written notice to the Agents. Borrower Representative hereby authorizes and
appoints (x) CEH (who hereby accepts such appointment) as its agent solely for
purposes of giving notices of borrowings or letter of credit requests to the
U.K. Agent with respect to U.K. Revolving Credit Loans and (y) ▇▇▇▇▇ (who hereby
accepts such appointment) as its agent solely for the purposes of giving notices
of borrowings or letter of credit requests to the Canadian Agent with respect to
Canadian Revolving Credit Loans.
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3.13 Canadian Revolving Credit Loans Refunding.
(a) If any Default or Event of Default shall occur and be
continuing or upon 30 days' written notice, Canadian Lender may, in its
sole and absolute discretion, direct that the Canadian Revolving Credit
Loans owing to it be refunded by delivering a notice (with such detail as
Agent shall request, a "Notice of Canadian Revolving Loan Refunding") to
Agent. Upon receipt of such notice, Agent shall promptly give notice of
the contents thereof to the Canadian Participants at their respective
Facility Offices and, unless an Event of Default described in subsection
9.1.8 shall have occurred, to each Borrower. Each such Notice of Canadian
Revolving Credit Loan Refunding shall be deemed to constitute delivery of
a notice to Agent requesting each Canadian Participant to fund its
undivided Participating Interest in the outstanding Canadian Revolving
Credit Loans whereupon each Canadian Participant, through its Facility
Office, shall fund a pro rata portion of the outstanding Canadian
Revolving Credit Loans and related Obligations in an amount equal to the
Canadian Participant's Revolving Loan Percentage of the aggregate
principal amount of such Canadian Revolving Credit Loans held by each
corresponding Lender to which the Canadian Participant is affiliated;
provided that, with respect to the Canadian LC Obligations, the Canadian
Participant is not required to fund the Revolving Loan Percentage
attributable to the Canadian LC Obligations until such time as the
underlying Canadian Letter of Credit or Canadian Letter of Credit
supported by a Canadian LC Guaranty has been drawn. Subject to the proviso
in the immediately preceding sentence, each Canadian Participant shall
immediately (or at the option of Canadian Lender, on a weekly or other
basis) transfer (or, if applicable, shall cause its Canadian Affiliate to
transfer) to Canadian Lender, in immediately available funds, the amount
of its Participating Interest in the same currency as the underlying
Revolving Credit Loan that was made by Canadian Lender.
(b) Whenever, at any time after a Canadian Participant has
funded a pro rata portion of the outstanding Canadian Revolving Credit
Loans and related Obligations in accordance with Section 3.13(c), Canadian
Lender receives any payment on account thereof, Canadian Lender will
distribute to Agent for delivery to each Canadian Participant its
Participating Interest in such amount (appropriately adjusted, in the case
of interest payments, to reflect the period of time during which such
Canadian Participant's Participating Interest was outstanding and funded);
provided, however, that in the event that such payment received by
Canadian Lender is required to be returned, such Canadian Participant will
return to Agent for delivery to Canadian Lender any portion thereof
previously delivered by Agent or Canadian Lender to it. For purposes of
Section 2.12, any interest distributed by Canadian Lender to a Canadian
Participant shall be deemed to have been paid by the Canadian Borrower.
(c) Each Canadian Participant's obligation to fund the pro
rata portion of the outstanding Canadian Revolving Credit Loans and
related Obligations referred to in this Section 3.13 shall be absolute and
unconditional and shall not be affected by any circumstances, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or
other right which such Canadian Participant or any Borrower may have
against Canadian Lender, any Canadian Participant, any Borrower or any
other Person for any reason whatsoever, (ii) the occurrence or continuance
of a Default or Event of
39
Default, (iii) any adverse change in the condition (financial or
otherwise) of any Borrower, (iv) any breach of this Agreement or any other
Loan Document by any Borrower or any other Lender or Canadian Participant,
or (v) any other circumstances, happening or event whatsoever, whether or
not similar to any of the foregoing.
3.14 U.K. Revolving Credit Loans Refunding.
(a) If any Default or Event of Default shall occur and be
continuing or upon 30 days' written notice, U.K. Lender may, in its sole
and absolute discretion, direct that the U.K. Revolving Credit Loans owing
to it be refunded by delivering a notice (with such detail as Agent shall
request, a "Notice of U.K. Revolving Loan Refunding") to Agent. Upon
receipt of such notice, Agent shall promptly give notice of the contents
thereof to the U.K. Participants at their respective Facility Office and,
unless an Event of Default described in subsection 9.1.8 shall have
occurred, to each Borrower. Each such Notice of U.K. Revolving Credit Loan
Refunding shall be deemed to constitute delivery of a notice to Agent
requesting each U.K. Participant fund its undivided U.K. Participating
Interest in the outstanding U.K. Revolving Credit Loans whereupon each
U.K. Participant, through its Facility Office, shall fund (or, if such
Lender has a U.K. Affiliate, shall cause its U.K. Affiliate to fund) a pro
rata portion of the outstanding U.K. Revolving Credit Loans and related
Obligations in an amount equal to the U.K. Participant's Revolving Loan
Percentage of the aggregate principal amount of such U.K. Revolving Credit
Loans held by each corresponding Lender to which the U.K. Participant is
affiliated; provided that, with respect to the U.K. LC Obligations, the
U.K. Participant is not required to fund the Revolving Loan Percentage
attributable to the U.K. LC Obligations until such time as the underlying
U.K. Letter of Credit or U.K. Letter of Credit supported by a U.K. LC
Guaranty has been drawn. Subject to the proviso in the immediately
preceding sentence, each U.K. Participant shall immediately (or at the
option of U.K. Lender, on a weekly or other basis) transfer to (or, if
applicable, shall cause its U.K. Affiliate to transfer) U.K. Lender, in
immediately available funds, the amount of its U.K. Participating Interest
in the same currency as the underlying Revolving Credit Loan or U.K.
Letter of Credit or U.K. LC Guaranty was made or issued by U.K. Lender,
unless otherwise advised by Agent.
(b) Whenever, at any time after a U.K. Participant has funded
a pro rata portion of the outstanding U.K. Revolving Credit Loans and
related Obligations, U.K. Lender receives any payment on account thereof,
U.K. Lender will distribute to Agent for delivery to each U.K. Participant
its Participating Interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which such
U.K. Participant's Participating Interest was outstanding and funded);
provided, however, that in the event that such payment received by U.K.
Lender is required to be returned, such U.K. Participant will return to
Agent for delivery to U.K. Lender any portion thereof previously delivered
by Agent or U.K. Lender to it.
(c) Each U.K. Participant's obligation to fund the pro rata
portion of the outstanding U.K. Revolving Credit Loans and related
Obligations referred to in this Section 3.14 shall be absolute and
unconditional and shall not be affected by any circumstances, including,
without limitation, (i) any set-off, counterclaim, recoupment,
40
defense or other right which such U.K. Participant or any Borrower may
have against U.K. Lender, any U.K. Participant, any Borrower or any other
Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or Event of Default, (iii) any adverse change in the condition
(financial or otherwise) of any Borrower, (iv) any breach of this
Agreement or any other Loan Document by any Borrower or any other Lender
or U.K. Participant, or (v) any other circumstances, happening or event
whatsoever, whether or not similar to any of the foregoing.
3.15 Mitigation Obligations. If a Lender claims any additional cost or
reduced amount pursuant to Section 3.8, or any Borrower is required to pay any
additional amount or indemnity to any Lender, Participant or Canadian
Participant or U.K. Participant or any governmental authority for the account of
any Lender or Canadian Participant or U.K. Participant pursuant to Section 2.12
of the Agreement, then such Lender, Participant or Canadian Participant or U.K.
Participant shall use reasonable efforts (consistent with legal and regulatory
restrictions) to designate a different lending office or to file any certificate
or document reasonably requested by Borrower Representative at the Appropriate
Notice Office or to assign its rights and obligations hereunder to another of
its offices, branches or affiliates, if the making of such designation, filing
or assignment would avoid the need for, or reduce the amount of, any such
additional cost or reduced amount or additional amount as would not, in the bona
fide discretion of such Lender, be otherwise disadvantageous to such Lender,
Participant or Canadian Participant or U.K. Participant; provided, however, that
nothing herein shall obligate a U.S. Lender to transfer the Canadian
Participation or Canadian Revolving Credit Loans or the U.K. Participation or
U.K. Revolving Credit Loans (following a funding under Section 3.13) to its
Canadian or United Kingdom office or Affiliate. In the event that the provisions
of Sections 2.12 or 3.8 of the Agreement result in the effective interest rates
being charged by or with respect to any Lender to Borrowers being increased, on
a per annum basis, by more than one quarter percent (1/4%), or if any Lender
defaults on its obligations to make Revolving Credit Loans hereunder, Borrowers
may require any such Lender (an "Affected Lender") to sell and transfer all of
its interest in this Agreement and its Notes to a substitute Lender (who shall
be reasonably acceptable to Agent) for a price in cash equal to the principal
balance of such Affected Lender's outstanding Loans plus all accrued but unpaid
interest thereon plus all accrued but unpaid fees due any such Affected Lender
under the terms hereof. Any such sale and transfer shall be made pursuant to the
terms of Section 10.9 hereof. Canadian Borrower shall not be required to
indemnify any Person or pay any additional amounts in respect of Tax Liabilities
to the extent that such Tax Liabilities result from a failure by any Person to
comply (to the extent such Person is able to comply) with any certification,
identification, information, documentation or other reporting requirement if
compliance is required by law, regulation, administrative practice or any
applicable tax treaty as a precondition to exemption or reduction in the rate of
deduction or withholding of Tax Liabilities.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to the right of Lenders to cease making
Loans to Borrower during the continuance of any Default or Event of Default,
this Agreement shall be in effect for a period of five (5) years from the date
hereof, through and including April __, 2009 (the "Term"), unless terminated as
provided in Section 4.2 hereof.
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4.2 Termination.
4.2.1 Termination by Lenders. Agent may, and at the direction of
Majority Lenders shall, terminate this Agreement without notice upon or after
the occurrence and during the continuance of an Event of Default or a Change in
Control.
4.2.2 Termination by Borrower Representative. Upon at least three
(3) days prior written notice to Agent and Lenders, Borrower Representative may,
at its option, terminate this Agreement; provided, however, that no such
termination shall be effective until Borrowers have paid or collateralized to
Agent's reasonable satisfaction all of the Obligations in immediately available
funds, all Letters of Credit and LC Guaranties have expired, terminated or have
been cash collateralized to Agent's reasonable satisfaction and Borrowers have
complied with Section 2.6 and subsection 3.2.5. Any notice of termination given
by Borrower Representative shall be irrevocable unless all Lenders otherwise
agree in writing and no Lender shall have any obligation to make any Loans or
issue or procure any Letters of Credit or LC Guaranties on or after the
termination date stated in such notice. Borrowers may elect to terminate this
Agreement in its entirety only. No section of this Agreement or type of Loan
available hereunder may be terminated singly.
4.2.3 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrowers contained in the Loan Documents
shall survive any such termination and Agent shall retain its Liens in the
Collateral and Agents and each Lender shall retain all of its rights and
remedies under the Loan Documents notwithstanding such termination until all
Obligations have been discharged or paid or cash collateralized to Agent's
satisfaction, in full, in immediately available funds, including, without
limitation, all Obligations under Section 2.6 and subsection 3.2.5 resulting
from such termination; provided, that (x) the Lien on the Canadian Collateral
shall be released once all Canadian Obligations have been discharged and paid in
full and (y) the Lien on the U.K. Collateral shall be released once all U.S.
Obligations and U.K. Obligations have been discharged and paid in full.
Notwithstanding the foregoing or the payment in full of the Obligations, Agents
shall not be required to terminate their Liens in the Collateral unless, with
respect to any loss or damage Agents may incur as a result of dishonored checks
or other items of payment received by Agents from any Borrower or any Account
Debtor and applied to the Obligations, Agent shall, at its option, (i) have
received a written agreement satisfactory to Agent, executed by Borrowers and by
any Person whose loans or other advances to Borrowers are used in whole or in
part to satisfy the Obligations, indemnifying Agent and each Lender from any
such loss or damage or (ii) have retained cash Collateral or other Collateral
for such period of time as Agent, in its reasonable discretion, may deem
necessary to protect Agent, Canadian Agent, U.K. Agent and each Lender from any
such loss or damage.
SECTION 5. COLLATERAL ADMINISTRATION
5.1 General.
5.1.1 Location of Collateral. All Collateral, other than Inventory
in transit and motor vehicles, will at all times be kept by each Borrower and
its Subsidiaries at one or more of
42
the business locations set forth in Exhibit 5.1.1 hereto, as updated by
Borrowers providing prior written notice to Agent of any new location.
5.1.2 Insurance of Collateral. Each Borrower shall maintain and pay
for insurance upon all Collateral wherever located and with respect to the
business of each Borrower and each of its Subsidiaries, covering casualty,
hazard, public liability, workers' compensation and such other risks in such
amounts and with such insurance companies as are reasonably satisfactory to
Agent. Borrower Representative shall deliver certificates of insurance or
certified copies of such policies to Agent as promptly as practicable, with
satisfactory lender's loss payable endorsements, naming Agent, Canadian Agent or
U.K. Agent, as applicable, as a loss payee, assignee or additional insured, as
appropriate, as its interest may appear, and showing only such other loss
payees, assignees and additional insureds as are satisfactory to Agent. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than 10 days' prior written notice to Agent in the event of
cancellation of the policy for nonpayment of premium and not less than 30 days'
prior written notice to Agent in the event of cancellation of the policy for any
other reason whatsoever and a clause specifying that the interest of Agent shall
not be impaired or invalidated by any act or neglect of any Borrower, any
Subsidiary of any Borrower or the owner of the Property or by the occupation of
the premises for purposes more hazardous than are permitted by said policy.
Borrower Representative agrees to deliver to Agent, promptly upon request of
Agent, true copies of all reports made in any reporting forms to insurance
companies. All proceeds of business interruption insurance (if any) of any
Borrower or its Subsidiaries shall be remitted to the applicable Agent for
application to the outstanding balance of the Revolving Credit Loans.
Unless Borrowers provide Agent with evidence of the insurance
coverage required by this Agreement, Agent may purchase insurance at the
applicable Borrower's expense to protect Agents' interests in the Properties of
Borrowers and their Subsidiaries. This insurance may, but need not, protect the
interests of Borrowers and their Subsidiaries. The coverage that Agent purchases
may not pay any claim that any Borrower or any Subsidiary makes or any claim
that is made against any Borrower or any such Subsidiary in connection with said
Property. Borrowers may later cancel any insurance purchased by Agent, but only
after providing Agent with evidence that Borrowers and their Subsidiaries have
obtained insurance as required by this Agreement. If Agent purchases insurance,
the applicable Borrower will be responsible for the costs of that insurance,
including interest and any other charges Agents may impose in connection with
the placement of insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance may be added to the
Obligations. The costs of the insurance may be more than the cost of insurance
that Borrowers and their Subsidiaries may be able to obtain on their own.
5.1.3 Protection of Collateral. Neither Agent nor any Lender shall
be liable or responsible in any way for the safekeeping of any of the Collateral
or for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in any Agent's or any Lender's actual
possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency or other person
whomsoever, but the same shall be at the applicable Borrower's or the applicable
Loan Party's sole risk.
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5.2 Administration of Accounts.
5.2.1 Records, Schedules and Assignments of Accounts. Borrowers
shall, and shall cause each other Loan Party to, keep accurate and complete
records of its Accounts and all payments and collections thereon. Concurrently
with the delivery of each Borrowing Base Certificate described in subsection
7.1.4, or more frequently as reasonably requested by Agent, from and after the
date hereof, Borrowers shall deliver to Agent a summary aged trial balance of
all Accounts of Borrowers and each other Loan Party. Annually, or more
frequently as requested by Agent if an Event of Default has occurred and is
continuing, Borrowers shall deliver to Agent a report specifying the names,
addresses, face values, dates of invoices and due dates for each Account Debtor
obligated on an Account so listed ("Schedule of Accounts"), and upon Agent's
request therefor, copies of proof of delivery and the original copy of all
documents, including, without limitation, repayment histories and present status
reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Agent shall
reasonably request. If requested by Agent, Borrowers shall, and shall cause each
other Loan Party to, execute and deliver to Agent formal written assignments of
all of its Accounts monthly, weekly or daily, which shall include all Accounts
that have been created since the date of the last assignment, together with
copies of invoices or invoice registers related thereto.
5.2.2 Discounts, Allowances, Disputes. If any Borrower or any other
Loan Party grants any discounts, allowances or credits that are not shown on the
face of the invoice for the Account involved, Borrowers shall report such
discounts, allowances or credits, as the case may be, to Agent as part of the
next required Borrowing Base Certificate.
5.2.3 Account Verification. Any of Agent's officers, employees or
agents shall have the right, at any time or times hereafter, in the name of
Agent, any designee of Agent, any Borrower or any other Loan Party, to verify
the validity, amount or any other matter relating to any Accounts by mail,
telephone, electronic communication or otherwise. Borrowers shall, and shall
cause each other Loan Party to, cooperate fully with Agent in an effort to
facilitate and promptly conclude any such verification process.
5.2.4 Maintenance of Dominion Account. Each Borrower shall, and
shall cause each other Loan Party to, maintain a Dominion Account or Accounts
pursuant to lockbox and blocked account arrangements acceptable to the Agent,
the Canadian Agent or the U.K. Agent, as applicable, with such banks as may be
selected by Borrower Representative and be acceptable to the applicable Agent;
provided that in the case of each U.K. Loan Party, at the request of U.K. Agent,
within ninety (90) days after the Closing Date, such Dominion Accounts shall be
moved to and maintained at Fleet U.K. Such blocked account and lockbox
arrangements shall provide for full dominion and control of each Borrower's and
each other Loan Party's cash deposited into all deposit accounts, except that
with respect to U.K. Loan Parties (to the extent such Dominion Account is
maintained at a bank other than Fleet U.K.) and Canadian Loan Parties such
blocked account arrangements shall provide for springing dominion over Canadian
Loan Parties' and U.K. Loan Parties' cash until the occurrence of an Event of
Default at which time the U.K. Agent or Canadian Agent, as applicable, shall
have the right to obtain full dominion over such cash. Each Borrower shall
issue, and shall cause each other Loan Party to issue, to any such banks an
irrevocable letter of instruction directing such banks (in the case of
44
Canadian Loan Parties, upon notice from Canadian Agent that an Event of Default
has occurred) to deposit all payments or other remittances received in the
lockbox and blocked accounts to the Dominion Account for application on account
of the Obligations as provided in subsection 3.2.1. All funds deposited in any
Dominion Account shall immediately become the property of the applicable Agent,
for the ratable benefit of the applicable Lenders, and the applicable Borrower
shall obtain, or shall cause the applicable Loan Party to obtain, the agreement
by such banks in favor of the applicable Agent to waive any recoupment, setoff
rights, and any security interest in, or against, the funds so deposited. No
Agent assumes any responsibility for such lockbox and blocked account
arrangements, including, without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder.
5.2.5 Collection of Accounts, Proceeds of Collateral. Each Borrower
agrees that all invoices rendered and other requests made by any Borrower or any
other Loan Party for payment in respect of Accounts shall contain a written
statement directing payment in respect of such Accounts to be paid to a lockbox
established pursuant to subsection 5.2.4. To expedite collection, Borrowers
shall endeavor, and shall cause each other Loan Party to endeavor, in the first
instance to make collection of its Accounts for Agents. All remittances received
by any Borrower or any Loan Party on account of Accounts, together with the
proceeds of any other Collateral, shall be held as Agent's, Canadian Agent's or
U.K. Agent's, as the case may be, property, for its benefit and the benefit of
the applicable Lenders, by the applicable Borrower or such Loan Party as trustee
of an express trust for Agent's, Canadian Agent's or U.K. Agent's benefit, as
applicable, and the applicable Borrower shall, or shall cause the applicable
Loan Party to, immediately deposit same in kind in the Dominion Account. Agents
retain the right at all times after the occurrence and during the continuance of
a Default or an Event of Default to notify Account Debtors that Borrowers' and
each other Loan Party's Accounts have been assigned to Agents and to collect
Borrowers' or any Loan Party's Accounts directly in its own name, or in the name
of any Agent's agent, and to charge the collection costs and expenses, including
attorneys' fees, to the applicable Borrower.
5.2.6 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, Agents are authorized, in their sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of the applicable Borrower and to charge such Borrower therefor, except
for taxes that (i) are being actively contested in good faith and by appropriate
proceedings and with respect to which the applicable Borrower or the applicable
Loan Party maintains reasonable reserves on its books therefor and (ii) would
not reasonably be expected to result in any Lien other than a Permitted Lien. In
no event shall any Agent or any Lender be liable for any taxes to any
governmental taxing authority that may be due by any Borrower or any other Loan
Party.
5.3 Administration of Inventory. Each Borrower shall keep, and shall cause
each other Loan Party to keep, records of its Inventory which records shall be
complete and accurate in all material respects. Borrowers shall furnish to Agent
Inventory reports concurrently with the delivery of each Borrowing Base
Certificate described in subsection 7.1.4 or more frequently as reasonably
requested by Agent, which reports will be in such other format and detail as
Agent shall reasonably request and shall include a current list of all locations
of Borrowers' and each other Loan Party's Inventory, together with such
supporting information as Agent shall
45
reasonably request. Borrowers shall conduct a physical inventory no less
frequently than annually or, in lieu of a physical inventory, shall conduct
cycle counts of Inventory.
5.4 Administration of Equipment.
5.4.1 Records and Schedules of Equipment. Each Borrower shall keep,
and shall cause each other Loan Party to keep, records of its Equipment which
shall be complete and accurate in all material respects itemizing and describing
the kind, type, quality, quantity and book value of its Equipment and all
dispositions made in accordance with subsection 5.4.2 hereof, and each Borrower
shall, and shall cause each other Loan Party to, furnish Agent with a current
schedule containing the foregoing information on at least an annual basis and
more often if reasonably requested by Agent. Promptly after the request therefor
by Agent, each Borrower shall deliver, or cause each other Loan Party to
deliver, to Agent any and all evidence of ownership, if any, of any Equipment of
any Borrower or any other Loan Party.
5.4.2 Dispositions of Equipment. Borrowers shall not, and shall not
permit any other Loan Party to, sell, lease or otherwise dispose of or transfer
any of their or its respective Equipment or other fixed assets or any part
thereof without the prior written consent of Agent, except as otherwise
expressly permitted by the terms of this Agreement, including without
limitation, subsection 7.2.9 of the Agreement.
5.5 Payment of Charges. All amounts chargeable to Borrowers under Section
5 hereof shall be Obligations secured by all of the Collateral (except that
amounts chargeable to U.S. Borrower shall not be secured by Canadian Collateral
and amounts chargeable to Canadian Borrower shall not be secured by the U.K.
Collateral and amounts chargeable to the U.K. Borrower shall not be secured by
the Canadian Collateral), shall be payable on demand by the applicable Borrower
and shall bear interest from the date such advance was made until paid in full
at the rate applicable to the Base Rate Revolving Portions (or in the case of
Canadian Borrower, Canadian Prime Rate Loans) from time to time.
5.6 Lien on Realty. The due and punctual performance of the Canadian
Obligations, the U.K. Obligations and/or the U.S. Obligations shall also be
secured by the Lien created by the Mortgages upon the real Property of the
Borrowers and other Loan Parties described therein; provided that (i) the Liens
created by any Mortgage upon the real Property of any Canadian Loan Party shall
not secure the U.S. Obligations, (ii) the Liens created by any Mortgage upon the
real Property of any U.K. Loan Party shall not secure the Canadian Obligations
and (iii) the Liens created by any Mortgage upon the real Property of any
Canadian Loan Party shall not secure the U.K. Loan Obligations. If any Borrower
or any other Loan Party shall acquire at any time or times hereafter any fee
simple interest in other real Property (other than leasehold interests in sales
offices or warehouses or other leasehold interests which Agent in Permitted
Discretion, determines to have no material value), the applicable Borrower
agrees promptly to execute and deliver to the applicable Agent, or to cause the
applicable Loan Party to execute and deliver to the applicable Agent, for its
benefit and the ratable benefit of the applicable Lenders, as additional
security and Collateral for the Obligations, deeds of trust, security deeds,
mortgages or other collateral assignments reasonably satisfactory in form and
substance to Agent and its counsel (herein collectively referred to as "New
Mortgages") covering such real Property; provided that (i) the Liens created by
any New Mortgages on the real Property of any Canadian Loan Party or U.K. Loan
Party shall not secure the U.S. Obligations, (ii) the Liens created by any New
Mortgage upon the real Property of any U.K. Loan Party shall not secure the
Canadian Obligations and (iii) the Liens created by any New Mortgage upon the
real Property of any Canadian
46
Loan Party shall not secure the U.K. Obligations. The Mortgages and each New
Mortgage shall be duly recorded (at the applicable Borrower's expense) in each
office where such recording is required to constitute a valid Lien on the real
Property covered thereby. In respect to any Mortgage or any New Mortgage, the
applicable Borrower shall deliver to Agent, or shall cause the applicable Loan
Party to deliver to Agent, at the applicable Borrower's expense, mortgagee title
insurance policies issued by a title insurance company reasonably satisfactory
to Agent, which policies shall be in form and substance reasonably satisfactory
to Agent and shall insure a valid Lien in favor of the applicable Agent for the
benefit of itself and each applicable Lender on the Property covered thereby,
subject only to Permitted Liens and those other exceptions reasonably acceptable
to Agent and its counsel. Such Borrower shall also deliver, or shall cause the
applicable Loan Party to deliver, to Agent such other usual and customary
documents, including, without limitation, ALTA Surveys of the real Property
described in the Mortgages or any New Mortgage, as Agent and its counsel may
reasonably request relating to the real Property subject to the Mortgages or the
New Mortgages.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 General Representations and Warranties. To induce Agents and each
Lender to enter into this Agreement and to make advances hereunder, Borrowers
warrant, represent and covenant to Agents and each Lender that:
6.1.1 Qualification. Each Borrower and each of its Subsidiaries
(other than Inactive Subsidiaries) is a corporation, limited partnership or
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization. Each
Borrower and each of its Subsidiaries (other than an Inactive Subsidiary) is
duly qualified and is authorized to do business and is in good standing as a
foreign limited liability company, limited partnership or corporation, as
applicable, in each state or jurisdiction listed on Exhibit 6.1.1 hereto and in
all other states and jurisdictions in which the failure of such Borrower or any
of its Subsidiaries (other than an Inactive Subsidiary) to be so qualified could
reasonably be expected to have a Material Adverse Effect.
6.1.2 Power and Authority. Each Borrower and each of its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate or
other relevant action and do not and will not: (i) require any consent or
approval of the shareholders of any Borrower or any of the shareholders,
partners or members, as the case may be, of any Subsidiary of such Borrower;
(ii) contravene any Borrower's or any of its Subsidiaries' charter, articles or
certificate of incorporation, partnership agreement, certificate of formation,
by-laws, limited liability agreement, operating agreement or other
organizational documents (as the case may be); (iii) violate, or cause any
Borrower or any of its Subsidiaries to be in default under, any provision of any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award in effect having applicability to any Borrower or any of its
Subsidiaries, the violation of which could reasonably be expected to have a
Material Adverse
47
Effect; (iv) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
any Borrower or any of its Subsidiaries is a party or by which it or its
Properties may be bound or affected, the breach of or default under which could
reasonably be expected to have a Material Adverse Effect; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
any Borrower or any of its Subsidiaries.
6.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each Borrower and each of its Subsidiaries party
thereto, enforceable against it in accordance with its respective terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law) and, with respect to
the obligations of the Canadian Borrower under Section 2.1.2, by the provisions
of Section 8(1) of the Interest Act (Canada).
6.1.4 Capital Structure. Exhibit 6.1.4 hereto states, as of the date
hereof, (i) the correct name of each of the Subsidiaries (other than Inactive
Subsidiaries) of each Borrower, its jurisdiction of incorporation or
organization and the percentage of its Voting Stock owned by each Borrower, (ii)
the name of each Borrower's and each of its Subsidiaries' corporate or joint
venture relationships and the nature of the relationship, (iii) the number,
nature and holder of all outstanding Securities of Borrower and the holder of
Securities of each Subsidiary (other than Inactive Subsidiaries) of each
Borrower and (iv) the number of authorized, issued and treasury Securities of
each Borrower. Each Borrower has good title to all of the Securities it purports
to own of each of such Subsidiaries, free and clear in each case of any Lien
other than Permitted Liens. All such Securities have been duly issued and are
fully paid and non-assessable. As of the date hereof, except as set forth in
Exhibit 6.1.4, there are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell any
Securities or obligations convertible into, or any powers of attorney relating
to any Securities of any Borrower or any of its Subsidiaries. Except as set
forth on Exhibit 6.1.4, as of the date hereof, there are no outstanding
agreements or instruments binding upon any of any Borrower's or any of its
Subsidiaries' partners, members or shareholders, as the case may be, relating to
the ownership of its Securities.
6.1.5 Names; Organization. Neither any Borrower nor any of its
Subsidiaries (other than Inactive Subsidiaries) has been known as or has used
any legal, fictitious or trade names, during the 5 years prior to the Closing
Date, except those listed on Exhibit 6.1.5 hereto. Except as set forth on
Exhibit 6.1.5, neither any Borrower nor any of its Subsidiaries (other than
Inactive Subsidiaries) has been, during the 5 years prior to the Closing Date,
the surviving entity of a merger or consolidation or has acquired all or
substantially all of the assets of any Person. Each of each Borrower's and each
of its Subsidiaries' (other than Inactive Subsidiaries) state(s) of
incorporation or organization, Type of Organization, Organizational I.D. Number
and in the case of U.K. Borrower, the number with which it is registered at
Companies House for England and Wales, and any Canadian equivalent thereof, is
set forth on Exhibit 6.1.5. The exact legal name of each Borrower and each of
its Subsidiaries is set forth on Exhibit 6.1.5.
48
6.1.6 Business Locations; Agent for Process. Each of each Borrower's
and each of its Subsidiaries' (other than Inactive Subsidiaries) chief executive
office, location of books and records and other places of business are as listed
on Exhibit 5.1.1 hereto, as updated from time to time by Borrowers in accordance
with the provisions of subsection 5.1.1. During the preceding one-year period,
neither any Borrower nor any of its Subsidiaries (other than Inactive
Subsidiaries) has had an office, place of business or agent for service of
process, other than as listed on Exhibit 5.1.1. All tangible Collateral is and
will at all times be kept by Borrowers and their Subsidiaries (other than
Inactive Subsidiaries) in accordance with subsection 5.1.1. Except as shown on
Exhibit 5.1.1, as of the date hereof, no Inventory is stored with a bailee,
distributor, warehouseman or similar party, nor is any Inventory consigned to
any Person.
6.1.7 Title to Properties; Priority of Liens. Each Borrower and each
of its Subsidiaries (other than Inactive Subsidiaries) has good, indefeasible
and marketable title to and fee simple ownership of, or valid and subsisting
leasehold interests in, all of its real Property, and good title to all of the
Collateral and all of its other Property, in each case, free and clear of all
Liens except Permitted Liens. Each Borrower and each of its Subsidiaries (other
than Inactive Subsidiaries) has paid or discharged all lawful claims which, if
unpaid, might become a Lien against any of any Borrower's or such Subsidiary's
Properties that is not a Permitted Lien. The Liens granted to Agents under the
Security Documents are First Priority Liens, subject only to Permitted Liens.
6.1.8 Accounts. Agent may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrowers and
each other Loan Party with respect to any Account or Accounts. With respect to
each of each Borrower's and each other Loan Party's Accounts, whether or not
such Account is an Eligible Account, unless otherwise disclosed to Agent in the
appropriate Borrowing Base Certificate or schedule:
(i) It is genuine and in all respects what it purports to be,
and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery
of goods or rendition of services by a Borrower or a Loan Party, in
the ordinary course of its business and in accordance with the terms
and conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between the
applicable Borrower or Loan Party and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Agent;
(iv) There are no facts, events or occurrences which in any
way impair the validity or enforceability of any Accounts or could
reasonably be expected to reduce the amount payable thereunder from
the face amount of the invoice and statements delivered or made
available to Agent with respect thereto;
49
(v) To the best of Borrowers' knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract
or other document giving rise to the Account was executed and (2)
such Account Debtor is Solvent; and
(vi) To the best of Borrowers' knowledge, there are no
proceedings or actions which are threatened or pending against the
Account Debtor thereunder which, in Borrowers' reasonable judgment,
would likely result in any material adverse change in such Account
Debtor's financial condition or the collectibility of such Account.
6.1.9 Equipment. The Equipment of each Borrower and its Subsidiaries
is in good operating condition and repair, and all necessary replacements of and
repairs thereto shall be made so that the operating efficiency thereof shall be
maintained and preserved, reasonable wear and tear excepted. Neither any
Borrower nor any of its Subsidiaries will permit any Equipment to become affixed
to any real Property leased to any Borrower or any of its Subsidiaries so that
an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of and in form reasonably acceptable to
Agent, and no Borrower will permit any of the Equipment of any Borrower or any
of its Subsidiaries to become an accession to any personal Property other than
Equipment that is subject to First Priority (except for Permitted Liens) Liens
in favor of Agents.
6.1.10 Financial Statements; Fiscal Year. The Consolidated and
consolidating balance sheets of Katy and its Subsidiaries (including the
accounts of all Subsidiaries of Katy and their respective Subsidiaries for the
respective periods during which a Subsidiary relationship existed) as of January
30, 2004, and the related statements of income and cash flows for the periods
ended on such dates, have been prepared in accordance with GAAP (except for the
absence of footnotes and normal year-end adjustments), and present fairly in all
material respects the financial positions of Katy and such Persons, taken as a
whole, at such dates and the results of Katy's and such Persons' operations,
taken as a whole, for such periods. As of the date hereof, since January 30,
2004, there has been no material adverse change in the financial position of
Katy and such other Persons, taken as a whole, as reflected in the Consolidated
balance sheet as of such date. As of the date hereof, the fiscal year of Katy
and each of its Subsidiaries ends on December 31 of each year.
6.1.11 Full Disclosure. The financial statements referred to in
subsection 6.1.10 hereof do not, nor does this Agreement or any other written
statement of any Borrower or any other Loan Party to Agent or any Lender (when
taken together with any supplements or amendments thereto) contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading in light of the
circumstances existing when such statement was made. There is no fact which any
Borrower has failed to disclose to Agent or any Lender in writing which could
reasonably be expected to have a Material Adverse Effect.
6.1.12 Solvent Financial Condition. Each Borrower and each (other
Loan Party (other than Savannah Energy Systems Company and ▇▇ ▇▇▇▇▇ ▇▇▇▇
Preserving Company),
50
neither of which has any material operations), is now and, after giving effect
to the initial Loans to be made and the initial Letters of Credit and LC
Guaranties to be issued hereunder and all related transactions, will be,
Solvent.
6.1.13 Surety Obligations. Except as set forth on Exhibit 6.1.13, as
of the date hereof, neither any Borrower nor any of its Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract or has issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person.
6.1.14 Taxes. Katy's federal tax identification number is
▇▇-▇▇▇▇▇▇▇. The federal tax identification number or Canadian or United Kingdom
equivalent thereof, of each Subsidiary of Katy is shown on Exhibit 6.1.14
hereto. Each Borrower and each of its Subsidiaries has filed all federal,
provincial, state and local tax returns and other reports relating to taxes
(including goods and services and value added taxes) it is required by law to
file or obtained appropriate extensions for such filings, and has paid, or made
provision for the payment of, all taxes, assessments, fees, levies and other
governmental charges upon it, its income and Properties prior to the time when
such taxes, assessments, fees, levies and charges become delinquent, unless and
to the extent any thereof are being actively contested in good faith and by
appropriate proceedings and except where the failure to make any such filing of
to pay any such tax could not be reasonably expected to have a Material Adverse
Effect, and each Borrower and each of its Subsidiaries maintains reasonable
reserves on its books therefor. The provision for unpaid taxes on the books of
each Borrower and its Subsidiaries is adequate for all years not closed by
applicable statutes, and for the current fiscal year.
6.1.15 Brokers. Except as shown on Exhibit 6.1.15 hereto, there are
no claims for brokerage commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.
6.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower
and each of its Subsidiaries owns, possesses or licenses or has the right to use
all the patents, trademarks, service marks, trade names, copyrights, licenses
and other Intellectual Property necessary for the present and planned future
conduct of its business without any known conflict with the rights of others,
except for such conflicts as could not reasonably be expected to have a Material
Adverse Effect. All such patents, trademarks, service marks, trade names,
copyrights, licenses and other similar rights are listed on Exhibit 6.1.16
hereto, which shall be updated annually by Borrowers or more frequently as
requested by Agent, if an Event of Default exists and is continuing. No claim
has been asserted to any Borrower or any of its Subsidiaries which is currently
pending that their use of their Intellectual Property or the conduct of their
business does or may infringe upon the Intellectual Property rights of any third
party. To the knowledge of Borrowers and except as set forth on Exhibit 6.1.16
hereto, as of the date hereof, no Person is engaging in any activity that
infringes in any material respect upon Borrower's or any of its Subsidiaries'
material Intellectual Property. Except as set forth on Exhibit 6.1.16, each
Borrower's and each of its Subsidiaries' (i) material trademarks, service marks
and copyrights are registered with the U.S. Patent and Trademark Office or in
the U.S. Copyright Office, as applicable and (ii) material license agreements
and similar arrangements relating to its Inventory (1) permit, and do not
restrict, the assignment by any Borrower or any of its Subsidiaries to Agent, or
any other Person
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designated by Agent, of all of any Borrower's or such Subsidiary's, as
applicable, rights, title and interest pertaining to such license agreement or
such similar arrangement to the extent consistent with customary business terms
and (2) would permit the continued use by any Borrower or such Subsidiary, or
Agent or its assignee, of such license agreement or such similar arrangement and
the right to sell Inventory subject to such license agreement for a period of no
less than 6 months after a default or breach of such agreement or arrangement.
The consummation and performance of the transactions and actions contemplated by
this Agreement and the other Loan Documents, including, without limitation, the
exercise by Agent of any of its rights or remedies under Section 9, will not
result in the termination or impairment of any of any Borrower's or any of its
Subsidiaries' ownership or rights relating to its Intellectual Property, except
for such Intellectual Property rights the loss or impairment of which could not
reasonably be expected to have a Material Adverse Effect. Except as listed on
Exhibit 6.1.16 and except as could not reasonably be expected to have a Material
Adverse Effect, (i) neither any Borrower nor any of its Subsidiaries is in
breach of, or default under, any term of any license or sublicense with respect
to any of its Intellectual Property and (ii) to the knowledge of Borrowers, no
other party to such license or sublicense is in breach thereof or default
thereunder, and such license is valid and enforceable.
6.1.17 Governmental Consents. Each Borrower and each of its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it, except where the failure to possess or
so maintain such rights could not reasonably be expected to have a Material
Adverse Effect.
6.1.18 Compliance with Laws. Each Borrower and each of its
Subsidiaries has duly complied, and its Properties, business operations and
leaseholds are in compliance with, the provisions of all federal, state and
local laws, rules and regulations applicable to such Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business, except
for such non-compliance as could not reasonably be expected to have a Material
Adverse Effect, and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of its Subsidiaries under any such
law, rule or regulation, except where such noncompliance could not reasonably be
expected to have a Material Adverse Effect. Each Borrower and each of its
Subsidiaries has established and maintains an adequate monitoring system to
insure that it remains in compliance in all material respects with all federal,
state and local rules, laws and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. ss. 201 et
seq.), as amended.
6.1.19 Restrictions. Neither any Borrower nor any other Loan Party
is a party or subject to any contract or agreement which restricts its right or
ability to incur Indebtedness, other than as set forth on Exhibit 6.1.19 hereto,
none of which prohibit the execution of or compliance with this Agreement or the
other Loan Documents by any Borrower or any of its Subsidiaries, as applicable.
6.1.20 Litigation. Except as set forth on Exhibit 6.1.20 hereto,
there are no actions, suits, proceedings or investigations pending, or to the
knowledge of any Borrower, threatened, against or affecting any Borrower or any
of its Subsidiaries, or the business,
52
operations, Properties, prospects, profits or condition of any Borrower or any
of its Subsidiaries which, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. Neither any Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal, which, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
6.1.21 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or any
Borrower's performance hereunder, constitute a Default or an Event of Default.
Neither any Borrower nor any of its Subsidiaries is in default in (and no event
has occurred and no condition exists which constitutes, or which the passage of
time or the giving of notice or both would constitute, a default in) the payment
of any Indebtedness to any Person for Money Borrowed in excess of $1,000,000.
6.1.22 Leases. Exhibit 6.1.22 hereto is a complete listing of all
capitalized and operating personal property leases of each Borrower and its
Subsidiaries and all real property leases of each Borrower and its Subsidiaries
with future non-cancelable payments of $25,000 or more. Each Borrower and each
of its Subsidiaries is in full compliance with all of the terms of each of its
respective capitalized and operating leases, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect.
6.1.23 Pension Plans.
(a) Except as disclosed on Exhibit 6.1.23 hereto, neither U.S.
Borrower nor any of its ERISA Affiliates maintains or contributes to any
Plan. U.S. Borrower and each of its ERISA Affiliates have operated in
compliance with the requirements of ERISA and the regulations promulgated
thereunder with respect to each Plan, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect.
To the best of Borrowers' knowledge, no fact or situation that could
reasonably be expected to result in a Material Adverse Effect exists in
connection with any Plan. Neither U.S. Borrower nor any ERISA Affiliates
has incurred any withdrawal liability under Title IV of ERISA in
connection with a Multiemployer Plan which remains unsatisfied or which
would reasonably be expected to have a Material Adverse Effect.
(b) The Canadian Pension Plans are duly registered under and
have been administered in compliance with the ITA and all other applicable
laws which require registration except where the failure to so comply
could not reasonably be expected to have a Material Adverse Effect. All
obligations of Canadian Borrower or any of its Subsidiaries (including
fiduciary, funding, investment and administration obligations) required to
be performed in connection with the Canadian Pension Plans and the funding
agreements therefor have been performed in a timely fashion, except where
the failure to so perform could not reasonably be expected to have a
Material Adverse Effect. There are no outstanding disputes, actions, suits
or claims concerning the assets of the Canadian Pension Plans other than
claims for benefits in the ordinary course that could reasonably be
expected to result in a Material Adverse Effect. Neither Canadian
53
Borrower nor its Subsidiaries is required to make any contributions to the
Canadian Pension Plans which contributions, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. Canadian
Borrower and its Subsidiaries have withheld all employee withholdings and
have made all employer contributions to be withheld and made by it
pursuant to federal and any provincial applicable law on account of
Canadian Pension Plans, Canadian Benefit Plans, Canadian employment
insurance and employee income taxes. To the best of Borrowers' knowledge,
no condition exists or transaction has occurred in connection with any
Canadian Pension Plan or Canadian Benefit Plan which could result in the
incurrence by Canadian Borrower or its Subsidiaries of any liability, fine
or penalty that could reasonably be expected to result in a Material
Adverse Effect.
(c) All pension schemes of U.K. Borrower and any Subsidiaries
of any Borrower that are organized under the laws of the United Kingdom
are operated in substantial compliance with applicable law and fully
funded to the extent required by law based on reasonable actuarial
assumptions applicable in the United Kingdom.
6.1.24 Trade Relations. There exists no actual or, to any Borrower's
knowledge, threatened termination, cancellation or limitation of, or any
modification or change in, the business relationship between any Borrower or any
of its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of Borrowers and
their Subsidiaries, or with any material supplier, except in each case, where
the same could not reasonably be expected to have a Material Adverse Effect, and
there exists no present condition or state of facts or circumstances which would
prevent any Borrower or any of its Subsidiaries from conducting such business
after the consummation of the transactions contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted.
6.1.25 Labor Relations. Except as described on Exhibit 6.1.25
hereto, as of the date hereof, neither any Borrower nor any of its Subsidiaries
is a party to any collective bargaining agreement. There are no material
grievances, disputes or controversies with any union or any other organization
of any Borrower's or any of its Subsidiaries' employees, or threats of strikes,
work stoppages or any asserted pending demands for collective bargaining by any
union or organization, except those that could not reasonably be expected to
have a Material Adverse Effect.
6.1.26 Borrowers and Each Other Loan Party. As of the Closing Date,
Borrowers and the other Loan Parties are engaged in the businesses of
manufacturing and distributing industrial and consumer products, including,
without limitation, sanitary maintenance supplies, coated abrasives, stains,
electrical and electronic components, as well as in certain other businesses.
These operations require financing on a basis such that the credit supplied can
be made available from time to time to Borrowers and the other Loan Parties, as
required for the continued successful operation of Borrowers and the other Loan
Parties taken as a whole. Borrowers and the other Loan Parties have requested
the Lenders to make credit available hereunder primarily for the purposes of
Section 1.1.3 and generally for the purposes of financing the operations of
Borrowers and the other Loan Parties. Borrowers and other Loan Party expect to
derive benefit (and the Board of Directors of each Borrower and each other Loan
54
Party has determined that each Borrower or such other Loan Party may reasonably
be expected to derive benefit), directly or indirectly, from a portion of the
credit extended by Lenders hereunder, both in its separate capacity and as a
member of the group of companies, since the successful operation and condition
of Borrowers and each other Loan Party is dependent on the continued successful
performance of the functions of the group as a whole. Borrowers acknowledge
that, but for the agreement of each of each Borrower and the other Loan Parties
to execute and deliver this Agreement and/or the Loan Documents, Agent and
Lenders would not have made available the credit facilities established hereby
on the terms set forth herein.
6.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of any Borrower's or one of Borrower's Subsidiary's
business or operations that would render the information in any exhibit attached
hereto or to any other Loan Document either inaccurate, incomplete or
misleading, so long as Majority Lenders have consented to such changes or such
changes are expressly permitted by this Agreement. Without limiting the
generality of the foregoing, each Loan request made or deemed made pursuant to
subsection 3.1.1 hereof shall constitute Borrowers' reaffirmation, as of the
date of each such loan request, of each representation, warranty or other
statement made or furnished to Agent or any Lender by or on behalf of Borrowers,
any Subsidiary of any Borrower or any other Loan Party in this Agreement, any of
the other Loan Documents, or any instrument, certificate or financial statement
furnished in compliance with or in reference thereto.
6.3 Survival of Representations and Warranties. All representations and
warranties of Borrowers contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Agent
and each Lender and the parties thereto and the closing of the transactions
described therein or related thereto.
SECTION 7. COVENANTS AND CONTINUING AGREEMENTS
7.1 Affirmative Covenants. During the Term, and thereafter for so long as
there are any Obligations outstanding, Borrowers covenant that, unless otherwise
consented to by Majority Lenders, in writing, they shall:
7.1.1 Visits and Inspections; Lender Meeting. Permit (i)
representatives of Agent, and during the continuation of any Default or Event of
Default any Lender, from time to time, as often as may be reasonably requested,
but only during normal business hours, to visit and inspect the Properties of
Borrowers and each of their Subsidiaries, inspect, audit and make extracts from
their books and records, and discuss with their officers, their employees and
their independent accountants, each Borrower's and each of its Subsidiaries'
business, assets, liabilities, financial condition, business prospects and
results of operations and (ii) appraisers engaged pursuant to Section 2.10
(whether or not personnel of Agent), but only during normal business hours, to
visit and inspect the Properties of each Borrower and each of its Subsidiaries,
for the purpose of completing appraisals pursuant to Section 2.10. Agent, if no
Default or Event of Default then exists, shall give Borrower Representative
reasonable prior notice of any such inspection or audit. Without limiting the
foregoing, on the request of Agent, Borrowers will participate and will cause
its key management personnel to participate in a meeting with Agent
55
and Lenders once during each year (except that during the continuation of an
Event of Default such meetings may be held more frequently as requested by Agent
or Majority Lenders), which meeting(s) shall be held at such times and such
places as may be reasonably requested by Agent.
7.1.2 Notices. Promptly notify Agent in writing, upon obtaining
knowledge, of the occurrence of any event or the existence of any fact which
renders any representation or warranty in this Agreement or any of the other
Loan Documents inaccurate, incomplete or misleading in any material respect as
of the date made or remade. In addition, except as otherwise set forth herein,
(x) Borrowers agree to provide Agent with prompt written notice, upon obtaining
knowledge, of any change in the information disclosed in any Exhibit hereto
which could reasonably be expected to have or to evidence a Material Adverse
Effect and (y) on a semi-annual basis, Borrowers agree to provide Agent with
updated versions of the factual Exhibits hereto, in each case after giving
effect to the materiality limits and Material Adverse Effect qualifications
contained therein.
7.1.3 Financial Statements. Keep, and cause each of their
Subsidiaries to keep, adequate records and books of account with respect to
their or its business activities in which proper entries are made in accordance
with customary accounting practices reflecting all their or its financial
transactions; and cause to be prepared and furnished to Agent and each Lender,
the following, all to be prepared in accordance with GAAP applied on a
consistent basis, unless Katy's certified public accountants concur in any
change therein and such change is disclosed to Agent and is consistent with
GAAP:
(i) not later than 90 days after the close of each fiscal year
of Katy, unqualified (except for a qualification for a change in
accounting principles with which the accountant concurs) audited
financial statements of Katy and its Subsidiaries as of the end of
such year, on a Consolidated basis, certified by a firm of
independent certified public accountants of recognized standing
selected by Katy but acceptable to Agent and, within a reasonable
time thereafter a copy of any management letter issued in connection
therewith;
(ii) not later than 30 days after the end of each month
hereafter other than the last month of Katy's fiscal year or 45 days
after the end of the last month of Katy's fiscal year, unaudited
interim financial statements of Katy and its Subsidiaries as of the
end of such month and of the portion of the fiscal year then
elapsed, on a Consolidated and consolidating basis, certified by the
principal financial officer of Katy as prepared in accordance with
GAAP and fairly presenting in all material respects the financial
position and results of operations of Katy and its Subsidiaries for
such month and period subject only to changes from audit and
year-end adjustments and except that such statements need not
contain notes;
(iii) together with each delivery of financial statements
pursuant to clauses (i) and (ii) of this subsection 7.1.3, a
management report setting forth in comparative form the
corresponding figures for the corresponding periods of the previous
fiscal year and the corresponding figures from the most recent
Projections for the current fiscal year delivered pursuant to
subsection 7.1.7. The
56
information above shall be presented in reasonable detail and shall
be certified by the chief financial officer of Katy to the effect
that such information fairly presents in all material respects the
results of operation and financial condition of Katy and its
Subsidiaries as at the dates and for the periods indicated;
(iv) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or
reports which Katy has made available to its Securities holders and
copies of any regular, periodic and special reports or registration
statements which Katy or any of its Subsidiaries files with the
Securities and Exchange Commission or any governmental authority
which may be substituted therefor or any national securities
exchange;
(v) upon request of Agent, copies of any annual report to be
filed as required by ERISA in connection with each Plan; and
(vi) such other data and information (financial and otherwise)
as Agent or any Lender (through Agent), from time to time, may
reasonably request, bearing upon or related to the Collateral or any
Borrower's or any of its Subsidiaries' financial condition or
results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this subsection 7.1.3, Katy shall forward to Agent a copy of
the accountants' letter to Katy's management that is prepared in connection with
such financial statements. Not later than 45 days after the end of any fiscal
quarter of Katy or if an Event of Default exists and is continuing, more
frequently if reasonably requested by Agent, Katy shall cause to be prepared and
furnished to Agent a Compliance Certificate in the form of Exhibit 7.1.3 hereto
executed by the Chief Financial Officer of Borrower (a "Compliance
Certificate").
7.1.4 Borrowing Base Certificates. On or before the 15th day of each
month from and after the date hereof, Borrowers shall deliver to Agents, in form
acceptable to Agent, a Borrowing Base Certificate as of the last day of the
immediately preceding month, with such supporting materials as Agent shall
reasonably request. If Borrowers deem it advisable, or Agent shall request,
Borrowers shall execute and deliver to Agents Borrowing Base Certificates more
frequently than monthly.
7.1.5 Landlord, Processor and Storage Agreements. Provide Agent with
copies of all agreements between any Borrower or any of its Subsidiaries and any
landlord, warehouseman, processor, distributor or consignee which owns or is the
lessee of any premises at which any Collateral may, from time to time, be kept.
With respect to any lease (other than leases for sales offices), warehousing
agreement or any processing agreement in any case entered into after the Closing
Date, the applicable Borrower shall provide Agent with appropriate Collateral
Access Agreements with respect to such premises. Such Collateral Access
Agreements shall be in a form supplied by Agent to Borrowers with such
reasonable revisions as are customarily accepted by Agent or by similar
financial institutions in similar financial transactions.
57
7.1.6 Projections. No later than 30 days after the first day of each
fiscal year of Katy, deliver to Agent Projections of Katy and each of its
Subsidiaries for said fiscal year, month by month.
7.1.7 Subsidiaries. Cause each Subsidiary of any Borrower (other
than Inactive Subsidiaries), whether now or hereafter in existence, promptly
upon Agent's request therefor, to execute and deliver to the applicable Agent a
Guaranty Agreement and the Security Agreement (or joinder thereto or British or
Canadian equivalents thereof) pursuant to which such Subsidiary guaranties the
payment of all Obligations (with respect to Domestic Subsidiaries), all Canadian
Obligations (with respect to Canadian Subsidiaries) or all U.K. and U.S.
Obligations (with respect to U.K. Subsidiaries) and grants to the applicable
Agent a first priority Lien (subject only to Permitted Liens) on all of its
Properties of the types described in the Security Agreement. Additionally, the
applicable Borrower shall execute and deliver to Agent a pledge agreement
pursuant to which such Borrower grants to Agent a First Priority Lien (subject
only to Permitted Liens) with respect to all of the issued and outstanding
Securities of each such Subsidiary or, with respect to Foreign Subsidiaries of
Katy, sixty-five percent (65%) of the issued and outstanding securities of each
top-tier Foreign Subsidiary.
7.1.8 Deposit and Brokerage Accounts. For each deposit account or
brokerage account that any Borrower or another Loan Party at any time opens or
maintains, the applicable Borrower shall, or shall cause the applicable Loan
Party to, at Agent's request and option, pursuant to an agreement in form and
substance reasonably satisfactory to Agent, cause the depository bank or
securities intermediary, as applicable, to agree to comply at any time with
instructions from the applicable Agent to such depository bank or securities
intermediary, as applicable, directing the disposition of funds from time to
time credited to such deposit or brokerage account, without further consent of
the applicable Borrower or the applicable Loan Party.
7.2 Negative Covenants. During the Term, and thereafter for so long as
there are any Obligations outstanding, Borrowers covenant that, unless otherwise
consented to by Majority Lenders, in writing, they shall not:
7.2.1 Mergers; Consolidations; Acquisitions; Structural Changes.
Merge or consolidate, or permit any Subsidiary of any Borrower to merge or
consolidate, with any Person; nor change its or any of its Subsidiaries' state
of incorporation or organization, Type of Organization or Organizational I.D.
Number; nor change its or any of any Borrower's Subsidiaries' legal name without
at least 14 days' prior written notice to Agent; nor acquire, nor permit any of
any Borrower's Subsidiaries to acquire, all or any substantial part of the
Properties of any Person, except for:
(i) mergers of any Subsidiary of a Borrower into a Borrower or
another wholly-owned Subsidiary of a Borrower;
(ii) acquisitions of assets consisting of fixed assets or real
Property that constitute Capital Expenditures permitted under
subsection 7.2.8;
(iii) Permitted Acquisitions;
58
(iv) as contemplated by Exhibit 7.2.12;
(v) sales or liquidations of Inactive Subsidiaries; and
(vi) dispositions of assets effected through a merger or
otherwise permitted pursuant to subsection 7.2.9.
7.2.2 Loans. Make, or permit any Subsidiary of a Borrower to make,
any loans or other advances of money to any Person, other than (i) for salary,
travel advances, advances against commissions and other similar advances to
employees in the ordinary course of business, (ii) extensions of trade credit in
the ordinary course of business, (iii) deposits with financial institutions
permitted under this Agreement, (iv) prepaid expenses; (v) prior to the Canadian
Effective Date, loans and advances to Canadian Borrower or its Subsidiaries;
provided that such loans and advances are incurred pursuant to the ▇▇▇▇▇
Subsidiary Note and/or the Glit Subsidiary Note and shall be secured by the
▇▇▇▇▇ Subsidiary Security Agreement and/or the Glit Subsidiary Security
Agreement and that the aggregate Dollar Equivalent of such loans and advances
does not exceed $11,000,000; (vi) prior to the U.K. Effective Date, loans and
advances to U.K. Borrower and its Subsidiaries; provided that such loans and
advances are incurred pursuant to the U.K. Subsidiary Note and are secured by
the U.K. Subsidiary Security Agreement and that the aggregate Dollar Equivalent
of such loans and advances does not exceed $2,000,000; and (vii) loans and
advances by a Borrower to any of its Subsidiaries and vice versa; provided that
such Subsidiary is a Loan Party, that any such loans and advances are evidenced
by a promissory note in form and substance acceptable to Agent and pledged to
the applicable Agent pursuant to the applicable Collateral Document.
7.2.3 Total Money Borrowed. Create, incur, assume, or suffer to
exist, or permit any Subsidiary of Borrower to create, incur or suffer to exist,
any Money Borrowed, except:
(i) Obligations owing to Agent or any Lender under this
Agreement or any of the other Loan Documents;
(ii) Money Borrowed, including without limitation Subordinated
Debt, existing on the date of this Agreement and listed on Exhibit
7.2.3;
(iii) Permitted Purchase Money Indebtedness;
(iv) Guaranties of any Money Borrowed permitted hereunder;
(v) Money Borrowed in respect of intercompany loans permitted
under subsection 7.2.2(v), (vi) and (vii);
(vi) obligations to pay Rentals permitted by subsection
7.2.18;
(vii) Second Lien Debt; and
(viii) Money Borrowed not included in paragraphs (i) through
(vii) above which does not exceed at any time, in the aggregate, the
sum of $500,000.
59
7.2.4 Affiliate Transactions. Enter into, or be a party to, or
permit any Subsidiary of any Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower or any holder of any Securities of
any Borrower or any Subsidiary of any Borrower, including without limitation any
management, consulting or similar fees, except:
(i) in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's or such Subsidiary's business and
upon fair and reasonable terms which are fully disclosed to Agent
and are no less favorable to such Borrower or such Subsidiary than
would be obtained in a comparable arms-length transaction with a
Person not an Affiliate or Security holder of Katy;
(ii) Borrowers and/or any other Loan Party may pay management
fees to K&C pursuant to the terms and conditions of the Management
Agreement as such terms and conditions are in effect as of the
Closing Date so long as (x) the aggregate amount of such fees paid
in any fiscal year of Katy does not exceed $500,000 plus
out-of-pocket expenses and (y) either no Default or Event of Default
has occurred and is continuing or would be caused by such payment or
a Default or Event of Default (other than a payment default of the
type referred to in subsection 9.1.1 or 9.1.2) and Aggregate
Availability after giving effect to the payment of any such
management fee shall exceed $15,000,000 (it being understood that
nothing in this subsection 7.2.4 shall prohibit the accrual of the
management fees under the Management Agreement during the period
that such fees or other amounts are prohibited from being paid
pursuant to this subsection 7.2.4); and
(iii) So long as no Event of Default or Default shall have
occurred and is continuing or shall be caused thereby, ▇▇▇▇ ▇▇▇ make
payments to K&C or K&C's Affiliates to the extent necessary to pay
Katy's obligations under any Kohlberg Agreement in effect on the
Closing Date or entered into by Katy after the Closing Date in
accordance with this subsection 7.2.4, as it may be amended from
time to time in accordance with subsection 7.2.19.
7.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary (other than Inactive Subsidiaries) of any Borrower to create or
suffer to exist, any Lien upon any of its Property, income or profits, whether
now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Agent for the
benefit of Lenders;
(ii) Liens for taxes, assessments or governmental charges
(excluding any Lien imposed pursuant to any of the provisions of
ERISA) not yet due, or being contested in the manner described in
subsection 6.1.14 hereto, but only, with respect to contested taxes,
if in Agent's judgment such Lien would not reasonably be expected to
adversely effect Agent's rights or the priority of Agent's lien on
any Collateral;
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(iii) Liens arising in the ordinary course of the business of
any such Borrower or any of its Subsidiaries by operation of law or
regulation, but only if payment in respect of any such Lien is not
at the time required and such Liens do not, in the aggregate,
materially detract from the value of the Property of such Borrower
or any of its Subsidiaries or materially impair the use thereof in
the operation of the business of such Borrower or any of its
Subsidiaries;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) such other Liens as appear on Exhibit 7.2.5 hereto;
(vi) Liens incurred or deposits made in the ordinary course of
business in connection with (1) worker's compensation, social
security, employer's health tax, unemployment insurance and other
like laws or (2) sales contracts, leases, statutory obligations,
work in progress advances and other similar obligations not incurred
in connection with the borrowing of money or the payment of the
deferred purchase price of property;
(vii) reservations, covenants, zoning and other land use
regulations, title exceptions or encumbrances granted in the
ordinary course of business, affecting real Property owned or leased
by a Borrower or one of its Subsidiaries; provided that such
exceptions do not in the aggregate materially interfere with the use
of such Property in the ordinary course of such Borrower's or such
Subsidiary's business;
(viii) judgment Liens that do not give rise to an Event of
Default under subsection 9.1.16;
(ix) Liens securing intercompany loans permitted under
subsection 7.2.2(v), (vi) and (vii);
(x) such other Liens as Majority Lenders may hereafter approve
in writing;
(xi) with respect to a Canadian Loan Party, the reservations,
limitations, provisos and conditions, if any, expressed in any
original grants from the Crown; and
(xii) Liens securing the Second Lien Debt.
7.2.6 Payments and Amendments of Certain Debt. (a) (a)Make or permit
any Subsidiary of any Borrower to make any payment of any part or all of the
Second Lien Debt or take any other action or omit to take any other action in
respect of any Second Lien Debt except in accordance with the terms of the
Second Lien Documents as in effect on the date hereof; or amend or modify any of
the Second Lien Documents (except to conform the Second Lien Documents to the
Loan Documents and otherwise in a manner not adverse to Agent or Lenders).
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(b) Make or permit any Subsidiary of any Borrower to make any
payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated
Debt, except in accordance with the subordination agreement relative
thereto or the subordination provisions thereof; or amend or modify any
agreement, instrument or document evidencing or relating to any
Subordinated Debt.
7.2.7 Distributions. Declare or make, or permit any Subsidiary of
any Borrower to declare or make, any Distributions, except for:
(i) Distributions by any Subsidiary of a Borrower to such
Borrower or to an intermediate Subsidiary of such Borrower;
(ii) Distributions paid solely in Securities of a Borrower or
any of its Subsidiaries including, without limitation, Distributions
paid by Katy solely in Securities on Katy's Convertible Preferred
Stock;
(iii) Distributions by a Borrower in amounts necessary to
permit such Borrower to repurchase Securities of such Borrower from
employees of such Borrower or any of its Subsidiaries upon the
termination of their employment or to permit Katy to make open
market repurchases of its Securities, so long as no Default or Event
of Default exists at the time of or would be caused by the making of
such Distributions and the aggregate cash amount of such
Distributions, measured at the time when made, does not exceed
$1,000,000 in any fiscal year of Katy;
(iv) so long as no Default or Event of Default exists at the
time of or would be caused by the making of such Distributions,
Distributions by Katy in an amount sufficient to permit Parent to
pay Consolidated tax liabilities of Parent, Katy and Katy's
Subsidiaries relating to the business of Borrowers and Borrowers'
Subsidiaries, so long as Parent applies the amount of such
Distributions for such purpose; and
(v) Distributions by Katy to the extent necessary to permit
Parent to pay administrative costs and expenses related to the
business of Borrowers and their Subsidiaries, not to exceed $100,000
in any fiscal year of Katy, so long as Parent applies the amount of
such Distributions for such purpose.
7.2.8 Capital Expenditures.
(a) Make Non-Restructuring Capital Expenditures (including,
without limitation, by way of capitalized leases but excluding (x) Capital
Expenditures funded from insurance, condemnation or sale proceeds of
Equipment and real Property and (y) Capital Expenditures made in
connection with the purchase of the ▇▇▇▇▇ Facility (to the extent such
Capital Expenditures are no more than $500,000 greater than the net
proceeds received from the ▇▇▇▇▇ Sale and Leaseback)) which, in the
aggregate, as to Borrowers and all of their Subsidiaries, exceed
$15,000,000 during any fiscal year of Katy, except that up to $3,000,000
of the unused portion of the Non-Restructuring
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Capital Expenditure allowance for any fiscal year may be carried over to
the immediately succeeding fiscal year only, to be used in such succeeding
fiscal year after all of the Capital Expenditure allowance for that year
has been used.
(b) Make Restructuring Capital Expenditures (including,
without limitation, by way of capitalized leases but excluding Capital
Expenditures funded from insurance, condemnation or sale proceeds of
Equipment and real Property), which in the aggregate, as to Borrowers and
all of their Subsidiaries exceed $2,000,000 in the fiscal year ending
December 31, 2004, or $0 in any subsequent fiscal year, except that up to
$500,000 of the unused portion of the Restructuring Capital Expenditures
allowance for any fiscal year may be carried over to the immediately
succeeding fiscal year only to be used in such succeeding fiscal year
after all the Restructuring Capital Expenditure allowance for that year
has been used.
7.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any
of, or permit any Subsidiary of any Borrower to sell, lease or otherwise dispose
of any of, its Properties, including any disposition of Property as part of a
sale and leaseback transaction, to or in favor of any Person, except for:
(i) sales of Inventory in the ordinary course of business;
(ii) transfers of Property to a Borrower by a Subsidiary of
Borrower or transfers of Property by a Loan Party to another Loan
Party;
(iii) dispositions of Property that is substantially worn,
damaged, uneconomic, redundant or obsolete; provided that the sales
proceeds from such dispositions are (A) reinvested in Equipment or
other real Property in which Agent has a Lien (subject only to
Permitted Liens that are not Purchase Money Liens) within 90 days
after the date of such disposition as provided in subsection 3.3.1
of the Agreement or (B) applied to the Loans pursuant to subsection
3.3.1 of the Loan Agreement.
(iv) dispositions of investments described in clauses (iv),
(v), (vi) and (vii) of the definition of the term "Restricted
Investments";
(v) other dispositions expressly authorized by this Agreement;
(vi) leases or subleases of unused real Property or Equipment;
provided that such leases or subleases are pursuant to arms-length
agreements with third parties at fair market rates;
(vii) sales of Equipment and real Property located at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; provided that the
aggregate net sales proceeds from such dispositions equal or exceed
$1,750,000 and that, subject to the terms of the Intercreditor
Agreement, such sales proceeds net of amounts required to remove
Permitted Liens prior to the Liens of Agent, shall be applied to
U.S. Revolving Credit Loans (without a permanent reduction of the
U.S. Revolving Credit Loan Commitment);
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(viii) Asset Sales of assets having a fair market value not in
excess of $10,000,000 in any single transaction (or a series of
related transactions) or in excess of $30,000,000 in the aggregate
over the Term; provided that in any such Asset Sale, (x) the
consideration received for such assets shall be in an amount at
least equal to the greater of (i) the fair market value thereof, and
(ii) (A) in the case of Accounts and Inventory, the aggregate value
attributable to such Accounts and Inventory in determining the
Canadian, U.K. or U.S. Borrowing Base, as applicable (but without
giving effect to any reduction due to advance rates or any
reserves), and (B), as long as the Term Loan is outstanding, in the
case of Equipment and real Property Assets, seventy percent (70%),
with respect to real Property, or eighty percent (80%), with respect
to Equipment, of the Appraised Value of such asset; it being
understood that in the case of Asset Sales of capital stock or other
equity interests (or any options or warrants to purchase stock or
other Securities exchangeable for or convertible into stock or other
equity interests) of any Person, the consideration received therefor
shall be in an amount equal to the greater of (i) the fair market
value thereof and (ii) the aggregate value attributable to such
Person's Accounts and Inventory in determining the Canadian, U.K. or
U.S. Borrowing Base, as applicable (but without giving effect to any
reduction due to advance rates or any reserves) plus seventy percent
(70%), with respect to real Property, or eighty percent (80%) with
respect to Equipment, of the Appraised Value of such Person's
Equipment or real Property; (y) the sole consideration received
shall be cash or, if the disposition in question is of a business
line, entire facility or division, assumption of Indebtedness; and
(z) the proceeds of such Asset Sales shall be applied as required by
subsection 3.3.1 of the Agreement or, with respect to sales proceeds
of Equipment or real Property, are reinvested in Equipment or other
real Property in which Agent has a Lien (subject only to Permitted
Liens that are not Purchase Money Liens) within 90 days after the
date of disposition as provided in subsection 3.3.1 of the
Agreement; and provided, further, that in any such Asset Sale in
which the consideration received exceeds $20,000, Agent shall have
received a certificate of an officer of Borrower Representative
evidencing that the conditions in clauses (x) and (y) above will be
satisfied and certifying that Borrowers and their Subsidiaries will
comply with clause (z) above and setting forth in reasonable detail
the calculations relating thereto and otherwise in form and
substance satisfactory to Agent at least 5 Business Days prior to
the consummation of the proposed Asset Sale;
(ix) to the sale by CCP of the real Property, facility, and
fixtures located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ (the "▇▇▇▇▇ Facility") and the leaseback of same by CCP
(said sale and leaseback hereinafter, the "▇▇▇▇▇ Sale and
Leaseback"); provided that (i) the aggregate net cash proceeds of
CCP received in respect of the ▇▇▇▇▇ Sale and Leaseback shall be no
more than $500,000 less than the sum of (x) the purchase price paid
by CCP for the ▇▇▇▇▇ Facility plus (y) related costs and expenses,
(ii) CCP shall pay the entire net cash proceeds to Agent, which
proceeds shall be applied to the principal balance of outstanding
U.S. Revolving Credit Loans, (iii) the ▇▇▇▇▇ Sale and Leaseback
shall be a bona fide arm's length transaction, (iv) the
documentation
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(the "▇▇▇▇▇ Sale and Leaseback Documents") in respect of the ▇▇▇▇▇
Sale and Leaseback shall be reasonably satisfactory in all material
respects to Agent (including, without limitation, the landlord
waiver to be delivered to Agent in connection therewith) and (v) the
▇▇▇▇▇ Sale and Leaseback shall be consummated within 150 days after
the Closing Date. Further, Agent and Lenders hereby consent to the
grant by CCP of a second subordinate Lien to the lessor under the
▇▇▇▇▇ Sale and Leaseback Documents of the Equipment of CCP located
at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇; provided
that such lessor executes in favor of Agent a subordination
agreement in form and substance reasonably acceptable to Agent,
which subordination agreement shall provide, inter alia, that such
lessor shall not take any action to foreclose upon its Lien on such
Equipment until the Obligations have been paid in full and this
Agreement shall have been terminated;
(x) sales or liquidations of Inactive Subsidiaries; and
(xi) mergers or consolidations otherwise permitted by this
Agreement.
7.2.10 Securities of Subsidiaries. Permit any of its Subsidiaries to
issue any additional Securities except to a Borrower or a wholly-owned
Subsidiary of a Borrower and except for director's qualifying Securities; except
in connection with dispositions permitted pursuant to subsection 7.2.9 above and
for director's qualifying shares, permit any Person other than Katy or another
Loan Party to own or control any issued and outstanding Security or Voting Stock
of any Loan Party (other than Parent).
7.2.11 ▇▇▇▇-and-Hold Sales, Etc. Make, or permit any Subsidiary of
any Borrower to make, a sale to any customer on a ▇▇▇▇-and-hold, guaranteed
sale, sale and return, sale on approval, repurchase or return or consignment
basis, except for immaterial consignments reflected on the most recent Borrowing
Base Certificate.
7.2.12 Restricted Investment. Make or have, or permit any Subsidiary
of any Borrower to make or have, any Restricted Investment; except for the
creation of a new U.S. or U.K. Subsidiary as set forth in Exhibit 7.2.12 or for
the creation of a new Canadian Subsidiary in connection with the amalgamation of
▇▇▇▇▇ and Glit/Gemtex so long as such new Canadian Subsidiary has no other
Indebtedness other than prior Indebtedness of ▇▇▇▇▇ or Glit/Gemtex, (x) such new
Canadian Subsidiary executes such Security Documents as requested by Canadian
Agent to grant to Canadian Agent a Lien on the Canadian Collateral comparable to
Canadian Agent's Lien on the assets and capital stock of ▇▇▇▇▇ and Glit/Gemtex,
(y) such new Canadian Subsidiary executes a joinder agreement in form and
substance reasonably acceptable to Agent evidencing and effecting such new
Canadian Subsidiary's replacement of ▇▇▇▇▇ as Canadian Borrower and the
assumption by such new Canadian Subsidiary of all of the obligations of ▇▇▇▇▇
and Glit/Gemtex under this Agreement and the other Loan Agreements to which
▇▇▇▇▇ or Glit/Gemtex are a party and (z) Borrower Representative gives Agent
fifteen (15) days' prior written notice of such amalgamation.
7.2.13 Subsidiaries and Joint Ventures. Create, acquire or otherwise
suffer to exist, or permit any Subsidiary of any Borrower to create, acquire or
otherwise suffer to exist,
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any Subsidiary or joint venture arrangement not in existence as of the date
hereof, except for as set forth in Exhibit 7.2.12 or in connection with a
Permitted Acquisition.
7.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than Parent and Borrowers'
Subsidiaries.
7.2.15 Organizational Documents. Agree to, or suffer to occur, any
amendment, supplement or addition to any Borrower's or any of its Subsidiaries'
charter, articles or certificate of incorporation, certificate of formation,
limited partnership agreement, bylaws, limited liability agreement, operating
agreement or other organizational documents (as the case may be), that would
reasonably be expected to have a Material Adverse Effect.
7.2.16 Fiscal Year End. Change, or permit any Subsidiary of any
Borrower to change, its fiscal year end.
7.2.17 Negative Pledges. Enter into any agreement limiting the
ability of any Borrower or any of its Subsidiaries to voluntarily create Liens
upon any of its Property other than Property securing Permitted Purchase Money
Indebtedness and other than pursuant to the Second Lien Documents.
7.2.18 Leases. Become, or permit any Subsidiary of any Borrower to
become, a lessee under any operating lease (other than a lease under which
Borrowers or any of their Subsidiaries is lessor) of Property if the aggregate
Rentals payable during any current or future period of twelve (12) consecutive
months under the lease in question and all other leases under which Borrowers or
any of their Subsidiaries is then lessee would exceed $20,000,000. The term
"Rentals" means, as of the date of determination, all payments which the lessee
is required to make by the terms of any lease.
7.2.19 Amendments or Waivers of Certain Agreements. Agree, or permit
any Subsidiary to agree, to any material amendment to, or waive any of its
material rights under, or terminate or agree to terminate any Kohlberg
Agreement, any Glit Subsidiary Document, the ▇▇▇▇▇ Note, any Related Agreements,
any Canadian Subsidiary Document, any ▇▇▇▇▇ Subsidiary Document or any U.K.
Subsidiary Document after the Closing Date, in each case in a manner that could
materially and adversely affect Agent or Lenders without in each case obtaining
the prior written consent of Majority Lenders to such amendment, waiver or
termination.
7.3 Specific Financial Covenants.
During the Term, and thereafter for so long as there are any Obligations
outstanding, Borrowers covenant that, unless otherwise consented to by Majority
Lenders, in writing, they shall comply with all of the financial covenants set
forth in Exhibit 7.3 hereto. If GAAP changes from the basis used in preparing
the audited financial statements delivered to Agent by Katy on or before the
Closing Date, Katy will provide Agent with certificates demonstrating compliance
with such financial covenants based upon GAAP in effect on the Closing Date and
will include, at the election of Katy or upon the request of Agent, calculations
setting forth the adjustments necessary to demonstrate how Borrowers and their
Subsidiaries are in compliance with such financial covenants based upon GAAP as
in effect on the Closing Date.
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SECTION 8. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Agent or any
Lender under the other sections of this Agreement, no Lender shall be required
to make any Loan, nor shall Agent be required to issue or procure any Letter of
Credit or LC Guaranty unless and until each of the following conditions has been
and continues to be satisfied:
8.1 Documentation.
Agent shall have received, in form and substance satisfactory to Agent and
its counsel, a duly executed copy of this Agreement and the other Loan
Documents, together with such additional documents, instruments, opinions and
certificates as Agent and its counsel shall require in connection therewith from
time to time (including, without limitation, all items set forth in Exhibit
8.1), all in form and substance satisfactory to Agent and its counsel.
8.2 No Default.
No Default or Event of Default shall exist.
8.3 Other Conditions.
Each of the conditions precedent set forth in the Loan Documents shall
have been satisfied.
8.4 Aggregate Availability.
Agent shall have determined that immediately after Lenders have made the
initial Loans and after Agent has issued or procured the initial Letters of
Credit and LC Guaranties contemplated hereby, Katy and Borrowers have paid (or,
if accrued, treated as paid), all closing costs incurred in connection with the
transactions contemplated hereby, Aggregate Availability shall not be less than
$15,000,000.
8.5 No Litigation.
No action, proceeding, investigation, regulation or legislation shall have
been instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of this Agreement or the
consummation of the transactions contemplated hereby.
8.6 Material Adverse Effect.
As of the Closing Date, since January 30, 2004, there has not been any
material adverse change in its business, assets, financial condition, income or
prospects and no event or condition exists which would be reasonably likely to
result in any Material Adverse Effect.
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8.7 Cash Management.
U.K. Agent and Canadian Agent (with respect to their respective Borrowers
and their Subsidiaries) shall have received, in form and substance satisfactory
to Agents and their counsel, duly executed copies of blocked account agreements
with Bank or its Affiliates providing for full dominion and control over each
Borrower's and its Subsidiaries' cash deposited into all bank accounts.
The foregoing notwithstanding, if as of any date all of the foregoing
conditions precedent have been satisfied with respect to U.S. Borrower and
Canadian Borrower, but not with respect to U.K. Borrower, Agents, Lenders and
Borrowers shall consummate the transactions contemplated herein with respect to
the Loans to be made to U.S. Borrower and Canadian Borrower. The transactions
contemplated hereby in connection with the Loans to be made to U.K. Borrower
shall be later consummated upon the fulfillment of the conditions precedent
listed in this Section 8 applicable to the U.K. Borrower. The date on which all
of such conditions precedent applicable to the U.K. Borrower are satisfied or
waived shall be deemed the "U.K. Effective Date." Until the U.K. Effective Date,
U.K. Lender shall not be required to make to U.K. Borrower, and U.K. Borrower
shall not be permitted to request from U.K. Lender, any Loans (including,
without limitation, U.K. Revolving Credit Loans, U.K. Letters of Credit and U.K.
LC Guaranties).
SECTION 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
9.1 Events of Default.
The occurrence of one or more of the following events shall constitute an
"Event of Default":
9.1.1 Payment of Obligations. Any Borrower shall fail to pay any of
the Obligations hereunder or under any Note consisting of principal, interest,
unused line fees or letter of credit fees on the due date thereof (whether due
at stated maturity, on demand, upon acceleration or otherwise); any Borrower
shall fail to pay any of the other Obligations hereunder or under any Note on
the due date thereof (whether due at stated maturity or demand, upon
acceleration or otherwise) and such failure shall continue for more than 5 days.
9.1.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Agent or any Lender by or on behalf of any
Borrower, any Subsidiary of any Borrower or any other Loan Party in this
Agreement, any of the other Loan Documents or any instrument, certificate or
financial statement furnished in compliance with or in reference thereto proves
to have been false or misleading in any material respect when made, furnished or
reaffirmed pursuant to Section 6.2 hereof.
9.1.3 Breach of Specific Covenants. Any Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Section or
subsection 5.1.1, 5.1.2, 5.2.4, 5.2.5, 7.1.1, 7.1.2, 7.1.4, 7.2 or 7.3 hereof on
the date that such Borrower is required to perform, keep or observe such
covenant or shall fail or neglect to perform, keep or observe any covenant
contained in Section 7.1.3 or 7.1.7 hereof within 5 days following the date on
which such Borrower is required to perform, keep or observe such covenant.
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9.1.4 Breach of Other Covenants. Any Borrower shall fail or neglect
to perform, keep or observe any covenant contained in this Agreement (other than
a covenant which is dealt with specifically elsewhere in Section 9.1 hereof) and
the breach of such other covenant is not cured to Agent's satisfaction within 30
days after the sooner to occur of such Borrower's receipt of notice of such
breach from Agent or the date on which such failure or neglect first becomes
known to any officer of such Borrower.
9.1.5 Default Under Security Documents or Other Agreements. Any
event of default shall occur under, or any Borrower, any of its Subsidiaries or
any other Loan Party shall default in the performance or observance of any term,
covenant, condition or agreement contained in, any of the Security Documents, or
the Other Agreements and such default shall continue beyond any applicable grace
period.
9.1.6 Other Defaults. There shall occur any default or event of
default on the part of any Borrower, any Subsidiary of any Borrower or any other
Loan Party under any agreement, document or instrument to which such Borrower,
such Subsidiary of such Borrower or such other Loan Party is a party or by which
such Borrower, such Subsidiary of such Borrower or such other Loan Party or any
of its Property is bound, evidencing or relating to any Money Borrowed (other
than the Obligations) with an outstanding principal balance in excess of
$1,000,000, if the payment or maturity of such Indebtedness is or could be
accelerated in consequence of such event of default or demand for payment of
such Indebtedness is made or could be made in accordance with the terms thereof.
9.1.7 Uninsured Losses. Any material loss, theft, damage or
destruction of any portion of the Collateral having a fair market value of
$1,000,000, in the aggregate, in any twelve month period if not fully covered
(subject to such deductibles and self-insurance retentions as Agent shall have
permitted) by insurance and such loss, theft, damage or destruction could
reasonably be expected to have a Material Adverse Effect.
9.1.8 Insolvency and Related Proceedings. Any Borrower, any
Subsidiary of any Borrower or any other Loan Party shall suffer the appointment
of a receiver, trustee, custodian, administrator, administrative receiver or
manager, examiner interim receiver, sheriff, monitor, sequestrator or similar
officer or fiduciary, or shall pass or convene any meeting for the purpose of
considering any resolution for winding up, examination or administration, or
shall make an assignment, composition or arrangement for the benefit of
creditors, or any petition for an order for relief (or similar proceedings,
including, without limitation, an application for a stay order or filing of a
proposal or notice of intention to make a proposal) shall be filed by or against
any Borrower, any Subsidiary of any Borrower or any other Loan Party under U.S.
federal bankruptcy laws, the Insolvency Laws of Canada, England's Insolvency Act
of 1986 or any other insolvency laws in the United Kingdom or Ireland (if
against any Borrower, any Subsidiary of any Borrower or any other Loan Party
(except with respect to any event occurring as set forth in the last sentence of
this subsection 9.1.8) and such action is not taken voluntarily by such
Borrower, any Subsidiary of any Borrower or any other Loan Party, the
continuation of such proceeding for more than 60 days, or, with respect to any
proceeding in the United Kingdom, 14 days), or such Borrower, such Subsidiary or
such other Loan Party shall make any offer of settlement, extension or
composition to their respective unsecured creditors generally. With respect to
U.K. Borrower, any of its Subsidiaries or any other U.K. Loan Party, a petition
has
69
been presented or meeting convened or application made for the purpose of
appointing a liquidator, an examiner, an administrator or receiver or other
similar officer of, or for the making of an administration or examination order
in respect of, U.K. Borrower, its such subsidiary or such other U.K. Loan Party
and (a) other than in the case of a petition to appoint an administrator, such
petition or application is not stayed or discharged within fourteen (14) days or
in any event before it is heard or (b) in the case of a petition to appoint an
administrator, U.K. Agent is not satisfied in its sole discretion that it will
be discharged before it is heard.
9.1.9 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Borrower, any Subsidiary
of any Borrower or any other Loan Party for a period which could reasonably be
expected to have a Material Adverse Effect; or any Borrower, any Subsidiary of
any Borrower or any other Loan Party shall suffer the loss or revocation of any
license or permit now held or hereafter acquired by such Borrower, any
Subsidiary of any Borrower or any other Loan Party which loss could reasonably
be expected to have a Material Adverse Effect; or any Borrower, any Subsidiary
of any Borrower or any other Loan Party shall be enjoined, restrained or in any
way prevented by court, governmental or administrative order from conducting all
or any part of its business affairs which injunction, restraint or other action
could reasonably be expected to have a Material Adverse Effect; or any lease or
agreement pursuant to which such Borrower, any Subsidiary of any Borrower or any
other Loan Party leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term, except any such lease or
agreement the cancellation or termination of which could not reasonably be
expected to have a Material Adverse Effect; or any portion of the Collateral
shall be taken through condemnation or the value of such Property shall be
impaired through condemnation, which taking or impairment could reasonably be
expected to have a Material Adverse Effect.
9.1.10 Lien on Katy Preferred or Common Stock. There shall exist any
Lien on the Preferred Stock or Common Stock of Katy owned by Parent.
9.1.11 ERISA. A Reportable Event shall occur which, in Agent's
determination, constitutes grounds for the termination by the Pension Benefit
Guaranty Corporation of any Plan or for the appointment by the appropriate
United States district court of a trustee for any Plan, or any Plan shall be
terminated or any such trustee shall be requested or appointed, or any Borrower,
any Subsidiary of any Borrower or any other Loan Party is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's, such Subsidiary's or such Loan
Party's complete or partial withdrawal from such Plan and any such event could
reasonably be expected to have a Material Adverse Effect.
9.1.12 Canadian Pension Plans. Any of the following events or
conditions has occurred and such event or condition could reasonably be expected
to have a Material Adverse Effect: (a) Canadian Borrower terminates any Canadian
Pension Plan; (b) an event providing grounds to terminate or wind-up a Canadian
Pension Plan in whole or in part by order of any applicable pension regulatory
authority; (c) any event or condition which would require the appointment by the
applicable regulator of a trustee or similar Person to administer a Canadian
Pension Plan.
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9.1.13 Challenge to Agreement. Any Borrower, any Subsidiary of any
Borrower or any other Loan Party, or any Affiliate of any of them, shall
challenge or contest in any action, suit or proceeding the validity or
enforceability of this Agreement or any of the other Loan Documents, the
legality or enforceability of any of the Obligations or the perfection or
priority of any Lien granted to Agents.
9.1.14 Repudiation of or Default Under Guaranty Agreement. Any
Borrower or other Loan Party shall revoke or attempt to revoke the Guaranty
Agreement signed by such Loan Party or the guaranty of such Borrower contained
herein, or shall repudiate such Borrower's or such other Loan Party's liability
thereunder or shall be in default under the terms thereof.
9.1.15 Criminal Forfeiture. Any Borrower, any Subsidiary of any
Borrower or any other Loan Party shall be criminally indicted or convicted under
any law that in Agent's Permitted Discretion, could reasonably be expected to
have a Material Adverse Effect.
9.1.16 Judgments. Any money judgment, writ of attachment or similar
processes (collectively, "Judgments") are issued or rendered against any
Borrower, any Subsidiary of any Borrower or any other Loan Party, or any of
their respective Property (i) in the case of money judgments, in an amount of
$1,000,000 or more for any single judgment, attachment or process or $2,500,000
or more for all such judgments, attachments or processes in the aggregate, in
each case in excess of any applicable insurance with respect to which the
insurer has admitted liability, and (ii) in the case of non-monetary Judgments,
such Judgment or Judgments (in the aggregate) could reasonably be expected to
have a Material Adverse Effect, in each case with respect to any Judgment
referred to in clauses (i) or (ii) above, which Judgment is not stayed, pending
appeal or otherwise, released or discharged within 30 days.
9.2 Acceleration of the Obligations.
Upon or at any time after the occurrence and during the continuance of an
Event of Default, (i) the Revolving Loan Commitments shall, at the option of
Agent or Majority Lenders be terminated and/or (ii) Agent or Majority Lenders
may declare all or any portion of the Obligations at once due and payable
without presentment, demand, protest or further notice by Agent or any Lender,
and Borrowers shall forthwith pay to Agent, in the case of U.S. Borrower, to
Canadian Agent, in the case of Canadian Borrower, and to U.K. Agent, in the case
of U.K. Borrower, the full amount of such Obligations; provided, that upon the
occurrence of an Event of Default specified in subsection 9.1.8 hereof, the
Revolving Loan Commitments shall automatically be terminated and all of the
Obligations shall become automatically due and payable, in each case without
declaration, notice or demand by Agent or any Lender.
9.3 Other Remedies.
Upon the occurrence and during the continuance of an Event of Default,
Agent shall have and may exercise from time to time the following other rights
and remedies:
9.3.1 All of the rights and remedies of a secured party under the
UCC, PPSA and the laws of the United Kingdom or under other applicable law, and
all other legal and equitable rights to which Agent or Lenders may be entitled,
all of which rights and remedies
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shall be cumulative and shall be in addition to any other rights or remedies
contained in this Agreement or any of the other Loan Documents, and none of
which shall be exclusive.
9.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrowers and each other Loan Party to assemble the Collateral,
at Borrowers' expense, and make it available to Agents at a place designated by
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
a Borrower or any Subsidiary of any Borrower, such Borrower agrees not to
charge, or permit any of its Subsidiaries to charge, Agents for storage
thereof).
9.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Agents, in
their sole discretion, may deem advisable. Agents may, at their option, disclaim
any and all warranties regarding the Collateral in connection with any such
sale. Each Borrower agrees that 10 days' written notice to such Borrower or any
other Loan Party of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Agents may designate in said notice. Agents shall have the right to
conduct such sales on any Borrower's or any of its Subsidiaries' or any other
Loan Party's premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. Agents shall have the right
to sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Agents, on behalf of Lenders, may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price, may set off
the amount of such price against the Obligations. The proceeds realized from the
sale of any Collateral may be applied, after allowing 2 Business Days for
collection, first to the costs, expenses and attorneys' fees incurred by Agents
in collecting the Obligations secured thereby, in enforcing the rights of Agents
and Lenders under the Loan Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
Collateral, second to the interest due upon any of the Obligations secured
thereby; and third, to the principal of the Obligations secured thereby. Subject
to Section 1.3 of this Agreement, if any deficiency shall arise, Borrowers and
each Loan Party shall remain jointly and severally liable to Agents and Lenders
therefor.
9.3.4 Agent, with respect to the U.S. Collateral, Canadian Agent,
with respect to the Canadian Collateral, and U.K. Agent, with respect to the
U.K. Collateral, is hereby granted a non-exclusive license or other right to
use, without charge, each Borrower's licenses for Software or any Property of a
similar nature, as it pertains to the Collateral, in realizing upon any
Collateral and each Borrower's rights under all such licenses shall inure to
Agent's, Canadian Agent's and U.K. Agent's benefit; provided that any such
license or right to use shall be subject to the terms and conditions of the
underlying license.
9.3.5 Agents, at their option, may require each applicable Borrower
to deposit with Agent, funds equal to the U.S. LC Amount, with Canadian Agent,
funds equal to the Canadian LC Amount and with U.K. Agent, the U.K. LC Amount,
and, if such Borrower fails to promptly make such deposit, Agent, Canadian Agent
and U.K. Agent, as the case may be, may
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advance such amount as a Revolving Credit Loan (whether or not an Overadvance is
created thereby). Each such Revolving Credit Loan shall be secured by all of the
Collateral (except that (x) Canadian Collateral shall not secure Revolving
Credit Loans to U.S. Borrower, (y) U.K. Collateral shall not secure the
Revolving Credit Loans to the Canadian Borrower and (z) the Canadian Collateral
shall not secure the Revolving Credit Loans to the U.K. Borrower) and shall
constitute a Base Rate Revolving Portion. Any such deposit or advance shall be
held by Agent, Canadian Agent or U.K. Agent, as applicable, as a reserve to fund
future payments on such applicable LC Guaranties and future drawings against
such applicable Letters of Credit. At such time as all LC Guaranties have been
paid or terminated and all Letters of Credit have been drawn upon or expired,
any amounts remaining in such reserve shall be applied against any outstanding
Obligations, or, if all Obligations have been indefeasibly paid in full,
returned to the applicable Borrower; provided, that in no event shall (i) any
such reserves held as Canadian Collateral or U.K. Collateral be applied to the
U.S. Obligations, (ii) any such reserves held as U.K. Collateral be applied to
the Canadian Obligations, and (iii) any such reserves held as Canadian
Collateral be applied to the U.K. Obligations.
9.4 Set Off and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrowers at any time or from time to time, with prior written
consent of Agents, and with reasonably prompt subsequent notice to Borrower
Representative (any prior or contemporaneous notice to Borrower Representative
being hereby expressly waived) to set off and to appropriate and to apply any
and all (i) balances held by such Lender at any of its offices for the account
of any Borrower (regardless of whether such balances are then due to any such
Borrower); and (ii) other property at any time held or owing by such Lender to
or for the credit or for the account of any Borrower against and on account of
any of the Obligations. Any Lender exercising a right to set off shall, to the
extent the amount of any such set off exceeds its Aggregate Percentage of the
amount set off, purchase for cash (and the other Lenders shall sell) interests
in each such other Lender's pro rata share of the Obligations as would be
necessary to cause such Lender to share such excess with each other Lender in
accordance with their respective Aggregate Percentages. Borrowers agree, to the
fullest extent permitted by law, that any Lender may exercise its right to set
off with respect to amounts in excess of its pro rata share of the Obligations
and upon doing so shall deliver such excess to Agent for the benefit of all
Lenders in accordance with the Aggregate Percentages. Notwithstanding the
foregoing, no Lender shall exercise set off rights with respect to (i) Canadian
Borrower's assets and apply such proceeds to the U.S. Obligations or (ii) U.K.
Borrower's assets and apply such proceeds to the Canadian Obligations or (iii)
Canadian Borrower's assets and apply such proceeds to the U.K. Obligations.
9.5 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrowers
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule given to Agents or any Lender or contained in any other agreement
between any Lender and any Borrower or between Agents and any Borrower
heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of any Borrower herein contained. The failure or delay
of Agents or any Lender to require strict performance by Borrowers of any
provision of this Agreement or to exercise or enforce any
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rights, Liens, powers, or remedies hereunder or under any of the aforesaid
agreements or other documents or security or Collateral shall not operate as a
waiver of such performance, Liens, rights, powers and remedies, but all such
requirements, Liens, rights, powers, and remedies shall continue in full force
and effect until all Loans and other Obligations owing or to become owing from
Borrowers to Agents and each Lender have been fully satisfied. None of the
undertakings, agreements, warranties, covenants and representations of Borrowers
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by Borrowers under this Agreement or any other Loan Documents
shall be deemed to have been suspended or waived by Lenders, unless such
suspension or waiver is by an instrument in writing specifying such suspension
or waiver and is signed by a duly authorized representative of Agents and
directed to Borrowers.
SECTION 10. AGENT; ASSIGNMENTS; AMENDMENTS
10.1 Authorization and Action.
(a) Each Lender hereby appoints and authorizes Agent to take
such action on its behalf and to exercise such powers under this Agreement
and the other Loan Documents as are delegated to Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental
thereto. Each Lender hereby appoints and authorizes Canadian Agent to take
such action on its behalf (and on behalf of Agent) and to exercise such
powers under this Agreement and the other Loan Documents with respect to
the administration of all Loans made to Canadian Borrower and with respect
to Canadian Collateral. Each Lender hereby appoints and authorizes U.K.
Agent to take such action on its behalf (and on behalf of Agent) and to
exercise such powers under this Agreement and the other Loan Documents
with respect to the administration of all Loans made to U.K. Borrower and
with respect to U.K. Collateral. Each Lender hereby acknowledges that
Agents shall not have by reason of this Agreement assumed a fiduciary
relationship in respect of any Lender. In performing its functions and
duties under this Agreement, Agents shall act solely as agent of Lenders
and shall not assume, or be deemed to have assumed, any obligation toward,
or relationship of agency or trust with or for, any Borrower. As to any
matters not expressly provided for by this Agreement and the other Loan
Documents (including without limitation enforcement and collection of the
Notes), Agents may, but shall not be required to, exercise any discretion
or take any action, but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from acting) upon
the instructions of the Majority Lenders, whenever such instruction shall
be requested by Agents or required hereunder, or a greater or lesser
number of Lenders if so required hereunder, and such instructions shall be
binding upon all Lenders; provided, that Agents shall be fully justified
in failing or refusing to take any action which exposes Agents to any
liability (other than taxes payable in the ordinary course of business) or
which is contrary to this Agreement, the other Loan Documents or
applicable law, unless Agent, Canadian Agent or U.K. Agent, as applicable,
is indemnified to its satisfaction by the other Lenders against any and
all liability and expense (other than any taxes that are not Tax
Liabilities) which it may incur by reason of taking or continuing to take
any such action. If Agent, Canadian Agent or U.K. Agent seeks the consent
or approval of the Majority Lenders (or a greater or lesser number of
Lenders as required in this Agreement), with respect to any action
hereunder, Agent,
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Canadian Agent or U.K. Agent, as applicable, shall send notice thereof to
each Lender and shall notify each Lender at any time that the Majority
Lenders (or such greater or lesser number of Lenders) have instructed
Agent, Canadian Agent or U.K. Agent, as applicable, to act or refrain from
acting pursuant hereto.
(b) Each Lender hereby authorizes Agent to delegate to
Canadian Agent and U.K. Agent any and all of its obligations under this
Agreement and the Loan Documents with respect to all actions required to
be taken in Canada and the United Kingdom, respectively, of any kind
whatsoever. Canadian Agent and U.K. Agent, when acting pursuant to the
authority granted hereunder, shall have all the protections, indemnities,
rights and powers granted to Agent under this Agreement and any Loan
Document.
(c) To the extent necessary, each Canadian Lender appoints the
Canadian Agent as its agent to hold in the name of the Canadian Agent, for
the benefit of each Canadian Lender, any of the debentures issued by
Canadian Borrower and outstanding from time to time forming part of the
Security Documents, and appoints CIBC Mellon Trust Company as the person
holding the power of attorney for the holders of bonds or other titles of
indebtedness for all purposes of Article 2692 of the Civil Code of Quebec.
Each Borrower, to the extent necessary, hereby consents to all present and
future appointments made in this Section 10.1(c) or pursuant thereto.
10.2 Agent's Reliance, Etc. None of Agents or their Affiliates, nor any of
their respective directors, officers, agents or employees, shall be liable for
any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, Agents: (i) may treat each Lender party hereto as the holder of
Obligations until Agent receives written notice of the assignment or transfer of
such Lender's portion of the Obligations signed by such Lender and in form
reasonably satisfactory to Agent; (ii) may consult with legal counsel,
independent public accountants and other experts selected by them and shall not
be liable for any action taken or omitted to be taken in good faith by it or
them in accordance with the advice of such counsel, accountants or experts;
(iii) make no warranties or representations to any Lender and shall not be
responsible to any Lender for any recitals, statements, warranties or
representations made in or in connection with this Agreement or any other Loan
Documents; (iv) shall not have any duty beyond Agents' customary practices in
respect of loans in which Agent, Canadian Agent or U.K. Agent is the only
lender, to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement or the other Loan Documents
on the part of Borrowers, to inspect the property (including the books and
records) of Borrowers, to monitor the financial condition of Borrowers or to
ascertain the existence or possible existence or continuation of any Default or
Event of Default; (v) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (vi) shall not be liable to any
Lender for any action taken, or inaction, by Agent, Canadian Agent or U.K. Agent
upon the instructions of Majority Lenders pursuant to Section 10.1 hereof or
refraining to take any action pending such instructions; (vii) shall not be
liable for any apportionment or distributions of payments made by it pursuant to
Section 3 hereof, absent gross negligence or willful
75
misconduct; (viii) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate, message or other instrument or writing (which may be by telephone,
facsimile, telegram, cable or telex) believed in good faith by it to be genuine
and signed or sent by the proper party or parties; and (ix) may assume that no
Event of Default has occurred and is continuing, unless Agent has actual
knowledge of the Event of Default, has received notice from Borrower
Representative or Borrowers' independent certified public accountants stating
the nature of the Event of Default, or has received notice from a Lender stating
the nature of the Event of Default and that such Lender considers the Event of
Default to have occurred and to be continuing.
10.3 Fleet and Affiliates. With respect to its commitment hereunder to
make Loans, Fleet, Fleet Canada and Fleet U.K. shall have the same rights and
powers under this Agreement and the other Loan Documents as any other Lender and
may exercise the same as though it were not Agent, Canadian Agent and U.K.
Agent, as applicable; and the terms "Lender," "Lenders" or "Majority Lenders"
shall, unless otherwise expressly indicated, include each of Fleet, Fleet Canada
and Fleet U.K. in their individual capacity as a Lender. Fleet, Fleet Canada and
Fleet U.K. and its Affiliates may lend money to, and generally engage in any
kind of business with, Borrowers and any Person who may do business with or own
Securities of Borrowers all as if they were not Agents and without any duty to
account therefor to any other Lender.
10.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agents or any other Lender and based on
the financial statements referred to herein and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agents 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. Except as otherwise provided for herein or in the other
Loan Documents, Agents shall not have any duty or responsibility, either
initially or on an ongoing basis, to provide any Lender with any credit or other
similar information regarding Borrowers.
10.5 Indemnification. Lenders agree to indemnify Agents (to the extent not
reimbursed by Borrowers), in accordance with their respective Aggregate
Percentages, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (other than taxes
that are not Tax Liabilities) or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against Agents, in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by Agents under this Agreement; provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agents' gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse Agents promptly
upon demand for its ratable share, as set forth above, of any out-of-pocket
expenses (other than taxes that are not Tax Liabilities but including legal
fees) incurred by Agents in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiation, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that Agents are not reimbursed for such expenses by
Borrowers. The obligations of Lenders under
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this Section 10.5 shall survive the payment in full of all Obligations and the
termination of this Agreement. If after payment and distribution of any amount
by Agents to Lenders, any Lender or any other Person, including Borrowers, any
creditor of Borrowers, a liquidator, administrator or trustee in bankruptcy,
recovers from Agents any amount found to have been wrongfully paid to Agents or
disbursed by Agents to Lenders, then Lenders, in accordance with their
respective Aggregate Percentages, shall reimburse Agents for all such amounts.
10.6 Rights and Remedies to be Exercised by Agent Only. Each Lender agrees
that, except as set forth in Section 9.4, no Lender shall have any right
individually (i) to realize upon the security created by this Agreement or any
other Loan Document, (ii) to enforce any provision of this Agreement or any
other Loan Document, or (iii) to make demand for payment by Borrowers under this
Agreement or any other Loan Document.
10.7 Agency Provisions Relating to Collateral. Each Lender authorizes and
ratifies Agents' entry into this Agreement and the Security Documents for the
benefit of Lenders. Each Lender agrees that any action taken by Agents with
respect to the Collateral in accordance with the provisions of this Agreement or
the Security Documents, and the exercise by Agents of the powers set forth
herein or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all Lenders. Agents are hereby
authorized on behalf of all Lenders, without the necessity of any notice to or
further consent from any Lender to take any action with respect to any
Collateral or the Loan Documents which may be necessary to perfect and maintain
perfected Agents' Liens upon the Collateral, for their benefit and the ratable
benefit of Lenders. Lenders hereby irrevocably authorize Agents at their option
and in their discretion, to release any Lien granted to or held by Agents upon
any Collateral (i) upon termination of the Agreement and payment and
satisfaction of all Obligations; or (ii) constituting property being sold or
disposed of if Borrower Representative certifies to Agent that the sale or
disposition is made in compliance with subsection 7.2.9 hereof (and Agents may
rely conclusively on any such certificate, without further inquiry); or (iii)
constituting property in which Borrowers owned no interest at the time the Lien
was granted or at any time thereafter; or (iv) in connection with any
foreclosure sale or other disposition of Collateral after the occurrence and
during the continuation of an Event of Default; or (v) if approved, authorized
or ratified in writing by Agent at the direction of all Lenders. Upon request by
Agent at any time, Lenders will confirm in writing Agents' authority to release
particular types or items of Collateral pursuant hereto. Agents shall have no
obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by Borrower or is cared for, protected or insured
or has been encumbered or that the Liens granted to Agents herein or pursuant to
the Security Documents 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 its rights,
authorities and powers granted or available to Agents in this Section 10.7 or in
any of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, Agents may act in any
manner they may deem appropriate, in their sole discretion, but consistent with
the provisions of this Agreement, including given Agents' own interest in the
Collateral as Lenders and that Agents shall have no duty or liability whatsoever
to any Lender.
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10.8 Agents' Right to Purchase Commitments. Agents shall have the right,
but shall not be obligated, at any time upon written notice to any Lender and
with the consent of such Lender, which may be granted or withheld in such
Lender's sole discretion, to purchase for Agents' own account all of such
Lender's interests in this Agreement, the other Loan Documents and the
Obligations, for the available amount of the outstanding Obligations owed to
such Lender, including without limitation, all accrued and unpaid interest and
fees.
10.9 Right of Sale, Assignment, Participations. Any Lender shall be
permitted to participate, sell, assign, transfer or otherwise dispose, at any
time or times hereafter, of this Agreement and any of the other Loan Documents,
or of any portion hereof or thereof, including, without limitation, such
Lender's rights, title, interests, remedies, powers and duties hereunder or
thereunder subject to the terms and conditions set forth below and within
Section 2.12:
10.9.1 Sales, Assignments. Each Lender hereby agrees that, with
respect to any sale or assignment (other than the purchase of a Participating
Interest pursuant to Section 3.13 or 3.14) or in the case of an assignment by
Canadian Lender or U.K. Lender to an Affiliate of Agent (i) no such sale or
assignment (except with respect to an assignment of a Lender's entire Loan
Commitments) shall be for an amount of less than $5,000,000 in the aggregate and
$1,000,000 increments in excess thereof, (ii) after giving effect to any such
assignment, the aggregate amount of the assigning Lender's Loan Commitments is
equal to or greater than $5,000,000, (iii) Agent and, in the absence of an Event
of Default, Borrowers, must consent, such consent not to be unreasonably
withheld, to each such assignment to a Person that is not an original signatory
to this Agreement, (iv) the assigning Lender shall pay to Agent a processing and
recordation fee of $3,500 and any out-of-pocket legal fees and expenses incurred
by Agent in connection with any such sale or assignment and (v) Agent, the
assigning Lender and the assignee Lender shall each have executed and delivered
an Assignment and Acceptance Agreement. After such sale or assignment has been
consummated (x) the assignee Lender thereupon shall become a "Lender" for all
purposes of this Agreement and (y) the assigning Lender shall have no further
liability for funding the portion of Revolving Loan Commitments assumed by such
other Lender.
10.9.2 Participations. Any Lender may grant participations in its
extensions of credit hereunder to any other Lender or other lending institution
(a "Participant"); provided that (i) no such participation shall be for an
amount of less than $5,000,000 in the aggregate and $1,000,000 increments in
excess thereof, (ii) no Participant shall thereby acquire any direct rights
under this Agreement, (iii) no Participant shall be granted any right to consent
to any amendment, except to the extent any of the same pertain to (1) reducing
the aggregate principal amount of, or interest rate on, or fees applicable to,
any Loan or (2) extending the final stated maturity of any Loan or the stated
maturity of any portion of any payment of principal of, or interest or fees
applicable to, any of the Loans; provided, that the rights described in this
subclause (2) shall not be deemed to include the right to consent to any
amendment with respect to or which has the effect of requiring any mandatory
prepayment of any portion of any Loan or any amendment or waiver of any Default
or Event of Default, (iv) no sale of a participation in extensions of credit
shall in any manner relieve the originating Lender of its obligations hereunder,
(v) the originating Lender shall remain solely responsible for the performance
of such obligations, (vi) Borrowers and Agent shall continue to deal solely and
directly with the originating Lender in connection with the originating Lender's
rights and obligations under this
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Agreement and the other Loan Documents, (vii) in no event shall any financial
institution purchasing the participation grant a participation in its
participation interest in the Loans without the prior written consent of Agent,
and, in the absence of a Default or an Event of Default, Borrowers, which
consents shall not unreasonably be withheld and (viii) all amounts payable by
Borrowers hereunder shall be determined as if the originating Lender had not
sold any such participation. The provisions of clause (iii) of the first
sentence of this subsection 10.9.2 do not apply to the Participating Interests
of the Lenders or their Affiliates in their capacity as holders of the
Participating Interests.
10.9.3 Certain Agreements of Borrowers. Each Borrower agrees that
(i) it will use its reasonable efforts to assist and cooperate with each Lender
in any manner reasonably requested by such Lender to effect the sale of
participation in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including, without limitation, assisting in the
preparation of appropriate disclosure documents and making members of management
available at reasonable times to meet with and answer questions of potential
assignees and Participants; and (ii) subject to the provisions of Section 11.14
hereof, such Lender may disclose credit information regarding Borrowers to any
potential Participant or assignee.
10.9.4 Non U.S. Resident Lenders and Transferees. If, pursuant to
this Section 10.9, any interest in this Agreement or any Loans is transferred to
any transferee which is organized under the laws of any jurisdiction other than
the United States or any state thereof, the transferor Lender shall cause such
transferee (including any Participant) concurrently with and as a condition
precedent to the effectiveness of such transfer, to (i) represent to the
transferor Lender (for the benefit of the transferor Lender, Agent and
Borrowers) that under applicable law and treaties no taxes will be required to
be withheld by Agent, Borrowers or the transferor Lender with respect to any
payments to be made to such transferee in respect of the interest so
transferred, (ii) furnish to the transferor Lender, Agent and Borrower
Representative either United States Internal Revenue Service Form W-8BEN or
United States Internal Revenue Service Form W-8ECI (wherein such transferee
claims and establishes entitlement to complete exemption from United States
federal withholding tax on all interest payments hereunder) and (iii) agree (for
the benefit of the transferor Lender, Agent and Borrowers) to provide the
transferor Lender, Agent and Borrower Representative a new Form W-8BEN or Form
W-8ECI upon the obsolescence of any previously delivered form and comparable
statements in accordance with applicable United States laws and regulations and
amendments duly executed and completed by such transferee, and to comply from
time to time with all applicable United States laws and regulations with regard
to such withholding tax exemption. Each Lender that is a Lender on the Closing
Date that is not a United States person for United States federal income tax
purposes hereby agrees to fully comply with the provisions of Section 10.9.4(i),
(ii) and (iii) as if it were a transferee and each Lender that is a Lender on
the Closing Date that is a United States person for United States federal income
tax purposes hereby agrees to provide to Borrower Representative a fully
executed United States Internal Revenue Form W-9. Notwithstanding anything to
the contrary herein, to the extent that any Lender or any transferee (including
any Participant) of any Lender fails to comply with the provisions of this
Section 10.9.4, then such Lender or such transferee or such Participant shall
not be entitled to any payment on account of or indemnification for any Tax
Liabilities. The foregoing notwithstanding, unless an Event of Default has
occurred and is continuing, no Lender shall be
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permitted to transfer its interest in this Agreement or any Loans if the result
of such transfer is to impose additional costs on Borrowers pursuant to Section
2.12 or 3.8 of the Agreement.
10.10 Amendment. No amendment or waiver of any provision of this Agreement
or any other Loan Document (including without limitation any Note), nor consent
to any departure by Borrower therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Majority Lenders and Borrower,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that no amendment,
waiver or consent shall be effective, unless (i) in writing and signed by each
Lender, to do any of the following: (1) increase or decrease the aggregate Loan
Commitments, or any Lender's Revolving Loan Commitment, or Term Loan Commitment,
(2) reduce the principal of, or interest on, any amount payable hereunder or
under any Note, other than those payable only to Fleet, Fleet Canada or Fleet
U.K. in their capacities as Agents, which may be reduced by Fleet, Fleet Canada
or Fleet U.K. unilaterally, (3) increase or decrease any interest rate payable
hereunder, (4) postpone any date fixed for any payment of principal of, or
interest on, any amounts payable hereunder or under any Note, other than those
payable only to Fleet, Fleet Canada, Fleet U.K. in their capacities as Agents,
which may be postponed by Fleet, Fleet Canada or Fleet U.K. unilaterally, (5)
increase any advance percentage contained in the definition of the terms
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. Borrowing Base or Canadian
Borrowing Base to amounts greater than the percentages in effect on the Closing
Date, (6) reduce the number of Lenders that shall be required for Lenders or any
of them to take any action hereunder, (7) except as otherwise specifically
contemplated by the provisions of this Agreement or in connection with the sale
of the Securities of any Loan Party (other than Katy or Parent) permitted
hereunder or consented to by Majority Lenders, release or discharge any Person
liable for the performance of any obligations of Borrower hereunder or under any
of the Loan Documents, (8) amend any provision of this Agreement that requires
the consent of all Lenders or consent to or waive any breach thereof, (9) amend
the definition of the term Majority Lenders, (10) amend this Section 10.10 or
(11) release any substantial portion of the Collateral, unless otherwise
permitted pursuant to Section 10.7 hereof or as otherwise contemplated by the
terms of this Agreement, including, without limitation, any Asset Sale permitted
pursuant to subsection 7.2.9 of the Agreement or any Asset Sale consented to by
Majority Lenders; or (ii) in writing and signed by Agent in addition to the
Lenders required above to affect the rights or duties of Agent under this
Agreement, any Note or any other Loan Document. Notwithstanding the foregoing,
in the event that the U.K. Sublimit and Canadian Sublimit are adjusted in
accordance with the terms hereof, Agent may, without the consent of the Lenders,
make conforming changes to the signature pages hereof and any Assignment and
Assumption Agreement to reflect such adjustments. If a fee is to be paid by
Borrowers in connection with any waiver or amendment hereunder, the agreement
evidencing such amendment or waiver may, at the discretion of Agent (but shall
not be required to), provide that only Lenders executing such agreement by a
specified date may share in such fee (and in such case, such fee shall be
divided among the applicable Lenders on a pro rata basis without including the
interests of any Lenders who have not timely executed such agreement).
10.11 Resignation of Agent; Appointment of Successor. Each of Agent,
Canadian Agent and U.K. Agent may resign as such by giving not less than thirty
(30) days' prior written notice, in the case of Agent, to Lenders and Borrower,
and in the case of Canadian Agent and U.K. Agent, to Lenders. If Agent, Canadian
Agent or U.K. Agent shall resign under this
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Agreement, then, (i) subject to the consent of Borrowers (which consent shall
not be unreasonably withheld and which consent shall not be required during any
period in which a Default or an Event of Default exists) in the case of Agent
only, Majority Lenders shall appoint from among Lenders (located in the relevant
jurisdiction) successor agents or agent, as applicable, for Lenders or (ii) if
successor agents or agent, as applicable, shall not be so appointed and approved
within the thirty (30) day period following such Agents' notice of such
resignation, then Agent shall appoint successor agents or agent, as applicable,
who shall serve as Agent until such time as Majority Lenders appoint successor
agents or agent, as applicable, subject to Borrowers' consent, if applicable, as
set forth above. Subject to the consent of Borrowers (which consent shall not be
unreasonably withheld and which consent shall not be required during any period
in which a Default or an Event of Default exists), in the case of Canadian Agent
or U.K. Agent only, Agent shall appoint from among the Lenders or any Affiliate
of Agent located in the relevant jurisdiction a successor agent or agents, as
applicable. Upon its appointment, such successor agents or agent shall succeed
to the rights, powers and duties of Agents and the term "Agent", "Canadian
Agent", "U.K. Agent" and "Agents", as applicable, shall mean each such successor
effective upon its appointment, and the former Agents' rights, powers and duties
as Agents shall, as applicable, be terminated without any other or further act
or deed on the part of such former Agents or any of the parties to this
Agreement. After the resignation of such Agents hereunder, the provisions of
this Section 10 shall inure to the benefit of such former Agents and such former
Agents shall not by reason of such resignation be deemed to be released from
liability for any actions taken or not taken by it while acting as Agents under
this Agreement. Notwithstanding the foregoing, without the consent of the
Lenders or the Borrowers, an Affiliate of Fleet Capital Canada Corporation or
Fleet Capital Corporation may be appointed by Fleet Capital Canada Corporation
to replace Fleet Capital Canada Corporation as Canadian Agent hereunder;
provided, that such replacement Canadian Agent shall provide prior notice to
Borrowers of such replacement.
10.12 Audit and Examination Reports; Disclaimer by Lenders. By signing
this Agreement, each Lender:
(a) is deemed to have requested that Agents furnish such
Lender, promptly after it becomes available, a copy of each audit or
examination report (each a "Report" and collectively, "Reports") prepared
by or on behalf of any Agent;
(b) expressly agrees and acknowledges that Agents (i) do not
make any representation or warranty as to the accuracy of any Report, and
(ii) shall not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agents or other party
performing any audit or examination will inspect only specific information
regarding Borrowers and will rely significantly upon Borrowers' books and
records, as well as on representations of Borrowers' personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and not to distribute except to its participants, or use
any Report in any other manner, in accordance with the provisions of
Section 11.14; and
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(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold
Agents and any such other Lender preparing a Report harmless from any
action the indemnifying Lender may take or conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or
other credit accommodations that the indemnifying Lender has made or may
make to Borrowers, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of Borrowers; and (ii)
to pay and protect, and indemnify, defend and hold Agents and any such
other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses (other than taxes that are
not Tax Liabilities) and other amounts (including attorneys' fees and
expenses) incurred by any Agent and any such other Lender preparing a
Report as the direct or indirect result of any third parties who might
obtain all or part of any Report through the indemnifying Lender.
10.13 Syndication Agent Agreement. The Syndication Agent identified in the
introductory paragraph of this Agreement, in its capacity as such, shall have no
rights, powers, duties or responsibilities and no rights, powers, duties or
responsibilities shall be read into this Agreement or any other Loan Document or
otherwise exist on behalf of or against such entity, in its capacity as such. If
the Syndication Agent resigns, as such agent, no successor Syndication Agent
shall be appointed.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney.
Each Borrower hereby irrevocably designates, makes, constitutes and
appoints Agent, Canadian Agent and U.K. Agent (and all Persons designated by
Agent, Canadian Agent and U.K. Agent) as such Borrower's and each other Loan
Party's (other than Parent) true and lawful attorney (and agent-in-fact), solely
with respect to the matters set forth in this Section 11.1, and Agents, or any
Agent's agent, may, without notice to such Borrower or any other Loan Party and
in such Borrower's, such other Loan Party's or such Agent's name, but at the
cost and expense of such Borrower:
11.1.1 At such time or times as Agents or said agent, in their sole
discretion, may determine, endorse such Borrower's or such other Loan Party's
name on any checks, notes, acceptances, drafts, money orders or any other
evidence of payment or proceeds of the Collateral which come into the possession
of any Agent or under any Agent's control.
11.1.2 At such time or times upon or after the occurrence and during
the continuance of an Event of Default (provided that the occurrence of an Event
of Default shall not be required with respect to clauses (iv), (vi), (viii) and
(ix) below), as any Agent or its agent in its sole discretion may determine: (i)
demand payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of any
Borrower's or any other Loan Party's rights and remedies with respect to the
collection of the Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts or other Collateral or any legal proceedings brought
to collect any of the Accounts or other Collateral; (iii) sell or assign any of
the Accounts and other Collateral upon such terms, for such amounts
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and at such time or times as any Agent deems advisable, and at such Agent's
option, with all warranties regarding the Collateral disclaimed; (iv) take
control, in any manner, of any item of payment or proceeds relating to any
Collateral; (v) prepare, file and sign any Borrower's or such other Loan Party's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to any Borrower or such other Loan Party and
notify postal authorities to change the address for delivery of remittances on
Accounts to such address as any Agent may designate; (vii) endorse the name of
any Borrower or such other Loan Party upon any of the items of payment or
proceeds relating to any Collateral and deposit the same to the account of any
Agent on account of the Obligations; (viii) endorse the name of any Borrower or
any other Loan Party upon any chattel paper, document, instrument, invoice,
freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or agreement relating to the
Accounts, Inventory and any other Collateral; (ix) use any Borrower's or any
other Loan Party's stationery and sign the name of any Borrower or such other
Loan Party to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and Computer Hardware and Software relating to the Accounts,
Inventory, Equipment and any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in any
Agent's determination, to fulfill the applicable Borrower's or any other Loan
Party's obligations under this Agreement.
The power of attorney granted hereby shall constitute a power
coupled with an interest and shall be irrevocable.
11.2 Indemnity.
Borrowers hereby agree to indemnify Agents and each Lender (and each of
their Affiliates) and hold Agents and each Lender (and each of their Affiliates)
harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by any such Person (including reasonable
attorneys' fees and legal expenses) as the result of any Borrower's failure to
observe, perform or discharge Borrower's duties hereunder. In addition, each
Borrower shall defend Agents and each Lender (and each of their Affiliates)
against and save it harmless from all claims of any Person with respect to the
Collateral (except those resulting from the gross negligence or intentional
misconduct of any Agent, any Lender or any Affiliate of any Agent or any Lender,
as applicable). Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against any Agent or any Lender
(and each of their Affiliates) by any Person under any Environmental Laws by
reason of any Borrower's or any other Person's failure to comply with laws
applicable to solid or hazardous waste materials or other toxic substances.
Notwithstanding any contrary provision in this Agreement, the obligation of each
Borrower under this Section 11.2 shall survive the payment in full of the
Obligations and the termination of this Agreement.
11.3 Sale of Interest.
Borrowers may not sell, assign or transfer any interest in this Agreement,
any of the other Loan Documents, or any of the Obligations, or any portion
thereof, including, without limitation, Borrowers' rights, title, interests,
remedies, powers and duties hereunder or thereunder.
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11.4 Severability.
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.5 Successors and Assigns.
This Agreement, the Other Agreements and the Security Documents shall be
binding upon and inure to the benefit of the successors and assigns of
Borrowers, Agents and each Lender permitted under Section 10.9 hereof.
11.6 Cumulative Effect; Conflict of Terms.
The provisions of the Other Agreements and the Security Documents are
hereby made cumulative with the provisions of this Agreement. Except as
otherwise provided in any of the other Loan Documents by specific reference to
the applicable provision of this Agreement, if any provision contained in this
Agreement is in direct conflict with, or inconsistent with, any provision in any
of the other Loan Documents, the provision contained in this Agreement shall
govern and control.
11.7 Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
11.8 Notice.
Except as otherwise provided herein, all notices, requests and demands to
or upon a party hereto, to be effective, shall be in writing, and shall be sent
by certified or registered mail, return receipt requested, by personal delivery
against receipt, by overnight courier or by facsimile and, unless otherwise
expressly provided herein, shall be deemed to have been validly served, given,
delivered or received immediately when delivered against receipt, three (3)
Business Days' after deposit in the mail, postage prepaid, one (1) Business Day
after deposit with an overnight courier or, in the case of facsimile notice,
when sent with respect to machine confirmed, addressed as follows:
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(A) If to Agent: Fleet Capital Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Loan Administration Manager
and ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(B) If to Borrower: Katy Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to: Ropes & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
KKTY Holding Company, L.L.C.
c/o Kohlberg Management IV, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(C) If to any Lender, at its address indicated on the signature pages
hereof and in an Assignment and Acceptance Agreement,
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Agent or a Lender pursuant to subsection 3.1.1 or
4.2.2 hereof shall not be effective until received by Agent or such Lender.
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11.9 Consent.
Whenever Agent's, Agents', Majority Lenders' or all Lenders' consent is
required to be obtained under this Agreement, any of the Other Agreements or any
of the Security Documents as a condition to any action, inaction, condition or
event, except as otherwise specifically provided herein, Agent, Agents, Majority
Lenders or all Lenders, as applicable, shall be authorized to give or withhold
such consent in its or their sole and absolute discretion and to condition its
or their consent upon the giving of additional Collateral security for the
Obligations, the payment of money or any other matter.
11.10 Credit Inquiries.
Each Borrower hereby authorizes and permits Agent and each Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrower or any of its Subsidiaries.
11.11 Time of Essence.
Time is of the essence of this Agreement, the Other Agreements and the
Security Documents.
11.12 Entire Agreement.
This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.
11.13 Interpretation.
No provision of this Agreement or any of the other Loan Documents shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.
11.14 Confidentiality.
Each Agent and each Lender shall hold all nonpublic information obtained
pursuant to the requirements of this Agreement in accordance with such Agent's
and such Lender's customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices and in any
event may make disclosure reasonably required by a prospective participant or
assignee in connection with the contemplated participation or assignment or as
required or requested by any governmental authority or representative thereof or
pursuant to legal process and shall require any such participant or assignee to
agree to comply with this Section 11.14.
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11.15 GOVERNING LAW; CONSENT TO FORUM.
THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED IN AND SHALL BE
DEEMED TO HAVE BEEN MADE IN CHICAGO, ILLINOIS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS; PROVIDED,
HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION
OTHER THAN ILLINOIS, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD,
MANNER AND PROCEDURE FOR FORECLOSURE OF ANY AGENT'S LIEN UPON SUCH COLLATERAL
AND THE ENFORCEMENT OF ANY AGENT'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL
TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR
INCONSISTENT WITH THE LAWS OF ILLINOIS. AS PART OF THE CONSIDERATION FOR NEW
VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF ANY BORROWER, ANY AGENT OR ANY LENDER, EACH BORROWER HEREBY
CONSENTS AND AGREES THAT THE CIRCUIT COURT OF ▇▇▇▇ COUNTY, ILLINOIS, OR, AT
AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS, EASTERN DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS ON THE ONE HAND AND AGENTS OR
ANY LENDER ON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT. EACH BORROWER EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION WHICH SUCH BORROWER
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF
AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH BORROWER HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR
SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF SUCH BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE
DEEMED OR OPERATE TO AFFECT THE RIGHT OF ANY AGENT OR ANY LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY
ANY AGENT OR ANY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
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11.16 WAIVERS BY BORROWER.
EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH EACH AGENT AND
EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM
OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE
OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE,
SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS,
CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY ANY AGENT OR ANY LENDER ON WHICH ANY BORROWER MAY IN ANY WAY BE
LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER ANY AGENT OR ANY LENDER MAY DO
IN THIS REGARD; (iii) NOTICE PRIOR TO ANY AGENT'S TAKING POSSESSION OR CONTROL
OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT
PRIOR TO ALLOWING ANY AGENT TO EXERCISE ANY OF SUCH AGENT'S REMEDIES; (iv) THE
BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OF
ACCEPTANCE HEREOF; AND (vi) EXCEPT AS PROHIBITED BY LAW, A RIGHT TO CLAIM OR
RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR ANY CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO EACH
AGENT'S AND EACH LENDER'S ENTERING INTO THIS AGREEMENT AND THAT EACH AGENT AND
EACH LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH
BORROWERS. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
11.17 No Novation.
Notwithstanding anything to the contrary contained herein, this Agreement
is not intended to and does not serve to effect a novation of the Obligations.
Instead, it is the express intention of the parties hereto to reaffirm the
indebtedness created under the Original Loan Agreement which is evidenced by the
notes provided for therein and secured by the Collateral. Borrowers acknowledge
and confirm that the liens and security interests granted pursuant to the Loan
Documents secured the indebtedness, liabilities and obligations of Borrowers to
Agent and Lenders under the Original Loan Agreement, as amended and restated
hereby, and that the term "Obligations" as used in the Loan Documents (or any
other terms used therein to describe or refer to the indebtedness, liabilities
and obligations of Borrowers to Agent and Lenders) includes, without limitation,
the indebtedness, liabilities and obligations of Borrowers under the Notes to be
delivered hereunder, and under the Original Loan Agreement, as amended and
restated hereby, as the same may be further amended, modified, supplemented or
restated from
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time to time. The Loan Documents and all agreements, instruments and documents
executed or delivered in connection with any of the foregoing shall each be
deemed to be amended to the extent necessary to give effect to the provisions of
this Agreement. Cross-references in the Loan Documents to particular section
numbers in the Original Loan Agreement shall be deemed to be cross-references to
the corresponding sections, as applicable, to this Agreement.
11.18 Advertisement.
Each Borrower hereby authorizes Agent to publish the name of such Borrower
or any other Loan Party and the amount of the credit facility provided hereunder
in any "tombstone" or comparable advertisement which Agent elects to publish.
11.19 English Language.
The parties hereby confirm their express wish that this Agreement and all
documents and agreements directly and indirectly related thereto, including
notices, be drawn up in English. Notwithstanding such express wish, the parties
agree that any of such documents, agreements and notices or any part thereof or
of this Agreement may be drawn up in French. Les parties reconnaissent leur
volonte expresse que la presente convention ainsi que tous les documents et
conventions qui s'y rattachent directement ou indirectement, y compris ▇▇▇ ▇▇▇▇,
soient rediges en langue anglaise. Nonobstant telle volonte expresse, les
parties conviennent que n'importe quelle desdits documents, conventions et avis
ou toute partie de ceux-ci ou de cette convention puissent etre rediges en
langue francaise.
(Signature Page Follows)
89
(Signature Page to Loan Agreement)
IN WITNESS WHEREOF, this Agreement has been duly executed on the day and
year specified at the beginning of this Agreement.
KATY INDUSTRIES, INC.
By:
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
(Signature Page to Loan Agreement)
CEH LIMITED
By:
-------------------------------
Name:
------------------------
Title:
------------------------
(Signature Page to Loan Agreement)
▇▇▇▇▇ INDUSTRIES (CANADA) INC.
By:
-------------------------------
Name:
------------------------
Title:
------------------------
(Signature Page to Loan Agreement)
FLEET CAPITAL CORPORATION,
as Agent and as a Lender
By:
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Revolving Loan Commitment: $36,818,181.82
(40.909090911%) Outstanding Principal Balance of
Existing Term Loan: $587,954.95 New Term Loan
Commitment: $7,593,863.23
(Signature Page to Loan Agreement)
▇▇▇▇▇ FARGO FOOTHILL LLC, as Syndication Agent and
as a Lender
By:
-------------------------------
Name:
------------------------
Title:
------------------------
Revolving Loan Commitment: $24,545,454.55
(27.272727278%) Outstanding Principal Balance of
Existing Term Loan: $377,971.04 New Term Loan
Commitment: $5,076,574.42
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(Signature Page to Loan Agreement)
LASALLE BANK NATIONAL ASSOCIATION, as Documentation
Agent and as a Lender
By:
-------------------------------
Name:
------------------------
Title:
------------------------
Revolving Loan Commitment: $20,454,545.45
(22.727272722%) Outstanding Principal Balance of
Existing Term Loan: $251,980.70 New Term Loan
Commitment: $4,293,473.84 Term Loan Amount:
$4,545,454.54
Address:
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(Signature Page to Loan Agreement)
UPS CAPITAL CORPORATION, as a Lender
By:
-------------------------------
Name:
------------------------
Title:
------------------------
Revolving Loan Commitment: $8,181,818.18
(9.090909089%) Outstanding Principal Balance of Existing
Term Loan: $167,987.13 New Term Loan Commitment:
$1,650,194.69 Address:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(Signature Page to Loan Agreement)
FLEET NATIONAL BANK, LONDON U.K. BRANCH, trading as
FleetBoston Financial, as U.K. Agent and as U.K. Lender
By:
-------------------------------
Name:
------------------------
Title:
------------------------
U.K. Sublimit $11,000,000, as adjusted pursuant to
Section 1.1.1 hereof
Facility Office:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ OED
Attention: Loan Operations
Facsimile No.: ▇▇▇ ▇▇ (▇) ▇▇ ▇▇▇▇ ▇▇▇▇
(Signature Page to Loan Agreement)
FLEET CAPITAL GLOBAL FINANCE, INC., as Canadian Agent
and Canadian Lender
By:
-------------------------------
Name:
------------------------
Title:
------------------------
Canadian Sublimit: $12,000,000
as adjusted pursuant to Section 1.1.1
hereof
Facility Office:
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
APPENDIX A
GENERAL DEFINITIONS
When used in the Amended and Restated Loan Agreement dated as of April 20,
2004, by and among Fleet Capital Corporation, individually and as Agent, ▇▇▇▇▇
Fargo Foothill LLC, as Syndication Agent, LaSalle Bank National Association, as
Documentation Agent, Fleet Capital Global Finance, Inc., as Canadian Agent,
Fleet National Bank, London U.K. branch, trading as FleetBoston Financial, as
U.K. Agent, the other financial institutions which are or become parties thereto
and Katy Industries, Inc., ▇▇▇▇▇ Industries (Canada) Inc., and CEH Limited, (a)
the terms Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Financial Asset,
Fixture, General Intangibles, Goods, Instruments, Inventory, Investment
Property, Letter-of-Credit Rights, Payment Intangibles, Proceeds, Promissory
Notes, Security, Security Entitlement, Software, Supporting Obligations,
Tangible Chattel Paper and Uncertificated Security have the respective meanings
assigned thereto under the UCC or the PPSA, as applicable; (b) all terms
reflecting Collateral having the meanings assigned thereto under the UCC or the
PPSA, as applicable, shall be deemed to mean such Property, whether now owned or
hereafter created or acquired by the applicable Borrower or in which the
applicable Borrower now has or hereafter acquires any interest; (c) to the
extent that any term reflecting Collateral has different meanings under the PPSA
and the UCC, such term shall be defined in the alternative so as to include both
meanings; (d) capitalized terms which are not otherwise defined have the
respective meanings assigned thereto in said Loan Agreement; and (e) the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account - has the meaning assigned thereto under the UCC and the PPSA and,
in addition thereto, shall include as to U.K. Borrower: the amounts now or
subsequently standing to the credit of any account which U.K. Borrower has, or
has an interest in, with any Person and the debts represented thereby and all
book and other debts and monetary claims now or subsequently due or owing to
U.K. Borrower, the proceeds of the same and the benefit of all securities or
investments, Liens and guarantees or other rights of any nature now or
subsequently enjoyed or held by it in relation thereto (other than Accounts).
Account Debtor - any Person who is or may become obligated under or on
account of any Account, Chattel Paper or General Intangible.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.
Agent - Fleet Capital Corporation in its capacity as agent for itself, the
Lenders, Canadian Agent and U.K. Agent under the Agreement and any successor in
that capacity appointed pursuant to Section 10.11 of the Agreement.
▇-▇
▇▇▇▇▇▇ - ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Agent and U.K. Agent.
Agent Loans - as defined in subsection 1.1.5 of the Agreement.
Aggregate Availability - the sum of U.S. Availability, U.K. Availability
and Canadian Availability in the aggregate.
Aggregate Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of (i) the Revolving Credit Maximum Amount; or (ii)
the sum of U.S. Borrowing Base, the U.K. Borrowing Base and the Canadian
Borrowing Base.
Aggregate Percentage - with respect to each Lender, the percentage equal
to the quotient of (i) such Lender's Loan Commitment divided by (ii) the
aggregate of all Loan Commitments.
Agreement - the Loan Agreement referred to in the first sentence of this
Appendix A, all Exhibits and Schedules thereto and this Appendix A, as each of
the same may be amended from time to time.
ALTA Survey - a survey prepared in accordance with the standards adopted
by the American Land Title Association and the American Congress on Surveying
and Mapping in 1997, known as the "Minimum Standard Detail Requirements of Land
Title Surveys". The ALTA Survey shall be in sufficient form to satisfy the
requirements of [Name of] Title Insurance Company to provide extended coverage
over survey defects and shall also show the location of all easements,
utilities, and covenants of record, dimensions of all improvements,
encroachments from any adjoining property, and certify as to the location of any
flood plain area affecting the subject real estate. The ALTA Survey shall
contain the following certification: "To [Name of Borrower or applicable Loan
Party], Fleet Capital Corporation, as Agent, and [Name of] Title Insurance
Company. This is to certify that this map of plat and the survey on which it is
based were made in accordance with the "Minimum Standard Detail Requirements for
Land Title Surveys" jointly established and adopted by ALTA and ACSM in 1997.
(signed (SEAL) License No. __________".
Applicable Margin -
(a) U.K. and Canadian Loans. With respect to Revolving Credit Loans to
U.K. Borrower in Sterling and Euros, to Revolving Credit Loans to Canadian
Borrower in Canadian Dollars and the issuance of Canadian Letters of Credit or
Canadian LC Guaranties or U.K. Letters of Credit or U.K. LC Guaranties, from the
Closing Date to, but not including, the first Adjustment Date (as hereinafter
defined) the percentages set forth below with respect to the Base Rate Revolving
Portion, Canadian Prime Loans, the LIBOR Revolving Portion, Canadian BA Rate
Loans and the Letter of Credit and LC Guaranty Fees:
A-2
Base Rate Revolving Portion or 1.75%
Canadian Prime Loans
LIBOR Revolving Portion or 1.75%
Canadian BA Rate Loans
LC Fee 1.50%
The percentages set forth above will be adjusted on the first day of the
month following delivery by Borrowers to Agent of the financial statements
required to be delivered pursuant to subsection 7.1.3(ii) of the Agreement for
each September 30, December 31, March 31 and June 30 during the Term, commencing
with the month ending September 30, 2004 (each such date an "Adjustment Date"),
effective prospectively, by reference to the applicable "Financial Measurement"
(as defined below) for the four quarters most recently ending in accordance with
the following:
Base Rate LIBOR
Revolving Revolving
Portion or Canadian Portion or Canadian
Financial Measurement Prime Loans BA Rate Loans LC Fee
--------------------- ----------- ------------- ------
>/= 3.5 to 1 2.75% 2.75% 2.50%
>/= 2.5 to 1, but < 3.5 to 1 2.50% 2.50% 2.25%
>/= 2.0 to 1, but <2.5 to 1 2.25% 2.25% 2.00%
>/= 1.5 to 1, but < 2.0 to 1 2.00% 2.00% 1.75%
< 1.5 to 1 1.75% 1.75% 1.50%
provided that, (i) if Katy's audited financial statements for any fiscal year
delivered pursuant to subsection 7.1.3(i) of the Agreement reflect a Financial
Measurement that yields a higher Applicable Margin than that yielded by the
monthly financial statements previously delivered pursuant to subsection
7.1.3(ii) of the Agreement for the last month of such fiscal year, the
Applicable Margin shall be readjusted retroactively for the period that was
incorrectly calculated and (ii) if Borrowers fail to deliver the financial
statements required to be delivered pursuant to subsection 7.1.3(i) or
subsection 7.1.3(ii) of the Agreement on or before the due date thereof, the
interest rate shall automatically adjust to the highest interest rate set forth
above, effective prospectively from such due date until the next Adjustment
Date.
(b) U.S. Loans. With respect to Revolving Credit Loans to U.S. Borrower in
Dollars, the Term Loan, U.S. Letters of Credit, U.S. LC Guaranties and the
Unused Line Fee, from the Closing Date to, but not including, the first
Adjustment Date (as hereinafter defined) the percentages set forth below with
respect to the Base Rate Revolving Portion, the Base Rate Term Portion, the
LIBOR Revolving Portion, the LIBOR Term Portion, the Letter of Credit and LC
Guaranty Fees and the Unused Line Fee:
A-3
Base Rate Revolving Portion 0%
Base Rate Term Portion .25%
LIBOR Revolving Portion 1.75%
LIBOR Term Portion 2.00%
LC Fee 1.50%
Unused Line Fee 0.375%
The percentages set forth above will be adjusted on the first day of the
month following delivery by Borrower to Agent of the financial statements
required to be delivered pursuant to subsection 7.1.3(ii) of the Agreement for
each September 30, December 31, March 31 and June 30 during the Term, commencing
with the month ending September 30, 2004 (each such date an "Adjustment Date"),
effective prospectively, by reference to the applicable "Financial Measurement"
(as defined below) for the four quarters most recently ending in accordance with
the following:
Base
Base Rate Rate LIBOR LIBOR Unused
Financial Revolving Term Revolving Term Line
Measurement Portion Portion Portion Portion Fee LC Fee
----------- ------- ------- ------- ------- --- ------
>/= 3.5 to 1 1.00% 1.25% 2.75% 3.00% 0.50% 2.50%
>/= 2.5 to 1,
but <3.5 to 1 0.75% 1.00% 2.50% 2.75% 0.50% 2.25%
>/= 2.0 to 1,
but < 2.5 to 1 0.50% 0.75% 2.25% 2.50% 0.375% 2.00%
>/= 1.5 to 1,
but < 2.0 to 1 0.25% 0.50% 2.00% 2.25% 0.375% 1.75%
< 1.5 to 1 0% 0.25% 1.75% 2.00% 0.375% 1.50%
provided that, (i) if Katy's audited financial statements for any fiscal year
delivered pursuant to subsection 7.1.3(i) of the Agreement reflect a Financial
Measurement that yields a higher Applicable Margin than that yielded by the
monthly financial statements previously delivered pursuant to subsection
7.1.3(ii) of the Agreement for the last month of such fiscal year, the
Applicable Margin shall be readjusted retroactively for the period that was
incorrectly calculated and (ii) if Borrower fails to deliver the financial
statements required to be delivered pursuant to subsection 7.1.3(i) or
subsection 7.1.3(ii) of the Agreement on or before the due date thereof, the
interest rate shall automatically adjust to the highest interest rate set forth
above, effective prospectively from such due date until the next Adjustment
Date. For purposes of paragraphs (a) and (b) of this definition of Applicable
Margin, "Financial Measurement" shall mean the Leverage Ratio (as such term is
defined in Exhibit 7.3). The foregoing notwithstanding, as of any date on which
the aggregate outstanding principal balance of the Term Loan is $10,000,000 or
less, then each percentage contained in the above table for Base Rate Term
Portion and LIBOR Term Portion shall be reduced by 0.25%.
Appraised Value - means with respect to any Loan Party's real Property or
Equipment, the appraised value of such real Property or Equipment as shown on
Schedule B attached hereto
A-4
and incorporated herein, as such appraised values may be updated from time to
time by Agent based on appraisals obtained pursuant to Section 2.10 of the
Agreement.
Appropriate Notice Office - means (x) with respect to U.S. Revolving
Credit Loans, U.S. Letters of Credit, Canadian Revolving Credit Loans and
Canadian Letters of Credit, the office of Agent located at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Katy Loan Administration Manager,
facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, (y) with respect to U.K. Revolving Credit Loans and
U.K. Letters of Credit, the office of U.K. Agent located at FleetBoston
Financial, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ OED, Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, facsimile:
011 ▇▇ (▇) ▇▇ ▇ ▇▇▇ ▇▇▇▇ and (z) with respect to the Canadian Revolving Credit
Loans and U.K. Letters of Credit, the office of the Canadian Agent located at
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇.
Appropriate Payment Office - means with respect to (i) Revolving Credit
Loans, Term Loans and U.S. LC Obligations of U.S. Borrower, the office of Agent
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn:
Katy Loan Administration Manager, facsimile: (▇▇▇) ▇▇▇-▇▇▇▇, or such other
office as Agent may designate to Borrower Representative and the Lenders from
time to time, (ii) Revolving Credit Loans and U.K. LC Obligations of U.K.
Borrower, the office of Fleet National Bank located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, or such other office as U.K. Agent may
designate to Borrower Representative and the Lenders from time to time and (iii)
Revolving Credit Loans and Canadian LC Obligations of Canadian Borrower), the
office of Canadian Agent located at ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Canada, or such other office as Canadian Agent may designate to
Borrower Representative and the Lenders from time to time.
Asset Sale - the sale by Parent, any Borrower or any of its Subsidiaries
to any Person other than a Borrower or any other Loan Party of (i) any of the
stock of any Borrower or of any of such Borrower's Subsidiaries, (ii)
substantially all of the assets of any division or line of business of Parent,
any Borrower or any Subsidiary of any Borrower, (iii) any other assets (whether
tangible or intangible) of Parent, any Borrower or any Subsidiary of any
Borrower (other than Inventory sold in the ordinary course of business).
Assignment and Acceptance Agreement - an assignment and acceptance
agreement in form and content reasonably acceptable to Agent pursuant to which a
Lender assigns to another Lender all or any portion of any of such Lender's
Revolving Loan Commitment or Term Loan Commitment, as permitted pursuant to the
terms of this Agreement.
Associated Costs Rate - with respect to any Revolving Credit Loan made to
U.K. Borrower, the Mandatory Costs and up to date U.K. Loan Markets Association
formula.
Bank - Fleet National Bank.
Bankruptcy Code - Title 11 of the United States Code entitled
"Bankruptcy," as now and hereinafter in effect, or any successor statute.
Base Rate - (i) with respect to Revolving Credit Loans in Dollars to U.S.
Borrower, the rate of interest announced or quoted by Bank from time to time as
its prime rate for commercial loans for Dollars, whether or not such rate is the
lowest rate charged by Fleet National Bank to
A-5
its most preferred borrowers; and, if such prime rate for commercial loans is
discontinued by Bank as a standard, a comparable reference rate designated by
Bank as a substitute therefor shall be the Base Rate; (ii) with respect to
Revolving Credit Loans to Canadian Borrower in Canadian Dollars, the Canadian
Prime Rate, and (iii) with respect to Revolving Credit Loans in Sterling or
Euros to U.K. Borrower, the rate of interest announced or quoted by Fleet U.K.
as its U.K. Base Rate for Sterling or Euros, as applicable, whether or not such
rate is the lowest rate charged by Fleet U.K. to its most preferred borrowers;
and, if such U.K. Base Rate is discontinued by Fleet U.K. as a standard, a
comparable reference rate designated by Fleet U.K. as a substitute therefor
shall be the Base Rate.
Base Rate Portion - a Base Rate Term Portion, or a Base Rate Revolving
Portion.
Base Rate Revolving Portion - that portion of the Revolving Credit Loans
that is not subject to a LIBOR Option.
Base Rate Term Portion - that portion of the Term Loan that is not subject
to a LIBOR Option.
Borrower(s) - shall have the meaning contained in the first paragraph of
this Agreement.
Borrower Organizational Documents - means the Organizational Documents of
any Borrower, in the form delivered to Agent prior to the execution of this
Agreement and as such Organizational Documents may be amended from time to time
thereafter to the extent permitted by the terms of the Agreement.
Borrower Representative - has the meaning set forth in Section 3.12
hereof.
Borrowing Base Certificate - a certificate by an officer of Borrower
Representative, substantially in the form of Exhibit 8.1.4 (or another form
acceptable to Agent) setting forth the calculation of the Aggregate Borrowing
Base, U.S. Borrowing Base, U.K. Borrowing Base and Canadian Borrowing Base,
including a calculation of each component thereof, all in such detail as shall
be satisfactory to Agent. All calculations of the Aggregate Borrowing Base, U.S.
Borrowing Base, U.K. Borrowing Base and Canadian Borrowing Base in connection
with the preparation of any Borrowing Base Certificate shall originally be made
by Borrower Representative and certified to Agent; provided, that Agent shall
have the right to review and adjust, in the exercise of its reasonable credit
judgment, any such calculation after giving notice thereof to Borrower
Representative, (1) to reflect its reasonable estimate of declines or increases
in value of any of the Collateral described therein, and (2) to the extent that
Agent determines that such calculation is not in accordance with this Agreement.
All Borrowing Base Certificate calculations shall be made in Dollars at the
exchange rates most recently quoted by Agent.
Business Day - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the (i) State of Wisconsin or the State of
Illinois, (ii) Province of Ontario, Canada, (iii) City of London, England or is
a day on which banking institutions located in either of such states, provinces
or city, as applicable, are closed or (iv) with respect to Revolving Credit
Loans made in Euros to U.K. Borrower any day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer Payment System is open for
settlement of payments in Euros.
A-6
Canadian Agent -Fleet Capital Global Finance, Inc., in its capacity as
Canadian Agent for itself, the Lenders and U.K. Agent under the Agreement and
any successor in that capacity appointed pursuant to the Agreement.
Canadian Availability - the amount of additional money which Canadian
Borrower is entitled to borrow from time to time as Canadian Revolving Credit
Loans, such amount being the lesser of (i) the Canadian Sublimit minus the
outstanding balance of the Dollar Equivalent of the Canadian Revolving Credit
Loans and the Canadian LC Obligations and (ii) the difference derived when the
sum of the Dollar Equivalent of the principal amount of Canadian Revolving
Credit Loans to Canadian Borrower then outstanding (including any amounts which
Agent, Canadian Agent or Canadian Lender may have paid for the account of any
Canadian Borrower pursuant to any of the Loan Documents and which have not been
reimbursed by Canadian Borrower) and the Dollar Equivalent of the Canadian LC
Obligations is subtracted from the Dollar Equivalent of the Canadian Borrowing
Base. If the applicable outstanding Canadian Obligations are equal to or greater
than the Canadian Sublimit or the Canadian Borrowing Base, Canadian Availability
is 0.
Canadian BA - a depository ▇▇▇▇ as defined in the Depository Bills and
Notes Act (Canada) in Canadian Dollars that is in the form of an order drawn by
a Borrower and accepted by the Canadian Lender.
Canadian BA Rate - for the applicable Interest Period of a Canadian BA
Rate Loan, the rate of interest per annum equal to the annual rate of interest
quoted by Agent as being the rate of interest applicable to Canadian BAs with a
face amount similar to the principal amount of the applicable Canadian BA Rate
Loan and for the applicable Interest Period.
Canadian BA Rate Loan - a Canadian Revolving Credit Loan in Canadian
Dollars maintained at the Canadian BA Rate.
Canadian BA Request - a notice in writing (or by telephone confirmed
electronically or by telecopy or other facsimile transmission on the same day as
the telephone request) from Borrower Representative to Canadian Agent and Agent
requesting that interest on a Canadian Revolving Credit Loan be based on the
Canadian BA Rate, specifying: (i) the first day of the Interest Period (which
shall be a Business Day); (ii) the length of the Interest Period; (iii) whether
the Canadian BA Rate Loan is a new Loan, a conversion of a Canadian Prime Rate
Loan, or a continuation of a Canadian BA Rate Loan; and (iv) the Canadian Dollar
Equivalent of the Canadian BA Rate Loan, which shall be in an amount not less
than $1,000,000 Canadian Dollars or an integral multiple of $100,000 Canadian
Dollars in excess thereof.
Canadian Benefit Plans - all material employee benefit plans, programs or
arrangements of any nature or kind whatsoever that are not Canadian Pension
Plans and are maintained or contributed to by, or to which there is or may be an
obligation to contribute by, any Borrower or its Subsidiaries in respect of
their employees or former employees in Canada.
Canadian Borrower - ▇▇▇▇▇ Industries (Canada) Inc., or any successor
thereto arising out of the amalgamation of ▇▇▇▇▇ Industries (Canada) Inc. and
Glit/Gemtex, Inc. if such amalgamation is consummated in accordance with
subsection 7.2.12 of the Agreement.
A-7
Canadian Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(i) the Canadian Sublimit, or
(ii) an amount equal to the sum of:
(a) 85% of the net amount of Eligible Accounts of Canadian Loan
Parties outstanding at such date; plus
(b) the lesser of (i) $8,000,000 or (2) 65% of the value of
Eligible Inventory of Canadian Loan Parties at such date,
minus (subtract from the sum of (a) and (b) above);
(c) the sum of (a) the Hedge Reserve applicable to Canadian Loan
Parties, (b) Dilution Reserves applicable to Canadian Loan
Parties, (c) Rent Reserves applicable to Canadian Loan
Parties, (d) the Revolving Loan Repayment Reserve applicable
to Canadian Loan Parties, (e) any Reserve established by
Canadian Agent in its Permitted Discretion for Prior Claims
and (f) the aggregate amount of other reserves applicable to
Canadian Loan Parties, if any, established by Agent in the
exercise of its Permitted Discretion against Eligible Accounts
and Eligible Inventory.
provided that Agent, in the exercise of its Permitted Discretion, may (a)
increase or decrease reserves against Eligible Accounts Receivable and Eligible
Inventory and (b) reduce the advance rates provided in this definition, or
restore such advance rates to any level equal to or below the advance rates in
effect as of the Closing Date.
For purposes hereof, (i) the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts, less any and all returns,
rebates, discounts (which may, at Agent's option, be calculated on shortest
terms), credits allowance or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or payable in connection
with such accounts at such time and (2) the amount of Eligible Inventory shall
be determined on a first-in, first-out, lower of cost or market basis in
accordance with GAAP, with costs adjusted for differences between standard and
actual costs.
Canadian Collateral - all of Canadian Borrower's and each other Canadian
Loan Party's right, title and interest in (i) the Property and interests in
Property described in the Security Documents, and (ii) all other Property and
interests in Property that now or hereafter secure the payment and performance
of any of the Obligations.
Canadian Dollar - the lawful currency of Canada.
Canadian Dollar Equivalent - the amount of Canadian Dollars as of any date
of determination into which Dollars can be converted as determined in accordance
with Section 1.4.
Canadian Fronting Fee - has the meaning set forth in Section 2.6 hereof.
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Canadian Lender -an Affiliate of Fleet National Bank that is not a
non-resident of Canada for purposes of the ITA to be selected by Agent, in its
capacity as the Person obligated to make Canadian Revolving Credit Loans to
Canadian Borrower hereunder, together with its successors and permitted assigns.
Canadian LC Amount - at any time, the Dollar Equivalent of the aggregate
undrawn available amount of all Canadian Letters of Credit and Canadian LC
Guaranties (without duplication) then outstanding.
Canadian LC Guaranty - any guaranty pursuant to which Canadian Agent or
Canadian Lender or any Affiliate of Canadian Agent or Canadian Lender shall
guaranty the payment or performance by Canadian Borrower or any other Canadian
Loan Party of their reimbursement obligation under any letter of credit.
Canadian LC Obligations - any Canadian LC Amount plus any Obligations that
arise from any draw against any Canadian Letter of Credit or against any letter
of credit supported by a Canadian LC Guaranty.
Canadian Letter of Credit - any standby or documentary letter of credit or
guaranties or bonds issued by Canadian Agent or any Affiliate of Canadian Agent
for the account of any Canadian Borrower or any other Canadian Loan Party.
Canadian Loan Parties - any Loan Party that is incorporated or organized
under the laws of Canada or any province thereof.
Canadian Obligations - means the outstanding principal balance of the
Canadian Revolving Credit Loans made to Canadian Borrower and the Canadian LC
Obligations and all accrued interest, fees and expenses (other than taxes that
are not Tax Liabilities) with respect thereto.
Canadian Participant - means each Lender (including, without limitation,
Fleet Canada in its capacity as a Lender) or any Affiliates thereof (which
Affiliate shall be a resident of Canada) as set forth on the execution pages to
this Agreement or the relevant Assignment and Acceptance Agreement. Canadian
Participant shall not include the Agents.
Canadian Participating Interest - with respect to each Canadian
Participant other than Canadian Lender, such Canadian Participant's obligation
to fund a Participating Interest in the Canadian Revolving Credit Loans as set
forth in Section 3.13 of the Agreement.
Canadian Pension Plans - means each plan, program or arrangement which is
required to be registered as a pension plan under any applicable pension
benefits standards or tax statute and/or regulation in Canada maintained or
contributed to by, or to which there is or may be an obligation to contribute
by, any Borrower or its Subsidiaries in respect of their Canadian employees or
former employees.
Canadian Prime Rate - a per annum rate of interest quoted by Canadian
Lender as its reference rate for commercial loans made by it in Canada in
Canadian Dollars.
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Canadian Prime Rate Loans - a Canadian Revolving Credit Loan maintained at
the Canadian Prime Rate.
Canadian Revolving Credit Loan - as defined in subsection 1.1.1(c) of the
Agreement.
Canadian Revolving Notes - the Secured Promissory Notes to be executed by
each Canadian Borrower on or about the Closing Date in favor of each Canadian
Lender to evidence the Canadian Revolving Credit Loans, which shall be in the
form of Exhibit 1.1 to the Agreement, together with any replacement or successor
notes therefor.
Canadian Security Documents - collectively, the Glit Subsidiary Documents
and the ▇▇▇▇▇ Subsidiary Documents.
Canadian Sublimit - with respect to all Lenders, initially, the Dollar
Equivalent of $12,000,000 and with respect to any Lender, such Lender's (or its
Affiliate's) commitment to purchase Canadian Revolving Credit Loans and
thereafter to fund Canadian Revolving Credit Loans in Canadian Dollars to
Canadian Borrower, expressed in Dollar Equivalents (including such Lender's or
its Affiliate's Canadian Participating Interest and deducting such Canadian
Participating Interests from Canadian Lender's commitment), as initially set
forth on the signature page of the Agreement or any Assignment and Acceptance
Agreement executed by such Lender, in each case as adjusted from time to time in
accordance with this Agreement.
Canadian Subsidiary - a Subsidiary of Katy organized under the laws of
Canada or any province thereof.
Capital Expenditures - expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Cash Equivalents - means any Investment in (i) direct obligations of the
United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Ratings Services and P-1 by ▇▇▇▇▇'▇ Investors Services, Inc.,
(iii) time deposits with, including certificates of deposit issued by, any
office located in the United States of any bank or trust company which is
organized under the laws of the United States or any State thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000 and
which issues (or the parent of which issues) certificates of deposit or
commercial paper with a rating described in clause (ii) above, (iv) repurchase
agreements with respect to securities described in clause (i) above entered into
with an office of a bank or trust company meeting the criteria specified in
clause (iii) above, provided in each case that such Investment matures within
one year from the date of acquisition thereof by any Loan Party, or (v) any
money market or mutual fund which invests only in the foregoing types of
investments and the liquidity of which is satisfactory to Agent.
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CCP - Continental Commercial Products, L.L.C., a Delaware limited
liability company (formerly known as Contico International, L.L.C.) and a
Subsidiary of the U.S. Borrower.
Change in Control - means any of the following: (i) Parent Funds shall
cease to beneficially own and control 51% of the issued and outstanding shares
of capital stock of Parent entitled (without regard to the occurrence of any
contingency) to vote for the election of members of the Governing Body of
Parent; (ii) Parent shall cease to beneficially own and control all of the
issued and outstanding shares of Convertible Preferred Stock; (iii) Parent shall
cease to beneficially own and control at least 51% of the issued and outstanding
capital stock of Borrower on a fully diluted basis entitled (after giving effect
to conversion of the Convertible Preferred Stock, whether or not such
Convertible Preferred Stock is convertible at such time, but without regard to
the occurrence of any other contingency) to vote for the election of members of
the Governing Body of Borrower; (iv) the occurrence of a change in the
composition of the Governing Body of Parent such that a majority of the members
of such Governing Body are not Continuing Members or the occurrence of a change
in the composition of the Governing Body of Borrower such that a majority of the
members of the Governing Body of Borrower are not Parent Designated Members; (v)
the occurrence of any "Change in Control" as defined in the Borrower
Organizational Documents; or (vi) the occurrence of any "Distribution Date,"
"Section 11(a)(ii) Event" or "Section 13 Event," in each case as defined in the
Rights Agreement. As used herein, the term "beneficially own" or "beneficial
ownership" shall have the Exchange Act and the rules and regulations promulgated
thereunder.
Closing Date - the date on which all of the conditions precedent in
Section 8 of the Agreement are satisfied or waived and the initial Loan is made
or the initial Letter of Credit or LC Guaranty is issued under the Agreement.
Collateral - all of the Property and interests in Property described as
"Collateral" in the Security Agreement, and all other Property and interests in
Property that now or hereafter secure the payment and performance of any of the
Obligations.
Collateral Access Agreement -any landlord waiver, mortgagee waiver, bailee
letter or any similar acknowledgement agreement of any landlord or mortgagee in
respect of any real Property of any Loan Party where any Inventory is located or
any warehouseman or processor in possession of Inventory, substantially in the
form supplied to Loan Parties by Agent, with such changes thereto as may be
reasonably satisfactory to Agent.
Common Stock - Borrower's common stock, par value $1.00 per share.
Companies Act - means the Companies Act of 1985 of England and Wales.
Compliance Certificate - as defined in subsection 8.1.3 of the Agreement.
Computer Hardware and Software - all of any Borrower's or any other Loan
Party's rights (including rights as licensee and lessee) with respect to (i)
computer and other electronic data processing hardware, including all integrated
computer systems, central processing units, memory units, display terminals,
printers, computer elements, card readers, tape drives, hard and soft disk
drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware; (ii) all
Software and all software
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programs designed for use on the computers and electronic data processing
hardware described in clause (i) above, including all operating system software,
utilities and application programs in any form (source code and object code in
magnetic tape, disk or hard copy format or any other listings whatsoever); (iii)
any firmware associated with any of the foregoing; and (iv) any documentation
for hardware, Software and firmware described in clauses (i), (ii) and (iii)
above, including flow charts, logic diagrams, manuals, specifications, training
materials, charts and pseudo codes.
Consolidated - the consolidation in accordance with GAAP of the accounts
or other items as to which such term applies.
Consolidated Current Assets - means, as at any date of determination, the
total assets of Katy and its Subsidiaries on a Consolidated basis which may
properly be classified as current assets in conformity with GAAP, excluding cash
and Cash Equivalents, the current portions of deferred tax assets which are not
receivable in cash within one year of such date of determination, and current
assets which are LIFO reserves.
Consolidated Current Liabilities - means, as at any date of determination,
the total liabilities of Katy and its Subsidiaries on a Consolidated basis which
may properly be classified as current liabilities in conformity with GAAP,
excluding the current portions of long-term Money Borrowed and Capital Leases,
the current portions of deferred tax liabilities which are not payable in cash
within one year of such date of determination.
Consolidated Working Capital - means, as at any date of determination, the
excess (or deficit) of Consolidated Current Assets over Consolidated Current
Liabilities.
Consolidated Working Capital Adjustment - means, for any period on a
consolidated basis, the amount (which may be a negative number) by which
Consolidated Working Capital as of the beginning of such period exceeds (or is
less than) Consolidated working Capital as of the end of such period.
Continuing Member - as of any date of determination any member of the
Governing Body of Parent who (i) was a member of such Governing Body on the
Closing Date or (ii) was nominated for election or elected to such Governing
Body with the affirmative vote of a majority of the members who were either
members of such Governing Body on the Closing Date or whose nomination or
election was previously so approved.
Convertible Preferred Stock - Katy's convertible preferred stock par value
$100 per share.
Current Assets - at any date means the amount at which all of the current
assets of a Person would be properly classified as current assets shown on a
balance sheet at such date in accordance with GAAP.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
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Derivative Obligations - every obligation of a Person under any forward
contract, futures contract, exchange contract, swap, option or other financing
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreement), the value of which is dependent upon interest rates,
currency exchange rates, commodities or other indices.
Dilution - for any period with respect to any Loan Party, the fraction,
expressed as a percentage, the numerator of which is the aggregate amount of
reductions in the Accounts of such Loan Party for such period other than by
reason of dollar (or equivalent currency) for dollar (or equivalent currency)
cash payment and the denominator of which is the aggregate dollar (or equivalent
currency) amount of the sales of such Loan Party for such period.
Dilution Reserves - as of any date of determination, without duplication,
such reserves as Agent may from time to time establish and revise with respect
to any Loan Party in its Permitted Discretion in such amounts as Agent may
determine in its Permitted Discretion to reflect the Dilution as of any such
date with respect to the Accounts of such Loan Party for the immediately
preceding twelve-month period to the extent such Dilution exceeds five percent
(5%).
Distribution - in respect of any Person means and includes: (i) the
payment of any dividends or other distributions on Securities (except
distributions in such Securities) and (ii) the redemption or acquisition of
Securities of such Person, as the case may be, unless made contemporaneously
from the net proceeds of the sale of Securities.
Dollars and the sign $ - the lawful money of the United States of America.
Unless otherwise specified, all payments under the Loan Documents shall be made
in Dollars.
Dollar Equivalent - the amount of Dollars, as of any date of
determination, into which Canadian Dollars, Sterling or Euros (as the context
may require) can be converted in accordance with Section 1.4 of the Agreement.
Domestic Active Subsidiary - any Domestic Subsidiary of Borrower (other
than Wabash Holding Inc., HPMI, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Inc., Katy Teweh,
Inc., ▇.▇. ▇▇▇▇▇ Wood Preserving Company, WP Liquidating, Inc., Ashford Holding
Company, ▇▇▇▇ ▇▇▇▇▇▇▇, Inc., Chatham Resources Recovery Systems, Inc., Savannah
Energy Construction Company, K-S Energy Corporation, GCW, Inc., DBPI, Inc., and
TTI Holdings, Inc., in each case so long as each such specified Subsidiary
(other than ▇.▇. ▇▇▇▇▇ Wood Preserving Company) does not own or acquire assets
with an aggregate fair market value in excess of $10,000 determined after
netting intercompany payables and receivables).
Domestic Pledge Agreement. Each pledge agreement or similar instrument
(other than a Foreign Pledge Agreement), executed on or about January 31, 2003
or from time to time thereafter in accordance with subsection 7.1.7 by Parent,
Borrower or any Domestic Subsidiary that owns capital stock or other ownership
interests of one or more Domestic Active Subsidiaries, in form and substance
satisfactory to Agent, as such Domestic Pledge Agreement may be amended,
supplemented or otherwise modified from time to time.
Domestic Subsidiary - any Subsidiary of Katy that is incorporated or
organized under the laws of the United States of America, any state thereof or
in the District of Columbia.
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Dominion Account - a special bank account or accounts of Agent, Canadian
Agent or U.K. Agent, as applicable, established by a Borrower pursuant to
subsection 5.2.4 of the Agreement at banks selected by such Borrower (provided
that U.K. Borrower shall select Fleet U.K.), but acceptable to Agents in their
sole discretion, and over which Agent, Canadian Agent or U.K. Agent, as
applicable, shall have sole and exclusive access and control for withdrawal
purposes.
Eligible Accounts- means, with respect to Borrowers and each other Loan
Party (other than Parent), Accounts of such Loan Party (other than Parent)
deemed by Agent in the exercise of its Permitted Discretion to be eligible for
inclusion in the calculation of the Canadian Borrowing Base, U.K. Borrowing Base
or U.S. Borrowing Base, as applicable. In determining the amount to be so
included, the face amount of such Accounts shall be reduced by the amount of all
returns, discounts, deductions, claims, credits, charges, or other allowances.
Unless otherwise approved in writing by Agent, an Account shall not be an
Eligible Account if:
(a) it arises out of a sale made by such Loan Party to an Affiliate;
or
(b) it is unpaid (i) more than 60 days after the original payment
due date or (ii) more than 120 days from date of invoice; or
(c) it is from the same Account Debtor or its Affiliate and 50% or
more of all Accounts from that Account Debtor (and its Affiliates) are
ineligible under (b) above; or
(d) when aggregated with all other Accounts of an Account Debtor,
such account exceeds 20% in face value of all Eligible Accounts of all Loan
Parties then outstanding, but only to the extent of such excess, unless such
excess is supported by an irrevocable letter of credit satisfactory to Agent (as
to form, substance and issuer) and assigned to and directly drawable by Agent;
or
(e) the Account Debtor for such Account is a creditor of such Loan
Party, has or has asserted a right of setoff against such Loan Party, or has
disputed its liability or otherwise has made any claim with respect to such
Account or any other Account which has not been resolved, in each case to the
extent of the amount owed by such Loan Party to such account debtor, the amount
of such actual or asserted right of setoff, or the amount of such dispute or
claim, as the case may be; or
(f) the Account arises from a sale made or services rendered to an
Account Debtor that does not have substantial business operations and assets in
the United States, Canada or the United Kingdom, unless backed by a letter of
credit, guaranty or acceptance terms or a guaranty by a Person with substantial
business operations in the United States, Canada or the United Kingdom, in each
case acceptable to Agent in its sole and absolute discretion; or
(g) such Account is not payable in Dollars, Canadian Dollars or
Sterling; or
(h) the sale to the Account Debtor is on a ▇▇▇▇-and-hold, guaranteed
sale, sale-and-return, sale on approval or consignment basis or made pursuant to
any other written agreement providing for repurchase or return; or
A-14
(i) Agent in its Permitted Discretion determines by its own credit
analysis that collection of such Account is uncertain or that such Account may
not be paid; or
(j) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, the Insolvency Laws of Canada or England's Insolvency
Act of 1986 (or any other applicable insolvency laws) as now constituted or
hereafter amended, or made an assignment, composition or arrangement for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in the premises in respect of the Account Debtor in an
involuntary case under the federal bankruptcy laws, the Insolvency Laws of
Canada or England's Insolvency Act of 1986 (or any other applicable insolvency
laws) as now constituted or hereafter amended, or any other petition or other
application for relief under the federal bankruptcy laws, the Insolvency Laws of
Canada or England's Insolvency Act of 1986 (or any other applicable insolvency
laws), as now constituted or hereafter amended, has been filed against the
Account Debtor, or if the Account Debtor has failed, suspended business, ceased
to be Solvent, or consented to or suffered a receiver, trustee, liquidator,
custodian, administrator receiver or manager, interim receiver, sheriff,
monitor, sequestrator or similar officer of fiduciary to be appointed for it or
for all or a significant portion of its assets or affairs; or
(k) the Account Debtor is the United States of America, the United
Kingdom (or any country therein) or Canada or any department, agency or
instrumentality thereof, unless the applicable Loan Party assigns its right to
payment of such Account to the applicable Agent, in a manner satisfactory to
such Agent, in its sole judgment, so as to comply with the Assignment of Claims
Act of 1940 (31 U.S.C. ss.3727, 41 U.S.C. ss.15 et seq., as amended) or any
applicable U.K. law relating to the creation of valid assignments or the
Financial Administration Act (Canada), as applicable; or
(l) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the Account Debtor, the services giving rise to
such Account have not been performed and accepted, or such Account otherwise
does not represent a final sale; or
(m) such Account does not comply with all Requirements of Law,
including without limitation the Federal Consumer Credit Protection Act, the
Federal Truth in Lending Act and Regulation Z of the Board of Governors of the
Federal Reserve System; or
(n) such Account is subject to any adverse security deposit,
progress payment. or other similar advance made by or for the benefit of the
applicable Account Debtor, but only to the extent thereof; or
(o) it is not subject to a valid and perfected First Priority Lien
in favor of Agent, Canadian Agent or U.K. Agent, as applicable, or does not
otherwise conform to the representations and warranties contained in the Loan
Documents; or
(p) it is subject to unapplied cash receipts or an unprocessed
credit memo.
provided that Agent, in the exercise of its Permitted Discretion, may impose
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition.
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Eligible Inventory - means, with respect to Borrowers and each other Loan
Party (other than Parent), the aggregate amount of Inventory of such Loan Party
(other than Parent) deemed by Agent in the exercise of its Permitted Discretion
to be eligible for inclusion in the calculation of the Canadian Borrowing Base,
U.S. Borrowing Base or U.K. Borrowing Base, as applicable. In determining the
amount to be so included, Inventory shall be valued at the lower of cost (based
on FIFO) or market on a basis consistent with such Loan Party's current and
historical accounting practice. Unless otherwise approved in writing by Agent,
an item of Inventory shall not be included in Eligible Inventory if:
(a) it is not owned solely by such Loan Party or such Loan Party
does not have good, valid and marketable title thereto; or
(b) it is not located in the United States, Canada or the United
Kingdom; or
(c) it is not located on property owned or leased by such Loan Party
or in a contract warehouse, in each case subject to a Collateral Access
Agreement: executed by any applicable mortgagee, lessor or contract
warehouseman, as the case may be, and segregated or otherwise separately
identifiable from goods of others, if any, stored on the premises; provided that
if such Inventory is not subject to a Collateral Access Agreement, Agent may, in
its sole discretion, include such Inventory as Eligible Inventory so long as a
reserve (the "Rent Reserves") is established in an amount equal to rental
payments paid or payable by Loan Parties to applicable mortgagees, lessors or
contract warehousemen for the immediately succeeding three-month period with
respect to such Inventory; or
(d) it is work in progress Inventory; or
(e) it is not subject to a valid and perfected First Priority Lien
in favor of Agent, Canadian Agent or U.K. Agent, as applicable, (including
Inventory covered by any negotiable documents of title (including documents,
warehouse receipts, dock receipts and bills of lading)) issued by any Person to
the extent such negotiable documents of title have not been delivered to Agent)
except, with respect to Inventory stored at sites described in clause (c) above,
for Liens for unpaid rent or normal and customary warehousing charges; or
(f) it consists of goods returned or rejected by such Loan Party's
customers or goods in transit to third parties (other than to warehouse or other
sites covered by a Collateral Access Agreement or with respect to which Rent
Reserves exist in accordance with subsection (c) above); or
(g) it is not first-quality goods, is obsolete, slow moving,
unsalable (including, without limitation, unsalability due to branding), damaged
or unfit for further processing, or does not otherwise conform to the
representations and warranties contained in the Loan Documents; or
(h) it consists of purchased components which are not classified as
raw materials and which are manufactured specifically for such Loan Party; or
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(i) it consists of components or supplies used or consumed in the
Loan Parties' business (other than raw materials used for manufacturing of
finished goods for sale), spare parts, packaging or shipping materials; or
(j) it consists of Inventory delivered to or held by the Loan
Parties on "sale on approval", "sale or return", "consignment", "guarantee sale"
or "▇▇▇▇ and hold" or that is subject to any repurchase or return agreement, or
otherwise has terms by reason of which the Loan Parties' ownership or possession
thereof may be conditional; or
(k) raw materials Inventory of ▇▇▇▇▇ Industries that has not been
sold or converted into work in process or finished goods Inventory;
provided that Agent in the exercise of its Permitted Discretion, may impose
additional restrictions (or eliminate the same) to the standards of eligibility
set forth in this definition.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, orders and consent decrees relating to health, safety
and environmental matters.
ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute, and all rules and regulations from time to time
promulgated thereunder.
ERISA Affiliate - means any entity with which U.S. Borrower is treated as
a single employer under Section 414(b), (c), (m) and/or (o) of the Internal
Revenue Code of 1986, as amended.
Euro, euro or euros - the single currency of Participating Member States.
Euro Equivalent - the amount of Euros as of any date of determination into
which Dollars can be converted, as determined in accordance with Section 1.4.
Event of Default - as defined in Section 9.1 of the Agreement.
Excess Cash Flow - with respect to any fiscal year of Borrowers,
commencing with the fiscal year ending December 31, 2004, 50% of the amount
equal to Consolidated EBITDA (x) minus the sum of (a) regularly scheduled or
voluntary payments of principal on Indebtedness for Money Borrowed and
repayments of Revolving Loans to the extent the Revolving Loan Commitments are
permanently reduced in connection with such repayments, (b) interest expense
payable in cash, (c) provisions for taxes based on income paid in cash, (d) that
portion of the acquisition cost paid in cash with respect to Permitted
Acquisitions, (e) Distributions permitted by Section 7.2.7(iii), (f) pro-forma
EBITDA of acquired businesses, (g) amounts added in connection with clauses
(vii) through and including (viii) of the definition of Consolidated EBITDA, (h)
all unusual expenses and other non-capitalized restructuring expenses (including
costs and expenses attributable to employee severance obligations and facility
consolidation costs) paid in cash in such period to the extent not disallowed by
Agent in its sole discretion, (i) non-cash income included in determining net
income and (j) Capital Expenditures which are not financed for such fiscal year
plus (y) the amount of the Consolidated Working Capital Adjustment (which amount
may be a negative number) for the fiscal year in question, all
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determined for Borrowers and their Subsidiaries on a Consolidated basis in
accordance with GAAP.
Existing Lenders - as defined in the first WHEREAS clause to the
Agreement.
Facility Office - in relation to any Lender, Canadian Participant or U.K.
Participant, the office specified as such office on the signature page of this
Agreement or any Assignment and Acceptance Agreement executed by a new Lender
through which it will perform its obligations hereunder.
Fee Letter - as defined in Section 2.3 of the Agreement.
First Priority (Lien) - with respect to any Lien purported to be created
in any Collateral pursuant to any Security Document, that (i) such Lien is
perfected and has priority over any other Lien on such Collateral other than
nonconsensual property tax Liens that arise by operation of law and that relate
to amounts the payment of which are not required under subsection 7.2.5,
purchase money security interests for acquisitions of specific equipment
permitted, and purchase money security interests granted in connection with the
acquisition of property pursuant to subsection 7.2.5(iv) hereof and (ii) such
Lien is the only Lien (other than Permitted Liens) to which such Collateral is
subject.
Fleet - Fleet Capital Corporation.
Fleet Canada - Fleet Capital Global Finance, Inc.
Fleet U.K. - Fleet National Bank, London U.K. branch, trading as
FleetBoston Financial or any successor thereto by merger, consolidation or
amalgamation.
Foreign Active Subsidiary - any Foreign Subsidiary of Borrower (other than
Glit Limited (English company number 2347069)) and Labour Holdings, Limited
(English company number 1083809)), in each case so long as each such specified
Subsidiary does not own or acquire assets with an aggregate fair market value in
excess of $10,000.
Foreign Pledge Agreement - each pledge agreement or similar instrument
governed by the laws of a country other than the United States, executed on or
about January 31, 2003 or from time to time thereafter in accordance with
subsection 7.1.7 by Katy or any Domestic Subsidiary that owns capital stock or
other ownership interests of one or more Foreign Active Subsidiaries organized
in such country, in form and substance satisfactory to Agent, as such Foreign
Pledge Agreement may be amended, supplemented or otherwise modified from time to
time.
Foreign Subsidiary - any Subsidiary of Katy that is not a Domestic
Subsidiary.
Fronting Fees- as defined in Section 2.6.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time.
Glit - Glit/Gemtex, Ltd., a Canadian corporation and a Subsidiary of Katy.
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Glit Subsidiary Documents - the Glit Subsidiary Note and Glit Subsidiary
Security Agreement.
Glit Subsidiary Note - that certain promissory note dated June 28, 2001
executed by Glit in favor of Katy, substantially in form and substance
reasonably acceptable to Agent, as such promissory note is in effect on the
Closing Date and as such promissory note may be amended from time to time
thereafter to the extent permitted under this Agreement.
Glit Subsidiary Security Agreement - means that certain security agreement
dated June 28, 2001 by and between Glit and Katy, in form and substance
reasonably acceptable to Agent, as such security agreement is in effect on the
Closing Date and as such agreement may be amended from time to time thereafter
to the extent permitted under the Agreement.
Governmental Authority - any governmental or regulatory body, commission,
central bank, board, bureau, organ or instrumentality or any court, any
political subdivision or department thereof, in each case whether federal,
state, local or foreign.
Governing Body - the board of directors or other body having the power to
direct or cause the direction of the management and policies of a Person that is
a corporation, partnership, trust or limited liability company.
Guarantors - Parent, Borrower or any Subsidiary of Katy (other than an
Inactive Subsidiary) executing a Loan Document including, without limitation,
▇▇▇▇▇ and Glit, and each other Person who now or hereafter executes a Loan
Document as a guarantor or as a hypothecator.
Guaranty Agreements - the Amended and Restated Guaranty Agreement which
was executed on or about the Closing Date by Katy and each other Loan Party, in
form and substance satisfactory to Agent, together with each other guaranty
hereafter executed by any Guarantor; pursuant to which each U.S. Loan Party
shall guaranty the full and complete performance and payment of all Obligations
and each Canadian Loan Party shall guaranty the full and complete performance of
the Canadian Obligations and each U.K. Loan Party shall guaranty the full and
complete performance of the U.S. Obligations and the U.K. Obligations.
Hedge Reserve - the fluctuating reserve established by Agent against the
U.S. Borrowing Base, the U.K. Borrowing Base or the Canadian Borrowing Base, as
applicable, in an amount equal to the aggregate ▇▇▇▇-to-Market Adjustments under
all agreements evidencing any Derivative Obligation included within the
Obligations. Agent shall adjust the Hedge Reserve to reflect any change in the
▇▇▇▇-to-Market Adjustment Amount under such an agreement evidencing such a
Derivative Obligation as set forth in a certificate of a related Lender
Counterparty and any other reserve established by Agent in its Permitted
Discretion, with respect to any other Product Obligation.
Inactive Subsidiary - any Domestic or Foreign Subsidiary of Borrowers that
owns or acquires assets with an aggregate fair market value of $10,000 or less
after netting intercompany payables and receivables.
Indebtedness - as applied to a Person means, without duplication:
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(i) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person at the date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease Obligations;
(ii) all obligations of other Persons which such Person has guaranteed;
(iii) all reimbursement obligations in connection with letters of credit
or letter of credit guaranties issued for the account of such Person;
(iv) Derivative Obligations; and
(v) in the case of Borrowers (without duplication), the Obligations.
Insolvency Laws of Canada - means each of the Bankruptcy and Insolvency
Act (Canada) and the Companies Creditors' Arrangement Act (Canada), each as now
and hereafter in effect, any successors to such statutes and any other
applicable insolvency or other similar law of any jurisdiction including,
without limitation, any law of any jurisdiction permitting a debtor to obtain a
stay or a compromise of the claims of its creditors against it.
Interest Period - means,
(a) as applicable to any LIBOR Portion for Revolving Credit Loans or
the Term Loan to U.S. Borrower, a period commencing on the date such LIBOR
Portion is advanced, continued or converted, and ending on the date which is one
(1) month, two (2) months, three (3) months, or six (6) months later, as may
then be requested by Borrower Representative on behalf of U.S. Borrower;
provided that (i) any Interest Period which would otherwise end on a day which
is not a Business Day shall end in the next preceding or succeeding Business Day
as is Agent's custom in the market to which such LIBOR Portion relates; (ii)
there remains a minimum of one (1) month, two (2) months, three (3) months or
six (6) months (depending upon which Interest Period Borrower Representative
selects) in the Term, unless Borrower Representative and Lenders have agreed to
an extension of the Term beyond the expiration of the Interest Period in
question; (iii) all Interest Periods of the same duration which commence on the
same date shall end on the same date; and (iv) with respect to any LIBOR Term
Portion, no applicable Interest Period shall extend beyond the scheduled
installment payment date for such LIBOR Term Portion.
(b) as applicable to any LIBOR Portion, for Revolving Credit Loans
to U.K. Borrower, a period commencing on the date such LIBOR Portion is
advanced, continued or converted, and ending on the date which is one (1) month,
two (2) months, three (3) months, or six (6) months later, as may then be
requested by Borrower Representative on behalf of U.K. Borrower (or U.K.
Borrower); provided that (i) any Interest Period which would otherwise end on a
day which is not a Business Day shall end in the next preceding or succeeding
Business Day as is Agent's custom in the market to which such LIBOR Portion
relates; (ii) there remains a minimum of one (1) month, two (2) months, three
(3) months or six (6) months (depending upon which Interest Period Borrower
Representative selects) in the Term, unless Borrower Representative and Lenders
have agreed to an extension of the Term beyond the expiration of the Interest
Period in question; and (iii) all Interest Periods of the same duration which
commence on the same date shall end on the same date.
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(c) as applicable to Canadian BA Rate Loans to Canadian Borrower, a
period commencing on the date such Canadian BA Rate Loan is advanced, continued
or converted, and ending on the date which is 30, 60, 90 or 180 days later, as
may then be requested by Borrower Representative on behalf of Canadian Borrower;
provided that (i) any Interest Period which would otherwise end on a day which
is not a Business Day shall end on the next preceding or succeeding Business Day
as is Canadian Agent's custom in the market to which such Canadian BA Rate Loan
relates; (ii) there remains a minimum of 30, 60, 90 or 180 days (depending upon
which Interest Period Borrower Representative selects) in the Term, unless
Borrower Representative and Lenders have agreed to an extension of the Term
beyond the expiration of the Interest Period in question; and (iii) all Interest
Periods of the same duration which commence on the same date shall end on the
same date.
Investment - means any investment in any Person, whether by means of
acquiring or holding Securities, capital contributions, loans, time deposits,
advances or otherwise.
ITA - means collectively the Income Tax Act (Canada) and the regulations
to the Income Tax Act (Canada), all as the same may from time to time be in
effect.
Judgment Conversion Date - has the meaning set forth in Section 1.5(a).
Judgment Currency - has the meaning set forth in Section 1.5(a).
K&C - Kohlberg & Company, L.L.C., a Delaware limited liability company.
Kohlberg Agreements - any and all agreements relating to any services
(including without limitation consulting, management broker or investment
banking services) to be provided by K&C or any of its Affiliates to any Loan
Party, including the Management Agreement.
LC Amount - the Dollar Equivalent of the U.S. LC Amount, the Canadian LC
Amount and U.K. LC Amount , in the aggregate.
LC Guaranty - the U.S. LC Guaranty, the Canadian LC Guaranty and U.K. LC
Guaranty, in the aggregate.
LC Obligations - the U.S. LC Obligations, the Canadian LC Obligations and
U.K. LC Obligations, in the aggregate.
Lenders - Fleet and each other Lender holding, or obligated to make,
Revolving Credit Loans and/or the Term Loan.
Lender Counterparty - Bank, Agent, a Lender or any Affiliate of Bank,
Agent or a Lender party to an agreement evidencing a Derivative Obligation
included within the Obligations.
Letter of Credit - the U.S. Letters of Credit, the Canadian Letters of
Credit and U.K. Letters of Credit, in the aggregate.
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LIBOR - means
(a) for Revolving Credit Loans and the Term Loan to U.S. Borrower,
as applicable to any LIBOR Portion, for the applicable Interest Period, the rate
per annum (rounded upward, if necessary, to the nearest 1/8 of one percent) as
determined on the basis of the offered rates for deposits in U.S. dollars, for a
period of time comparable to such Interest Period which appears on the Telerate
page 3750 as of 11:00 a.m. (London time) on the day that is two (2) London
Banking Days preceding the first day of such Interest Period; provided, however,
if the rate described above does not appear on the Telerate System on any
applicable interest determination date, the LIBOR shall be the rate (rounded
upwards as described above, if necessary) for deposits in U.S. dollars for a
period substantially equal to the Interest Period on the Reuters Page "LIBO" (or
such other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the first day of such Interest Period. If both
the Telerate and Reuters systems are unavailable, then the rate for that date
will be determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such Interest Period which are
offered by four (4) major banks in the London interbank market at approximately
11:00 a.m. (London time), on the day that is two (2) London Banking Days
preceding the first day of such Interest Period as selected by Agent. The
principal London office of each of the major London banks so selected will be
requested to provide a quotation of its U.S. dollar deposit offered rate. If at
least two (2) such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations. If fewer than two quotations are provided as
requested, the rate for that date will be determined on the basis of the rates
quoted for loans in U.S. dollars to leading European banks for a period of time
comparable to such Interest Period offered by major banks in New York City at
approximately 11:00 a.m. (New York City time), on the day that is two (2) London
Banking Days preceding the first day of such Interest Period. In the event that
Agent is unable to obtain any such quotation as provided above, it will be
determined that LIBOR pursuant to a Interest Period cannot be determined. In the
event that the Board of Governors of the Federal Reserve System shall impose a
Reserve Percentage with respect to LIBOR deposits of any Lender then for any
period during which such Reserve Percentage shall apply, LIBOR shall be equal to
the amount determined above divided by an amount equal to 1 minus the Reserve
Percentage;
(b) for Revolving Credit Loans in Sterling to U.K. Borrower, as
applicable to any LIBOR Portion, (i) the rate for the applicable Interest Period
appearing on page 3750 of the Telerate screen which displays British Bankers
Association Interest Settlement Rates for deposits in Sterling (or such other
page or service as may replace such page on such system or service for the
purpose of displaying such rates) at or about 11:00 a.m. on the quotation date
for the Interest Period; or (ii) if no such display rate is then available for
deposits in Sterling or for the Interest Period relating to such LIBOR Portion
by prime banks in the London Interbank Market at or about 11:00 a.m. on the
quotation date for the Interest Period, then the arithmetic mean (rounded
upwards to four decimal places) of the rates, as supplied to Fleet U.K. at its
request, quoted by the Reference Banks to leading banks in the London interbank
market; and
(c) for Revolving Credit Loans in Euros to U.K. Borrower to any
LIBOR Portion, (i) the rate for the applicable Interest Period appearing on page
3750 of the Telerate screen which displays British Bankers Association Interest
Settlement Rates for deposits in
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Euros (or such other page or service as may replace such page on such system or
service for the purpose of displaying such rates) at or about 11:00 a.m. on the
quotation date for the Interest Period; or (ii) if no such display rate is then
available for deposits in Euros or for the Interest Period relating to such
LIBOR Portion by prime banks in the London Interbank Market at or about 11:00
a.m. on the quotation date for the Interest Period, then the arithmetic mean
(rounded upwards to four decimal places) of the rates, as supplied to Fleet U.K.
at its request, quoted by the Reference Banks to leading banks in the London
interbank market.
LIBOR Interest Payment Date - the first day of each calendar month during
any Interest Period.
LIBOR Option - the option granted pursuant to Section 3.1 of the Agreement
to have the interest on all or any portion of the principal amount of the Term
Loan or the Revolving Credit Loans (except Canadian Revolving Credit Loans)
based on the LIBOR.
LIBOR Portion - a LIBOR Revolving Portion.
LIBOR Request - a notice in writing (or by telephone confirmed
electronically or by telecopy or other facsimile transmission on the same day as
the telephone request) from Borrower Representative to Agent or U.K. Borrower to
U.K. Agent requesting that interest on a Revolving Credit Loan (except Canadian
Revolving Credit Loans) be based on the LIBOR, specifying: (i) whether the
Revolving Credit Loan is to be made to U.S. Borrower or U.K. Borrower, (ii) the
first day of the Interest Period (which shall be a Business Day); (iii) the
length of the Interest Period; (iv) whether the LIBOR Portion is a new Loan, a
conversion of a Base Rate Portion, or a continuation of a LIBOR Portion, and (v)
the dollar amount of the LIBOR Revolving Portion, which shall be in an amount
not less than $1,000,000 (or the Sterling Equivalent or Euro Equivalent, as
applicable) or an integral multiple of $100,000 (or the Sterling Equivalent or
Euro Equivalent, as applicable) in excess thereof.
LIBOR Revolving Portion - that portion of the Revolving Credit Loans made
to U.S. Borrower or U.K. Borrower specified in a LIBOR Request (including any
portion of Revolving Credit Loans which is being borrowed by U.S. Borrower or
U.K. Borrower concurrently with such LIBOR Request) which, as of the date of the
LIBOR Request specifying such LIBOR Revolving Portion, has met the conditions
for basing interest on the LIBOR in Section 3.1 of the Agreement and the
Interest Period of which has not terminated.
LIBOR Term Portion - that portion of the Term Loan specified in a LIBOR
Request which, as of the date of the LIBOR Request specifying such LIBOR Term
Portion, has met the conditions for basing interest on the LIBOR in Section 3.1
of the Agreement and the Interest Period of which has not terminated.
Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
rights of seller under conditional sales contracts or title retention
agreements, reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting Property. For the purpose of the Agreement, Borrower
shall be deemed to be the owner of any
A-23
Property which it has acquired or holds subject to a conditional sale agreement
or other arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Agent,
Canadian Agent or U.K. Agent pursuant to Section 3.6 of the Agreement.
Loan Commitment - with respect to any Lender, the amount of such Lender's
Revolving Loan Commitment plus such Lender's Term Loan Commitment.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loan Party(ies) - the individual and collective reference to the Borrowers
and the Guarantors.
Loans - all loans and advances of any kind made by Agent, any Lender, or
any Affiliate of Agent or any Lender, pursuant to the Agreement, including,
without limitation, any LC Obligations.
London Banking Day - any date on which commercial banks are open for
business in London, England.
Majority Lenders - as of any date, Lenders holding 51% or more of the Term
Loan and Revolving Loan Commitments determined on a combined basis and following
the termination of the Revolving Loan Commitments, Lenders (and, if Canadian
Participants or U.K. Participants have purchased Participating Interests
pursuant to Section 3.13 or 3.14 respectively, such Lenders' corresponding
Canadian Participants and U.K. Participants) holding 51% or more of the
outstanding Loans, including Participating Interests, LC Amounts and LC
Obligations not yet reimbursed by Borrowers or funded with a Revolving Credit
Loan; provided, that (i) in each case, if there are 2 or more such Lenders with
outstanding Loans, LC Amounts, unfunded and unreimbursed LC Obligations or
Revolving Loan Commitments, at least 2 Lenders shall be required to constitute
Majority Lenders; and (ii) prior to termination of the Revolving Loan
Commitments, if any Lender breaches its obligation to fund any requested
Revolving Credit Loan, for so long as such breach exists, its voting rights
hereunder shall be calculated with reference to its outstanding Loans, LC
Amounts and unfunded and unreimbursed LC Obligations, rather than its Revolving
Loan Commitment.
Management Agreement - that certain Management Agreement by and between
K&C and Borrower dated on or about June 28, 2001 as such agreement is in effect
as of the Closing Date and as such agreement may be amended from time to time
thereafter to the extent permitted by Section 7.2.19.
Mandatory Costs - with respect to a Loan, the cost of complying with
certain regulatory requirements expressed as a percentage per annum calculated
by Agent in accordance with Schedule A.
▇▇▇▇-to-Market Adjustment - the fluctuating credit exposure of a Lender
Counterparty under an agreement evidencing a Derivative Obligation included
within the Obligations based on
A-24
increases or decreases in interest rates, exchange rates or commodity prices.
Each Lender Counterparty shall provide to Agent a certificate containing the
calculation of the ▇▇▇▇-to-Market Adjustment amount under the related agreement
in reasonable detail not less frequently than monthly.
Material Adverse Effect - (i) a material adverse effect on the business,
condition (financial or otherwise), operation, performance or properties of the
Loan Parties, taken as a whole, which impairs the ability of Loan Parties to
perform, in any material respect, their obligations hereunder or under any Loan
Document or (ii) a material adverse effect on the validity or enforceability of
any of the Loan Documents, Liens in favor of the Agents or the rights and
remedies of Agents or Lenders under the Loan Documents.
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to any Borrower or any of its Subsidiaries; (ii) Indebtedness,
whether or not in any such case arising from the lending by any Person of money
to any Borrower or any of its Subsidiaries, (1) which is represented by notes
payable or drafts accepted that evidence extensions of credit, (2) which
constitutes obligations evidenced by bonds, debentures, notes or similar
instruments, or (3) upon which interest charges are customarily paid (other than
accounts payable) or that was issued or assumed as full or partial payment for
Property (other than accounts payable); (iii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iv) reimbursement obligations with respect to
letters of credit or guaranties of letters of credit and (v) Indebtedness of any
Borrower or any of its Subsidiaries under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by any Borrower or any of its Subsidiaries. Money
Borrowed shall not include trade payables or accrued expenses; provided,
however, that Money Borrowed shall not include amounts outstanding or payable
under the ▇▇▇▇▇ Note.
Mortgages - the mortgages or deeds of trust executed by any Borrower or
another Loan Party on or about January 31, 2003 in favor of Agent, for the
benefit of itself and Lenders, Canadian Agent for the benefit of itself and
Canadian Lender or U.K. Agent for the benefit of itself and U.K. Agent, as
applicable, by which such Borrower or such Loan Party has granted to Agent,
Canadian Agent or U.K. Agent, as applicable, as security for the Obligations, a
Lien upon the real Property of such Borrower or such Loan Party located at: (i)
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇; (ii) ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (if not sold prior to the Closing Date); (iii)
▇▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; and (iv) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇,
together with all mortgages, deeds of trust and comparable documents now or at
any time hereafter securing the whole or any part of the Obligations.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.
New Mortgages - as defined in Section 5.6 of the Agreement.
New Term Loan - as defined in Section 1.6 of the Agreement.
Non-Restructuring Capital Expenditure - any Capital Expenditure that is
not a Restructuring Capital Expenditure.
Notes - the Revolving Notes and the Term Notes.
A-25
Obligation Currency - has the meaning set forth in Section 1.5(a).
Obligations - all Loans, all LC Amounts, LC Guaranties, LC Obligations and
all other advances, debts, liabilities, obligations, covenants and duties,
together with all interest, fees and other charges thereon, owing, arising, due
or payable from each Borrower to Agent, Canadian Agent or U.K. Agent, for its
own benefit, from each Borrower to Agent, Canadian Agent or U.K. Agent, for the
benefit of any Lender, Canadian Participant or U.K. Participant, from each
Borrower to any Lender, Canadian Participant or U.K. Participant or from each
Borrower to Bank or any other Affiliate of Agent, Canadian Agent or U.K. Agent,
of any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under the Agreement or any of the other
Loan Documents, whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or to become due,
now existing or hereafter arising and however acquired, including without
limitation any Product Obligations owing to Agent, Canadian Agent, U.K. Agent,
any Lender, Bank or any Affiliate of Bank, Agent, Canadian Agent, U.K. Agent or
any Lender.
Organizational I.D. Number - with respect to any Person, the
organizational identification number assigned to such Person by the applicable
governmental unit or agency of the jurisdiction of organization of such Person.
Organizational Documents - the documents (including Bylaws, if applicable)
pursuant to which a Person that is a corporation, partnership, trust or limited
liability company is organized.
Original Loan Agreement - as defined in the first WHEREAS clause of the
Agreement.
Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other third
party and delivered to Agent, Canadian Agent or U.K. Agent or any Lender in
respect of the transactions contemplated by the Agreement or with respect to any
Product Obligations.
Overadvance - as defined in subsection 1.1.2 of the Agreement.
Parent - KKTY Holding Company, L.L.C., a Delaware limited liability
company.
Parent Designated Member - as of any date of determination, (i) any member
of the Governing Body of Katy who shall have been designated by Parent and
elected at the 2001 annual meeting of Katy's shareholders to serve until the
annual meeting of Katy's shareholders to be held in 2003 and (ii) their
successors whose nomination for election or whose appointment to such Governing
Body shall have been designated or approved by Parent and by a majority of such
members described in clause (i) or their successors who shall have been so
elected or appointed.
Parent Funds - Kohlberg Investors IV, L.P., ▇▇▇▇▇▇▇▇ ▇▇ Investors IV,
L.P., Kohlberg Offshore Investors, IV, L.P., Kohlberg Partners IV, L.P and any
other Affiliated investment fund advised by the same advisors as any of the
foregoing under common control with any of the foregoing.
A-26
Parent Member Agreement - that certain Members' Agreement by and among the
members of Parent named therein dated as of May 26, 2001, as such agreement is
in effect on the Closing Date and as such agreement may be amended from time to
time thereafter to the extent permitted under subsection 7.2.19 of the
Agreement.
Participation Fees - as defined in Section 2.6.
Participating Interest - with respect to each Lender other than Canadian
Lender and U.K. Lender, such Lender's, Canadian Participant's or U.K.
Participant's, Canadian Participating Interest and U.K. Participating Interest,
as applicable.
Participating Member State - any member state which adopts the euro unit
of the single currency pursuant to the Treaty.
Patent Security Agreement - the Patent and License Security Agreements
executed by Katy and all or certain of the other U.S. Loan Parties on or after
January 31, 2003 in favor of Agent for its benefit and the benefit of Lenders
and by which Katy or the applicable U.S. Loan Party assigned to Agent for its
benefit and the benefit of Lenders and granted to Agent for its benefit and the
benefit of Lenders a security interest in, as security for the Obligations, all
of Katy's or such U.S. Loan Party's right, title and interest in and to all of
Katy's or such U.S. Loan Party's patents and other assets described therein as
the same may be amended or modified from time to time.
PAYE Reserve - a reserve of funds maintained for the purpose of meeting
any claims in respect of preferential debts of a U.K. Loan Party or an
Applicable Loan Party with assets located in the United Kingdom as such debts
are defined pursuant to or in accordance with the provisions of Section 386 and
Schedule 6 of the Insolvency Act of 1986.
Pension Plan - any Plan, other than a "multiemployer plan" as defined in
Section 3(37) of ERISA, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
Permitted Acquisition(s) - means any acquisition(s) by a Loan Party of all
or substantially all of the assets or outstanding capital stock or other
ownership interests of a Person, or an operating division of a Person or a
merger of a Person with a Loan Party, which in either case, constitutes a
business unit so long as each of the following conditions precedent
(collectively, the "Acquisition Conditions") have been fulfilled to the
satisfaction of Agent: (i) no Default or Event of Default shall have occurred
and be continuing at the time of such acquisition or would occur as a result
thereof; (ii) the business unit being acquired (the "Target") is primarily
located in the United States of America, Canada or the United Kingdom and is in
the same or related line of business as a Loan Party; (iii) if the acquisition
in question is not an asset acquisition, Katy shall require Target to comply
with the provisions of Section 7.1.7, or if the acquisition in question is an
asset acquisition, the applicable Loan Party shall have executed such financing
statements and other collateral documents as reasonably requested by the
applicable Agent to grant to the applicable Agent a perfected security interest
subject only to Permitted Liens in substantially all of the acquired assets;
(iv) the aggregate purchase price (including, without limitation, assumed
Indebtedness) paid in connection with (x) any one or related series of such
acquisition(s) does not exceed $2,000,000 or (y) all such acquisitions
consummated
A-27
within the Term does not exceed $10,000,000; and (v) Availability on an average
pro forma basis after giving effect to the acquisition in question for the 90
days immediately prior to the closing date of such acquisition equals or exceeds
$15,000,000 with respect to acquisitions consummated after June 30, 2003. No
Account or Inventory acquired in a Permitted Acquisition shall be included
within Eligible Accounts or Eligible Inventory until Agent has conducted an
audit of such Accounts or Inventory and the results of such audit are
satisfactory to Agent in its reasonable discretion.
Permitted Discretion - Agent's good faith and commercially reasonable
judgment based upon any factor which it believes in good faith: (i) will or
could adversely affect the value of any Collateral, the enforceability or
priority of Agent's Liens thereon or the amount which Agent and Lenders would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral; (ii) suggests that any
collateral report or financial information delivered to Agent by any Person on
behalf of any Loan Party is incomplete, inaccurate or misleading in any material
respect; (iii) materially increases the likelihood of a bankruptcy,
reorganization or other insolvency proceeding involving Parent, Borrower or any
of its Subsidiaries or any of the Collateral; or (iv) creates or reasonably
could be expected to create a Default or Event of Default. In exercising such
judgment, Agent may consider such factors already included in or tested by the
definition of Eligible Accounts or Eligible Inventory as well as any of the
following: (i) the financial and business climate of any Loan Party's industry
and general macroeconomic conditions, (ii) changes in collection history and
dilution with respect to Loan Parties' Accounts, (iii) changes in demand for,
and pricing of, Loan Parties' Inventory, (iv) changes in any concentration of
risk with respect to such Accounts or Inventory, and (v) any other factors that
change the credit risk of lending to Borrower on the security of such Accounts
or Inventory. The burden of establishing lack of good faith shall be on
Borrower.
Permitted Disposition - any sale or other disposition of any asset of
Borrower or any other Loan Party of the type described in clauses (i) - (x) of
subsection 7.2.9 of the Agreement.
Permitted Liens - any Lien of a kind specified in subsection 7.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of a
Borrower or a Subsidiary thereof incurred after the date hereof which is secured
by a Purchase Money Lien and the principal amount of which, when aggregated with
the principal amount of all other such Indebtedness and Capitalized Lease
Obligations of Borrowers and their Subsidiaries at the time outstanding, does
not exceed $1,000,000. For the purposes of this definition, the principal amount
of any Purchase Money Indebtedness consisting of capitalized leases (as opposed
to operating leases) shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower or any of its Subsidiaries that is covered by Title IV of ERISA.
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PPSA - means the Personal Property Security Act in force in the Province
of Ontario; provided, that in the event that, by reason of mandatory provisions
of law, the validity, perfection and effect of perfection or non-perfection of a
security interest or other applicable Lien is governed by other personal
property security laws, the term "PPSA" means such other personal property
security laws.
Preferential Creditors - means, as to U.K. Borrower, holders of
"preferential debts" as interpreted in Section 386 of the Insolvency ▇▇▇ ▇▇▇▇ of
England and Wales and listed in Schedule 6 of that Act.
Prior Claims - means all Liens created by applicable law (in contrast with
Liens voluntarily granted) which rank or are capable of ranking prior to pari
passu with Agent's, Canadian Agent's or U.K. Agent's, as applicable, Lien (or
the applicable equivalent of such Liens) against all or part of the Collateral,
including for amounts owing for vacation pay, employee deductions and
contributions, goods and services taxes, sales taxes, realty taxes, business
taxes, workers' compensation, pension plan or fund obligations and overdue rents
(to the extent, in the case of rents, that such rents are not already the
subject of a reserve).
Product Obligations - every obligation of Borrowers under and in respect
of any one or more of the following types of services or facilities extended to
any Borrower by Bank, Agent, Canadian Agent, U.K. Agent, any Lender or any
Affiliate of Bank or Agent, Canadian Agent, U.K. Agent or any Lender: (i) credit
cards, (ii) cash management or related services including the automatic clearing
house transfer of funds for the account of any Borrower pursuant to agreement or
overdraft, (iii) cash management, including controlled disbursement services and
(iv) Derivative Obligations.
Projections - Katy's forecasted Consolidated and consolidating (i) balance
sheets, (ii) profit and loss statements, (iii) cash flow statements, and (iv)
capitalization statements, all prepared on a consistent basis with the
historical financial statements of Katy and its Subsidiaries, together with
appropriate supporting details and a statement of underlying assumptions.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within 10 days prior to or after the acquisition of any fixed
assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
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Reference Banks - with respect to LIBOR, the principal London offices of
Barclays Bank PLC, The Royal Bank of Scotland and HSBC or such other banks as
may be appointed by Fleet U.K. (acting on the instructions of the Majority
Lenders) in consultation with the Borrower Representative.
Related Agreements -the Borrower Organizational Documents (including the
Preferred Stock Certificate of Designation), the Parent Member Agreement, the
Rights Agreement, the Management Agreement, and all other agreements and
instruments delivered pursuant to or in connection with any of the foregoing,
including any purchase agreement or registration rights agreement.
Rentals - as defined in subsection 8.2.18 of the Agreement.
Rent Reserves - as defined in clause (c) of the definition of Eligible
Inventory.
Reportable Event - any of the events set forth in Section 4043(c) of
ERISA.
Requirement of Law - (a) the certificates or articles of incorporation,
by-laws or other organizational or governing documents of a Person or (b) any
law, treaty, rule, regulation or determination of an arbitrator or other
Governmental Authority.
Reserve Percentage - the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against "Euro-currency Liabilities" as
defined in Regulation D.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
(i) investments by Katy, the extent existing on the Closing Date, in one
or more Subsidiaries of Katy, investments by Katy in one or more Subsidiaries of
Katy to be formed after the Closing Date and listed and described on Exhibit
7.2.12 hereto, or if consented to in writing by Agent, investments by Katy in
one or more Subsidiaries of Katy to be formed after the Closing Date if, in any
case, any such Subsidiary complies with subsection 7.1.7 of the Agreement;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in the
ordinary course of business of Katy or any of its Subsidiaries;
(iv) investments in direct obligations of the United States of America, or
any agency thereof or obligations guaranteed by the United States of America;
provided that such obligations mature within one year from the date of
acquisition thereof;
(v) investments in certificates of deposit maturing within one year from
the date of acquisition and fully insured by the Federal Deposit Insurance
Corporation;
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(vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from the date
of creation thereof;
(vii) investments in money market, mutual or similar funds having assets
in excess of $100,000,000 and the investments of which are limited to investment
grade securities;
(viii) intercompany loans permitted under subsections 7.2.2(v), (vi) and
(vii) of the Agreement;
(ix) investments existing on the date hereof and listed on Exhibit 7.2.12
hereto; and
(x) investments otherwise expressly permitted pursuant to the Agreement.
Restructuring Capital Expenditures - Capital Expenditures (x) made by Katy
or any of its Subsidiaries in connection with its corporate and operational
restructuring and reorganization, and (y) are identified as Restructuring
Capital Expenditures on Projections submitted to Agent by Borrowers and are not
disallowed as such by Agent in its reasonable discretion. Any Capital
Expenditure that does not meet the criteria described in clauses (x) and (y)
above may only be classified as a Restructuring Capital Expenditure with Agent's
consent to be given or refused in Agent's sole discretion.
Revolving Credit Loan - a Loan made by any Lender pursuant to Section 1.1
of the Agreement.
Revolving Credit Maximum Amount - $90,000,000, as such amount may be
reduced from time to time pursuant to the terms of the Agreement.
Revolving Loan Commitment - with respect to all Lenders, $90,000,000, and
with respect to any Lender, such Lender's Revolving Loan Commitment (including
such Lender's or its Affiliate's Canadian Participating Interest and U.K.
Participating Interest), as initially set forth on the signature page of the
Agreement or any Assignment and Acceptance Agreement executed by such Lender, in
each case, as adjusted from time to time in accordance with the Agreement.
Revolving Loan Payment Reserve - a reserve established by Agent against
the applicable U.S., U.K. or Canadian Borrowing Base in an amount equal to the
aggregate of all amounts applied by Agent to repay Revolving Credit Loans
pursuant to subsection 3.3.1 or subsection 5.4.2 of the Agreement pending
reinvestment by a Borrower of such sale, insurance or condemnation proceeds in
repaired or replacement assets.
Revolving Loan Percentage - with respect to each Lender, the percentage
equal to the quotient of such Lender's Revolving Loan Commitment divided by the
aggregate of all Revolving Loan Commitments.
Revolving Notes - the Canadian Revolving Notes, the U.K. Revolving Notes
and the U.S. Revolving Notes.
Rights Agreement - that certain Rights Agreement by and between Borrower
and LaSalle National Bank, as Rights Agent, dated as of January 13, 1995, as
such agreement has been
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amended by the First Amendment thereto, the Second Amendment thereto, the Third
Amendment thereto and the Fourth Amendment thereto and is in effect on the
Closing Date and as such agreement may be from time to time thereafter to the
extent permitted under subsection 7.2.19.
Second Lien Debt - Money Borrowed outstanding pursuant to the Second Lien
Documents.
Second Lien Documents - (a) any loan agreement, promissory note, indenture
or comparable agreement evidencing term Money Borrowed to be incurred by
Borrower and/or its Subsidiaries; (b) any and all guarantees, security
agreements, mortgages, pledge agreements and the like executed in connection
with or to secure the payment of the Money Borrowed evidenced by any of the
agreements, notes or indentures referred to in clause (a) above; and (c) any
intercreditor and/or lien subordinated agreement entered into by Agent and the
lenders under the agreements, notes or indentures referred to in clause (a)
above. The terms and conditions of such Second Lien Documents and Second Lien
Debt, including, without limitation, interests rates, principal amount,
principal amortization, financial covenants and subordination provisions shall
be subject to Agent's and each Lender's approval, to be granted or withheld in
Agent's and each Lender's sole discretion. Further, Agent and any Lender may
condition its approval of the Second Lien Documents upon changes or amendments
to this Agreement, including, without limitation, changes in the financial
covenants or definition of Applicable Margin.
Security - all shares of stock, partnership interests, membership
interests, membership units or other ownership interests in any other Person and
all warrants, options or other rights to acquire the same.
Security Agreement- means the Security Agreement executed by Borrower and
each other Loan Party on or about January 31, 2003, in form and substance
acceptance to Agent, as such Security Agreement may thereafter be amended,
supplemented or modified from time to time.
Security Documents - the Guaranty Agreements, the Mortgages, the New
Mortgages, the Patent Security Agreement, the Domestic Pledge Agreement, the
Foreign Pledge Agreement, the Security Agreement, the Trademark Security
Agreement and all other instruments and agreements now or at any time hereafter
securing the whole or any part of the Obligations.
▇▇▇▇▇ Note - that certain promissory note dated as of April 29, 2002 by
Savannah Energy Systems Company in favor of the Resource Recovery Development
Authority for the City of Savannah.
Solvent - as to any Person, that such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Sterling - means the lawful currency of Great Britain.
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Sterling Equivalent - the amount of Sterling as of any date of
determination into which Dollars can be converted, as determined in accordance
with Section 1.4 of the Agreement.
Subordinated Debt - Indebtedness of any Borrower or any Subsidiary of any
Borrower that is subordinated to the Obligations in a manner satisfactory to
Agent, and contains terms, including without limitation, payment terms,
satisfactory to Agent.
Subsidiary - any Person of which another Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting Stock
at the time of determination.
Swingline Loans - as defined in subsection 1.1.4 of the Agreement.
Tax Liability - as defined in Section 2.12 of the Agreement.
Term - as defined in Section 4.1 of the Agreement.
Term Loan - the Loan described in subsection 1.6 of the Agreement, which
Term Loan shall be in the initial aggregate principal amount of $20,000,000.
Term Loan Commitment - with respect to any Lender, the amount of such
Lender's Term Loan Commitment pursuant to subsection 1.6 of the Agreement, as
set forth below such Lender's name on the signature pages hereof or any
Assignment and Acceptance Agreement executed by such Lender, minus all Term Loan
payments paid to such Lender.
Term Loan Notes - the Secured Promissory Notes to be executed by Borrower
on or about the Closing Date in favor of each applicable Lender to evidence its
Term Loan, which shall be in the form of Exhibit 1.6 to the Agreement, together
with any replacement or successor notes therefor.
Term Loan Percentage - with respect to each Lender, the percentage equal
to the quotient of such Lender's Term Loan Commitment divided by the aggregate
of all Term Loan Commitments.
Total Credit Facility - $110,000,000, as reduced from time to time
pursuant to the terms of the Agreement.
Trademark/Security Agreement - the Trademark and License Security
Agreements executed by Katy and all or certain of the U.S. Loan Parties on or
after January 31, 2003 in favor of Agent for its benefit and the benefit of
Lenders and by which Katy or the applicable U.S. Loan Party assigned to Agent,
and granted to Agent for its benefit and the benefit of Lenders, a security
interest in, as security for the Obligations all of Katy's or such U.S. Loan
Party's right, title and interest in and to all of Katy's or such U.S. Loan
Party's trademarks or other assets as described therein, as the same may be
amended or modified from time to time.
Treaty - the Treating establishing the European Community being the Treaty
of name as amended from time to time.
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Type of Organization - with respect to any Person, the kind or type of
entity by which such Person is organized, such as a corporation or limited
liability company.
UCC - the Uniform Commercial Code as in effect in the State of Illinois on
the date of this Agreement, as it may be amended or otherwise modified.
U.K. Agent - Fleet U.K., in its capacity as U.K. agent for itself, the
Lenders and Canadian Agent under the Agreement and any successor in that
capacity appointed pursuant to the Agreement.
U.K. Availability - the amount of additional money which U.K. Borrower is
entitled to borrow from time to time as Revolving Credit Loans, such amount
being the lesser of (i) the U.K. Sublimit minus the outstanding balance of the
Dollar Equivalent of U.K. Revolving Credit Loans and the U.K. LC Obligations and
(ii) the difference derived when the sum of the principal amount of the Dollar
Equivalent of the Revolving Credit Loans to U.K. Borrower then outstanding
(including any amounts which Agent or any Lender may have paid for the account
of U.K. Borrower pursuant to any of the Loan Documents and which have not been
reimbursed by U.K. Borrower) and the Dollar Equivalent of the U.K. LC
Obligations is subtracted from the U.K. Borrowing Base. If the outstanding U.K.
Obligations are equal to or greater than the U.K. Sublimit or the U.K. Borrowing
Base, U.K. Borrowing Availability is 0.
U.K. Borrower -CEH Limited, a private limited company incorporated under
the laws of England and Wales.
U.K. Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) the U.K. Sublimit, or
(ii) an amount equal to the sum of:
(a) 85% of the net amount of Eligible Accounts of U.K. Loan
Parties outstanding at such date; plus
(b) the lesser of (1) $6,000,000 or (2) 65% of the value of
Eligible Inventory of U.K. Loan Parties at such date, minus
(subtract from the sum of (a) and (b) above);
(c) the sum of (1) the Hedge Reserve applicable to U.K. Loan
Parties, (2) Dilution Reserves applicable to U.K. Loan
Parties, (3) Rent Reserves applicable to U.K. Loan Parties,
(4) the Revolving Loan Repayment Reserve applicable to U.K.
Loan Parties, (e) the PAYE Reserve and (5) the aggregate
amount of other reserves applicable to U.K. Loan Parties, if
any, established by Agent in the exercise of its Permitted
Discretion against Eligible Accounts and Eligible Inventory.
provided that Agent, in the exercise of its Permitted Discretion, may (a)
increase or decrease reserves against Eligible Accounts Receivable and Eligible
Inventory and (b) reduce the advance
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rates provided in this definition, or restore such advance rates to any level
equal to or below the advance rates in effect as of the Closing Date.
For purposes hereof, (i) the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts, less any and all returns,
rebates, discounts (which may, at Agent's option, be calculated on shortest
terms), credits allowance or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or payable in connection
with such accounts at such time and (2) the amount of Eligible Inventory shall
be determined on a first-in, first-out, lower of cost or market basis in
accordance with GAAP, with costs adjusted for differences between standard and
actual costs.
U.K. Collateral - all of U.K. Borrower's and each other U.K. Loan Party's
right, title and interest in (i) the Property and interests in Property
described in the Security Documents, and (ii) all other Property and interests
in Property that now or hereafter secure the payment and performance of any of
the Obligations.
U.K. Effective Date - shall have the meaning contained in the last
paragraph of Section 8 of the Agreement.
U.K. LC Amount - at any time, the Dollar Equivalent of the aggregate
undrawn available amount of all U.K. Letters of Credit and U.K. LC Guaranties
(without duplication) then outstanding.
U.K. LC Guaranty - any guaranty pursuant to which Fleet U.K. or any
Affiliate of Fleet U.K. shall guaranty the payment or performance by U.K.
Borrower or any other U.K. Loan Party of their reimbursement obligations under
any letter of credit.
U.K. LC Obligations - Any U.K. LC Amount plus any Obligations that arise
from any draw against any U.K. Letter of Credit or against any letter of credit
supported by a U.K. LC Guaranty.
U.K. Lender - Fleet, or at Fleet's option, Fleet U.K., in either case, in
its capacity as the Person obligated to make U.K. Revolving Credit Loans to U.K.
Borrower hereunder and to issue U.K. Letters of Credit and U.K. LC Guaranties,
together with its successors and permitted assigns.
U.K. Letter of Credit - any standby or documentary letter of credit or
guaranties or bonds issued by Fleet U.K. or any Affiliate of Fleet U.K. for the
account of U.K. Borrower or any other U.K. Loan Party.
U.K. Loan Parties -CEH Limited and Contico Europe Limited.
U.K. Obligations - means the outstanding principal balance of the U.K.
Revolving Credit Loans made to U.K. Borrower and the U.K. LC Obligations and all
accrued interest, fees and expenses (other than taxes that are not Tax
Liabilities) with respect thereto.
U.K. Participant - means each Lender (including, without limitation, Fleet
in its capacity as a Lender) or any Affiliate thereof (which Affiliate shall be
a resident of the United Kingdom)
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as set forth on the execution pages to this Agreement or the relevant Assignment
and Acceptance Agreement. U.K. Participant shall not include the Agents.
U.K. Participating Interest - with respect to each Lender other than
Agents, such Lender's obligation to fund a participating interest in the U.K.
Revolving Credit Loans and U.K. LC Amount as set forth in Section 3.14 of the
Agreement.
U.K. Revolving Credit Loan - as defined in subsection 1.1.1(b) of the
Agreement.
U.K. Revolving Notes - the Secured Promissory Notes to be executed by U.K.
Borrower on or about the Closing Date in favor of each U.K. Lender to evidence
the U.K. Revolving Credit Loans, which shall be in the form of Exhibit 1.1 to
the Agreement, together with any replacement or successor notes therefor.
U.K. Security Trustee - means the U.K. Agent, acting as "Security Trustee"
under the Security Documents governing U.K. Borrowers.
U.K. Sublimit - with respect to all Lenders, initially, the Dollar
Equivalent of $11,000,000 and with respect to any Lender, such Lender's (or its
Affiliate's) commitment to purchase U.K. Revolving Credit Loans and thereafter
to fund U.K. Revolving Credit Loans in Sterling or Euros to U.K. Borrower,
expressed in Dollar Equivalents (including such Lender's or its Affiliate's U.K.
Participating Interest and deducting all such U.K. Participating Interests from
U.K. Lender's commitment), as initially set forth on the signature page of the
Agreement or any Assignment and Acceptance Agreement executed by such Lender, in
each case as adjusted from time to time in accordance with subsection 1.1.1(e)
of the Agreement.
U.K. Subsidiary - a Subsidiary organized under the laws of the United
Kingdom or Republic of Ireland.
U.K. Subsidiary Documents - the U.K. Subsidiary Note and the U.K.
Subsidiary Security Agreement.
U.K. Subsidiary Note - means that certain promissory note executed by
Contico Manufacturing Limited in favor of Katy, in form and substance acceptable
to Agent, as such promissory note is in effect on the Closing Date and as such
promissory note may be amended from time to time thereafter to the extent
permitted under subsection 7.2.19 of the Agreement.
U.K. Subsidiary Security Agreement - means that certain Debenture by and
between Contico Manufacturing Limited and Katy, in form and substance acceptable
to Agent, as such security agreement is in effect on the Closing Date and as
such agreement may be amended from time to time thereafter to the extent
permitted under Section 7.2.19 of the Agreement.
Unused Line Fee - as defined in Section 2.5 of the Agreement.
U.S. Availability - the amount of additional money which U.S. Borrower is
entitled to borrow from time to time as Revolving Credit Loans, such amount
being the lesser of (i) the U.S. Revolving Loan Commitment minus the outstanding
balance of the U.S. Revolving Credit Loans and the U.S. LC Obligations and (ii)
the difference derived when the sum of the Dollar
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Equivalent of the principal amount of Revolving Credit Loans to U.S. Borrower
then outstanding (including any amounts which Agent or any Lender may have paid
for the account of U.S. Borrower pursuant to any of the Loan Documents and which
have not been reimbursed by U.S. Borrower), the Dollar Equivalent of the U.S. LC
Obligations is subtracted from the U.S. Borrowing Base. If the outstanding U.S.
Obligations are equal to or greater than the U.S. Revolving Loan Commitment or
the U.S. Borrowing Base, U.S. Borrowing Availability is 0.
U.S Borrower - Katy Industries, Inc.
U.S. Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(i) the U.S. Revolving Loan Commitment, or
(ii) an amount equal to the sum of:
(a) 85% of the net amount of Eligible Accounts of U.S. Loan
Parties (as defined below) outstanding at such date; plus
(b) the lesser of (1) $60,000,000 or (2) 65% of the value of
Eligible Inventory of U.S. Loan Parties at such date; plus
(c) if, on such date, no Eligible Account or Eligible Inventory of
U.K. Loan Parties are included in the U.K. Borrowing Base as
evidenced by a Borrowing Base Certificate, 85% of the net
amount of Eligible Accounts of U.K. Loan Parties outstanding
at such date; plus
(d) if, on such date, no Eligible Accounts or Eligible Inventory
of U.K. Loan Parties are included in the U.K. Borrowing Base
as evidenced by a Borrowing Base Certificate, the lesser of
(1) $6,000,000 or (2) 65% of the Value of Eligible Inventory
of U.K. Loan Parties at such date, minus (subtract from the
sum of (a), (b), (c) and (d) above);
(e) the sum of (1) the Hedge Reserve applicable to U.S. Loan
Parties, (2) Dilution Reserves applicable to U.S. Loan
Parties, (3) Rent Reserves applicable to U.S. Loan Parties,
(4) the Revolving Loan Repayment Reserve applicable to U.S.
Loan Parties, (5) the PAYE Reserve (to the extent Eligible
Accounts and Eligible Inventory of U.K. Loan Parties are
included in the U.S. Borrowing Base) and (6) the aggregate
amount of other reserves applicable to U.S. Loan Parties, if
any, established by Agent in the exercise of its Permitted
Discretion against Eligible Accounts and Eligible Inventory.
provided that Agent, in the exercise of its Permitted Discretion, may (a)
increase or decrease reserves against Eligible Accounts Receivable and Eligible
Inventory and (b) reduce the advance rates provided in this definition, or
restore such advance rates to any level equal to or below the advance rates in
effect as of the Closing Date.
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For purposes hereof, (i) the net amount of Eligible Accounts at any time
shall be the face amount of such Eligible Accounts, less any and all returns,
rebates, discounts (which may, at Agent's option, be calculated on shortest
terms), credits allowance or excise taxes of any nature at any time issued,
owing, claimed by Account Debtors, granted, outstanding or payable in connection
with such accounts at such time and (2) the amount of Eligible Inventory shall
be determined on a first-in, first-out, lower of cost or market basis in
accordance with GAAP, with costs adjusted for differences between standard and
actual costs.
U.S. Collateral - all of U.S. Borrower's and each other U.S. Loan Party's
right, title and interest in (i) the Property and interests in Property
described in the Security Documents, and (ii) all other Property and interests
in Property that now or hereafter secure the payment and performance of any of
the Obligations.
U.S. LC Amount - at any time, the Dollar Equivalent of the aggregate
undrawn available amount of all U.S. Letters of Credit and U.S. LC Guaranties
(without duplication) then outstanding.
U.S. LC Guaranty - any guaranty pursuant to which Agent or any Affiliate
of Agent shall guaranty the payment or performance by U.S. Borrower or any other
U.S. Loan Party of their reimbursement obligations under any letter of credit.
U.S. LC Obligations - Any U.S. LC Amount plus any Obligations that arise
from any draw against any U.S. Letter of Credit or against any letter of credit
supported by a U.S. LC Guaranty.
U.S. Lender - each Lender other than the Canadian Lender and the U.K.
Lender.
U.S. Letter of Credit - any standby or documentary letter of credit issued
by Agent or any Affiliate of Agent for the account of U.S. Borrower or any other
U.S. Loan Party.
U.S. Loan Parties - U.S. Borrower and any Domestic Active Subsidiary.
U.S. Obligations - means the outstanding principal balance of the U.S.
Revolving Credit Loans made to U.S. Borrowers, the Term Loan and the U.S. LC
Obligations and all accrued interest, fees and expenses (other than taxes that
are not Tax Liabilities) with respect thereto.
U.S. Revolving Credit Loan - as defined in subsection 1.1.1(a) of the
Agreement.
U.S. Revolving Loan Commitment - (x) with respect to all Lenders,
initially, $90,000,000, (subject to adjustment in accordance with the Agreement)
minus, as of any date of determination, the sum of (a) the Dollar Equivalent of
the outstanding balances of the Canadian Revolving Credit Loan and the U.K.
Revolving Credit Loan and (b) the Canadian LC Obligations and the U.K. LC
Obligations and (y) with respect to any Lender, such Lender's commitment to
provide U.S. Revolving Credit Loans in Dollars to U.S. Borrowers, as initially
set forth on the signature page of the Agreement or any Assignment and
Acceptance Agreement executed by such Lender minus such Lender's Revolving Loan
Percentage of the sum of the Dollar Equivalent of Canadian Revolving Credit
Loan, Canadian LC Amount, U.K. Revolving Credit Loan, U.K. LC Amount.
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U.S. Revolving Notes - the Secured Promissory Notes to be executed by U.S.
Borrower on or about the Closing Date in favor of each Lender (other than the
U.K. Lender and the Canadian Lender) to evidence the U.S. Revolving Credit
Loans, which shall be in the form of Exhibit 1.1 to the Agreement, together with
any replacement or successor notes therefor.
Voting Stock - Securities of any class or classes of a corporation,
limited partnership or limited liability company or any other entity the holders
of which are ordinarily, in the absence of contingencies, entitled to vote with
respect to the election of corporate directors (or Persons performing similar
functions).
▇▇▇▇▇ Facility - as defined in subsection 7.2.9(ix).
▇▇▇▇▇ Sale and Leaseback - as defined in subsection 7.2.9(ix).
▇▇▇▇▇ Sale and Leaseback Documents - as defined in subsection 7.2.9(ix).
▇▇▇▇▇ - ▇▇▇▇▇ Industries (Canada) Inc., a Canadian corporation and a
Subsidiary of Katy.
▇▇▇▇▇ Industries - ▇▇▇▇▇ Industries, Inc., a Delaware corporation and a
Subsidiary of Katy.
▇▇▇▇▇ Subsidiary Documents - means the ▇▇▇▇▇ Subsidiary Note and the ▇▇▇▇▇
Subsidiary Security Agreement.
▇▇▇▇▇ Subsidiary Note means that certain promissory note dated June 28,
2001 executed by ▇▇▇▇▇ in favor of Katy, in form and substance acceptable to
Agent, as such promissory note is in effect on the Closing Date and as such
promissory note may be amended from time to time thereafter to the extent
permitted under subsection 7.2.19.
▇▇▇▇▇ Subsidiary Security Agreement - means that certain security
agreement dated June 28, 2001 by and between ▇▇▇▇▇ and Katy, in form and
substance acceptable to Agent, as such security agreement is in effect on the
Closing Date and as such agreement may be amended from time to time thereafter
to the extent permitted under this Agreement.
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the UCC to the extent the
same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof. The
phrases "to Borrowers' knowledge" or "to any Borrower's knowledge" and any other
phrase of similar import refer to the actual knowledge of the executive
A-39
or senior officers of Loan Parties or to the knowledge that any such officer
should have obtained in the prudent and diligent exercise of his duties as an
officer of Loan Parties.
A-40
LIST OF EXHIBITS AND SCHEDULES
Exhibit 1.1(a) Form of U.S. Revolving Credit Note
Exhibit 1.1(b) Form of U.K. Revolving Credit Note
Exhibit 1.1(c) Form of Canadian Revolving Credit Note
Exhibit 1.6 Form of Term Loan Note
Exhibit 5.1.1 Business Locations
Exhibit 6.1.1 Jurisdictions in which Borrower and each Subsidiary is
Authorized to do Business
Exhibit 6.1.4 Capital Structure of Borrower and each Subsidiary
Exhibit 6.1.5 Names; Organization
Exhibit 6.1.13 Surety Obligations
Exhibit 6.1.14 Tax Identification Numbers of Katy Subsidiaries
Exhibit 6.1.15 Brokers' Fees
Exhibit 6.1.16 Patents, Trademarks, Copyrights and Licenses
Exhibit 6.1.19 Contracts Restricting Right to Incur Debts
Exhibit 6.1.20 Litigation
Exhibit 6.1.22 Capitalized and Operating Leases
Exhibit 6.1.23 Pension Plans
Exhibit 6.1.25 Labor Relations
Exhibit 7.1.3 Form of Compliance Certificate
Exhibit 7.1.4 Form of Borrowing Base Certificate
Exhibit 7.2.3 Existing Indebtedness
Exhibit 7.2.5 Permitted Liens
Exhibit 7.2.12 Permitted Investments
Exhibit 7.3 Financial Covenants
Exhibit 8.1 U.K. Conditions Precedent
Schedule A Mandatory Costs
Schedule B Appraised Values
List of Exhibits and Schedules
EXHIBIT 1.1(a)
FORM OF AMENDED AND RESTATED
U.S. REVOLVING CREDIT NOTE
SECURED PROMISSORY NOTE
$______________ ______________ __, 20__
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned ("U.S. Borrower") promises to pay to
the order of _________________________ ("Lender"), at the principal office of
Fleet Capital Corporation, as agent for said Lender, or at such other place in
the United States of America as the holder of this Note may designate from time
to time in writing, in lawful money of the United States of America or such
other currency as provided in the Loan Agreement referred to below and in
immediately available funds, the principal amount of the Dollar Equivalent of
__________________________________ Dollars ($___________) or such lesser
principal amount as may be outstanding pursuant to the Loan Agreement (as
hereinafter defined) with respect to the U.S. Revolving Credit Loans, together
with interest on the unpaid principal amount of this Note outstanding from time
to time.
This Revolving Note (the "Note") is one of the Revolving Notes referred to
in, and is issued pursuant to, that certain Amended and Restated Loan Agreement
among the borrower signatories thereto (including U.S. Borrower), the lender
signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as
agent for such lenders (FCC, in such capacity, "Agent") dated as of April __,
2004 (hereinafter, as amended from time to time, the "Loan Agreement"), and is
entitled to all of the benefits and security of the Loan Agreement. All of the
terms, covenants and conditions of the Loan Agreement and the other Loan
Documents are hereby made a part of this Note and are deemed incorporated herein
in full. All capitalized terms used herein, unless otherwise specifically
defined in this Note, shall have the meanings ascribed to them in the Loan
Agreement.
The rate of interest in effect hereunder shall be calculated with
reference to the Base Rate or LIBOR, as applicable, as more specifically
provided in the Loan Agreement. The interest due shall be computed in the manner
provided in the Loan Agreement.
Except as otherwise expressly provided in the Loan Agreement, if any
payment on this Note becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day, and
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. Notwithstanding the foregoing, if
any portion of the U.S. Revolving Credit Loans evidenced by this promissory note
is subject to a LIBOR Option, and an extension of the maturity of any payment
hereon would cause the maturity thereof to occur during the next calendar month,
then such payment shall mature on the next preceding Business Day.
Exhibit 1.1(a) - Page 1
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrower Representative may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence and continuation of any one or more of the Events of
Default specified in the Loan Agreement which have not been cured by Borrowers
or waived by Lenders or Majority Lenders (as required by the Loan Agreement),
Agent or Majority Lenders may declare all Obligations evidenced hereby to be
immediately due and payable (except with respect to any Event of Default set
forth in subsection 9.1.8 of the Loan Agreement, in which case all Obligations
evidenced hereby shall automatically become immediately due and payable without
the necessity of any notice or other demand) without presentment, demand,
protest or any other action or obligation of Majority Lenders or Agent.
The right to receive principal of, and stated interest on, this Note may
only be transferred in accordance with the provisions of the Loan Agreement.
Time is of the essence of this Note. U.S. Borrower hereby waives
presentment, demand, protest and notice of any kind. No failure to exercise, and
no delay in exercising, any rights hereunder on the part of the holder hereof
shall operate as a waiver of such rights.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Agent or Lenders in the exercise
of any right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Agent
or Lenders of any right or remedy preclude any other right or remedy. Agent
and/or Lenders, at its or their option, may enforce its or their rights against
any collateral securing this Note without enforcing its or their rights against
U.S. Borrower, any guarantor of the indebtedness evidenced hereby or any other
property or indebtedness due or to become due to U.S. Borrower. U.S. Borrower
agrees that, without releasing or impairing U.S. Borrower's liability hereunder,
Agent and/or Lenders may at any time release, surrender, substitute or exchange
any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
Exhibit 1.1(a) - Page 2
The validity, interpretation and enforcement of this promissory note shall
be governed by the internal laws of the State of Illinois without giving effect
to the conflict of laws principles thereof.
U.S. BORROWER:
KATY INDUSTRIES, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Exhibit 1.1(a) - Page 3
EXHIBIT 1.1(b)
FORM OF AMENDED AND RESTATED
U.K. REVOLVING CREDIT NOTE
SECURED PROMISSORY NOTE
______________ __, 20__
$______________ ________________, England
FOR VALUE RECEIVED, the undersigned (U.K. "Borrower") promises to pay to
the order of ______________________________ ("Lender"), at the principal office
of Fleet National Bank, as agent for said Lender, or at such other place in the
United Kingdom as the holder of this Note may designate from time to time in
writing, in lawful money of the United Kingdom or such other currency as
provided in the Loan Agreement referred to below and in immediately available
funds, the principal amount of the Dollar Equivalent of
__________________________________ Dollars ($___________) or such lesser
principal amount as may be outstanding pursuant to the Loan Agreement (as
hereinafter defined) with respect to the U.K. Revolving Credit Loans, together
with interest on the unpaid principal amount of this Note outstanding from time
to time.
This Revolving Note (the "Note") is one of the Revolving Notes referred to
in, and is issued pursuant to, that certain Amended and Restated Loan Agreement
among the borrower signatories thereto (including U.K. Borrower), the lender
signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as
agent for such lenders (FCC, in such capacity, "Agent") dated as of April __,
2004 (hereinafter, as amended from time to time, the "Loan Agreement"), and is
entitled to all of the benefits and security of the Loan Agreement. All of the
terms, covenants and conditions of the Loan Agreement and the other Loan
Documents are hereby made a part of this Note and are deemed incorporated herein
in full. All capitalized terms used herein, unless otherwise specifically
defined in this Note, shall have the meanings ascribed to them in the Loan
Agreement.
The rate of interest in effect hereunder shall be calculated with
reference to the Base Rate or LIBOR, as applicable, as more specifically
provided in the Loan Agreement. The interest due shall be computed in the manner
provided in the Loan Agreement.
Except as otherwise expressly provided in the Loan Agreement, if any
payment on this Note becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day, and
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. Notwithstanding the foregoing, if
any portion of the U.K. Revolving Credit Loans evidenced by this promissory note
is subject to a LIBOR Option, and an extension of the maturity of any payment
hereon would cause the maturity thereof to occur during the next calendar month,
then such payment shall mature on the next preceding Business Day.
Exhibit 1.1(b) - Page 1
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrower Representative may
also terminate the Loan Agreement and, in connection with such termination,
prepay this Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence and continuation of any one or more of the Events of
Default specified in the Loan Agreement which have not been cured by Borrowers
or waived by Lenders or Majority Lenders (as required by the Loan Agreement),
Agent or Majority Lenders may declare all Obligations evidenced hereby to be
immediately due and payable (except with respect to any Event of Default set
forth in subsection 9.1.8 of the Loan Agreement, in which case all Obligations
evidenced hereby shall automatically become immediately due and payable without
the necessity of any notice or other demand) without presentment, demand,
protest or any other action or obligation of Majority Lenders or Agent.
The right to receive principal of, and stated interest on, this Note may
only be transferred in accordance with the provisions of the Loan Agreement.
Time is of the essence of this Note. U.K. Borrower hereby waives
presentment, demand, protest and notice of any kind. No failure to exercise, and
no delay in exercising, any rights hereunder on the part of the holder hereof
shall operate as a waiver of such rights.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Agent or Lenders in the exercise
of any right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Agent
or Lenders of any right or remedy preclude any other right or remedy. Agent
and/or Lenders, at its or their option, may enforce its or their rights against
any collateral securing this Note without enforcing its or their rights against
U.K. Borrower, any guarantor of the indebtedness evidenced hereby or any other
property or indebtedness due or to become due to U.K. Borrower. U.K. Borrower
agrees that, without releasing or impairing U.K. Borrower's liability hereunder,
Agent and/or Lenders may at any time release, surrender, substitute or exchange
any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
Exhibit 1.1(b) - Page 2
The validity, interpretation and enforcement of this promissory note shall
be governed by the internal laws of the State of Illinois without giving effect
to the conflict of laws principles thereof.
U.K. BORROWER:
CEH LIMITED
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Exhibit 1.1(b) - Page 3
EXHIBIT 1.1(c)
FORM OF AMENDED AND RESTATED
CANADIAN REVOLVING CREDIT NOTE
SECURED PROMISSORY NOTE
$______________ ______________ __, 20__
Toronto, Ontario
FOR VALUE RECEIVED, the undersigned ("Canadian Borrower") Canada promises
to pay to the order of ______________________________ ("Lender"), at the
principal office of Fleet Capital Global Finance, Inc., as agent for said
Lender, or at such other place in Canada as the holder of this Note may
designate from time to time in writing, in lawful money of Canada and in
immediately available funds, the principal amount of the Dollar Equivalent of
__________________________________ Dollars ($___________) or such lesser
principal amount as may be outstanding pursuant to the Loan Agreement (as
hereinafter defined) with respect to the Canadian Revolving Credit Loans,
together with interest on the unpaid principal amount of this Note outstanding
from time to time.
This Revolving Note (the "Note") is one of the Revolving Notes referred to
in, and is issued pursuant to, that certain Amended and Restated Loan Agreement
among the borrower signatories thereto (including Canadian Borrower), the lender
signatories thereto (including Lender) and Fleet Capital Corporation ("FCC") as
agent for such lenders (FCC, in such capacity, "Agent") dated as of April __,
2004 (hereinafter, as amended from time to time, the "Loan Agreement"), and is
entitled to all of the benefits and security of the Loan Agreement. All of the
terms, covenants and conditions of the Loan Agreement and the other Loan
Documents are hereby made a part of this Note and are deemed incorporated herein
in full. All capitalized terms used herein, unless otherwise specifically
defined in this Note, shall have the meanings ascribed to them in the Loan
Agreement.
The rate of interest in effect hereunder shall be calculated with
reference to the Base Rate or the Canadian BA Rate, as applicable, as more
specifically provided in the Loan Agreement. The interest due shall be computed
in the manner provided in the Loan Agreement.
Except as otherwise expressly provided in the Loan Agreement, if any
payment on this Note becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day, and
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension. Notwithstanding the foregoing, if
any portion of the Canadian Revolving Credit Loans evidenced by this promissory
note is subject to a LIBOR Option, and an extension of the maturity of any
payment hereon would cause the maturity thereof to occur during the next
calendar month, then such payment shall mature on the next preceding Business
Day.
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrower Representative may
also terminate the Loan
Exhibit 1.1(c) - Page 1
Agreement and, in connection with such termination, prepay this Note in the
manner provided in Section 4 of the Loan Agreement.
Upon the occurrence and continuation of any one or more of the Events of
Default specified in the Loan Agreement which have not been cured by Borrowers
or waived by Lenders or Majority Lenders (as required by the Loan Agreement),
Agent or Majority Lenders may declare all Obligations evidenced hereby to be
immediately due and payable (except with respect to any Event of Default set
forth in subsection 9.1.8 of the Loan Agreement, in which case all Obligations
evidenced hereby shall automatically become immediately due and payable without
the necessity of any notice or other demand) without presentment, demand,
protest or any other action or obligation of Majority Lenders or Agent.
The right to receive principal of, and stated interest on, this Note may
only be transferred in accordance with the provisions of the Loan Agreement.
Time is of the essence of this Note. Canadian Borrower hereby waives
presentment, demand, protest and notice of any kind. No failure to exercise, and
no delay in exercising, any rights hereunder on the part of the holder hereof
shall operate as a waiver of such rights.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Canadian Agent or Canadian Lenders
in the exercise of any right or remedy hereunder shall operate as a waiver
thereof, nor as an acquiescence in any default, nor shall any single or partial
exercise by Canadian Agent or Canadian Lenders of any right or remedy preclude
any other right or remedy. Canadian Agent and/or Canadian Lenders, at its or
their option, may enforce its or their rights against any collateral securing
this Note without enforcing its or their rights against Canadian Borrower, any
guarantor of the indebtedness evidenced hereby or any other property or
indebtedness due or to become due to Canadian Borrower. Canadian Borrower agrees
that, without releasing or impairing Canadian Borrower's liability hereunder,
Canadian Agent and/or Canadian Lenders may at any time release, surrender,
substitute or exchange any collateral securing this Note and may at any time
release any party primarily or secondarily liable for the indebtedness evidenced
by this Note.
Exhibit 1.1(c) - Page 2
The validity, interpretation and enforcement of this promissory note shall
be governed by the internal laws of the State of Illinois without giving effect
to the conflict of laws principles thereof.
CANADIAN BORROWER:
▇▇▇▇▇ INDUSTRIES (CANADA) INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Exhibit 1.1(c) - Page 3
EXHIBIT 1.6
FORM OF AMENDED AND RESTATED
TERM LOAN NOTE
(SECURED PROMISSORY NOTE)
[Aggregate $20,000,000] ___________, 200_
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned ("U.S. Borrower") hereby promises to
pay to the order of _______________________, a ________________ corporation
(hereinafter "Lender"), or its registered assigns at the office of Fleet Capital
Corporation, as agent for such Lender, or at such other place in the United
States of America as the holder of this Note may designate from time to time in
writing, in lawful money of the United States, in immediately available funds,
at the time of payment, the principal sum of [aggregate Twenty Million Dollars
($20,000,000)], together with interest from and after the date hereof on the
unpaid principal balance outstanding from time to time.
This Secured Promissory Note (the "Note") is one of the Term Loan Notes
referred to in, and is issued pursuant to, that certain Amended and Restated
Loan Agreement dated as of April __, 2004, among the borrower signatories
thereto (including U.S. Borrower), the lender signatories thereto (including
Lender) and Fleet Capital Corporation ("FCC") as Agent for said lenders (FCC in
such capacity "Agent") (hereinafter, as amended from time to time, the "Loan
Agreement"), and is entitled to all of the benefits and security of the Loan
Agreement. All of the terms, covenants and conditions of the Loan Agreement and
the Security Documents are hereby made a part of this Note and are deemed
incorporated herein in full. All capitalized terms used herein, unless otherwise
specifically defined in this Note, shall have the meanings ascribed to them in
the Loan Agreement.
For so long as no Event of Default shall have occurred and be continuing,
the principal amount and accrued interest of this Note shall be due and payable
on the dates and in the manner hereinafter set forth:
(a) interest on the unpaid principal balance outstanding from time
to time shall be paid at such interest rates and at such times as are specified
in the Loan Agreement;
(b) principal shall be due and payable quarterly commencing on July
1, 2004 and continuing on each October 1, January 1, April 1 and July 1
thereafter to and including January 1, 2008 in installments equal to
$________________ [aggregate amount of quarterly installments to all Lenders
equal to $714,285.75];
(c) the entire remaining principal amount then outstanding, together
with any and all other amounts due hereunder, shall be due and payable on April
__, 2009.
Notwithstanding the foregoing, the entire unpaid principal balance and
accrued interest on this Note shall be due and payable immediately upon any
termination of the Loan Agreement pursuant to Section 4 thereof.
Exhibit 1.6 - Page 1
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrower may also prepay this
Note in the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence, and during the continuation, of an Event of Default,
this Note shall or may, as provided in the Loan Agreement, become or be declared
immediately due and payable.
The right to receive principal of, and stated interest on, this Note may
only be transferred in accordance with the provisions of the Loan Agreement.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by Borrower.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Illinois.
U.S. BORROWER:
KATY INDUSTRIES, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Exhibit 1.6 - Page 2
EXHIBIT 5.1.1
BUSINESS LOCATIONS
1. Each Borrower currently has the following business locations, and no others:
Chief Executive Office:
Other Locations:
2. Each Borrower maintains its books and records relating to Accounts and
General Intangibles at:
3. Each Borrower has had no office, place of business or agent for process
located in any county other than as set forth above, except:
4. Each Subsidiary currently has the following business locations, and no
others:
Chief Executive Office:
Other Locations:
5. Each Subsidiary maintains its books and records relating to Accounts and
General Intangibles at:
6. Each Subsidiary has had no office, place of business or agent for process
located in any county other than as set forth above, except:
7. The following bailees, warehouseman, similar parties and consignees hold
Inventory of each Borrower or one of its Subsidiaries:
-----------------------------------------------------------------------------------------
Owner of
Name and Address of Party Nature of Relationship Amount of Inventory Inventory
------------------------- ---------------------- ------------------- ---------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Owner of
Name and Address of Party Nature of Relationship Amount of Inventory Inventory
------------------------- ---------------------- ------------------- ---------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Exhibit 5.1.1 - Page 1
EXHIBIT 6.1.1
JURISDICTIONS IN WHICH EACH BORROWER
AND ITS SUBSIDIARIES
ARE AUTHORIZED TO DO BUSINESS
Name of Entity Jurisdiction
Exhibit 6.1.1 - Page 1
EXHIBIT 6.1.4
CAPITAL STRUCTURE
1. The classes and the number of authorized and issued Securities of each
Borrower and each of its Subsidiaries and the record owner of such Securities of
each Borrower are as follows:
Borrowers:
--------------------------------------------------------------------------------
Class of Number of Securities Number of Securities
Securities Issued and Outstanding Record Owners Authorized but Unissued
---------- ---------------------- ------------- -----------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Subsidiaries:
--------------------------------------------------------------------------------
Class of Number of Securities Number of Securities
Securities Issued and Outstanding Record Owners Authorized but Unissued
---------- ---------------------- ------------- -----------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. The number, nature and holder of all other outstanding Securities of each
Borrower and each Subsidiary are as follows:
3. The correct name and jurisdiction of incorporation or organization of each
Subsidiary of each Borrower and the percentage of its issued and outstanding
Voting Stock owned by each Borrower are as follows:
--------------------------------------------------------------------------------
Percentage of Voting
Jurisdiction of Stock Owned by
Name Incorporation/Organization the Applicable Borrower
---- -------------------------- -----------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4. The name of each of each Borrower's and each Subsidiary's corporate or joint
venture Affiliates and the nature of the affiliation are as follows:
5. The agreements or instruments binding upon the partners, members or
shareholders of each Borrower or any of its Subsidiaries and relating to the
ownership of its Securities, are as follows:
Exhibit 6.1.4 - Page 1
EXHIBIT 6.1.5
NAMES; ORGANIZATION
1. Each Borrower's correct name, as registered with the Secretary of State of
the State of ____________ is:
2. In the conduct of its business, each Borrower has used the following
names:
3. Each Subsidiary's correct name, as registered with the Secretary of State
of the State of its incorporation or formation, is:
4. In the conduct of its business, each Subsidiary has used the following
names:
5. Each Borrower's Organizational I.D. Number is:
6. Each Subsidiary's Organizational I.D. Number is:
7. Each Borrower's Type of Organization is:
8. Each Subsidiary's Type of Organization is:
9. No Borrower has been the surviving entity of a merger or consolidation nor
has it acquired substantially all the assets of any person.
10. No Subsidiary has been the surviving entity of a merger or consolidation
nor has it acquired substantially all the assets of any person.
Exhibit 6.1.5 - Page 1
EXHIBIT 6.1.13
SURETY OBLIGATIONS
Exhibit 6.1.13 - Page 1
EXHIBIT 6.1.14
TAX IDENTIFICATION NUMBERS OF EACH SUBSIDIARY OF KATY
--------------------------------------------------------------------------------
Subsidiary Number
---------- ------
--------------------------------------------------------------------------------
Exhibit 6.1.14 - Page 1
EXHIBIT 6.1.15
BROKER'S FEES
Exhibit 6.1.15 - Page 1
EXHIBIT 6.1.16
PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
1. Each Borrower's and its Subsidiaries' patents:
-----------------------------------------------------------------------------------------
Status in Federal
Patent Owner Patent Office Registration Number Registration Date
------ ----- ------------- ------------------- -----------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
2. Each Borrower's and its Subsidiaries' trademarks:
-----------------------------------------------------------------------------------------
Status in Federal
Patent Owner Patent Office Registration Number Registration Date
------ ----- ------------- ------------------- -----------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
3. Each Borrower's and its Subsidiaries' copyrights:
-----------------------------------------------------------------------------------------
Status in Federal
Patent Owner Patent Office Registration Number Registration Date
------ ----- ------------- ------------------- -----------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
4. Each Borrower's and its Subsidiaries' licenses (other than routine business
licenses, authorizing them to transact business in local jurisdictions):
-----------------------------------------------------------------------------------------
Name of License Nature of License Licensor Term of License
--------------- ----------------- -------- ---------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
5. Infringement Activities:
6. Unregistered material trademarks, service marks and copyrights:
7. Material license agreements that do not permit assignment or limit the use of
license after default:
Exhibit 6.1.16 - Page 1
EXHIBIT 6.1.19
CONTRACTS RESTRICTING RIGHT TO INCUR DEBT
Contracts that restrict the right of any Borrower or any of its Subsidiaries to
incur Indebtedness:
-------------------------------------------------------------------------------------------
Title of Contract Identity of Parties Nature of Restriction Term of Contract
----------------- ------------------- --------------------- ----------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Exhibit 6.1.19 - Page 1
EXHIBIT 6.1.20
LITIGATION
1. Actions, suits, proceedings and investigations pending against any Borrower
or any Subsidiary:
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Title of Action Nature of Action Complaining Parties Jurisdiction or Tribunal
--------------- ---------------- ------------------- ------------------------
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2. The only threatened actions, suits, proceedings or investigations of which
any Borrower or any Subsidiary is aware are as follows:
Exhibit 6.1.20 - Page 1
EXHIBIT 6.1.22
CAPITALIZED AND OPERATING LEASES
Each Borrower and its Subsidiaries have the following capitalized and operating
leases:
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Lessee Lessor Term of Lease Property Covered
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Exhibit 6.1.22 - Page 1
EXHIBIT 6.1.23
PENSION PLANS
Each Borrower and its Subsidiaries have the following Plans:
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Party Type of Plan
----- ------------
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Borrower
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Subsidiaries
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Exhibit 6.1.23 - Page 1
EXHIBIT 6.1.25
COLLECTIVE BARGAINING AGREEMENTS; LABOR CONTROVERSIES
1. Each Borrower and its Subsidiaries are parties to the following collective
bargaining agreements:
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Type of Agreement Parties Term of Agreement
----------------- ------- -----------------
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2. Material grievances, disputes of controversies with employees of any Borrower
or any of its Subsidiaries are as follows:
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Parties Involved Nature of Grievance, Dispute or Controversy
---------------- -------------------------------------------
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3. Threatened strikes, work stoppages and asserted pending demands for
collective bargaining with respect to any Borrower or any of its Subsidiaries
are as follows:
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Parties Involved Nature of Matter
---------------- ----------------
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Exhibit 6.1.25 - Page 1
EXHIBIT 7.1.3
COMPLIANCE CERTIFICATE
[________________________]
__________________, ___
Fleet Capital Corporation, as Agent
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned, the chief financial officer of Katy Industries, Inc.
("Katy"), gives this certificate to Fleet Capital Corporation, in its capacity
as Agent ("Agent") in accordance with the requirements of subsection 7.1.3 of
that certain Amended and Restated Loan Agreement dated March __, 2004 among Katy
and certain of its subsidiaries, Agent, _________________, as [Syndication
Agent] [Documentation Agent] and the Lenders party thereto ("Loan Agreement").
Capitalized terms used in this Certificate, unless otherwise defined herein,
shall have the meanings ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets and statements of
income of Katy and its Subsidiaries for the [__________] period ending
_______________, ____, copies of which are attached hereto, I hereby certify
that:
(i) Restructuring Capital Expenditures during the period and
for the fiscal year to date total $__________ and $__________,
respectively;
(ii) Non-Restructuring Capital Expenditures for the period and
for the fiscal year to date total $___________ and $__________,
respectively;
(iii) The difference between (x) Consolidated Interest Expense
as shown on the income statement of Katy and its Subsidiaries for the
[_______ _______] period ending _________ and (y) Consolidated Interest
Expense for such period is reconciled in reasonable detail on the attached
Schedule;
(iv) The Fixed Charge Coverage Ratio for the [four] fiscal
quarters ending on __________ is ________ to 1; and
(iv) Consolidated Leverage Ratio as of ________________ is
__________ to 1.0.
2. No Default exists on the date hereof, other than: _______________
________________________________________________ [if none, so state]; and
Exhibit 7.1.3 - Page 1
3. No Event of Default exists on the date hereof, other than _______
____________________________________________________ [if none, so state].
Very truly yours,
-------------------------------
Chief Financial Officer
Exhibit 7.1.3 - Page 2
EXHIBIT 7.1.4
FORM OF BORROWING BASE CERTIFICATE
[to come]
Exhibit 7.1.4 - Page 1
EXHIBIT 7.2.3
EXISTING INDEBTEDNESS
Borrower Lender Amount Maturity
-------- ------ ------ --------
Exhibit 7.2.3 - Page 1
EXHIBIT 7.2.5
PERMITTED LIENS
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Secured Party Nature of Lien
------------- --------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
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Exhibit 7.2.5 - Page 1
EXHIBIT 7.2.12
PERMITTED INVESTMENTS
Exhibit 7.2.12 - Page 1
EXHIBIT 7.3
FINANCIAL COVENANTS
DEFINITIONS
Consolidated EBITDA - for any period, the sum, without duplication,
of the amounts for such period of (i) Consolidated Net Income, (ii) interest
expense, (iii) provisions for taxes based on income, (iv) total depreciation
expense, (v) total amortization expense, (vi) all unusual expenses and all other
non-capitalized restructuring expenses (including costs and expenses
attributable to employee severance obligations and facility consolidation costs)
for such period to the extent not disallowed by Agent in its sole discretion,
(vii) any payment of or accrual for the Management Fee under the Management
Agreement, (viii) all other payments made to K&C and its Affiliates during such
period for expenses incurred on behalf of Parent, Katy or any of their
respective Subsidiaries pursuant to Kohlberg Agreements, (ix) any non-cash
expense incurred with respect to Katy's stock appreciation rights plan ("SAR")
and (x) any non-cash expense with respect to changes in market value of any
options to purchase Katy's Common Stock and (xi) other non-cash items (other
than any such non-cash item to the extent that it represents an accrual of or
reserve for cash expenditures in any future period), but only, in the case of
clauses (ii)-(xi), to the extent deducted in the calculation of Consolidated Net
Income less other non-cash items added in the calculation of Consolidated Net
Income (other than any such non-cash item to the extent that it will result in
the receipt of cash payments in any future period), all of the foregoing as
determined on a consolidated basis for Katy and its Subsidiaries in conformity
with GAAP; provided that there shall be subtracted from the sum of items (i)
through (xi) above the amount of any cash expenditure made within the applicable
period pursuant to the SAR, to the extent that the amount of such cash
expenditure was expensed or will be expensed against a prior or future period's
Consolidated Net Income; provided, further, that (a) in the event any Loan Party
makes an acquisition of any Person or any division or any business unit
permitted hereunder or consented to by Majority Lenders during such period, if
Katy provides Agent and Lenders financial statements with respect to the
business so acquired (which financial statements shall have been audited by one
of the "Big 4" accounting firms or another nationally recognized accounting firm
reasonably satisfactory to Agent or financial statements otherwise satisfactory
to Agent) reasonably satisfactory to Majority Lenders, Consolidated EBITDA for
such period shall be calculated on a pro forma basis, taking into account the
elimination of non-recurring expenses, based on the results of such acquired
Person or acquired assets as if such acquisition had occurred on the first day
of such period, and (b) in the event any Loan Party makes a Permitted
Disposition (or any other disposition of any Person or any division or any
business unit permitted hereunder or consented to by the Majority Lenders)
during such period, Consolidated EBITDA for such period shall be calculated on a
pro forma basis, based on the results of such disposed Person or disposed assets
as if such Permitted Disposition (or such other disposition) had occurred on the
first day of such period.
Consolidated Fixed Charges, with respect to any period, the sum of:
(i) scheduled principal payments required to be made during such period in
respect to Indebtedness for Money Borrowed (including the principal portion of
Capitalized Lease Obligations), plus (ii) Consolidated Interest Expense payable
in cash for such period, all as determined for Borrowers and their Subsidiaries
on a Consolidated basis and in accordance with GAAP.
Exhibit 7.3 - Page 1
Consolidated Interest Expense - for any period, total interest
expense of Katy and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Katy and its Subsidiaries, including, without
limitation, net costs under Interest Rate Agreements, but excluding, however,
(i) any amounts referred to in the Fee Letter or amortization thereof, (ii) any
deferred financing fees or amortization thereof, (iii) commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, (iv) unused line charges, (v) non-cash charges included in
interest expense other than in clauses (i) and (ii) and (vi) to the extent
included in interest expense, costs associated with the unsuccessful second lien
financing abandoned prior to the Closing Date.
Consolidated Leverage Ratio, as at any date, the ratio of (a)
Consolidated Total Debt as at such date minus contingent reimbursement
obligations with respect to letters of credit or guaranties of letters of credit
to (b) Consolidated EBITDA for the consecutive four fiscal quarters ending on
the last day of the most recently ended fiscal quarter.
Consolidated Net Income, for any period, the net income (or loss) of
Katy on a Consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any Person (other than a Subsidiary of Katy) in which
any other Person (other than Katy or any of its Subsidiaries) has a joint
interest, except to the extent of the amount of dividends or other distributions
actually paid to Katy or any of its Subsidiaries by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of Katy or is merged into or consolidated with Katy or any
of its Subsidiaries or that Person's assets are acquired by Katy or any of its
Subsidiaries, (iii) the income of any Subsidiary of Katy to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (iv) any after-tax gains
or losses attributable to Asset Sales or returned surplus assets of any Pension
Plan, (v) any LIFO reserves of CCP to the extent such LIFO reserves decrease or
increase net income of CCP, and (vii) (to the extent not included in clauses (i)
through (v) above) any net extraordinary gains or net extraordinary losses.
Consolidated Total Debt means, as at any date of determination, the
aggregate stated balance sheet amount (which shall not include the face amount
of undrawn Letters of Credit) of all Money Borrowed of Katy and its Subsidiaries
on the last day of the most recently ended fiscal quarter, determined on a
Consolidated basis in accordance with GAAP.
Fixed Charge Coverage Ratio, with respect to any period, the ratio
of (i) Consolidated EBITDA for such period minus the sum of (a) any income taxes
paid in cash during such period and restructuring payments made in cash after
the Closing Date during such period plus (b) non-financed Capital Expenditures
(other than Restructuring Capital Expenditures) during such period, to (ii)
Consolidated Fixed Charges for such period, all as determined for Borrowers and
their Subsidiaries on a Consolidated basis and in accordance with GAAP.
Exhibit 7.3 - Page 2
A. Fixed Charge Coverage Ratio. Katy shall not permit the Fixed
Charge Coverage Ratio for any period set forth below to be less than the ratio
set forth below opposite such period:
Period Ratio
------ -----
Four Fiscal Quarters Ending June 30, 2004 and
each September 30, December 31, March 31 and
June 30 thereafter 1.10 to 1
B. Consolidated Leverage Ratio. Katy shall not permit the
Consolidated Leverage Ratio as of any date set forth below to be more than the
amount set forth below opposite such date:
Period Ratio
------ -----
Four Fiscal Quarters Ending June 30, 2004 3.75 to 1
Four Fiscal Quarters Ending September 30, 2004 3.50 to 1
Four Fiscal Quarters Ending December 31, 2004,
March 31, 2005 and June 30, 2005 3.25 to 1
Four Fiscal Quarters Ending September 30, 2005
and each December 31, March 31, June 30 and
September 30 thereafter 3.00 to 1
Exhibit 7.3 - Page 3
EXHIBIT 8.1
U.K. Documentary Conditions Precedent
(each to be in a form and substance satisfactory to U.K. Agent)
1. Formalities Certificate(s): a certificate (dated no earlier than the date
the first Loan is drawn down or such other date as Agent may approve) from
each U.K. Loan Party in the form approved by Agent, signed by an
authorized director of each U.K. Loan Party, which in each case shall have
attached to it the documents referred to in such certificate including,
without limitation, the documents for each U.K. Loan Party referred to in
paragraphs 2, 3, 4 and 5 below, all such documents to be in the agreed
form and shall contain a confirmation that no borrowing, guaranteeing or
similar limit binding on each U.K. Loan Party will be exceeded by its
entry into and performance of the Loan Documents, to which it is a party;
2. Constitutional Documents: a copy of the certificate of incorporation, the
certificate of incorporation on change of name, the memorandum and
articles of association of each U.K. Loan Party;
3. Board Resolutions: a copy of the resolutions of the board of directors (or
equivalent) of each U.K. Loan Party:
(a) approving the terms of and transactions contemplated by the Loan
Documents and resolving that it execute the Loan Documents to which
it is a party;
(b) authorizing a specified person or persons to execute the Loan
Documents to which it is a party on its behalf; and
(c) authorizing a specified person or persons on its behalf to sign
and/or dispatch all other documents and notices to be signed and/or
dispatched by it under or in connection with the Loan Documents;
4. Specimen Signatures: a specimen of the signature of each person authorized
by each U.K. Loan Party to sign the Loan Documents to which it is a party;
5. Security Documents: each of the following documents in the agreed form
duly executed and delivered by all parties thereto:
(a) a guarantee and debenture by each U.K. Loan Party;
(b) a share change to Continental Commercial Products, LLC with respect
to 100% of the shares of capital stock of CEH Limited; and
(c) a share change by CEH Limited with respect to 100% of the shares of
capital stock of Contico Europe Limited.
6. Consents/Notices: certified copies of all third party consents that are
required in connection with the creation or registration of any Lien
contained in any Security
Exhibit 8.1 - Page 1
Document and all notices of assignment or charge required to be given
under the terms of the Security Documents (subject to the specific
provisions of the Security Documents).
7. Legal Opinion: a legal opinion of Hunton & ▇▇▇▇▇▇▇▇ as to matters of
English law, in form and substance satisfactory to Agent.
8. Property Searches: official priority searches relating to the properties
charged under the Security Documents, in favor of Fleet U.K. in respect of
any registered or unregistered titles giving a sufficient period of
priority and showing that no adverse entry exists.
9. Deed of Release: Deed of Release executed by each of Continental
Commercial Products LLC and Contico Europe Limited with respect to the
Debenture dated 3 February, 2003 in favor of Fleet National Bank, London
U.K. Branch.
Exhibit 8.1 - Page 2
SCHEDULE A
Mandatory Costs Formulae
1. The Mandatory Cost is an addition to the interest rate to compensate
Lenders for the cost of compliance with (a) the requirements of the Bank
of England and/or the Financial Services Authority (or, in either case,
any other authority which replaces all or any of its functions) or (b) the
requirements of the European Central Bank.
2. On the first day of each Interest Period (or as soon as possible
thereafter), Agent shall calculate, as a percentage rate, a rate (the
"Additional Costs Rate") for each Lender, in accordance with the
paragraphs set out below. The Mandatory Cost will be calculated by Agent
as a weighted average of the Lenders' Additional Costs Rates (weighted in
proportion to the percentage participation of each Lender in the relevant
Loan) and will be expressed as a percentage rate per annum.
3. The Additional Costs Rate for any Lender lending from a facility office in
a Participating Member State (as defined below) will be the percentage
notified by that Lender to Agent. This percentage will be certified by
that Lender in its notice to Agent to be its reasonable determination of
the cost (expressed as a percentage of that Lender's participation in all
advances made from that facility office) of complying with the minimum
reserve requirements of the European Central Bank in respect of loans made
from that facility office.
4. The Additional Costs Rate for any Lender lending from a facility office in
the United Kingdom will be calculated by Agent as follows:
(a) in relation to a Sterling Loan:
AB + C(B-D) + E x 0.01 per cent. per annum
100 - (A+C)
(b) in relation to a Loan in any currency other than Sterling:
E x 0.01 per cent. per annum
300
where:
A is the percentage of Eligible Liabilities (assuming these to be in
excess of any stated minimum) which that Lender is from time to time
required to maintain as an interest free cash ratio deposit with the
Bank of England to comply with cash ratio requirements;
B is the percentage rate of interest (excluding the Applicable Margin
and the Mandatory Cost and, if the Loan is an unpaid sum, the
additional rate of interest specified in subsection 2.1.2 of the
Agreement, payable for the relevant Interest Period on the Loan;
Schedule A - Page 1
C is the percentage (if any) of Eligible Liabilities which that Lender
is required from time to time to maintain as interest bearing
Special Deposits with the Bank of England;
D is the percentage rate per annum payable by the Bank of England to
Agent on interest-bearing Special Deposits; and
E is designed to compensate Lenders for amounts payable under the Fees
Rules and is calculated by Agent as being the average of the most
recent rates of charge supplied by the Reference Banks to Agent
pursuant to paragraph 8 below and expressed in pounds per
(pound)1,000,000.
5. For the purposes of this Schedule:
(a) "Eligible Liabilities" and "Special Deposits" have the meanings
given to them from time to time under or pursuant to the Bank of
England Act 1998 or (as may be appropriate) by the Bank of England;
(b) "Fees Rules" means the rules on periodic fees contained in the FSA
Supervision Manual or such other law or regulation as may be in
force from time to time in respect of the payment of fees for the
acceptance of deposits;
(c) "Fee Tariffs" means the fee tariffs specified in the Fees Rules
under the activity group A.1 Deposit acceptors (ignoring any minimum
fee or zero rated fee required pursuant to the Fees Rules but taking
into account any applicable discount rate); and
(d) "Tariff Base" has the meaning given to it in, and will be calculated
in accordance with, the Fees Rules.
6. In application of the above formulae, A, B, C and D will be included in
the formulae as percentages (i.e., 5 per cent. will be included in the
formula as 5 and not as 0.05). A negative result obtained by subtracting D
from B shall be taken as zero. The resulting figures shall be rounded up
to four decimal places.
7. If requested by Agent, each Reference Bank shall, as soon as practicable
after publication by the Financial Services Authority, supply to Agent,
the rate of charge payable by that Reference Bank to the Financial
Services Authority pursuant to the Fees Rules in respect of the relevant
financial year of the Financial Services Authority (calculated for this
purpose by that Reference Bank as being the average of the Fee Tariffs
applicable to that Reference Bank for that financial year) and expressed
in pounds per (pound)1,000,000 of the Tariff Base of that Reference Bank.
8. Each Lender shall supply any information required by Agent for the purpose
of calculating its Additional Costs Rate. In particular, but without
limitation, each Lender shall supply the following information in writing
on or prior to the date on which it becomes a Lender:
Schedule A - Page 2
(a) its jurisdiction of incorporation and jurisdiction of its facility
office; and
(b) any other information that Agent may reasonably require for such
purpose.
Each Lender shall promptly notify Agent in writing of any change to the
information provided by it pursuant to this paragraph.
9. The percentages of each Lender for the purpose of A and C above, and the
rates of charge of each Reference Bank for the purpose of E above shall be
determined by Agent, based upon the information supplied to it pursuant to
paragraphs 7 and 8 above, and on the assumption that, unless a Lender
notifies Agent to the contrary, each Lender's obligations in relation to
cash ratio deposits and Special Deposits are the same as those of a
typical bank from its jurisdiction of incorporation with a facility office
in the same jurisdiction as its facility office.
10. Agent shall have no liability to any person if such determination results
in an Additional Costs Rate which over- or under-compensates any Lender
and shall be entitled to assume that the information provided by any
Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true
and correct in all respects.
11. Agent shall distribute the additional amounts received as a result of the
Mandatory Costs to the Lenders on the basis of the Additional Costs Rate
for each Lender, based on the information provided by each Lender and each
Reference Bank pursuant to paragraphs 3, 7 and 8 above.
12. Any determination by Agent pursuant to this Schedule in relation to a
formula, the Mandatory Cost, an Additional Costs Rate or any amount
payable to a Lender shall, in the absence of manifest error, be conclusive
and binding on all parties to this Agreement.
13. Agent may from time to time, after consultation (but without their
consent) with the Borrower Representative and the Lenders, determine and
notify to all parties to this Agreement any amendments that are required
to be made to this Schedule in order to comply with any change in law,
regulation or any requirements from time to time imposed by the Bank of
England, the Financial Services Authority or the European Central Bank
(or, in any case, any other authority which replaces all or any of its
functions). Any such determination shall, in the absence of manifest
error, be conclusive and binding on all such parties.
14. For the purposes of this Schedule "Participating Member State" means any
member state of the European Communities that adopts or has adopted the
Euro as its lawful currency in accordance with legislation of the European
Community relating to Economic and Monetary Union.
Schedule A - Page 3
SCHEDULE B
Appraised Values
Delivered - On File with Fleet Capital Corporation
Schedule B - Page 1