1
--------------------------------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of November 2, 1998
among
PARK-OHIO INDUSTRIES, INC.,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as Banks,
KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent,
and
THE HUNTINGTON NATIONAL BANK,
as Co-Agent.
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I. DEFINITIONS ..................................................................1
ARTICLE II. AMOUNT AND TERMS OF CREDIT .................................................12
SECTION 2.1. AMOUNT AND NATURE OF CREDIT .....................................12
SECTION 2.2. CONDITIONS TO LOANS .............................................14
SECTION 2.3. PAYMENT ON NOTES, ETC ...........................................16
SECTION 2.4. PREPAYMENT ......................................................16
SECTION 2.5. COMMITMENT AND OTHER FEES; REDUCTION OF COMMITMENTS .............17
SECTION 2.6. COMPUTATION OF INTEREST AND FEES; DEFAULT
RATE ....................................................17
SECTION 2.7. MANDATORY PAYMENT ...............................................18
SECTION 2.8. EXTENSION OR INCREASE OF COMMITMENT .............................18
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS; INCREASED CAPITAL; TAXES ...18
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC ............................18
SECTION 3.2. TAX LAW, ETC .....................................................19
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST
RATE UNASCERTAINABLE .....................................20
SECTION 3.4. INDEMNITY ........................................................20
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS
UNLAWFUL .................................................20
SECTION 3.6. FUNDING ..........................................................20
SECTION 3.7. CAPITAL ADEQUACY .................................................21
ARTICLE IV. CONDITIONS PRECEDENT .......................................................21
SECTION 4.1. NOTES ............................................................21
SECTION 4.2. GUARANTIES OF PAYMENT OF DEBT ....................................21
SECTION 4.3. OFFICER'S CERTIFICATE ............................................22
SECTION 4.4. LEGAL OPINION ....................................................22
SECTION 4.5. CLOSING, AGENTS', AND LEGAL FEES ................................22
SECTION 4.6. GOOD STANDING CERTIFICATES; LIEN SEARCHES ........................22
SECTION 4.7. NO MATERIAL ADVERSE CHANGE .......................................22
SECTION 4.8. MISCELLANEOUS ....................................................22
i
3
ARTICLE V. COVENANTS ..................................................................22
SECTION 5.1. INSURANCE ........................................................22
SECTION 5.2. MONEY OBLIGATIONS ................................................23
SECTION 5.3. FINANCIAL STATEMENTS .............................................23
SECTION 5.4. FINANCIAL RECORDS ................................................24
SECTION 5.5. FRANCHISES .......................................................24
SECTION 5.6. ERISA COMPLIANCE .................................................24
SECTION 5.7. FINANCIAL COVENANTS ..............................................25
SECTION 5.8. BORROWING ........................................................25
SECTION 5.9. LIENS ............................................................25
SECTION 5.10. REGULATIONS U and X .............................................26
SECTION 5.11. INVESTMENTS AND LOANS ...........................................26
SECTION 5.12. MERGER AND SALE OF ASSETS .......................................27
SECTION 5.13. ACQUISITIONS ....................................................27
SECTION 5.14. NOTICE ..........................................................28
SECTION 5.15. ENVIRONMENTAL COMPLIANCE ........................................28
SECTION 5.16. AFFILIATE TRANSACTIONS ..........................................28
SECTION 5.17. CORPORATE NAMES .................................................29
SECTION 5.18. SUBSIDIARY GUARANTIES ...........................................29
SECTION 5.19. RESTRICTED PAYMENTS .............................................29
ARTICLE VI. REPRESENTATIONS AND WARRANTIES ............................................29
SECTION 6.1. CORPORATE EXISTENCE; SUBSIDIARIES; FOREIGN
QUALIFICATION ...........................................29
SECTION 6.2. CORPORATE AUTHORITY ..............................................30
SECTION 6.3. COMPLIANCE WITH LAWS .............................................30
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS ........................30
SECTION 6.5. TITLE TO ASSETS ..................................................31
SECTION 6.6. LIENS AND SECURITY INTERESTS .....................................31
SECTION 6.7. TAX RETURNS ......................................................31
SECTION 6.8. ENVIRONMENTAL LAWS ...............................................31
SECTION 6.9. EMPLOYEE BENEFITS PLANS ..........................................31
SECTION 6.10. CONSENTS OR APPROVALS ...........................................32
SECTION 6.11. SOLVENCY ........................................................32
SECTION 6.12. FINANCIAL STATEMENTS ............................................32
SECTION 6.13. REGULATIONS .....................................................33
SECTION 6.14. MATERIAL AGREEMENTS .............................................33
SECTION 6.15. INTELLECTUAL PROPERTY ...........................................33
SECTION 6.16. INSURANCE .......................................................33
SECTION 6.17. ACCURATE AND COMPLETE STATEMENTS ................................33
SECTION 6.18. INDENTURE .......................................................33
ii
4
SECTION 6.19. NEW CREDIT FACILITY .............................................34
SECTION 6.20. DEFAULTS ........................................................34
SECTION 6.21. YEAR 2000 COMPLIANCE ............................................34
ARTICLE VII. EVENTS OF DEFAULT ........................................................34
SECTION 7.1. PAYMENTS .........................................................34
SECTION 7.2. SPECIAL COVENANTS ................................................34
SECTION 7.3. OTHER COVENANTS ..................................................34
SECTION 7.4. REPRESENTATIONS AND WARRANTIES ...................................34
SECTION 7.5. CROSS DEFAULT ....................................................35
SECTION 7.6. ERISA DEFAULT ....................................................35
SECTION 7.7. CHANGE IN MANAGEMENT/CONTROL .....................................35
SECTION 7.8. MONEY JUDGMENT ...................................................35
SECTION 7.9. DESIGNATED SENIOR INDEBTEDNESS/ PERMITTED INDEBTEDNESS ..........35
SECTION 7.10. INDENTURE .......................................................35
SECTION 7.11. VALIDITY OF LOAN DOCUMENTS ......................................36
SECTION 7.12. SOLVENCY ........................................................36
ARTICLE VIII. REMEDIES UPON DEFAULT....................................................36
SECTION 8.1. OPTIONAL DEFAULTS.................................................36
SECTION 8.2. AUTOMATIC DEFAULTS................................................37
SECTION 8.3. OFFSETS 37
SECTION 8.4. EQUALIZATION PROVISION............................................37
ARTICLE IX. THE AGENTS.................................................................37
SECTION 9.1. APPOINTMENT AND AUTHORIZATION.....................................38
SECTION 9.2. NOTE HOLDERS......................................................38
SECTION 9.3. CONSULTATION WITH COUNSEL.........................................38
SECTION 9.4. DOCUMENTS.........................................................38
SECTION 9.5. AGENTS AND AFFILIATES.............................................38
SECTION 9.6. KNOWLEDGE OF DEFAULT..............................................38
SECTION 9.7. ACTION BY AGENTS..................................................38
SECTION 9.8. NOTICES, DEFAULT, ETC.............................................39
SECTION 9.9. INDEMNIFICATION OF AGENTS.........................................39
SECTION 9.10. SUCCESSOR AGENT..................................................39
iii
5
ARTICLE X. MISCELLANEOUS...............................................................40
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION.................................40
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES...................................40
SECTION 10.3. AMENDMENTS, CONSENTS.............................................40
SECTION 10.4. NOTICES .........................................................41
SECTION 10.5. COSTS, EXPENSES AND TAXES........................................41
SECTION 10.6. INDEMNIFICATION..................................................41
SECTION 10.7 OBLIGATIONS SEVERAL; NO FIDUCIARY
OBLIGATIONS.........................................41
SECTION 10.8. EXECUTION IN COUNTERPARTS........................................42
SECTION 10.9. BINDING EFFECT; BORROWER'S ASSIGNMENT............................42
SECTION 10.10. ASSIGNMENTS/PARTICIPATIONS......................................42
SECTION 10.11. SEVERABILITY OF PROVISIONS; CAPTIONS;
ATTACHMENTS.........................................44
SECTION 10.12. INVESTMENT PURPOSE..............................................45
SECTION 10.13. ENTIRE AGREEMENT................................................45
SECTION 10.14. GOVERNING LAW; SUBMISSION TO JURISDICTION.......................45
SECTION 10.15. JURY TRIAL WAIVER...............................................46
SCHEDULE 1 .............................................................................47
SCHEDULE 2 GUARANTORS OF PAYMENT........................................................48
EXHIBIT A TRANCHE A NOTE...............................................................49
EXHIBIT B TRANCHE B NOTE...............................................................51
EXHIBIT C TRANCHE C NOTE...............................................................53
EXHIBIT D FORM OF COMPLIANCE CERTIFICATE ..............................................56
EXHIBIT E FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT.................................57
ANNEX 1 TO ASSIGNMENT AND ACCEPTANCE AGREEMENT.........................................61
iv
6
This AMENDED AND RESTATED CREDIT AGREEMENT (as it may from time to time
be amended, restated or otherwise modified, this "Agreement") is made effective
as of the 2nd day of November, 1998, among PARK-OHIO INDUSTRIES, INC., an Ohio
corporation, 00000 Xxxxxx Xxxxxx, Xxxxxx, Xxxx 00000 ("Borrower"), the banking
institutions named in SCHEDULE 1 attached hereto and made a part hereof
(collectively, "Banks", and individually, "Bank"), KEYBANK NATIONAL ASSOCIATION,
000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000, as administrative agent for the
Banks under this Agreement ("Administrative Agent"), and THE HUNTINGTON NATIONAL
BANK, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, as co-agent for the Banks under
this Agreement ("Co-Agent", and, together with Administrative Agent, "Agents").
WITNESSETH:
WHEREAS, Borrower, Agents and the Banks are parties to a Credit
Agreement dated as of January 14, 1998 (the "Original Credit Agreement");
WHEREAS, Borrower, Agents and the Banks desire to amend and restate the
Original Credit Agreement to contract for the establishment of credits in the
aggregate principal amounts hereinafter set forth, to be made available to
Borrower upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Acquisition" shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of any Person, or any
business or division of any Person, (b) the acquisition of more than fifty
percent (50%) of the stock (or other equity interest) of any Person, or (c) the
acquisition of another Person (other than a Company) by a merger or
consolidation or any other combination with such Person.
"Adjusted Prime Rate" shall mean a rate per annum equal to the greater
of (a) the Prime Rate or (b) one and one-half percent (1-2%) in excess of the
Federal Funds Effective Rate. Any change in the Adjusted Prime Rate shall be
effective immediately from and after such change in the Adjusted Prime Rate.
"Administrative Agent Fee Letter" shall mean the Administrative Agent
Fee Letter from Borrower to Administrative Agent, dated as of the Closing Date.
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Bank in respect of the Debt, if such payment results in that
Bank having less than its pro rata share of the Debt then outstanding, than was
the case immediately before such payment.
1
7
"Affiliate" shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and "control" (including
the correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Company,
whether through the ownership of voting securities, by contract or otherwise.
"Applicable Margin" shall mean, with respect to any Loan, the number of
basis points (depending upon whether such Loan is a Prime Rate Loan or a LIBOR
Loan) set forth in the following matrix:
--------------------------------------------------------------------------------------------------------------------
APPLICABLE BASIS APPLICABLE BASIS
TYPE OF LOAN POINTS FOR LIBOR POINTS FOR PRIME
LOANS RATE LOANS
--------------------------------------------------------------------------------------------------------------------
Tranche A Loan 90 basis points -100 basis points
--------------------------------------------------------------------------------------------------------------------
Tranche B Loan 150 basis points -50 basis points
--------------------------------------------------------------------------------------------------------------------
Tranche C Loan 170 basis points -30 basis points
--------------------------------------------------------------------------------------------------------------------
The above matrix does not modify or waive, in any respect, the requirements of
Section 5.7 hereof, the rights of the Banks to charge the Default Rate, or the
rights and remedies of Agent and the Banks pursuant to Articles VII and VIII
hereof.
"Assignment Agreement" shall mean an Assignment and Acceptance
Agreement in the form of EXHIBIT E hereto.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to close in Cleveland, Ohio, and, if the applicable
Business Day relates to any LIBOR Loan, on which dealings are carried on in the
London interbank eurodollar market.
"Change in Control" shall mean (a) the acquisition by any Person or
group (other than Xxxxxx X. Xxxxxxxx and his immediate family) of beneficial
ownership (within the meaning of Rule 13d-3 of the SEC under the Securities
Exchange Act of 1934, as then in effect) of thirty-three percent (33%) or more
of the outstanding shares of voting stock of (i) Borrower (except that Parent
may acquire one hundred percent (100%) of the voting stock of Borrower) or (ii)
Parent, if Parent shall have been created, or (b) a "Change of Control", as
defined in the Indenture, shall have occurred.
"Closing Date" shall mean the effective date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
together with the rules and regulations promulgated thereunder.
2
8
"Commitment" shall mean the obligation hereunder of the Banks to make
Loans pursuant to the Tranche A Commitments, the Tranche B Commitments and the
Tranche C Commitments up to the Total Commitment Amount during the Commitment
Period.
"Commitment Percentage" shall mean, for each Bank, the percentage set
forth opposite such Bank's name under the column headed "Commitment Percentage"
as described in SCHEDULE 1 hereof.
"Commitment Period" shall mean the period from the Closing Date to
April 30, 2001, or such earlier date on which the Commitment shall have been
terminated pursuant to Article VIII hereof.
"Company" shall mean Borrower, Parent or a Subsidiary of Borrower.
"Companies" shall mean Borrower, Parent and all Subsidiaries of
Borrower.
"Compliance Certificate" shall mean a certificate in the form of
EXHIBIT D hereto.
"Computer System" shall mean a computer system and all related
peripherals, including, but not limited to, hardware, software, devices and
systems.
"Consideration" shall mean, in connection with an Acquisition, the
aggregate consideration paid, including borrowed funds, cash, the issuance of
securities or notes, the assumption or incurring of liabilities (direct or
contingent), the payment of consulting fees or fees for a covenant not to
compete and any other consideration paid for the purchase.
"Consolidated" shall mean the resultant consolidation of the financial
statements of Borrower and its Subsidiaries in accordance with GAAP, including
principles of consolidation consistent with those applied in preparation of the
consolidated financial statements referred to in Section 6.13 hereof.
"Consolidated Depreciation and Amortization Charges" shall mean, for
any period, the Depreciation and Amortization Charges of Borrower for such
period, as determined on a Consolidated basis and in accordance with GAAP.
"Consolidated EBIT" shall mean, for any period, on a Consolidated basis
and in accordance with GAAP, Consolidated Net Earnings for such period plus the
aggregate amounts deducted in determining such Consolidated Net Earnings in
respect of (a) income taxes, and (b) Consolidated Interest Expense; provided,
however, that all charges recorded for costs that are properly classified as
non-recurring in accordance with GAAP shall be excluded from Consolidated Net
Earnings.
"Consolidated EBITDA" shall mean, for any period, (a) Consolidated
EBIT, plus (b) Consolidated Depreciation and Amortization Charges.
3
9
"Consolidated Interest Expense" shall mean, for any period,
Consolidated interest expense of Borrower and its Subsidiaries for such period,
determined in accordance with GAAP.
"Consolidated Net Earnings" shall mean the net earnings (losses) of
Borrower, after taxes and after extraordinary items, determined on a
Consolidated basis and in accordance with GAAP.
"Consolidated Net Worth" shall mean, at any date, the Consolidated
shareholders' equity of Borrower and its Subsidiaries, determined as of such
date in accordance with GAAP.
"Consolidated Pro-Forma EBITDA" shall mean the sum of (a) Consolidated
EBITDA, plus (b)(i) without duplication, the EBITDA of Companies acquired by
Borrower and its Subsidiaries during the most recently completed four (4) fiscal
quarters to the extent that such EBITDA of Companies acquired is confirmed by
audited financial or other information satisfactory to Agents, minus (ii) EBITDA
of Companies disposed of by Borrower and its Subsidiaries during the most
recently completed four (4) fiscal quarters.
"Controlled Group" shall mean a Company and each Person required to be
aggregated with a Company under Code Sections 414(b), (c), (m) or (o).
"Debt" shall mean, collectively, (a) all Indebtedness incurred by
Borrower to Agents or the Banks pursuant to this Agreement and includes the
principal of and interest on all Notes; (b) each extension, renewal or
refinancing thereof in whole or in part; and (c) the commitment fees, other fees
and any prepayment fees payable hereunder.
"Default Rate" shall mean a rate per annum that shall be two percent
(2%) in excess of the Adjusted Prime Rate from time to time in effect.
"Depreciation and Amortization Charges" shall mean, for any period, in
accordance with GAAP, the aggregate of all such charges for fixed assets,
leasehold improvements and general intangibles (specifically including goodwill)
of a Person for such period.
"Derived LIBOR Rate" shall mean, with respect to any Loan, a rate per
annum equal to the sum of the Applicable Margin applicable to such Loan plus the
LIBOR Rate.
"Derived Prime Rate" shall mean, with respect to any Loan, a rate per
annum equal to the sum of the Applicable Margin applicable to such Loan plus the
Adjusted Prime Rate.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America or by any state or municipality thereof or by
any court, agency, instrumentality, regulatory authority or commission of any of
the foregoing concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
4
10
"EBITDA" shall mean, for any period, in accordance with GAAP, net
earnings for such period plus the aggregate amounts deducted in determining such
net earnings in respect of (a) income taxes, (b) interest expense, and (c)
Depreciation and Amortization Charges.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated pursuant thereto.
"ERISA Event" shall mean: (a) the existence of any condition or event
with respect to an ERISA Plan which presents a risk of the imposition of an
excise tax or any other liability on a Company or of the imposition of a Lien on
the assets of a Company, (b) a Controlled Group member has engaged in a
non-exempt "prohibited transaction" (as defined under ERISA Section 406 or Code
Section 4975) or a breach of a fiduciary duty under ERISA which could result in
liability to a Company, (c) a Controlled Group member has applied for a waiver
from the minimum funding requirements of Code Section 412 or ERISA Section 302
or a Controlled Group member is required to provide security under Code Section
401(a)(29) or XXXXX Xxxxxxx 000, (x) a Reportable Event has occurred with
respect to any Pension Plan as to which notice is required to be provided to the
PBGC, (e) a Controlled Group member has withdrawn from a Multiemployer Plan in a
"complete withdrawal" or a "partial withdrawal" (as such terms are defined in
ERISA Sections 4203 and 4205, respectively), (f) a Multiemployer Plan is in or
is likely to be in reorganization under ERISA Section 4241, (g) an ERISA Plan
(and any related trust) which is intended to be qualified under Code Sections
401 and 501 fails to be so qualified or any "cash or deferred arrangement" under
any such ERISA Plan fails to meet the requirements of Code Section 401(k), (h)
the PBGC takes any steps to terminate a Pension Plan or appoint a trustee to
administer a Pension Plan, or a Controlled Group member takes steps to terminate
a Pension Plan, (i) a Controlled Group member or an ERISA Plan fails to satisfy
any requirements of law applicable to an ERISA Plan, (j) a claim, action, suit,
audit or investigation is pending or threatened with respect to an ERISA Plan,
other than a routine claim for benefits, or (k) a Controlled Group member incurs
or is expected to incur any liability for post-retirement benefits under any
Welfare Plan, other than as required by ERISA Section 601, ET. SEQ. or Code
Section 4980B.
"ERISA Plan" shall mean an "employee benefit plan" (within the meaning
of ERISA Section 3(3)) that a Controlled Group member at any time sponsors,
maintains, contributes to, has liability with respect to or has an obligation to
contribute to such plan.
"Eurocurrency Reserve Percentage" shall mean, for any Interest Period
in respect of any LIBOR Loan, as of any date of determination, the aggregate of
the then stated maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves), expressed as a decimal, applicable to such
Interest Period (if more than one such percentage is applicable, the daily
average of such percentages for those days in such Interest Period during which
any such percentage shall be so applicable) by the Board of Governors of the
Federal Reserve System, any successor thereto, or any other banking authority,
domestic or foreign, to which a Bank may be subject in respect to eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Federal Reserve Board) or in respect of any other category of liabilities
including deposits by reference to which the interest rate on LIBOR Loans is
determined or any category of extension
5
11
of credit or other assets that include the LIBOR Loans. For purposes hereof,
such reserve requirements shall include, without limitation, those imposed under
Regulation D of the Federal Reserve Board, and the LIBOR Loans shall be deemed
to constitute Eurocurrency Liabilities subject to such reserve requirements,
without benefit of credits for proration, exceptions or offsets which may be
available from time to time to any Bank under said Regulation D.
"Event of Default" shall mean an event or condition that constitutes an
event of default as defined in Article VII hereof.
"Federal Funds Effective Rate" shall mean, for any day, the rate per
annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of
1%)) announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers as the "Federal Funds Effective Rate"
as of the Closing Date.
"Financial Officer" shall mean any of the following officers: chief
executive officer, president, chief financial officer or controller.
"Funded Indebtedness" shall mean, for any period, all Indebtedness that
is funded, including, but not limited to, current, long-term and Subordinated
Indebtedness; provided, however, that (a) reimbursement obligations (contingent
or otherwise) under any letter of credit, banker's acceptance, interest rate
swap, cap, collar or floor agreement or other interest rate management device
shall not be deemed to be "funded" so long as such obligation remains solely a
contingent obligation, and (b) any guaranty shall be deemed to be "funded" but
shall be measured without duplication to Indebtedness otherwise included as
"funded".
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States from time to time, which shall include the official
interpretations thereof by the Financial Accounting Standards Board, applied on
a basis consistent with the past accounting practices and procedures of
Borrower; provided that, with respect to changes in generally accepted
accounting principles that become effective following the Closing Date with
respect to non-cash items, such changes shall not be given effect if Borrower,
Agents and the Majority Banks agree not to give effect to such changes for the
purpose of evaluating the Companies' financial condition or performance under
this Agreement.
"Guarantor" shall mean a Person that pledges its credit or property in
any manner for the payment or other performance of the indebtedness, contract or
other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or a Person
that agrees conditionally or otherwise to make any purchase, loan or investment
in order thereby to enable another to prevent or correct a default of any kind.
"Guarantor of Payment" shall mean any one of the Companies listed on
SCHEDULE 2 attached hereto, which Companies are each executing and delivering a
Guaranty of Payment, or any other
6
12
Person that shall execute and deliver a Guaranty of Payment to Administrative
Agent, for the benefit of the Banks, subsequent to the Closing Date.
"Guaranty of Payment" shall mean each of the guaranties of payment of
the Debt executed and delivered on or after the Closing Date in connection
herewith by the Guarantors of Payment, as the same may be from time to time
amended, restated or otherwise modified.
"Indebtedness" shall mean, for any Company (excluding in all cases
trade payables payable in the ordinary course of business, and any guaranties
thereof by such Company), (a) all obligations to repay borrowed money, direct or
indirect, incurred, assumed, or guaranteed, (b) all obligations for the deferred
purchase price of capital assets, (c) all obligations under conditional sales or
other title retention agreements, (d) all lease obligations which have been or
should be capitalized on the books of such Company in accordance with GAAP, (e)
all reimbursement obligations (contingent or otherwise) under any letter of
credit, banker's acceptance, currency swap agreement, interest rate swap, cap,
collar or floor agreement or other interest rate management device, (f) all
synthetic leases, and (g) any other transaction (including forward sale or
purchase agreements or agreements for the sale of receivables on a full recourse
basis) having the commercial effect of a borrowing of money entered into by such
Company to finance its operations or capital requirements.
"Indenture" shall mean that certain Indenture dated as of November 25,
1997, between Borrower and Norwest Bank Minnesota, National Association, as
trustee, pursuant to which the Senior Subordinated Notes were issued to the
Senior Subordinated Noteholders, as the same may be from time to time amended,
restated or otherwise modified.
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is made and ending on the last day
of such period, as selected by Borrower pursuant to the provisions hereof and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of such period, as selected
by Borrower pursuant to the provisions hereof. The duration of each Interest
Period for any LIBOR Loan shall be one (1) month, two (2) months, three (3)
months or six (6) months, in each case as Borrower may select upon notice, as
set forth in Section 2.2 hereof, provided that: (a) if Borrower fails to so
select the duration of any Interest Period, Borrower shall be deemed to have
converted such LIBOR Loan to a Prime Rate Loan at the end of the then current
Interest Period; and (b) Borrower may not select any Interest Period for a LIBOR
Loan that ends after any date when principal is due on such LIBOR Loan.
"Leverage Ratio" shall mean, at any time, on a Consolidated basis and
in accordance with GAAP, the ratio for Borrower of (a) Total Funded Indebtedness
(based upon the financial statements of Borrower for the most recently completed
fiscal quarter), to (b) Consolidated Pro-Forma EBITDA (based upon the financial
statements of Borrower for the most recently completed four (4) fiscal
quarters).
7
13
"Leverage Ratio Condition" shall mean any time during which the
aggregate principal amount of Loans outstanding hereunder are, or are projected
to be, based upon any proposed Acquisition, in excess of One Hundred Million
Dollars ($100,000,000).
"LIBOR Loan" shall mean a Loan described in Section 2.1 hereof on which
Borrower shall pay interest at a rate based on the LIBOR Rate.
"LIBOR Rate" shall mean, for any Interest Period with respect to a
LIBOR Loan, the quotient (rounded upwards, if necessary, to the nearest one
sixteenth of one percent (1/16th of 1%) of: (a) the per annum rate of interest,
determined by Administrative Agent in accordance with its usual procedures
(which determination shall be conclusive absent manifest error) as of
approximately 11:00 A.M. (London time) two (2) Business Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, as provided by
Telerate Service, Bloomberg's or Reuters (or any other similar company or
service that provides rate quotations comparable to those currently provided by
such companies) as the rate in the London interbank market for dollar deposits
in immediately available funds with a maturity comparable to such Interest
Period, DIVIDED BY (b) a number equal to 1.00 MINUS the Eurocurrency Reserve
Percentage applicable to Administrative Agent. In the event that such rate
quotation is not available for any reason, then the rate (for purposes of clause
(a) hereof) shall be the rate, determined by Administrative Agent as of
approximately 11:00 A.M. (London time) two (2) Business Days prior to the
beginning of such Interest Period pertaining to such LIBOR Loan, to be the
average (rounded upwards, if necessary, to the nearest one sixteenth of one
percent (1/16th of 1%)) of the per annum rates at which dollar deposits in
immediately available funds in an amount comparable to such LIBOR Loan and with
a maturity comparable to such Interest Period are offered to the prime banks by
leading banks in the London interbank market. The LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Percentage.
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance on, pledge or deposit of, or conditional sale or other title
retention agreement with respect to any property (real or personal) or asset.
"Loan" or "Loans" shall mean the credit extended to Borrower by the
Banks in accordance with Section 2.1A, B or C hereof.
"Loan Documents" shall mean this Agreement, each of the Notes, each of
the Guaranties of Payment, the Administrative Agent Fee Letter and any other
documents relating to any of the foregoing, as any of the foregoing may from
time to time be amended, restated or otherwise modified or replaced.
"Majority Banks" shall mean the holders of at least sixty-six and
two-thirds percent (66-2/3%) of the Total Commitment Amount, or, if there is any
borrowing hereunder, the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the aggregate amount outstanding under the Notes.
8
14
"Maximum Amount" shall mean, for each Bank, the amount set forth
opposite such Bank's name under the column headed "Maximum Amount" as listed on
SCHEDULE 1 hereto.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
"Note" shall mean any Tranche A Note, Tranche B Note, Tranche C Note,
or other note delivered pursuant to this Agreement.
"Obligor" shall mean (a) a Person whose credit or any of whose property
is pledged to the payment of the Debt and includes, without limitation, any
Guarantor, and (b) any signatory to a Related Writing.
"Parent" shall mean Park-Ohio Holdings Corp., an Ohio corporation,
together with its successors and assigns.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean an ERISA Plan that is a "pension plan"
(within the meaning of ERISA Section 3(2)).
"Permitted Parent Loans" shall mean loans to Parent from Borrower or a
Subsidiary of Borrower for any of the following purposes: (a) franchise taxes
and other fees required to maintain Parent's corporate existence, (b) costs
associated with preparation of required documents for filing with the SEC and
with any exchange on which Parent's securities are traded, (c) federal, state,
foreign and local taxes to the extent that such taxes are attributable to the
ownership of Borrower and its Subsidiaries, (d) payments, directly or
indirectly, to employees to repurchase capital stock of Parent upon the death,
disability or termination of employment of such employees, in amounts not to
exceed the aggregate, for all such payments pursuant to this subpart (d), of One
Million Five Hundred Thousand Dollars ($1,500,000) per year, and (e) loans (in
addition to the loans permitted by subparts (a) through (d) hereof) made by
Borrower or any Subsidiary of Borrower to Parent which shall not exceed the
aggregate amount, for all such loans by Borrower and its Subsidiaries, of Two
Million Dollars ($2,000,000) at any time outstanding.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
"Prime Rate" shall mean the interest rate established from time to time
by Administrative Agent as Administrative Agent's prime rate, whether or not
such rate is publicly announced; the Prime Rate may not be the lowest interest
rate charged by Administrative Agent for commercial or other extensions of
credit. Each change in the Prime Rate shall be effective immediately from and
after such change.
9
15
"Prime Rate Loan" shall mean a Loan described in Section 2.1 hereof on
which Borrower shall pay interest at a rate based on the Adjusted Prime Rate.
"Projected Leverage Ratio" shall mean, with respect to any proposed
Acquisition, the ratio of (a) Funded Indebtedness as projected to exist on the
date of consummation of such Acquisition to (b) Consolidated Proforma EBITDA,
taking into account the EBITDA of the Person to be acquired (or portion thereof
attributable to the Person to be acquired), as calculated for the four (4) most
recently completed fiscal quarters.
"Related Writing" shall mean the Loan Documents and any assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by a Company or any
Obligor, or any of their respective officers, to Agents or the Banks pursuant to
or otherwise in connection with this Agreement.
"Reportable Event" shall mean a reportable event as that term is
defined in Title IV of ERISA, except actions of general applicability by the
Secretary of Labor under Section 110 of such Act.
"Restricted Payment" shall mean, with respect to any Company, (a) any
amount paid in redemption (including any mandatory redemption or optional
redemption), retirement, repurchase, direct or indirect, of (i) any shares of
any class of capital stock or other equity interests of such Company, or (ii)
the Senior Subordinated Notes or any other Subordinated Indebtedness; or (b) the
exercise by such Company of any right of defeasance or covenant defeasance or
similar right with respect to the Senior Subordinated Notes or any other
Subordinated Indebtedness.
"SEC" shall mean the United States Securities and Exchange Commission,
or any governmental body or agency succeeding to any of its principal functions.
"Senior Subordinated Noteholder" shall mean any one of the Senior
Subordinated Noteholders under the Indenture.
"Senior Subordinated Notes" shall mean the Senior Subordinated Notes
issued pursuant to the Indenture.
"Sister Company" shall mean a Person which is a Subsidiary of Parent
but which is not a Subsidiary of Borrower.
"Subordinated", as applied to Indebtedness, shall mean that the
Indebtedness has been subordinated (by written terms or written agreement being,
in either case, in form and substance satisfactory to the Banks) in favor of the
prior payment in full of the Debt.
"Subsidiary" of a Person shall mean (a) a corporation more than fifty
percent (50%) of the voting power or capital stock of which is owned, directly
or indirectly, by such Person or by one or more other Subsidiaries of such
Person or by such Person and one or more Subsidiaries of such
10
16
Person, (b) a partnership or limited liability company of which such Person, one
or more other Subsidiaries of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, is a general partner or
managing member, as the case may be, or otherwise has the power to direct the
policies, management and affairs thereof, or (c) any other Person (other than a
corporation) in which such Person or one or more other Subsidiaries of such
Person, directly or indirectly, has at least a majority ownership interest or
the power to direct the policies, management and affairs thereof.
"Total Capitalization" shall mean, at any time, on a Consolidated basis
and in accordance with GAAP, the sum of Borrower's (a) Consolidated Net Worth,
plus (b) Total Senior Funded Indebtedness, plus (c) the outstanding principal on
the Senior Subordinated Notes.
"Total Commitment Amount" shall mean the principal amount of One
Hundred Fifty Million Dollars ($150,000,000) (or such lesser amount as shall be
determined pursuant to Section 2.5 hereof).
"Total Funded Indebtedness" shall mean, on a Consolidated basis and in
accordance with GAAP, all Funded Indebtedness of Borrower.
"Total Senior Funded Indebtedness" shall mean Total Funded Indebtedness
of [Borrower and its Subsidiaries] except Subordinated Indebtedness.
"Tranche A Commitment" shall mean the obligation hereunder of each Bank
to participate in the making of Tranche A Loans, during the Commitment Period,
up to the aggregate amount set forth opposite such Bank's name under the column
headed "Tranche A Commitment Amount" as set forth on SCHEDULE 1 hereof (or such
lesser amount as shall be determined pursuant to Section 2.5 hereof); provided
that the aggregate amount of the Tranche A Commitments for all Banks shall not
exceed One Hundred Million Dollars ($100,000,000).
"Tranche A Loan" shall mean a Loan granted to Borrower by the Banks in
accordance with Section 2.1A hereof.
"Tranche A Note" shall mean any Tranche A Note executed and delivered
pursuant to Section 2.1A hereof.
"Tranche B Commitment" shall mean the obligation hereunder of each Bank
to participate in the making of Tranche B Loans, during the Commitment Period,
up to the aggregate amount set forth opposite such Bank's name under the column
headed "Tranche B Commitment Amount" as set forth on SCHEDULE 1 hereof (or such
lesser amount as shall be determined pursuant to Section 2.5 hereof); provided
that the aggregate amount of the Tranche B Commitments for all Banks shall not
exceed Twenty-Five Million Dollars ($25,000,000).
"Tranche B Loan" shall mean a Loan granted to Borrower by the Banks in
accordance with Section 2.1B hereof.
11
17
"Tranche B Note" shall mean any Tranche B Note executed and delivered
pursuant to Section 2.1B hereof.
"Tranche C Commitment" shall mean the obligation hereunder of each Bank
to participate in the making of Tranche C Loans, during the Commitment Period,
up to the aggregate amount set forth opposite such Bank's name under the column
headed "Tranche C Commitment Amount" as set forth on SCHEDULE 1 hereof (or such
lesser amount as shall be determined pursuant to Section 2.5 hereof); provided
that the aggregate amount of the Tranche C Commitments for all Banks shall not
exceed Twenty-Five Million Dollars ($25,000,000).
"Tranche C Loan" shall mean a Loan granted to Borrower by the Banks in
accordance with Section 2.1C hereof.
"Tranche C Note" shall mean any Tranche C Note executed and delivered
pursuant to Section 2.1C hereof.
"Unmatured Event of Default" shall mean an event or condition that
constitutes, or which with the lapse of any applicable grace period or the
giving of notice or both would constitute, an Event of Default and that has not
been waived by the Majority Banks in writing.
"Voting Power" shall mean, with respect to any Person, the exclusive
ability to control, through the ownership of shares of capital stock,
partnership interests, membership interests or otherwise, the election of
members of the board of directors or other similar governing body of such
Person, and the holding of a designated percentage of Voting Power of a Person
means the ownership of shares of capital stock, partnership interests,
membership interests or other interests of such Person sufficient to control
exclusively the election of that percentage of the members of the board of
directors or similar governing body of such Person.
"Welfare Plan" shall mean an ERISA Plan that is a "welfare plan" within
the meaning of ERISA Section 3 (l).
"Wholly-Owned Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity all of the securities or
other ownership interest, of which having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Year 2000 Compliant" shall mean that a Computer System will operate
accurately, without interruption and with no negative change in performance due
to the change of the millennium.
Any accounting term not specifically defined in this Article I shall
have the meaning ascribed thereto by GAAP.
The foregoing definitions shall be applicable to the singular and
plurals of the foregoing defined terms.
12
18
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
conditions of this Agreement, each Bank will participate to the extent
hereinafter provided in making Loans to Borrower, in such aggregate amount as
Borrower shall request pursuant to the Commitment; provided, however, that in no
event shall the aggregate principal amount of all Loans outstanding under this
Agreement be in excess of the Total Commitment Amount.
Each Bank, for itself and not one for any other, agrees to participate
in Loans made hereunder during the Commitment Period on such basis that (a)
immediately after the completion of any borrowing by Borrower the aggregate
principal amount then outstanding on the Notes issued to such Bank, shall not be
in excess of the Maximum Amount for such Bank, and (b) such aggregate principal
amount outstanding on the Notes issued to such Bank shall represent that
percentage of the aggregate principal amount then outstanding on all Notes
(including the Notes held by such Bank) that is such Bank's Commitment
Percentage.
Each borrowing from the Banks hereunder shall be made pro rata
according to the Banks' respective Commitment Percentages. The Loans may be made
as Tranche A Loans, Tranche B Loans and Tranche C Loans as follows:
A. Tranche A Loans. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Banks shall make a Tranche A Loan
or Tranche A Loans to Borrower in such amount or amounts as Borrower may from
time to time request, but not exceeding in aggregate principal amount at any
time outstanding hereunder the aggregate amount of the Tranche A Commitments.
Borrower shall have the option, subject to the terms and conditions set forth
herein, to borrow Tranche A Loans, maturing on the last day of the Commitment
Period, by means of any combination of (a) Prime Rate Loans, or (b) LIBOR Loans.
Borrower shall pay interest on the unpaid principal amount of Prime
Rate Loans outstanding from time to time from the date thereof until paid at the
Derived Prime Rate from time to time in effect. Interest on such Prime Rate
Loans shall be payable, commencing December 31, 1998, and on the last day of
each succeeding March, June, September and December of each year and at the
maturity thereof.
Borrower shall pay interest on the unpaid principal amount of each
LIBOR Loan outstanding from time to time, from the date thereof until paid, at
the Derived LIBOR Rate, fixed in advance for each Interest Period as herein
provided for each such Interest Period. Interest on such LIBOR Loans shall be
payable on each Interest Adjustment Date with respect to an Interest Period
(provided that if an Interest Period exceeds three (3) months, the interest must
be paid every three (3) months, commencing three (3) months from the beginning
of such Interest Period).
13
19
The obligation of Borrower to repay the Prime Rate Loans and the LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Tranche A Note of Borrower in the form of EXHIBIT A hereto, dated the Closing
Date, and payable to the order of such Bank in the principal amount of its
Tranche A Commitment, or, if less, the aggregate unpaid principal amount of
Tranche A Loans made hereunder by such Bank. Subject to the provisions of this
Agreement, Borrower shall be entitled under this Section 2.1A to borrow funds,
repay the same in whole or in part and re-borrow hereunder at any time and from
time to time during the Commitment Period.
B. Tranche B Loans. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Banks shall make a Tranche B Loan
or Tranche B Loans to Borrower in such amount or amounts as Borrower may from
time to time request, but not exceeding in aggregate principal amount at any
time outstanding hereunder the aggregate amount of the Tranche B Commitments;
provided, however, that Borrower shall not request any Tranche B Loan hereunder
unless the Tranche A Commitments have been fully funded. Borrower shall have the
option, subject to the terms and conditions set forth herein, to borrow Tranche
B Loans, maturing on the last day of the Commitment Period, by means of any
combination of (a) Prime Rate Loans, or (b) LIBOR Loans.
Borrower shall pay interest on the unpaid principal amount of Prime
Rate Loans outstanding from time to time from the date thereof until paid at the
Derived Prime Rate from time to time in effect. Interest on such Prime Rate
Loans shall be payable, commencing December 31, 1998, and on the last day of
each succeeding March, June, September and December of each year and at the
maturity thereof.
Borrower shall pay interest on the unpaid principal amount of each
LIBOR Loan outstanding from time to time, from the date thereof until paid, at
the Derived LIBOR Rate, fixed in advance for each Interest Period as herein
provided for each such Interest Period. Interest on such LIBOR Loans shall be
payable on each Interest Adjustment Date with respect to an Interest Period
(provided that if an Interest Period exceeds three (3) months, the interest must
be paid every three (3) months, commencing three (3) months from the beginning
of such Interest Period).
The obligation of Borrower to repay the Prime Rate Loans and the LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Tranche B Note of Borrower in the form of EXHIBIT B hereto, dated the Closing
Date, and payable to the order of such Bank in the principal amount of its
Tranche B Commitment, or, if less, the aggregate unpaid principal amount of
Tranche B Loans made hereunder by such Bank. Subject to the provisions of this
Agreement, Borrower shall be entitled under this Section 2.1B to borrow funds,
repay the same in whole or in part and re-borrow hereunder at any time and from
time to time during the Commitment Period.
C. Tranche C Loans. Subject to the terms and conditions of this
Agreement, during the Commitment Period, the Banks shall make a Tranche C Loan
or Tranche C Loans to Borrower in such amount or amounts as Borrower may from
time to time request, but not exceeding in aggregate principal amount at any
time outstanding hereunder the aggregate amount of the Tranche C Commitments;
provided, however, that Borrower shall not request any Tranche C Loan hereunder
14
20
unless the Tranche A Commitments and Tranche B Commitments have been fully
funded. Borrower shall have the option, subject to the terms and conditions set
forth herein, to borrow Tranche C Loans, maturing on the last day of the
Commitment Period, by means of any combination of (a) Prime Rate Loans, or (b)
LIBOR Loans.
Borrower shall pay interest on the unpaid principal amount of Prime
Rate Loans outstanding from time to time from the date thereof until paid at the
Derived Prime Rate from time to time in effect. Interest on such Prime Rate
Loans shall be payable, commencing December 31, 1998, and on the last day of
each succeeding March, June, September and December of each year and at the
maturity thereof.
Borrower shall pay interest on the unpaid principal amount of each
LIBOR Loan outstanding from time to time, from the date thereof until paid, at
the Derived LIBOR Rate, fixed in advance for each Interest Period as herein
provided for each such Interest Period. Interest on such LIBOR Loans shall be
payable on each Interest Adjustment Date with respect to an Interest Period
(provided that if an Interest Period exceeds three (3) months, the interest must
be paid every three (3) months, commencing three (3) months from the beginning
of such Interest Period).
The obligation of Borrower to repay the Prime Rate Loans and the LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Tranche C Note of Borrower in the form of EXHIBIT C hereto, dated the Closing
Date, and payable to the order of such Bank in the principal amount of its
Tranche C Commitment, or, if less, the aggregate unpaid principal amount of
Tranche C Loans made hereunder by such Bank. Subject to the provisions of this
Agreement, Borrower shall be entitled under this Section 2.1C to borrow funds,
repay the same in whole or in part and re-borrow hereunder at any time and from
time to time during the Commitment Period.
SECTION 2.2. CONDITIONS TO LOANS. The obligation of the Banks to make,
convert or continue any Loan hereunder is conditioned, in the case of each
borrowing, conversion or continuation hereunder, upon:
(a) all conditions precedent as listed in Article IV hereof shall have
been satisfied;
(b) receipt by Administrative Agent of a notice of a request for a
Loan, such notice (i) to contain the proposed date and aggregate amount of the
requested borrowing and initial Interest Period, if applicable, and (ii) to be
received by 1:00 P.M. (Cleveland, Ohio time) on the proposed date of borrowing
with respect to Prime Rate Loans and, with respect to LIBOR Loans, by 1:00 P.M.
(Cleveland, Ohio time) three (3) Business Days prior to the proposed date of
borrowing, conversion or continuation. Such notice shall be given by a Financial
Officer of Borrower, except that, with respect to a notice requesting Loans in
an aggregate amount of less than Five Million Dollars ($5,000,000), such request
may be made by Xxxxx Xxxxxxxxx, or such other agent of Borrower who may be
authorized by Borrower in a writing delivered to Administrative Agent.
Administrative Agent shall notify each Bank of the date, amount and initial
interest period (if applicable) promptly upon the receipt of such notice, and,
in any event, by 3:00 P.M. (Cleveland, Ohio time) on the date such notice is
received. On the date such Loan is to be made, each Bank shall provide
15
21
Administrative Agent, not later than 4:00 P.M. (Cleveland, Ohio time), with the
amount in federal or other immediately available funds, required of it;
(c) Borrower's request for a Prime Rate Loan shall be in an amount of
not less than Five Hundred Thousand Dollars ($500,000), increased by increments
of One Hundred Thousand Dollars ($100,000), and Borrower's request for a LIBOR
Loan shall be in an amount of not less than One Million Dollars ($1,000,000),
increased by increments of Two Hundred Fifty Thousand Dollars ($250,000);
(d) the fact that no Unmatured Event of Default or Event of Default
shall then exist or immediately after the making, conversion or continuation of
the Loan would exist; and
(e) the fact that each of the representations and warranties contained
in Article VI hereof shall be true and correct with the same force and effect as
if made on and as of the date of the making, conversion or continuation of such
Loan, except to the extent that any thereof expressly relate to an earlier date.
At the request of Borrower, subject to the notice and other provisions
of this Section 2.2, Bank shall convert Prime Rate Loans to LIBOR Loans at any
time and shall convert LIBOR Loans to Prime Rate Loans on any Interest
Adjustment Date. Each request by Borrower for the making, conversion or
continuation of a Loan hereunder shall be deemed to be a representation and
warranty by Borrower as of the date of such request as to the facts specified in
(d) and (e) above.
At no time shall Borrower request that LIBOR Loans be outstanding for
more than six (6) different Interest Periods at any time, and, if Prime Rate
Loans are outstanding, then LIBOR Loans shall be limited to five (5) different
Interest Periods at any time.
Each request for a LIBOR Loan shall be irrevocable and binding on
Borrower and Borrower shall indemnify Agents and the Banks against any loss or
expense incurred by Agents or the Banks as a result of any failure by Borrower
to consummate such transaction including, without limitation, any loss
(including loss of anticipated profits) or expense incurred by reason of
liquidation or re-employment of deposits or other funds acquired by the Banks to
fund such LIBOR Loan. A certificate as to the amount of such loss or expense
submitted by the Banks to Borrower shall be conclusive and binding for all
purposes, absent manifest error.
SECTION 2.3. PAYMENT ON NOTES, ETC. Each payment made on Loans
hereunder shall be applied first to Tranche C Loans, if any are outstanding,
then to Tranche B Loans, if any are outstanding, and then to Tranche A Loans.
All payments of principal, interest and commitment and other fees shall be made
to Administrative Agent in immediately available funds for the account of the
Banks, and Administrative Agent, within one (1) Business Day, shall distribute
to each Bank its ratable share of the amount of principal, interest, and
commitment and other fees received by it for the account of such Bank. Each Bank
shall record (a) any principal, interest or other payment, and (b) the principal
amount of the Prime Rate Loans and the LIBOR Loans and all prepayments thereof
and the applicable dates with respect thereto, by such method as such Bank may
generally employ; provided, however, that failure to make any such entry shall
in no way detract from Borrower's
16
22
obligations under each such Note. The aggregate unpaid amount of Loans set forth
on the records of Administrative Agent shall be rebuttably presumptive evidence
of the principal and interest owing and unpaid on each Note. Whenever any
payment to be made hereunder, including, without limitation, any payment to be
made on any Note, shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall in each case be included in the computation of the
interest payable on such Note; provided, however, that with respect to any LIBOR
Loan, if the next succeeding Business Day falls in the succeeding calendar
month, such payment shall be made on the preceding Business Day and the relevant
Interest Period shall be adjusted accordingly.
SECTION 2.4. PREPAYMENT. Borrower shall have the right at any time or
from time to time to prepay, on a pro rata basis for all of the Banks, all or
any part of the principal amount of the Notes then outstanding as designated by
Borrower, plus interest accrued on the amount so prepaid to the date of such
prepayment. Borrower shall give Administrative Agent notice of prepayment of any
Prime Rate Loan by not later than 11:00 A.M. (Cleveland, Ohio time) on the
Business Day such prepayment is to be made and written notice of the prepayment
of any LIBOR Loan not later than 1:00 P.M. (Cleveland, Ohio time) three (3)
Business Days before the Business Day on which such prepayment is to be made.
Prepayments of Prime Rate Loans shall be without any premium or penalty.
In any case of prepayment of a LIBOR Loan, Borrower agrees that if the
reinvestment rate, as quoted by the money desk of Administrative Agent
("Reinvestment Rate"), shall be lower than the LIBOR Rate applicable to the
LIBOR Loan which is intended to be prepaid (hereinafter, "Last LIBOR"), then
Borrower shall, upon written notice by Administrative Agent, promptly pay to
Administrative Agent, for the benefit of the Banks, in immediately available
funds, a prepayment fee equal to the product of (a) a rate (the "Prepayment
Rate") which shall be equal to the difference between the Last LIBOR and the
Reinvestment Rate, times (b) the principal amount of the LIBOR Loan which is to
be prepaid, times (c) (i) the number of days remaining in the Interest Period of
the LIBOR Loan which is to be prepaid divided by (ii) three hundred sixty (360).
In addition, Borrower shall immediately pay directly to Administrative Agent,
for the account of the Banks, the amount of any additional costs or expenses
(including, without limitation, cost of telex, wires, or cables) incurred by
Administrative Agent or the Banks in connection with the prepayment, upon
Borrower's receipt of a written statement from Administrative Agent. Each
prepayment of a LIBOR Loan shall be in the aggregate principal sum of not less
than One Million Dollars ($1,000,000), except in the case of a mandatory
prepayment pursuant to Section 2.7 or Article III hereof.
SECTION 2.5. COMMITMENT AND OTHER FEES; REDUCTION OF COMMITMENTS.
(a) Borrower shall pay to Administrative Agent, for the ratable account
of the Banks, as a consideration for the Tranche A Commitment, a commitment fee
from the Closing Date to and including the last day of the Commitment Period
equal to (i) one-fourth percent (1/4%) per annum, times (ii) the average daily
unborrowed amount of the Tranche A Commitment. The commitment fee shall be
payable, in arrears, on December 31, 1998 and on the last day of each March,
June, September and December thereafter, and on the last day of the Commitment
Period.
17
23
(b) Borrower shall pay to Administrative Agent, for the ratable account
of the Banks, as a consideration for the Tranche B Commitment, a commitment fee
from the Closing Date to and including the last day of the Commitment Period
equal to (i) three-eighths percent (3/8%) per annum, times (ii) the average
daily unborrowed amount of the Tranche B Commitment. The commitment fee shall be
payable, in arrears, on December 31, 1998 and on the last day of each March,
June, September and December thereafter, and on the last day of the Commitment
Period.
(c) Borrower shall pay to Administrative Agent, for the ratable account
of the Banks, as a consideration for the Tranche C Commitment, a commitment fee
from the Closing Date to and including the last day of the Commitment Period
equal to (i) three-eighths percent (3/8%) per annum, times (ii) the average
daily unborrowed amount of the Tranche C Commitment. The commitment fee shall be
payable, in arrears, on December 31, 1998 and on the last day of each March,
June, September and December thereafter, and on the last day of the Commitment
Period.
(d) Borrower shall pay to Administrative Agent, for its sole benefit,
on the Closing Date and on each anniversary of the Closing Date, all fees as set
forth in the Administrative Agent Fee Letter from Administrative Agent to
Borrower dated the Closing Date and accepted by Borrower on the Closing Date.
(e) Borrower may at any time or from time to time permanently reduce in
whole or ratably in part the Commitment of the Banks hereunder to an amount not
less than the aggregate principal amount of the Loans then outstanding, by
giving Agents not fewer than five (5) Business Days' notice, provided that any
partial reduction shall be in an aggregate amount for all of the Banks of Five
Million Dollars ($5,000,000) or any multiple thereof. Administrative Agent shall
promptly notify each Bank of the date of each such reduction and such Bank's
proportionate share thereof. After each such reduction, the commitment fees
payable hereunder shall be calculated upon the Commitment of the Banks as so
reduced. If Borrower reduces in whole the Commitment of the Banks, on the
effective date of such reduction (Borrower having prepaid in full the unpaid
principal balance, if any, of the Notes, together with all interest and
commitment and other fees accrued and unpaid), all of the Notes shall be
delivered to Administrative Agent marked "Canceled" and Administrative Agent
shall redeliver such Notes to Borrower. Any partial reduction in the Commitment
of the Banks shall be effective during the remainder of the Commitment Period.
SECTION 2.6. COMPUTATION OF INTEREST AND FEES; DEFAULT RATE. Interest
on Loans and commitment and other fees and charges hereunder shall be computed
on the basis of a year having three hundred sixty (360) days and calculated for
the actual number of days elapsed. Anything herein to the contrary
notwithstanding, if an Event of Default shall occur hereunder, the principal of
each Note and the unpaid interest thereon shall bear interest, until paid, at
the Default Rate. In no event shall the rate of interest hereunder exceed the
maximum rate allowable by law.
SECTION 2.7. MANDATORY PAYMENT. If the sum of the aggregate principal
amount of all Loans outstanding at any time exceeds the Total Commitment Amount,
Borrower shall, as promptly as practicable, but in no event later than the next
Business Day, prepay an aggregate
18
24
principal amount of the Loans sufficient to bring the aggregate outstanding
principal amount of all Loans within the Commitment of the Banks. Any prepayment
of a LIBOR Loan pursuant to this Section 2.7 shall be subject to the prepayment
fees set forth in Section 2.4 hereof.
SECTION 2.8. EXTENSION OR INCREASE OF COMMITMENT. Upon the written
request of Borrower received by Agents at least ninety (90) days prior to any
anniversary of the Closing Date (prior to the last day of the Commitment
Period), the Banks shall have the option of extending the Commitment for an
additional year. Each such extension shall require the unanimous written consent
of each of the Banks. In the event that the Commitment is at any time increased,
Borrower shall pay to Administrative Agent, for the benefit of the Banks in
accordance with their respective Commitment Percentages, an increase fee of
one-fourth percent (1/4%) of the amount by which the Commitment has been
increased. Such increase fee shall be in addition to all fees, costs and other
amounts payable under the terms of this Agreement or as may otherwise be
negotiated between Borrower and the Banks.
19
25
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR
LOANS; INCREASED CAPITAL; TAXES.
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If, at any time,
any law, treaty or regulation (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System) or the interpretation
thereof by any governmental authority charged with the administration thereof or
any central bank or other fiscal, monetary or other authority shall impose
(whether or not having the force of law), modify or deem applicable any reserve
and/or special deposit requirement (other than reserves included in the
Eurocurrency Reserve Percentage, the effect of which is reflected in the
interest rate(s) of the LIBOR Loan(s) in question) against assets held by, or
deposits in or for the amount of any LIBOR Loan by, any Bank, and the result of
the foregoing is to increase the cost (whether by incurring a cost or adding to
a cost) to such Bank of making or maintaining hereunder any LIBOR Loan or to
reduce the amount of principal or interest received by such Bank with respect to
such LIBOR Loan, then, upon demand by such Bank, Borrower shall pay to such Bank
from time to time on Interest Adjustment Dates with respect to such LIBOR Loan,
as additional consideration hereunder, additional amounts sufficient to fully
compensate and indemnify such Bank for such increased cost or reduced amount,
assuming (which assumption such Bank need not corroborate) such additional cost
or reduced amount was allocable to such LIBOR Loan. A certificate as to the
increased cost or reduced amount as a result of any event mentioned in this
Section 3.1, setting forth the calculations therefor, shall be promptly
submitted by such Bank to Borrower and shall, in the absence of manifest error,
be conclusive and binding as to the amount thereof. Notwithstanding any other
provision of this Agreement, after any such demand for compensation by any Bank,
Borrower, upon at least three (3) Business Days' prior written notice to such
Bank through Administrative Agent, may prepay any affected LIBOR Loan in full or
convert such LIBOR Loan to a Prime Rate Loan regardless of the Interest Period
thereof. Any such prepayment or conversion shall be subject to the prepayment
fees set forth in Section 2.4 hereof. Each Bank shall notify Borrower as
promptly as practicable (with a copy thereof delivered to Administrative Agent)
of the existence of any event that will likely require the payment by Borrower
of any such additional amount under this Section.
SECTION 3.2. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, any Bank shall, with respect to this Agreement or
any transaction under this Agreement, be subjected to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of such Bank) and if any such measures
or any other similar measure shall result in an increase in the cost to such
Bank of making or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or commitment fee receivable by such Bank in respect
thereof, then such Bank shall promptly notify Borrower stating the reasons
therefor. Borrower shall thereafter pay to such Bank, upon demand from time to
time on Interest Adjustment Dates with respect to such LIBOR Loan, as additional
consideration hereunder, such additional amounts as shall fully compensate such
Bank for such increased cost or reduced amount. A certificate as to any such
increased cost or reduced amount, setting forth the calculations therefor, shall
be submitted by such
20
26
Bank to Borrower and shall, in the absence of manifest error, be conclusive and
binding as to the amount thereof.
If any Bank receives such additional consideration from Borrower
pursuant to this Section 3.2, such Bank shall use reasonable efforts to obtain
the benefits of any refund, deduction or credit for any taxes or other amounts
on account of which such additional consideration has been paid and shall
reimburse Borrower to the extent, but only to the extent, that such Bank shall
receive a refund of such taxes or other amounts together with any interest
thereon or an effective net reduction in taxes or other governmental charges
(including any taxes imposed on or measured by the total net income of such
Bank) of the United States or any state or subdivision thereof by virtue of any
such deduction or credit, after first giving effect to all other deductions and
credits otherwise available to such Bank. If, at the time any audit of such
Bank's income tax return is completed, such Bank determines, based on such
audit, that it was not entitled to the full amount of any refund reimbursed to
Borrower as aforesaid or that its net income taxes are not reduced by a credit
or deduction for the full amount of taxes reimbursed to Borrower as aforesaid,
Borrower, upon demand of such Bank, shall promptly pay to such Bank the amount
so refunded to which such Bank was not so entitled, or the amount by which the
net income taxes of such Bank were not so reduced, as the case may be.
Notwithstanding any other provision of this Agreement, after any such
demand for compensation by any Bank, Borrower, upon at least three (3) Business
Days' prior written notice to such Bank through Administrative Agent, may prepay
any affected LIBOR Loan in full or convert such LIBOR Loan to a Prime Rate Loan
regardless of the Interest Period of any thereof. Any such prepayment or
conversion shall be subject to the prepayment fees set forth in Section 2.4
hereof.
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In respect of any LIBOR Loan, in the event that Administrative
Agent shall have determined that dollar deposits of the relevant amount for the
relevant Interest Period for such LIBOR Loan are not available to the Banks in
the applicable eurodollar market or that, by reason of circumstances affecting
such market, adequate and reasonable means do not exist for ascertaining the
LIBOR Rate applicable to such Interest Period, as the case may be,
Administrative Agent shall promptly give notice of such determination to
Borrower and (a) any notice of a new LIBOR Loan (or conversion of an existing
Loan to a LIBOR Loan) previously given by Borrower and not yet borrowed (or
converted, as the case may be) shall be deemed a notice to make a Prime Rate
Loan, and (b) Borrower shall be obligated either to prepay, or to convert to a
Prime Rate Loan, any outstanding LIBOR Loan on the last day of the then current
Interest Period with respect thereto.
SECTION 3.4. INDEMNITY. Without prejudice to any other provisions of
this Article III, Borrower hereby agrees to indemnify each Bank against any loss
or expense which such Bank may sustain or incur as a consequence of any default
by Borrower in payment when due of any amount hereunder in respect of any LIBOR
Loan, including, but not limited to, any loss of profit, premium or penalty
incurred by such Bank in respect of funds borrowed by it for the purpose of
making or maintaining such LIBOR Loan, as determined by such Bank in the
exercise of its sole but reasonable discretion. A certificate as to any such
loss or expense shall be promptly submitted by such Bank to Borrower and shall,
in the absence of manifest error, be conclusive and binding as to the amount
thereof.
21
27
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any
time any new law, treaty or regulation, or any change in any existing law,
treaty or regulation, or any interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof, shall make it
unlawful for any Bank to fund any LIBOR Loan which it is committed to make
hereunder with moneys obtained in the eurodollar market, the commitment of such
Bank to fund such LIBOR Loan shall, upon the happening of such event forthwith
be suspended for the duration of such illegality, and such Bank shall by written
notice to Borrower and Agents declare that its commitment with respect to such
LIBOR Loan has been so suspended and, if and when such illegality ceases to
exist, such suspension shall cease and such Bank shall similarly notify Borrower
and Agents. If any such change shall make it unlawful for any Bank to continue
in effect the funding in the applicable eurodollar market of any LIBOR Loan
previously made by it hereunder, such Bank shall, upon the happening of such
event, notify Borrower, Agents and the other Banks thereof in writing stating
the reasons therefor, and Borrower shall, on the earlier of (a) the last day of
the then current Interest Period or (b) if required by such law, regulation or
interpretation, on such date as shall be specified in such notice, either
convert such LIBOR Loan to a Prime Rate Loan or prepay such LIBOR Loan to the
Banks in full. Any such prepayment or conversion shall be subject to the
prepayment fees described in Section 2.4 hereof.
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
SECTION 3.7. CAPITAL ADEQUACY. To the extent not covered by Article III
hereof, if any Bank shall have determined, after the date hereof, that the
adoption of any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its lending office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital (or the capital of its holding company) as
a consequence of its obligations hereunder to a level below that which such Bank
(or its holding company) could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's policies or the policies of
its holding company with respect to capital adequacy) by an amount deemed by
such Bank to be material, then from time to time, within fifteen (15) days after
demand by such Bank (with a copy to Administrative Agent), Borrower shall pay to
such Bank such additional amount or amounts as shall compensate such Bank (or
its holding company) for such reduction, provided that Borrower's obligation
under this Section 3.7 are limited to the parts of such reduction directly
related to the Loans. No Bank shall enforce this provision solely against
Borrower or against a few of such Bank's customers without in each case
generally enforcing these (or similar) provisions in other contracts (provided
that, anything herein to the contrary notwithstanding, (a) no Bank shall be
required to disclose to any Company the identity of or the nature of the Bank's
relationship with, any other of such Bank's customers and (b) a general written
statement of Bank regarding the satisfaction of this requirement shall be
satisfactory to Borrower). Each Bank shall designate a different lending office
if such designation will avoid the
22
28
need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. Failure on the part of any Bank to
demand compensation for any reduction in return on capital with respect to any
period shall not constitute a waiver of such Bank's rights to demand
compensation for any reduction in return on capital in such period or in any
other period. The protection of this Section shall be available to each Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, regulation or other condition which shall have been imposed.
ARTICLE IV. CONDITIONS PRECEDENT
The obligation of the Banks to make the first Loan hereunder is subject
to Borrower satisfying each of the following conditions:
SECTION 4.1. NOTES. Borrower shall have executed and delivered to each
Bank its Tranche A Note, Tranche B Note and Tranche C Note.
SECTION 4.2. GUARANTIES OF PAYMENT OF DEBT. Each Guarantor of Payment
shall have executed and delivered its Guaranty of Payment to Administrative
Agent.
SECTION 4.3. OFFICER'S CERTIFICATE. Borrower and each Guarantor of
Payment shall have delivered to each Bank an officer's certificate, in form and
substance satisfactory to Administrative Agent, together with (a) certified
copies of the resolutions of the board of directors of Borrower and each
Guarantor of Payment evidencing approval of the execution and delivery of the
Loan Documents and the execution of other Related Writings to which Borrower or
such Guarantor of Payment, as the case may be, is a party, and (b) such other
corporate governance documents as Administrative Agent shall reasonably request.
SECTION 4.4. LEGAL OPINION. An opinion of counsel for Borrower and each
Guarantor of Payment, in form and substance satisfactory to Agents and the
Banks, shall have been delivered to each Bank.
SECTION 4.5. CLOSING, AGENTS', AND LEGAL FEES. Borrower shall have paid
(a) to Administrative Agent, for its sole benefit, such fees as described in the
Administrative Agent Fee Letter referenced in Section 2.5 hereof, (b) to
Administrative Agent, for the pro rata benefit of the Banks, a facility fee in
the amount of One Hundred Fifty Thousand Dollars ($150,000), and (c) all legal
fees and expenses of Agents in connection with the preparation and negotiation
of the Loan Documents.
SECTION 4.6. GOOD STANDING CERTIFICATE; LIEN SEARCHES. With respect to
Charken Company, Inc., Borrower shall have provided (a) a good standing
certificate for such
23
29
Company issued by the Secretary of State in the state where such Company is
incorporated, and (b) the results of UCC lien, federal and state tax lien and
judicial lien searches, satisfactory to Agents.
SECTION 4.7. NO MATERIAL ADVERSE CHANGE. No material adverse change, in
the opinion of Agents, shall have occurred in the financial condition,
operations or prospects of the Companies.
SECTION 4.8. MISCELLANEOUS. Borrower shall have provided such other
items as may be reasonably required by Agents or the Banks.
ARTICLE V. COVENANTS
Borrower agrees that so long as the Commitment remains in effect and
thereafter until the principal of and interest on all Notes and all other
payments and fees due hereunder shall have been paid in full, Borrower shall
perform and observe, and shall cause each Company to perform and observe, each
of the following provisions:
SECTION 5.1. INSURANCE. Each Company shall (a) at all times maintain
insurance to such extent and against such hazards and liabilities as is commonly
maintained by companies similarly situated, and (b) within ten (10) days of
Administrative Agent or Co-Agent's written request, Borrower shall furnish to
Administrative Agent and Co-Agent such information about Borrower's insurance as
Administrative Agent or Co-Agent may from time to time reasonably request, which
information shall be prepared in form and detail satisfactory to Administrative
Agent and Co-Agent and certified by a Financial Officer of Borrower.
SECTION 5.2. MONEY OBLIGATIONS. Each Company shall pay in full (a)
prior in each case to the date when penalties would attach, all taxes,
assessments and governmental charges and levies (except only those so long as
and to the extent that the same shall be contested in good faith by appropriate
and timely proceedings and for which adequate reserves have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its wage obligations
to its employees in compliance with the Fair Labor Standards Act (29 U.S.C.
206-207) or any comparable provisions; and (c) all of its other obligations
calling for the payment of money (except only those so long as and to the extent
that the same shall be contested in good faith and for which adequate reserves
have been established in accordance with GAAP) before such payment becomes
overdue.
SECTION 5.3. FINANCIAL STATEMENTS. Borrower shall furnish to each Bank:
(a) within sixty (60) days after the end of each of the first three (3)
quarter-annual periods of each fiscal year of Parent and Borrower, balance
sheets of Parent and Borrower, as of the end of such period and statements of
income (loss), shareholders' equity and cash flow for the quarter and fiscal
year to date periods, all prepared on a Consolidated basis (consolidated as to
Parent and Consolidated as to Borrower, independent of Parent), in accordance
with GAAP, and in form
24
30
and detail satisfactory to the Banks and certified by a Financial Officer of
Borrower, subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(b) within one hundred twenty (120) days after the end of each fiscal
year of Parent and Borrower, an annual audit report of Parent and Borrower for
that year prepared on a Consolidated basis (consolidated as to Parent and
Consolidated as to Borrower, independent of Parent), in accordance with GAAP,
and in form and detail satisfactory to the Banks and certified by an independent
public accountant satisfactory to the Banks, which report shall include balance
sheets and statements of income (loss), shareholders' equity and cash-flow for
that period;
(c) concurrently with the delivery of the financial statements in (a)
and (b) above, a Compliance Certificate;
(d) with the delivery of the quarterly and annual financial statements
in (a) and (b) above, a copy of any letter disclosing material weaknesses in the
internal controls of Borrower or any Subsidiary of Borrower or such similar
writings;
(e) within ninety (90) days after the end of each fiscal year of
Borrower, annual pro-forma projections of the Companies for the then current
fiscal year and the next two (2) succeeding fiscal years, to be in form
acceptable to Agents;
(f) as soon as available, copies of all material notices, reports,
definitive proxy or other statements and other documents sent by Borrower (or
Parent, if applicable) to its shareholders, to the holders of any of its
debentures or bonds or the trustee of any indenture securing the same or
pursuant to which they are issued, or sent by Borrower (or Parent, if
applicable) (in final form) to any securities exchange or over the counter
authority or system, or to the Securities and Exchange Commission or any similar
federal agency having regulatory jurisdiction over the issuance of Borrower's or
Parent's securities; and
(g) within ten (10) days of Administrative Agent's or Co-Agent's
written request, such other information about the financial condition,
properties and operations of any Company as Administrative Agent or Co-Agent may
from time to time reasonably request, which information shall be submitted in
form and detail satisfactory to Administrative Agent or Co-Agent, as
appropriate, and certified by a Financial Officer of the Company or Companies in
question.
SECTION 5.4. FINANCIAL RECORDS. Each Company shall at all times
maintain true and complete records and books of account including, without
limiting the generality of the foregoing, appropriate reserves for possible
losses and liabilities, all in accordance with GAAP, and at all reasonable times
(during normal business hours and upon notice to the Company in question) permit
Administrative Agent or Co-Agent, or their respective representatives, to
examine that Company's books and records and to make excerpts therefrom and
transcripts thereof.
25
31
SECTION 5.5. FRANCHISES. Each Company shall preserve and maintain at
all times its existence.
SECTION 5.6. ERISA COMPLIANCE. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any ERISA Plan.
Borrower shall furnish to the Banks (a) as soon as possible and in any event
within thirty (30) days after any Company knows or has reason to know that any
Reportable Event with respect to any ERISA Plan has occurred, a statement of the
Financial Officer of such Company, setting forth details as to such Reportable
Event and the action that such Company proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the PBGC if
a copy of such notice is available to such Company, and (b) promptly after
receipt thereof a copy of any notice such Company, or any member of the
Controlled Group may receive from the PBGC or the Internal Revenue Service with
respect to any ERISA Plan administered by such Company; provided, that this
latter clause shall not apply to notices of general application promulgated by
the PBGC or the Internal Revenue Service. Borrower shall promptly notify the
Banks of any material taxes assessed, proposed to be assessed or which Borrower
has reason to believe may be assessed against a Company by the Internal Revenue
Service with respect to any ERISA Plan. As used in this Section "material" means
the measure of a matter of significance which shall be determined as being an
amount equal to five percent (5%) of the Consolidated Net Worth of Borrower and
its Subsidiaries. As soon as practicable, and in any event within twenty (20)
days, after any Company becomes aware that an ERISA Event has occurred, such
Company shall provide Bank with notice of such ERISA Event with a certificate by
a Financial Officer of such Company setting forth the details of the event and
the action such Company or another Controlled Group member proposes to take with
respect thereto. Borrower shall, at the request of Agents, deliver or cause to
be delivered to Agents true and correct copies of any documents relating to the
ERISA Plan of any Company.
SECTION 5.7. FINANCIAL COVENANTS.
(a) INTEREST COVERAGE RATIO. Borrower shall not suffer or permit, at
any time, the ratio of (i) Consolidated EBIT to (ii) Consolidated Interest
Expense to be less than 1.60 to 1.00, based upon Borrower's financial statements
for the most recently completed four (4) fiscal quarters.
(b) SENIOR FUNDED INDEBTEDNESS TO CAPITALIZATION. Borrower and its
Subsidiaries shall not suffer or permit, at any time, the ratio of (i) Total
Senior Funded Indebtedness to (ii) Total Capitalization, to exceed .30 to 1.00,
based upon Borrower's financial statements for the most recently completed
fiscal quarter.
(c) LEVERAGE RATIO. At any time that the Leverage Ratio Condition
exists, Borrower shall not suffer or permit the Leverage Ratio to exceed 5.00 to
1.00.
SECTION 5.8. BORROWING. Parent shall not create, incur or have
outstanding any obligation for borrowed money or any Indebtedness of any kind,
other than Permitted Parent Loans. Neither Borrower nor any Subsidiary of
Borrower shall create, incur or have outstanding any
26
32
obligation for borrowed money or any Indebtedness of any kind in violation of
any covenant set forth in the terms and conditions of the Indenture.
SECTION 5.9. LIENS. No Company shall create, assume or suffer to exist
any Lien upon any of its property or assets, whether now owned or hereafter
acquired; provided that this Section shall not apply to the following:
(a) any mortgage, security interest or Lien securing only indebtedness
incurred to Agents and the Banks;
(b) any Lien for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP;
(c) any other statutory Lien incidental to the conduct of its business
or the ownership of its property and assets that (i) was not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and (ii) does not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of its
business;
(d) any Lien on property or assets of a Subsidiary of Borrower to
secure obligations of such Subsidiary of Borrower to Borrower or a Guarantor of
Payment;
(e) any purchase money Lien on fixed assets of Borrower or a Subsidiary
of Borrower provided that such Lien only attaches to the property being
acquired;
(f) the Liens set forth in SCHEDULE 5.9 attached hereto;
(g) easements or other minor defects or irregularities in title of real
property not interfering in any material respect with the use of such property
in the business of any Company; or
(h) any Lien on fixed assets that are owned by a Company (other than
Parent) as a result of an Acquisition permitted pursuant to Section 5.13 hereof,
so long as such Lien is released within thirty (30) days after the Acquisition.
No Company shall enter into any contract or agreement that would prohibit Agents
or the Banks from acquiring a security interest, mortgage or other Lien on, or a
collateral assignment of, any of the property or assets of any Company.
SECTION 5.10. REGULATIONS U and X. No Company shall take any action
that would result in any non-compliance of the Loans with Regulations U and X of
the Board of Governors of the Federal Reserve System.
27
33
SECTION 5.11. INVESTMENTS AND LOANS.
(a) Borrower and its Subsidiaries shall not (i) make or hold any
investment in any stocks, bonds or securities of any kind in any Sister Company,
or (ii) make or keep outstanding any advance or loan to any Sister Company.
(b) Without the prior written consent of Agents and the Majority Banks,
Borrower and its Subsidiaries shall not (i) make or hold any investment in any
stocks, bonds or securities of any kind in any Person that is not Borrower or a
Guarantor of Payment, (ii) make or keep outstanding any advance or loan to any
Person that is not Borrower or a Guarantor of Payment, or (iii) be or become a
Guarantor of any kind, except guaranties securing only Indebtedness of Borrower
and its Subsidiaries incurred or permitted pursuant to this Agreement; provided,
that this Section shall not apply to:
(A) Permitted Parent Loans;
(B) loans made to a direct or indirect Subsidiary of Borrower,
provided that there is compliance with Section 5.18 hereof; or
(C) investments in any Person that is not Parent or a Sister
Company so long as all such investments do not exceed the aggregate
amount of Ten Million Dollars ($10,000,000) at any time.
(c) Parent shall not (i) make or hold any investment in any stocks,
bonds or securities of any kind in any Person which is not Borrower or a
Guarantor of Payment, (ii) make or keep outstanding any advance or loan to any
Person that is not Borrower or a Guarantor of Payment, or (iii) be or become a
Guarantor of any kind, except guaranties securing only Indebtedness of Borrower
and its Subsidiaries incurred or permitted pursuant to this Agreement; provided,
that this Section shall not apply to (A) any investments or loans of Parent that
do not exceed the aggregate amount, for all such investments and loans, of Two
Million Dollars ($2,000,000) at any time existing or outstanding, or (B) the
holding of any stock of any Sister Company.
SECTION 5.12. MERGER AND SALE OF ASSETS. Without the prior written
consent of Agents and the Majority Banks, no Company shall merge or consolidate
with any other Person or sell, lease or transfer or otherwise dispose of all or
a substantial part of its assets to any Person, except that if no Unmatured
Event of Default or Event of Default shall then exist or immediately thereafter
shall begin to exist:
(a) any Subsidiary of Borrower may merge with (i) Borrower (provided
that Borrower shall be the continuing or surviving corporation), or (ii) one (1)
or more Guarantors of Payment, provided that either (A) the continuing or
surviving corporation shall be a Wholly-Owned Subsidiary that is a Guarantor of
Payment, or (B) after giving effect to any merger pursuant to this subclause
(ii), Borrower and/or one or more Wholly-Owned Subsidiaries that are Guarantors
of Payment shall own not less than the same percentage of the outstanding Voting
Power of the continuing or
28
34
surviving corporation as Borrower and/or one or more Wholly-Owned Subsidiaries
(which are Guarantors of Payment) owned of the merged Subsidiary of Borrower
immediately prior to such merger,
(b) any Subsidiary of Borrower may sell, lease, transfer or otherwise
dispose of any of its assets to (i) Borrower, (ii) any Wholly-Owned Subsidiary
that is a Guarantor of Payment, or (iii) any Guarantor of Payment, of which
Borrower and/or one or more Wholly-Owned Subsidiaries, that are Guarantors of
Payment, shall own not less than the same percentage of Voting Power as Borrower
and/or one or more Wholly-Owned Subsidiaries (which are Guarantors of Payment)
then own of the Subsidiary of Borrower making such sale, lease, transfer or
other disposition, or
(c) any Subsidiary with total assets less than One Million Dollars
($1,000,000) may dispose of all or a substantial part of such assets for fair
market value.
SECTION 5.13. ACQUISITIONS. Without the prior written consent of Agents
and the Majority Banks, Borrower and its Subsidiaries shall not consummate or
permit any Subsidiary of Borrower to consummate any Acquisition, except that
Borrower, a Guarantor of Payment or a Subsidiary of Borrower that will become a
Guarantor of Payment on or before the day of the Acquisition may consummate an
Acquisition so long as all of the following conditions are met:
(a) in the case of any Acquisition of a Person for
Consideration in excess of Ten Million Dollars ($10,000,000), the
aggregate principal amount of all Loans outstanding hereunder, both
prior to and immediately after such Acquisition, is less than or equal
to One Hundred Twenty Million Dollars ($120,000,000);
(b) Borrower, such Guarantor of Payment or such Subsidiary, as
applicable, is the surviving entity;
(c) the Companies are in full compliance with the Loan
Documents both prior to and subsequent to the transaction; and
(d) Borrower shall provide to Agents and the Banks, at least
ten (10) days prior to such Acquisition, written notice of such
Acquisition, and, in addition, in the case of any Acquisition of a
Person for Consideration in excess of Five Million Dollars
($5,000,000), historical financial statements of the target entity and
a pro forma financial statement of Borrower and its Subsidiaries
accompanied by a certificate of a Financial Officer of Borrower showing
pro forma compliance with Section 5.7 hereof, both before and after the
proposed Acquisition.
Anything herein to the contrary notwithstanding, if (i) at the time of
Borrower's consideration of a proposed Acquisition, the Loans outstanding are in
excess of One Hundred Million Dollars ($100,000,000) or (ii) the Loans
outstanding are projected to be or will be in excess of One Hundred Million
Dollars ($100,000,000) upon the completion of such Acquisition, then Borrower
shall calculate a Projected Leverage Ratio. If the Projected Leverage Ratio is
in excess of 5.00 to 1.00,
29
35
then Borrower shall not proceed with the Acquisition without the prior written
consent of Agents and the Majority Banks. Furthermore, upon request of Agents at
any time with respect to a proposed Acquisition, Borrower shall provide to
Agents the calculations of the Proposed Leverage Ratio.
SECTION 5.14. NOTICE.
(a) Borrower shall cause a Financial Officer of Borrower to promptly
notify Agents and the Banks whenever any Unmatured Event of Default or Event of
Default may occur hereunder or any representation or warranty made in Article VI
hereof or elsewhere in this Agreement or in any Related Writing may for any
reason cease in any material respect to be true and complete; and
(b) Borrower shall provide notice to Agents and the Banks
contemporaneously with any notice provided to the trustee or the Senior
Subordinated Noteholders under the Indenture or the Senior Subordinated Notes.
SECTION 5.15. ENVIRONMENTAL COMPLIANCE. Each Company shall comply in
all material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which any Company owns or
operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in real property
or otherwise. Borrower shall furnish to the Banks, promptly after receipt
thereof, a copy of any notice any Company may receive from any governmental
authority, private Person or otherwise that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow the release or disposal of hazardous waste, solid waste or
other wastes on, under or to any real property in which any Company holds any
interest or performs any of its operations, in violation of any Environmental
Law. As used in this Section, "litigation or proceeding" means any demand,
claim, notice, suit, suit in equity action, administrative action, investigation
or inquiry whether brought by any governmental authority, private Person or
otherwise. Borrower shall defend, indemnify and hold Agents and the Banks
harmless against all costs, expenses, claims, damages, penalties and liabilities
of every kind or nature whatsoever (including attorneys fees) arising out of or
resulting from the noncompliance of any Company with any Environmental Law.
SECTION 5.16. AFFILIATE TRANSACTIONS. Except as set forth on SCHEDULE
5.16 hereto, no Company shall, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with any Affiliate
of such Company on terms that are less favorable to such Company than those that
might be obtained at the time in a transaction with a non-Affiliate; provided,
however, that the foregoing shall not prohibit the payment of (a) customary and
reasonable directors' fees to directors who are not employees of a Company or
any Affiliate of a Company, or (b) any transaction between a Borrower and an
Affiliate (if a Guarantor of Payment) which Borrower reasonably determines in
good faith is beneficial to Borrower and its Affiliates as a whole and which
30
36
is not entered into for the purpose of hindering the exercise by Agents or the
Banks of their rights or remedies under this Agreement.
SECTION 5.17. CORPORATE NAMES. No Company shall change its corporate
name, unless, in each case, such Company shall provide Agents with at least
thirty (30) days prior written notice thereof.
SECTION 5.18. SUBSIDIARY GUARANTIES. Each Subsidiary or other affiliate
of Borrower and its Subsidiaries, created, acquired or held subsequent to the
Closing Date, shall immediately execute and deliver to Administrative Agent a
Guaranty of Payment, such agreement to be in form and substance acceptable to
Agents and the Majority Banks, along with such corporate governance and
authorization documents and an opinion of counsel as may be deemed necessary or
advisable by Agents; provided, however, that (a) a Subsidiary shall not be
required to execute such Guaranty of Payment so long as (i) the total assets of
such Subsidiary are less than the amount of One Million Dollars ($1,000,000),
and (ii) the aggregate of the total assets of all of such Subsidiaries with
total asset values of less than One Million Dollars ($1,000,000) does not exceed
the aggregate amount of Two Million Dollars ($2,000,000), and (b) a Subsidiary
organized outside of the United States shall not be required to execute a
Guaranty of Payment to the extent that such Guaranty of Payment will result in
adverse tax consequences for Borrower. In the event that the total assets of any
Subsidiary that is not a Guarantor of Payment are at any time equal to or
greater than One Million Dollars ($1,000,000), Borrower shall provide Agents and
the Banks with prompt written notice of such asset value.
SECTION 5.19. RESTRICTED PAYMENTS. Neither Borrower nor any Subsidiary
of Borrower shall make any Restricted Payment, except that (a) if no Event of
Default shall then exist or immediately thereafter shall begin to exist,
Borrower may make regularly scheduled payments of interest with respect to any
Subordinated Indebtedness; and (b) if no Unmatured Event of Default or Event of
Default shall then exist or immediately thereafter shall begin to exist,
Borrower or any Subsidiary of Borrower may make a Restricted Payment so long as
the aggregate amount of all Restricted Payments made by Borrower and all of its
Subsidiaries does not, from the Closing Date until the Debt has been paid in
full and the Commitment terminated, exceed (i) Ten Million Dollars ($10,000,000)
less (ii) the amount, if any, of Permitted Parent Loans used by Parent to make
Restricted Payments.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants that the statements set forth in this
Article VI are true, correct and complete.
SECTION 6.1. CORPORATE EXISTENCE; SUBSIDIARIES; FOREIGN QUALIFICATION.
Each Company is a corporation duly organized, validly existing, and in good
standing under the laws of its state of incorporation and is duly qualified and
authorized to do business and is in good standing as a foreign corporation in
the jurisdictions set forth opposite its
31
37
name on SCHEDULE 6.1 hereto, which are all of the states or jurisdictions where
the character of its property or its business activities makes such
qualification necessary, except where the failure to so qualify will not cause
or result in a material adverse effect on the business, operations or condition
(financial or otherwise) of such Company. SCHEDULE 6.1 sets forth each
Subsidiary of Borrower, its state of incorporation, the location of its chief
executive offices and its principal place of business. Except as provided on
SCHEDULE 6.1, Borrower owns all of the capital stock of each of its
Subsidiaries.
SECTION 6.2. CORPORATE AUTHORITY. Each Company has the right and power
and is duly authorized and empowered to enter into, execute, deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Company is a party have
been duly authorized and approved by such Company's Board of Directors and are
the valid and binding obligations of such Company, enforceable against such
Company in accordance with their respective terms. The execution, delivery and
performance of the Loan Documents will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in
the creation of any Lien (other than Liens permitted under Section 5.9 of this
Agreement) upon any assets or property of the Companies under the provisions of
the Articles (or Certificate) of Incorporation, Bylaws or Regulations or any
agreement of the Companies.
SECTION 6.3. COMPLIANCE WITH LAWS. Each Company:
(a) holds permits, certificates, licenses, orders, registrations,
franchises, authorizations, and other approvals from federal, state, local, and
foreign governmental and regulatory bodies necessary for the conduct of its
business and is in material compliance with all applicable laws relating
thereto;
(b) is in material compliance with all federal, state, local, or
foreign applicable statutes, rules, regulations, and orders including, without
limitation, those relating to environmental protection, occupational safety and
health, and equal employment practices; and
(c) is not in violation of or in default under any material agreement
to which it is a party or by which its assets are subject or bound.
SECTION 6.4. LITIGATION AND ADMINISTRATIVE PROCEEDINGS. Except as
disclosed on SCHEDULE 6.4 hereto, there are (a) no lawsuits, actions,
investigations, or other proceedings pending or threatened against Borrower or
any of its Subsidiaries, or in respect of which Borrower or any of its
Subsidiaries may have any liability, in any court or before any governmental
authority, arbitration board, or other tribunal, (b) no orders, writs,
injunctions, judgments, or decrees of any court or government agency or
instrumentality to which any Company is a party or by which the property or
assets of any Company are bound and (c) no grievances, disputes, or
controversies outstanding with any union or other organization of the employees
of any Company, or threats of work stoppage, strike, or pending demands for
collective bargaining, which as to subsections (a), (b) and (c) hereof, if
violated or determined adversely, would have or would be reasonably expected to
32
38
have a material adverse effect on the business, property or operations
(financial or otherwise) of any Company,
SECTION 6.5. TITLE TO ASSETS. Each Company has good title to and
ownership of all property it purports to own, which property is free and clear
of all Liens, except those permitted under Section 5.9 hereto.
SECTION 6.6. LIENS AND SECURITY INTERESTS. On and after the Closing
date, except for Liens permitted pursuant to Section 5.9 hereof, (a) there is no
financing statement outstanding covering any personal property of any Company;
(b) there is no mortgage outstanding covering any real property of any Company;
and (c) no real or personal property of any Company is subject to any security
interest or Lien of any kind. No Company has entered into any contract or
agreement that exists on or after the Closing Date that would prohibit Agents
and the Banks from acquiring a security interest, mortgage or other Lien on, or
a collateral assignment of, any of the property or assets of any Company.
SECTION 6.7. TAX RETURNS. All federal, state and local tax returns and
other reports required by law to be filed in respect of the income, business,
properties and employees of Borrower have been filed and all taxes, assessments,
fees and other governmental charges which are due and payable have been paid,
except as otherwise permitted herein or the failure to do so does not and will
not cause or result in a material adverse effect on the business, operations or
condition (financial or otherwise) of Borrower and its Subsidiaries, on a
Consolidated basis. The provision for taxes on the books of Borrower is adequate
for all years not closed by applicable statutes and for the current fiscal year.
SECTION 6.8. ENVIRONMENTAL LAWS. Each Company is in material compliance
with any and all Environmental Laws including, without limitation, all
Environmental Laws in all jurisdictions in which any Company owns or operates,
or has owned or operated, a facility or site, arranges or has arranged for
disposal or treatment of hazardous substances, solid waste or other wastes,
accepts or has accepted for transport any hazardous substances, solid waste or
other wastes or holds or has held any interest in real property or otherwise.
Except as disclosed in SCHEDULE 6.4 hereof, no litigation or proceeding arising
under, relating to or in connection with any Environmental Law is pending or, to
the best of their knowledge, threatened against any Company, any real property
in which any Company holds or has held an interest or any past or present
operation of any Company. No release, threatened release or disposal of
hazardous waste, solid waste or other wastes is occurring, and no material
release, threatened release or disposal of hazardous waste, solid waste or other
wastes has occurred (other than those that are currently being cleaned up in
accordance with Environmental Laws), on, under or to any real property in which
any Company holds any interest or performs any of its operations, in violation
of any Environmental Law. As used in this Section, "litigation or proceeding"
means any demand, claim, notice, suit, suit in equity, action, administrative
action, investigation or inquiry whether brought by any governmental authority,
private Person or otherwise.
SECTION 6.9. EMPLOYEE BENEFITS PLANS. No ERISA Event has occurred or is
expected to occur with respect to an ERISA Plan. Full payment has been made of
all amounts which
33
39
a Controlled Group member is required, under applicable law or under the
governing documents, to have been paid as a contribution to or a benefit under
each ERISA Plan. The liability of each Controlled Group member with respect to
each ERISA Plan has been fully funded based upon reasonable and proper actuarial
assumptions, has been fully insured, or has been fully reserved for on its
financial statements. No changes have occurred or are expected to occur that
would cause a material increase in the cost of providing benefits under the
ERISA Plan. With respect to each ERISA Plan that is intended to be qualified
under Code Section 401(a): (a) the ERISA Plan and any associated trust
operationally comply with the applicable requirements of Code Section 401(a),
(b) the ERISA Plan and any associated trust have been amended to comply with all
such requirements as currently in effect, other than those requirements for
which a retroactive amendment can be made within the "remedial amendment period"
available under Code Section 401(b) (as extended under Treasury Regulations and
other Treasury pronouncements upon which taxpayers may rely), (c) the ERISA Plan
and any associated trust have received a favorable determination letter from the
Internal Revenue Service stating that the ERISA Plan qualifies under Code
Section 401(a), that the associated trust qualifies under Code Section 501(a)
and, if applicable, that any cash or deferred arrangement under the ERISA Plan
qualifies under Code Section 401(k), unless the ERISA Plan was first adopted at
a time for which the above-described "remedial amendment period" has not yet
expired, (d) the ERISA Plan currently satisfies the requirements of Code Section
410(b), without regard to any retroactive amendment that may be made within the
above-described "remedial amendment period", and (e) no contribution made to the
ERISA Plan is subject to an excise tax under Code Section 4972. With respect to
any Pension Plan, the "accumulated benefit obligation" of Controlled Group
members with respect to the Pension Plan (as determined in accordance with
Statement of Accounting Standards No. 87, "Employers' Accounting for Pensions")
does not exceed the fair market value of Pension Plan assets. The aggregate
potential amount of liability that would result if all Controlled Group members
withdrew from all Multiemployer Plans in a "complete withdrawal" (within the
meaning of ERISA Section 4203) is not material.
SECTION 6.10. CONSENTS OR APPROVALS. Except as to the Banks, no
consent, approval or authorization of, or filing, registration or qualification
with, any governmental authority or any other Person is required to be obtained
or completed by Borrower in connection with the execution, delivery or
performance of any of the Loan Documents, which has not already been obtained or
completed.
SECTION 6.11. SOLVENCY. Borrower has received consideration which is
the reasonable equivalent value of the obligations and liabilities that Borrower
has incurred to the Banks. Borrower is not insolvent as defined in any
applicable state or federal statute, nor will Borrower be rendered insolvent by
the execution and delivery of the Loan Documents to Agents and the Banks.
Borrower is not engaged or about to engage in any business or transaction for
which the assets retained by it are or will be an unreasonably small amount of
capital, taking into consideration the obligations to Agents and the Banks
incurred hereunder. Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature.
SECTION 6.12. FINANCIAL STATEMENTS. The audited Consolidated financial
statements of the Companies for the fiscal year ended December 31, 1997 and the
unaudited
34
40
financial statements of the Companies for the fiscal quarter ended September 30,
1998, furnished to Agents and the Banks, are true and complete, have been
prepared in accordance with GAAP, and fairly present the Companies' financial
condition as of the dates of such financial statements and the results of their
operations for the periods then ending, subject, in case of such unaudited
interim statements, to changes from audit and year-end adjustments. Since the
dates of such statements, there has been no material adverse change in any
Company's financial condition, properties or business nor any change in any
Company's accounting procedures.
SECTION 6.13. REGULATIONS. Borrower is not engaged principally or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States of America). Neither the granting of any Loans (or any conversion
thereof) nor the use of the proceeds of the Loans will violate, or be
inconsistent with, the provisions of Regulation U or X of said Board of
Governors.
SECTION 6.14. MATERIAL AGREEMENTS. Except as disclosed on SCHEDULE 6.14
hereto, neither Borrower nor any of its Subsidiaries is a party to any (a) debt
instrument; (b) lease (capital, operating or otherwise), whether as lessee or
lessor thereunder; (c) contract, commitment, agreement, or other arrangement
involving the purchase or sale of any inventory by it, or the license of any
right to or by it; (d) contract, commitment, agreement, or other arrangement
with any of its Affiliates; (e) management or employment contract or contract
for personal services with any of its Affiliates which is not otherwise
terminable at will or on less than ninety (90) days' notice without liability;
(f) collective bargaining agreement; or (g) other contract, agreement,
understanding, or arrangement, which, as to subsections (a) through (g), above,
has been violated, breached, or terminated and which violation, breach or
termination has had or would be reasonably expected to have a material adverse
effect on the business, operation or condition (financial or otherwise) of
Borrower and its Subsidiaries on a Consolidated basis.
SECTION 6.15. INTELLECTUAL PROPERTY. Each Company owns, possesses, or
has the right to use all of the patents, patent applications, trademarks,
service marks, copyrights, licenses, and rights with respect to the foregoing
necessary for the conduct of its business without any known conflict with the
rights of others.
SECTION 6.16. INSURANCE. Each Company maintains with financially sound
and reputable insurers insurance with coverage and limits as required by law and
as is customary with persons engaged in the same businesses as the Companies.
SECTION 6.17. ACCURATE AND COMPLETE STATEMENTS. Neither the Loan
Documents nor any written statement made by any Company in connection with any
of the Loan Documents contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein or in the
Loan Documents not misleading.
SECTION 6.18. INDENTURE. (a) No Event of Default (as defined in the
Indenture) or Default (as defined in the Indenture) exists, nor will any such
Event of Default or Default exist
35
41
immediately after the granting of any Loan, under the Indenture, the Senior
Subordinated Notes or any agreement executed by Borrower in connection
therewith; (b) no Company has incurred (as defined in the Indenture) any
Designated Senior Indebtedness (as defined in the Indenture) other than the
Debt; (c) the Debt constitutes Permitted Indebtedness (as defined in the
Indenture); and (d) no Company has "incurred" (as defined in the Indenture)
either prior to or after the granting of any Loan, any Indebtedness (as defined
in the Indenture) in violation of Section 4.06 (Limitation on Additional
Indebtedness) of the Indenture.
SECTION 6.19. NEW CREDIT FACILITY. This Agreement (a) constitutes "New
Credit Facility" (as defined in the Indenture), and (b) is a replacement of the
Credit Agreement dated as of April 11, 1995, as amended, among Borrower, KeyBank
National Association (successor by merger to Society National Bank), as Agent,
and the banking institutions listed on Annex 1 attached thereto], and the Credit
Agreement dated as of January 14, 1998 among Borrower, KeyBank National
Association, as Administrative Agent, The Huntington National Bank, as Co-Agent,
and the banking institutions listed on Schedule 1 attached thereto.
SECTION 6.20. DEFAULTS. No Unmatured Event of Default or Event of
Default exists hereunder, nor will any begin to exist immediately after the
execution and delivery hereof.
SECTION 6.21. YEAR 2000 COMPLIANCE. Except as disclosed on SCHEDULE
6.21 hereto, each Company's Computer Systems are, or have been modified to be,
Year 2000 Compliant, except to the extent that noncompliance will not cause or
result in a material adverse effect to the business, operations or condition
(financial or otherwise) of the Companies taken as a whole.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
SECTION 7.1. PAYMENTS. If the principal of or interest on any Note or
any commitment or other fee shall not be paid in full punctually when due and
payable and shall remain unpaid for a period of five (5) consecutive Business
Days.
SECTION 7.2. SPECIAL COVENANTS. If any Company or any Obligor shall
fail or omit to perform and observe Sections 5.7 or 5.12 hereof.
SECTION 7.3. OTHER COVENANTS. If any Company or any Obligor shall fail
or omit to perform and observe any agreement or other provision (other than
those referred to in Sections 7.1 or 7.2 hereof) contained or referred to in
this Agreement or any Related Writing that is on such Company's or Obligor's
part, as the case may be, to be complied with, and that Unmatured Event of
Default shall not have been fully corrected within thirty (30) days after the
giving of written notice thereof to Borrower by Administrative Agent, Co-Agent
or any Bank that the specified Unmatured Event of Default is to be remedied.
36
42
SECTION 7.4. REPRESENTATIONS AND WARRANTIES. If any representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company or any
Obligor to the Banks or any thereof or any other holder of any Note, shall be
false or erroneous in any material respect; provided, however, that with respect
to Sections 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.13, 6.14, 6.15, 6.16 and 6.21
hereof, such inaccuracy shall not constitute an Event of Default if it is
corrected within thirty (30) days after the giving of written notice thereof to
Borrower by Administrative Agent or Co-Agent that the specified Unmatured Event
of Default is to be remedied.
SECTION 7.5. CROSS DEFAULT. If any Company or any Obligor shall default
in the payment of principal or interest due and owing upon any other obligation
for borrowed money in excess of the aggregate, for all such obligations, of Five
Hundred Thousand Dollars ($500,000) beyond any period of grace provided with
respect thereto or in the performance or observance of any other agreement, term
or condition contained in any agreement under which such obligation is created,
if the effect of such default is to allow the acceleration of the maturity of
such Indebtedness or to permit the holder thereof to cause such Indebtedness to
become due prior to its stated maturity.
SECTION 7.6. ERISA DEFAULT. The occurrence of one or more ERISA Events
which (a) the Majority Banks determine could have a material adverse effect on
the financial condition of the Companies when taken as a whole, or (b) results
in a Lien on any of the assets of any Company in excess, for all such Liens of
Five Hundred Thousand Dollars ($500,000).
SECTION 7.7. CHANGE IN MANAGEMENT/CONTROL. If (a) any Change of Control
shall occur, (b) Xxxxxx X. Xxxxxxxx or his immediate family shall cease to own
or control, directly or indirectly, at least twenty percent (20%) of the voting
stock of Borrower, or (c) either (i) Xxxxxx X. Xxxxxxxx shall cease to perform
his role as chief executive officer of Borrower, or (ii) Xxxxxx X. Xxxxxxxx
shall die or become incompetent and, within one hundred eighty (180) days
thereafter, Borrower shall not have selected a replacement Chief Executive
Officer with the expertise and management skills, in the sole opinion of the
Majority Banks, necessary for the successful management of the Companies.
SECTION 7.8. MONEY JUDGMENT. A final judgment or order for the payment
of money shall be rendered against any Company or any Obligor by a court of
competent jurisdiction, which remains unpaid or unstayed and undischarged for a
period (during which execution shall not be effectively stayed) of thirty (30)
days after the date on which the right to appeal has expired, provided that the
aggregate of all such judgments shall exceed Five Hundred Thousand Dollars
($500,000).
SECTION 7.9. DESIGNATED SENIOR INDEBTEDNESS/ PERMITTED INDEBTEDNESS. If
(a) any Company shall incur or permit to exist any Designated Senior
Indebtedness (as defined in the Indenture) other than the Debt, or (b) the Debt
shall cease to be Permitted Indebtedness (as defined in the Indenture).
37
43
SECTION 7.10. INDENTURE. If (a) any Event of Default (as defined in the
Indenture), or any event or condition which with the lapse of time or giving of
notice or both would constitute an Event of Default (as defined in the
Indenture), shall exist under the Indenture, the Senior Subordinated Notes or
any agreement executed by Borrower in connection therewith, (b) without the
prior written consent of Agents and the Majority Banks, the Indenture or the
Senior Subordinated Notes shall be amended or modified in any respect, or (c)
the Senior Subordinated Notes shall be accelerated for any reason.
SECTION 7.11. VALIDITY OF LOAN DOCUMENTS. (a) The validity, binding
effect or enforceability of any Loan Document against Borrower or any Guarantor
of Payment shall be contested by any Company or any other Obligor; (b) Borrower
or any Guarantor of Payment shall deny that it has any or further liability or
obligation thereunder; or (c) any Loan Document shall be terminated, invalidated
or set aside, or be declared ineffective or inoperative.
SECTION 7.12. SOLVENCY. If any Company or any Obligor shall (a)
discontinue business, (b) generally not pay its debts as such debts become due,
(c) make a general assignment for the benefit of creditors, (d) apply for or
consent to the appointment of a receiver, a custodian, a trustee, an interim
trustee or liquidator of all or a substantial part of its assets, (e) be
adjudicated a debtor or have entered against it an order for relief under Title
11 of the United States Code, as the same may be amended from time to time, (f)
file a voluntary petition in bankruptcy or file a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to take advantage of
any other law (whether federal or state) relating to relief of debtors, or admit
(by answer, by default or otherwise) the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief of debtors, (g) suffer
or permit to continue unstayed and in effect for thirty (30) consecutive days
any judgment, decree or order entered by a court of competent jurisdiction,
which approves a petition seeking its reorganization or appoints a receiver,
custodian, trustee, interim trustee or liquidator of all or a substantial part
of its assets, or (h) take, or omit to take, any action in order thereby to
effect any of the foregoing.
ARTICLE VIII. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or
elsewhere,
SECTION 8.1. OPTIONAL DEFAULTS. If any Event of Default referred to in
Section 7.1, 7.2., 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 or 7.11 hereof shall
occur, the Majority Banks shall have the right in their discretion, by directing
Administrative Agent, on behalf of the Banks, to give written notice to
Borrower, to:
(a) terminate the Commitment and the credits hereby established, if not
previously terminated, and, immediately upon such election, the obligations of
the Banks, and each thereof, to make any further Loan hereunder immediately
shall be terminated, and/or
38
44
(b) accelerate the maturity of all of the Debt (if the Debt is not
already due and payable), whereupon all of the Debt shall become and thereafter
be immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by Borrower.
SECTION 8.2. AUTOMATIC DEFAULTS. If any Event of Default referred to in
Section 7.12 hereof shall occur:
(a) all of the Commitment and the credits hereby established shall
automatically and immediately terminate, if not previously terminated, and no
Bank thereafter shall be under any obligation to grant any further Loan
hereunder, and
(b) the principal of and interest then outstanding on all Notes, and
all of the Debt to the Banks, shall thereupon become and thereafter be
immediately due and payable in full (if the Debt is not already due and
payable), all without any presentment, demand or notice of any kind, which are
hereby waived by Borrower.
SECTION 8.3. OFFSETS. If there shall occur or exist any Event of
Default referred to in Section 7.12 hereof or if the maturity of the Notes is
accelerated pursuant to Section 8.1 or 8.2 hereof, each Bank shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all Debt then owing by Borrower to that Bank (including,
without limitation, any participation purchased or to be purchased pursuant to
Section 8.4 hereof), whether or not the same shall then have matured, any and
all deposit balances and all other indebtedness then held or owing by that Bank
to or for the credit or account of Borrower, all without notice to or demand
upon Borrower or any other Person, all such notices and demands being hereby
expressly waived by Borrower.
SECTION 8.4. EQUALIZATION PROVISION. Each Bank agrees with the other
Banks that if it, at any time, shall obtain any Advantage over the other Banks
or any thereof in respect of the Debt (except under Article III hereof), it
shall purchase from the other Banks, for cash and at par, such additional
participation in the Debt as shall be necessary to nullify the Advantage. If any
such Advantage resulting in the purchase of an additional participation as
aforesaid shall be recovered in whole or in part from the Bank receiving the
Advantage, each such purchase shall be rescinded, and the purchase price
restored (but without interest unless the Bank receiving the Advantage is
required to pay interest on the Advantage to the Person recovering the Advantage
from such Bank) ratably to the extent of the recovery. Each Bank further agrees
with the other Banks that if it at any time shall receive any payment for or on
behalf of Borrower on any indebtedness owing by Borrower to that Bank by reason
of offset of any deposit or other indebtedness, it will apply such payment first
to any and all Debt owing by Borrower to that Bank (including, without
limitation, any participation purchased or to be purchased pursuant to this
Section or any other Section of this Agreement). Borrower agrees that any Bank
so purchasing a participation from the other Banks or any thereof pursuant to
this Section may exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Bank was a
direct creditor of Borrower in the amount of such participation.
39
45
ARTICLE IX. THE AGENTS
The Banks authorize Administrative Agent and Co-Agent, and
Administrative Agent and Co-Agent hereby agree, to act as agents for the Banks
in respect of this Agreement upon the terms and conditions set forth elsewhere
in this Agreement, and upon the following terms and conditions:
SECTION 9.1. APPOINTMENT AND AUTHORIZATION. Each Bank hereby
irrevocably appoints and authorizes Administrative Agent and Co-Agent to take
such action as agent on its behalf and to exercise such powers hereunder as are
delegated to Agents by the terms hereof, together with such powers as are
reasonably incidental thereto. None of Administrative Agent, Co-Agent or any of
their respective directors, officers, attorneys or employees shall be liable for
any action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct.
Except as set forth in this Agreement, neither Administrative Agent nor Co-Agent
shall have the ability to act on behalf of the other except with the express
consent of the other.
SECTION 9.2. NOTE HOLDERS. Agents may treat the payee of any Note as
the holder thereof until written notice of transfer shall have been filed with
it, signed by such payee and in form satisfactory to Agents.
SECTION 9.3. CONSULTATION WITH COUNSEL. Agents may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the opinion of such counsel.
SECTION 9.4. DOCUMENTS. Agents shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Documents or any other Related Writing furnished pursuant hereto or in
connection herewith or the value of any collateral obtained hereunder, and
Agents shall be entitled to assume that the same are valid, effective and
genuine and what they purport to be.
SECTION 9.5. AGENTS AND AFFILIATES. With respect to the Loans, Agents
shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though they were not Agents, and Agents and their
respective affiliates may accept deposits from, lend money to and generally
engage in any kind of business with any Company or affiliate thereof.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and
agreed that Agents shall be entitled to assume that no Unmatured Event of
Default or Event of Default has occurred and is continuing, unless Agents has
been notified by a Bank in writing that such Bank believes that an Unmatured
Event of Default or Event of Default has occurred and is continuing and
specifying the nature thereof.
40
46
SECTION 9.7. ACTION BY AGENTS. So long as Agents shall be entitled,
pursuant to Section 9.6 hereof, to assume that no Unmatured Event of Default or
Event of Default shall have occurred and be continuing, Agents shall be entitled
to use their discretion with respect to exercising or refraining from exercising
any rights which may be vested in it by, or with respect to taking or refraining
from taking any action or actions which it may be able to take under or in
respect of, this Agreement. Agents shall incur no liability under or in respect
of this Agreement by acting upon any notice, certificate, warranty or other
paper or instrument believed by it to be genuine or authentic or to be signed by
the proper party or parties, or with respect to anything which it may do or
refrain from doing in the reasonable exercise of its judgment, or which may seem
to it to be necessary or desirable in the premises.
SECTION 9.8. NOTICES, DEFAULT, ETC. In the event that Agents shall have
acquired actual knowledge of any Unmatured Event of Default or Event of Default,
Agents shall promptly notify the Banks and shall take such action and assert
such rights under this Agreement as the Majority Banks shall direct and Agents
shall inform the other Banks in writing of the action taken. Agents may take
such action and assert such rights as it deems to be advisable, in its
discretion, for the protection of the interests of the holders of the Notes.
SECTION 9.9. INDEMNIFICATION OF AGENTS. The Banks agree to indemnify
Agents (to the extent not reimbursed by Borrower), ratably according to their
Commitment Percentages from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against Agents in their capacity as agent in any way relating to
or arising out of this Agreement or any Loan Document or any action taken or
omitted by Agents with respect to this Agreement or any Loan Document, provided
that no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorney fees) or disbursements resulting from Agents' respective
gross negligence, willful misconduct or from any action taken or omitted by
Agents, or either thereof, in any capacity other than as agent under this
Agreement.
41
47
SECTION 9.10. SUCCESSOR AGENT. Administrative Agent or Co-Agent may
resign as agent hereunder by giving not fewer than thirty (30) days' prior
written notice to Borrower and the Banks. If Administrative Agent or Co-Agent
shall resign under this Agreement, then whichever of Agents which shall not have
resigned shall fulfill the roles of both Administrative Agent and Co-Agent. If
both Agents shall resign under this Agreement, then (a) the Majority Banks shall
appoint from among the Banks a successor agent for the Banks (with the consent
of Borrower so long as an Event of Default has not occurred and which consent
shall not be unreasonably withheld or delayed), or (b) if a successor agent
shall not be so appointed and approved within the thirty (30) day period
following the notice to the Banks of the resignation, then Agents shall appoint
a successor agent (with the consent of Borrower so long as an Event of Default
has not occurred and which consent shall not be unreasonably withheld or
delayed) who shall serve as agent until such time as the Majority Banks appoint
a successor agent (with the consent of Borrower so long as an Event of Default
has not occurred and which consent shall not be unreasonably withheld or
delayed). Upon its appointment, such successor agent shall succeed to the
rights, powers and duties as agent, and the term "Administrative Agent",
"Co-Agent" and "Agents" shall mean such successor effective upon its
appointment, and any former agent's rights, powers and duties as agent shall be
terminated without any other or further act or deed on the part of such former
agent or agents or any of the parties to this Agreement.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank, by its
signature to this Agreement, acknowledges and agrees that neither Administrative
Agent nor Co-Agent has made any representations or warranties, express or
implied, with respect to the creditworthiness, financial condition, or any other
condition of any Company or with respect to the statements contained in any
information memorandum furnished in connection herewith or in any other oral or
written communication between Administrative Agent or Co-Agent, as the case may
be, and such Bank. Each Bank represents that it has made and shall continue to
make its own independent investigation of the creditworthiness, financial
condition and affairs of the Companies in connection with the extensions of
credit hereunder, and agrees that neither Administrative Agent nor Co-Agent have
any duty or responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information with respect thereto
(other than such notices as may be expressly required to be given by
Administrative Agent or Co-Agent, or both, to the Banks hereunder), whether
coming into its possession before the granting of the first Loans hereunder or
at any time or times thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of Agents, any Bank or the holder of any Note in exercising
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are cumulative and in addition
to any other rights, powers or privileges held by operation of law, by contract
or otherwise.
42
48
SECTION 10.3. AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Banks and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
Notwithstanding the foregoing provision to the contrary, the consent of the
holders of eighty-one percent (81%) of the amount of the Commitment, or, if
there is borrowing hereunder, the holders of eighty one percent (81%) of the
amount of the Notes, shall be required with respect to Section 5.7 hereof.
Furthermore, anything herein to the contrary notwithstanding, unanimous consent
of the Banks shall be required with respect to (a) any increase in the
Commitment hereunder, (b) the extension of maturity of the Notes, the payment
date of interest thereunder, or the payment of commitment or other fees or
amounts payable hereunder, (c) any reduction in the rate of interest on the
Notes, or in any amount of principal or interest due on any Note, or the payment
of commitment or other fees or amounts payable hereunder or any change in the
manner of pro rata application of any payments made by Borrower to the Banks
hereunder, (d) any change in any percentage voting requirement, voting rights,
or the Majority Banks definition in this Agreement, (e) the release of any
Guarantor of Payment, any collateral or any other security for the Debt (if
any), or (f) any amendment to this Section 10.3 or Section 8.4 hereof. Notice of
amendments or consents ratified by the Banks hereunder shall immediately be
forwarded by Borrower to all Banks. Each Bank or other holder of a Note shall be
bound by any amendment, waiver or consent obtained as authorized by this
Section, regardless of its failure to agree thereto.
SECTION 10.4. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Bank, mailed or delivered to it,
addressed to the address of such Bank specified on the signature pages of this
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each of the other parties. All notices,
statements, requests, demands and other communications provided for hereunder
shall be deemed to be given or made when delivered or forty-eight (48) hours
after being deposited in the mails with postage prepaid by registered or
certified mail, addressed as aforesaid, or sent by facsimile with telephonic
confirmation of receipt, except that all notices hereunder shall not be
effective until received.
SECTION 10.5. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on
demand all reasonable costs and expenses of Agents, including, but not limited
to, (a) administration and out-of-pocket expenses, including, but not limited to
reasonable attorneys' fees and expenses, of Administrative Agent in connection
with the preparation, negotiation and closing of the Loan Documents and the
administration of the Loan Documents, the collection and disbursement of all
funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agents in connection with the
administration of the Loan Documents and the other instruments and documents to
be delivered hereunder, (c) the reasonable fees and out-of-pocket expenses of
special counsel for the Banks, with respect to the foregoing, and of local
counsel, if any, who may be retained by said special counsel with respect
thereto, and (d) all costs and expenses, including reasonable attorneys' fees,
in connection with the restructuring or enforcement of the Debt, the Loan
Documents or any Related Writing. In addition, Borrower shall
43
49
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution and delivery of the Loan Documents, and
the other instruments and documents to be delivered hereunder, and agrees to
hold Agent and each Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
SECTION 10.6. INDEMNIFICATION. Borrower agrees to defend, indemnify and
hold harmless Agents and the Banks from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorney fees) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent, Co-Agent or any Bank in connection with any investigative,
administrative or judicial proceeding (whether or not such Bank, Administrative
Agent or Co-Agent shall be designated a party thereto) or any other claim by any
Person relating to or arising out of this Agreement or any actual or proposed
use of proceeds of the Loans or any of the Debt, or any activities of any
Company or any Obligor or any of their affiliates; provided that no Bank,
Administrative Agent nor Co-Agent shall have the right to be indemnified under
this Section for its own gross negligence or willful misconduct as determined by
a court of competent jurisdiction. All obligations provided for in this Section
10.6 shall survive any termination of this Agreement.
SECTION 10.7. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS. The
obligations of the Banks hereunder are several and not joint. Nothing contained
in this Agreement and no action taken by Agents or the Banks pursuant hereto
shall be deemed to constitute the Banks a partnership, association, joint
venture or other entity. No default by any Bank hereunder shall excuse the other
Banks from any obligation under this Agreement; but no Bank shall have or
acquire any additional obligation of any kind by reason of such default. The
relationship among Borrower and the Banks with respect to the Loan Documents and
the Related Writings is and shall be solely that of debtor and creditors,
respectively, and Agents or any Bank shall not have any fiduciary obligation
toward Borrower with respect to any such documents or the transactions
contemplated thereby.
SECTION 10.8. 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 taken together shall constitute but one and the
same agreement.
SECTION 10.9. BINDING EFFECT; BORROWER'S ASSIGNMENT. This Agreement
shall become effective when it shall have been executed by Borrower, Agents and
by each Bank and thereafter shall be binding upon and inure to the benefit of
Borrower, Agents and each of the Banks and their respective successors and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of Agents and
all of the Banks.
44
50
SECTION 10.10. ASSIGNMENTS/PARTICIPATIONS.
A. Assignments of Commitment. Each Bank shall have the right at any
time or times to assign to another financial institution, without recourse, all
or a percentage of all of the following (a) that Bank's Commitment, (b) all
Loans made by that Bank, (c) that Bank's Notes, and (d) that Bank's interest in
any participation purchased pursuant to Section 8.4; provided, however, in each
such case, that the assignor and the assignee shall have complied with the
following requirements:
(i) Prior Consent. No assignment may be consummated pursuant to this
Section 10.10 without the prior written consent of Borrower and Agents (other
than an assignment by any Bank to any affiliate of such Bank which affiliate is
either wholly-owned by such Bank or is wholly-owned by a Person that
wholly-owns, either directly or indirectly, such Bank), which consent of
Borrower and Agents shall not be unreasonably withheld; provided, however, that,
Borrower's consent shall not be required if, at the time of the proposed
assignment any Unmatured Event of Default or Event of Default shall have
occurred. Anything herein to the contrary notwithstanding, any Bank may at any
time make a collateral assignment of all or any portion of its rights under the
Loan Documents to a Federal Reserve Bank, and no such assignment shall release
such assigning Bank from its obligations hereunder;
(ii) Minimum Amount. Each such assignment shall be in a minimum amount
of the lesser of Ten Million Dollars ($10,000,000) of the assignor's Commitment
and interest herein or the entire amount of the assignor's Commitment and
interest herein;
(iii) Assignment Fee; Assignment Agreement. Unless the assignment shall
be to an affiliate of the assignor or the assignment shall be due to merger of
the assignor or for regulatory purposes, either the assignor or the assignee
shall remit to Administrative Agent, for its own account, an administrative fee
of Three Thousand Dollars ($3,000). Unless the assignment shall be due to merger
of the assignor or a collateral assignment for regulatory purposes, the assignor
shall (A) cause the assignee to execute and deliver to Borrower and
Administrative Agent an Assignment Agreement, and (B) execute and deliver, or
cause the assignee to execute and deliver, as the case may be, to Administrative
Agent such additional amendments, assurances and other writings as
Administrative Agent may reasonably require;
(iv) Non-U.S. Assignee. If the assignment is to be made to an assignee
that is organized under the laws of any jurisdiction other than the United
States or any state thereof, the assignor Bank shall cause such assignee, at
least five (5) Business Days prior to the effective date of such assignment, (A)
to represent to the assignor Bank (for the benefit of the assignor Bank,
Administrative Agent and Borrower) that under applicable law and treaties no
taxes will be required to be withheld by Administrative Agent, Borrower or the
assignor with respect to any payments to be made to such assignee in respect of
the Loans hereunder, (B) to furnish to the assignor (and, in the case of any
assignee registered in the Register (as defined below), Administrative Agent and
Borrower) either (1) U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 or (2) United States Internal Revenue Service Form W-8
or W-9, as applicable (wherein such assignee claims entitlement to complete
exemption from U.S. federal withholding tax on all
45
51
interest payments hereunder), and (C) to agree (for the benefit of the assignor,
Administrative Agent and Borrower) to provide the assignor Bank (and, in the
case of any assignee registered in the Register, Administrative Agent and
Borrower) a new Form 4224 or Form 1001 or Form W-8 or W-9, as applicable, upon
the expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such assignee, and to comply from time
to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
Upon satisfaction of the requirements specified in clauses (i) through
(iv) above, Borrower shall execute and deliver (A) to Administrative Agent, the
assignor and the assignee, any consent or release (of all or a portion of the
obligations of the assignor) required to be delivered by Borrower in connection
with the Assignment Agreement, and (B) to the assignee, an appropriate Note or
Notes. After delivery of the new Note or Notes, the assignor's Note or Notes
being replaced shall be returned to Borrower marked "replaced".
Upon satisfaction of the requirements set forth in (i) through (iv),
and any other condition contained in this Section 10.10A, (A) the assignee shall
become and thereafter be deemed to be a "Bank" for the purposes of this
Agreement, (B) in the event that the assignor's entire interest has been
assigned, the assignor shall cease to be and thereafter shall no longer be
deemed to be a "Bank" and (C) the signature pages hereto and SCHEDULE 1 hereof
shall be automatically amended, without further action, to reflect the result of
any such assignment.
Administrative Agent shall maintain at its address referred to in
Section 10.4 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Banks and the Commitment of, and principal amount of the Loans owing to, each
Bank from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and Borrower, Agents and the Banks may treat each
financial institution whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Bank at any reasonable time and from
time to time upon reasonable prior notice.
B. Sale of Participations. Each Bank shall have the right at any time
or times, without the consent of Agents or Borrower, to sell one or more
participations or sub-participations to a financial institution, as the case may
be, in all or any part of (a) that Bank's Commitment, (b) that Bank's Commitment
Percentage, (c) any Loan made by that Bank, (d) any Note delivered to that Bank
pursuant to this Agreement, and (e) that Bank's participations, if any,
purchased pursuant to Section 8.4 or this Section 10.10B.
The provisions of Article III and Section 10.6 shall inure to the
benefit of each purchaser of a participation or sub-participation and
Administrative Agent shall continue to distribute payments pursuant to this
Agreement as if no participation has been sold.
If any Bank shall sell any participation or sub-participation, that
Bank shall, as between itself and the purchaser, retain all of its rights
(including, without limitation, rights to enforce against
46
52
Borrower the Loan Documents and the Related Writings) and duties pursuant to the
Loan Documents and the Related Writings, including, without limitation, that
Bank's right to approve any waiver, consent or amendment pursuant to Section
10.3, except if and to the extent that any such waiver, consent or amendment
would:
(i) reduce any fee or commission allocated to the
participation or sub-participation, as the case may
be,
(ii) reduce the amount of any principal payment on any
Loan allocated to the participation or
sub-participation, as the case may be, or reduce the
principal amount of any Loan so allocated or the rate
of interest payable thereon, or
(iii) extend the time for payment of any amount allocated
to the participation or sub-participation, as the
case may be.
No participation or sub-participation shall operate as a delegation of
any duty of the seller thereof. Under no circumstance shall any participation or
sub-participation be deemed a novation in respect of all or any part of the
seller's obligations pursuant to this Agreement.
SECTION 10.11. SEVERABILITY OF PROVISIONS; CAPTIONS; ATTACHMENTS. Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. The several captions to Sections and subsections
herein are inserted for convenience only and shall be ignored in interpreting
the provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be deemed to be a part hereof.
SECTION 10.12. INVESTMENT PURPOSE. Each of the Banks represents and
warrants to Borrower that it is entering into this Agreement with the present
intention of acquiring any Note issued pursuant hereto for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Bank shall at all times retain full control over the
disposition of its assets.
SECTION 10.13. ENTIRE AGREEMENT. This Agreement, any Note and any other
Loan Document or other agreement, document or instrument attached hereto or
referred to herein or executed on or as of the Closing Date integrate all the
terms and conditions mentioned herein or incidental hereto and supersede all
oral representations and negotiations and prior writings with respect to the
subject matter hereof. This Agreement is intended to, and Borrower, Agents and
the Banks agree that this Agreement shall, (a) constitute "New Credit Facility"
(as defined in the Indenture), and (b) be a replacement of the Credit Agreement
dated as of April 11, 1995, as amended, among Borrower, KeyBank National
Association (successor by merger to Society National Bank), as Agent, and the
banking institutions listed on Annex 1 attached thereto, and the Credit
Agreement dated as of January 14, 1998 among Borrower, KeyBank National
Association, as
47
53
Administrative Agent, The Huntington National Bank, as Co-Agent, and the banking
institutions listed on Schedule 1 attached thereto.
SECTION 10.14. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement, each of the Notes and any Related Writing shall be governed by and
construed in accordance with the laws of the State of Ohio and the respective
rights and obligations of Borrower and the Banks shall be governed by Ohio law,
without regard to principles of conflict of laws. Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this Agreement, any Loan Document or any Related Writing, and
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably waives,
to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of venue in any action or proceeding in any such court as
well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to another court on the grounds of FORUM NON
CONVENIENS or otherwise. Borrower agrees that a final, nonappealable judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
[Remainder of page intentionally left blank.]
48
54
SECTION 10.15. JURY TRIAL WAIVER. BORROWER, AGENTS AND EACH OF THE
BANKS WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENTS AND THE
BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. THIS
WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY AGENTS' OR ANY
BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT AMONG BORROWER, AGENTS AND THE BANKS, OR ANY THEREOF.
Address: 00000 Xxxxxx Xxxxxx PARK-OHIO INDUSTRIES, INC.
Xxxxxx, Xxxx 00000
Attention: Corporate Secretary By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx, Vice President
and /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, Secretary
Address: Key Center KEYBANK NATIONAL ASSOCIATION,
000 Xxxxxx Xxxxxx as a Bank and as Administrative Agent
Xxxxxxxxx, Xxxx 00000-0000
Attention: Commercial Loans- By: /s/ Xxxxxxx X. Xxxxxx
Cleveland District ---------------------------------
Xxxxxxx X. Xxxxxx, Vice President
Address: Huntington Building THE HUNTINGTON NATIONAL BANK,
000 Xxxxxx Xxxxxx as a Bank and as Co-Agent
Xxxxxxxxx, Xxxx 00000
Attention: Commercial By: /s/ Xxxxxxx X. Xxxx
Banking Division ---------------------------------
Xxxxxxx X. Xxxx, Vice President
49
