LOAN AGREEMENT
Dated as of September 9, 1998
Among
EDO CORPORATION,
the Borrower
MELLON BANK, N.A.
EUROPEAN AMERICAN BANK and
KEYBANK, NA,
collectively, the Lenders
and
MELLON BANK, N.A.,
as the Agent and the Issuing Bank
LOAN AGREEMENT, dated as of September 9,1998, among EDO CORPORATION, a New York
corporation ("Borrower"); MELLON BANK, N.A., a national banking association
("Mellon"); EUROPEAN AMERICAN BANK, a commercial bank organized and existing
under the laws of the State of New York ("EAB"); KEYBANK, NA, a national
banking association ("KeyBank"; Mellon, EAB and KeyBank are hereinafter each
referred to individually as a "Lender", and collectively as the "Lenders");
Mellon, as issuer of the Letters of Credit (Mellon, in such capacity, and any
successor issuing bank shall be referred to hereinafter as the "Issuing Bank")
and Mellon, as agent for the Lenders and the Issuing Bank (Mellon, in such
capacity, and any successor agent shall be referred to hereinafter as the
"Agent").
BACKGROUND
At the Borrower's request the Lenders have agreed to provide the Revolving
Credit to the Borrower, the Issuing Bank has agreed to issue Letters of Credit
and the Lenders have agreed to participate in the Letter of Credit Liability,
in each case on the terms and conditions herein contained. The purposes of the
Revolving Credit are (A) to help finance acquisitions otherwise permitted
pursuant to Section 6.15 hereof or consented to in writing by the Agent, and
(B) for working capital and general corporate purposes.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section I.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined): "Account" has the
meaning given to such term in the U.C.C.
"Accumulated Funding Deficiency" has the meaning given to such term in section
302(a)(2) of ERISA.
"Acquisition Consideration" means the sum of (without duplication) (A) cash
paid, (B) debt incurred or assumed, (C) guarantees given or incurred and (D)
the value of any other consideration given by the Borrower or any of its
Subsidiaries in connection with a Permitted Acquisition.
"Adjusted Base Rate" means the Floating Base Rate plus the Applicable Margin.
The Adjusted Base Rate shall change simultaneously with each change in the
Floating Base Rate or Applicable Margin.
"Adjusted LIBOR" means LIBOR plus the Applicable Margin.
"Administrative Fee" has the meaning given to such term in Section 2.4 hereof.
"Advance" has the meaning given to such term in Section 2.1 hereof.
"Affiliate" of any Person means (A) any other Person who directly or indirectly
controls, is controlled by, or is under common control with such Person and (B)
any director or officer (or, in the case of a Person which is not a
corporation, any individual having analogous powers) of such Person or of a
Person who is an Affiliate of such Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person whether through the ownership of voting
securities, by contract or otherwise, provided that no employee, officer or
director of such Person shall be considered an Affiliate of such Person solely
by reason of their status as such an officer, director or employee.
"Agent" has the meaning given to such term in the introductory paragraph
hereof.
"Agreement" means this Loan Agreement, as the same may be amended,
supplemented, or modified from time to time.
"Amount of Unfunded Benefit Liabilities" has the meaning given to such term in
section 4001(a)(18) of ERISA.
"Applicable Margin" means for Base Rate Loans, 0% per annum, and for LIBOR
Loans, 1.5% per annum, provided that so long as no Event of Default has
occurred and is continuing hereunder, from and after September 1, 1998, the
foregoing shall continue in effect unless otherwise specified in accordance
with the table and text below:
If the ratio of Net Total Debt Then the Applicable Margin is
to EBITDA is: For Base Rate Loans: For LIBOR Loans:
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Less than 2.0 0% 1.5%
2.0 or greater but less than 2.5 0% 2.0%
2.5 or greater but less than 3.0 0% 2.25%
3.0 or greater but less than 3.5 0.25% 2.5%
3.5 or greater 0.25% 2.75%
The calculation of the Applicable Margin pursuant to the above table shall be
made each time the Borrower is required to submit a Compliance Certificate
hereunder, based upon the immediately preceding twelve (12) month period, as
reflected in the Compliance Certificate delivered by the Borrower and the
Consolidated balance sheet as of the last day of such period and supporting
calculations for such period. In the event that the Applicable Margin changes,
such change shall become effective, for the then outstanding principal balance
of the Revolving Credit and all Advances thereafter made, as of the first day
of the month immediately following the month in which the Compliance
Certificate of the Borrower is delivered to the Agent.
"Assignment Agreement" has the meaning given to such term in Section 9.11
hereof.
"Associate" of any Person means (A) any corporation or organization of which
such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity securities, (B) any
trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity, (C) any relative or spouse of such Person, or any relative of such
spouse, (D) if such Person is a corporation, any officer or director of such
Person, or (E) if such Person is a partnership, any partner in such Person.
"Automotive" means EDO Automotive Natural Gas, Inc., a Delaware corporation.
"Xxxxxx" means Xxxxxx Engineering Co., a Delaware corporation.
"Base Rate Loans" means any portion of the Revolving Credit to which the
Adjusted Base Rate is applicable.
"Books and Records" has the meaning given to such term in Section 3.1 hereof.
"Borrower" has the meaning given to such term in the introductory paragraph
hereof.
"Borrowing Base" means the sum of (A) 85% of billed Eligible Accounts other
than International Accounts qualifying as Eligible Accounts by reason of the
proviso contained in clause (L) of the definition of "Eligible Accounts" plus
(B) 65% of billed International Accounts qualifying as Eligible Accounts by
reason of the proviso contained in clause (L) of the definition of "Eligible
Accounts", plus (C) 40% of Eligible Unbilled Accounts plus (D) the least of (1)
25% of Eligible Inventory, (2) $10,000,000.00 or (3) 30% of the Commitment
being utilized as of the date of determination; provided that with respect to
clauses (B) and (C), the Agent, in its sole discretion, may, from time to time,
reduce the foregoing percentages as they apply to International Accounts; and
provided further that the Agent shall have the right to determine whether and
to what extent Eligible Accounts, Eligible Unbilled Accounts and Eligible
Inventory of a Subsidiary of the Borrower hereafter created or acquired is to
be included in the Borrowing Base.
"Borrowing Base Certificate" means a certificate of the Borrower in the form
attached hereto as Exhibit 2.2(A).
"Business Day" means a day other than a Saturday, Sunday, or other day on which
banks are authorized or required to close under the laws of Pennsylvania or
under Federal law.
"Cash Equivalents" means (A) securities issued or fully guaranteed or insured
by the United States Government or any agency or instrumentality thereof, (B)
time deposits, certificates of deposit or bankers' acceptances of (1) any
Lender or (2) any commercial bank having capital and surplus in excess of
$100,000,000.00 and the commercial paper of the holding company of which is
rated at least A-2 or the equivalent thereof by Standard & Poor's Ratings Group
(a division of McGraw Hill Inc.) or any successor rating agency ("S&P") or at
least P-2 or the equivalent thereof by Xxxxx'x Investors Service, Inc. or any
successor rating agency ("Moody's") (or if at such time neither is issuing
ratings, then a comparable rating of such other nationally recognized rating
agency as shall be approved by the Agent in its reasonable judgment), (C)
commercial paper rated at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's (or if at such time neither is
issuing ratings, then a comparable rating of such other nationally recognized
rating agency as shall be approved by the Agent in its reasonable judgment),
(D) investments in money market funds complying with the risk limiting
conditions of Rule 2a-7 or any successor rule of the Securities and Exchange
Commission under the Investment Company Act, in each case provided in clauses
(A), (B), (C), and (D) above, maturing within twelve months after the date of
acquisition, and (E) any other security or obligation consistent with the EDO
Corporation Investment Policy/Guidelines in effect on the date hereof, as
described on Exhibit 1.1(D) attached hereto and made a part hereof.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information Systems List, as the same may be amended from time to
time.
"Chattel Paper" has the meaning given to such term in the U.C.C..
"Closing Date" means the first date on which all of the conditions precedent
set forth in Article IV are satisfied.
"COBRA Violation" means any violation of the "continuation coverage
requirements" of "group health plans" of former section 162(k) of the Code (as
in effect for tax years beginning on or before December 31, 1988) and of
section 4980B of the Code (as in effect for tax years beginning on or after
January 1, 1989) and Part 6 of Subtitle B of Title I of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Collateral" means all property which serves or is intended to serve as
collateral for any of the Liabilities hereunder, under any of the Loan
Documents and/or any other agreement, document or instrument now or hereafter
entered into.
"Commitment" means, as determined from time to time, the lesser of (A) Thirty
Million Dollars ($30,000,000.00) less any reduction of the unutilized principal
of the Revolving Credit in accordance with Sections 2.1(D) or 2.6 hereof, or
(B) the Borrowing Base.
"Commitment Fee" has the meaning given to such term in Section 2.4 hereof.
"Compliance Certificate" means a certificate of the chief financial officer of
the Borrower in substantially the form of Exhibit 1.1(C) attached hereto and
made a part hereof as to each of the following: (A) the absence of any Default
or Event of Default on such date, or, if any Default or Event of Default then
exists, the existence of each, with a description thereof in reasonable detail
and a statement of the action taken and to be taken by the Borrower to cure or
attempt to cure each such Default or Event of Default (provided that the
acceptance by any of the Lender Group of a Compliance Certificate stating that
any Default or Event of Default has occurred shall not constitute a waiver of
any such Default or Event of Default or remedy available as a result thereof),
(B) the truth of the representations and warranties herein and in the other
Loan Documents as of such date, and (C) compliance (or if required by the terms
of this Agreement respecting delivery of a Compliance Certificate, pro forma
compliance after taking into account the acquisitions or other events
triggering the requirement herein for such pro forma Compliance Certificate)
with the financial covenants and limitations set forth in Sections 6.4, 6.15,
6.17, 6.24, 6.25, 6.26, 6.27, 6.28, 6.29, 6.30 and 6.31.
"Consents" has the meaning given to such term in Section 4.1 hereof.
"Consolidated" refers to the consolidation of the accounts of the Borrower and
its Subsidiaries in accordance with GAAP, including principles of
consolidation.
"Consolidated Net Worth" means, as of the date of determination, the
stockholder equity of the Borrower and its Subsidiaries, on a Consolidated
basis.
"Consolidating" refers to the separation of the accounts of the Borrower and
its Subsidiaries in accordance with GAAP.
"Contingent Liability" means as to the Borrower and its Subsidiaries (for
purposes of this definition, collectively referred to as "guaranteeing person")
any obligation of (A) the guaranteeing person or (B) another Person (including,
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counterindemnity
or similar obligation, in either case guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations (the "primary
obligations") of any other third Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, any such
obligation of the guaranteeing person, whether or not contingent, (1) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (2) to advance or supply funds (a) for the purchase
or payment of any such primary obligation or (b) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (3) to purchase property, security or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (4) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided, however, that the
term Contingent Liability shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Liability of any guaranteeing person shall be deemed to be the lower
of (i) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Liability is made and (ii) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Contingent Liability, unless such
primary obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount of such
Contingent Liability shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof.
"Contribution Amount" means that portion of the amount which the Borrower (or
any of the Guarantors) are required to contribute from time to time to the ESOT
to enable the ESOT to pay amounts owing under the ESOT Loan Documents as they
become due, which is expensed on the financial statements of the Borrower in
accordance with GAAP.
"Controlled Group" means all trades or businesses which are under common
control (as defined in section 4001(b)(1) of ERISA) with the Borrower or any of
its Subsidiaries.
"Credit Obligation" means any obligation for the payment of Indebtedness,
including without limitation for borrowed money or the installment purchase
price of property or on account of a lease of property which, in accordance
with GAAP, is capitalized, and also means any obligation under a guaranty or
suretyship agreement covering obligations of such type.
"Current Maturities" means (A) those portions of Credit Obligations of the
Borrower and its Subsidiaries determined on a Consolidated basis, including
without limitation capital leases and the Liabilities, and (B) those portions
of the ESOT Loan, , in each such case that was payable over the previous one
year period, and in the case of any payment of the Revolving Credit, to the
extent that the amount of such prepayment is not available for reborrowing due
to a reduction in Commitment in accordance with Section2.6.
"Default" means the occurrence or non-occurrence of an event which but for the
giving of notice, the passage of time, or both would constitute an Event of
Default.
"Default Rate" has the meaning given to such term in Section 2.8 hereof.
"Defined Benefit Pension Plan" means an employee benefit pension plan (other
than a Multiemployer Plan) covered by Title IV of ERISA as provided in section
4021 of ERISA.
"Defined Contribution Plan" means an individual account plan as defined in
section 3(34) of ERISA.
"Delinquent Purchaser" means a Purchaser more than thirty percent (30%) of
whose aggregate Account indebtedness to the Borrower and/or its Subsidiaries or
any of them is more than 90 days past due.
"Documents" has the meaning given to such term in the U.C.C.
"Dollars" and "$" mean lawful money of the United States of America.
"Domestic Subsidiary" means a Subsidiary of the Borrower or any of its
Subsidiaries which is organized under the laws of the United States or of one
of the states or territories thereof.
"EBITDA" means, on any date of determination, with respect to the Borrower and
its Subsidiaries determined on a Consolidated basis, net income prior to income
taxes for the last four (4) consecutive, completed fiscal quarters ending on or
prior to such date of determination (or where expressly set forth herein, from
and after a certain date), adjusted to exclude the following items (without
duplication) of income or expenses to the extent that such items are included
in the calculations of net income: (A) Interest Expense, (B) any non-cash
expenses and charges, (C) total income tax expense, (D) depreciation expense,
(E) the expense associated with amortization of intangible and other assets
(including amortization or other expense recognition of any costs associated
with asset write-ups in accordance with APB Nos. 16 and 17), (F) non-cash
provisions for reserves for discontinued operations, (G) any extraordinary,
unusual or non-recurring gains or losses or charges or credits, (H) any gain or
loss associated with the sale or write-down of assets not in the ordinary
course of business, (I) any income or loss accounted for by the equity method
of accounting (except in the case of income to the extent of the amount of cash
dividends or cash distributions paid to the Borrower or any of its Subsidiaries
by the entity accounted for by the equity method of accounting) and (J) the
Contribution Amount.
"Effective Date" means, for LIBOR Loans, the date the Borrower designates as
the date on which a LIBOR Interest Period is to commence pursuant to Article II
hereof.
"Eligible Account" means any Account created in an arm's length transaction
which meets all of the following specifications at the time of determination of
Eligible Accounts: (A) the Account is lawfully owned by the Borrower or any of
its Subsidiaries free and clear of all liens, security interests or prior
assignments (except as contemplated in the Intercreditor Agreement), and the
Borrower or such Subsidiary has the right to grant a security interest therein
(subject to the procedures required to effect and/or perfect such assignment or
grant, set forth in applicable federal or state law); (B) the Account is valid
and enforceable; (C) the amount of the Eligible Accounts from each Purchaser
shall be net of (1) the aggregate amount subject to any defense, set-off,
counterclaim, warranty claim, credit, allowance or adjustment relating to
Eligible Accounts, and (2) the credit balance of any defense, set-off,
counterclaim, warranty, claim, credit, allowance or adjustment relating to an
Account which is not an Eligible Account; (D) if the Account arises from the
sale of goods, to the extent such goods have been delivered, the Purchaser has
accepted such goods, and no part of such goods have been returned, rejected,
lost or damaged; (E) if the Account arises from the sale of goods by the
Borrower or any of its Subsidiaries, such sale was an absolute sale and not on
consignment or on approval or on a sale-or-return basis nor subject to any
other repurchase or return agreements, and such goods have been shipped or
otherwise made available to the Purchaser in accordance with the Borrower's or
such Subsidiary's agreements with such Purchaser; (F) if the Account arises
from the performance of services, such services have actually been performed;
(G) the Account has arisen in the ordinary course of business of the Borrower
or any of its Subsidiaries; (H) no notice of the bankruptcy, receivership,
reorganization or insolvency of the Purchaser owing such Account has been
received by the Agent, any Lender, the Borrower or any of its Subsidiaries,
provided that if an Account included by the Borrower as an Eligible Account on
a Borrowing Base Certificate is rejected by the Agent solely for the reason set
forth in this clause (H), the Agent shall promptly notify the Borrower thereof
(either orally or in writing); (I) the Account has been invoiced on or about
the date on which the Inventory or other goods or the performance of service to
which such invoice relates has been delivered or performed, as the case may be,
and has remained unpaid for less than 91 days from the earlier of the date of
shipment or the date of invoice; (J) if (1) the Purchaser is a state, territory
or local government or governmental agency that has in effect a statute,
regulation or other law relating to the assignment of claims or payments under
contracts with such state, territory or local governments or governmental
agency, and (2) such Account arises under a contract or agreement or in
connection with a transaction from which the Borrower or any of its
Subsidiaries reasonably anticipates total invoices to equal or exceed
$1,000,000.00 or if otherwise required by the Agent, then the Borrower or such
Subsidiary has delivered to the Agent all notices, assignments and other
instruments necessary for such Account to have been effectively assigned and
perfected under such statute (whether or not the Agent shall have delivered,
recorded and/or filed any such notices, assignments or other instruments as may
be required by such state law); (K) the Purchaser is not the Federal government
or any Federal governmental agency except to the extent (1) such agency and the
subject Account are subject to the Federal Assignment of Claims Act, and (2) if
the Account arises under a contract or agreement or in connection with a
transaction from which the Borrower or any of its Subsidiaries reasonably
anticipates total invoices to equal or exceed $1,000,000.00 or if otherwise
required by the Agent, the Borrower or such Subsidiary has delivered to the
Agent all notices, assignments and other instruments necessary for such Account
to have been assigned and notice given under the Federal Assignment of Claims
Act (whether or not the Agent shall have delivered such notice and assignment
to the applicable governmental agency in accordance with the Federal Assignment
of Claims Act); (L) the Account is not an International Account, unless such
Account is a Secured Account, provided however that, at each time of
determination at the request of the Borrower the Agent shall have the right at
its sole discretion to designate as Eligible Accounts up to an aggregate of
$4,000,000.00 of International Accounts not constituting Secured Accounts but
satisfying the other requirements of an Eligible Account; (M) the payment for
such Account has not been returned uncollected for any reason; (N) the
Purchaser for such Account is not otherwise in default pursuant to the terms
underlying the agreement creating such Account; (O) the Purchaser owing such
Account is not the Borrower or an Affiliate or Subsidiary of the Borrower; (P)
the Account is not a contra Account; (Q) the Account is not owed by a
Delinquent Purchaser or any Subsidiary or Affiliate of a Delinquent Purchaser;
(R) the Account is subject to a first priority perfected security interest in
favor of the Agent for the benefit of the Lender Group subject only to those
Permitted Encumbrances which are permitted to be senior to or pari passu with
the security interest of the Agent pursuant to Section 6.4 hereof; (S) the
Purchaser owing such Account is located in and maintains assets in a state the
courts of which are available to the owner of such Account to enforce such
Account without the need of such owner to cure any failure to qualify to do
business, to file any overdue tax returns, to pay any past due tax due, to file
any past due business activities reports or to comply with any other
requirement for the use of such courts; (T) if such Account is evidenced or
secured by an Instrument, a letter of credit or a judgment, any and all such
judgments have been assigned to the Agent, copies (or if requested by the
Agent, originals) of any such Instruments and letters of credit have been
delivered to the Agent and if requested by the Agent assigned to the Agent; and
(U) such Account is otherwise acceptable to the Agent in its reasonable
judgment; provided however that the Agent may adjust the standard for
determination of Eligible Accounts upon completion of any field audit to the
extent the Agent reasonably determines any such adjustment to be necessary or
appropriate. It is expressly understood and agreed that if the Borrower or any
of its Subsidiaries, (i) has been debarred or suspended by any governmental
authority, or has been issued a notice of proposed debarment or notice of
proposed suspension by any governmental authority; (ii) is a party to any
contractual obligation with any governmental authority which has been actually
terminated due to such Borrower's or Subsidiary's alleged fraud, willful
misconduct or any other wrongdoing; (iii) is a party to any contractual
obligation with any governmental authority which has been actually terminated
for any other reason whatsoever, which could result in liability or expense in
excess of Two Million Five Hundred Thousand Dollars ($2,500,000.00), or (iv)
has been issued a cure notice or show cause notice under any contractual
obligation with any governmental authority involving amounts in excess of Two
Million Five Hundred Thousand Dollars ($2,500,000.00) and has failed to cure
the default giving rise to such cure notice or failed to resolve the matter set
forth in the show cause notice (a) within the time period available to the
Borrower or such Subsidiary, pursuant to such contractual obligation with any
governmental authority and/or such notice or (b) before the date on which the
contractual obligation terminates as a consequence of such default or matter
set forth in the show cause notice then in any such event, any and all Accounts
of such Borrower or Subsidiary, may, in the sole but reasonable discretion of
the Agent, be deemed and treated by the Agent as ineligible Accounts and shall
not be "Eligible Accounts".
"Eligible Assignee" means: (A) a commercial bank organized under the laws of
the United States, or any State thereof, and having total assets in excess of
$100,000,000.00; (B) any Lender or any Affiliate of any Lender having a net
worth of at least $100,000,000.00; (C) a savings and loan association or
savings bank organized under the laws of the United States, or any state
thereof, and having net worth of at least $100,000,000.00; or (D) a finance
company, insurance company or other financial institution or investment entity
having total assets in excess of $100,000,000.00 (whether a corporation,
partnership, trust or other entity) which is engaged in making, purchasing or
otherwise investing in commercial loans of a revolving nature in the ordinary
course of its business.
"Eligible Inventory" means Inventory of the Borrower or any of its Subsidiaries
valued at the lower of cost or market, which: (A) is work-in-process, raw
materials or finished goods; (B) is not being held on consignment; (C) is not
subject to a security interest except in favor of the Agent for the benefit of
the Lender Group and except for Permitted Encumbrances; (D) is located at one
of the locations identified on Exhibit 3.6 hereto and is stored in a manner
acceptable to the Agent; (E) conforms in all respects to the representations
and warranties relating to Inventory contained herein; (F) is subject to a
first priority perfected security interest in favor of the Agent for the
benefit of the Lender Group subject only to those Permitted Encumbrances which
are senior to or pari passu with the security interest of the Agent pursuant to
Section 6.4 hereof; and (G) is otherwise acceptable to the Agent in its
reasonable judgment.
"Eligible Unbilled Account" means an Account created in an arm's length
transaction which is an "unbilled account" according to GAAP which meets all of
the following specifications at the time of determination (A) the Account is
lawfully owned by the Borrower or any of its Subsidiaries free and clear of all
liens, security interests or prior assignments (except as contemplated in the
Intercreditor Agreement), and the Borrower or such Subsidiary has the right to
grant a security interest therein (subject to the procedures required to effect
and/or perfect such assignment or grant, set forth in applicable federal or
state law); (B) no notice of the bankruptcy, receivership, reorganization or
insolvency of the Purchaser with respect to such Account has been received by
the Agent, any Lender, the Borrower or any of its Subsidiaries, provided that,
if an Account included by the Borrower as an Eligible Unbilled Account on a
Borrowing Base Certificate is rejected by the Agent solely for the reason set
forth in this clause (B), the Agent shall notify the Borrower thereof (either
orally or in writing); (C) the Purchaser with respect to such Account is not
the Borrower or an Affiliate or Subsidiary of the Borrower; (D) the Account is
subject to a first priority perfected security interest in favor of the Agent
for the benefit of the Lender Group, subject only to those Permitted
Encumbrances which are permitted to be senior or pari passu with the security
interest of the Agent pursuant to Section 6.4 hereof; (E) if such Account
relates to a purchase order or contract, such purchase order or contract is the
valid and enforceable obligation of the Purchaser owed to and owned by the
Borrower or any of its Subsidiaries free and clear of all liens, security
interests or prior assignments (except as contemplated in the Intercreditor
Agreement); and (F) such Account is otherwise acceptable to the Agent in its
reasonable judgment.
"Employee Benefit Plan" has the meaning given to such term in section 3(3) of
ERISA.
"Energy" means EDO Energy Corporation, a Delaware corporation.
"Environmental Approvals" means any approval, order, consent, authorization,
certificate, license, permit or validation of, or exemption or other action by,
or filing, recording or registration with, any governmental authority pursuant
to or required under any Environmental Law.
"Environmental Claim" means, with respect to any Person, any action, suit,
proceeding, investigation, notice, claim, complaint, demand, request for
information or other communication (written or oral) by any other Person
(including but not limited to any governmental authority, citizens' group or
present or former employee of such Person) alleging, asserting or claiming any
actual or potential (A) violation of any Environmental Law, (B) liability under
any Environmental Law or (C) liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting
from the presence, or release into the environment, of any Environmental
Concern Materials or other toxic substance at any location, whether or not
owned by such Person.
"Environmental Cleanup Site" means any location which is listed or proposed for
listing on the National Priorities List (as established under CERCLA), on
CERCLIS or on any similar state list of sites requiring investigation or
cleanup, or which is the subject of any pending or threatened action, suit,
proceeding or investigation related to or arising from any alleged violation of
any Environmental Law.
"Environmental Concern Materials" means any flammable substance, explosive,
radioactive material, hazardous material, hazardous waste, toxic material,
industrial chemical waste, pollutant, contaminant, raw material, substance,
product or by-product of any substance now or hereafter specified in or
regulated by any Environmental Law (including but not limited to any "hazardous
substance" as defined in CERCLA or any similar state law), asbestos, any
petroleum products or compounds and polychlorinated biphenyl.
"Environmental Law" means any federal, state or local statute, law, rule,
ordinance, regulation, standard, permit or requirement whether now existing or
subsequently enacted relating to (A) pollution or protection of the
environment, including natural resources, (B) exposure of Persons, including
but not limited to employees, to Environmental Concern Materials, (C)
protection of the public health or welfare from the effects of products,
by-products, wastes, emissions, discharges or releases of Environmental Concern
Materials or (D) regulation of the manufacture, use or introduction into
commerce of Environmental Concern Materials including their manufacture,
formulation, packaging, labeling, distribution, transportation, handling,
storage or disposal concerning or relating to the protection of health and the
environment.
"Equipment" has the meaning given to such term in the U.C.C.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder.
"ESOT" means the trust established under the Borrower's Employee Stock
Ownership Plan.
"ESOT Assignment Documents" means those documents by which Fleet Bank, NA,
successor in interest to MHTC as creditor under the ESOT Loan Documents, has
assigned its interest in the ESOT Loan and the ESOT Loan Documents to Mellon,
as identified on Exhibit 1.1(A) attached hereto and made a part hereof.
"ESOT Loan" means the term loan in the original principal amount of
$19,185,399.00 extended by MHTC to Irving Trust Company, as trustee of the
ESOT, pursuant to the ESOT Loan Documents.
"ESOT Loan Documents" means the documents evidencing and securing the ESOT
Loan, including amendments thereto and restatements thereof, as identified on
Exhibit 1.1(B) attached hereto and made a part hereof.
"Event of Default" has the meaning given to such term in Section 7.1 hereof.
"Eurocurrency Reserve Requirement" means, for any LIBOR Loan, for any LIBOR
Interest Period relating thereto, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained during such
LIBOR Interest Period under Regulation D by a member bank of the Federal
Reserve System against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Eurocurrency
Reserve Requirement shall reflect any other reserves required to be maintained
by such member bank against (A) any category of liabilities which includes
deposits by reference to which LIBOR for LIBOR Loans is to be determined or (B)
any category of extension of credit or other assets that include LIBOR Loans.
"Federal Funds Rate" means for each day, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) which is the weighted average of the
rates on overnight federal funds transactions arranged on such day by federal
funds brokers, computed and released by the Federal Reserve Bank of New York
(or any successor).
"Fees" means all payments except for interest, principal and reimbursements for
draws under Letters of Credit which the Borrower is required to make to the
Agent, the Issuing Bank, and/or the Lenders hereunder and shall include,
without limitation, amounts owing in connection with any prepayment under any
LIBOR Loan, the Administrative Fee, the Commitment Fee, the Origination Fee,
the L/C Fee, any other fees associated with the issuance of any Letter of
Credit or otherwise required under Section 2.18 hereof and the costs of
hedging.
"Financial Statements" means an audited Consolidated and unaudited
Consolidating balance sheet, statements of operations, cash flow and retained
earnings together with all notes pertaining thereto, all as at and for a
designated period, with management's unaudited comparisons to budget and the
preceding fiscal year and all in accordance with GAAP and any other statements
that the Borrower and/or any Subsidiary may be required to deliver.
"Fixed Charge Coverage Ratio" means the ratio of (A) EBITDA minus capital
expenditures, minus income taxes to (B) Fixed Charges, (1) with respect to
calculations made prior to September 30, 1999, for the period from July 1, 1998
through such date of calculation, and (2) with respect to calculations made on
or after September 30, 1999, for the last four quarters on a rolling basis.
"Fixed Charges" means with respect to the Borrower and its Subsidiaries
determined on a Consolidated basis, at any time and without duplication (A)
interest in connection with any Credit Obligation (including without limitation
the Loans), (B) Current Maturities, (C) amounts paid over the period of
calculation by the Borrower and its Subsidiaries of any kind or nature
whatsoever to shareholders, or holders of options, warrants or other rights to
become shareholders of the Borrower or its Subsidiaries or holders of any right
to receive payments based on the capital stock of the Borrower or its
Subsidiaries, including without limitation (1) cash dividends, (2) payments to
any shareholder, warrant holder, option holder or holder of any interest or
right convertible thereto or exchangeable therefor, including without
limitation amounts paid to retire, purchase or redeem, directly or indirectly,
any common or preferred stock or other equity interest or debt of the Borrower
or any Subsidiary, the amount of any payment of any option price, stock
appreciation right, put price or any similar payment on or based upon the value
of, the capital stock of the Borrower or any Subsidiary or any portion thereof
(other than salaries, bonuses, benefits and other similar payments to officers
and employees of the Borrower or any of its Subsidiaries as compensation for
performance of their duties as such officers and employees and not solely in
connection with their ownership of any capital stock, warrants, options or
other rights to acquire capital stock of the Borrower or any of its
Subsidiaries),, and (3) with respect to costs and expenses incurred in
connection with any registration of any of the capital stock of the Borrower or
any Subsidiary, and (D) any prepayment of the principal of any Credit
Obligation, provided that voluntary prepayments of the Revolving Credit shall
only be included in Fixed Charges to the extent such amounts constitute Current
Maturities.
"Floating Base Rate" means the higher of (A) the rate of interest which the
Agent announces from time to time to be its prime rate (which rate is not
necessarily the lowest rate of interest which the Agent charges any of its
customers) or (B) the Federal Funds Rate plus 0.50%.
"Foreign Sales" means EDO Foreign Sales Corporation, a U.S. Virgin Islands
corporation.
"Foreign Subsidiary" means any Subsidiary of the Borrower or any of its
Subsidiaries which is not a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles in the United States of
America in effect from time to time, applied in a consistent manner (subject to
Section 1.2).
"General Intangibles" has the meaning given to such term in the U.C.C.
"Guarantee" means the Guarantee and Security Agreement of even date herewith
executed and delivered by the Guarantors pursuant to the requirements hereof,
as the same may be hereafter amended from time to time.
"Guarantors" means, collectively, Western, International, Xxxxxx, Sports,
Energy, Technology, Automotive, Foreign Sales and any other Subsidiary of the
Borrower which enters into a joinder to the Guarantee as required by the terms
of this Agreement.
"Indebtedness" means with respect to the Borrower and its Subsidiaries on a
Consolidated basis, at any date (without duplication): (A) all obligations of
the Borrower and/or any of its Subsidiaries for borrowed money or credit
extended to or on behalf of any of them or for the deferred purchase price of
property or services (other than trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices); (B) any
other obligation of the Borrower and/or any of its Subsidiaries which is
evidenced by a note, bond, debenture or similar instrument; (C) all obligations
of the Borrower and/or any of its Subsidiaries under capitalized leases; (D)
all obligations of the Borrower and/or any of its Subsidiaries in respect of
bankers' acceptances or similar obligations issued or created for the account
of any of them; (E) for purposes of Section 6.24 and Section 7.1 (H) hereof
only, all obligations of the Borrower and/or any of its Subsidiaries in respect
of interest rate or currency protection agreements, interest rate or currency
futures, interest rate or currency options, interest rate caps and any other
interest rate or currency hedge arrangements; (F) for purposes of Section 6.24
only, all preferred stock issued by the Borrower or any of its Subsidiaries
which, pursuant to its terms, is subject to mandatory redemption, retirement or
acquisition by the issuer or any Affiliate thereof on or prior to the
Termination Date and which redemption, retirement or acquisition is not
contingent on any condition (other than the passage of time) yet to be
satisfied; (G) the face amount of all letters of credit issued for the account
of the Borrower and/or any of its Subsidiaries and, without duplication, the
unreimbursed amount of all drafts drawn thereunder, and all other obligations
of any of them associated with such letters of credit or draws thereon; (H) for
purposes of Section 7.1(H) hereof only, any guaranty or other Contingent
Liability of the Borrower and/or any of its Subsidiaries arising with respect
to the obligation of others of the type described in clauses (A) through (G)
and (I) hereof; and (I) all obligations of the type referred to in clauses (A)
through (H) secured by a Lien on any property owned by the Borrower and/or any
of its Subsidiaries but for which such Person has not assumed or otherwise
become liable for the payment thereof, provided, however, that for purposes of
determining the amount of such Indebtedness described in this clause (I), the
amount of such non-recourse Indebtedness shall be limited to the lesser of (1)
the fair market value of the assets subject to such Lien, and (2) the amount of
such Indebtedness.
"Independent Directors" has the meaning given to such term in Section 4.1(A)
(4) hereof.
"Instrument" has the meaning given to such term in the U.C.C.
"Intercreditor Agreement" means the intercreditor agreement between Mellon on
one hand and the Lender Group on the other, consented to by the Borrower, dated
as of the date hereof regarding the relative priorities of Mellon as the holder
of the ESOT Loan and the Lender Group with respect to the Collateral.
"Interest Expense" means, for any period, interest expense (accrued and paid or
payable in cash for such period) on Indebtedness of the Borrower and its
Subsidiaries for such period, determined on a Consolidated basis.
"Interest Period" means a LIBOR Interest Period or any period during which the
Interest Rate is the Adjusted Base Rate, as appropriate.
"Interest Rate" means the Adjusted Base Rate, Adjusted LIBOR or the Default
Rate, as the case may be.
"Interim Financial Statements" means an unaudited Consolidated and
Consolidating balance sheet and statements of operations, cash flow and
retained earnings for the Borrower and its Subsidiaries, all as, at and for a
designated period with a comparison to (A) the corresponding fiscal period for
the preceding year, and (B) with respect to the statement of operations, the
budget, all in accordance with, GAAP subject only to year-end adjustments and
the absence of footnotes.
"International" means EDO International Corporation, a Delaware corporation.
"International Account" means an Account which arises out of a transaction
between the Borrower or any of its Subsidiaries and a Purchaser who meets at
least one of the following criteria: (A) the Purchaser is a non-United States
(federal, state or local) government, governmental agency or
government-controlled business, (B) the Purchaser is subject to the
jurisdictions of the court systems of neither the United States nor any state
of the United States, (C) the Purchaser does not maintain in the United States
an office to which such Account is invoiced, or (D) the Purchaser does not
maintain in the United States Cash Equivalents in an amount in excess of twice
the amount of the aggregate of such Accounts.
"Inventory" has the meaning given to such term in the U.C.C.
"Issuing Bank" has the meaning given to such term in the introductory paragraph
hereof.
"Landlord's Waiver" has the meaning given to such term in Section 3.4 hereof.
"L/C Fee" has the meaning given to such term in Section 2.4 hereof.
"Lender" has the meaning given to such term in the introductory paragraph
hereof.
"Lender Group" means, collectively, the Lenders, the Agent and the Issuing
Bank.
"Letter of Credit" means one of the Letters of Credit issued hereunder by the
Issuing Bank.
"Letter of Credit Cash Collateral Account" has the meaning given to such term
in Section 2.17 hereof.
"Letter of Credit Liability" means, at any date of determination, the sum of
the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding plus the
amount of all unreimbursed draws under any Letters of Credit. For purposes
hereof, Letters of Credit on which a draw for the full face amount thereof has
not been made shall be deemed outstanding until the earlier of (A) the date on
which the Letter of Credit is returned to the Issuing Bank, undrawn, for
cancellation, or (B) the expiration date of such Letter of Credit.
"Letter of Credit Sublimit" means $20,000,000.00.
"Leverage Ratio" means as of any date of determination, the ratio of (A) Total
Debt on such date to (B) EBITDA for the four quarters immediately preceding
such date of determination calculated on a pro forma basis to take into account
any acquisitions made during such period as if such acquisition were made at
the beginning of such period.
"Liabilities" has the meaning given to such term in Section 3.1 hereof.
"LIBOR" means, for each LIBOR Loan, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) determined by the Agent according to
the following formula:
X
R = ---
1-Y
where R = LIBOR
X = London Interbank Offered Rate for such LIBOR Loan for the
applicable LIBOR Interest Period
Y = Eurocurrency Reserve Requirement for such LIBOR Loan for the
applicable LIBOR Interest Period
"LIBOR Interest Period" means, for each LIBOR Loan, a period of time, beginning
on an Effective Date, of one, two, three, four or six months in length (as such
periods are commonly used), selected by the Borrower by telephone or in writing
(and if by telephone, confirmed by the Borrower promptly thereafter in
writing), during which the Interest Rate is Adjusted LIBOR. If a LIBOR
Interest Period would otherwise end on a day that is not a Business Day, such
LIBOR Interest Period shall be extended to the next Business Day, unless such
Business Day would fall in the next calendar month, in which event such LIBOR
Interest Period shall end on the immediately preceding Business Day.
"LIBOR Loan" means any portion of the Revolving Credit to which Adjusted LIBOR
applies having the same LIBOR Interest Period.
"Liens" has the meaning given to such term in Section 6.4 hereof.
"Loan" means each of the Base Rate Loans and/or the LIBOR Loans.
"Loan Documents" means this Agreement, the Notes, the Pledge Agreement, the
Guarantee, the Intercreditor Agreement and all other documents executed and
delivered by the Borrower or any of the Guarantors in connection herewith.
"London Business Day" means any Business Day on which the London eurodollar
interbank market is open for business.
"London Interbank Offered Rate" means, with respect to each day during each
LIBOR Interest Period pertaining to a LIBOR Loan, the rate per annum determined
by the Agent to be the arithmetic mean (rounded upwards to the nearest 1/100th
of 1%) of the offered rates for Dollar deposits with a term comparable to such
Interest Period that appears on the Telerate British Bankers Assoc. Interest
Settlement Rates Page (as defined below) at approximately 11:00 A.M., London
time, on the second full Business Day preceding the first day of such Interest
Period; provided, however, that if there shall at any time no longer exist a
Telerate British Bankers Assoc. Interest Settlement Rates Page, "London
Interbank Offered Rate" shall mean, with respect to each day during each LIBOR
Interest Period pertaining to a LIBOR Loan, the rate per annum equal to the
rate at which Mellon is offered Dollar deposits at or about 10:00 A.M., New
York City time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar and foreign
currency and exchange operations in respect of its LIBOR Loans are then being
conducted for delivery on the first day of such LIBOR Interest Period for the
number of days comprised therein and in an amount comparable to the amount of
its LIBOR Loan to be outstanding during such Interest Period. "Telerate
British Bankers Assoc. Interest Settlement Rates Page" shall mean the display
designated as Dow Xxxxx Market Page 3750 (or such other page as may replace
such page for the purpose of displaying the rates at which Dollar deposits are
offered by leading banks in the London interbank deposit market).
"Majority Lenders" means those Lenders which are then in compliance with their
obligations hereunder holding not less than 51% of the outstanding principal
amount of the aggregate Loans plus Letter of Credit Liability of those Lenders
which are then in compliance with their obligations hereunder.
"Management Investors" means, collectively, the officers, directors, employees
and managers, of or consultants to, the Borrower or any of its Subsidiaries, or
family members or relatives thereof or trusts for the benefit of any of the
foregoing, or any of their heirs, executors, successors or legal
representatives, who at any particular date shall beneficially own or have the
right to acquire, directly or indirectly, common stock of the Borrower.
"Management Subscription Agreement" means one or more stock subscription, stock
option, grant or other agreements which have been or may be entered into
between the Borrower and certain Management Investors, with respect to the
issuance to such parties of common stock of the Borrower or options, warrants
or other rights in respect of common stock of the Borrower, any agreements
entered into from time to time by transferees of any such stock, options,
warrants or other rights in connection with the sale, transfer or reissuance
thereof, and any assumptions of any of the foregoing by third parties, as
amended, supplemented, waived or otherwise modified from time to time.
"Margin Stock" has the meaning given to such term in Regulation U of the Board
of Governors of the Federal Reserve System.
"Material Adverse Effect" means a material adverse effect on (A) the assets,
properties, financial condition, operations, business or prospects of the
Borrower and the Guarantors, taken as a whole, or (B) the ability of the
Borrower and the Guarantors taken as a whole to comply with its or their
obligations under any of the Loan Documents, or (C) the validity or
enforceability of this Agreement, any of the Notes or any of the other Loan
Documents, or (D) the availability of the rights and remedies of the Lender
Group under the Loan Documents.
"Mellon" has the meaning given to such term in the introductory paragraph
hereof.
"MHTC" means Manufacturers Hanover Trust Company.
"Multiemployer Plan" has the meaning given to such term in section 3(37) of
ERISA and regulations issued thereunder.
"Net Cash Proceeds" means, with respect to any transaction involving the
Borrower or any of its Subsidiaries, the gross proceeds thereof (including
without limitation insurance proceeds) net of the sum of the following (without
duplication): (a) payments made to retire obligations (other than to the
Borrower or any of its Subsidiaries) that are attributable to or secured by the
properties that are the subject of a sale, assignment or other disposition
which is part of the transaction, (b) reasonable brokerage commissions and
other reasonable fees and expenses (including reasonable fees and expenses of
legal counsel and investment bankers) related to such transaction payable to
unrelated third parties, (c) all taxes actually paid or payable as a result of
such transaction, and (d) appropriate amounts provided or to be provided by the
Borrower as a reserve in accordance with GAAP, against any liabilities
associated with such transaction and retained by the Borrower or any of its
Subsidiaries after such transaction or to be used by the Borrower to discharge
or pay in appropriate amounts liabilities associated with such transaction
retained by the Borrower or any of its Subsidiaries.
"Net Income" means net profit after taxes.
"Net Total Debt" means, as of any date of determination, Total Debt on such
date minus the value of Cash Equivalents on such date.
"Net Worth" means total assets minus total liabilities.
"Note" has the meaning given to such term in Section 2.1(F) hereof.
"Origination Fee" has the meaning given to such term in Section 2.4 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a pension plan (as defined in section 3(2) of ERISA) which
is subject to Part 3 of Subtitle B of Title I of ERISA or subject to section
412 of the Code and maintained by the Borrower, any of its Subsidiaries or any
member of any of their Controlled Groups.
"Permitted Acquisition" means an acquisition by the Borrower and/or any of its
Subsidiaries of all or substantially all of the assets or capital stock of
another Person which is either (A) consented to by the Majority Lenders, or (B)
otherwise permitted pursuant to Section 6.15 hereof.
"Permitted Encumbrances" has the meaning given to such term in Section 6.4
hereof.
"Permitted Indebtedness" has the meaning given to such terms in Section 6.24
hereof. "Person" means an individual, corporation, partnership, trust or any
other entity.
"Plan" means an employee benefit plan (other than a Multiemployer Plan) as
defined in section 3(3) of ERISA which is either (A) maintained by the
Borrower, any of its Subsidiaries or any member of any of their Controlled
Groups, or (B) maintained pursuant to a collective bargaining agreement or any
other arrangement under which more than one employer makes contributions and to
which the Borrower, any of its Subsidiaries or any member of any of their
Controlled Groups are then making or accruing an obligation to make
contributions or has ever been obligated to make contributions.
"Pledge Agreement" has the meaning given to such term in Section 3.2 hereof.
"Prohibited Transaction" has the meaning given to such term in section 406 of
ERISA or regulations issued thereunder.
"Pro Rata Share" of a Lender means such Lender's pro rata percentage as set
forth on Exhibit 2.1(A) hereof.
"Purchaser" means a buyer of goods or services from the Borrower or any of its
Subsidiaries.
"Register" has the meaning given to such term in Section 9.11 hereof.
"Reimbursement Date" has the meaning given to such term in Section 2.18 hereof.
"Reorganization" has the meaning given such term in section 4241 of ERISA.
"Reportable Event" has the meaning given to such term in section 4043(b) of
ERISA or regulations issued thereunder.
"Responsible Officer" as to any Person, means any of the following officers of
such Person: (A) the chief executive officer or the president of such Person
and, with respect to financial matters, the chief financial officer, the
treasurer or the controller of such Person, (B) any vice president of such
Person or, with respect to financial matters, any assistant treasurer or
assistant controller of such Person, who has been designated in writing to the
Agent as a Responsible Officer by such chief executive officer or president of
such Person or, with respect to financial matters, such chief financial officer
of such Person, (C) with respect to Section 6.13 and without limiting the
foregoing, the general counsel of such person, and (D) with respect to ERISA
related matters, the vice president of human resources of such Person.
"Revolving Credit" means the credit facility being extended by the Lenders to
the Borrower pursuant to Article II hereof.
"Secured Account" means any Account secured by a letter of credit in an amount
not less than the aggregate of all Accounts secured thereby, issued by a bank
acceptable to the Agent and delivered by the Borrower or any of its
Subsidiaries to the Agent as Collateral hereunder.
"Senior Debt" means all Indebtedness of the Borrower and/or its Subsidiaries or
any of them included in the definition of "Total Debt", except Subordinated
Indebtedness.
"Senior Leverage Ratio" means as of any date of determination, the ratio of (A)
Senior Debt on such date to (B) EBITDA for the four quarters immediately
preceding such date of determination calculated on a pro forma basis to take
into account any acquisitions made during such period as if each such
acquisition had been made at the beginning of such period.
"Sports" means EDO Sports, Inc., a Delaware corporation.
"Subordinated Debentures" means the 7% convertible Subordinated Debentures due
December 15, 2011 issued pursuant to an Indenture dated November 15, 1986,
between the Borrower and MHTC in the original principal amount of
$40,250,000.00, of which $29,317,000.00 remain outstanding on the date of this
Agreement.
"Subordinated Indebtedness" means the Indebtedness evidenced by the
Subordinated Debentures.
"Subsidiary" of any Person means any other Person more than 50% of the voting
securities (or other ownership interests) of which are owned, directly or
indirectly, by such Person, provided that no reference to any Subsidiary shall
include EDO (Canada) Inc.
"Technology" means EDO Acquisition II, Inc., a Delaware corporation doing
business as EDO Technology Services and Analysis.
"Termination Date" means the earlier of (A) August 27, 2001, or (B) the date on
which the Lenders' obligation to make Advances and the Issuing Bank's
obligation to issue Letters of Credit are terminated in whole pursuant to the
terms of this Agreement.
"Total Debt" means the sum of all Indebtedness of the Borrower and its
Subsidiaries on a Consolidated basis that would, in accordance with GAAP, be
classified as Indebtedness of the Borrower and its Subsidiaries on a
Consolidated basis, including without limitation, the Letter of Credit
Liability, the other Indebtedness of the Borrower hereunder, the amount
outstanding under the ESOT Loan, the outstanding amount of any other
Indebtedness guaranteed by the Borrower and/or its Subsidiaries or any of them,
including without limitation any Subordinated Indebtedness.
"U.C.C." means the Uniform Commercial Code as adopted in the Commonwealth of
Pennsylvania.
"Western" means EDO Western Corporation, a Utah corporation.
"Withdrawal Liability" has the meaning given such term in section 4201 of
ERISA.
Section I.2 Accounting Terms. All accounting terms not specifically defined
herein shall be construed, and all financial data submitted pursuant to this
Agreement shall be prepared, in accordance with GAAP. If any change in
generally accepted accounting principles results in a change in the method of
calculation of, or affects the results of such calculation of, any of the
financial covenants or related defined terms in this Agreement which either the
Borrower or the Agent reasonably deems to be material, then the parties hereto
agree to enter into and diligently pursue good-faith negotiations in order to
amend such financial covenant and/or related defined terms so as to equitably
reflect such change, with the desired result that the criteria for evaluating
the Borrower's compliance shall be the same after such change in generally
accepted accounting principles as if such change had not been made, provided
however that until such parties agree on an amendment to such financial
covenants and/or related defined terms, the Borrower agrees to comply with the
financial covenants herein contained as calculated in accordance with GAAP in
effect immediately prior to such change.
ARTICLE II
THE REVOLVING CREDIT
Section II.1 The Revolving Credit. Subject to the terms and conditions
hereinafter provided, each Lender, for itself only, agrees to make its portion
of advances requested under the Revolving Credit to the Borrower (including
such sums deemed requested by the Borrower pursuant to Section 2.18 hereof)
(each advance under the Revolving Credit is hereinafter referred to as an
"Advance"), from time to time during the period from the Closing Date to and
including the Termination Date, provided that (1) the aggregate outstanding
principal amount of each Lender's portion of the Advances under the Revolving
Credit when added to such Lender's participation in the Letter of Credit
Liability at any time shall not exceed the amount set forth opposite such
Lender's name on Exhibit 2.1(A) hereto, as such amount may be reduced by such
Lender's Pro Rata Share of any reduction of the Commitment pursuant to Sections
2.1(D) or 2.6 hereof, (2) the total outstanding principal under the Revolving
Credit when added to the Letter of Credit Liability at that time shall not
exceed the Commitment, and (3) the Letter of Credit Liability shall at no time
exceed the Letter of Credit Sublimit. If the outstanding principal under the
Revolving Credit plus the Letter of Credit Liability at any time exceeds the
Commitment, the Borrower shall immediately repay the amount of the excess,
together with accrued interest thereon, and any amount which may be due
pursuant to Section 2.16 on account of such payment. If, at any time, the
aggregate Letter of Credit Liability exceeds the Letter of Credit Sublimit, the
Borrower shall pledge to the Agent for the benefit of the Lender Group cash
collateral in an amount equal to or greater than the amount by which the Letter
of Credit Liability exceeds the Letter of Credit Sublimit, which cash
collateral shall be deposited and held in the Letter of Credit Cash Collateral
Account. The Borrower shall use the Revolving Credit for the purposes set
forth in the Background Section hereof. Each Advance shall be from all of the
Lenders ratably according to their respective Pro Rata Shares of the
Commitment.
(A) On the Termination Date, the Borrower shall (1) repay in full (a) the
aggregate principal amount of any and all Advances, (b) the amount of any
drawings under Letters of Credit which have not been previously reimbursed by
the Borrower, and (c) all other amounts then outstanding under the Notes, and
(2) if there remain any unexpired Letters of Credit on such date, deposit into
the Letter of Credit Cash Collateral Account an amount equal to such Letter of
Credit Liability.
(B) The Borrower shall pay interest on the principal amount of the Revolving
Credit outstanding from time to time at the Interest Rate applicable to each
portion of the Revolving Credit in accordance with Section 2.3 hereof. The
principal balance of Advances outstanding under the Revolving Credit shall
accrue interest at the Adjusted Base Rate and/or the Adjusted LIBOR as provided
herein. The Borrower shall have the right to convert all or a portion of the
Base Rate Loans to LIBOR Loans subject to the other provisions of this Article
II and provided that at any time when a principal payment is due hereunder,
there is then earning interest at the Adjusted Base Rate an amount equal to or
greater than the amount of such payment.
(C) The Borrower shall have the right at any time and from time to time, upon
at least five (5) Business Days prior written notice delivered by the Borrower
to the Agent, to terminate the Commitment in whole or reduce the Commitment in
part, provided however that: (1) the Borrower shall simultaneously with such
reduction pay to the Agent (a) the amount by which the outstanding principal
amount of the Advances plus the Letter of Credit Liability exceeds the
Commitment as and if so reduced, with such repaid principal to be applied as
determined by the Agent against Base Rate Loans and LIBOR Loans, (b) all
accrued and unpaid interest thereon, and (c) the accrued Commitment Fee
relating thereto; (2) to the extent application of this subsection requires a
paydown of any LIBOR Loans prior to the end of the applicable Interest
Period(s), the Borrower shall pay any prepayment compensation provided by
Section 2.16 herein; and (3) while any Letters of Credit remain outstanding the
Borrower shall not be permitted to terminate the Commitment in whole or reduce
the Commitment below the aggregate amount of Letter of Credit Liability then
outstanding except as contemplated by Section 2.1(B). Any partial reduction of
the Commitment shall be in the minimum amount of $1,000,000.00 or in multiples
of $1,000,000.00 in excess thereof, and shall reduce each Lender's portion of
the Commitment by such Lender's Pro Rata Share of the amount by which the
Commitment is reduced. Any termination or reduction of the Commitment
hereunder shall be permanent, and the Commitment cannot thereafter be restored
or increased without the written consent of all of the Lenders.
(D) Each Advance shall be in an aggregate amount of $250,000.00 or in multiples
of $1,000.00 in excess thereof. Each LIBOR Loan shall be in an aggregate
amount of $250,000.00 or in multiples of $1,000.00 in excess thereof. The
Borrower shall not have more than ten (10) LIBOR Loans outstanding at any one
time. The Borrower may borrow, repay and reborrow under the Revolving Credit
until the Termination Date subject to the terms and conditions of this
Agreement.
(E) The obligation of the Borrower to repay the Revolving Credit shall be
evidenced by promissory notes, dated the Closing Date, each payable to the
order of a Lender in the principal amount equal to the amount set forth
opposite such Lender's name under the heading "Revolving Credit" on Exhibit
2.1(A) and otherwise substantially in the form of Exhibit 2.1(F) attached
hereto (the "Notes"). In the event that any Lender assigns all or a portion of
its Pro Rata Share of the Commitment as permitted under Section 9.11 hereof,
the Borrower will execute and deliver replacement Note(s) in the form of
Exhibit 2.1(F) upon the request of the Agent and against return of the Note(s)
being replaced.
Section II.2 Making the Advances under the Revolving Credit. The Borrower
shall notify the Agent by telephone no later than 11:00 A.M., Pennsylvania
time, on the date of each proposed Advance to which only the Adjusted Base Rate
will apply, specifying the date and amount of the proposed Advance. The Agent
in turn shall promptly notify each other Lender of such proposed Advance. The
Borrower shall notify the Agent by telephone or in writing, by 11:00 A.M.,
Pennsylvania time, at least three (3) London Business Days before each proposed
Advance, if any portion of such Advance is to earn interest at Adjusted LIBOR,
specifying the date and the amount of the proposed Advance, the amount of such
proposed Advance to which the Adjusted LIBOR will apply, and the length of the
proposed LIBOR Interest Period(s). The Agent shall in turn promptly notify
each other Lender of such proposed Advance. The Borrower will confirm promptly
in writing any telephonic notice of a proposed Advance. Each notice by the
Borrower to the Agent under this Section 2.2 shall constitute representations
by the Borrower that, at the time thereof and after giving effect to the
Advance requested thereby, (1) all conditions precedent described in Sections
4.1 (in the case of the initial Advance) and 4.2 and in Section 2.1(A) have
been satisfied, and (2) the proceeds of such Advance are intended to be used
for the purposes described in the Background Section hereof and for no other
purpose. Upon notice from the Agent of the proposed Advance, each Lender shall
wire transfer to the Agent, at the Agent's office identified on the signature
pages hereof or such other office designated by the Agent from time to time, in
immediately available funds, which funds shall be in Dollars, prior to 12:00
p.m., Pennsylvania time, on the date of the proposed Advance, an amount equal
to such Lender's Pro Rata Share of such Advance. Upon receipt of such funds by
the Agent and upon the Agent's determination that the applicable conditions set
forth in Article IV and Section 2.1(A) hereof have been fulfilled, the Agent
will immediately make such funds available to the Borrower by crediting such
amount to an account of the Borrower at the Agent or to such other account as
may be requested by the Borrower. The Agent shall have no obligation to make
funds available to the Borrower in excess of amounts received by it from
Lenders. The Borrower agrees to hold the Agent harmless from any liability for
any loss resulting from the Agent's reliance on any writing, facsimile copy or
telephonic notice purportedly made by an authorized officer of the Borrower,
provided that the Agent has acted in good faith and without gross negligence in
doing so. The Agent may assume telephonic notice of a requested Advance is
from an authorized officer of the Borrower, absent willful misconduct or gross
negligence on the part of the Agent.
(A) Unless the Agent receives notice from a Lender prior to the date any
Advance is to be made that such Lender does not intend to make its Pro Rata
Share of such Advance available to the Agent, the Agent may (but shall not be
obligated to) assume that such Lender has made or will make such proceeds
available to the Agent when due, and the Agent, in reliance upon such
assumption, may (but shall not be obligated to) make available to the Borrower
a corresponding amount. If such corresponding amount is not, in fact, made
available to the Agent by such Lender on the date the Advance is made, (1) the
Agent shall be entitled to recover such amount on demand from such Lender
together with interest thereon at a rate per annum equal to the Federal Funds
Rate for each day during the period between the date that the Agent makes the
Advance and the date on which the Lender makes its Pro Rata Share of the
Advance available to the Agent, (2) the Agent shall be entitled to retain for
its own account any and all interest from the Borrower accrued on such amount
during the period from the date that the Agent makes the Advance to the date on
which the Lender makes its Pro Rata Share of the Advance available to the
Agent, and (3) if such Lender fails to make available to the Agent such
Lender's Pro Rata Share of an Advance and the Agent elects to advance the full
amount of the Advance requested by the Borrower, the Borrower shall be
obligated to repay to the Agent for the Agent's account the amount so advanced
by the Agent and not advanced by the Lender(s) with interest at the Adjusted
Base Rate or Adjusted LIBOR, as applicable, (a) on demand, or (b) if no demand
is made, in amounts and at the times the Borrower otherwise would be obligated
to repay such Advance.
Section II.3 Interest. Base Rate Loans. The Borrower shall pay to the Agent
for the benefit of the Lenders interest at the Adjusted Base Rate in arrears on
the unpaid principal amount of each Base Rate Loan, from the date on which such
Base Rate Loan is advanced or converted from a LIBOR Loan until such principal
amount has been repaid in full, or converted to a LIBOR Loan, (1) quarterly on
the last day of each calendar quarter commencing September 30, 1998, and (2)
with respect to all Base Rate Loans, on the Termination Date. The Adjusted
Base Rate shall change (a) simultaneously with each change in the Floating Base
Rate and (b) with each change in the Applicable Margin in accordance with the
definition thereof.
(A) Conversions to LIBOR Loans. By notifying the Agent at least three (3)
London Business Days prior to an Effective Date, the Borrower may convert into
a LIBOR Loan any Base Rate Loan in an aggregate principal amount of $250,000.00
and multiples of $1,000.00 in excess thereof. At the end of the applicable
LIBOR Interest Period, the LIBOR Loan will convert back to a Base Rate Loan
unless the Borrower notify the Agent at least three (3) London Business Days
before the end of the existing LIBOR Interest Period that the Borrower are
electing to continue such LIBOR Loan as a LIBOR Loan and is selecting a new
LIBOR Interest Period.
(B) LIBOR Loans. The Borrower shall pay interest in arrears on the unpaid
principal amount of each LIBOR Loan at Adjusted LIBOR on the last day of the
applicable LIBOR Interest Period and, in the case of any LIBOR Loan having an
Interest Period longer than three months, on that date in the third month after
the Effective Date which corresponds to the Effective Date. There shall be no
more than ten (10) LIBOR Loans outstanding at any one time.
Section II.4 Fees. Commitment Fee. The Borrower shall pay to the Agent, for
the account of each Lender, a commitment fee (the "Commitment Fee") on the
daily unused amount of such Lender's Pro Rata Share of the maximum amount of
the Commitment without reference to the Borrowing Base for each day from and
including the Closing Date to and including the Termination Date. The rate per
annum shall initially be equal to 0.20% of such unused amount but shall be
adjusted as of the first day of the month following delivery by the Borrower of
the Compliance Certificate as required by this Agreement. At any time that
such Compliance Certificate is required to be delivered hereunder and is not so
delivered, then the Commitment Fee shall be based on the highest percentage set
forth below in this Section. The adjustments in the rate shall be based on the
Net Total Debt/EBITDA ratio as set forth in the chart below. The Commitment
Fee shall be payable in arrears (1) on the first day of each quarter commencing
October 1, 1998, and on the first day of each January, April, July and October
thereafter, (2) on the date of any reduction of the Commitment (to the extent
accrued and unpaid on the amount of such reduction) and (3) on the Termination
Date.
Net Total Commitment
Debt/EBITDA Fee
--------------------------------------------------------------
Less than 2.0 0.20%
Greater than or equal to 2.0 but less than 3.5 0.25%
Greater than or equal to 3.5 0.375%
(A) The Administrative Fee. The Borrower shall pay to the Agent for the
Agent's sole account and not for the account of any other Lender or
participant, such fees (collectively, the "Administrative Fee") as set forth in
the fee letter dated April 27, 1998, from the Agent to and accepted by the
Borrower.
(B) Origination Fee. The Borrower shall pay to the Agent, for the account of
each Lender, an origination fee (collectively the "Origination Fee") (1) on the
Closing Date in the amount equal to 0.25% of such Lender's Pro Rata Share of
the Commitment; and (2) thereafter, 0.25% of such Lender's Pro Rata Share of
that portion of the Commitment in excess of $10,000,000.00 which is actually
used by the Borrower for Advances but not Letters of Credit without giving
effect to repayments of Advances, provided the aggregate amount of fees
payable under this clause (2) shall not exceed $50,000.00, payable on the
date(s) such excess amount is advanced. The Origination Fee shall be deemed
fully earned and non-refundable upon execution of this Agreement by the
Borrower.
(C) Letter of Credit Fees. The Borrower shall pay to the Agent for the account
of each Lender, a commission on each Letter of Credit (each, a "L/C Fee")
payable on issuance and on each anniversary date of issuance, if any, in an
amount equal to the per annum rate of 1% of the Letter of Credit Liability with
respect to such Letter of Credit, pro rated to the stated expiry date of such
Letter of Credit, provided that such percentage rate shall be adjusted (as set
forth below) (1) with respect to Letters of Credit thereafter issued and
renewals of then outstanding Letters of Credit, as of the first day of the
month following delivery by the Borrower of the Compliance Certificate as
required by this Agreement and (2) with respect to each then outstanding Letter
of Credit, as of the next anniversary date of its issuance following delivery
of said Compliance Certificate. At any time that such Compliance Certificate
is required to be delivered hereunder and is not so delivered, then L/C Fees
shall be based on the highest percentage set forth below. The adjustments in
the rate shall be based on Net Total Debt/EBITDA ratio as set forth in the
chart below.
Net Total Debt/EBITDA L/C Commission Rate
------------------------------------------------------------------------
Less than 2.5 1%
Greater than or equal to 2.5, but less than 3.0 1.25%
Greater than or equal to 3.0 1.5%
In addition, the Borrower shall pay to the Agent, for the account of the
Issuing Bank, the Issuing Bank's standard posted charges for such matters as
opening, negotiation, amendments, draws and transfers. In the event that a
Letter of Credit is returned to the Issuing Bank for cancellation prior to its
expiry date without a draw having occurred thereunder and other than in
connection with a transfer thereof, and provided that there has not occurred
and is not continuing an Event of Default, the Lenders shall each refund to
the Borrower its Pro Rata Share of that portion of the L/C Fee relating to the
period between the date of such early cancellation and the expiry date of such
Letter of Credit.
Section II.5 Manner of Payment. Except to the extent required by applicable
law, the Borrower shall make each payment under this Agreement and under the
Notes without reduction or deduction of any kind. Each such payment shall be
made in immediately available funds, in Dollars, not later than 2:00 p.m.,
Pennsylvania time, on the day such payment is due, at the office of the Agent
set forth on the signature pages hereof or such other office designated in
writing by the Agent to the Borrower. The Agent shall remit to each Lender,
subject to collection, its ratable share of each such payment on the same day
as received if received before 2:00 p.m., Pennsylvania time, and otherwise on
the next Business Day.
(A) After the occurrence of an Event of Default hereunder, all payments
received by the Agent, the Issuing Bank, and/or Lenders from the Borrower or
any of its Subsidiaries shall be applied in the following order: (1) to the
payment of Fees and other costs and expenses then due and owing from the
Borrower, (2) to the payment of accrued and unpaid interest then due, (3) to
the payment of the outstanding Advances under the Revolving Credit, (4) to any
other amounts then due and owing hereunder, and (5) to the Letter of Credit
Cash Collateral Account.
Section II.6 Mandatory Prepayment. No more than five (5) Business Days after
the date of any sale, assignment, transfer or other disposition by the Borrower
or any of its Subsidiaries, or the damage, destruction, condemnation,
governmental taking or other loss of any assets of the Borrower or any of its
Subsidiaries (other than the sale of Inventory in the ordinary course of
business) whether now owned or hereafter acquired which alone or when
aggregated with other such transactions or events occurring within the
immediately preceding twelve months result in Net Cash Proceeds of
$1,000,000.00 or more (collectively, a "disposition of assets"), the Borrower
shall notify the Agent in writing that such disposition of assets has occurred,
the date of such event and the amount of the Net Cash Proceeds received in
connection therewith. In the event that the Borrower and/or its Subsidiaries
have not, within 364 days after the date of any such disposition of assets, (1)
reinvested all of the corresponding Net Cash Proceeds in their business
pursuant to an acquisition of property or assets located in the United States
of a nature or type that are used in the business of the Borrower and its
Subsidiaries on the date of such acquisition, which is permitted by Section
6.15 and in which the Agent shall have a first priority, perfected security
interest subject only to those Permitted Encumbrances which are permitted to be
senior to or pari passu with the security interest of the Agent pursuant to
Section 6.4 hereof (and so state, as to both conditions, in reasonable detail
in a certificate delivered by the Borrower to the Agent), or (2) delivered to
the Agent a certificate stating in reasonable detail its plans to reinvest such
Net Cash Proceeds as described in clause (1) above within the next succeeding
364 days, then the Borrower shall give written notice of prepayment (in the
amount not so reinvested or intended to be so reinvested) to the Agent at least
five (5) days prior to the date of the subject prepayment, and on or before the
364th day following such disposition of assets shall repay the Revolving Credit
and reduce the Commitment in an amount equal to the amount of such Net Cash
Proceeds not so reinvested. In the event the Borrower delivers a plan for
reinvestment pursuant to clause (2) of the preceding sentence, and either (a)
fails to comply with the terms of such plan, or (b) determines to abandon such
plan, within five (5) days after such failure or abandonment, as the case may
be, the Borrower shall give written notice to the Agent of prepayment in the
amount of Net Cash Proceeds not reinvested and on or before the date which is
five (5) days after such notice, shall repay the Revolving Credit and reduce
the Commitment by such amount.
(A) Within five (5) days of the sale or issuance of any capital stock or debt
securities of the Borrower or any of its Subsidiaries (other than a sale or
issuance of capital stock to the Borrower or any Subsidiary or to any employee
of the Borrower or any Subsidiary, if sold or issued to such employee by reason
of his or her status as an employee as long as such issuance does not result in
a change in control or otherwise violate any provision of any Loan Document, or
to any former employee of the Xxxx ower or any Subsidiary as a result of the
operation of the provisions of the ESOT, or issuance of common stock to the
holders of the Subordinated Debentures upon conversion), the Commitment shall
be reduced in an amount equal to the amount of the Net Cash Proceeds of such
sale of stock or debt securities and the Borrower shall prepay a portion of the
Revolving Credit as may be required as a result of such reduction to the
Commitment.
(B) The Borrower agrees that as long as there are any Letters of Credit
outstanding hereunder, or the Borrower has a right to request that the Issuing
Bank issue Letters of Credit hereunder, the aggregate amount outstanding under
the ESOT Loan plus the outstanding Loans shall not be less than $250,000.00.
If the Trustee under the ESOT or any other Person prepays, or unconditionally
expresses its intention to repay any portion of the ESOT Loan, or if the
Borrower or any other Person prepays, or unconditionally expresses its
intention to repay any portion of the Loans, in either such case so that after
such prepayment(s) the aggregate outstanding amount under the ESOT Loan plus
the outstanding Loans shall be less than $250,000.00, then prior to any such
prepayment of the ESOT Loan and/or the Loans (as the case may be), (1) the
Borrower shall immediately deposit into the Letter of Credit Cash Collateral
Account an amount equal to the outstanding Letter of Credit Liability, if any
and (2) the Issuing Bank's obligation to issue Letters of Credit shall be
immediately suspended until such time as the aggregate outstanding amount under
the ESOT Loan plus the outstanding Loans shall exceed $250,000.00. It is the
intent of the parties hereto that (a) the provisions of this Section 2.6(c)
shall apply with respect to any prepayment, whether mandatory or voluntary and
whether or not resulting from a reduction in the Commitment hereunder, and (b)
notwithstanding anything to the contrary contained herein, including witho ut
limitation, in Section 2.18 hereof, the Issuer Bank shall have no obligation to
issue Letters of Credit hereunder at any time when the aggregate amount
outstanding under the ESOT Loan plus the outstanding Loans is less than
$250,000.00.
(C) Each amount applied in accordance with this Section 2.6 shall permanently
reduce the Commitment. Such prepayments shall be subject to the provisions of
Section 2.1(D)(1) and Section 2.16 hereof.
Section II.7 Computation of Interest and Fees. All interest on the Revolving
Credit, Fees and other sums payable hereunder shall be computed on the basis of
a year of three hundred sixty (360) days for the actual number of days elapsed.
Section II.8 Interest and Commissions After Event of Default. After the
occurrence of any Event of Default, at the option of the Agent, the outstanding
principal amount of Advances shall bear interest at the Adjusted Base Rate plus
two percent (2.0%) (such rate, the "Default Rate").
Section II.9 Late Charges. In addition to the rights and remedies of the
Lender Group hereunder upon the occurrence of an Event of Default (including
without limitation, the right to charge interest at the Default Rate or to
accelerate payment of all sums outstanding hereunder) and not in derogation
thereof, in the event that the Borrower fails to make any principal or interest
payment required hereunder or under the Notes in each case within fifteen (15)
days of the date first due, the Borrower shall, to the extent permitted by law,
pay to the Agent for the benefit of the Lenders a late charge equal to five
percent (5%) of the amount of such overdue payment (but in no event less than
$25.00 nor more than $2,500.00) to defray the Lenders' costs of collecting such
late payments. Any such late charge assessed shall be immediately due and
payable.
Section II.10 Payment on Non-Business Days. Whenever any payment to be made
hereunder or under any Notes 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, except as otherwise specifically provided herein, such extension of time
shall in such case be included in the computation of payment of interest
hereunder or under the Notes or the Fees, as the case may be.
Section II.11 Reimbursement to the Lenders for Cost Increases Imposed by Law.
If any change in existing law or regulation, any new law, change in regulatory
interpretation or any other factor having the force of law shall impose or
increase any tax (other than taxes on income in general), reserve, insurance,
special deposit or similar requirements or charges with respect to funds
obtained by any Lender to make or maintain any of the Loans during any Interest
Period, and the result is to increase the cost to such Lender of obtaining or
maintaining such funds or to reduce the return to such Lender on the Loans to
which such Interest Period applies, then such Lender shall so notify the
Borrower and the Agent in writing, certifying the amount of, and the
computation thereof and reasons for such increased costs or reduced return, and
the Borrower shall promptly pay to such Lender an amount sufficient to
compensate such Lender in full for such increased costs or such reduced return,
provided that, in any such case, the Borrower may elect to convert the LIBOR
Loans made by such Lender hereunder to Base Rate Loans by giving the Agent at
least one Business Day's notice of such election, in which case the Borrower
shall promptly pay to such Lender, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 2.16. If any Lender
becomes entitled to claim any additional amounts pursuant to this Section, it
shall provide prompt notice thereof to the Borrower, through the Agent,
certifying (1) that one of the events described in this paragraph (A) has
occurred and describing in reasonable detail the nature of such event, (2) as
to the increased cost or reduced amount resulting from such event and (3) as to
the additional amount demanded by such Lender and a reasonably detailed
explanation of the calculation thereof.
(A) If any existing law or regulation or any new law or regulation or
regulatory interpretation or other factor having the force of law imposes or
increase any tax (other than taxes on income in general), reserve, insurance,
special deposit or similar requirements or charges with respect to mortgages,
security agreements or other types of pledges of security, or notes, loans, or
other debts secured thereby, so as to require the Agent, the Issuing Bank or
any Lender to pay, or collect, any such tax, reserve, insurance, special
deposit or similar charge, and the Agent so notifies the Borrower in writing,
then the Borrower shall bear and pay the full amount thereof as and when due,
and to the extent there remains availability under the Revolving Credit, the
Borrower hereby authorizes the Lenders to advance such amounts under the
Revolving Credit and to add the amount thereof to the amount outstanding under
the Revolving Credit.
(B) For purposes of the application of this Section 2.11 and in calculating the
amount necessary to compensate any Lender for such increased costs or reduced
return, such Lender shall determine the applicability of this provision and
calculate the amount payable to it hereunder in a manner consistent with the
manner in which it shall apply and calculate similar compensation payable to it
by other borrowers having provisions in their credit agreements comparable to
this Section 2.11.
Section II.12 Reimbursement to the Lender Group Members for Increased Costs Due
to Capital Adequacy Requirements. If any law or regulation or the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof, or compliance by any Lender Group
member with any request or directive (whether or not having the force of law)
of any such authority, applicable from time to time, shall hereafter (A)
impose, modify, deem applicable or result in the application of any capital
maintenance, capital ratio or similar requirements against loan commitments or
other facilities made by any Lender Group member and the result thereof shall
be to impose upon such Lender Group member a fee or a requirement to increase
any capital requirement applicable as a result of the making or maintenance of
the Loans or Letters of Credit (which imposition of or increase in capital
requirements may be determined by such Lender Group member's reasonable
allocation of the aggregate of such capital impositions or increases), or (B)
subject any Lender Group member to any tax, duty or other charge with respect
to the Loans, the Letters of Credit or its interest therein, the Note which it
holds, or its obligation to advance hereunder, or change the basis of taxation
of payments to such Lender Group member of the principal of or interest on the
Loans or any other amounts due under this Agreement in respect of the Loans or
Letters of Credit or its obligation to advance its Pro Rata Share of the
Commitment (except for changes in the rate of tax on the overall net income of
such Lender Group member imposed by any jurisdiction in which such Lender Group
member is obligated to pay taxes), then, upon written notice by such Lender
Group member to the Borrower with a copy to the Agent, the Borrower shall
promptly pay to such Lender Group member from time to time as specified by such
Lender Group member, such additional amounts or fees which shall be sufficient
to compensate such Lender Group member for such impositions of or increases in
capital requirements or taxes from the date of such change, together with
interest on each such amount from the date demanded until payment in full
thereof at the Default Rate with respect to amounts or fees not paid when due.
Upon the occurrence of any event referred to above, a certificate setting forth
in reasonable detail the amounts necessary to compensate such Lender Group
member, and the computation thereof, as a result of an imposition of or
increase in capital requirements or taxes submitted by such Lender Group member
to the Borrower and the Agent shall be conclusive, absent manifest error or bad
faith, as to the amount thereof. For purposes of the application of this
Section 2.12, and in calculating the amount necessary to compensate such Lender
Group member for any imposition of or increase in capital requirements or taxes
hereunder, such Lender Group member shall determine the applicability of this
provision and calculate the amount payable to it hereunder in a manner
consistent with the manner in which it shall apply and calculate similar
compensation payable to it by other borrowers having provisions in their credit
agreements comparable to this Section 2.12.
Section II.13 Illegality. Notwithstanding any other provision in this
Agreement, if the adoption of any applicable law, rule, or regulation, 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 Lender Group
member (or its lending office) with any request or directive of any such
authority, central bank, or comparable agency shall make it unlawful or
impossible for such Lender Group member (or its lending office) to make,
continue or convert into a LIBOR Loan, or to comply with its obligations
hereunder with respect thereto, (A) such Lender shall promptly give written
notice of such circumstances to the Borrower and the Agent (which notice shall
be withdrawn whenever such circumstances no longer exist), (B) the commitment
of such Lender hereunder to make LIBOR Loans, continue LIBOR loans as such and
convert Base Rate Loans to LIBOR Loans shall forthwith be canceled and, until
such time as it shall no longer be unlawful for such Lender to make, maintain
or convert into LIBOR Loans, such Lender shall then have a commitment only to
make a Base Rate Loan when a LIBOR Loan is requested, and (C) such Lender's
Loans then outstanding as LIBOR Loans, if any, shall be converted automatically
to Base Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a LIBOR Loan occurs on a day which is not the
last day of the then current Interest Period with respect thereto, the Borrower
shall pay to such Lender such amounts, if any, as may be required pursuant to
subsection Section 2.16.
Section II.14 Special Provisions for LIBOR Loans. Unavailability of Funds and
Indeterminate Interest Rates. If on or before the date Lenders are to make any
LIBOR Loan or on or before any Effective Date (1) the Agent determines in good
faith that using commercially reasonable methods it is unable to obtain funds
at the LIBOR Rate for the elected Interest Period for any reason, including,
but not limited to the unavailability of funds at such rate, any change in
existing law, any new law, the length of such Interest Period, or otherwise or
(2) the Agent determines in good faith that no adequate means exists to
determine the LIBOR Rate for such Interest Period, then the Agent shall so
notify the Borrower and the Lenders as soon as practicable thereafter. If such
notice if given (a) any LIBOR Loans requested to be made on the first day of
such Interest Period shall be made as Base Rate Loans, (b) any Loans that were
to have been converted on the first day of such Interest Period to or continued
as LIBOR Loans shall be converted to or continued as Base Rate Loans and (c)
any outstanding LIBOR Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by
the Agent, no further LIBOR Loans shall be made or continued as such, nor shall
the Borrower have the right to convert Base Rate Loans to LIBOR Loans.
(A) Changes Affecting Ability to Maintain Funds. If, during any Interest
Period, any change in existing law, any new law, or any other factor beyond the
control of any Lender prevents such Lender in its good faith determination and
using commercially reasonable methods from maintaining funds at the rate the
adjustment of which determines the LIBOR Rate for such Interest Period and
requires such Lender to cease so maintaining funds actually so maintained prior
to termination of such Interest Period, then on the date of such required
cessation, the Borrower shall be required to specify a different Interest Rate
for such Interest Period or, in the alternative, to elect an Interest Period of
a length for which all Lenders may maintain funds at the rate the adjustment of
which determines the LIBOR Rate. In addition, within five (5) days after the
Agent notifies the Borrower of such required conversion, the Borrower shall
reimburse each Lender (to the extent not otherwise reimbursed pursuant to
Section 2.11 hereof) for any loss or expense such Lender has certified in
writing to the Borrower and the Agent that such Lender has incurred as a result
of any such required cessation.
(B) Ineligible Interest Periods. If, on any date the Lenders are to make an
Advance all or a portion of which is to earn interest at the Adjusted LIBOR or
on any Effective Date with respect to a LIBOR Loan, the period of time from
such date or such Effective Date to the Termination Date is less than an
Interest Period which the Borrower could otherwise elect, the Borrower will
elect a LIBOR Loan whose Interest Period will end on or before the Termination
Date, as necessary. If an appropriate Interest Period is not available, then
the requested Advance shall earn interest at the Adjusted Base Rate.
(C) Discretion of the Lenders as to Manner of Funding. Notwithstanding any
other provision of this Agreement, each Lender may fund or maintain its funding
of all or any part of the Loans in any legal manner it chooses and such manner
of funding shall not in any way relieve the Borrower of its obligations to pay
prepayment compensation in the event of a prepayment as set forth in Section
2.16 hereof nor shall such manner of funding increase or decrease the amount
payable by the Borrower under or otherwise affect the application of Sections
2.11, 2.12, 2.13, 2.14, 2.15, and 2.16 hereof.
Section II.15 Availability of Rate Quotations. Notwithstanding anything herein
to the contrary, if the Agent reasonably and in good faith determines (which
determination shall be conclusive) that quotations of interest rates for the
relevant deposits referred to in the definition used to calculate Adjusted
LIBOR are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest on a LIBOR Loan as
provided in this Agreement, then the Agent shall forthwith give notice thereof
to the Borrower, whereupon until the Agent notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, (A) the
obligation of the Lenders to make LIBOR Loans in the affected amounts and in
the affected maturities shall be suspended; and (B) the Borrower shall repay in
full the then outstanding principal amount of each LIBOR Loan, together with
accrued interest thereon, on the last day of the then current Interest Period
applicable to such LIBOR Loan by remitting sufficient funds to the Agent or by
conversion to a Base Rate Loan.
Section II.16 Prepayment. The Borrower may prepay Base Rate Loans in whole or
in part at any time and from time to time, without premium or penalty. The
Borrower agrees not to prepay any LIBOR Loan prior to the expiration of its
Interest Period, unless otherwise expressly required hereunder or after
acceleration by the Agent pursuant to Section 7.2. In the event that the
Borrower prepays any LIBOR Loan prior to the expiration of its Interest Period,
whether or not in violation of the previous sentence, or with the consent of
the Agent, or in compliance with the express requirements of this Agreement,
the Borrower shall pay to the Agent for the account of each Lender, upon the
request of such Lender through the Agent, such amount or amounts as shall be
sufficient to compensate it for any loss, cost or expense whether incurred or
which would have been incurred if such Lender had funded its portion of the
LIBOR Loans in the London eurocurrency interbank markets, which such Lender
determines is attributable to:
(A) any payment, prepayment, conversion or renewal of a LIBOR Loan made by the
Borrower on a date other than the last day of an Interest Period for such LIBOR
Loan (whether by reason of acceleration or otherwise); or
(B) any failure by the Borrower to borrow, convert into or renew a LIBOR Loan
to be made, converted into or renewed by such Lender on the date specified
therefor pursuant to the Borrower's prior election.
At the election of such Lender, and without limiting the generality of the
foregoing, but without duplication, such compensation on account of losses may
include an amount equal to the present value (based on the Federal Funds Rate)
of the excess of (1) the interest that would have been received from the
Borrower under this Agreement during the remainder of the applicable Interest
Period over (2) the interest component of the return that such Lender
determines it could have obtained had it placed such amount on deposit in the
interbank Dollar market for a period equal to such remaining portion of the
Interest Period. A determination of any Lender as to the amounts payable
pursuant to this Section 2.16 shall be conclusive absent manifest error or bad
faith. Unless otherwise designated in writing by the Borrower or otherwise
required hereby or by law, the Lender Group shall apply any principal payment
by the Borrower against the Loans so as to minimize the amount the Borrower is
obligated to pay under this Section 2.16.
Section II.17 Letter of Credit Cash Collateral Account. Cash collateral
pledged by the Borrower, whether pledged voluntarily or as required under
Sections 2.1, 2.6, 2.18(A) or 2.18(B) hereof, shall be deposited into an
account of the Borrower maintained with the Agent, over which the Agent shall
have sole control (the "Letter of Credit Cash Collateral Account"). Prior to
the occurrence of a Default or Event of Default amounts on deposit in the
Letter of Credit Cash Collateral Account shall be invested from time to time in
Cash Equivalents upon the instruction of the Borrower and at the risk and for
the benefit of the Borrower, provided that the Agent shall be obligated to
comply with such instruction only to the extent that the Agent retains a
perfected security interest in the Letter of Credit Cash Collateral Account and
all investments therein, as granted below. The Borrower hereby grants,
bargains, conveys and sets over to the Agent, for the benefit of the Lender
Group, a security interest in and lien upon the Letter of Credit Cash
Collateral Account and all cash and Cash Equivalents at any time hereafter
contained therein as security for the payment and performance of all of the
Borrower's obligations now or hereafter incurred hereunder or under the Notes
or otherwise in connection herewith. The Borrower shall take such action and
execute and deliver such documents, including financing statements, as the
Agent may determine necessary or desirable to further the security interest
hereby created. Provided there does not then exist an Event of Default or
Default, if at any time the value of the assets held in the Letter of Credit
Cash Collateral Account exceed the sum of the then existing Letter of Credit
Liability plus the amount of any yet to be issued Letters of Credit then
subject to a request by the Borrower under Section 2.18(B) hereof, the Agent
shall remit such excess to the Borrower provided that the Agent shall have no
obligation to remit such excess except from uninvested cash in the Letter of
Credit Cash Collateral Account. In the event that the value of the assets held
in the Letter of Credit Cash Collateral Account is less than the sum of the
then existing Letter of Credit Liability plus the amount of any yet to be
issued Letters of Credit then subject to a request by the Borrower under
Section 2.18(B), the Borrower shall deposit such difference in the Letter of
Credit Cash Collateral Account promptly upon notice from the Agent. After the
occurrence of an Event of Default and acceleration of the Loans as set forth in
Section 7.2 hereof, or if the Borrower shall have failed to pay all amounts
which have come due on or prior to such applicable due date, the Agent shall
apply all funds held in the Letter of Credit Cash Collateral Account in the
manner provided in Section 2.18(C). On the Termination Date, all monies and
Cash Equivalents in the Letter of Credit Cash Collateral Account in excess of
the amount required to repay the Loans, the Letter of Credit Liability and any
other amount then owing hereunder shall be returned to the Borrower.
Section II.18 Letters of Credit. Letters of Credit. In addition to requests
that the Lenders make Advances pursuant to Section 2.1, the Borrower may
request, in accordance with the provisions of this Section 2.18, that on and
after the date on which all of the conditions set forth in Section 4.3 are
satisfied to that date which is thirty one (31) days prior to the Termination
Date, the Issuing Bank issue subject to the terms and conditions hereof,
Letters of Credit for the account of the Borrower in an aggregate amount up to
the Letter of Credit Sublimit; provided, that (1) in no event shall the Issuing
Bank be obligated to issue any Letter of Credit having an expiration date later
than the Termination Date, (2) the Borrower shall not request that the Issuing
Bank issue any Letter of Credit if, after giving effect to such issuance the
Letter of Credit Liability would exceed the Letter of Credit Sublimit, (3) the
Borrower shall not request the Issuing Bank to issue any Letter of Credit if,
after giving effect to such issuance the Letter of Credit Liability plus
outstanding Loans would exceed the Commitment and (4) the Borrower shall not be
entitled to request the Issuing Bank to issue any Letter of Credit unless (a)
such Letter of Credit is to be issued in connection with the acquisition of any
businesses, properties or assets of any kind or issued in connection with the
amendment, renewal, extension, modification or refunding of the same; or (b)
the Borrower deposits into the Letter of Credit Cash Collateral Account an
amount equal to the face amount of such Letter of Credit. The issuance of any
Letter of Credit in accordance with the provisions of this Section 2.18 shall
require the satisfaction of each condition set forth in Sections 4.1, 4.2 and
4.3.
(A) Notice of Issuance or Amendment. Whenever the Borrower desires the
issuance of a Letter of Credit or the amendment of a Letter of Credit, the
Borrower shall deliver to the Issuing Bank and the Agent no later than 11:00
A.M. at least five (5) Business Days in advance of the proposed date of
issuance or such shorter period as may be agreed to by the Issuing Bank, an
executed application for such Letter of Credit in the form customarily required
by the Issuing Bank for the issuance of letters of credit and an accompanying
written notice which shall (a) with respect to Letters of Credit which are not
fully cash collateralized pursuant to Section 2.18(A), contain a statement of
the purpose of such Letter of Credit, together with an explanation and
confirmation that such Letter of Credit is to be used in connection with the
acquisition of any specified businesses, properties or assets of any kind or in
connection with the amendment, renewal, extension, modification or refunding of
the same, and (b) specify a precise description of the documents and the
verbatim text of such Letter of Credit and any certificate to be presented by
the beneficiary which, if presented by the beneficiary prior to the expiration
date of the Letter of Credit, would require the Issuing Bank to make payment
under the Letter of Credit; provided that the Issuing Bank, in its sole, but
reasonable, judgment, may require changes in any such documents and
certificates; and provided further that no Letter of Credit shall require
payment against a conforming draft to be made on the same Business Day that
such draft is presented if presentation is made after 11:00 A.M. on such
Business Day. On the proposed date of issuance of any Letter of Credit, the
Issuing Bank shall determine to the best of its knowledge whether the proposed
Letter of Credit, when added to the then outstanding Letter of Credit
Liability, would be within the Letter of Credit Sublimit and, when added to the
then outstanding Letter of Credit Liability and outstanding Advances, would be
less than or equal to the Commitment. The Lenders and the Borrower shall hold
the Issuing Bank harmless for any miscalculations or other errors in making
such determinations except that if such miscalculations or other errors
resulted from the bad faith or willful misconduct of the Issuing Bank as
determined in a final judgement by a court of competent jurisdiction or a
settlement tantamount to such formal decision, the Issuing Bank shall not be
entitled to be held harmless under this sentence. In the event that, upon
issuance of such proposed Letter of Credit, (1) the Letter of Credit Sublimit
is exceeded, the Borrower shall immediately establish the Letter of Credit Cash
Collateral Account with the Agent, if not already so established, and deposit
into the Letter of Credit Cash Collateral Account the amount of such excess;
and (2) the outstanding Advances plus the Letter of Credit Liability exceed the
Commitment, the Borrower shall immediately repay to the Agent, for the benefit
of the Lenders, the amount of such excess for application against the Advances,
together with accrued interest thereon and any amount which may be due pursuant
to Section 2.16 on account of such payment. In determining whether to pay
under any Letter of Credit, the Issuing Bank shall be responsible only to
determine in good faith that the documents and certificates required to be
delivered under that Letter of Credit have been delivered and that they comply
on their face with the requirements of that Letter of Credit.
(B) Payment of Amounts Drawn Under Letters of Credit. In the event of any
request for drawing under any Letter of Credit by the beneficiary thereof, the
Issuing Bank shall immediately notify the Borrower and the Agent, and the
Borrower shall reimburse the Issuing Bank on the day on which such drawing is
honored in immediately available funds equal to the amount of such drawing;
provided that (1) if sufficient funds are then in the Letter of Credit Cash
Collateral Account to reimburse it in full for the amount of such drawing, the
Issuing Bank shall immediately request the Agent and the Agent shall withdraw
such amount necessary to reimburse it from the Letter of Credit Cash Collateral
Account, (2) if the funds then in the Letter of Credit Cash Collateral Account
are insufficient to reimburse the Issuing Bank in full for the amount of such
drawing, the Agent shall withdraw all of the funds in the Letter of Credit Cash
Collateral Account which shall be applied directly by the Agent to reimburse
the Issuing Bank for such drawing and the unreimbursed balance of such drawing
shall be reimbursed in accordance with clause (3) below, and (3) if there are
no funds then in the Letter of Credit Cash Collateral Account, or if such funds
are insufficient to reimburse the Issuing Bank in full for the amount of such
drawing, then (a) unless the Borrower shall have notified the Agent prior to
11:00 A.M. on the date of such drawing that the Borrower intend to reimburse
the Issuing Bank for the amount of such drawing with funds other than the
proceeds of Advances, the Borrower shall be deemed to have given notice to the
Agent requesting the Lenders to make an Advance which shall earn interest at
the Adjusted Base Rate in accordance with Section 2.2 on the day on which such
drawing is honored (the "Reimbursement Date") in an aggregate amount equal to
the amount of such drawing less the amount, if any, withdrawn from the Letter
of Credit Cash Collateral Account pursuant to clause (2) above, and (b) subject
to satisfaction or waiver of the conditions specified in Section 4.2, the
Lenders shall, on the Reimbursement Date, make an Advance, which shall earn
interest at the Adjusted Base Rate, in an aggregate amount equal to the amount
of such drawing less the amount, if any, withdrawn from the Letter of Credit
Cash Collateral Account pursuant to clause (2) above, the proceeds of which
shall be applied directly by the Agent to reimburse the Issuing Bank for such
drawing.
(C) Compensation. In addition to the L/C Fee, the Borrower agrees to pay to
the Issuing Bank with respect to the issuance, amendment, transfer,
administration, cancellation or conversion of each Letter of Credit and each
drawing made thereunder, documentary and processing charges in accordance with
the Issuing Bank's standard schedule for such charges in effect at the time of
such issuance, amendment, transfer, administration, cancellation or drawing, as
the case may be, or as otherwise agreed to by the Issuing Bank (which fees
shall be for the benefit of the Issuing Bank and shall not be shared with the
other Lenders).
(D) Obligations Absolute. The obligation of the Borrower to reimburse the
Issuing Bank for drawings made under the Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances (except to the extent caused by
the gross negligence or willful misconduct of the Issuing Bank as determined in
the final judgment of a court of competent jurisdiction or in settlement
tantamount to such final judgment) including, without limitation, the
following circumstances:
(1) any lack of validity or enforceability of any Letter of Credit;
(2) the existence of any claim, set-off, defense or other right which the
Borrower may have at any time against a beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such transferee may
be acting), the Issuing Bank, the Agent or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between the
Borrower or one of its Subsidiaries and the beneficiary for which the Letter
of Credit was procured);
(3) any draft, demand, certificate or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(4) payment by the Issuing Bank to or as directed by the beneficiary of a
Letter of Credit under such Letter of Credit against presentation of a demand,
draft or certificate or other document which does not comply with the terms of
such Letter of Credit;
(5) any breach of this Agreement or any document delivered in connection
herewith by any party hereto or thereto; or
(6) the fact that an Event of Default or a Default shall have occurred and be
continuing.
(E) Indemnification; Nature of Lender's Duties. In addition to amounts payable
as elsewhere provided in this Section 2.18, the Borrower hereby agrees to
protect, indemnify and save the Agent, the Issuing Bank and each Lender
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees and
allocated costs of internal counsel) which the Agent, the Issuing Bank and each
Lender may incur or be subject to as a consequence, direct or indirect, of (1)
the issuance of any Letter of Credit, or (2) the failure of the Issuing Bank to
honor a drawing under any Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority, except with respect to any such claim,
demand, liability, damage, loss, cost, charge or expense, to the extent
resulting from the Issuing Bank's gross negligence or willful misconduct as
determined in a final judgment of a court of competent jurisdiction or a
settlement tantamount to such formal decision. Without limiting the foregoing,
the Issuing Bank shall have no obligation to ascertain whether the stated
purpose of any requested Letter of Credit is permitted by this Agreement and
shall not be liable for the Borrower's use of a Letter of Credit issued
pursuant to the terms hereof in violation of the Borrower's covenants contained
herein.
As among the Borrower, the Agent, the Lenders and the Issuing Bank, the
Borrower assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by the Issuing Bank by the respective beneficiaries of
such Letters of Credit. In furtherance and not in limitation of the foregoing,
neither the Agent, the Issuing Bank nor any Lender (absent its own gross
negligence or willful misconduct as determined in a final order of a court of
competent jurisdiction or in a settlement agreement tant amount to such final
order) shall be responsible for: (1) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of such Letters of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (2) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (3) failure of the beneficiary of any such Letter of Credit to
comply fully with conditions required in order to draw upon such Letter of
Credit, unless (a) such failure is material and substantive, and (b) the
Issuing Bank's payment on such Letter of Credit constitutes bad faith, gross
negligence or willful misconduct as determined in a final judgment by a court
of competent jurisdiction or a settlement tantamount to such formal decision;
(4) errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (5) errors in interpretation of technical terms; (6) any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (7) the misapplication by the beneficiary of any such Letter of
Credit; or (8) any consequences arising from causes beyond the control of the
Issuing Bank. None of the above shall affect, impair, or prevent the vesting
of any of the Issuing Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific provisions
hereinabove set forth, any action taken or omitted by the Issuing Bank under or
in connection with the Letters of Credit issued by it or the related
certificates, if (i) taken or omitted in good faith and without gross
negligence or willful misconduct as determined in a final order of a court of
competent jurisdiction or in a settlement agreement tantamount to such final
order, and (ii) substantially in accordance with the terms t hereof, shall not
put the Issuing Bank under any resulting liability to the Borrower or the
Lender Group.
As between the Agent, the Issuing Bank and Lenders, the Issuing Bank agrees
that it will take the same care as it takes in connection with letters of
credit in which it alone is interested. However, neither the Issuing Bank nor
any of its directors, officers, agents 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 as
determined in a final judgement by a court of competent jurisdiction or a
settlement tantamount to such formal decision.
With respect to its Pro Rata Share of the Advances and Letter of Credit
Liability (if any), the Issuing Bank shall have the same rights and powers
hereunder as any Lender and may exercise the same as though it were not the
Issuing Bank. The Issuing Bank may accept deposits from, lend money to and
generally engage in any kind of banking or trust business with any Borrower and
any Subsidiaries or Affiliates of the Borrower as if the Issuing Bank were not
the Issuing Bank unless otherwise prohibited by the terms of this Agreement.
It is expressly understood and agreed that the obligations of the Issuing Bank
hereunder are only those expressly set forth in this Agreement and that the
Issuing Bank shall be entitled to assume that no Event of Default or Default
has occurred and is continuing unless the Issuing Bank has actual knowledge of
such fact or has received written notice from a Lender or the Borrower that
such Lender or the Borrower considers that an Event of Default or Default has
occurred and is continuing and specifying the nature thereof.
So long as the Issuing Bank shall be entitled, pursuant to the immediately
preceding paragraph, to assume that no Event of Default or Default has occurred
and is continuing, the Issuing Bank shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights that may be
vested in it by, or with respect to taking or refraining from taking any action
or actions that it may be able to take under or in respect of, this Agreement.
The Issuing Bank shall incur no liability under or in respect of this Agreement
by acting upon any notice, consent, certificate, warranty or other paper or
instrument reasonably believed in good faith by it to be genuine or authentic
or to be signed by the proper party or parties, or with respect to anything
that it may do or refrain from doing in good faith and in the reasonable
exercise of its judgment.
Each Lender agrees to indemnify the Issuing Bank (to the extent not reimbursed
by the Borrower), ratably according to its Pro Rata Share, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by or asserted against the Issuing
Bank in any way relating to or arising out of this Agreement or any action
taken or omitted by the Issuing Bank under this Agreement, provided that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Issuing Bank's gross negligence or willful
misconduct as determined in a final judgment by a court of competent
jurisdiction or a settlement tantamount to such formal decision.
Section II.19 Disbursement of Payments to the Lenders and Issuing Bank. The
Agent shall promptly distribute to each applicable Lender Group member its
ratable share of each payment received by the Agent under the Loan Documents
for the account of such Lender Group member by crediting an account of such
Lender Group member at the Agent's office or by wire transfer to an account of
such Lender Group member at an office of any other commercial bank located in
the United States or at any Federal Reserve Bank designated by such Person.
Unless the Agent shall have received notice from the Borrower prior to the date
on which any payment is due to any Lender Group member under the Loan Documents
that the Borrower will not make such payment in full, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date and the
Agent, in its sole discretion may, in reliance upon such assumption, cause to
be distributed to each applicable Lender Group member on such due date, a
corresponding amount with respect to the amount then due to such Person. If
and to the extent that the Borrower shall not have so made such payment in full
to the Agent, and the Agent shall have so distributed to such Lender or Lenders
or the Issuing Bank a corresponding amount, such Lender Group member shall, on
demand, repay to the Agent the amount so distributed together with interest
thereon, for each day from the date such amount is distributed to such Lender
Group member until the date such Person repays such amount to the Agent, at the
Federal Funds Rate until (and including) the third Business Day after demand is
made and thereafter at the Adjusted Base Rate. Moreover, any Lender Group
member that shall have failed to make available the required amount shall not
be entitled to vote on such matters as Lenders are otherwise entitled to vote
on or consent to or approve under this Agreement and the other Loan Documents
until such amount with interest is paid in full to the Agent by such Lender
Group member. Nothing in th is Section 2.19 shall relieve the Borrower from
any payment obligations.
ARTICLE III
COLLATERAL
Section III.1 Security Interests. (A) As security for the performance of this
Agreement and of the other Loan Documents, the payment of principal and
interest under the Loans and the payment of all other liabilities of the
Borrower and/or any Guarantors to the Agent, the Issuing Bank and the Lenders,
whether absolute or contingent, matured or unmatured, direct or indirect, sole,
joint, several, or joint and several, similar or dissimilar, due or to become
due or heretofore or hereafter contracted or acquired (the "Liabilities"), the
Borrower hereby grants, pledges, and assigns to the Agent, as agent for the
Lender Group, a security interest in all assets of the Borrower constituting
personal property now owned or hereafter acquired including, without
limitation, (A) all Accounts, Chattel Paper, Equipment (whether or not
constituting fixtures but excluding motor vehicles title to which is evidence
by a certificate of title), Documents, Instruments, General Intangibles
(including, but not limited to, any and all interests in trademarks, service
marks, patents, licenses, permits, copyrights, contracts and agreements),
including without limitation the Borrower's rights under all present and future
contracts (to the extent assignments thereof are not prohibited by their
terms), authorizations, permits and licenses issued or granted to the Borrower
by any governmental agency, whether federal, state or local for the ownership
and operation of its business, and all proceeds of sale thereof, (B) all
Inventory of the Borrower held for sale or lease or to be furnished under
contracts of service, (C) all books, records, tapes, information, data, stored
material, computer media, passwords, access codes arising or related to the
Borrower's business, now existing or hereafter acquired (collectively, "Books
and Records"), (D) any account maintained by the Borrower with the Agent or any
Affiliate of the Agent or any Lender or any Affiliate of any Lender and all
cash held therein, and (E) all proceeds and products of the foregoing,
including casualty insurance thereon, now owned or hereafter acquired by the
Borrower.
Section III.2 Further Security. As further security for payment of the
Liabilities: (A) the Borrower and the Guarantors shall execute and deliver a
pledge agreement (the "Pledge Agreement") in favor of the Agent for the benefit
of the Lender Group, pursuant to which they will grant to the Agent for the
benefit of the Lender Group a lien on and security interest, in (i) 100% of the
capital stock in each Domestic Subsidiary whether now existing or hereafter
created or acquired, (ii) 65% of the capital stock of each Foreign Subsidiary
whether now existing or hereafter created or acquired, and (iii) obligations
owed by the Borrower or any Guarantor to the Borrower or any other Guarantor,
whether now existing or hereafter created; (B) the Borrower and the Guarantors
shall deliver to the Agent original stock certificates and instruments (if any)
representing the property pledged pursuant to the Pledge Agreement, together
with powers executed in blank; (C) the Guarantors shall deliver to the Agent
the Guarantee pursuant to which (I) the Guarantors shall each jointly and
severally guarantee and become surety for all of the Borrower's obligations
hereunder and (ii) the Guarantors shall each grant to the Agent a security
interest in all of the personal property assets of each Guarantor as security
for the Guarantors' obligations under the Guarantee and for the Borrower's
Liabilities; and (D) the Borrower and each Guarantor shall deliver executed
UCC-1 financing statements as to such pledges and security interests in form
and substance as required by the Agent.
Section III.3 Financing Statements; Certificates of Title. The Borrower will
join with the Agent in executing such financing statements and continuation
statements (in form satisfactory to the Agent) under the Uniform Commercial
Code as the Agent may specify, and will pay the cost of filing the same in such
public offices as the Agent shall designate. The Borrower agrees to take
whatever action the Agent reasonably requests to perfect and to continue
perfection of the Agent's security interest in the Collateral.
Section III.4 Landlord's Waiver. The Borrower shall exercise reasonable
commercial efforts to cause the owners of the locations identified on Exhibit
3.6 to execute and deliver to the Agent an instrument (in form satisfactory to
the Agent) by which each such owner waives its right to distrait on any of the
Collateral, and by which such owner grants to the Agent the right (but not the
obligation) to cure any default by the Borrower under the applicable lease
(each, a "Landlord's Waiver").
Section III.5 The Agent's Rights With Respect to Accounts, Chattel Paper,
Instruments and General Intangibles. With respect to any Account, Chattel
Paper, Instrument and General Intangible that is Collateral hereunder, upon the
occurrence and continuance of an Event of Default which has resulted in the
acceleration of the Loans, the Agent shall have the right at any time and from
time to time, with notice to the Borrower (which may be oral or written), to:
(A) endorse in the name of the Borrower all proceeds of the Accounts, Chattel
Paper, Instruments and General Intangibles payable to the Borrower that may
come to the Agent; (B) notify Purchasers under the Borrower's Accounts, Chattel
Paper, Instruments and General Intangibles that such Accounts, Chattel Paper,
Instruments and General Intangibles have been assigned to the Agent, forward
invoices to such Purchasers directing them to make payments to the Agent,
collect all Accounts, Chattel Paper, Instruments and General Intangibles of the
Borrower in the Agent's or the Borrower's name, and take control of any cash or
non-cash proceeds of the Borrower's Accounts, Chattel Paper, any Instruments
and General Intangibles; (C) compromise, extend, or renew any Account, Chattel
Paper, Instrument or General Intangible of the Borrower or deal with the
Borrower's Accounts, Chattel Paper, Instruments and General Intangibles as the
Agent may deem advisable; (D) make exchanges, substitutions, or surrenders of
Collateral; and (E) take control of any cash or non-cash proceeds of any
Collateral.
Section III.6 Places of Business; Location of Collateral. The Borrower
represents that (1) the properties listed on part A of Exhibit 3.6 attached
hereto serve as the Borrower's chief place of business, chief executive office,
and the place where it keeps its Books and Records, and (2) all of the
locations where the Borrower and/or any Guarantor keeps Equipment or Inventory
having an aggregate value in excess of $1,000,000.00 are listed on part B of
Exhibit 3.6 attached hereto.
(A) The Borrower will notify the Agent prior to (1) any change in the location
of the chief place of business or chief executive office of the Borrower or any
Guarantor, (2) any change in the place where the Borrower or any Guarantor
keeps its Equipment and/or Inventory or its Books and Records, (3) the
establishment of any new or the discontinuance of any existing place of
business of the Borrower or any Guarantor, and (4) the establishment of any new
or the discontinuance of any location where Inventory, Equipment or Books and
Records are kept by the Borrower or any Guarantor.
(B) Except for the temporary removal of mobile Equipment in the ordinary course
of the Borrower's business, the Borrower will not permit any of its or any
Guarantor's Equipment having an aggregate value of $1,000,000.00 or more to be
removed from its current location or any of its or their Inventory having an
aggregate value of $1,000,000.00 or more to be so removed without giving the
Agent prior written notice and then, only if and to the extent the Agent
retains a first priority, perfected security interest therein.
Section III.7 Accounts. With respect to each Account represented on the
Borrower's Consolidated balance sheet the Borrower represents that: (1) except
as reflected on such Consolidated balance sheet such Account is not evidenced
by a judgment, an Instrument or Chattel Paper or secured by a letter of credit
(except (a) such judgment as has been assigned, (b) such Instrument or Chattel
Paper as has been endorsed and delivered to the Agent and (c) such letter of
credit as has been assigned and delivered to the Agent) and represents a bona
fide completed transaction; (2) except as reflected on such Consolidated
balance sheet, the amount shown on the Borrower's Books and Records and on any
list, invoice or statement furnished to the Agent is owing to the Borrower; (3)
the Borrower has good title to the Account free and clear of all liens and
encumbrances except for Permitted Encumbrances; (4) the Account has not been
transferred to any other Person, and, at the time such Account is created, no
person except the Borrower or Purchaser has any claim thereto or to the goods
or services represented thereby; (5) except as reflected on such Consolidated
balance sheet, no partial payment against any Account has been made by anyone
other than as noted on the Borrower's Books and Records; and (6) except as
reflected on such Consolidated balance sheet, to the best of the Borrower's
knowledge, no set-off or counter-claim to such Account exists, and no agreement
has been made with any person under which any deduction or discount may be
claimed. The Borrower shall be deemed not to have made a misrepresentation
(either upon execution of this Agreement or at the time such representations
may be deemed renewed in accordance with the terms of this Agreement) with
respect to this Section 3.7(A) if the representations set forth in the
foregoing sentence (i) are true for all Eligible Accounts on the then current
Borrowing Base Certificate, and (ii) are untrue for Accounts aggregating not
more than $1,000,000.00 at the time such representation is made or deemed
renewed.
(A) The Borrower will promptly notify the Agent if any Account arises out of
contracts with the United States, any United States state, territory or local
government, or any department, agency or instrumentality thereof, furnish the
Agent with copies of each such contract and, at the Agent's request, execute
any instruments and take any steps in order that (subject to the following
sentence) all moneys due and to become due under any such contract shall be
assigned to the Agent and notice given under the Federal Assignment of Claims
Act (or applicable state statute, if any). The Agent agrees not to deliver any
such notices of assignments to the applicable United States or other United
States state, territory or local governmental department, agency or
instrumentality unless and until there occurs an Event of Default and then the
Agent shall deliver such notices of assignment only if it determines or the
Majority Banks determine (as indicated in writing to the Agent directing the
Agent to so deliver such notices of assignment) in good faith that under the
circumstances it is reasonable to do so to protect its or their rights in and
to such Accounts or the proceeds thereof or in anticipation of exercising its
or their rights hereunder as a result of such Event of Default.
(B) The Borrower will (1) if requested by the Agent, furnish to the Agent
copies, with such duplicate copies as the Agent may request, of any invoice
applicable to each of its Accounts; (2) inform the Agent immediately of any
delay in performance by the Borrower or claims made in regard to its Accounts
which alone or in the aggregate with other claims or delays could likely have a
Material Adverse Effect; and (3) furnish the Agent with such other reports as
the Agent may from time to time reasonably request.
Section III.8 Chattel Paper; Letters of Credit and Instruments. The Borrower
covenants that it will deliver to the Agent promptly copies (or if requested by
the Agent originals) of (A) all letters of credit securing Accounts, except to
the extent such letters of credit (1) secure Accounts not included as Eligible
Accounts on the then current Borrowing Base Certificate, and (2) such Accounts
aggregate not more than $1,000,000.00, (B) Chattel Paper, and/or (C)
Instruments now in its possession or hereafter acquired, each properly assigned
and/or endorsed over to the Agent, the originals of which letters of credit,
Chattel Paper and Instruments delivered to the Agent shall be held by the Agent
as security hereunder. The Borrower shall remain solely responsible for the
observance and performance of all of its or their covenants and obligations
under all Chattel Paper and Instruments, and the Agent shall not be required to
observe or perform any such covenants or obligations.
Section III.9 Equipment. The Borrower represents, warrants and agrees that (A)
the Borrower has good title to its Equipment (other than leased Equipment),
subject only to the security interests created hereby and Permitted
Encumbrances; and (B) Borrower will not dispose of any of its Equipment other
than in the ordinary course of business and then in accordance with the terms
of this Agreement, or permit any of its Equipment to become a fixture or an
accession to other property unless the Agent's security interest therein would
continue to be a perfected, first lien priority security interest therein.
Section III.10 Expenses of Agent. The Borrower will reimburse the Agent within
ten (10) days after demand for all reasonable expenses (including the
reasonable fees and expenses of legal counsel for the Agent) in connection with
the enforcement of the Agents' rights to take possession of the Collateral and
the proceeds thereof and to hold, collect, render in compliance with applicable
laws and regulations (including without limitation Environmental Laws), prepare
for sale, sell and dispose of the Collateral.
Section III.11 Notices. If notice of sale, disposition or other intended
action by the Agent with respect to the Collateral is required by the U.C.C. or
other applicable law, any notice thereof sent to the Borrower at its address
listed herein or such other address of the Borrower as may from time to time be
shown on the records of the Agent at least ten days prior to such action, shall
constitute reasonable notice to the Borrower.
Section III.12 Insurance; Discharge of Taxes, etc. The Agent shall have the
right at any time and from time to time, with or without notice to the
Borrower, to (A) obtain insurance covering any of the Collateral if the
Borrower fails to do so, (B) discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on any of the Collateral and
(C) pay for the maintenance and preservation of any of the Collateral. The
Borrower will reimburse the Agent, on demand, with interest thereon at the
Default Rate for any payment the Agent makes, or any reasonable expense the
Agent incurs under this authorization. The Borrower assigns to the Agent all
right to receive the proceeds of insurance covering the Collateral, directs any
insurer to pay all such proceeds directly to the Agent, authorizes the Agent to
endorse in the name of the Borrower any draft for such proceeds, and authorizes
the Agent to apply such proceeds as a prepayment against the Loans if there
then exists an Event of Default or to the extent so provided in Section 2.6
hereof (but subject to the terms of such Section 2.6 relating to the Borrower's
option to reinvest such proceeds). In the event that there does not exist a
Default or Event of Default and such proceeds are not to be applied as a
prepayment pursuant to Section 2.6 hereof because the Borrower intends to
repair or replace damaged Collateral or otherwise reinvest the proceeds of such
insurance as permitted thereby, upon receipt of Borrower's written request, the
Agent shall make such proceeds available to the Borrower and to its appropriate
Subsidiary (if any) for the repair or replacement of damaged Collateral (or
other reinvestment) if and on condition that (i) the Borrower proceeds
diligently to cause such replacement, repair and/or reinvestment, (ii) there
does not occur or exist any Default or Event of Default at the time such
proceeds are received by the Agent or at any time during such repair and/or
replacement, and (iii) any excess proceeds remaining after such repair,
replacement or other reinvestment shall be applied by the Agent as a prepayment
against the Loans to the extent required under Section 2.6. If such proceeds
are to be used to repair or replace the damaged Collateral as set forth in the
previous sentence and such aggregate proceeds exceed $3,000,000.00 (when added
to any such proceeds received by any Subsidiary), then the Agent shall retain
such proceeds in a restricted access account and shall advance such proceeds
against actual costs incurred as evidenced by paid invoices or other evidence
as the Agent may require. If such proceeds are to be used to repair or replace
the damaged Collateral and such aggregate proceeds are $3,000,000.00 or less
(when added to any such proceeds received by any Subsidiary), the Agent shall
remit such proceeds to the Borrower promptly for such use. The Borrower shall
keep the Agent informed, as the Agent may reasonably request, as to the
progress of such repair, replacement or reinvestment. In the event that there
does not then exist any Default or Event of Default and such proceeds are not
to be applied as a prepayment pursuant to Section 2.6 hereof because the Net
Cash Proceeds when added to Net Cash Proceeds from dispositions of assets for
the immediately preceding twelve months do not equal or exceed $1,000,000.00,
the Borrower shall be entitled to retain such proceeds for its corporate
purposes.
Section III.13 Waiver and Release by the Borrower. The Borrower (A) waives
protest of all commercial paper at any time held by the Agent on which the
Borrower is in any way liable, notice of nonpayment at maturity of any and all
Accounts and, except where required hereby or by law, notice of action taken by
the Agent under the Loan Documents, and (B) releases the Agent from all claims
for loss or damage caused by any failure to collect any Account or by any act
or omission on the part of the Agent or its officers, agents and employees,
except willful misconduct or gross negligence as determined in a final judgment
of a court of competent jurisdiction or a settlement tantamount to such formal
order.
Section III.14 Records and Reports. The Borrower shall keep accurate and
complete records of its Accounts (and the collection thereof), General
Intangibles, Chattel Paper, Instruments, Documents and Inventory and furnish
the Agent such information about its Accounts, General Intangibles, Chattel
Paper, Instruments, Documents, and Inventory as the Agent may reasonably
request. The Agent shall have the right to conduct periodic examinations and
verifications of the Borrower's Books and Records, which examination may
include, without limitation, verifications of Accounts by contacting
Purchasers; provided that if there then exists no Event of Default, the Agent
shall conduct such verifications with the Borrower's assistance (which the
Borrower agrees to provide) using the Borrower's letterhead with responses to
be returned to a lock box under the Agent's control. The Borrower agrees to
make its Books and Records available to the Agent at the Borrower's principal
place of business for purposes of such examinaton. Provided there does not
exist an Event of Default, the Agent agrees to give the Borrower at least two
(2) Business Days prior notice of such examination (which notice need not be in
writing) and to conduct such examination during normal business hours. The
Borrower shall reimburse the Agent for the reasonable costs and expenses of any
such examination conducted following the occurrence and during the continuation
of an Event of Default.
Section III.15 Further Assurances. From time to time the Borrower will execute
and deliver to the Agent such additional instruments as the Agent may
reasonably request to effectuate the purposes of this Agreement and to assure
to the Agent, as secured party, a perfected, first priority security interest
in the Collateral.
Section III.16 Application of Proceeds of Collateral. After the occurrence of
an Event of Default, all proceeds of Collateral shall be applied (A) to the
costs of preservation and, liquidation of such Collateral and the Agent's
exercise of its rights hereunder then (B) to all other Liabilities.
Section III.17 Continuing Collateral. The Agent shall be under no obligation
to proceed first against any part of the Collateral before proceeding against
any other part of the Collateral. It is expressly agreed that all of the
Collateral stands as equal security for all Liabilities and the Agent shall
have the right to proceed against or sell any and/or all of the Collateral in
any order, or simultaneously, as it, in its sole discretion, shall determine.
ARTICLE IV
CONDITIONS OF LENDING
Section IV.1 General Conditions Precedent. The obligation of the Issuing Bank
to issue Letters of Credit and of each Lender to make its Pro Rata Share of the
initial Advance of the Revolving Credit, and to participate in its Pro Rata
Share of Letters of Credit hereunder is subject to the Agent having received,
on or before the day on which such Advance, disbursement or issuance is to be
made, all of the following which shall be in form and substance satisfactory to
the Agent:
(A) a copy, certified in writing by the Secretary or an Assistant Secretary of
the Borrower and each Guarantor as of the Closing Date, of (1) resolutions of
the Board of Directors (or, if authorized, the Executive Committee) of such
Person evidencing approval of the Loan Documents to which it is a party and the
matters contemplated thereby, (2) each document evidencing other necessary
corporate action and governmental approvals, if any, with respect to the Loan
Documents, (3) such Person's by-laws, certificate of incorporation and
amendments thereto and (4) written consent of a majority of those members of
the Borrower's Board of Directors who are not, and have not been during the
five years prior hereto, employees of the Borrower and who were either members
of the Borrower's Board of Directors on November 25, 1986, or who subsequently
became directors of the Borrower and whose election or nomination for election
by the Borrower's shareholders, were approved by a majority of the directors
described in this clause (4) on the Board of Directors at the time of such
election or nomination (collectively, the "Independent Directors");
(B) a favorable opinion of counsel(s) to the Borrower and the Guarantors dated
as of the Closing Date on such matters and in such form as the Agent shall
require;
(C) a written certificate as of the Closing Date by the Secretary or an
Assistant Secretary of the Borrower and each Guarantor as to the names and
signatures of the officers of such Person authorized to sign the Loan Documents
to which such Person is a party and the other documents or certificates of such
Person to be executed and delivered pursuant thereto;
(D) recent certificates, issued by the Secretary of State of each jurisdiction
where the Borrower and each Guarantor is incorporated and/or authorized to do
business, stating that such Person is a corporation duly incorporated or
authorized to do business (as the case may be) and in good standing under the
laws of such jurisdiction;
(E) the Notes executed by the Borrower;
(F) the Pledge Agreement executed by the Borrower and each Guarantor together
with the original certificates for all shares of capital stock owned by the
Borrower and each Guarantor and stock powers duly endorsed in blank by the
Borrower and each Guarantor and the originals of all notes or other instruments
pledged under the Pledge Agreement;
(G) the Guarantee executed by each Guarantor;
(H) the Uniform Commercial Code financing statements executed by the Borrower
and each Guarantor, and any other document which the Agent may reasonably
request, including without limitation any other document for filing or
otherwise, in order to perfect the Agent's security interest in the Collateral;
(I) evidence that the Borrower and the Guarantors have complied with those
covenants regarding insurance as are contained herein and in the Guarantee;
(J) evidence that the Borrower and each Guarantor have provided to the Agent
the documents necessary for the Agent to open the Letter of Credit Cash
Collateral Account;
(K) a certificate of the Borrower representing to the Lenders that (1) there is
no pending or, to the Borrower's knowledge, threatened litigation against the
Borrower or any Subsidiary which, if decided against such Person, would result
in a Material Adverse Effect; (2) no material adverse change has occurred in
the financial condition of the Borrower and its Subsidiaries taken as a whole
since December 31, 1997; (3) the representations and warranties of the Borrower
contained in the Loan Documents are correct and accurate on and as of the
Closing Date as though made on and as of the Closing Date; and (4) no Default
or Event of Default has occurred or will result from the making of the Loans or
issuance of any Letters of Credit;
(L) a Uniform Commercial Code, tax and judgment lien search prepared by a
search company acceptable to the Agent showing no perfected liens against any
property of the Borrower or any Guarantor or against any Collateral, excluding
Permitted Encumbrances or liens being assigned to the Agent on the Closing
Date;
(M) a copy of each and every authorization, permit, consent and approval of and
other action by, and notice to and filing with (collectively, "Consents"),
every governmental authority and regulatory body which is required to be
obtained or made by the Borrowers and each Guarantor for the due execution,
delivery and performance of this Agreement and the other Loan Documents and for
the consummation of the transactions contemplated therein, or a certificate of
an officer of the Borrower and each Guarantor and such supporting evidence as
the Agent may request that no such Consents are required;
(N) a certificate executed by the trustee of the Subordinated Debentures and by
an authorized officer of the Borrower stating (1) the principal amount
outstanding thereunder as of the date hereof, (2) that there has occurred no
default or event of default with respect thereto, (3) that there have been no
amendments thereto or to the indenture under which such Subordinated Debentures
were issued, (4) that the obligations of the Borrower hereunder constitute
"Senior Indebtedness" for purposes of such Subordinated Debentures, and (5)
such other facts as the Agent may reasonably require;
(O) the Intercreditor Agreement executed by all parties thereto;
(P) certified copies of all shareholder agreements relating to the Borrower,
its Subsidiaries, or any of them;
(Q) copies of all of the Borrower's and each of its Subsidiaries' material
contracts;
(R) a pro forma Compliance Certificate as of the Closing Date using the
Borrower's results for the twelve month period ending June 30, 1998;
(S) pro forma financial statements and projections of the Borrower on a
Consolidated basis as of the Closing Date through the Termination Date;
(T) such other financial statements, reports, projections and other financial
information as the Agent may reasonably request, all of which shall be
certified by the Borrower and its Subsidiaries as having been prepared in good
faith and based on assumptions reasonably believed by the Borrowers and its
Subsidiaries to be reasonable, all of which shall be satisfactory to the Agent
in form and substance;
(U) all of the Borrowers' instruments, chattel paper and letters of credit , if
any, supporting any Account owed by a Purchaser, each properly endorsed and/or
assigned to the Agent;
(V) the Borrower shall have delivered to the Agent evidence that, prior to or
substantially simultaneously with the making of the initial Loans, (1) all
Indebtedness of the Borrower and its Subsidiaries except the Subordinated
Debentures will be repaid, (2) all commitments to lend in respect of such
Indebtedness shall have been effectively terminated and (3) all collateral held
in connection therewith shall have been released (or undertakings to release
such collateral upon receipt of specified funds shall have been duly made) and
UCC-3 termination statements and all other documents necessary in the
determination of the Agent to effectively terminate of record all security
interests related to such Indebtedness shall have been duly executed by the
proper parties and shall have been delivered to the Agent (or undertakings to
do so upon receipt of specified funds shall have been furnished to the Agent);
(W) the Borrower shall establish a Loan funding account with the Agent;
(X) payment by the Borrower of all Fees then due;
(Y) results satisfactory to Lender of (1) a field examination of the Collateral
conducted by the Agent; and (2) a review and audit of the Borrower's and each
of its Subsidiaries' material contracts;
(Z) a Borrowing Base Certificate as of the Closing Date executed by the
Borrower with such supporting data as the Agent may require;
(AA) fully executed ESOT Loan Assignment Documents and evidence that all
conditions to the assignment of the ESOT Loan and ESOT Loan Documents to Mellon
have been satisfied; and
(BB) such other documents and information as the Agent may reasonably request.
Section IV.2 Additional Conditions Precedent. The obligation of the Issuing
Bank to issue Letters of Credit and of each Lender to make its Pro Rata Share
of Advances under the Revolving Credit (including the initial Advance), and to
participate in any Letters of Credit are subject to the further conditions
precedent that:
(A) The representations and warranties contained herein shall be accurate on
and as of the date of such Advance, disbursement or selection as though made on
and as of such date except for changes permitted hereby or in writing by the
Majority Lenders;
(B) No Event of Default or Default shall have occurred and be continuing or
will result from the making of such Advance, disbursement or issuance;
(C) No material adverse change shall have occurred in the financial condition
of the Borrower and its Subsidiaries taken as a whole since the date of the
most recent audited financial statements submitted to the Lenders; and
(D) If the intended use of the proceeds of such Advance or of the Letter of
Credit is to assist in the financing of a Permitted Acquisition, the Borrower
shall have delivered to the Agent evidence satisfactory to the Agent that after
giving effect to such Advance or Letter of Credit and to such Permitted
Acquisition, the sum of the unused availability under the Commitment plus the
Borrower's aggregate Cash Equivalents shall not be less than $5,000,000.00.
Section IV.3 Conditions to Issuance of Letters of Credit. The obligation of
the Issuing Bank to issue any Letter of Credit hereunder is subject to the
prior or concurrent satisfaction of all of the following conditions:
(A) On or before the date of issuance of each Letter of Credit, the Issuing
Bank shall have received, in accordance with the provisions of Section 2.18, a
notice requesting the issuance of such Letter of Credit, an executed
application for such Letter of Credit in the form customarily required by the
Issuing Bank for the issuance of letters of credit, all other information
specified in Section 2.18, and such other documents as the Issuing Bank may
reasonably require in connection with the issuance of s uch Letter of Credit;
(B) On the date of issuance of each Letter of Credit, all conditions precedent
described in Sections 4.1 and 4.2 shall be satisfied to the same extent as
though the issuance of such Letter of Credit were the making of an Advance, and
each request by the Borrower to the Issuing Bank to issue a Letter of Credit
shall constitute a representation by the Borrower that at the time thereof (1)
all conditions precedent described in Sections 4.1 and 4.2 and (2) the sum of
the proposed Letter of Credit plus the Letter of Credit Liability plus the
Advances then outstanding would not exceed the Commitment, and (3) the sum of
the proposed Letter of Credit plus the Letter Credit Liability will not exceed
the Letter of Credit Sublimit; and
(C) On or before the date of issuance of such Letter of Credit, the Borrower
shall have paid the L/C Fee and the other fees required under Section 2.18.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In addition to all other representations and warranties set forth in this
Agreement, the Borrower represents and warrants to the Agent, the Lenders and
the Issuing Bank as follows, it being understood that representations and
warranties that do not speak solely as of the Closing Date may be up-dated,
from time to time, by the Borrower delivering modifications of any relevant
Exhibits:
Section V.1 Existence. The Borrower and each Subsidiary is a corporation duly
incorporated, validly existing and in good standing under its respective state
of incorporation. The Borrower and each Subsidiary has all requisite power and
authority, corporate and otherwise, to conduct its business and to own its
properties and is duly qualified as a foreign corporation in good standing in
all other jurisdictions in which its failure so to qualify could reasonably be
expected to have a Material Adverse Effect.
Section V.2 Authorization. The execution, delivery and performance by the
Borrower and each Subsidiary of this Agreement, the Notes and the Loan
Documents to which it is a party have been duly authorized by all necessary
corporate action (including without limitation by written consent of a majority
of the Borrower's Independent Directors to the Borrower entering into this
Agreement); do not and will not violate any current provision of any government
regulation or statute, or of the charter or by-laws of such Person or result in
a breach of or constitute a default under any instrument or other material
agreement to which such Person is a party or by which it or its properties are
bound or affected, except for any such violation, breach or default as could
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect; and do not and will not result in or require the
creation of any lien, security interest or other encumbrance (other than in
favor of the Agent) upon any of i ts properties.
Section V.3 Validity of Documents. This Agreement, the Notes and each other
Loan Document to which the Borrower or any of its Subsidiaries is a party
constitute the valid and legally binding obligations of such Person,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
Section V.4 Financial Information. The Financial Statements of the Borrower
and its Subsidiaries dated December 31, 1997 delivered to the Lender Group
members, together with the Interim Statements as of March 31, 1998, delivered
to the Lender Group members present fairly, in all material respects, the
financial positions, results of operations and cash flows of the Borrower and
its Subsidiaries as of such date and for the period then ended in accordance
with GAAP. Since December 31, 1997, there has been no material adverse change
in the financial condition or the results operations of the Borrower and its
Subsidiaries taken as a whole.
Section V.5 Litigation. There are no actions, suits, or proceedings pending
or, to the knowledge of the Borrower, threatened against the Borrower or any of
its Subsidiaries, or any of their properties, before any court or governmental
department, commission, board, bureau, agency, or instrumentality (domestic or
foreign), including without limitation with respect to any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
material, industrial chemical waste, pollutant, contaminant, raw material,
substance, product or by-product of any substance which does not constitute an
Environmental Concern Material, that, if determined adversely to such Person
could reasonably be expected to have a Material Adverse Effect.
Section V.6 Contingent Liabilities. As of the Closing Date there are no
Contingent Liabilities of the Borrower or any of its Subsidiaries that are not
disclosed on the financial statements mentioned in Section 5.4 hereof or on
Exhibit 5.6 hereto which individually or in the aggregate could not be
reasonably expected to have a Material Adverse Effect.
Section V.7 Taxes. The Borrower and each of its Subsidiaries has filed all tax
returns and reports required to be filed before the date hereof and have paid
all taxes, assessments and charges imposed upon them or their property, or that
they are required to withhold and pay over, to the extent that they were
required to be paid before the date hereof, other than any (A) taxes, fees or
other charges with respect to which the failure to pay, in the aggregate, would
not have a Material Adverse Effect or (B) taxes, fees or other charges the
amount or validity of which are currently being contested in good faith by
appropriate proceedings diligently conducted and with respect to which reserves
in conformity with GAAP have been provided on the books of the Borrower.
Section V.8 Encumbrances. None of the properties or assets of the Borrower or
any of its Subsidiaries are subject to any mortgage, pledge, security interest,
lien, or other encumbrance except for Permitted Encumbrances.
Section V.9 Consents. No authorization, consent, approval, license, exemption
by or filing or registration with any court or governmental department,
commission, board (including the Board of Governors of the Federal Reserve
System), bureau, agency, or instrumentality, domestic or foreign, or other
Person is or will be necessary for the valid execution, delivery, or
performance by the Borrower or any of its Subsidiaries of the Loan Documents to
which it is a party, except (A) those which have been obtained or made prior
to the Closing Date, (B) filings necessary to perfect the Liens intended to be
created by the Loan Documents, which shall be made promptly in accordance with
the terms of the Loan Documents, and (C) those which the failure to obtain or
make could not reasonably be expected, individually or in the aggregate to have
a Material Adverse Effect.
Section V.10 ERISA. The Borrower, its Subsidiaries and the members of their
Controlled Groups maintain only those Defined Benefit Pension Plans, Defined
Contribution Plans and other Plans listed on Exhibit 5.10 attached hereto and
contribute to only those Multiemployer Plans listed on Exhibit 5.10 attached
hereto.
(A) Each Defined Benefit Pension Plan and Defined Contribution Plan, which are
intended to be qualified under section 401(a) of the Code as most recently
amended, including amendments to any trust agreement, group annuity, or
insurance contracts, or other governing instrument, is the subject of a
favorable determination letter by the Internal Revenue Service with respect to
its qualification under section 401(a) of the Code.
(B) All Plans comply in all material respects, both in form and in operation,
with the applicable requirements of the Code and ERISA.
(C) There is not now, and has not been, any material violation of the Code or
ERISA with respect to the filing of applicable reports, documents, and notices
regarding any Plan with the Secretary of Labor, the Secretary of the Treasury,
the PBGC or any other governmental entity or the furnishing of such documents
to the participants or beneficiaries of any Plan. The Borrower has furnished
to the Lender Group members copies of the most recent annual report, audited
financial statements, and other reports filed with the Secretary of Labor, the
Secretary of the Treasury, the PBGC or any other governmental entity with
respect to each Plan.
(D) All Pension Plans, as of the date hereof, meet the applicable minimum
funding standards of section 412 of the Code and section 302 of ERISA without
regard to any funding waiver. The Borrower, its Subsidiaries and the members
of their Controlled Groups have, as of the date hereof, made all contributions
or payments to or under Pension Plans required by the terms of any such Plan or
any contract or agreement.
(E) No liability to the PBGC has been, or is expected by the Borrower, any of
its Subsidiaries or any member of its Controlled Group to be, incurred by the
Borrower, any of its Subsidiaries or any member of its Controlled Group.
(F) No Defined Benefit Pension Plan has any Amount of Unfunded Benefit
Liabilities except as listed on Exhibit 5.10.
(G) No trust was established in connection with any Defined Benefit Pension
Plan pursuant to section 4049 of ERISA (as in effect on December 17, 1987) and
no liabilities (whether or not such liability is being litigated) have been
asserted against the Borrower, any of its Subsidiaries or any member of their
Controlled Groups in connection with any such Defined Benefit Pension Plan by
the PBGC or by a trustee appointed pursuant to section 4042(b) or (c) of ERISA,
and no lien has been attached and no person has threatened to attach a lien on
any property of the Borrower, any of its Subsidiaries or any member of their
Controlled Groups as a result of any failure to comply with the Code or ERISA.
(H) No Prohibited Transaction which could reasonably be expected to result in a
Material Adverse Effect has occurred with respect to any Plan.
(I) No Reportable Event which could reasonably be expected to result in a
Material Adverse Effect has occurred with respect to any Defined Benefit
Pension Plan.
(J) Neither the Borrower, nor any of its Subsidiaries, nor or any member of
their Controlled Groups has any unfunded liabilities of unfunded and uninsured
"employee welfare benefit plans" (as defined in section 3(1) of ERISA).
(K) There is not now, and has not been, any COBRA Violation with respect to any
Plan to which such continuation coverage requirements apply which has a
material adverse effect, directly or indirectly, on the financial condition of
the Borrower or any of its Subsidiaries.
(L) The Borrower, its Subsidiaries and the members of their Controlled Group
have established only those irrevocable trusts the assets of which remain
subject to the general creditors of the Borrower, any of its Subsidiaries
and/or members of their Controlled Groups (sometimes referred to as "rabbi
trusts") listed on Exhibit 5.10 attached hereto and have furnished to the
Lender Group members copies of each such "rabbi trust."
(M) If the Borrower, any of its Subsidiaries or any member of their Controlled
Groups were obligated to pay the entire potential Withdrawal Liabilities for
which any of them would be liable if each of them were to withdraw from the
Multiemployer Plans to which any of them makes contributions, such obligations
would not be in excess of $0.00.
(N) The Borrower, all of its Subsidiaries and the members of their Controlled
Group have complied with the requirements of section 515 of ERISA with respect
to Multiemployer Plans.
Section V.11 Ownership; Subsidiaries and Affiliates; Fictitious Names. The
record and beneficial owners of the outstanding capital stock of each of
Borrower's Subsidiaries as of the Closing Date is set forth on Exhibit 5.11
attached hereto. The record and beneficial owners of five percent (5%) or more
of any class of outstanding capital stock of the Borrower as of the Closing
Date, as reported in writing to the Borrower, is set forth on Exhibit 5.11
attached hereto. Exhibit 5.11 hereto lists as of the Closing Date Affiliates
known to the Borrower and all Subsidiaries of the Borrower and each of its
Subsidiaries, and sets forth the equity ownership of each. Neither the
Borrower nor any of its Subsidiaries trades under any fictitious names except
as indicated on Exhibit 5.11. Except as otherwise permitted in this Agreement,
the Borrower has no Subsidiaries except for the Guarantors.
Section V.12 Licenses, Permits, etc. The Borrower and each of its Subsidiaries
is in possession of and operating in compliance with all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and orders
required for the conduct of its business as now conducted, and all of them are
valid and in full force and effect, except any the absence or invalidity of
which could not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
Section V.13 Compliance with Laws. The Borrower and each of its Subsidiaries
is in compliance with all laws, rules, regulations and orders of all federal,
state and governmental agencies and courts which are applicable to it, to the
conduct of its business, or to the ownership and use of its properties to the
extent that the failure to comply would reasonably be expected to have a
Material Adverse Effect.
Section V.14 Environmental Matters. Except as disclosed on Exhibit 5.14
attached hereto and made a part hereof, the Borrower and each of its
Subsidiaries is and has been, in full compliance with all applicable
Environmental Laws, except to the extent that the failure to be in compliance
could not reasonably be expected to have a Material Adverse Effect. To the
best of the Borrower's knowledge, there are no circumstances that may prevent
or interfere with such compliance now or in the future.
(A) The Borrower and each of its Subsidiaries have all Environmental Approvals
necessary or desirable for the ownership and operation of their respective
properties, facilities and businesses as presently owned and operated and as
presently proposed to be owned and operated, in the future, except the absence
or invalidity of which could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(B) There is no Environmental Claim pending or to the knowledge of the Borrower
after due inquiry, threatened, and to the best of the Borrower's knowledge,
there are no past or present acts, omissions, events or circumstances
(including but not limited to any dumping, leaching, deposition, removal,
abandonment, escape, emission, discharge or release of any Environmental
Concern Material at, on or under any facility or property now or previously
owned, operated or leased by the Borrower or any of its Subsidiaries) that
could form the basis of any Environmental Claim against the Borrower or any of
its Subsidiaries, which Environmental Claim could reasonably be expected to
have a Material Adverse Effect.
(C) To the best of the Borrower's knowledge, no facility or property now or
previously owned, operated or leased by the Borrower or any of its Subsidiaries
is an Environmental Cleanup Site and neither the Borrower nor any of its
Subsidiaries has directly transported or disposed of any Environmental Concern
Materials to, or has been identified as a potentially responsible party with
respect to, any Environmental Cleanup Site. No lien exists, and, to the
Borrower's knowledge after due inquiry, no condition exists which could result
in the filing of a lien, against any property of the Borrower or any of its
Subsidiaries under any Environmental Law.
Section V.15 Patents, etc. The Borrower and each of its Subsidiaries owns, or
has the legal right to use all patents, trademarks, copyrights, trade names,
trade secrets and other intellectual property rights that are required to
conduct such Person's business without conflict with the rights of others,
except for those the failure to own or have such legal right to use,
individually or in the aggregate, would not be reasonably expected to have a
Material Adverse Effect.
Section V.16 Other Debt. Neither the Borrower nor any of its Subsidiaries has
Indebtedness except for (A) the Subordinated Debentures, (B) Indebtedness owed
to the Lenders, and (C) Indebtedness permitted by Section 6.24 hereof (which,
as of the Closing Date, the Borrower represents is none).
Section V.17 Margin Stock. Neither the Borrower nor any of its Subsidiaries
engages in the business of making loans for the purchase of Margin Stock.
Section V.18 Regulation U, etc. No part of the proceeds of the Loans or
Letters of Credit will be used for any purposes which violate or are
inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
Section V.19 Labor Matters. There are no existing, or, to the best of the
Borrower's knowledge, threatened or contemplated, strikes, slowdowns, picketing
or work stoppages by any employees against the Borrower or any of its
Subsidiaries, any lockouts by the Borrower or any of its Subsidiaries of any of
its employees or any labor trouble or other occurrence, event or condition of a
similar character which could reasonably be expected to have a Material Adverse
Effect.
Section V.20 Regulation O. As of the Closing Date, no director or executive
officer of the Borrower or any of its Subsidiaries is a "director," "executive
officer" or "principal shareholder" of any Lender, as such terms are used in
Regulation O of the Board of Governors of the Federal Reserve System, as
amended.
Section V.21 Subordinated Debentures. The Borrower hereby confirms that its
obligations to (A) pay principal and interest to the Lenders under this
Agreement, (B) reimburse the Issuing Bank for draws on Letters of Credit which
are issued in connection with the Borrower's acquisition of any businesses,
properties or assets of any kind, (C) reimburse the Issuing Bank for draws on
Letters of Credit issued on the Closing Date, and (D) reimburse the Issuing
Bank for draws on Letters of Credit in connection with the amendment, renewal,
extension, modification or refunding of the Letters of Credit referred to in
clauses (B) and (C) hereof constitute and will constitute "Senior Indebtedness"
within the meaning ascribed to such terms in such indentures. The
subordination provisions therein are enforceable against the respective issuers
thereunder and the holders, from time to time, of the Subordinated Debentures.
The respective issuers are not in default under any such indenture and there
does not exist, and the execution, delivery and performance of the Loan
Documents or any of them will not result in, an "event of default" or
"Redemption Event" as those terms are defined in such indenture.
Section V.22 Year 2000. The replacement of internally developed business
critical software or other solutions necessary to address the year 2000 issue
in respect of internally developed business critical software is expected to be
completed by December 31, 1999. As of the Closing Date, the cost to the
Borrower of such replacement or other solution, to the extent not reflected or
reserved for on the Consolidated balance sheet of the Borrower and its
Subsidiaries as of December 31, 1997, would not reasonably be expected to have
a Material Adverse Effect.
Section V.23 Full Disclosure. No representation or warranty by the Borrower in
this Agreement and no information in any statement, certificate, schedule, or
other document furnished or to be furnished pursuant hereto or thereto, or in
connection with the transactions contemplated hereby or thereby, contains or
will contain as of the Closing Date any untrue statement of a material fact or
be misleading in any material respect. Except as disclosed in this Agreement,
there is no fact known to the Borrower which the Borrower has not disclosed to
the Lender Group members in writing which could reasonably be expected to have
a Material Adverse Effect. It is understood that no representation or warranty
is made concerning the forecasts, estimates, pro forma information, projections
and statements as to anticipated future performance or conditions, and the
assumptions on which they were based, contained in any such statement,
certificate, schedule or other document, except that as of the date such
forecasts, estimates, pro forma information, projections and statements were
generated, (A) such forecasts, estimates, pro forma information, projections
and statements were based on the good faith assumptions of the management of
the Borrower and (B) such assumptions were reasonably believed by such
management to be reasonable. Such forecasts, estimates pro forma information
and statements, and the assumptions on which they were based, may or may not
prove to be correct.
ARTICLE VI
COVENANTS
In addition to all other covenants set forth in this Agreement, so long as any
amount due any Lender Group member hereunder remains outstanding, or any Lender
shall have any Commitment hereunder, unless the Majority Lenders, or, if
required under Section 9.1 hereof, all Lenders, shall otherwise consent in
writing, the Borrower agrees that:
Section VI.1 Use of Proceeds. The proceeds of the Loans will be used in
accordance with the Background Section hereof.
Section VI.2 Financial Information. The Borrower will furnish or cause to be
furnished to each Lender (1) as soon as available, and in any event within
ninety (90) days after the close of each fiscal year of the Borrower, Financial
Statements as of the end of such fiscal year together with the unqualified
opinion of independent certified public accountant of recognized national
standing selected by the Borrower; (2) as soon as available, and in any event
within forty-five (45) days after the end of each fiscal quarter (including the
fourth fiscal quarter) of each fiscal year of the Borrower, Interim Financial
Statements as of the close of such fiscal quarter; and (3) as soon as
available, and in any event within twenty (20) days after the end of each
month, a Borrowing Base Certificate signed by the chief financial officer of
the Borrower together with an accounts receivable aging report in such detail
and with such information as the Agent may from time to time reasonably
request. All financial statements in respect of clauses (1) and (2) above will
be prepared in accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods that began on or after the Closing
Date (except as approved by such accountants or officer, as the case may be,
and disclosed therein, and except, in the case of the financial statements in
respect of clause (2), for the absence of certain notes).
(A) The Borrower will deliver with each statement and report called for by
subsection 6.2(A)(1) and (2) a completed Compliance Certificate executed by its
Chief Financial Officer.
(B) Simultaneously with the filing thereof, the Borrower shall deliver to each
Lender copies of all notices required by law or regulation to be filed,
reports, registrations, requests for interpretive letters or rulings, proxy
statements and any other material filed from time to time with the Securities
and Exchange Commission or delivered to shareholders by the Borrower.
(C) The Borrower will deliver with the Financial Statements called for by
subsection 6.2(A)(1) a copy of any accountants' management letter respecting
the Borrower and its Subsidiaries prepared by the certified public accountants
who prepared the Financial Statements delivered in accordance with subsection
6.2(A)(1).
(D) As soon as available after the end of each fiscal year but in no event
later than delivery of the Financial Statements called for by subsection
6.2(A)(1), the Borrower will deliver to each Lender a budget of projected
revenues and expenses for the present fiscal year.
(E) The Borrower will deliver to the Agent all notices and certificates
delivered to or received from the trustees under the Subordinated Debenture
indenture promptly upon receipt or delivery as the case may be.
(F) As soon as available, the Borrower will deliver to each Lender each
quarterly report with respect to ground water monitoring and soil vapor
extraction respecting the Norwalk, Connecticut superfund site and each annual
cost summary relating thereto prepared by GZA Environmental or other
environmental assessment firm acceptable to the Agent.
Section VI.3 Insurance. The Borrower will maintain and cause each of its
Subsidiaries to maintain liability (including without limitation products
liability), business interruption and all-risk casualty insurance generally and
with respect to all of its and their properties, and flood insurance and
workers' compensation to the extent required by law or regulation or as
otherwise required by the Loan Documents, with responsible and reputable
insurance companies in such amounts and covering such risks accep table to the
Agent and as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower and
its Subsidiaries operate or own such properties, and in such form and with such
terms acceptable to the Agent provided however that the Agent and the Lenders
(A) have reviewed and approved the Borrower's current insurance coverage as
represented by certificates and/or endorsements presented by the Borrower in
anticipation of the Closing Date and (B) agree that they will not hereafter
require additional or increased coverage except (1) to the extent such
additional or increased coverage is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas as
the Borrower and its Subsidiaries and (2) for proportionate increases in and
extensions of coverage to include assets or business hereafter acquired by the
Borrower or its Subsidiaries. The Borrower will promptly furnish to the Agent
a certificate evidencing all such insurance policies which shall insure, with
respect to casualty coverage, the interest of the Agent, for the benefit of the
Lender Group in accordance with a standard lender's loss payable clause. All
insurance policies will name the Agent as an additional insured and contain
provisions (A) that the insurance policies may be canceled only after not less
than thirty (30) days notice of intent to cancel provided to the Agent and (B)
stating "[t]his policy shall not be invalidated by any act, neglect, breach of
warranty, or misrepresentation of the primary insured."
Section VI.4 Encumbrances. The Borrower will not grant, create, incur, assume,
or suffer to exist and will not permit any of its Subsidiaries to grant, incur,
assume or suffer to exist any mortgage, pledge, lien, or other encumbrance of
any kind upon, or any security interest (collectively, "Liens") in any of its
or their assets, whether now owned or hereafter acquired, except for the
following (collectively, "Permitted Encumbrances") which Permitted
Encumbrances, to the extent encumbering Collateral, shall be subordinate to the
Lien in favor of the Agent granted hereunder or under the Loan Documents except
to the extent such Permitted Encumbrances may be granted statutory priority
irrespective of order of perfection or are otherwise identified as senior or
pari passu on Exhibit 6.4 attached hereto and made a part hereof: (A) Liens
for taxes (1) not yet delinquent or (2) the nonpayment of which in the
aggregate would not reasonably be expected to have a Material Adverse Effect,
provided that no taxing authority has begun proceedings to enforce or execute
on such Lien against Collateral having a fair market value in excess of
$100,000.00 in the aggregate; or (3) being contested in good faith in
appropriate proceedings provided that (a) such proceedings have the effect of
staying any right of the taxing authority to enforce or execute against such
lien, (b) the Borrower or its Subsidiary, as the case may be, prosecutes such
action diligently and without delay, (c) the Borrower or its Subsidiary, as the
case may be, creates adequate reserves for the payment of all such contested
taxes, and (d) the Borrower or the Subsidiary, as the case may be, pays prior
to delinquency any portion of such taxes not being contested in good faith; (B)
pledges, deposits or other Liens in connection with the Borrower's statutory
obligations respecting worker's compensation, unemployment insurance, or other
social security obligations (including, without limitation, pledges or deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements respecting such statutory obligations); (C) mechanic's, xxxxxxx'x,
materialman's, landlord's, carrier's, warehouseman's, laborer's or other
similar Liens arising in the ordinary course of business with respect to
obligations that are not overdue for a period of more than 60 days or which are
being contested in good faith by appropriate proceedings diligently conducted
and in either case provided that adequate reserves have been established in
accordance with GAAP; (D) easements, rights-of-way, zoning and other
restrictions and other similar encumbrances on the use of, and minor
irregularities of title affecting, real property which do not interfere with
the ordinary conduct of the business of the Borrowers and do not materially
affect the value of such property; (E) Liens in respect of judgments or awards
for which appeals or proceedings for review are being prosecuted diligently, in
good faith and without delay and in respect of which a stay of execution upon
any such appeal or proceeding for review shall have been secured or the period
within which such proceedings may be initiated shall not have expired; (F)
Liens created in favor of manufacturers and/or manufacturers' representatives
or agents to secure the purchase price of fixed assets acquired from such
secured party by the Borrower or any of its Subsidiaries (or, to the extent
assigned to and assumed by the Borrower or any of its Subsidiaries in
connection with a Permitted Acquisition, acquired from such secured party by
the assignor) and incurred at the time of acquisition or within one hundred
eighty (180) days thereafter, so long as each such Lien shall not exceed the
purchase price of the asset or assets so acquired and shall at all times be
confined solely to the asset or assets so acquired and provided that at no time
shall such Liens collectively secure more than $4,000,000.00 of Indebtedness;
(G) Liens in favor of the Agent for the benefit of the Lender Group and the
Lien granted to each Lender pursuant to Section 9.3 hereof and Section 8.6 of
the Guarantee; (H) Liens granted to Mellon to secure the Borrower's and its
Subsidiaries' guaranty obligation with respect to the ESOT Loan, the priority
of such Liens to be pari passu with the priority of Liens referred to in clause
(G) above and otherwise to be governed by the Intercreditor Agreement; (I)
Liens to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds, judgment and like bonds, replevin and similar bonds and
other obligations of a like nature incurred in the ordinary course of business,
(J) Liens in existence on the Closing Date and listed in Exhibit 6.4, provided
that no such Lien is spread to cover any additional property after the Closing
Date and that the amount of Indebtedness secured thereby is not increased; (K)
Liens on patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, technology, know-how and processes to
the extent such Liens arise from the granting of licenses to use such patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, technology, know-how and processes to any Person in the
ordinary course of business of the Borrower and its Subsidiaries; and (L) Liens
securing Contingent Liabilities permitted under Section 6.7(F) not exceeding
(as to the Borrower and its Subsidiaries) $1,000,000.00 in the aggregate amount
at any time outstanding. The Borrower will not enter into or permit any of its
Subsidiaries to enter into any other agreement which prohibits or restricts the
ability of such Person to create, incur, assume, grant, or suffer to exist any
Liens upon, or any security interest in, any of its assets, whether now owned
or hereafter acquired, except (1) as set forth in the ESOT Assignment Documents
and (2) as provided in any agreement respecting a Lien permitted pursuant to
clause (F) above provided that such prohibition or limitation (a) is effective
only with respect to the assets so financed or acquired and (b) is ineffective
against any Lien created hereby in favor of the Agent.
Section VI.5 Fiscal Year. The Borrower shall at all times maintain its fiscal
year ending on December 31.
Section VI.6 Taxes. The Borrower shall pay, and cause each of its Subsidiaries
to pay, when due all material taxes, assessments and charges imposed upon any
of them or their properties or which any of them are required to withhold or
pay over, except where contested in good faith and where adequate reserves have
been set aside in accordance with GAAP.
Section VI.7 Guaranties, etc. Neither the Borrower nor any of its Subsidiaries
shall become liable on the obligation of another Person or otherwise incur any
Contingent Liability on behalf of another Person other than
(A) Contingent Liabilities in existence on the Closing Date and listed on
Exhibit 6.7 hereof, and any refinancings, refundings, extensions or renewals
thereof, provided that the amount of such Contingent Liabilities shall not be
increased at the time of such refinancing, refunding, extension or renewal;
(B) Contingent Liabilities in connection with up to an aggregate principal
amount of $1,000,000.00 of Indebtedness outstanding at any time incurred by
Management Investors in connection with any Management Subscription Agreement,
and any refinancing, refundings, extensions or renewals thereof, provided that
such amount shall be reduced by the aggregate then outstanding principal amount
of loans and advances permitted by clause (11) of Section 6.8;
(C) Contingent Liabilities for performance, appeal, judgment, replevin and
similar bonds, or suretyship arrangements, all in the ordinary course of
business;
(D) Contingent Liabilities in respect of indemnification and contribution
agreements expressly permitted by Section 6.21 or similar agreements by the
Borrower or any of its Subsidiaries;
(E) Reimbursement obligations in respect of the Letters of Credit;
(F) Contingent Liabilities in respect of third-party loans and advances to
officers or employees of the Borrower or any of its Subsidiaries (1) for travel
and entertainment expenses incurred in the ordinary course of business, (2) for
relocation expenses incurred in the ordinary course of business or (3) for any
other purpose and, in the case of this clause (3), in an aggregate principal
amount (as to the Borrower and all its Subsidiaries), together with the
aggregate amount of all investments permitted under Section 6.8(4), of up to
$1,000,000.00 outstanding at any time;
(G) obligations to insurers required in connection with worker's compensation
and other insurance coverage incurred in the ordinary course of business;
(H) obligations of the Borrower under any interest rate protection agreements
relating to Indebtedness of the Borrower under this Agreement entered into
pursuant to Section 6.32 hereof;
(I) guarantees made in the ordinary course of its business by the Borrower or
any of its Subsidiaries of obligations of the Borrower or any of its
Subsidiaries, which obligations are otherwise permitted under this Agreement;
(J) Contingent Liabilities in connection with sales or other dispositions
permitted under Section 6.17, including indemnification obligations with
respect to leases, and guarantees of collectability in respect of accounts
receivable or notes receivable for up to face value;
(K) accommodation guarantees for the benefit of trade creditors of the Borrower
or any of its Subsidiaries in the ordinary course of business of obligations of
the Borrower or any of its Subsidiaries, which obligations are otherwise
permitted by this Agreement;
(L) Contingent Liabilities of the Borrower and its Subsidiaries pursuant to the
ESOT Loan Documents and the ESOT Assignment Documents;
(M) Contingent Liabilities in respect of Indebtedness of a Person in connection
with a joint venture or similar arrangements in respect of which no other
co-investor or other Person has a greater legal or beneficial ownership
interest than the Borrower or any of its Subsidiaries and, as to all of such
Persons, which Contingent Liabilities when added to the aggregate investment of
the Borrower and its Subsidiaries made pursuant to Section 6.8(9), does not at
any time exceed $2,500,000.00 in aggregate principal amount; and
(N) Contingent Liabilities incurred pursuant to the Guarantee or otherwise in
respect of Indebtedness under this Agreement, the Notes and the Letters of
Credit.
Section VI.8 Loans and Investments. Neither the Borrower nor any of its
Subsidiaries shall make (A) any loans or advances to, or (B) purchase, acquire
or own any stock, bonds, notes or securities of, or any partnership interest
in, or other interest in, or (C) make any capital contribution to or other
investment in any other Person except for:
(1) extensions of trade credit in the ordinary course of business;
(2) investments in Cash Equivalents;
(3) investments existing on the Closing Date and described in Exhibit 6.8
attached hereto, setting forth the respective amounts of such investments as of
a recent date;
(4) loans and advances to officers, directors or employees of the Borrower or
of its Subsidiaries (a) in the ordinary course of business for travel and
entertainment or relocation expenses, (b) existing on the Closing date and
described in Exhibit 6.8 attached hereto, (c) made after the Closing Date for
other purposes, not to exceed (as to the Borrower and all its Subsidiaries),
together with the amount of all Contingent Liabilities permitted pursuant to
Section 6.7(F), $1,000,000.00 in the aggregate outstanding at any time or (d)
related to indemnification or reimbursement of any officers, directors or
employees in respect of liabilities relating to their serving in any such
capacity or as otherwise specified in Section 6.21;
(5) investments by the Borrower in its Subsidiaries and by such Subsidiaries in
the Borrower and in other Subsidiaries of the Borrower;
(6) Permitted Acquisitions;
(7) investments of the Borrower under Interest Rate Protection Agreements
relating to Indebtedness of the Borrower under this Agreement entered into
pursuant to Section 6.32 hereof;
(8) investments in the nature of pledges or deposits with respect to leases or
utilities provided to third parties in the ordinary course of business or
otherwise described in Section 6.4(B), (C) or (I);
(9) investments by the Borrower or any of its Subsidiaries in a Person in
connection with a joint venture or similar arrangement in respect of which no
other co-investor or other Person has a greater legal or beneficial ownership
interest than such Borrower or such Subsidiary in an aggregate amount, which
when added to the aggregate Contingent Liabilities incurred pursuant to Section
6.7(M), does not at any time exceed $2,500,000.00;
(10) investments representing evidences of Indebtedness, securities or other
property received from another Person by the Borrower or any of its
Subsidiaries in connection with any bankruptcy proceeding or other
reorganization of such other Person or as a result of foreclosure, perfection
or enforcement of any Lien or exchange for evidences of Indebtedness,
securities or other property of such other person held by the Borrower or any
of its Subsidiaries, provided that any such securities or other property
received by the Borrower or any of its Subsidiaries is pledged to the Agent for
the benefit of the Lenders, to the extent otherwise required hereunder, under
the Pledge Agreement, or under any other Loan Document;
(11) loans and advances to Management Investors in connection with the purchase
by such Management Investors of capital stock of the Borrower of up to
$1,000,000.00 outstanding at any one time, provided that such amount shall be
reduced by the aggregate principal amount of Indebtedness in respect of
Contingent Obligations permitted by clause (B) of Section 6.7;
(12) investments in notes receivable to the extent permitted by Section 6.17 in
connection with transactions permitted under such Section; and
(13) investments not otherwise permitted by the preceding clauses of this
Section 6.8 not to exceed $250,000.00 in the aggregate.
Section VI.9 Compliance with Laws. The Borrower shall comply and shall cause
all of its Subsidiaries to comply with all laws, regulations, orders, decrees
and rules of any court or governmental authority applicable to any of them in
the operation of their businesses except to the extent that failure to comply
therewith, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
Section VI.10 Environmental Matters. To the extent necessary for the conduct
of its business, the Borrower will obtain and comply in all material respects
and will cause each of its Subsidiaries to obtain and comply in all material
respects with all required permits, licenses, registrations, and approvals
relating to the discharge or release of Environmental Concern Material into the
environment and to the extent that such are applicable to the conduct of its
business, the Borrower will comply and will ca use each of its Subsidiaries to
comply with all applicable Environmental Laws, except to the extent that any
failure to so obtain or comply, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
(A) The Borrower will promptly notify the Agent if the Borrower or any of its
Subsidiaries receives (1) any written notice from any governmental agency that
it is a potentially responsible party in any proceeding under CERCLA or any
similar Environmental Law, (2) any written notice of any Environmental Claim
pending or threatened against the Borrower or any Subsidiary, or (3) any
information concerning any spilling, leaking, discharge, release, or threat of
release of any environmental concern Material, except for notices and
conditions which could not reasonably be expected to have a Material Adverse
Effect.
(B) The Borrower hereby indemnifies and agrees to defend and hold harmless each
Lender Group member, and their respective parent corporations, subsidiaries,
successors, assigns, officers, directors, shareholders, employees, agents and
counsel from and against any and all claims, actions, causes of action,
liabilities, penalties, fines, damages, judgments, losses, suits, expenses,
legal or administrative proceedings, interest, costs and expenses (including
court costs and reasonable attorneys', consultants' and experts' fees) caused
by, relating to, arising out of, resulting from or in any way connected with
the Loan Documents or the transactions contemplated therein and arising out of
or in any way relating to (1) the presence of any Environmental Concern
Material on, about, beneath or arising from any property used or occupied by
the Borrower or any of its Subsidiaries; (2) the failure of the Borrower or any
of its Subsidiaries or Affiliates to comply with any Environmental Law,
provided however that, the Borrower shall not be obligated under this Section
6.10(C)(2) for any indemnified party's liability or costs as a result of the
failure of any of the Borrower's Affiliates to comply with any Environmental
Law if such indemnified party's liability or costs arise because of any
transaction or dealing other than the transactions herein contemplated; (3) the
Borrower's breach of any of the representations and warranties or covenants
contained in Section 5.14 hereof or this Section 6.10; (4) any Environmental
Claim and (5) the imposition or recording of a Lien against any property of or
occupied by the Borrower or any of its Subsidiaries pursuant to any
Environmental Law, except to the extent that any such liability arises from the
gross negligence or willful misconduct of any person indemnified hereunder as
determined by a final judgment of a court of competent jurisdiction. IT IS
INTENDED THAT THE INDEMNITY PROVIDED IN THIS SECTION SHALL SURVIVE THE
REPAYMENT OF THE LIABILITIES.
Section VI.11 Maintenance of Property. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain, all of its property (subject to
ordinary wear and tear), taken as a whole, in operable condition and repair.
Section VI.12 Right of Inspection. The Borrower will permit, and will cause
each of its Subsidiaries to permit, representatives of the Agent, the Issuing
Bank or any Lender or any agent or representative thereof, to inspect, examine
and/or audit the Collateral, any of their other property and/or their Books and
Records and to make extracts therefrom at all reasonable times, and, except
after the occurrence and during the continuance of an Event of Default, upon
reasonable notice.
Section VI.13 Reports. The Borrower will furnish the following to the Agent
and each Lender:
(A) as soon as possible and in any event within fifteen (15) days after any
Responsible Officer of the Borrower becomes aware of the occurrence of any
Default or Event of Default, a written statement by the chief executive or
chief financial officer of such Borrower setting forth details of such Default
or Event of Default, stating whether or not the same is continuing and, if so,
the action proposed to be taken with respect thereto;
(B) promptly after receiving knowledge thereof, notice in writing (together
with copies of any documentation relating thereto) of the institution of any
action, suit, or proceeding before any court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
affecting the Borrower or any of its Subsidiaries if such action, suit or
proceeding could reasonably be expected to have a Material Adverse Effect;
(C) as soon as possible and in any event within five (5) days after the
Borrower becomes aware of the occurrence of a material adverse change in the
financial condition or operations of the Borrower or any of its Subsidiaries, a
written statement by the chief executive or chief financial officer of such
Person setting forth the details of such material adverse change and the action
proposed to be taken with respect thereto;
(D) promptly after a Responsible Officer receives knowledge thereof, notice in
writing of any strike or walkout involving the Borrower's or any of its
Subsidiaries' employees;
(E) promptly after a Responsible Officer receives knowledge thereof, notice in
writing of the incurrence by the Borrower or any of its Subsidiaries of any
Contingent Liability which individually or together with other Contingent
Liabilities then existing could reasonably be expected to have a Material
Adverse Effect;
(F) copies of all notices, reports, certificates or other material delivered to
or by the trustee or any other party under the indenture under which the
Subordinated Debentures were issued;
(G) such other information respecting the business, properties, operations and
condition (financial or otherwise) of the Borrower or its Subsidiaries' as the
Agent may at any time and from time to time reasonably request.
Section VI.14 ERISA.
(A) The Borrower will, and will cause each of its Subsidiaries and each member
of any of their Controlled Groups, to comply in all material respects with the
applicable provisions of ERISA and the Code with respect to any Plan both in
form and in operation.
(B) The Borrower will cause to be made all contributions required to avoid any
Accumulated Funding Deficiency, whether or not waived, with respect to any
Pension Plan which could reasonably be expected to result in a Material Adverse
Effect.
(C) The Borrower will not adopt or permit the adoption by any of its
Subsidiaries or any member of any of their Controlled Groups of any Defined
Benefit Pension Plan which could reasonably be expected to result in any Amount
of Unfunded Benefit Liabilities in excess of $250,000.00.
(D) Unless otherwise consented to by the Majority Lenders, the Borrower will
not acquire, or permit the acquisition by any of its Subsidiaries or any member
of their Controlled Groups of, any trade or business which has incurred either
directly or indirectly any Amount of Unfunded Benefit Liabilities under any
Defined Benefit Pension Plan in excess of $1,000,000.00 unless such acquired
Defined Benefit Pension Plan is merged into an existing Defined Benefit Pension
Plan of the Borrower, any of its Subsidiaries or any member of their Controlled
Groups resulting in a combined Plan with no Amount of Unfunded Benefit
Liabilities.
(E) The Borrower will not permit with respect to any Plan, any Prohibited
Transaction resulting in liability of the Borrower, any of its Subsidiaries or
any member of their Controlled Groups which together with any other liabilities
subject to this paragraph (E) would in the aggregate be in excess of
$250,000.00.
(F) The Borrower will not withdraw, or permit any of its Subsidiaries or any
member of their Controlled Groups to withdraw, from any Multiemployer Plan to
which any of them may now or hereafter contribute if the Withdrawal Liability
which would thereupon be incurred would have a Material Adverse Effect,
directly or indirectly, on the financial condition of any of the Borrowers.
(G) The Borrower will not permit any unfunded liabilities of unfunded and
uninsured "employee welfare benefit plans" (as defined in section 3(1) of
ERISA) of the Borrower and of any member of their Controlled Groups in excess
of $250,000.00 in the aggregate with all other liabilities subject to this
paragraph (G).
(H) The Borrower will not, and will not permit any of its Subsidiaries or any
member of their Controlled Groups to, cause or suffer to exist a COBRA
Violation with respect to any Plan to which continuation coverage requirements
apply if the violation(s) could result in a liability in excess of $250,000.00
in the aggregate.
(I) Promptly upon the Borrower becoming aware of any of the following, the
Borrower shall give the Agent notice thereof, together with a written statement
setting forth the details thereof and any action with respect thereto taken or
proposed to be taken by the Borrower:
(1) any taxes, penalties, interest charges and other financial obligations in
excess of $500,000.00 that have been assessed or otherwise imposed, or which
the Borrower has reason to believe may be assessed or otherwise imposed,
against the Borrower, any of its Subsidiaries or any member of their Controlled
Groups by the Internal Revenue Service, the PBGC, the Department of Labor or
any other governmental entity with respect to any Plan or Multiemployer Plan;
(2) any application for a waiver by the Borrower, any of its Subsidiaries or
any member of their Controlled Groups of the minimum funding standard under
section 412 of the Code in an amount exceeding $250,000.00 with respect to a
Pension Plan;
(3) the adoption of any Plan, including but not limited to a Defined Benefit
Pension Plan, or any obligation to contribute to any Multiemployer Plan by the
Borrower, any of its Subsidiaries or any member of their Controlled Groups;
(4) any Prohibited Transaction with respect to a Plan of the Borrower, any of
its Subsidiaries or any member of their Controlled Group which would result in
a Material Adverse Effect.
(5) (a) that any Reportable Event has or will occur with respect to any Defined
Benefit Pension Plan maintained by the Borrower, any of its Subsidiaries or any
member of their Controlled Groups, (b) that any Defined Benefit Pension Plan
maintained by the Borrower, any of its Subsidiaries or any member of their
Controlled Groups is to be terminated in "distress termination" (within the
meaning of section 4041(c) of ERISA), (c) that the PBGC has instituted or will
institute proceedings under Title IV of ERISA to terminate any Defined Benefit
Pension Plan maintained by the Borrower, any of its Subsidiaries or any member
of their Controlled Groups, (d) that the Borrower, or any of its Subsidiaries
has incurred Withdrawal Liability from a Multiemployer Plan maintained by any
of them or any member of their Controlled Groups, (e) that any Multiemployer
Plan to which the Borrower, any of its Subsidiaries or any member of their
Controlled Groups has made contributions is or will be in Reorganization, or
(f) that any other condition exists with respect to a Defined Benefit Pension
Plan or Multiemployer Plan which presents a material risk of termination of any
such Plan, the Borrower will furnish a statement to the Lenders setting forth
the details of such Reportable Event, distress termination, termination
proceedings, Withdrawal Liability, Reorganization or condition, and the action
that Borrower proposes to take with respect thereto, together with a copy of
any notice of such Reportable Event or distress termination given to the PBGC,
or a copy of any notice of termination proceedings, Withdrawal Liability or
Reorganization received by the Borrower, any of its Subsidiaries or any member
of their Controlled Groups.
(6) any default by the Borrower, any of its Subsidiaries or any member of their
Controlled Groups (as defined in section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan required by reason of its withdrawal (as
defined in section 4203 or section 4205 of ERISA).
(7) any action brought against the Borrower, any of its Subsidiaries or any
member of their Controlled Groups under section 502 of ERISA with respect to
its failure to comply with section 515 of ERISA.
(J) The Borrower shall deliver to the Agent, copies of the following:
(1) Promptly after the filing thereof with the Secretary of Labor, the
Secretary of the Treasury, the PBGC or any other governmental entity, copies of
each annual report, each audited financial statement and any other report so
filed with respect to each Plan.
(2) As soon as possible (and in any event within ten days) after the receipt by
the Borrower, any of its Subsidiaries or any member of their Controlled Groups
of a demand letter from the PBGC notifying the Borrower, any of its
Subsidiaries or any member of their Controlled Groups of the final decision
finding liability and the date by which such liability must be paid, the
Borrower will furnish to the Lenders a copy of such letter together with a
statement to the Lenders setting forth the action which the Borrower proposes
to take with respect thereto.
(3) The Borrower will furnish to the Lenders as soon as possible after receipt
thereof a copy of any notice that the Borrower, any of its Subsidiaries or any
member of their Controlled Groups receives from the PBGC, the Internal Revenue
Service, the Department of Labor or any other governmental entity or the
sponsor of any Multiemployer Plan that sets forth or proposes any action to be
taken or determination made by the PBGC, the Internal Revenue Service, the
Department of Labor or any other governmental entity or the sponsor of any
Multiemployer Plan with respect to any Plan if such action or determination
could reasonably be expected to result in a Material Adverse Effect.
Section VI.15 Acquisitions, Mergers, etc. Neither the Borrower nor any of its
Subsidiaries will, directly or indirectly, (1) acquire, whether through
purchase or exchange of capital stock or assets or otherwise, all or any
substantial part of the assets of any other Person or any capital stock of or
other equity interest in any other Person, or (2) merge or consolidate into any
other Person (except that any of its Subsidiaries may merge into the Borrower
or with or into any other Subsidiary), unless each of the following conditions
are satisfied:
(a) no Default or Event of Default shall have occurred and be continuing,
(b) after giving effect to such acquisition, merger or consolidation the
Borrower shall be in compliance with all of its covenants hereunder and the
Guarantors shall be in compliance with all of their covenants contained in the
Guarantee,
(c) if such transaction is an acquisition, whether such acquisition is of
assets or capital stock, such acquisition shall be of a going concern (or shall
become a going concern promptly upon acquisition by the Borrower) and the
Borrower shall have (directly or indirectly) acquired control of the acquired
entity,
(d) if such transaction is an acquisition, the acquired entity or business must
be engaged in a similar or related line of business as the Borrower,
(e) the Borrower shall deliver to the Agent and the Lenders not less than ten
(10) Business Days prior to the consummation of such transaction a completed
Compliance Certificate and a completed Borrowing Base Certificate each giving
pro forma effect to such transaction and executed by the Borrower's Chief
Financial Officer;
(f) if such transaction is a merger or consolidation involving the Borrower,
the Borrower shall be the surviving entity;
(g) if such transaction is a merger or consolidation involving one or more of
the Borrower's Subsidiaries organized under the laws of a state of the United
States and/or having its chief executive office in the United States, one of
such Subsidiaries shall be the surviving entity;
(h) if such transaction is an acquisition for Acquisition Consideration which,
when added to the aggregate Acquisition Consideration paid in all acquisitions
made in the twelve month period immediately prior thereto, is greater than
$15,000,000.00, such acquisition is approved in writing signed by the Majority
Lenders;
(i) if such transaction is an acquisition for Acquisition Consideration which,
when added to the aggregate Acquisition Consideration paid in all acquisitions
made in the twelve month period immediately prior thereto, is less than
$7,000,000.00, then after such acquisition, the Borrower's Cash Equivalents
minus the sum of net customer advances, the principal amount outstanding
hereunder, the Letter of Credit Liability, and any deferred portion of the
Acquisition Consideration shall be greater than zero; and
(j) if such transaction is an acquisition for Acquisition Consideration in an
amount other than as described in clauses (h) or (i), the acquired entity shall
have had positive EBITDA for the twelve month period immediately preceding such
acquisition.
(A) Neither the Borrower nor any of its Subsidiaries shall consummate any
recapitalization or reorganization unless each of the following conditions are
satisfied:
(1) after giving effect to such recapitalization or reorganization, the
Borrower shall be in compliance with all of its covenants hereunder, the
Guarantors shall be in compliance with all of its covenants contained in the
Guarantee and there shall not otherwise exist a Default or Event of Default,
(2) the Net Cash Proceeds of any such recapitalization or reorganization, if
any, shall be applied in accordance Section 2.6(B) hereof; and
(B) Neither the Borrower nor any of its Subsidiaries shall create or acquire
any Subsidiary unless (1) the creation or acquisition of such Subsidiary is
necessary or desirable for the conduct of the Borrower's business, (2) if such
Subsidiary is a Domestic Subsidiary, such Subsidiary (a) becomes a Guarantor
under the Guarantee and assumes the liabilities thereunder pursuant to joinder
and assumption documents satisfactory in form and substance to the Agent and
(b) grants to the Agent, for the benefit of the Lender Group, a first priority
lien and security interest in and to all assets of such Subsidiary, (3) if such
Subsidiary is a Foreign Subsidiary, the Majority Lenders have consented
thereto, which consent may be conditional on, among other things, an amendment
to this Agreement reasonably satisfactory to the Majority Lenders, and (4) if
such Subsidiary is a Domestic Subsidiary all of the stock of such Subsidiary is
pledged as Collateral to secure the Liabilities and if such Subsidiary is a
Foreign Subsidiary, 65% of the stock of such Subsidiary is pledged as
Collateral to secure the Liabilities.
Section VI.16 Nature of Business. The Borrower will maintain and will cause
each Subsidiary to maintain its existing line of business and will not enter
into any new line of business, other than a line of business related to its
existing line of business.
Section VI.17 Disposal of Assets. The Borrower will not nor will it permit any
of its Subsidiaries to convey, sell, lease, assign, transfer or otherwise
dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests, whether now owned or hereafter
acquired, or, in the case of any of its Subsidiaries, issue or sell any share
of such Subsidiary's capital stock, to any Person other than the Borrower or
any of its Subsidiaries, except:
(A) the disposition of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;
(B) the disposition of any property (including Inventory) in the ordinary
course of business;
(C) the conversion or exchange of accounts receivable into or for notes
receivable, in connection with the compromise or collection thereof;
(D) dispositions of any assets or property by the Borrower or any Subsidiary of
the Borrower to the Borrower or any other Subsidiary of the Borrower;
(E) any other dispositions of assets by the Borrower or any of its Subsidiaries
the Net Cash Proceeds of which do not exceed $5,000,000.00 in the aggregate
after the Closing Date and the non-cash portion of the consideration for any
such disposition does not exceed 25% thereof, provided that Net Cash Proceeds
shall be applied in accordance with Section 2.6(A);
(F) the abandonment or other disposition of patents, trademarks or other
intellectual property that are, in the reasonable judgment of the Borrower, no
longer economically practicable to maintain or useful in the conduct of the
business of the Borrower and its Subsidiaries taken as a whole;
(G) dispositions of assets and property acquired as permitted by Section
6.8(10) provided that the Net Cash Proceeds shall be applied in accordance with
Section 2.6(A); and
(H) the disposition of any Subsidiary of the Borrower that is not a Guarantor
provided that the Net Cash Proceeds of any such disposition shall be applied in
accordance with Section 2.6(A).
Section VI.18 Patents, etc. The Borrower will maintain and will cause each of
its Subsidiaries to maintain all of its patents, trademarks, copyrights, trade
secrets and other intellectual property rights, and licenses therefor, if any,
in full force and effect until their respective expiration dates provided that
neither the Borrower nor any Subsidiary shall be required to maintain any such
patents, trademarks, copyrights, trade secrets or other intellectual property
rights and licenses if the failure to do so could not reasonably be expected to
have a Material Adverse Effect.
Section VI.19 Corporate Structure; Maintenance of Existence. The Borrower will
continue to own directly or indirectly all of the capital stock of each of its
Subsidiaries, except to the extent the law of the jurisdiction in which such
Subsidiary is created requires that de minimus amounts of shares of such
Subsidiary must be owned by a Person other than the Borrower. The Borrower
shall maintain its corporate existence and good standing in the jurisdiction of
its incorporation and its good standing as a qualified foreign corporation in
each jurisdiction in which its qualification is required in the normal conduct
of its business.
Section VI.20 Regulation U. The Borrower will not (A) use the proceeds of the
Loans or any Letter of Credit to purchase or carry any Margin Stock; (B) engage
in the business of making Loans for the purchase of Margin Stock; or (C) carry
any Margin Stock.
Section VI.21 Transactions With Affiliates; Subsidiaries. Neither the Borrower
nor any Guarantor will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate (other than the Borrower or its
Subsidiaries) unless such transaction is (i) otherwise permitted under this
Agreement, and (ii) upon terms no less favorable to the Borrower or such
Subsidiary than it would obtain in a comparable arm's length transaction with a
Person which is not an Affiliate; provided that nothing contained in this
Section 6.21 shall be deemed to prohibit:
(A) the Borrower or any Subsidiary from entering into or performing any
consulting, management or employment agreements or other compensation
arrangements with a director, officer or employee of the Borrower or any of its
Subsidiaries;
(B) the payment of transaction expenses in connection with this Agreement and
the other transactions related hereto;
(C) the Borrower or any Subsidiary from entering into, making payments pursuant
to and otherwise performing, to the extent it is within its corporate power and
authorization and otherwise permitted by applicable law, an indemnification and
contribution agreement in favor of each person who becomes a director, officer,
agent or employee of the Borrower or any of its Subsidiaries, in respect of
liabilities (1) arising under the Securities Act, the Exchange Act and any
other applicable securities laws or otherwise, in connection with any offering
of securities by the Borrower or any of its Subsidiaries, (2) incurred to third
parties for any action or failure to act of the Borrower or any of its
Subsidiaries, predecessors or successors, (3) arising out of the performance by
such person of management consulting or financial advisory services provided to
the Borrower or any of its Subsidiaries, (4) arising out of the fact that any
indemnitee was or is a director, officer, agent or employee of the Borrower or
any of its Subsidiaries, or is or was serving at the request of any such
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or enterprise or (5) to the fullest extent
permitted by Delaware or other applicable state law, out of any breach or
alleged breach by such indemnitee of his or her fiduciary duty as a director or
officer of the Borrower or any of its Subsidiaries;
(D) any transaction permitted under clause (B) of Section 6.7, clause (D) of
Section 6.7, clause (F) of Section 6.7, clause (4) of Section 6.8, clause (11)
Section 6.8 or Section 6.30. For purposes of this Section 6.21, (i) any
transaction with any Affiliate shall be deemed to have satisfied the standard
set forth in Clause (B) of the first sentence hereof if (a) such transaction is
approved by a majority of the Disinterested Directors of the Board of Directors
of the Borrower, or (b) in the event that at the time of any such transaction,
there are no Disinterested Directors serving on the Board of Directors of the
Borrower, such transaction shall be approved by a nationally recognized expert
with expertise in appraising the terms and conditions of the type of
transaction for which approval is required, and (ii) "Disinterested Director"
shall mean, with respect to any Person and transaction, a member of the Board
of Directors of such Person who does not have any material direct or indirect
financial interest in or with respect to such transaction.
Section VI.22 Authorizations. The Borrower will obtain and cause each of its
Subsidiaries to obtain any authorizations, consents, approvals, licenses,
exemptions by filing or registration with any court or governmental department,
commission, board (including the Board of Governors of the Federal Reserve
System), bureau, agency or instrumentality, domestic or foreign, which are or
become necessary to maintain the validity of the Loan Documents and necessary
for the performance by the Borrower or its Subsidiaries of the Loan Documents
to which they are a party.
Section VI.23 Licenses, Permits, etc. Except where the failure to do so could
not, individually or in the aggregate, be expected to have a Material Adverse
Effect, the Borrower will maintain and will cause each of its Subsidiaries to
maintain the validity, force and effect of and operate in compliance with all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates and orders required for the conduct of the Borrower's or such
Subsidiaries' businesses.
Section VI.24 Other Indebtedness. Neither the Borrower nor any of its
Subsidiaries will incur any Indebtedness except for the following
(collectively, "Permitted Indebtedness"):
(A) Indebtedness of the Borrower and its Subsidiaries under this Agreement, any
Notes and the other Loan Documents;
(B) Indebtedness of the Borrower or any of its Subsidiaries to any of
Borrower's Subsidiaries or the Borrower;
(C) Indebtedness of the Borrower and any of its Subsidiaries to manufacturers
and/or manufacturers' representatives or agents to purchase fixed assets from
such creditor and incurred or assumed at the time of acquisition or within one
hundred eighty (180) days thereafter, so long as the Indebtedness shall not
exceed the purchase price of such asset and provided that such Indebtedness
does not exceed in the aggregate as to the Borrower and its Subsidiaries
$4,000,000.00 at any time outstanding;
(D) Indebtedness of the Borrower under interest rate and currency protection
agreements required or permitted under the terms of Section 6.32 hereof;
(E) the Subordinated Debentures;
(F) to the extent that any Contingent Liability permitted under Section 6.7
constitutes Indebtedness, such Indebtedness;
(G) Indebtedness of the Borrower or any of its Subsidiaries incurred to finance
insurance premiums in the ordinary course of business;
(H) Indebtedness arising from the honoring of a check, draft or similar
instrument against insufficient funds, provided that such Indebtedness is
extinguished within three Business Days of its incurrence; and
(I) additional Indebtedness of the Borrower or any Subsidiary of the Borrower
not exceeding $500,000.00 as to the Borrower and its Subsidiaries in aggregate
principal amount at any one time outstanding.
Section VI.25 Asset Coverage. The aggregate of the Borrower's and its
Subsidiaries' Senior Debt shall at all times be less than the sum of their
Accounts, Inventory and Cash Equivalents as such values are determined in
accordance with GAAP.
Section VI.26 Consolidated Net Worth. The Borrower will not permit
Consolidated Net Worth at any time to be less than the amount determined in
accordance with the following formula:
NI
(PF x .9) + -- + NP
2
where:
PF = Consolidated Net Worth of the Borrower as shown on the
pro forma balance sheet delivered by the Borrower and
approved by the Agent as a condition to funding pursuant to
Section 4.1(S) hereof.
NI = cumulative quarterly net income of the Borrower, without
reduction for any quarterly losses, for the period from the
Closing Date through the date of determination
NP = the aggregate of (A) Net Cash Proceeds from any equity
issuances, (B) the amount, if any, by which the net proceeds
resulting from the disposition of assets exceeds the book
value of the assets disposed, or (C) increases in stockholder
equity resulting from payments made on the ESOT Loan or
otherwise resulting from the operation of the ESOT.
Section VI.27 Leverage Ratio. The Leverage Ratio shall not be more than 4.0 to
1.0 at any time from the Closing Date through December 31, 2000. The Leverage
Ratio shall not be more than 3.0 to 1.0 at any time from and after January 1,
2001.
Section VI.28 Senior Leverage Ratio. The Senior Leverage Ratio shall not be
more than 3.0 to 1.0 at any time from the Closing Date through December 31,
2000. The Senior Leverage Ratio shall not be more than 2.0 to 1.0 at any time
from and after January 1, 2001.
Section VI.29 Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio
shall not be less than 1.50 to 1.00 at any time from and after June 30, 1998.
Section VI.30 Dividends and Distributions; Redemptions; Payments To
Shareholders. The Borrower will not declare or pay dividends upon any of its
capital stock now or hereafter outstanding or return any capital to any of its
shareholders or make any other distribution, payment or delivery of property or
cash to any of its shareholders in their capacities as such, or redeem, retire,
purchase or acquire, directly or indirectly, any shares of its capital stock
now or hereafter outstanding, or make any payment with respect to or under the
terms of any warrant, option, stock appreciation right or other agreement or
instrument granting the right to acquire, or the right to receive payment based
upon the value of, all or any portion of its capital stock (whether common,
preferred, convertible or other); provided that, the Borrower may declare and
pay dividends on common stock of the Borrower outstanding on the date hereof,
if (A) each such dividend is lawful in all respects, (B) no Default or Event of
Default has occurred and is continuing, (C) prior to the payment of each
dividend the Borrower's Financial Statements or Interim Financial Statements,
Borrowing Base Certificate, Compliance Certificate and other supporting
certifications for the immediately preceding fiscal quarter shall indicate that
no Default or Event of Default exists or would have existed after giving effect
to such dividend, (D) such dividend shall not be paid prior to the date on
which such payment is due, and (E) total dividends declared and paid by the
Borrower during any twelve month period shall not exceed $.28 per share;
provided further that the Borrower may redeem, purchase, retire or otherwise
acquire, directly or indirectly, shares of its capital stock now or hereafter
outstanding (for purposes hereof, an "acquisition"), if (1) such acquisition is
lawful in all respects, (2) no Default or Event of Default has occurred and is
continuing, (3) prior to the payment of the purchase price for each such
acquisition, the Borrower's Financial Statements or Interim Financial
Statements, Borrowing Base Certificate, Compliance Certificate and other
supporting certifications for the immediately preceding fiscal quarter shall
indicate that no Default or Event of Default exists or would have existed after
giving effect to such payment, (4) at the time of each acquisition there shall
be no Loans outstanding and such acquisition shall not result in an Advance or
the issuance of a Letter of Credit, and (5) the consideration of all such
acquisitions shall not exceed $3,000,000.00 in the aggregate.
Section VI.31 Subordinated Indebtedness. (A) The Borrower shall not make any
payment or prepayment on or with respect to, or any redemption or repurchase
of, any Subordinated Indebtedness while this Agreement remains in effect,
whether of principal, interest or otherwise, except that (1) the Borrower shall
be permitted to make regularly scheduled payments of principal and interest on
the Subordinated Debentures provided that (a) no such payment shall be made
prior to the due date for such payment, and (b) there does not exist any
Default or Event of Default at the time of such payment, and (c) if such
payment were to have been made on the last day of the fiscal quarter ended
immediately prior to such payment date, the Borrower would have remained in
compliance with Sections 6.25 through 6.29; and (2) the Borrower may prepay,
redeem or repurchase (for purposes hereof, a "redemption") Subordinated
Indebtedness if (a) such redemption is lawful in all respects, (b) no Default
or Event of Default has occurred and is continuing, (c) prior to the payment of
the redemption price for each such redemption, the Borrower's Financial
Statements or Interim Financial Statements, Borrowing Base Certificate,
Compliance Certificate and other supporting certifications for the immediately
preceding fiscal quarter shall indicate that no Default or Event of Default
exists or would have existed after giving effect to such payment, (d) at the
time of each such redemption there shall be no Loans outstanding and such
redemption shall not result in an Advance or the issuance of a Letter of
Credit, (e) such Subordinated Indebtedness shall be redeemed at par or at a
discount from par but not at a premium, and (f) the consideration of all such
redemptions shall not exceed $2,000,000.00 in the aggregate.
(B) The Borrower shall not enter into any amendment or modification of the
Subordinated Debentures or the indenture pursuant to which the Subordinated
Debentures were issued without the Agent's prior written consent which consent
shall not be unreasonably withheld.
Section VI.32 Hedging Requirements. (A) The Borrower shall maintain one or
more rate swap, cap or collar agreement with respect to the Indebtedness
incurred hereunder, as and when requested by the Agent in its reasonable
discretion, containing such terms and conditions as the Agent may reasonably
request. (B) The Borrower and its Subsidiaries may enter into rate or currency
swap, cap or collar agreements in the ordinary course of business with such
terms as the Borrower shall reasonably determine in order to fix the effective
rate of interest on Indebtedness or the rate of exchange for currencies other
than Dollars provided that such agreements and transactions shall be entered
into to hedge actual interest rate or currency exposures and not for the
purpose of speculation.
Section VI.33 Indemnification. The Borrower hereby indemnifies and agrees to
protect, defend, and hold harmless the Agent, and each Lender and all of their
respective parent corporations, subsidiaries, successors, assigns, directors,
officers, employees, agents, attorneys and shareholders from and against any
and all losses, damages, expenses or liabilities of any kind or nature and from
any suits, claims, or demands, including all reasonable counsel fees incurred
in investigating, evaluating, or defending such claims, suffered by any of them
and caused by, relating to, arising out of, resulting from, or in any way
connected with this Agreement, the Notes, any other Loan Document and any
transaction contemplated herein or therein except to the extent resulting from
the gross negligence or willful misconduct of an indemnified party as
determined in a final judgment of a court of competent jurisdiction. If the
Borrower shall have knowledge of any claim or liability hereby indemnified
against, it shall promptly give written notice to the Agent, the Agent, and
each Lender. Notwithstanding anything contained in this Section 6.33 to the
contrary (but subject to the other provisions of this Agreement), the Borrower
shall not have any obligation under this Section 6.33 to the Agent or any
Lender with respect to any tax, levy, impost, duty, charge, fee, deduction or
withholding imposed, levied, collected, withheld or assessed by any
governmental authority. THIS COVENANT SHALL SURVIVE THE PAYMENT OF THE
INDEBTEDNESS CREATED BY THIS AGREEMENT, THE NOTES OR THE LOAN DOCUMENTS.
ARTICLE VII
DEFAULT
Section VII.1 Events of Default. Each of the following shall be an event of
default ("Event of Default"):
(A) if the Borrower shall (1) fail to pay when due any principal due hereunder
or under the Notes, or (2) fail to pay when due any interest due hereunder or
under the Notes or any other Liabilities for which it is obligated and in the
case of this clause (2) such failure continues for five (5) days;
(B) if any representation or warranty by the Borrower or any Subsidiary made in
any Loan Document to which it is a party, or in any certificate, agreement,
instrument, statement, or report contemplated by or made or delivered pursuant
to or in connection herewith, or if any information furnished to the Agent, the
Issuing Bank or any Lenders pertaining to the Loans or the Letters of Credit,
shall prove to have been incorrect in any material respect on or as of the date
made or deemed made;
(C) if the Borrower or any of its Subsidiaries shall be adjudicated bankrupt or
insolvent, or admit in writing its inability to pay its debts as they mature,
or make an assignment for the benefit of its creditors; or if the Borrower or
any of its Subsidiaries shall apply for or consent to the appointment of any
receiver, trustee, or similar officer for the Borrower or any of its
Subsidiaries or for all or any substantial part of any of their property; or
any such receiver, trustee, or similar officer shall be appointed without the
application or consent of the Borrower or any of its Subsidiaries and shall
continue undischarged for a period of sixty (60) days; or if the Borrower or
any of its Subsidiaries shall institute (by petition, application, answer,
consent, or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation, or similar proceeding relating
to it under the laws of any jurisdiction; or if such proceeding shall be
instituted (by petition, application, or otherwise) against the Borrower or any
of its Subsidiaries and an order for relief shall be entered in such proceeding
or such proceeding shall remain undismissed for a period of sixty (60) days; or
if any judgment, writ, warrant of attachment or execution, or similar process
shall be issued or levied against property of the Borrower or any of its
Subsidiaries which represents a substantial portion of the property of the
Borrower or any of its Subsidiaries and such judgment, writ, or similar process
shall not be released, vacated, or fully bonded within sixty (60) days after
its issue or levy;
(D) if (1) any Reportable Event, or any failure of compliance required by
Section 6.14 hereof, that the Agent reasonably determines in good faith creates
a reasonable possibility of the termination of any Defined Benefit Pension Plan
of the Borrower or any Subsidiaries or of the appointment by the appropriate
United States district court of a trustee to administer any such Plan, shall
have occurred and be continuing thirty (30) days, or (2) any such Plan shall be
terminated, or (3) the plan administrator of any such Plan shall file with the
PBGC a notice of intention to terminate such Defined Benefit Pension Plan, or
(4) the PBGC shall institute proceedings to terminate any such Defined Benefit
Pension Plan or to appoint a trustee to administer any such Defined Benefit
Pension Plan and such proceedings shall remain undismissed or unstayed for
thirty (30) days and if, in any of the cases described in the foregoing clauses
(1) through (4), the Agent further reasonably determines that the amount of the
unfunded guaranteed benefits (within the meaning of Title IV of ERISA)
resulting upon termination of such Defined Benefit Pension Plan would have a
Material Adverse Effect if a lien against the assets of the Borrower or any of
its Subsidiaries were to result under ERISA;
(E) if an event of default (as therein defined) shall occur under the ESOT Loan
Documents or the ESOT Assignment Documents, any of the other Loan Documents or
any other document evidencing, securing, or otherwise executed in connection
with the Loans or the Letters of Credit;
(F) if the Borrower fails to perform or observe any other term, covenant, or
agreement contained in Sections 6.3, 6.4, 6.7, 6.8, 6.10, 6.12, 6.15, 6.17,
6.19, 6.20, 6.21, or 6.24 through 6.31 of this Agreement on its part to be
performed or observed;
(G) if the Borrower shall default in the observance or performance of any other
agreement contained in this Agreement (other than as provided in paragraphs (A)
and (F) of this Section 7.1), and, if such default is capable of being cured,
such default shall continue unremedied for a period ending 30 days after the
earlier of (1) the date a Responsible Officer of the Borrower shall have
discovered such default and (2) the date written notice of such default has
been given to the Borrower by the Agent or the Majority Lenders;
(H) if the Borrower or any of its Subsidiaries shall fail to pay any Credit
Obligation in an amount exceeding $500,000.00 owing by it, or any interest or
premium thereon, when due, whether owed to the Lenders or any other Person and
whether such Credit Obligation shall become due, subject to applicable notice
and grace periods, if any, by scheduled maturity, by required prepayment, by
acceleration, by demand, or otherwise, or shall fail to perform any term,
covenant, or agreement on its part to be performed under any agreement or
instrument evidencing or securing or relating to any such Credit Obligation
when required to be performed, if the effect of such failure is to accelerate,
or to permit the holder or holders of such Credit Obligation currently to
accelerate, the maturity of such Credit Obligation, whether or not such failure
to perform shall be waived by the holder or holders of such Credit Obligation,
unless such waiver has the effect of suspending (and then only so long as such
suspension is in effect) or terminating the right of such holder or holders to
accelerate the maturity of such Credit Obligation as a result of such failure,
or if there otherwise occurs any event of default or redemption event with
respect to the Subordinated Debentures or the indenture pursuant to which the
Subordinated Debentures were issued;
(I) if, in the reasonable judgment of the Majority Lenders, there shall occur
any material adverse change in the financial condition, properties, business,
or operations of the Borrower or any of its Subsidiaries taken as a whole and
the Borrower does not promptly present to the Agent a plan, in such detail as
the Agent may require, which can reasonably be expected to mitigate the effects
of such material adverse change;
(J) if the Borrower or any of its Subsidiaries fails to comply with any of the
terms of any other Loan Document to which it is a party; or
(K) if the Borrower or any of its Subsidiaries has been disbarred or suspended
by any governmental authority or has been issued a notice of proposed debarment
or notice of proposed suspension by any governmental authority or if the
Borrower or any of its Subsidiaries is a party to any contractual obligation
with any governmental authority which has been actually terminated due to such
Borrower's or Subsidiary's alleged fraud, willful misconduct or any other
wrongdoing.
Section VII.2 Acceleration. Unless waived pursuant to Section 9.1 hereof, if
any Event of Default, other than those described in Section 7.1(C) hereof with
respect to the Borrower or any Subsidiary of the Borrower, shall occur and be
continuing, then upon notice by the Agent to the Borrower, at the Agent's
option or at the direction of the Majority Lenders (A) the Commitment shall
terminate, at which time the obligations of the Lenders to make Advances under
the Revolving Credit shall terminate, (B) the Issuing Bank shall not have any
further obligation to issue Letters of Credit and Lenders shall have no further
obligation to participate in any Letters of Credit thereafter issued, (C) the
Borrower shall pledge cash collateral and deposit in the Letter of Credit Cash
Collateral Account an amount equal to or greater than (as determined by the
Issuing Bank in its sole discretion) the amount of any Letter of Credit
Liability, and/or (D) the entire unpaid principal amount of the Loans, the
entire amount of unreimbursed drawings under Letters of Credit, all interest
accrued and unpaid thereon and all other amounts payable hereunder shall become
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
If any Event of Default described in Section 7.1(C) shall occur with respect to
the Borrower or any of its Subsidiaries, then automatically and without notice
each of the events described in (A) through (D) of the preceding sentence shall
occur.
Section VII.3 Remedies. Upon the occurrence and during the continuance of any
one or more Events of Default, the Agent may proceed to protect and enforce the
rights of the Lender Group under this Agreement and the other Loan Documents by
exercising such remedies as are available to the Agent in respect thereof under
applicable law, either by suit in equity or by action at law, or both, whether
for specific performance of any provision contained in this Agreement or any of
the other Loan Documents or in aid of the exercise of any power granted in this
Agreement or the other Loan Documents.
(A) Upon the occurrence and during the continuance of any one or more Events of
Default, the Agent, in addition to all the other rights and remedies herein
contained or contained in any of the Loan Documents, shall be entitled to
exercise any and all rights available to it in law or equity.
ARTICLE VIII
THE AGENT
Section VIII.1 Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes the Agent to take such action on its behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto.
Section VIII.2 General Immunity. In performing its duties as the Agent
hereunder, the Agent will take the same care as it takes in connection with
loans in which it alone is interested. However, the Agent nor any of its
directors, officers or employees shall be liable for any action taken or
omitted to be taken by it hereunder or in connection herewith except for its
own gross negligence or willful misconduct.
Section VIII.3 Consultation with Professionals. The Agent may consult with
legal counsel and other professionals selected by it and shall not be liable
for any action taken or suffered in good faith by it in accordance with the
advice of such counsel and professionals in their respective areas of
expertise.
Section VIII.4 Documents. The Agent shall be under no duty to examine or pass
upon the effectiveness, genuineness or validity of this Agreement, the Notes,
or Loan Documents pursuant hereto or in connection herewith, and the Agent
shall be entitled to assume that the same are valid, effective, genuine and
what they purport to be. The Agent specifically disclaims any representation
or warranty respecting any such provision and each Lender agrees to undertake
its own examination of such provisions.
Section VIII.5 Rights as a Lender. With respect to its Pro Rata Share of the
Commitment, the Agent shall have the same rights and powers hereunder as any
Lender and may exercise the same as though it were not the Agent. The terms
"Lender" and "Lenders" shall, unless the context otherwise indicates, include
the Agent in its individual capacity. The Agent may accept deposits from, lend
money to and generally engage in any kind of commercial banking, investment
banking or trust business with the Borrower or Affiliates of the Borrower as if
the Agent were not the Agent.
Section VIII.6 Responsibility of the Agent. It is expressly understood and
agreed that the obligations of the Agent hereunder are only those expressly set
forth in this Agreement or in any other Loan Document and that the Agent shall
be entitled to assume that neither a Default nor an Event of Default has
occurred or is continuing unless the Agent has actual knowledge of such fact or
has received notice from a Lender or the Borrower that such Lender or the
Borrower considers that a Default or an Event of Default has occurred and is
continuing and specifying the nature thereof. Without limiting the foregoing,
the Agent shall not have any obligation to distribute to the Lenders any
statements, reports or other information received from the Borrower pursuant to
provisions hereof which obligate the Borrower to send such statements, reports
or other information to the Agent and the Lenders.
Section VIII.7 Action by the Agent. So long as the Agent shall be entitled,
pursuant to Section 8.6 hereof, to assume that no Default or Event of Default
has occurred and is continuing, the Agent shall be entitled to use its
discretion with respect to exercising or refraining from exercising any rights
that may be vested in it by, or with respect to taking or refraining from
taking any action or actions that it may be able to take under or in respect
of, this Agreement, the Loan Documents, or any of them, provided that, as
between the Agent and the Lenders only, after an Event of Default, the Agent
(A) shall each be entitled to exercise any rights or remedies granted to it
hereunder, or otherwise available to it at law or in equity unless directed
otherwise in writing by the Majority Lenders (or all of the Lenders if
otherwise required under Section 9.1 hereof) and (B) upon the direction of the
Majority Lenders (or all of the Lenders if otherwise required under Section 9.1
hereof), shall exercise such rights and remedies as so directed. The Agent
shall not incur liability under or in respect of this Agreement by acting upon
any notice, consent, 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 that it may do or refrain from doing in
the reasonable exercise of its judgment, or that may seem to it to be necessary
or desirable under the circumstances.
Section VIII.8 Notices of Event of Default, Etc. In the event that the Agent
shall have acquired actual knowledge of any Default or Event of Default, the
Agent shall promptly give notice thereof to each Lender and, subject to Section
8.7 hereof, the Agent may take such action and assert such rights with respect
to taking or refraining from taking any action or actions that it may be able
to take under or in respect of this Agreement, the Loan Documents, or any of
them as it deems to be advisable in its sole discretion for the protection of
the interests of the Lenders including, without limitation, the exercise of
rights and remedies under Article VII hereof.
Section VIII.9 Indemnification of the Agent. Each Lender agrees to indemnify
the Agent (to the extent not reimbursed by the Borrower), ratably according to
its Pro Rata Share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of this
Agreement, the Loan Documents, or any of them or any action taken or omitted by
the Agent under this Agreement, the Loan Documents, or any of them provided
that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct as determined in a final order by a court of competent
jurisdiction (except to the extent such gross negligence or willful misconduct
was committed at the express direction of the Majority Lenders and, in such
event, only the Majority Lenders that actually voted in favor of such direction
shall be responsible for the indemnification obligations under this Section
8.9, with the proportionate liability of each such voting Lender to be a
fraction, the numerator of which is the Pro Rata Share of the Commitment of
such voting Lender and the denominator of which is the aggregate Pro Rata Share
of the Commitment of such voting Lenders).
Section VIII.10 Resignation of the Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign from
the performance of all of its functions and duties at any time by giving 60
days' prior written notice to the Borrower and to the Lenders. Upon receipt of
any such notice the Majority Lenders shall appoint any bank or financial
institution as the successor Agent with the consent of the Borrower (such
consent not to be unreasonably withheld or delayed), provided that such
appointment shall not require the Borrower's consent if made after and during
the continuance of a Default or Event of Default. If no successor Agent shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within thirty (30) days after the giving of notice by the retiring
Agent, then such retiring Agent may on behalf of the Lenders appoint any bank
or financial institution as the successor Agent. Upon the acceptance of any
Person of its appointment as successor Agent, such Person shall thereupon
succeed to and become vested with all the rights, powers, privileges, duties
and obligations of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations as the Agent under the Loan
Documents. After any retiring Agent's resignation, the provisions of this
Article VIII shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken while it was acting as the Agent. The resignation
of the Agent of its duties as the Agent shall not in any way affect its rights
as a Lender under this Agreement.
ARTICLE IX
ADDITIONAL PROVISIONS
Section IX.1 No Waiver; Cumulative Remedies. No failure or delay on the part
of the Lender Group members 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. No waiver of
any provision hereof shall be effective unless the same shall be in writing and
signed by the Majority Lenders, excet that all the Lenders must join in (A) the
deferral of the payment of any interest or principal, Fees, or any other
amounts due hereunder beyond its due date, including any waiver of the
Termination Date, (B) any reduction in the Borrower's obligation to repay the
principal amount of the Loans or any Letter of Credit Liability or any downward
change in any Interest Rate or Fees hereunder, (C) any increase in the
Commitment or any change in the relative amount of the Commitment of any
Lender, (D) any amendment to this Section 9.1 or Section 9.4, (E) the addition
of any new borrower hereunder, or the release of the Borrower from its
obligations hereunder, (F) a change in the definition of the Majority Lenders,
(G) the termination of the Letter of Credit Cash Collateral Account or the
release of any funds held in such account following the occurrence of an Event
of Default which has not been waived or cured, (H) the release of (1) any
Accounts or Inventory as Collateral (other than Inventory sold in the ordinar
y course of business), or (2) any other Collateral having an aggregate value in
excess of $2,500,000.00 in any calendar year or $5,000,000.00 during the term
of this Agreement, except, in each case, to the extent otherwise consistent
with the terms of this Agreement and the other Loan Documents, (I) the waiver
of any rights of or against the Issuing Bank under Section 2.18; or (J) except
as otherwise provided herein or in the Guarantee, the release of any Guarantor
from its obligations under the Guarantee. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. In the event of
a dispute between the Borrower and the Lenders concerning the principal amount
outstanding hereunder, the interest rates applicable thereto, the amounts
available under the Commitments, the payment of principal, interest and other
amounts hereunder, or concerning similar factual matters, absent manifest error
the books and records of the Agent shall be presumed to be correct. In the
event of a dispute between the Borrower and the Lenders concerning the Letters
of Credit or the Letter of Credit Liability, or concerning similar factual
matters, absent manifest error, the books and records of the Issuing Bank shall
be presumed to be correct.
Section IX.2 Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be given to any party hereto
at its address specified in the signature page of this Agreement or at such
other address as shall be designated by such party in a notice to each other
party complying with the terms of this Section 9.2. All notices, requests,
demands and other communications provided for hereunder shall be effective (A)
if given by mail, five (5) days after placing in the United States mail, with
first class postage prepaid, addressed as aforesaid, and (B) if given by any
other means (including telecopy), when delivered or received at the aforesaid
addresses. No notice given by the Borrower or any of its Subsidiaries under
the Loan Documents shall be deemed to be defective or otherwise inoperative due
to the failure of the Person giving such notice to correctly and accurately
identify the provision pursuant to which the notice is required to be provided.
Section IX.3 Set-Off; Sharing of Recoveries. Each Lender shall have a right of
set-off against, a lien upon and a security interest in all property of the
Borrower now or at any time in the possession of such Lender in any capacity
whatever, including, but not limited to, the interest of the Borrower in any
deposit account, as security for all liabilities of the Borrower hereunder. In
the event that a Lender recovers funds from the Borrower, whether by exercise
of its right of set-off or the foreclosure of a banker's lien, such Lender
agrees that all sums recovered from the Borrower shall be recovered on behalf
of all the Lenders and shall be shared by the Lenders according to their
respective Pro Rata Share. If a Lender makes any such recovery, it will
promptly remit to the other Lenders their respective Pro Rata Shares of such
recovery. No Lender's Pro Rata Share shall have priority over any other
Lender's Pro Rata Share. If any Lender acquires title to any assets or
property of the Borrower, through foreclosure or otherwise, title to such asset
shall be taken (unless otherwise mutually agreed upon in writing by the
Lenders) by the Lenders as tenants in common according to each Lender's Pro
Rata Share. If at any time, as the result of exercising such rights or
otherwise, any Lender receives a payment on account of its portion of the Loans
and participation in the Letters of Credit in a proportion greater than similar
payments on account of the portions of the Loans and participation in Letters
of Credit held by the other Lenders, the Lender which receives such greater
proportionate payment will purchase a participation in the portions of the
Loans and participations in the Letters of Credit held by the other Lenders in
such amount that after such purchase each Lender shall hold a proportionate
share in the aggregate outstanding principal balance of the Loans equal to
their respective proportionate shares in the outstanding principal balance of
the Loans and participations in the Letters of Credit before the
disproportionate payment. If, however, any payment on account of the Loans or
participations in the Letters of Credit is rescinded or invalidated or must
otherwise be restored or returned by the recipient in a bankruptcy or
insolvency proceeding or otherwise, then any participations purchased as a
result of such payment will be rescinded.
Section IX.4 Amendments. Any of the provisions of this Agreement may be
modified or amended in writing by any agreement or agreements entered into by
the Borrower and the Majority Lenders, except that (A) all the Lenders must
agree to (1) the deferral of the payment of any interest or principal, Fees, or
any other amounts due hereunder beyond its due date, (2) any reduction in the
Borrower's obligation to repay the principal amount of the Loans or any Letter
of Credit Liability or any downward change in any Interest Rate or Fees
hereunder, (3) any increase in the Commitment or any change in the relative
amount of the Commitment or the Pro Rata Share of any Lender, (4) any amendment
to Section 9.1 or this Section 9.4, (5) the addition of any new borrower
hereunder , or the release of the Borrower from its obligations hereunder, (6)
a change in the definition of the Majority Lenders, (7) the termination of the
Letter of Credit Cash Collateral Account or the release of any funds held in
such account following the occurrence of an Event of Default which has not been
waived or cured, (8) the release of (a) any Accounts or Inventory as Collateral
(other than Inventory sold in the ordinary course of business), or (b) any
other Collateral having an aggregate value in excess of $2,500,000.00 in any
calendar year or $5,000,000.00 during the term of this Agreement except, in
each case, to the extent otherwise consistent with the terms of this Agreement
and the other Loan Documents; (9) the amendment of any rights of or against the
Issuing Bank under Section 2.18; or (10) except as otherwise provided herein or
in the Guarantee, the release of any Guarantor from its obligations under the
Guarantee; and (B) no such modification or amendment shall extend to or affect
any obligation not expressly modified or amended, or impair any right of the
Lenders related to such obligation.
Section IX.5 Costs and Expenses. The Borrower agrees to pay on demand (A) all
reasonable out-of-pocket costs and expenses of the Agent and the Issuing Bank
in connection with the preparation, printing, execution, delivery and
syndication of this Agreement, the Notes and the Loan Documents (including
without limitation the reasonable fees and out-of-pocket expenses of one firm
of counsel of the Agent and the costs of recording financing statements and
other instruments to perfect the security interests granted under the Loan
Documents) and including fees and expenses incurred by the Agent in connection
with its commitment letter, due diligence, negotiation and documentation of the
transactions contemplated hereby, including costs associated with any field
audit, Collateral audit or environmental assessment performed by third parties
on behalf of the Agent, (B) all reasonable costs and expenses of the Agent and
the Issuing Bank in connection with the administration and/or amendment of this
Agreement, the Notes and the Loan Documents (including without limitation the
reasonable fees and out-of-pocket expenses of one firm of counsel), and (C) all
reasonable costs and expenses, if any, of the Lender Group members in
connection with the enforcement against the Borrower and/or the Guarantors of
this Agreement, the Notes and the Loan Documents (including without limitation
the reasonable fees and out-of-pocket expenses of counsel and other consultants
with respect thereto of each of the Lender Group members). Any and all amounts
owing under this Section 9.5 shall be added to the principal of the Loans, earn
interest at the Interest Rate and be secured, to the extent permitted by law,
by the Collateral. All demands for payment pursuant to this Section 9.5 shall
be accompanied by such information as the Borrower may reasonably request
documenting the manner in which such costs and expenses were incurred.
Section IX.6 Governing Law. This Agreement and the other Loan Documents shall
be governed in all respects by the law of the Commonwealth of Pennsylvania, the
jurisdiction in which the Loan Documents have been executed and delivered, and
for all purposes shall be construed in accordance with such law.
Section IX.7 Survival of Agreements and Representations; JURY WAIVER. Except
as otherwise set forth herein or in any other Loan Document, all agreements,
representations and warranties made herein shall survive the delivery of this
Agreement and the Notes until the Liabilities are paid in full. The Borrower
and each Lender irrevocably consents to the service of any and all process in
any such action or proceeding by the mailing of copies of such process to the
Borrower or such Lender at its address specified on the signature page of this
Agreement or such Lender's Assignment Agreement. The Borrower and each Lender
agrees that a final judgment in any such action or proceeding may be enforced
in any jurisdiction by suit on the judgment or in any other manner provided by
law. THE BORROWER AND EACH LENDER GROUP MEMBER WAIVE ANY RIGHT ANY OF THEM MAY
HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THE AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREIN.
Nothing in this Section 9.7 shall affect the right of any party to serve legal
process in any other manner permitted by law.
To the extent that the Borrower, the Agent or any other member of the Lender
Group has or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether from service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, the Borrower, the Agent or any other member of the
Lender Group hereby irrevocably waives such immunity in respect of its
obligations under this Agreement and the other Loan Documents.
Section IX.8 Binding Effect; Assignment. This Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lender Group members and their respective successors and assigns, except
that the Borrower shall not have the right to assign or delegate its rights or
obligations under any of such documents.
Section IX.9 Headings. Article and Section headings used in this Agreement are
for convenience only and shall not affect the construction of this Agreement.
Section IX.10 Usury. Nothing herein contained or in any other Loan Document,
nor any transaction related hereto or thereto, shall be construed or shall so
operate either presently or prospectively to require the Borrower (A) to pay
interest at a rate greater than is now lawful in such case to contract for, but
shall require payment of interest only to the extent of such lawful rate, or
(B) to make any payment or do any act contrary to law, but if any provision
herein or therein contained shall otherwise so operate to invalidate this
Agreement, the Notes, or any other Loan Document, in whole or in part, then
such provision only shall be held for naught as though not herein or therein
contained and the remainder of this Agreement, the Notes, and the other Loan
Documents shall remain operative and in full force and effect. Any interest
paid in excess of the lawful rate shall be refunded to the Borrower. Such
refund shall be made by application of the excessive amount of interest paid
against any sums outstanding under this Agreement and shall be applied in such
order as the Agent may determine. If the excessive amount of interest paid
exceeds the sums outstanding hereunder, the portion exceeding the said sums
outstanding shall be refunded in cash by the Agent. Any such crediting or
refund shall not cure or waive any Default by the Borrower hereunder or under
the Notes or any other Loan Document. The Borrower agrees, however, that in
determining whether or not any interest payable exceeds the highest rate
permitted by law, any non-principal payment (except payments specifically
stated in this Agreement to be "interest") shall be deemed, to the extent
permitted by law, to be an expense, fee, premium, or penalty rather than
interest.
Section IX.11 Participations; Assignments. Conditions to Assignments by the
Lenders. Except as provided herein, each Lender may assign to one or more
Eligible Assignees all or a portion of its interests, rights and obligations
under this Agreement and the Notes held by it; provided that (1) the Agent and
the Borrower shall have given its prior written consent, which consent will not
be unreasonably withheld, provided further that, after the occurrence and
during the continuance of an Event of Default no consent of the Borrower shall
be required, (2) each assignment shall be of a constant and not a varying
percentage of all of the assigning Lender's rights and obligations under this
Agreement and the Notes held by it, (3) each assignment shall be in the minimum
amount of $5,000,000.00, and (4) the parties to such assignment shall execute
and deliver to the Agent for recording in the Register an Assignment and
Assumption Agreement substantially in the form of Exhibit 9.11 attached hereto
(an "Assignment Agreement"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after the date specified in such Assignment Agreement, which effective date
shall be at least five (5) Business Days after the execution thereof, (a) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder, and (b) the assigning Lender shall, to the extent provided in such
Assignment Agreement and upon payment to the Agent of the registration fee
referred to in subsection (C) hereof, be released from its obligations under
this Agreement. Notwithstanding anything to the contrary contained herein,
Sections 9.11(A)(1) and (3) shall not apply to the assignment of portions of
any Lender's Pro Rata Share of the Commitment hereunder to another Lender.
(A) Certain Representation and Warranties; Limitations; Covenants. By
executing and delivering an Assignment Agreement, the parties to the assignment
thereunder confirm to and agree with each other and the other parties hereto as
follows: (1) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties, or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto; (2) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or any other Person primarily or secondarily liable in respect
of the Liabilities, or the performance or observance by the Borrower or any
other Person primarily or secondarily liable for any of the Liabilities of any
of their obligations under this Agreement or any of the other Loan Documents or
any other instrument or document furnished pursuant hereto or thereto; (3) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements delivered by the Borrower in
accordance with Section 6.2(A)(1)hereof and such other documents and
information as it has deemed appropriate to enter into such Assignment
Agreement; (4) such assignee will, independently and without reliance on such
assigning Lender, or any other Lender Group member based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (5) such
assignee represents and warrants that it is an Eligible Assignee; (6) such
assignee authorizes and appoints the Agent to take such action as Agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; (7) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender; and (8) such assignee represents and warrants that it is
legally authorized to enter into such Assignment Agreement.
(B) Register. The Agent shall maintain a copy of each Assignment Agreement
delivered to it and a register or similar list (the "Register") for the
recordation of names and addresses of the Lenders and the Pro Rata Share of the
Commitment from time to time. The entries in the Register shall be conclusive
absent manifest error, and the Borrower, the Agent and each Lender may treat
each person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower, the Agent and Lenders at reasonable times and from time to
time upon reasonable prior notice. Upon each such recordation, the assigning
Lender agrees to pay to the Agent a registration fee in the sum of $3,500.00.
(C) New Notes. Upon its receipt of an Assignment Agreement executed by the
parties to such assignment, together with each Note subject to such assignment,
the Agent shall (1) record the information contained therein in the Register,
and (2) give prompt notice thereof to the Borrower and the Lenders (other than
the assigning Lender). Within five (5) Business Days after receipt of such
notice and upon receipt of new unexecuted Notes from the Agent, the Borrower,
at its own expense, shall execute and deliver to the Agent, in exchange for
each surrendered Note, a new Note to the order of such Eligible Assignee in an
amount equal to the amount of the applicable Loan(s) assumed by such Eligible
Assignee pursuant to such Assignment Agreement and, if the assigning Lender has
retained some portion of its rights and obligations hereunder, a new Note to
the order of the assigning Lender in an amount equal to the amount of the
applicable Loan(s) retained by the assigning Lender. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such Assignment Agreement and shall otherwise be
substantially in the form of the surrendered Notes. The surrendered Notes will
be cancelled and returned promptly to the Borrower.
(D) Participations. Each Lender may sell participations to one or more
financial institutions in all or a portion of such Lender's rights and
obligations under the Agreement and the other Loan Documents; provided that (1)
any such sale or participation shall not affect the rights or duties of the
selling Lender hereunder to the Borrower, and (2) the only rights granted to
the participant pursuant to such participation arrangements with respect to
waivers, modifications or amendments of the Loan Documents shall be the right
to approve waivers, modifications or amendments that would reduce the principal
of or interest on the Loans, extend the term or increase such Lender's Pro Rata
Share of the Commitment of such Lender as it relates to such participant,
reduce the amount of the Commitment Fee or the L/C fee to which such
participant is entitled or extend any regularly scheduled payment date for
principal or interest.
(E) Disclosure. The Borrower agrees that in addition to disclosures made in
accordance with standard and customary banking practices any Lender may
disclose information obtained by such Lender pursuant to this Agreement to
assignees or participants or potential assignees or participants; provided that
such assignees or participants or potential assignees or participants shall
agree (1) to treat in confidence such information, (2) not to disclose such
information to a third party, and (3) not to make use of such information for
purposes and transactions unrelated to such contemplated assignment or
participation.
(F) Assignee or Participant Affiliated with the Borrower. If any assignee
Lender is an Affiliate of the Borrower, then any such assignee Lender shall
have no right to vote as a Lender hereunder or under the Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications of any of the Loan Documents and for the
determination of the Majority Lenders shall for all purposes of this Agreement
and the other Loan Documents be made without regard to such assignee Lender's
interest in any of the Loans. If any Lender sells a participating interest in
any of the Loans to a participant and such participant is the Borrower or an
Affiliate of the Borrower, then such transferor Lender shall promptly notify
the Agent of such participation. Such transferor Lender shall have no right to
vote as a Lender hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents and the determination
of the Majority Lenders shall for all purposes of this Agreement and the other
Loan Documents be made without regard to the interest of such transferor Lender
in the Loans to the extent of such participation.
(G) Miscellaneous Assignment Provisions. If any assignee Lender is not
incorporated under the laws of the United States or any state thereof, it
shall, prior to the date on which any interest or fees are payable hereunder or
under any of the Loan Documents for its account, deliver to the Borrower and
the Agent certification as to its exemption from deduction of withholding of
any United States federal income taxes. In addition to the assignments and
participations permitted under this Section 9.11, any Lender may assign and
pledge all or any portion of its Loans and Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circuit issued by such Federal Reserve
Bank without obtaining the Borrower's approval. No such sale or assignment
shall release the selling or assigning Lender from its obligations hereunder.
Section IX.12 Replacement of the Lenders If any Lender refuses or fails to make
available its Pro Rata Share of any Advance or if any Lender requests
compensation under Section 2.12 hereof, the Borrower, upon three Business Days'
notice, may require that such Lender transfer all of its right, title and
interest under this Agreement and such Lender's Notes to any Eligible Assignee
identified by the Borrower (A) if such proposed transferee agrees to assume all
of the obligations of such Lender for consideration equal to such Lender's Pro
Rata Share of the Loans, together with interest thereon to the date of such
transfer, and satisfactory arrangements are made for payment to such Lender of
all other amounts payable hereunder to such Lender on or prior to the date of
such transfer (including any fees accrued hereunder and any amounts that would
be payable under Section 2.16 as if all of such Lender's Pro Rata Share of the
Loans were being prepaid in full on such date), and (B) the Agent consents to
such proposed transferee, which consent shall not be unreasonably withheld.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements of the Borrower contained in Sections 2.11, 2.12,
2.14, 2.15 and 9.5 (without duplication of any payments made to such Lender by
the Borrower or the proposed transferee) shall survive for the benefit of any
Lender replaced under this Section 9.12 with respect to the time prior to such
replacement.
Section IX.13 Borrowers' Liabilities. The unconditional liability of the
Borrower for the entire Liabilities shall not be impaired by any event
whatsoever, including, but not limited to, the merger, consolidation,
dissolution, cessation of business or liquidation of the Borrower; the
financial decline or bankruptcy of the Borrower; the failure of any other party
to guarantee the Liabilities or to provide collateral therefor; the Lenders'
compromise or settlement with or without release of the Borrower or any
Guarantor; the Agent's release of any Guarantor or any collateral for the
Liabilities, with or without notice to the Borrower or any other Person; the
Agent's or Lenders' failure to file suit against the Borrower or any Guarantor
(regardless of whether such Person is becoming insolvent, is believed to be
about to leave the state or jurisdiction or any other circumstance); the
Agent's or Lenders' failure to give any Person notice of default; the
unenforceability of the Liabilities against the Borrower or any Guarantor due
to bankruptcy discharge, counterclaim or for any other reason; the Agent's or
Lenders' acceleration of the Liabilities at any time; the extension,
modification or renewal of the Liabilities or any Loan Document; the Agent's or
Lenders' failure to undertake or exercise diligence in collection efforts
against any party or property; the termination of any relationship of the
Borrower with any Guarantor, including, but not limited to, any relationship of
commerce or ownership; the Borrower's change of name or use of any name other
than the name used to identify the Borrower in this Agreement; or any
Borrower's use of the credit extended for any purpose whatsoever.
Section IX.14 Confidentiality. The Agent and each Lender agree to keep
confidential any written or oral information (A) provided to it by or on behalf
of the Borrower pursuant to or in connection with this Agreement or any other
Loan Document or (B) obtained by such Lender based on a review of the books and
records of the Borrower; provided that nothing herein shall prevent the Agent
or any Lender from disclosing any such information (1) to the Agent or any
other Lender, (2) to any transferee or prospective transferee of the disclosing
Lender which agrees to comply with the provisions of this subsection, (3) to
its Affiliates, its Subsidiaries and the employees, directors, agents,
attorneys, accountants and other professional advisors of it, its Affiliates
and its Subsidiaries, provided that such Lender shall inform each such Person
of the agreement under this Section 9.14 and take reasonable actions to cause
compliance by any such Person referred to in this clause (3) with this
agreement (including, where appropriate, to cause any such Person to
acknowledge its agreement to be bound by the agreement under this Section
9.14), (4) upon the request or demand of any governmental authority having
jurisdiction over the Agent or such Lender or to the extent required in
response to any order of any court or other governmental authority or as shall
otherwise be required pursuant to any requirement of law, provided that the
Agent or such Lender shall, unless the Agent or such Lender believes in good
faith that it is prohibited by any requirement of law, notify the Borrower of
any disclosure pursuant to this clause (4) as far in advance as is reasonably
practicable under such circumstances, (5) which has been publicly disclosed
other than in breach of this Agreement, (6) in connection with the exercise of
any remedy hereunder, (7) in connection with periodic regulatory examinations,
(8) in connection with any litigation to which the Agent or such Lender may be
a party, subject to the proviso in clause (4), and (9) if, prior to such
information having been so provided or obtained, such information was already
in the Agent's or a Lender's possession on a nonconfidential basis without a
duty of confidentiality to the Borrower being violated.
Section IX.15 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section IX.16 Entire Agreement. This Agreement, the Exhibits attached hereto
and the other Loan Documents constitute the entire understanding among the
parties with respect to the subject matter hereof and supersede any and all
contemporaneous and prior agreements between the parties hereto with respect to
the subject matter hereof and thereof.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
caused this Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
EDO CORPORATION
By:
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Title:
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ADDRESS FOR THE BORROWER:
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
(SIGNATURES CONTINUED ON NEXT PAGE)
MELLON BANK EUROPEAN AMERICAN BANK
By: By:
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Title: Title:
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ADDRESS FOR MELLON BANK: ADDRESS FOR EUROPEAN AMERICAN BANK:
Phone No.: Phone No.:
Fax No.: Fax No.:
KEYBANK, NA
By:
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Title:
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